Kusserow’s Corner: Medicare Appeals Backlog Update—New Suit Filed by Beneficiaries

Over the last year, I have blogged many more than eight times on the “saga” of the backlog in the Medicare claims appeals process. Last year at this time, Nancy Griswold, Chief Administrative Law Judge (ALJ) in an open memorandum to Office of Medicare Hearings and Appeals (OMHA) Medicare Appellants, stated effective July 15, 2013, they were suspending the assignment of most new requests for an ALJ hearing for at least two years. This was to allow time to catch up on almost a half million claims that are backlogged. They simply have not been able to keep pace with the rising caseload and have been falling further and further behind. Also, last year the American Hospital Association and three hospital and healthcare systems sued HHS over the long backlog in Medicare claim denial appeals. Now patients are joining in with a nationwide class action suit.

Now on August 26, 2014, in the U.S. District Court in Connecticut, the Center for Medicare Advocacy filed a class action suit on the behalf of five named Medicare beneficiary plaintiffs that had waited more than three months for a hearing and decision by an ALJ on their Medicare appeals, even though the law says an appeal decision must be issued within 90 days (Lessler v Burwell, 3:14-CV-1230, D. Conn.). In the suit, the beneficiaries argue that this failure to receive an ALJ decision within that 90-day period is a “defective administrative review process” that violates the Medicare statute and the Due Process Clause of the Fifth Amendment. According to the filing, the current average wait time between when a request for a hearing is filed and when a decision is issued is, on average, 489 days, or five times as long as the maximum amount of time it is supposed to take under the law. The suit seeks a declaratory, injunctive, and mandamus relief to compel the HHS Secretary to meet statutory deadlines for reviewing Medicare claim denials. The American Hospital Association suit also calls for HHS to ensure that its ALJs meet the statutory 90-day timeline requirement for deciding Medicare claim appeals. The suit also asks the Court to issue a “declaratory judgment that HHS’s delay in adjudication of Medicare appeals violates federal law” and to also compel HHS to comply with providing timely ALJ reviews within the statutory limit.

There are now several lawsuits in play that impact on a variety of appeals handled by OMHA that are part of the backlog, including:

  1. Medicare eligibility and entitlement
  2. Part B and D income-related premiums
  3. Part A and B pre- and post-payment claims (MACs, RACs, PSC/ZPICs)
  4. Continuation of care (QIOs)
  5. Part C managed care coverage (Medicare Advantage programs)
  6. Part D prescription drug coverage (Prescription Drug Plans)

As if the lawsuits are not enough, this problem has drawn Congressional attention following OMHA’s actions. A bipartisan group of 111 House members signed a letter to the HHS Secretary earlier this year calling for a fix to this problem and an easing of the backlog, as well as a continued effort to make sure beneficiaries’ appeals are handled first. Stay tuned; more is sure to follow in this messy situation.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.

Kusserow’s Corner: Senate Aging Committee Reports CMS Failing With Its Contractors

In a series of recent blogs, I have reported on the problem of the multi-year backlog of appeals to administrative law judges (ALJs) that led to the Office of Medicare Hearings and Appeals (OMHA) suspending new cases from being filed. I reported on House hearings on the subject. Now coming from the Senate is a related attack on what appears to them as a system that is not working the way it should.

The Senate Special Committee on Aging released a bipartisan report on Medicare audit programs, including the recovery audit contractors (RACs) that expressed concern that the government’s “strategy to reduce improper payments is actually a strategy aimed more at identifying and recovering improper payments that have already occurred.” They noted a “significant burden is being placed on providers as result of the larger number of audits, many of which may be duplicative.” This is resulting in providers losing millions of dollars that are tied up in appeals because of increasing numbers of Medicare audits. The contractors receive contingency fees of between 9-12.5 percent for their recoveries. A recent OIG report was cited that found providers were successful in 72 percent of the inpatient claims denials that they appealed. Another finding was that most errors identified by the contractors were overruled by ALJs upon appeal. Many from the industry pointed out they won the vast majority of appeals with less than a quarter of the appealed recoveries sustained. In many cases, millions of dollars were withheld during the appeals process. The report also stated that “contractor error rate reduction plans must be overseen more effectively by the CMS.”

The Committee noted that the administration has added considerable manpower over the last several years to investigate cases, increase audits, and analyze more data to fight fraud in the Medicare program, including launching a $77 million technology screening system designed to proactively prevent fraudulent providers from joining the system and prevent bogus claims from being paid in the first place. Despite all these new resources being employed, improper payments within Medicare’s largest sector increased for the first time in five years, jumping from $30 billion to $36 billion. What this means is that improper Medicare payments climbed from 8.5 percent in fiscal year (FY) 2012 to 10.1 percent or $50 billion in FY 2013, despite all efforts by the administration.

The Committee expressed concern that the government’s “strategy to reduce improper payments is actually a strategy aimed more at identifying and recovering improper payments that have already occurred.” It blamed the administration for lax oversight of its confusing maze of private fraud prevention contractors, noting a fundamental flaw in the way certain contractors are paid because they are paid based on the dollar amount of fraud they identify. The Committee made a number of recommendations to CMS:

  • Consolidating post-payment review activities to the maximum extent possible;
  • Considering financial incentives aimed more at the reduction of improper payment rates in a given contractor’s jurisdiction, rather than solely on the amount of improper payments identified;
  • Strengthening its review of contractor error rate reduction plans; and
  • Emphasizing provider education.

In response to the criticisms, CMS reported making changes as it prepares to award a new round of contracts. For example, the contractors won’t be paid their contingency fees until their decisions have been upheld at the second level of the six-stage appeals process.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.

Kusserow’s Corner: New Pilot Programs to Address ALJ Appeals Backlog

The HHS Office of Medicare Hearings and Appeals (OMHA) announced earlier this year a temporary suspension of assignment of new Medicare appeals to administrative law judges (ALJs) for at least 28 months as a result of the significant backlog. To address the significant backlog of Medicare administrative appeals at the ALJ level, OMHA has posted information about two pilot programs that providers with Medicare appeals pending before an ALJ may use to resolve claims. They are:

  1. A Settlement Conference Facilitation (SCF) Pilot, which is an alternative dispute resolution process applicable only to Medicare Part B claims. At least 20 claims or $10,000 must be at issue.
  1. A Statistical Sampling Pilot, under which a provider would agree to allow OMHA to adjudicate a group of appeals using statistical sampling.

SCF Pilot

The SCF is a pilot alternate dispute resolution process designed to bring the appellant and CMS together to discuss the potential of a mutually agreeable resolution to the claims appealed to an ALJ hearing. If a resolution is reached, a settlement document is drafted by the facilitator to reflect the agreement. The document is signed by the appellant and CMS at the settlement conference session. As part of the agreement, the requests for an ALJ hearing for the claims covered by the settlement will be dismissed. The facilitator, an OMHA employee, uses mediation principles to assist the appellant and CMS in working toward a mutually agreeable resolution. The facilitator does not make official determinations on the merits of the claims at issue and does not serve as a fact finder, but may help the appellant and CMS see the relative strengths and weaknesses of their positions. To be eligible for the SCF process:

  • The request for hearing must appeal a Qualified Independent Contractor’s (QIC) reconsideration of a claim for Medicare Part B items or services;
  • Appellant must be a Medicare provider or supplier;
  • Beneficiary must not have been found liable after the initial determination or participated in the QIC reconsideration;
  • All jurisdictional requirements for an ALJ hearing must be met for the request for hearing and all appealed claims;
  • Request for hearing must have been filed in 2013 and not currently assigned to an ALJ;
  • Amount of each individual claim must be less than $100,000. For the purposes of an extrapolated statistical sample, the extrapolated amount must be less than $100,000.
  • At least 20 claims must be at issue, or at least $10,000 must be in controversy if fewer than 20 claims are involved;
  • There cannot be an outstanding request for OMHA statistical sampling for the same claims; and
  • Request must include all of the appellant’s pending appeals for the same item or service at issue that meet the SCF criteria.

Statistical Sampling Pilot

The Statistical Sampling Pilot is limited to appellants that are single Medicare providers or suppliers; multiple providers or suppliers may qualify if the owning entity agrees to accept or make any Medicare payment due as a single payment. To participate, a provider must identify a group of at least 250 claims, all of which fall into one of the following categories: pre-payment claim denials; post-payment non-RAC claim denials; or post-payment RAC claim denials. Claims also must meet all jurisdictional requirements for hearing before an ALJ. Currently, OMHA will only allow statistical sampling for appeals currently assigned to an ALJ but not scheduled for hearing, or appeals filed between April 1 and June 30, 2013. Once a provider has requested statistical sampling, OMHA will secure an independent statistical expert to assist the ALJ with conducting the sampling according to existing CMS guidance. The provider will receive a pre-hearing conference with an ALJ to establish that the provider has consented to the process, as well as to establish the claims from which a sample will be drawn. The ALJ will then issue a pre-hearing conference order, after which participation in statistical sampling becomes binding. The universe of claims will then be consolidated into one appeal, and the ALJ will hold a hearing and issue a decision on the sample units drawn from the larger group. A Medicare contractor will then extrapolate the ALJ’s decision on the sample claims to the larger universe of claims. The appropriate Medicare Administrative Contractor (MAC) will be directed to effectuate the decision based on the extrapolated amount.

Appellants who are eligible and interested in the pilot must complete a written request for sampling along with a detailed spreadsheet of claims for consideration. OMHA has included template request documents. Hospitals may be interested in evaluating whether or not initiating the pilot will be beneficial. While this may expedite the adjudication of long-awaiting appeals, the downsides of this project should also be considered.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.

Kusserow’s Corner: OIG Critical of CMS in Failing to Recover Billions of Dollars in Misspent Funds

Brian Ritchie, HHS Office of Evaluation and Inspections (OEI) Acting Deputy Inspector General (IG), provided testimony before a House oversight committee on the topic of “Medicare Mismanagement: Oversight of the Federal Government Efforts to Recapture Misspent Funds.” The HHS Office of Inspector General (OIG) cited deficiencies in recovering billions of dollars annually in misspent funds, and offered recommendations from their work to rectify the problem. The OIG was critical of both CMS and its contractors in ensuring accurate and appropriate payments for services on behalf of beneficiaries, as well as when inappropriate payments are identified to be collected. The OIG cited improper payments cost tax payers $50 billion a year. The largest program, fee-for-service (FFS), has a reported error rate of over 10 percent that translates to $38 billion a year.

The OIG credited CMS with implementing many of its prior recommendations that resulted in cost saving, improved program operations, and enhanced protection of beneficiaries. But, there many other opportunities for CMS program improvements. The OIG “Compendium of Priority Recommendations” provides a large list of propose actions yet to be acted upon by CMS.

The testimony cited a number of areas where significant improvements in operations and recoveries could be made:

  • From its oversight of the Medicare Part D drug benefit program, the OIG found millions of dollars lost as result of weak safeguard. The investigations uncovered prescription fraud cases involving many millions of dollars. CMS has been provided with a number of recommendations needing actions to better protect beneficiaries and taxpayers from inappropriate prescribing, use, and billing for prescription drugs. These include requiring Part D plans to verify that those prescribing have the authority to do so. The OIG called upon CMS to instruct its program integrity contractors to expand their analysis of prescribers for questionable patterns and give additional guidance on monitoring prescribing patterns.
  • The fraud-ridden home health program was also highlighted. It has been a major area of concern for over a decade. Although CMS has taken many actions to curb fraud and abuse in this area, much remains to be done. The OIG found nearly one-third of home health claims did not meet the requirements for face-to-face encounters with their patients. Also, CMS has not found the means to collect overpayments from home health agencies. OIG also found significant patterns of questionable billing that have resulted in hundreds of millions of dollars in fraud and abuse. Unimplemented OIG recommendations include CMS creating a form that ensures face-to-face encounters with patients; implementing security bonds for home health agencies; and increasing program monitoring of home health.
  • The OIG has urged CMS to make greater efforts to recover billions of dollars in improper payments made, and to address vulnerabilities that lead to fraud and abuse through better payment safeguards. CMS has labeled billions of dollars as uncollectable. Furthermore, the vast majority of overpayments identified by CMS program integrity contractors went uncollected and CMS does not have an adequate system to track these overpayments and their collection status.
  • The OIG notes CMS needs to better address vulnerabilities giving rise to fraud. CMS contractors have been identifying a number of vulnerabilities with CMS acting on most of these, but not all. OIG recommends that CMS improve tracking and monitoring of overpayment collections; expand the type of provider identifiers used to recover overpayments; and address in a more timely manner program vulnerabilities identified by contractors. Finally, CMS needs to evaluate the effectiveness of corrective action measures implemented.
  • OIG called upon CMS to use data more effectively to oversee contractor performance, which includes key performance metrics. It found data used by CMS to oversee ZPICs is not accurate or uniform, limiting the ability to accurately assess performance. ZPIC fraud detection results varied considerably without explanation. The contractors need to have their performance evaluated in a more timely and effective manner.
  • The OIG testimony included criticism of the Medicare appeals system that has completely broken down. Over half of the appeals by providers are sustained, but the backlog of appeals now number in years with questioned costs lingering indefinitely. To fix the system, the OIG calls upon CMS to identify and clarify conflicting policies being interpreted inconsistently; standardize case files and make them electronic; continue increased CMS involvement in appeals; and implement quality assurance process for evaluate ALJ decisions.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow’s Corner Newsletter

Copyright © 2014 Strategic Management Services, LLC. Published with permission.