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If you listen closely during the recent Thanksgiving weekend, you just might be able to hear a collective sigh of relief coming from providers across the country.

After all, as those in the healthcare industry were preparing for Thanksgiving, they might have one extra thing to be thankful for this year. The U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) has released a report on the challenges providers are encountering at the Administrative Law Judge (ALJ) level.

In summary, the report includes 10 recommendations intended to create an array of improvements and efficiencies in this critical level of appeals – though who the recommended changes might benefit more, providers or the federal government, remains to be seen.

“Providers focus thousands and millions of dollars on resources trying to comply by Medicare’s rules in the first round with patient care, only to get benched years down the road after the cursory review of a cold record,” said Taryn Schraad, an audit and appeals specialist in the Compliance Department of Lawrence Memorial Hospital in Lawrence, Kan. “Hindsight is always better for everyone – but regardless, if the provider feels as if they did everything they could to make (a) determination as accurately as possible, they should be entitled to defend that.”

In 2005, the OIG noted in its report, ALJs were required to follow new regulations addressing how the Centers for Medicare & Medicaid Services participates in appeals, plus how to apply Medicare policy and when to accept new evidence in a case. The compilation of the report represented the first significant effort to assess the impact of those changes.

The study outlined in the report scrutinized all ALJ appeals decided in the 2010 fiscal year, and the study further was based on data analysis and interviews with ALJs, Qualified Independent Contractors (which administer the second level of appeals), and CMS staff.

What the report’s architects found was that ALJs reversed QUIC decisions and decided in favor of appellants in more than half of all appeals to reach the third level (56 percent). The OIG chalked this fact up to “different interpretations of Medicare policies and other factors,” according to a recently released report summary.

Officials also found that ALJ decisions were less likely to be favorable to appellants when CMS directly participated in appeal adjudication, as well as the fact that ALJ staff generally handled suspicions of fraud inconsistently throughout the test year.

The summary also included the aforementioned 10 recommendations, including that CMS and the Office of Medicare Hearings and Appeals (OMHA):

  1. Develop and provide coordinated training on Medicare policies to ALJs and QICs;
  2. Identify and clarify Medicare policies that are unclear and interpreted differently;
  3. Standardize case files and make them electronic in nature;
  4. Revise regulations to provide more guidance to ALJs regarding the acceptance of new evidence; and
  5. Improve the handling of appeals from appellants who are also under fraud investigation, and also seek statutory authority to postpone such appeals when necessary.

For OMHA specifically, the report recommended that the agency:

  1. Seek statutory authority to establish a filing fee;
  2. Implement a quality assurance process to review ALJ decisions;
  3. Determine whether specialization among ALJs would improve consistency and efficiency; and
  4. Develop policies to handle suspicions of fraud appropriately and consistently (and train staff accordingly).

For CMS specifically, the report recommended that the agency:

10. Continue to increase CMS participation in ALJ appeals.

CMS and OMHA reportedly concurred fully or in part with all 10 recommendations. Reaction from compliance experts was a little more mixed.

“Boy oh boy,” wrote Mike Jamrog, compliance officer at McLaren Health Care Corporation in Michigan in comments to racmonitor.com. “The recommended changes may … have some merit, but the how and … whom could create a ‘Col. Sanders guarding the chicken house’ situation.”

“Call me a conspiracy theorist,” he added, “but this all sounds to me like ‘You’re losing too many cases at the ALJ level, so you need to tell the ALJs the correct interpretation of your confusing policies.’ Then we’ll monitor the decisions and make sure you are interpreting the policies correctly.”

Jamrog called the ALJ level of appeal “where common sense is considered” – at long last, in some providers’ opinions.

“They truly consider the time period when the service was given, not today’s environment,” he explained. “They are not bound by manuals and can interpret the Medicare policies for themselves. At this level the judge’s opinion rules, even if CMS doesn’t agree.”

Schraad agreed with Jamrog’s take that the ALJ level of appeal might rank low on the long list of areas ripe for reform.

“The ALJ process is not broken; it is the process before the case gets to the ALJ that is broken,” she said. “ALJ decisions are overturning the MAC and QIC decisions because, as I quote from page 10 of the report, ‘Most ALJ and QIC staff agreed that reasonable people can interpret Medicare policies differently, and several staff emphasized that some policies need to be flexible to cover a wide range of beneficiary circumstances.’”

“There is the problem,” she concluded. “CMS isn’t listening, considering and acting on the underlying theme of all this – give providers a well-defined, clear, concise definition of inpatient versus outpatient status, then put their … resources and energies into a solution that actively educates, audits and reforms the process of selecting appropriate patient status. If CMS achieves the 10 objectives in this report without considering the providers input, then CMS bypasses the problem and disregards addressing a true solution to this issue.”

About the Authors

Chuck Buck is the publisher of RACmonitor.

Mark Spivey is a national correspondent with RACmonitor.

Contact the Authors



To comment on this article please go to editor@racmonitor.com

To review highlights of the report in PDF form, go online to https://oig.hhs.gov/oei/reports/oei-02-10-00340.asp.

SNFs and Medicaid Personal Care Services Are Under the OIG’s Microscope, Reports Principal Deputy Inspector General Larry Goldberg


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