Expect Final Decision on Appeal Cases to Take Years

For those for you who are regular listeners to Monitor Mondays, you heard Dr. Ronald Hirsch in his April 10 ”Monday Rounds” segment discuss an article recently published online by the Journal of Hospital Medicine detailing the appeal process of Recovery Audit Contractor (RAC) denials at three academic hospitals.

I suspect that some of you did not get a chance to read this piece, or found the prospect of slogging through a peer-reviewed medical journal article on the Medicare appeals process as enticing as reading through the terms and conditions of your new iPhone. So let me take this chance to reiterate the highlights of the article, as pointed out by Dr. Hirsch, and make a couple of other points.

Lead author Dr. Ann Sheehy and her co-authors looked at data from academic hospitals at the University of Wisconsin, University of Utah, and Johns Hopkins. 

The study evaluated complex Medicare Part A audits and appeals reaching the third level of the five-level appeals process as of May 1, 2016. Of the 219 appeals reaching that level, 135 had a decision, 96 of which were good news for the hospitals.

Parenthetically, while not the objective of the study, the overturn rate, which exceeded 70 percent, certainly supports the concerns previously expressed by hospitals that RACs may be overzealous in their denials.

The mean total time since the date of service was 1,663 days – that’s over four and a half years – until either a decision was rendered or the data collection period ended. It is important to note that only 60 percent of the cases examined in the study had a decision, which means that 40 percent didn’t, and those latter cases remained in the appeals process when the study data collection period ended on May 1, 2016. The current appeals system remains overwhelmed, and despite dramatic interventions by the Centers for Medicare & Medicaid Services (CMS) to address the backlog, including the two-midnight rule and the 68-percent settlement offer, it will likely take additional years for these cases to reach a final decision. 

This suggests that the over 1,600 days reported in the study is probably a significant underestimate of what the final mean length of time will be for all 219 cases. Similarly, the mean total days in appeals of 891 reported in the study was mitigated by the data collection. The final number will also likely be much higher.

To no surprise of regular listeners to Monitor Mondays, on average, government contractors and judges met legislative timeliness deadlines less than half the time, with declining compliance at successive levels from discussion, from 92.5 percent at first, down to 0 percent at the third level.  

The authors also looked at the decision letters of the government contractors and found that 95 percent of Level 1 and Level 2 decision letters cited time-based (i.e. 24-hour) criteria for determining inpatient status. Remember that these cases had a date of service before the two-midnight rule for determining inpatient status came into effect. Interestingly, the authors found that 70 percent of the 219 denied cases met a 24-hour care benchmark. 

Now that we are living in a two-midnight world, this could prove a cautionary tale to hospitals currently immersed in Quality Integrity Organization (QIO) audits of inpatient medical necessity. In these, auditors may interpret regulatory time benchmarks differently than the physicians who are making inpatient status determinations in real time when treating Medicare beneficiaries.