Judge Orders AHA to Submit Proposals for Reducing Medicare Appeals Backlog

Judge orders AHA to submit its recommendations by June 22, 2018. 

Recently there was a new development in the matter of American Hospital Association, et al., v. Azar (14-cv-00851-JEB)¹. This case arises out of a lawsuit filed in 2014 by the American Hospital Association (AHA) and a group of hospitals against the Secretary of the U.S. Department of Health and Human Services (HHS).

The gravamen of the lawsuit is that the length of time it takes to challenge a Medicare Recovery Auditor Contractor (RAC) decision at the Administrative Law Judge (ALJ) level of appeal violates the statutory deadlines set forth in 42 USC § 1395ff of the Social Security Act. The governing statute requires that ALJs “conduct and conclude a hearing” and “render a decision” within 90 days of the date a request for hearing is filed. Currently, the average processing time is more than three years.

To summarize the Medicare appeals process, a provider may request redetermination of a denied claim by the Medicare Administrative Contractor (MAC). If the denial is upheld, the provider may request reconsideration by a Qualified Independent Contractor (QIC). For the third level of review, providers may request a hearing before an ALJ, who conducts a de novo review of the case. The final administrative level of review allows providers to appeal the ALJ’s decision to the Medicare Appeals Council within the Departmental Appeals Board (Council), which conducts a de novo review of the ALJ decision on the record. Providers may seek review of the council’s decision in district court of claim denials worth at least $1,500. Both the redetermination and reconsideration levels of review are overseen by the Centers for Medicare & Medicaid Services (CMS) within HHS, whereas the ALJ stage is conducted by Office of Medicare Hearings and Appeals (OMHA), which is independent from CMS.

In December 2016, the U.S. District Court for the District of Columbia ruled favorably for AHA, accepting a proposal that would reduce the backlog of ALJ appeals by Dec. 31, 2020. The government then appealed to the United States Court of Appeals for the District of Columbia Circuit. On appeal, the government argued that lawful compliance with the District Court’s order would be impossible. In August 2017, the Court of Appeals vacated the District Court’s order in the government’s favor. The Court of Appeals remanded the matter to the District Court to evaluate the government’s claim that lawful compliance with the four-year resolution timetable would be impossible.

On March 22, 2018, Judge James E. Boasberg of the U.S. District Court of the District of Columbia ordered AHA to propose specific recommendations for reducing the Medicare appeals backlog that it wishes the court to impose via mandamus and explain why the current procedures are insufficient. AHA must submit its recommendations by June 22, 2018. The government must respond to the AHA’s recommendations and provide a status update on the progress of current reforms by July 6, 2018. This order signals that the Judge will consider options for clearing the backlog of appeals pending at the ALJ level.

It has been reported that AHA will recommend imposing financial penalties on the RACs if the majority of their denials are overturned on appeal, thereby incentivizing the RACs to take a close look at the merits of each case. AHA may also suggest the elimination of the RACs’ ability to deny cases on medical judgment, and that such cases be transferred to the QICs for review whose staff consists of physicians and other healthcare professionals, and therefore they may be better suited to review cases that concern issues of medical judgment. Finally, AHA is planning to push for additional settlement initiatives.

In addition to the recommendations identified by AHA, another possible solution would be to extend the ability of parties to enter into stipulated decisions prior to the ALJ level of appeal. Under federal regulations, CMS or one of its contractors may submit a written or oral statement at the ALJ level of appeal indicating that an item or service should be covered, or payment may be made. The ALJ or attorney adjudicator may then issue a stipulated decision finding in favor of the appellant or other liable parties on the basis of the statement, and without making findings of fact. If parties could enter stipulated decisions with the QIC or early in the appeals process for cases not eligible for the Settlement Conference Facilitation (SCF) program, it would potentially result in earlier settlement of claims and fewer ALJ appeals.

It is interesting to note that on March 30, 2018, CMS extended the deadline for providers to submit an expression of interest for the Low Volumes Appeals Initiative. While it is not clear that the extension of the Low Volume Appeals Initiative relates to Judge Boasberg’s order, it is evident there is mounting pressure on CMS and OMHA to reduce the appeals backlog.

Program Note

Listen to Andrew Wachler report this developing story on Monitor Monday, April 9, 10-10:30 a.m. EST.

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