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Senator Orrin Hatch

Senator Ron Wyden

Long an issue that has resonated among healthcare stakeholders, thorny matters associated with Medicare audits and appeals burst into the public’s consciousness last week when U.S. Sen. Orrin Hatch (R-Utah) and Sen. Ron Wyden (D-Ore.) put finishing touches on a bipartisan bill to reform the Medicare audit and appeal process.

Titled the Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015, the bill, which passed on a voice vote last Wednesday, appears to reflect some recommendations put forth in the 2016 budget request from the U.S. Department of Health and Human Services (HHS). That budget recognized three recommended approaches put forth by the Office of Medicare Hearings and Appeals (OMHA): investing new resources to increase adjudication capacity, implementing new strategies to alleviate the current backlog, and proposing legislative reforms that would provide additional funding and new authorities to increase efficiencies and address the volume of incoming appeals. A number of those issues cited in the 2016 budget as well as legislative proposals from HHS and OMHA have been addressed in the AFIRM Act.

“There are many significant issues addressed that can help improve efficiency of the ALJ (administrative law judge) hearing process with the goal to alleviate the unacceptable delay in violation of the statutory mandate,” said Andrew Wachler in an email to RACmonitor. “Significant aspects of the Act include OMHA’s ability to aggregate and consolidate cases and utilize statistical sampling in the hearing process. This will help to reduce the hearing caseload.” 

Another very significant section of the Act, according to Wachler, is that it establishes alternative dispute resolution processes, including mediation, to allow providers, suppliers, and beneficiaries resolve large batches of claims with similar laws and/or facts. 

“This is a welcome and substantial change from the current hearing process,” Wachler added.

Introducing Medicare Magistrates

The proposed bill calls for establishing Medicare Magistrates, a recommendation in the HHS budget.

Beginning on Jan.  1, 2017, Medicare Magistrates, which would be made up of licensed attorneys with “expertise in the Medicare statue, policies and procedures,” according to the bill’s language, “would perform reviews and render decisions in certain appeals.”

The bill would also require the secretary of HHS to establish a Centers for Medicare & Medicaid Services (CMS) ombudsman for Medicare reviews and appeals. Officially known as the Medicare Provider & Supplier Ombudsman, among the duties ascribed to this new position would include “identifying, investigating, and assisting in the resolution of complaints (including referring to the appropriate entity) involving Medicare review or appeals processes from appellants or those considering appeals.”

Current Amount in Controversy

The bill would also increase the current amount in controversy threshold for Medicare appealed claims heard by an ALJ through the OMHA. The current amount of $150 set for the 2015 fiscal year will be raised to a threshold equal to the amount in controversy as required for Medicare appealed claims to be heard at the federal court level. The new threshold would be effective Jan. 1, 2017 and would be indexed for inflation and updated annually, as it is in current law.

Remand Appeals with New Evidence Introduced

Remanding an appeal to the Medicare Administrative Contractors (MACs) for a redetermination would be allowed under the bill when appellants introduce new evidence into the administrative record at a subsequent level of appeal. Certain exceptions would take into account an inadvertent omission or erroneous decision by a lower-level adjudicator to omit the evidence from the administrative record, or when a decision by a lower-level adjudicator was made on new or different grounds than the initial decision. The bill would allow the HHS secretary latitude to make other exceptions.

No Material Facts in Dispute; Expedite Procedures

Under the bill, HHS would be required to implement a process whereby ALJs and Medicare Magistrates could issue decisions — based on the evidence of record — without holding a hearing when there are no material issues of fact in dispute and the ALJ or the Medicare Magistrate determine that there is a binding authority that would control the decision in the matter under review.

Use of Sampling and Extrapolation to Consolidate Appeals

In an effort to increase administrative efficiency, the bill also would allow for the consolidating of more than one pending request for review or appeal into a single appeal if one or more common question of fact or law for similar claims would be involved (or if aggregation of claims has been requested). Consolidation also would be permitted if the same individual or entity submitted claims. Finally, the bill would require a request for review or appeal that had been previously consolidated at a lower level of appeal or involved claims that were included as part of an extrapolation. These could be submitted as a single request for review or appeal in order to be entitled to a review or hearing.

“When an appeal involves a decision that was based on a statistical sample at a lower level, the adjudicator’s decision of such appeal must be based on the same statistical sample,” the bill reads. The bill also would allow an adjudicator to use statistical sampling and extrapolation methodologies for any requests for review or appeals that are pending or filed after the date of the enactment of this bill, with the consent of the appellant.

Shortened Lookback Periods

Of keen interest to providers is that this bill would prohibit Recovery Auditors (RACs) from conducting inpatient reviews more than six month after the date of service if the claim was submitted within three months of the date of service. The bill also would require HHS to study the impacts of shortening such lookback periods for other RAC audits, including those for physicians, suppliers, and other provider types. Under the bill, the HHS would have the discretion to implement lookback periods of less than three years.

Exemption Incentive

The bill also would require HHS to implement a system by which providers or suppliers with a low error rate for claims subject to additional document requests over a two-year period would be exempt from audits by RACs and MACs on a post-payment basis for one year – unless there is evidence of systematic gaming, fraud, abuse, or delays in the provision of care by a provider of services. The HHS secretary also would be required to assess the frequency with which decisions being made by the review entity contractors were consistent with Medicare payment and coverage law, regulations, and program instruction. The results of this validation would be posted to the CMS website.

Accuracy Incentive

Finally, under this provision, HHS would be required to adjust the number of medical records a review entity could request from a provider or supplier based on the assessment. This adjustment would be directly related to the accuracy of the review entity’s reviews.

“Contractors with an accuracy rate of 95 percent or more could be eligible to request additional medical records,” according to the bill’s language. “Contractors with an accuracy rate of less than 95 percent may be limited in their ability to request medical records, according to a sliding scale established by the Secretary.”

About the Author

Chuck Buck is publisher of RACmonitor.

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Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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