August 15, 2018

As of June 2017, the Medicare appeals backlog stood at an astonishing 607,402 pending cases at the administrative law judge level.  Estimates indicate that it will soar to 950,520 cases by the end of the 2021 fiscal year.

To help tackle the overwhelming glut of appeals, a federal judge asked the American Hospital Association (AHA) this past April to provide recommendations to the Department of Health and Human Services (HHS) on ways to address this significant and growing problem.

The AHA and several other organizations sued HHS in 2012, asserting that the lengthy delays in appeal decisions beyond the 90-day limit—many lasting three years—were illegal and placing a major financial burden on hospitals.

In 2016, HHS was ordered to adhere to a timetable for eliminating the backlog by December 31, 2020.  However, the elimination timetable was later rescinded based on the argument that HHS could not be expected to adhere to a timetable that it felt was impossible to achieve, and that, according to Sylvia Burwell, HHS Secretary at the time, making payment on Medicare claims regardless of the merit of those claims if the timetable could not be met would conflict with Medicare regulations.

In a brief filed this week, AHA reaffirmed its support for four broad categories of non-deadline remedies and one deadline-based remedy—solutions originally proposed in June in response to a court order.  HHS recently stated that it could resolve the backlog by 2022, and in light of that, argued that it should be required only to make periodic status reports on its progress.

However, in the brief issued this week, the AHA argues in favor of a deadline-based remedy with clearly defined targets for reductions in the appeals backlog to “keep HHS from backsliding” and to give the agency more aggressive goals that would be more likely to ensure steady progress.  Requiring HHS to set goals that are more ambitious than the agency’s projections would also encourage the agency to evaluate a variety of administrative and legislative options, including new authorities, funding and reforms, AHA argues.

The industry group also proposed the following four non-deadline remedies:

Court-ordered changes to the Recovery Audit Contractor (RAC) program.  AHA recommends imposing a financial penalty on RACs that experience a high overturn rate on appeal and shifting hospital-related claims from RACs to Quality Improvement Organizations (QIOs).

A requirement for HHS to document claims settlement activity.  Regular reporting by the agency “is the only way that the Court can ensure HHS is living up to its representations and to monitor any misalignment in the parties’ settlement incentives,” AHA asserts.

Reducing interest on retained alleged overpayments and allowing rebilling.  AHA argues in favor of reducing the interest on overpayments retained by providers during the appeals process and allowing providers to rebill allegedly miscoded claims. “Providers forced to turn over an alleged overpayment while its appeal lingers for years in limbo can be kept from providing needed patient services or upgrading facilities or equipment,” the brief states. “HHS, meanwhile, has the full faith and credit of the United States behind it.  Although the dollar amount that each side pays may be the same, the effect of that payment on each side’s operations is markedly not.”

A requirement for HHS to maintain its current activities.  With such a requirement, AHA contends, “HHS can alter its current programs at its whim, threatening to undo any current progress.  And that possibility is not remote; even now, HHS signals that it might choose to alter its efforts based on unspecified ‘other priorities.’”