Congressional lawmakers grill top ALJ on appeals backlog, say too many providers are being put out of business

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Efforts to root out Medicare fraud have put far too many above-board providers in auditors' crosshairs, leading to a staggering backlog of appeals that has no easy fix, Congressional lawmakers and a top government official said during a hearing Thursday.

The expansion of the Recovery Audit Contractor program in the last few years has been linked to a spike in Medicare claims appeals from long-term care and other provider types. This has swamped administrative law judges, who have been receiving as many as 16,000 appeals a week, Chief Administrative Law Judge Nancy J. Griswold told the House Committee on Oversight & Government Reform's Subcommittee on Energy Policy, Health Care and Entitlements.

Rooting out fraud and abuse must be a top priority, but too many of these appeals involve simple administrative snafus and are unduly burdening providers, several committee members said.

For example, a claim for a prosthesis was denied because documentation did not state that the beneficiary was an amputee, even though Medicare already had paid a surgery to perform the amputation, said Rep. Tammy Duckworth (D-IL), herself a double amputee. This is not an isolated incident, as more than 100 orthotics and prosthetics suppliers have gone out of business while waiting to be paid, she said.

The administrative complexity of Medicare claims is part of the problem, said Rep. Michelle Lujan Grisham (D-NM).

“I can't with consistency even read a Medicare EOB [explanation of benefits], and I'm a lawyer,” Grisham said.

The appeals reaching the ALJ level often involve “crazy stuff,” such as a physician's signature in the wrong place, added Rep. Mark Meadows (R-NC). Alleviating the ALJ backlog must involve action on the front-end, to prevent these claims from being denied or to more swiftly resolve the appeals, he said.

Griswold agreed that “zealous” anti-fraud efforts have created an imbalanced system, and she assured committee members that Health and Human Services Secretary Sylvia Mathews Burwell is committed to “restoring that balance.”

With regard to cutting down the existing backlog, options are limited, Griswold said. Hiring temporary administrative law judges could be part of the solution, but they can only come from other agencies or a pool of retired ALJs. The Office of Medicare Hearings and Appeals was not successful when it asked other agencies for temporary ALJs this spring, she said. The retiree pool only has about 100 people, and nearly 400 would be needed to resolve the backlog within a year.

OMHA recently announced an alternative dispute resolution process, which offers providers a way to potentially reach a settlement through a mediator, Griswold said.

In the long-term, legislative action that changes funding for OMHA and the Departmental Appeal Board could be a major step in the right direction, Griswold explained. When Congress expanded the RAC program, it was meant to be self-funding out of its own recoveries, and the legislation specified that CMS' administrative costs for the program also would be covered through the money brought in by the auditors. However, OMHA is not funded this way, even though the surge in appeals came in large part from RAC activity, Griswold observed.

RACs are bringing in enough money to support funding for the administrative law judges in Griswold's estimation, she said in response to a question from Rep. Jackie Speier (D-CA), the committee's ranking member. Rep. James Lankford (R-OK)* is chairman.

The Centers for Medicare & Medicaid Services also is taking action to alleviate the backlog, Griswold noted. For instance, under new RAC contracts, the auditors will be required to offer providers and suppliers a 30-day discussion period to reach a resolution before the claim is referred to other contractors for collection.

Click here to view the complete hearing.

*Editor's Note: This article previously stated that Rep. Lankford represents Texas.

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