Ten years – that’s how long the U.S. Department of Health and Human Services Office of Medicare Hearings and Appeals estimates the Medicare appeals backlog of 750,000 cases will take to clear.
The backlog was caused by some Medicare providers appealing nearly every claim denial at the Administrative Law Judge level of appeal in an attempt to game the system and secure higher payouts for their claims. Unlike at other levels of appeal, ALJs have wide discretion in their decision making and do not have to follow Medicare policy. According to Chief ALJ Nancy Griswold, 51% of the appeals in 2015 were filed by the same five appellants.
There’s a lot at stake. Within the Medicare Fee-for-Service program, more than $43 billion in taxpayer dollars is lost annually due to providers improperly billing claims. The Medicare appeals process provides the necessary checks and balances needed to ensure that providers are compensated fairly, but reform is greatly needed to clear the current logjam and prevent this from happening again.
To reform the Medicare appeals process, HHS has taken some good first steps with their recent notice of proposed rulemaking, but the Department also set a dangerous precedent in 2014 by offering providers a settlement of 68 cents on the dollar to retire a portion of pending appeals. In fact, HHS recently announced they will offer providers another similar settlement to retire even more cases from the system. By settling cases this way, without regard to their merit, it actually encourages providers to flood the appeals system to keep the payouts coming.
Additional legislation is greatly needed to enact safeguards to end the behaviors that caused the backlog in the first place. The Audit and Appeals Fairness, Integrity and Reforms in Medicare (AFIRM) Act, passed by the Senate Finance Committee last year, seeks to address several of the serious issues currently preventing Medicare appeals from functioning smoothly. AFIRM takes active steps to address the backlog by sending claims back to the first level of appeal when new evidence is introduced; creates Medicare Magistrates to perform reviews and render decisions on certain types of cases; and ensures fairness by requiring that all parties be notified of a hearing well in advance.
While the AFIRM Act addresses several of the current challenges, the Council for Medicare Integrity recommends some additional safeguards be added to further promote expediency, specifically:
Inclusion of an appeals filing fee, refundable if a provider wins its appeal, as championed by the President’s Budget, the HHS Secretary and the Chief ALJ;
Penalties for providers who fail to bill a claim within 3 months of the date of service;
Requirements recommended by Congress that ALJs make decisions consistently, in accordance with Medicare policy; and,
Expedition of claims where no facts are disputed.
The Council is greatly encouraged by the bipartisan support within Congress to actively address the top issues preventing our nation’s marquee healthcare program from functioning efficiently. With these new provisions, the AFIRM Act will finally streamline the audit and appeals process, adding the necessary safeguards to ensure fairness and prevent providers from filing meritless appeals to overload the system again in the future.
As we work to reform Medicare appeals, we must also reiterate the importance of a functional Medicare integrity program to ensure that billion-dollar hospital systems don’t continue efforts to game the system. Currently, proven integrity programs, like the Recovery Audit Contractor (RAC) Program, are sitting idle due to expired contracts while Medicare loses $118 million in unrecovered improper payments per day.
Congress, let’s pass AFIRM to get the appeals process back on track. And, HHS, let’s award the new RAC contracts and get auditors back to work to recover the billions of improperly billed Medicare dollars needed to fund the program for future generations of beneficiaries.