Medicare Appeals at a Standstill: Providers Convene, Press CMS to Intervene

Nearly 350 providers, suppliers, consultants, and beneficiary representatives convened at a February 12 OMHA forum, while over 600 listened in on audio and web feeds to hear Judge Griswold and others talk about the problems confounding the current system and voice frustration over the lack of confidence in the Centers for Medicare and Medicaid Services (CMS) and contractor led-lower level appeals.

Appeals System Snapshot

The OMHA announcement, that it had deferred the assignment of most requests for hearing received after July 15, 2013 until cases could be accommodated on an Administrative Law Judge’s docket, sent shockwaves through the provider community that has been under tremendous financial pressure as a result of Medicare audits.

Based on the current workload and volume of new requests, OMHA estimates hearings before an ALJ will be delayed up to 28 months, though beneficiary coverage denials will continue to be expedited within 10 days. Judge Griswold indicated that a limited number of claims were starting to be assigned to ALJs as of February 3.

The ALJ is required by law to issue a decision to providers within 90 days of receipt, but cases are now averaging 28 months, largely fueled by Recovery Audit Contractors (RACs), which were established by the Medicare Modernization Act of 2003 to uncover and deny improper provider payments and now dominate the OMHA caseload. Medicare Part A and B claims make up 99 percent of all cases, and steady increases of dual eligible cases brought by state Medicaid agencies and an increase in complex Medicare appeals have added to the backlog.

The Medicare appeals system is clearly broken. OMHA’s workload has increased 184 percent since 2010 and that the average number of appeals received each week has increased from 1,250 to 15,000 as of January. An example of how the process has slowed is demonstrated by the 15 weeks it takes OMHA just to “date stamp” and process a case request, and an additional 21 weeks from the time a record comes in the door to create a database record that is searchable. Already in FY 2014, there are 225,000 requests awaiting entry into the database.

The sheer volume of paper generated by health care providers and beneficiaries with cases before the ALJ is drowning OMHA’s Central Operations and its field offices as staff offices and conference rooms have given way to storage space for paper files. Jane Cironi, Director of OMHA’s Central Operations Division, used her time at the podium to plead with providers to stop sending duplicate boxes of claims that Qualified Independent Contractors (QICs) are expected to provide OMHA as claims move up the appeals process. Providers expressed concern that files are incomplete or lost as they move up to OMHA.

Congressional Activity

In a letter timed for release right before the OMHA forum, over 100 Members of Congress have urged the Centers for Medicare and Medicaid Services to reform the RAC program to ensure that auditors are “charged with identifying real claim coding and medical documentation errors, as well as provide a more transparent mechanism through which providers can be informed of errors so as to avoid them in the future.” In this letter, Representative Sam Graves (R-MO) and his colleagues have requested that CMS consider implementing an alternate payment arrangement that safeguards against potentially improper incentives for auditors to deny claims.

Congress included an 18.6 percent increase in funding for OMHA in its FY 2014 Department of Health and Human Services (HHS) Appropriations bill out of concern for “the growing backlog of cases at OMHA and the high rate of claims overturned by the Office.” Congress instructed the Department of Health and Human Services (HHS) “to work with providers at the early stages of the audit process so that only a small number of cases are ultimately appealed and the loss of provider time, energy, and resources due to incorrect audit results are limited.”

It is worth noting that given the current political climate, in which hardly any legislation in the health care arena receives favorable Congressional consideration, it continues to be difficult for the sponsors of comprehensive RAC Audit reform legislation to get substantial traction. This indicates a need to place a greater emphasis on securing incremental reforms through existing CMS authority over the RAC program, including through the ongoing RAC contractor procurement process.

OMHA Initiatives Underway

OMHA outlined planned projects and improvements to help increase the Administrative Law Judges’ efficiency while also acknowledging the burden the situation has placed on those waiting for appeals to be heard. Jason Green, Program Evaluation and Policy Director at OMHA, admits it will take time to hire and train staff, acquire the necessary space and upgrade the electronic infrastructure to get the system to where it needs to be.

ALJ Judge Jeffrey Gulin suggested one option is for those appealing to waive their right to a hearing to quicken the process. This seemed to contradict the response Judge Griswold offered to a question about why the ALJ was overturning a majority of its cases based on the same evidence being presented at lower level appeals. Griswold suggested that physician testimony often enhances the case presented at ALJ hearings.

Mr. Green floated the idea of using new methods of adjudicating claims such as use of statistical sampling and mediation, exploring alternate adjudication models including a pilot allowing the fast-track of reviews. Green suggested that OMHA might pursue long-term regulations to allow for alternative measures.

Mr. Green and Judge Griswold discussed authoring a “best practices” manual to promote greater consistency across ALJs, hiring additional people and opening a new office in a Central or Mountain Time Zone location. Judge Griswold does not plan to request public comment on the manual.

Bruce Goldin, who heads OMHA’s information management and systems division, announced plans for developing an Appeals Status Website to increase transparency for providers. The website will allow an appellant to view its appeal status and provide date about case assignment. OMHA is also developing an electronic case management system to handle case intake, assignment, workflow management, exhibits, and decision writing.

Judge Griswold announced plans to publish a Federal Register notice asking stakeholders for their comments and suggestions on how to handle the backlog. Unfortunately comments would be solely focused on OMHA operation and not on many of the CMS issues requiring reform.

Appellant Concerns Mount

Forum participants formed long lines to question Judge Griswold and the two CMS representatives in attendance, Michael Crochunis, Director of the Division of Appeal Operations, and Arrah Tabe-Bedward, Director of the Medicare Enrollment and Appeals Group. (Deputy Administrator Jonathan Blum was featured on an earlier OMHA agenda, but did not appear on the forum’s final agenda.) Appellants pleaded for CMS to work with contractors to ensure that the majority of cases not reach the ALJ review stage, and approached CMS staff with stacks of claims that had been denied in error. Representatives of hospitals, physicians, and suppliers shared overwhelming rates of success of appeals at the ALJ level.

Stakeholders at the forum noted the lack of consistency between decisions at the ALJ level and those at the first two levels of the appeals system, and some said the feedback loops between the different levels of appeals need to be tightened. One stakeholder questioned the inconsistencies between prompting others to question whether Medicare law had not been appropriately applied in cases where denials were overturned by the ALJs.

With pressure mounting about lower level appeals, Judge Griswold suggested that any reform approach would have to be applied holistically — across the Department (notably CMS) though she was hesitant to point any direct finger at her Medicare counterparts.

Medicare Appeals Board Chair, Judge Constance B. Tobias, addressed fourth level appeals, and the inability to meet its 90-day deadline. In FY 2013 Judge Tobias said the Appeals Board closed a record 2,592 appeals, estimating it will have 8,500 appeals in 2015.

If an ALJ cannot adjudicate a case within 90 days, the case can “escalate” via written request. There were seven such cases in 2013 and 19 so far this year. In 2013, there were two escalations to Federal District Court. So far in 2014, there have been six.

For more information on the OMHA announcement, please contact Amy J. Demske or Dan H. Renberg in our Washington office, Thomas E. Jeffry Jr. in our Los Angeles office, Connie A. Raffa in our New York office, or the Arent Fox attorney or policy adviser who normally handles your matters.