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July 25, 2018

HHS gets more time to asses Medicare claims appeals backlog

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    A federal judge has given HHS a few more weeks to review industry proposals intended to reduce a backlog of Medicare claims appeals.

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    Medicare's recovery audit contractor (RAC) program identifies situations in which health care providers allegedly inappropriately billed Medicare and recouped overbilled funds.

    In May 2014, the American Hospital Association (AHA) and a group of hospitals filed a lawsuit against HHS that claimed the length of time it takes to challenge a RAC decision violates the Medicare Act, which sets a 90-day-limit for such appeals to be settled.

    HHS agreed that the review process was taking too long, but said the process has slowed because administrative judges' workloads between 2012 and 2013 increased by a factor of five. The department contended that it lacks sufficient funding to remedy the issue.

    U.S. District Judge James Boasberg in December 2016 ordered HHS to clear the backlog by 2021 and to file progress reports every 90 days. To help remedy the issue, HHS in 2016 issued a proposed rule aimed at simplifying the claims appeals process and reducing the backlog. However, HHS in a progress report filed in March 2017 said it lacked the money and resources needed to meet the court-ordered deadline to clear the backlog. In November 2017, CMS announced that it was launching a low-volume appeals settlement option for certain health care providers in an effort to help clear out the backlog.

    AHA proposes ideas to help clear backlog

    HHS predicted that, as of June, it would take the department another three years to review 607,402 pending appeals, and the number of pending appeals would reach 950,520 by the end of fiscal year 2021.

    According to Modern Healthcare, Boasberg has been frustrated with HHS' lack of progress, and he ordered AHA to submit ideas to help HHS clear the backlog. AHA in June filed its proposals with the court.

    AHA proposed that HHS implement new contract standards for contractors working under Medicare's RAC program once their current agreements are up for renewal. AHA said, under the new standards, RACs that have more than 40% of the initial claims denials overturned within any given quarter should lose 25% of their contingency fees. AHA wrote, "A financial penalty on RACs with high [administrative law judge] overturn rates counteracts RACs' incentive to deny debatable claims."

    AHA also proposed having quality improvement organizations review Medicare claims instead of RACs. Such organizations include clinicians, consumers, and health quality experts, Modern Healthcare reports. According to Modern Healthcare, physicians typically are the first to review claims under quality improvement organizations, and they "are more likely to understand the clinical decisions that may have led to the denied claim."

    AHA also said HHS should prioritize and settle with 90 days denied claims submitted by inpatient rehabilitation facilities, which the group said were particularly affected by denied claims.

    AHA also suggested that HHS reduce the interest it charges on health care providers that fail to repay alleged overpayments within 30 days.

    Boasberg gave HHS until July 6 to respond to AHA's suggestions.

    Boasberg gives HHS more time to respond

    HHS had asked Boasberg to give the department until Aug. 15 to review AHA's proposals. The department said it needed the additional time because it was waiting for an update on how many claims appeals were still pending because policy changes implemented over the past year might have caused the backlog to drop. For instance, Congress earlier this year allocated an additional $75 million for HHS to hire staff to review appeals, Modern Healthcare reports.

    In addition, HHS said Joel McElvain, who had been a lead attorney for HHS on the case, had resigned in June. HHS said, "McElvain has played an active role in the development of litigation strategy in this matter, and it will require some time for a replacement supervisor to prepare for participation in this case."

    In response to HHS' request, Boasberg ruled that the department can have until Aug. 3 to review AHA's suggestions. According to Modern Healthcare, Boasberg did not say why he did not give HHS the full extension that the department had requested.

    AHA said it was disappointed with the extension. Melinda Hatton, general counsel at AHA, said, "The heavily backlogged and broken system continues to place a strain on hospitals that have billions of dollars in Medicare reimbursement tied up in appeals." She added, "Many recommendations that we have long suggested, including directly to HHS, could be taken by the agency to make progress toward the reduction and further growth of the Medicare billing appeals backlog and to prevent another large influx of appeals as a result of faulty assessments" (Dickson, Modern Healthcare, 7/20; Dickson, "Transformation Hub," Modern Healthcare, 6/25).

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