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August 28, 2018

Medicare says it will clear its appeals backlog in 2022—one year later than a court order allows

Daily Briefing

    HHS estimates that it will be able to eliminate a backlog of Medicare claims appeals in fiscal year (FY) 2022—one year longer than a district court's order that HHS eliminate the backlog by FY 2021.

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

    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.

    HHS says new funding, increased settlements will allow it to eliminate backlog in 2022 

    But HHS in a brief filed with the court earlier this month said recent settlements of appeals and increased funding from Congress should allow the department to eliminate the backlog in FY 2022.

    HHS said Congress earlier this year allocated $182.3 million in additional funding to the department so it could hire more administrative law judges and staff to more than double the department's ability to handle appeals. HHS said it plans to use the funding to hire an additional 80 administrative law judges and 600 other staff members over the next 14 months, which should allow the department to process nearly 188,000 appeals annually. In comparison, the department processed 85,000 appeals in 2017.

    In addition, HHS said settlement initiatives and changes to the RAC program have resulted in fewer appeals. Because of that, and given its anticipated staffing levels, HHS predicted that it would be able to eliminate the claims appeals backlog in FY 2022, as long as its funding levels for the Office of Medicare Hearings and Appeals remain the same.

    As such, HHS said the court should not reissues its order that HHS comply with its order to eliminate the backlog by FY 2021 and instead allow HHS to submit regular reports on its progress.

    AHA reacts

    AHA said the court should set a deadline for HHS to clear the backlog in addition to requiring regular progress reports. The group said, "[M]aking a deadline binding and not just aspirational will keep HHS from backsliding."

    AHA also said the court could direct HHS to implement its suggestions for reducing the backlog (Stein, Inside Health Policy, 8/17 [subscription required]; LaPointe, RevCycleIntelligence, 8/22; Gooch, Becker's Hospital CFO Report, 8/24).

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