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Hospitals File Lawsuit Over Medicare ALJ Hearings Delays

9.9.2014

Over 460,000 appeals requesting hearings before an administrative law judge (ALJ) were pending in the Office of Medicare Hearings and Appeals (OMHA) at the end of 2013, with 15,000 new appeals being submitted each week. At the beginning of 2014, OMHA suspended any further assignments of appeal requests by providers for a period of up to 28 months. The suspension applies to cases received by OMHA after July 15, 2013. The tremendous increase in appeals is directly related to the expanded number of Medicare contractors reviewing claims and the expanded volume of claims reviews.

The moratorium by OMHA prompted the American Hospital Association (AHA) to sue the U.S. Department of Health and Human Services (HHS) on May 22, 2014, to force the secretary of HHS to meet deadlines required by statute for reviewing denials of Medicare claims. In its lawsuit, AHA asserts that providers may wait up to five years to complete four levels of administrative appeals. Federal regulations require the ALJ hearing appeals to be completed within 90 days following the date the request is received by OMHA. If this timetable is not met, the only remedy available is escalation to the Departmental Appeals Board (DAB) where similar delays are common. If the DAB does not decide the appeal within 180 days, escalation is allowed to the federal district court. These remedies are of little practical value to providers.

The delays have hurt providers in many ways. ALJ reviews have consistently led to high rates of reversals of claim denials. In addition, Medicare providers are impacted by the recoupment of alleged overpayments during the expected 30 months they must wait for an appeal to be assigned and heard by an ALJ.

HHS and OMHA have taken steps to address the problem. Provider reviews by recovery auditors were suspended at the end of February 2014. When the RA audit program resumes with new contraOver 460,000 appeals requesting hearings before an ALJ were pending in the Office of Medicare Hearings and Appeals (OMHA) at the end of 2013 with 15,000 new appeals being submitted each week. At the beginning of 2014, OMHA suspended any further assignments of appeal requests by providers for a period of up to 28 months. The suspension applies to cases received by OMHA after July 15, 2013. The tremendous increase in appeals is directly related to the expanded number of Medicare contractors reviewing claims and the expanded volume of claims reviews.

The moratorium by OMHA prompted the American Hospital Association (AHA) to sue DHHS on May 22, 2014, to force the Secretary of HHS to meet deadlines required by statute for reviewing denials of Medicare claims. In its lawsuit and its recently filed Motion for Summary Judgment, AHA asserts that providers may wait up to five years to complete four levels of administrative appeals. Federal regulations require the ALJ hearing appeals to be completed within 90 days following the date the request is received by OMHA. If this timetable is not met, the only remedy available is escalation to the Departmental Appeals Board (DAB) where similar delays are common. If the DAB does not decide the appeal within 180 days, escalation is allowed to the Federal District Court. These remedies are of little practical value to providers. HHS requested and the Court granted an extension to respond to AHA's Summary Judgment Motion until September 11, 2014. Updates regarding this lawsuit are available on the AHA website.

The delays have hurt providers in many ways. ALJ reviews have consistently led to high rates of reversals of claim denials. In addition, Medicare providers are impacted by the contained accrual of interest and withholding of alleged overpayments during the expected 30 months they must wait for an appeal to be assigned and heard by an ALJ.

HHS and OMHA have taken only marginal steps to address the problem. Provider reviews by Recovery Auditors (RA) were suspended at the end of February, 2014. When the RA audit program resumes with new contractors, new guidelines will be in place that are designed to reduce the number of claims reviewed and to facilitate resolution of audit findings at the contractor level. The new contracts are expected to contain RAC program changes that CMS announced in February, including requiring auditors to wait 30 days to allow for a discussion before sending claims to the Medicare Administrative Contractors for collection. Under the new contracts, RACs will also be expected to confirm receipt of a discussion request within three days. CMS believes this will result in the filing of fewer administrative appeals. RACs will also have to wait until providers have moved through the second level of appeals before collecting their contingency fee, as well. The new contracts are also expected to change how many documents RACs may request for claims, and to adjust document request limits based on providers' denial rates.

CMS has also initiated a "Settlement Conference Facilitation Pilot," which is an alternate dispute resolution process designed to bring the appellant and CMS together to discuss the potential of a mutually agreeable resolution for claims appealed to the Administrative Law Judge. These and other actions by OMHA to assist providers impacted by the delays are described on its website (www.hhs.gov/omha), including "best practice" guideline tips for providers filing hearing requests.

On Friday, August 29, 2014, Medicare announced an offer to settle hundreds of thousands of hospital appeals relating to reimbursement for short-term care. The settlements could potentially result in payments to hospitals of several hundred million dollars. The proposed settlement offers hospitals a little more than two-thirds of the amounts they contend they are owed. Thousands of hospitals have filed appeals challenging the amount they should receive for treating patients whose hospital stays were one or two days, contributing to the backlog of appeals and resulting delays at the ALJ level. (Post from the CMS website in its "updates" dated August 29, 2014.)

Notwithstanding these measures, the moratorium on assigning cases for hearing remains in place and the backlog continues to grow. As AHA alleges in its lawsuit "OMHA has admitted that it is not meeting statutory deadlines and will not be able to do so any time the near future."

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