Will proposed rule change clear Medicare appeal claims logjam?

The Department of Health and Human Services late last month took a small step toward easing a very big problem. The agency issued a proposed rule designed to help reduce the backlog of more than 700,000 Medicare claims stuck in the appeals process.

The proposed changes to the Medicare appeals process would “streamline administrative processes, increase consistency in decision making across appeal levels and improve efficiency for both appellants and adjudicators,†HHS stated in a fact sheet.

Here are the three steps HHS is proposing that will address the backlog:

• Invest new resources at all levels of appeal to increase adjudication capacity and implement new strategies to alleviate the current backlog.
• Take administrative actions to reduce the number of pending appeals and encourage resolution of cases earlier in the process.
• Propose legislative reforms that provide additional funding and new authorities to address the appeals volume.

But is the proposal enough? Nancy Griswold, chief law judge of the Office of Medicare Hearing and Appeals, recently was quoted as saying that if there was not one more appeal filed and no changes in the system, it would still take 11 years to eliminate the current backlog.

Even if the new proposals are put in place, it could take another five years to eliminate the current backlog. In the meantime, the backlog has meant delaying billions of dollars in Medicare reimbursements to hospitals, many of which are already strapped for cash.

As of April 30, there were more than 750,000 pending appeals before the Office of Medicare Hearings and Appeals (OMHA), which operates under HHS. OMHA’s adjudication capacity was 77,000 appeals per year, with an additional adjudication capacity of 15,000 appeals per year expected by the end of this fiscal year.

There are four administrative levels to the appeals process for Medicare fee-for-service (FFS) claims within HHS and a fifth level in which appeals are reviewed by federal courts. Although a judge is required to issue a decision within 90 days, the average time from hearing request to decision is slightly more than two years, according to the agency.

Last month, the Government Accountability Office released a report critical of HHS current efforts. The GAO report found that from fiscal years 2010 and 2014, the total number of filed appeals at Levels 1 through 4 increased significantly, but varied by level. Level 3, a hearing before an administrative law judge, experienced the largest rate of increase in appeals — from 41,733 to 432,534 appeals (936 percent) — during this period. A significant portion of the increase was driven by appeals of hospital and other inpatient stays, which increased from 12,938 to 275,791 appeals (more than 2,000 percent) at Level 3.

The report indicated that HHS agencies have taken several actions aimed at reducing the total number of Medicare appeals filed and the current appeals backlog. For example, in 2014, CMS agreed to pay a portion (about 68 percent of the payable amount) for certain denied hospital claims on the condition that pending appeals associated with those claims were withdrawn and rights to future appeals of them waived. Despite these and other actions “the Medicare appeals backlog continues to grow at a rate that outpaces the adjudication process and will likely persist,†HHS stated.

Want to provide your input on the proposal? The Centers for Medicare and Medicaid Services is accepting comments through August 29, 2016.