Medicare audits not able to keep up with backlog of appeals, GAO says

Despite interventions by Medicare officials, the number of appeals from health care providers and patients challenging denied claims continues to spiral, increasing the backlog of cases and delaying many decisions well beyond the timeframes set by law, according to a government study released Thursday.

The report from the Government Accountability Office, said the backlog "shows no signs of abating."  It called for the Department of Health and Human Services to improve its oversight of the process and to streamline appeals so that prior decisions are taken into account and repetitive claims are handled more efficiently.

GAO investigators cited significant increases in cases filed at each of four stages of appeals. They found a 62 percent rise at the first level from 2010 through 2014, while appeals filed at the third stage -- which are heard by an administrative law judge -- had a nearly ten-fold increase during the same period.

[Also: CMS delays review of short stay patient claims under two midnight rule]

HHS officials have acknowledged the problem. 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, Nancy Griswold, the chief administrative law judge of the Office of Medicare Hearings and Appeals, said in an interview.

Requests for hearings increased "so dramatically and so quickly over the past four or five years -- during a period of time when our adjudication capacity was not able to keep up for funding reasons -- we were drowning" in appeals, she said. "It is not quite as bad right now, but we are unable to keep up with [those] that are coming in the door."

The GAO report said HHS attributed the increases in appeals to a greater interest by hospitals and doctors to file appeals and to enhanced efforts on the government's behalf to check for inappropriate payments, including a controversial program known as recovery audits, in which contractors inspect hospital payment records to find any errors.

The report was requested by Sens. Orrin Hatch, R-Utah, Ron Wyden, D-Ore., and Richard Burr, R-N.,C., who said the findings underscore the need for Congress to fix the problem. They have offered a bill, approved by the Senate Finance Committee, that  they say would address many deficiencies by improving HHS oversight and establishing a voluntary dispute resolution process, among other things.

[Also: CMS proposes payment rule for inpatient stays, long-term care]

"The voices of too many patients, providers, and states are going unheard because the gears of the Medicare audit and appeals system have ground to a halt," Wyden said.

In response to the findings, HHS Thursday issued an 11-page "primer" describing how officials have tried to cope with the situation. That included one intervention that that let hospitals settle their claims for 68 percent of the value in 2014. Officials also offered ideas for streamlining the appeals process. These include investing new resources at each level of appeal, administrative actions to encourage resolution of cases earlier in the process, supporting legislation providing additional funding and expanding the agency's powers.

For example, the agency is proposing that cases involving disputes of less than $1,500 should be reviewed by its senior attorneys instead of holding a hearing before an administrative law judge.

However, that idea worries at least one consumer advocacy group.

"We would prefer more judges instead of a stopgap measure," said Alice Bers, an attorney with the Center for Medicare Advocacy who is handling a class action lawsuit on behalf of beneficiaries.

The appeals office is already working to help curb the backlog by converting to an electronic case management system. Starting in August, appeals can be filed by computer.

For hospitals, the appeals delay has tied up billions of dollars in disputed claims, according to the American Hospital Association, which has sued the government to speed up the decisions. The hospitals have argued that Medicare's recovery audit contractors (RACs) unnecessarily reject payments and that hospitals frequently win the appeals.

Like Healthcare Finance on Facebook

"We are skeptical that anything short of fundamental reform that addresses the RACs' contingency fee structure, which encourages them to inappropriately deny claims, will have a lasting impact on the backlog," said Melissa Jackson, the association's senior associate policy director.

In another intervention, which Griswold called "one of our success stories," Medicare officials have prioritized appeals from beneficiaries so that they are processed ahead of those from hospitals, doctors and other health care providers. That policy began in 2014, and as a result, the average time for a beneficiary to get a decision from an administrative law judge is 68 days, she said.

Griswold said the policy would continue "as long as there is a backlog."

Kaiser Health News is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

Twitter: @HC_Finance