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CMS Seeks to Overhaul Medicare Claims Appeal Process

(July 18, 2016): The Centers for Medicare and Medicaid Services (CMS) has announced a series of proposed changes to the Medicare claims appeal process. The new rules primarily impact the Administrative Law Judge (ALJ) level of review, and CMS has indicated that the purpose of these changes is to help reduce the backlog of pending ALJ hearing requests. As many Medicare providers are aware, the claim appeal process consists of five steps:

  1. A request for redetermination by a Medicare Administrative Contractor;
  2. A request for reconsideration by a Qualified Independent Contractor;
  3. A request for a hearing before an ALJ;
  4. A request for review by the Medicare Appeals Council; and
  5. A request for review in Federal district court

Due to the frenetic auditing activities of CMS’ contractors in recent years – particularly the recovery audit contractors – this system has become overloaded with appeals. This is particularly true with respect to ALJ hearing requests filed with the Office of Medicare Hearings and Appeals (OMHA), where the enormous backlog has prevented OMHA from fulfilling its legal duty to decide appeals within 90 days. As of April 30, 2016 CMS estimates that there are more than 750,000 pending hearing requests. And the backlog only appears to be worsening: the average processing timeframe for an ALJ appeal has increased from 661 days to 819 days between 2015 and 2016.

CMS has stated that the changes to the claim appeals process have two main objectives: to streamline the ALJ hearing process and to increase the number of available adjudicators. Although these new changes impact most of CMS’ existing ALJ appeal regulations, the most significant revisions are summarized below.

  • The Medicare Appeals Council may render binding decisions. In many types of appeal systems, lower courts are required to follow the decisions of higher appellate courts. For example, the decisions of the U.S. Supreme Court are binding on all other Federal courts.

The Medicare Appeals Council is the highest level of appeal within the Department of Health and Human Services, and it is responsible for reviewing ALJ decisions. The Council’s decisions are currently not binding on ALJs or any of CMS’ contractors. The new rules would change this and permit the Council to designate certain decisions as precedential, which means that all of CMS’ contractors and the ALJs would be required to follow them. CMS believes that permitting the Council to render binding decisions would streamline the appeals process and allow for uniformity of some coverage and procedural issues.

  • Attorney Adjudicators will assist with appeals processing. ALJs do not just conduct hearings and write decisions, they also perform a variety of other tasks related to each case, such as: determining if the provider’s appeal is timely, valid, and complete; reviewing the record to ensure all pertinent case materials are present; and determining if good cause exists to admit new evidence offered by a provider.

CMS’ new rules would create new positions within OMHA called “Attorney Adjudicators,” who will be responsible for assisting ALJs with pending appeals. These new decision makers would perform most of the ancillary tasks currently undertaken by ALJs, thereby allowing the judges to focus on holding hearings and issuing decisions.

  • The amount in controversy requirement will increase for some providers. In order to file an ALJ hearing request, the current “amount in controversy” must be at least $150. When determining whether this requirement has been met under the existing regulations, an ALJ will consider the amount billed by the provider to Medicare for the item / service / claim in question.

The new regulation will change the amount in controversy rule for providers who are reimbursed according to a fee schedule, such as physicians, labs, or suppliers of durable medical equipment. In those cases, the amount in controversy will be changed from the amount billed to the amount allowed per the fee schedule. CMS believes that this will reduce the number of appeals submitted to OMHA. It is important to note that, under this new proposed rule, providers will still be permitted to bundle claims together to meet the amount in controversy requirement for an ALJ appeal. For providers who are not reimbursed based on a fee schedule, the amount in controversy rule will continue to be determined according to the amount billed for the claim or service.

These are only three examples of the changes sought by CMS. Many other aspects of the ALJ hearing process will also change, such as when new evidence may be admitted into the record, how cases involving statistical sampling and extrapolation should be handled, and how CMS’ contractors may participate in an ALJ hearing.

In practice, some of these changes may work to the detriment of providers. For example, deeming certain Council decisions precedential would mean that the contractors and ALJs would be required to follow those decisions in identical or similar cases. This could deprive ALJs of independence and flexibility to decide cases based on the unique facts and circumstances of each appeal. CMS does not appear to have offered an estimate as to how many appeals may be affected by this portion of the new rules.

Similarly, the involvement of attorney adjudicators in the process may increase the procedural hurdles encountered by providers during the appeals process. Failure to adhere to most of the procedural requirements for an ALJ hearing request may result in dismissal of the appeal. This increased focus on procedural aspects of the process will likely lead to more providers seeking assistance from attorneys to navigate the increasingly complex hearing process.

Time will tell whether these adjustments to the claim appeal regulations will actually help alleviate the backlog of pending ALJ appeals. The most direct way for CMS to accomplish that result would be to rein in the contractors responsible for the never-ending stream of audits as opposed to tweaking the rules for appeals.

If you have questions about the Medicare claims appeal process or need help with an appeal, you should contact an experienced attorney to discuss your questions and explore your options.

Medicare Claim AppealLiles Parker attorneys assist providers across the country with all matters related to claim appeals, reimbursement, enrollment, compliance, and corporate formation / transactions. If you have questions or concerns about a pending Medicare claim appeal, please contact Adam Bird for a free consultation.  He can be reached at:  1 (800) 475-1906.

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