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June/July 2019

Editor’s Note: A Constipated Appeals System Seeks Relief
By Lee DeOrio
For The Record
Vol. 31 No. 6 P. 3

Like traffic on Los Angeles’ Santa Ana Freeway, the list of Medicare appeals waiting resolution stretches for miles. It’s been an ongoing problem with little end in sight although attempts to alleviate the gridlock are ongoing.

In theory (well, it’s actually a law), administrative law judges (ALJs) are required to conduct a hearing and issue a decision no later than 90 days after a request is filed for a hearing. That’s not happening, to say the least. Five years ago, the American Hospital Association (AHA), among others, filed suit to make it happen. Still no luck. In fact, in 2014, the average processing time for an appeal was 415 days. Last year, that figure stood at an outrageous 1,142 days.

Never fear, though, because last November a district court mandated that Health and Human Services (HHS) resolve the logjam by the end of 2022. On the bright side, the number of pending appeals dropped from more than 886,000 in 2015 to 417,198 at the end of the fourth quarter of 2018, according to the AHA.

One thing HHS has on its side is more ALJs. Congress appropriated more than $182 million to address the Medicare appeals backlog, an increase of 70% over the amount appropriated in 2017. The court wants to see steady progress over the next three years, beginning with a 19% reduction by the end of this fiscal year (FY). Subsequent jumps amount to 49% by the end of FY 2020 and 75% at the conclusion of FY 2021.

Appellants may want to consider the Settlement Conference Facilitation (SCF), a one-day mediation in which a Medicare senior attorney or program analyst trained in mediation techniques acts as a neutral facilitator to negotiate a lump-sum settlement on eligible appeals. However, according to R. Kendall Smith Jr, MD, SFHM, a chief physician advisor at Intersect Healthcare, many providers are generally wary of the alternative appeals processes.

“The alternative processes may be better choices for providers with disputed claims that fall well within gray areas or that have financial pressures that require a quicker resolution of their appeal and are unable to wait for a proper day in court with an ALJ,” he says. “As things currently stand, ALJs remain unable to meet their statutorily required time frame of hearing appeals within 90 days.”

At this point, many health systems have been worn down by the journey and probably written off their appeals as a lost cause. Still, they will be keeping a close eye on developments in hopes that their coffers will emerge healthier after years of waiting their turn in court.

“Recent [Office of Inspector General] audits have highlighted the need for closer oversight of Medicare Advantage Organizations [MAOs] suggesting that much of the backlog in the appeals system could be better regulated not by forcing providers to a mediation session to accept a ‘haircut’ on payments due for properly submitted claims, but rather increase oversight and accountability of the MAOs and similar entities that are creating so much of the ‘churn’ that is backlogging the system,” Smith Jr says.