AHA recommendations for Medicare appeals ignore
existing integrity program reforms
Washington, D.C. (July 10, 2018) – Last week, the American Hospital Association (AHA) filed a brief with the federal court in response to U.S. District Judge James Boasberg’s request for ideas regarding how to address the Medicare appeals backlog. Instead of making substantive administrative recommendations to improve the Medicare appeals process, the AHA makes suggestions that are not only redundant based on existing CMS rules, they also clearly demonstrate that the AHA is more interested in sidelining the Recovery Audit Contractor (RAC) program to advance their industry’s financial gain, rather than actually seeking to fix the Medicare appeals backlog.
“The AHA’s suggestions are unconscionable given the recent Medicare Trustees’ Report predicting Medicare Part A insolvency is just eight years away,” said Kristin Walter, spokesperson for the Council for Medicare Integrity. “For this reason alone, there is a shared responsibility among all stakeholders to ensure that overpayments are returned to the Medicare Trust Funds – we must have balance between program integrity efforts and due process. Real appeals reforms are necessary to improve the Medicare appeals process, just as CMS reformed the RAC program. Program integrity, quality of care and financial solvency should not suffer while appeals reform continues to evolve.”
Two years ago, CMS implemented numerous enhancements to the RAC Program to reduce perceived “provider burden, enhance program oversight and increase transparency.” As a result of those reforms, appeals of RAC claim decisions are at lowest historical levels – just 9.5 percent in FY2016 and are likely even lower now. Significant changes to the current RAC program include:
- Ensuring RAC claim review accuracy by incentivizing contractors to maintain a 95 percent accuracy rate as determined by an independent validation contractor.
- Adding a financial penalty for recovery audit contractors with appeal overturn rates exceeding 10 percent.
- Changes to RAC payment timeline in the case of an appeal. RACs are only paid after the provider receives an unfavorable decision at the first and second level of appeals – a 420-day waiting period.
- Implementation of a new risk-based ADR limit policy. RACs can review a minimum of .5%, maximum of 5% of select Medicare claim types for billing accuracy based on each provider’s billing accuracy rate.
“Recommendations made by the AHA in response to Judge Boasberg’s request are baseless, completely redundant, and do little to reduce the appeals backlog,” said Walter. “The AHA is choosing to turn a blind eye to successful CMS reforms that have already significantly reduced Medicare appeals. Instead, they continue a groundless attack on an important integrity program put in place by Congress to preserve much-needed Medicare resources by ensuring the efficient and effective spending of tax dollars.”
For example, the AHA brief asks the court to implement a financial penalty against the RACs if appeal overturns exceed 40 percent. This recommendation is clearly redundant and not nearly as strict as the 10 percent threshold currently in place per CMS.
The AHA also asks the court to hold back a percentage of RAC payment, which would then only be disbursed if the contractors maintain an appeal overturn rate below 40% at the third level of appeal (ALJ). CMS currently holds back the entire RAC payment until claim decisions are upheld up to the second level of appeal. And again, financial penalties are already in place should any RAC’s appeal overturn rate exceed 10 percent.
Finally, the AHA also recommends that all hospital claims be reviewed by another program integrity contractor, Quality Improvement Organizations (QIOs). By law, the mission of the QIO Program is to improve the effectiveness, efficiency, economy, and quality of services delivered to Medicare beneficiaries. While this has enabled them to conduct RAC-legacy reviews, in the interim where clinical judgment is a necessary part of determining overpayments, they are not however equipped to help Medicare safeguard against all payment errors that may arise in hospital billings.
“CMS and RACs have proven that RACs are the best equipped to identify and pursue overpayments. Plus, the current QIO fixed fee payment structure will lead to higher costs to perform overpayment reviews and are contrary to national calls to move healthcare towards pay-for-performance models,” said Walter.
The AHA continues attacks on the RAC program in the face of a brief submitted to the court last year where HHS stated unequivocally that the RAC “program simply was not, and is not, the primary source of the [Medicare appeals] backlog.”
Additionally, Chief Administrative Law Judge Nancy Griswold, the HHS Office of the Inspector General and the Government Accountability Office (GAO) have all reported that providers are responsible for causing the Medicare appeals backlog. The GAO’s report shares that among the four levels of appeal, Level 3 (ALJ) experienced a sharp and sudden increase in appeals overall, as well as the largest increase in Part A appeals, which increased over 2,000 percent between fiscal years 2010 and 2014. This has been attributed to a number of providers, called “frequent filers,” intentionally working to game the system by appealing all claims at the ALJ in an effort to secure a different ruling because judges at that level are afforded wide discretion in their rulings, do not have to follow Medicare policy, and can review new evidence that was not previously shared with the earlier appeal levels. In Congressional testimony, Chief ALJ Nancy Griswold shared that 51 percent of appeals filed in 2015 were filed by the same five appellants.
“The AHA clearly has a significant incentive to continue their attacks on the Medicare RAC program,” said Walter. “Over the past three years, Medicare providers have enjoyed an audit holiday due to significant restrictions placed on billing oversight. During this time, the Medicare program has lost more than $120 billion in overpayments due to improper provider billing. Despite dire predictions about Medicare’s financial future, the AHA is working on overdrive to further restrict Medicare payment oversight so billions in much needed program resources fund their member’s bottom lines instead of extending full coverage and care to seniors.”
In 2009, Congress mandated the creation of the Recovery Audit Contractor (RAC) program, which reviews Medicare claims, identifies billing errors and returns improperly spent funds back to the program. To date, recovery auditors have successfully returned more than $10 billion back to the Medicare Trust Fund and have been credited with extending the financial solvency of the Medicare program by two full years, all while reviewing a very small fraction of claims on a post-payment basis. Unfortunately, the AHA has greatly pressured CMS to scale back the RAC program due to complaints that Medicare billing oversight is a “burden” to providers. As a result, currently 99.5 percent of Medicare Fee for Service claims are paid without a review for provider billing accuracy.
“Reforms to the RAC program have already resulted in an improved appeals process, therefore the AHA’s fear that RAC appeals will increase if the program is later expanded is unjustified,” said Walter. “For the backlog to be addressed we must have meaningful reform to the appeals process. We must ensure the appeals process instills mutual accountability for appellants. A tiered, volume-based refundable filing fee should be imposed on appellants to curb documented frequent filers. Other reforms should include limits on the introduction of new evidence, transparency in audit scenarios and consistent education for all those who are determining cases. Ultimately, the backlog can only be reduced by addressing the systemic issues not by hampering effective Medicare program oversight.”
About the Council for Medicare Integrity. The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments. For more information, please visit: www.medicareintegrity.org