RAC Facts: Court Decision Highlights Need For Appeals Reform

Court Decision Highlights Need For Appeals Reform

On February 9, 2016, the District of Columbia U.S. Circuit Court of Appeals reopened a lawsuit by the American Hospital Association against the U.S. government over delayed Medicare reimbursement appeals.

CMS recently offered providers a settlement to clear the backlog of Medicare appeals, but new estimates show that providers are still filing an overwhelming number of appeals. However, most pending appeals are not on RAC improper payment decisions.  Despite the 96% accuracy rate of RAC auditors, the Office of Medicare Hearings and Appeals (OMHA) reported that appeals cases have surpassed 1 million claims.

Further, Chief Administrative Law Judge (ALJ) Nancy Griswold has testified before Congress that “51% of the incoming appeals have been filed by five appellants,” lending credence to findings by the HHS Office of the Inspector General that a few “frequent filer” hospitals are appealing every claim in an effort to game the system.

The court’s decision reminds us that all parties believe the appeals process is in dire need of improvement. For this reason, the Council for Medicare Integrity supports proposals by the Administration and Congress to improve the appeals process and provide it with adequate resources to meet statutory timeframes.

The President’s FY2016 Budget and OMHA have made many recommendations that seek to address vulnerabilities in the Medicare appeals process, including:

  • Sampling and consolidating similar claims for administrative efficiency
  • Expediting procedures for claims with no material fact in dispute
  • Requiring payment of a refundable filing fee when an appeal is filed to reduce frivolous claims

To further reduce the appeals system backlog, reforms should require ALJs to rule according to Medicare policy and include incentives for providers to bill accurately.

The Council also supports many of the provisions of the AFIRM Act, including:

  • Sending claims back to the first level of appeal when new evidence is introduced
  • Creating Medicare Magistrates and efforts to increase contractor participation in appeals hearings

Medicare deserves a strong recovery auditing program that will continue to identify millions of dollars in improper provider payments and return resources to the Medicare Trust Fund.  Instead of weakening the RAC program, we believe that common-sense appeals reform deserves support from Members of Congress interested in protecting and strengthening Medicare.

The time for appeals reform is now.


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