Hospital Industry’s ‘Frequent Filers’ at Root of ALJ Backlog

February 17, 2015                  

CONTACT: Kristin Walter
(202) 898-0995

Hospital Industry’s ‘Frequent Filers’ at Root of ALJ Backlog

Washington, D.C. – A backlog of 750,000 cases afflicting the Center for Medicare and Medicaid Service’s (CMS) most effective Medicare integrity program is due to the volume of provider appeals at the Administrative Law Judge (ALJ) level, not systemic flaws in the Recovery Audit Contractor (RAC) program as hospital groups have previously alleged, the American Coalition for Healthcare Claims Integrity (ACHCI) finds.

According to a report by the HHS Office of the Inspector General (OIG), most providers filed an average of six appeals in one year. In 2010, for example, 96 providers filed at least 50 appeals each, and one provider filed more than 1,000 appeals. The OIG found that these repeat filers accounted for nearly one-third of all ALJ appeals.

The OIG also found that “wide interpretation” of Medicare policy at the ALJ level has incented providers to appeal repeatedly with the expectation of receiving a different finding. All other levels of appeal rule strictly according to Medicare policy. Inconsistency at the ALJ level has led to a surge in what the OIG calls “frequent filers” – providers who appeal every audit in defiance of Medicare oversight.

“The simple truth is that healthcare providers are gaming the Medicare appeals system,” said ACHCI spokesperson Kristin Walter. “The increase in the number of appeals filed over the past few years can be attributed directly to provider groups encouraging frequent filers that appeal every decision, regardless of the type of audit or the audit’s conclusion.”

A coalition analysis of CMS data finds that among the total improper claims identified by recovery auditors in 2012 and 2013, only 2.3 percent and 10.6 percent, respectively, were appealed to the ALJ level. However, appeals on the whole have been consistently on the rise. In 2012, the CMS Office of Medicare Hearings and Appeals (OMHA) received 29,311 appeals from hospitals and providers. In 2013, the number of appeals rose to 161,840.

Table 1. Percentage of RAC denials appealed at the ALJ level

“All Medicare stakeholders agree that there is a serious need for reform at the ALJ level of appeals,” said Walter. “Our coalition urges decision makers to ensure consistency within the appeals process to address this ongoing problem.”

The President’s FY2016 Budget includes several provisions that seek to address the Medicare appeals process. ACHCI supports the following reforms, which will have a positive impact on addressing the ALJ backlog.

  • Require ALJs to rule according to Medicare policy.
  • Sample and consolidate similar claims for administrative efficiency.
  • Expedite procedures for claims with no material fact in dispute.
  • Provide for a refundable filing fee when a provider is successful on appeal.

Independent reviewers have determined that RACs have a 96 percent accuracy rate in their determinations. These auditors review less than 2 percent of a provider’s Medicare claims, yet they have successfully recovered more than $8.9 billion in improper Medicare payments since Congress put the program in place in 2009. According to recent Office of the Inspector General (OIG) reports, 88 percent of Medicare overbillings are attributed to in-patient hospitals.

With a billing error rate of 12.7 percent, which in FY2014 equated to an annual loss of $46 billion, the Medicare Trust Fund is hemorrhaging resources due to improper billing.

For more information, please visit: www.properpayments.com

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About the American Coalition for Healthcare Claims Integrity

Founded in 2009, the American Coalition for Healthcare Claims Integrity (ACHCI) is a non-profit organization committed to working toward achieving 100% accuracy in payment claims submitted to public and private sector healthcare payors. The coalition’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help identify and correct improper payments.

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