Inside Health Policy: Chief ALJ: Refundable Filing Fee Could Reduce New Appeals

From Inside Health Policy:

Chief ALJ: Refundable Filing Fee Could Reduce New Appeals

Chief Administrative Law Judge Nancy Griswold suggested a refundable filing fee paid by those appealing Medicare denials could help cut down on the number of appeals that reach the ALJs, though providers and suppliers have previously said such a fee would be unworkable and unfair to those who would have to wait not only to recoup funding from appeals decided in their favor but an extra fee as well.

Senate Finance Chair Orrin Hatch (R-UT) said the committee needs to consider legislative solutions to the Medicare appeals backlog after hearing recommendations from Griswold, a Medicare Administrative Contractor and a Qualified Independent Contractor that run the first two levels of the appeals system. Hatch said that the committee was “committed to improving this system.”

“There are, in our opinion, a variety of approaches that must work in tandem if the process is to be reformed,” Hatch said.

ALJs are supposed to make a decision on appeals within 90 days, but as of February that timeframe increased to 572 days, and Griswold’s testimony says providers, beneficiaries and others appealing will continue to have longer wait times “until receipt levels and adjudication capacity are brought into balance.”

One of the biggest challenges for the ALJs as they struggle with a backlog of claims that topped 870,000 pending appeals is the number of new appeals coming in, Griswold said. One way to cut back on the number of cases coming in is by creating a refundable filing fee, she added. The president’s 2016 budget [81379] included a proposal to create a filing fee at each level of appeal that would refunded if those appealing a denial win their case.

HHS Secretary Sylvia Burwell also backed refundable filing fees and told House lawmakers earlier this year that part of the reason the number of appeals is skyrocketing is because there’s not a cost to appeal, and the process is easy.

Griswold said that 51 percent of appeals have been filed by five appellants in 2015, and a fee would help make providers a little more discriminating about which appeals they send to the ALJs.

Thomas Naughton, senior vice president at MAXIMUS Federal Services Inc., said that about 5 percent of those appealing are responsible for the majority of appeals.

Finance Committee ranking Democrat Sen. Ron Wyden (OR) said, “What we ought to do is really laser in in terms of tracking those people, monitoring those people, watch-dogging that population.”

Some providers automatically appeal because they believe they have a good shot at winning their appeal and can beat the odds, Wyden added, pointing back to work from the HHS Office of Inspector General. Naughton said that providers are engaging high-powered law firms to represent them at ALJ hearings, and no one is representing the other side of the story so the providers know their odds of winning are good.

The Council For Medicare Integrity, which represents Recovery Auditors, said it agreed with Griswold and a filing fee would “deter the frivolous appeals clogging up the ALJ process and help level the playing field.”

“Recovery auditors are already penalized when they create an overpayment determination and support it through two levels of appeal, only to see it overturned at the ALJ level where the judge is not held to Medicare policy. It’s only fair that appellants be held accountable as well,” the council said. RACs are paid on a contingency fee basis, and when a denial is overturned the RAC must return its contingency fee.

Wyden said that while the vast majority of providers are straightforward and honest, “clearly there is a small number that has figured out a way to really hot wire the system.”

Melissa Jackson, senior associate director for policy at the American Hospital Association, disagreed with the idea of a filing fee.

“Hospitals appeal because they stand behind the medical judgment of the physicians who provide care to Medicare patients. Hospitals incur significant costs to participate in the appeals process, and in fact there are hospitals that cannot afford to do so. HHS should not add to that cost,” Jackson said. “A filing fee would penalize hospitals that choose to pursue their statutory appeals rights.”

One durable medical equipment lobbyist said that it would be inappropriate to pay a fee upfront to appeal and then get a refund for the fee years down the road when the appeal is decided.

Jackson also said the idea of refundable filing fees tinkers at the margins of the appeals backlog but doesn’t address RAC reforms. Sandy Coston, CEO and president of Diversified Service Options, Inc., which acts as a MAC and handles the first level of appeals, said that the overall percentage of appeals from RACs grew from 7 percent in 2011 to 63 percent in 2013 for one Part A contractor. Sen. Debbie Stabenow (D-MI) said that if the hospitals are bearing the full costs of appealing, then there doesn’t seem to be a downside for the RACs to deny claims.

Sen. Bob Casey (D-PA) asked what role funding has to play with the backlog. Griswold said that under the president’s proposal, which increases funding for the Office of Medicare Hearings and Appeals, the office could not only hire 119 new ALJ teams but also hire magistrates that would be less costly but process the same number of appeals as other ALJs. Under the president’s proposal, OMHA’s capacity to process appeals could grow from 77,000 appeals per year to about 278,000 appeals a year, she said. — Michelle M. Stein 

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