Delays In Medicare Appeals Adjudication Part 2: A Potential Legislative Solution

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adrienneJessica Gustafson HeadshotBy Adrienne Dresevic, Esq. and Jessica L. Gustafson, Esq. of The Health Law Partners, P.C.

As we discussed in Part 1 of this article, there presently exists a significant backlog of appeals pending at level three (ie, the Administrative Law Judge (ALJ) hearing stage) of the five-stage Medicare appeals process. The Office of Medicare Hearings and Appeals (OMHA) anticipates that a delay of approximately 2.5 years exists from the time a request for hearing is made until an ALJ hearing is held (and even longer for a decision to be issued). This delay is considerable, given that the Social Security Act, its implementing regulations, and CMS sub-regulatory guidance require that an ALJ “conduct and conclude a hearing on a decision of a qualified independent contractor… and render a decision on such hearing by not later than the end of the 90-day period beginning on the date a request for hearing has been timely filed.”[1] 


Potential Resolution

Over the past few years, CMS[2] and OMHA[3] have implemented pilot initiatives to alleviate the backlog of appeals pending at the ALJ level of appeal. Despite these actions, the significant backlog remains. Recently, a legislative solution has been proposed: the Audit & Appeals Fairness, Integrity, and Reforms in Medicare Act of 2015 (the AFIRM Act). On December 8, 2015, the AFIRM Act was introduced to Congress with bipartisan support.[4] If enacted as proposed, the AFIRM Act[5] would make significant changes to the Medicare appeals process (potentially resulting in fewer ALJ hearings, thus providing a longer-term solution to the appeals adjudication backlog). The legislation includes the following provisions:

  • Establishment of Medicare magistrate review. The amount in controversy requirement for ALJ Hearing would be increased to meet that of Federal court review (in 2016, $1,500). Medicare magistrates, rather than ALJs, would review claims failing to meet the AIC threshold. Adding to the workforce of adjudicators will assist in the resolution of pending appeals.
  • Remanding appeals to redetermination level with introduction of new evidence. Presently, appellants may present new evidence up until the reconsideration level of review for any reason, and thereafter for good cause shown.[6] The AFIRM Act would require appeals to be remanded to the redetermination level for a de novo review if new evidence were to be submitted following this stage of appeal. Presumably, in the case of documentation deficiencies, providers and suppliers may be able to correct such alleged errors through this process, negating the need for additional appeals.
  • Expedited access to appeals. The AFIRM Act would permit ALJs to issue decisions on the record in cases where there are no material issues of fact in dispute and the ALJ determines that there is a binding authority that controls the matter under review.
  • Authority to use sampling and extrapolation methodologies to consolidate appeals and allow for alternative dispute resolution. The AFIRM Act would permit adjudicators at any level, with the consent of the appellant, to consolidate pending appeals and issue a decision based on a review of a sampling of the pending appeals. An alternative dispute resolution process would be established.
  • Limiting the audit recovery and recovery period for patient status reviews. The AFIRM Act would limit the lookback period for patient status reviews to 6 months (provided that the provider submitted its claim for payment within 3 months from the dates of service at issue). This shortened lookback period will mean that generally, any denials received by a hospital based on patient status will occur during the timely filing period. Accordingly, hospitals will be able to choose whether to re-bill a denied claim as a Part B inpatient claim or pursue an appeal its Part A denial.
  • Incentives and disincentives for Medicare contractors, providers and suppliers. This portion of the AFIRM Act would establish a system through which those providers and suppliers that have achieved a low rate of denials of claims for payment over a 2 year period (as determined by the Secretary) would be exempt from additional post-payment auditing for a 1 year period. On the other hand, with respect to contractors, a sampling of review contractors’ records will be reviewed for compliance with CMS policy. High performing contractors will be granted the opportunity to request more records to review than low performing contractors.

The AFIRM Act also includes provisions with the goals to ensure quality decisions are issued. For example, the AFIRM Act mandates annual training for ALJs and Medicare magistrates to advise them regarding CMS policy.[7] It also creates an ombudsman to oversee medical reviews and appeals and contains provisions mandating that studies be performed to assess ALJ decisions for consistent application of CMS policy.



The ALJ adjudication delay has burdened the Medicare provider and supplier community, which has been subject to aggressive auditing activity and denied timely adjudication of appeals. The AFIRM Act, if passed as proposed, could result in an alleviation of some of this backlog, and potentially negate the need for some future appeals, creating a more long-term solution.


[1] See Section 1869 (d) (1) (A) of the Social Security Act (42 U.S.C. § 1395ff (d) (1) (A)) (emphasis added).  See also 42 C.F.R. § 405.1016 and Medicare Claims Process Manual (CMS Pub. 100-04), Ch. 29, § 330.1.  

[2] CMS proposed changes to the Recovery Audit program (effective with the next round of contracts), which should affect the number of appeals submitted: CMS also offered hospital appellants with pending “patient status appeals” a one-time offer of settlement of all pending cases for a partial payment of 68 percent of the net allowable amount. CMS executed settlements with over 1,900 hospitals, representing approximately 300,000 claims:

[3] OMHA added a fifth hearing office in Kansas City, Missouri to its existing field offices in (1) Irvine, California, (2) Cleveland, Ohio, (3) Arlington, Virginia and (4) Miami, Florida. Additionally, OMHA is considering alternate adjudication models. Models being considered include OMHA-facilitated mediation and statistical sampling (during which an ALJ hearing would be held with respect to a sampling of appeals submitted with results extrapolated to other pending appeals). OMHA is also considering engaging OMHA attorneys to review an ALJ hearing case file initially and “fast-track potentially favorable claims or narrow issues for hearing.” See “Policy Update,” included as part of the OMHA Medicare Appellant Forum Presentations, available at:



[6] 42 C.F.R. § 405.466 (a).

[7] Of note, however, presently, ALJs receive annual training related to CMS policy, and this training is not made available to the public. Some providers and suppliers would argue that ALJ decisions are often issued that are contrary to published CMS policy. Therefore, although the goals of training are laudable, this annual “private” training arguably creates notice issues for appellants.

Adrienne Dresevic, Esq. is a Founding Shareholder of The Health Law Partners, P.C., a nationally recognized healthcare law firm with offices in Michigan and New York.Practicing in all areas of healthcare law, she devotes a substantial portion of her practiceto providing clients with counsel and analysis regarding compliance, Stark Law, Anti-Kickback Statute, and compliance related issues. Ms. Dresevic serves on the American Bar Association Health Law Section’s Council, which serves as the voice of the national health law bar within the ABA. Ms. Dresevic also serves as the ABA Health Law Section’s Co-Chair of the Physicians Legal Issues Conference Committee, Vice Chair of the Programs Committee (Executive Leadership), and Vice Chair of the Sponsorship Committee. She is licensed to practice law in Michigan and New York, and can be contacted at

Jessica L. Gustafson, Esq. graduated from Wayne State University Law School. Practicing healthcare law, she concentrates on representing providers in the Medicare, Medicaid and third party payor audit appeals processes, compliance with federal and state healthcare regulations, and reimbursement matters.

The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at

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