Medicare Appeals Update: Is a Resolution Near?

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

Over recent years, providers and suppliers with claim denials awaiting adjudication of their pending appeals have experienced increasing and unprecedented delays.¹ The delays are the most significant at the third and fourth stages of the five-stage Medicare appeals process (ie, at the Administrative Law Judge (ALJ) stage and Medicare Appeals Council (Council) stages of appeal). For example, despite a statutory requirement that an ALJ decision be issued within 90 days from receipt of a request for ALJ hearing, presently, the average processing time for an appeal pending at this stage is 545.4 days.²

The backlog is even more pronounced at the Council level of appeal. The adjudication delays mean that most providers must wait years to obtain resolution. This is particularly troublesome since CMS is authorized to recoup against an alleged overpayment beginning following the second stage of appeal.³ In order to address the backlog of pending appeals, on June 28, 2016, the Department of Health and Human Services (HHS) issued a proposed rule, which would make changes to the Medicare appeals process. Unfortunately, it is unlikely that the proposals will be effective to address the backlog of pending appeals. Four of the most significant provisions of the Proposed Rule are summarized below.

1. Council decisions to have precedential value

Presently, when a Council decision is issued, it is binding only on the parties to that appeal, and it does not have precedential value.⁴ In its Proposed Rule, HHS stated its belief that, “it is appropriate to propose that select Council decisions be made precedential to increase consistency in decisions at all levels of appeal for appellants.”⁵

HHS has proposed granting authority to the Department Appeals Board Chair the sole right to select the Council decisions that would be made precedential.⁶ The decisions selected as precedential would bind all lower-level decision makers from the date that the decisions are posted on a HHS website.⁷ Establishing precedential value to certain cases would have the benefit of adjudication consistency, potentially eliminating the need for certain appeals prospectively. However, some providers and suppliers have questioned why “select” Council decisions should have precedential value and not others, and in particular they have questioned whether decisions rendered in favor of an appellant would be granted precedential value.

2. Attorney adjudicators

HHS further proposed to create attorney adjudicator positions to perform some of the tasks currently performed by ALJs. In particular, the Proposed Rule would provide authority for attorney adjudicators to issue decisions in the following scenarios:

when a decision can be issued without an ALJ conducting a hearing under the regulations (eg, if the evidence in the hearing record supports a finding in favor of the appellant on every issues, or if all parties agree in writing that they do not wish to appear before the ALJ at a hearing),
dismissals when an appellant withdraws a request for an ALJ hearing,
remands for information that can only be provided by CMS or its contractors or at the direction of Council, and
reviews of QIC and IRE dismissals.⁸

ALJs would continue to oversee all cases going to hearing.⁹

3. CMS and contractor participation

Of particular significance to appellants, the Proposed Rule also increases the opportunities for CMS or its contractors to elect to participate in an ALJ hearing process as either participants or parties. Under the Proposed Rule, HHS proposed to permit to allow CMS or its contractors to elect or request to participate in an ALJ hearing upon a request for ALJ hearing, in addition to during an ALJ hearing conducted orally (ie, granting CMS or its contractors the ability to participate in pre-hearing proceedings).¹⁰ The Proposed Rule also places limitations on the number of CMS contractors that may participate/enter as a party in the hearing processes.¹¹ However, if CMS or one of its contractors requests to enter the ALJ hearing process as a party, this effectively would preclude an ALJ from issuing an on-the-record decision.¹² This provision of the Proposed Rule in particular seems counter-to the Proposed Rule’s intent (ie, to reduce the backlog of pending appeals).

4. Amount in controversy

HHS proposed to change how it calculates the amount in controversy for an ALJ hearing, satisfaction of which is required in order for an appellant to be eligible for an ALJ hearing. HHS proposed that the amount in controversy be based on the Medicare allowable amount (ie, the amount reflected on the fee schedule or in the contractor-priced amount), rather than based on the amount charged to a beneficiary.¹³ For post-payment denials or overpayment determinations, the amount in controversy would be that set forth in the demand letter.¹⁴

While some of the proposals contained in the Proposed Rule may help to alleviate the backlog of pending appeals, other proposals would only impact the volume of appeals moving, and some proposals may actually increase the backlog. With all of the provisions of the Proposed Rule considered together, it seems unlikely that it will provide relief to those with pending appeals awaiting adjudication. Comments to the Proposed Rule are due August 29.

References/Notes:

This article supplements the following Link articles, which were published earlier this year: “Delays in Medicare Appeals Adjudication Part 1: Scope of the Problem,” and “Delays in Medicare Appeals Adjudication Part 2: A Potential Legislative Solution.”
http://www.hhs.gov/omha/important_notice_regarding_adjudication_timeframes.html
42 C.F.R. § 405.379.
81 Fed. Reg. 43790 at 43792 (July 5, 2016).
Id. at 43793 (emphasis added).
Id.
Id.
Id. at 43794.
Id.
Id. at 43802.
Id. at 43810-43816.
Under proposed 42 C.F.R. § 1000 (g), “An ALJ or attorney adjudicator may also issue a decision on the record on his or her own initiative if the evidence in the administrative record supports a fully favorable finding for the appellant, and there is no other party or no other party is entitled to a notice of hearing in accordance with § 405.1020 (c).” 81 Fed. Reg. at 43860.
Id. at 43805.
Id. at 43807.

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 adresevic@thehlp.com.

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 www.thehlp.com.

For more regulatory news, visit www.ahraonline.org/news.