By Jessica L. Gustafson, Esq. and Adrienne Dresevic, Esq. of The Health Law Partners, P.C.
As those with Medicare appeals awaiting adjudication are very much aware, there exists a significant backlog of appeals tied up in the administrative appeals process, which has greatly delayed final adjudication of hundreds of thousands of appeals. Section 1869 of the Social Security Act (42 U.S.C. § 1395ff) sets forth the five-stage uniform appeals process applied to Medicare Part A and Part B reimbursement appeals and establishes adjudication deadlines. The Department of Health and Human Services (HHS) Office of Medicare Hearings and Appeals (OMHA) oversees the third stage of this process, ie, the ALJ hearing stage. The Act expressly requires that an ALJ “conduct and conclude a hearing… and render a decision on such hearing by no later than the end of the 90-day period beginning on the date a request for hearing has been timely filed.”
Despite this statutory mandate, for the past five years, OMHA has failed to issue most decisions related to Medicare Part A and Part B reimbursement appeals within 90 days. In fact, the average processing time for appealed claims as of April 24 was 1,205.8 days.
With the backlog of appeals ever-increasing, on May 22, 2014 the American Hospital Association (AHA), together with three plaintiff hospitals, filed a complaint against the Secretary of HHS. The plaintiffs sought a writ of mandamus to compel HHS to decide pending Medicare appeals within the statutory deadlines. The litigation has been effective to compel HHS and CMS to adopt initiatives to attempt to lessen the appeals backlog.
Numerous initiatives already have been attempted, with varied results. Many of these were limited in scope. On November 3, 2017, CMS and OMHA announced two new initiatives, which are available all Medicare providers and suppliers with pending Medicare appeals (including radiology providers) and which are intended to reduce the backlog of appeals pending before OMHA (ie, at the ALJ stage of appeal). HHS anticipates that these initiatives will result in the disposition of a large number of pending appeals. On March 22, 2018, the judge in the AHA lawsuit ordered that the case be stayed until summer 2018, in an effort to allow HHS’s and CMS’s newly proposed resolution initiatives the opportunity to further reduce the backlog.
The two new backlog-alleviation programs include the following:
- Low Volume Appeals (LVA) Initiative. The LVA initiative is a settlement opportunity for resolving appeals for appellants with a low volume of appeals pending at the OMHA and Council stages of appeal. In particular, appellants with fewer than 500 Medicare Part A or Part B Claim appeals pending at OMHA and the Council combined as of November 3, 2017, with a total billed amount of $9,000 per appeal, could be potentially eligible to enter into settlement with CMS, provided certain conditions are satisfied. Under the LVA, CMS will settle eligible appeals at 62% of the net allowed amount. The timeframe to opt in to the LVA initiative was recently extended to June 8, 2018. HHS estimates that 80% of the providers in the backlog and 30% of pending appeals are eligible for the LVA initiative.
- Settlement Conference Facilitation (SCF). CMS also proposed to expand its existing SCF program to certain appellants that are ineligible for the LVA initiative. The SCF program is an alternative dispute resolution process at OMHA that gives certain providers and suppliers the opportunity to resolve their eligible Part A and Part B appeals. Among other requirements, Appellants eligible for SCF include those with 500 or more appeals pending at OMHA and the Council combined, or appellants with any number of appeals pending at OMHA and the Council that each have more than $9,000 in billed charges. The amount of each individual claim must be $100,000 or less (for the purposes of an extrapolated statistical sample, the overpayment amount extrapolated from the universe of claims must be $100,000 or less).
HHS estimates that (once appellants with program integrity concerns are removed) over 90% of the remaining appeals in the backlog are eligible for either LVA or SCF.
With a years-long backlog of appeals pending at the OMHA stage of appeal, providers and suppliers may find value in pursuing the new resolution initiatives proposed by HHS and CMS. The proposed initiatives have the potential to provide meaningful relief to most appellants that have been subject to the extended delays in appeals adjudication.
 Regulations implementing this portion of the Act are codified at 42 C.F.R. Part 405 Subpart I, and the Centers for Medicare & Medicaid Services (CMS) sub-regulatory guidance is set forth in the Medicare Claims Processing Manual (CMS Internet-Only Manual 100-04) Chapter 29.
 See Section 1869 (d) (1) (A) of the Act (42 U.S.C. § 1395ff (d) (1) (A)).
 See Complaint filed May 22, 2014, Civil Action No. 14-cv-851, available at www.aha.org/content/14/ 140522complaint-appeals.pdf.
A writ of mandamus is, “an extraordinary writ issued by a court of competent jurisdiction to an inferior tribunal, a public official, an administrative agency, a corporation or any person compelling the performance of an act usually only when there is a duty under the law to perform the act, the plaintiff has a clear right to such performance, and there is no other adequate remedy available.” Findlaw Legal Dictionary, available at http://dictionary.findlaw.com/definition/mandamus.html.
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.
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 firstname.lastname@example.org
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.