AHA Medicare appeals reform recommendations miss the mark

Last week, the American Hospital Association (AHA) filed a brief with the federal court in response to U.S. District Judge James Boasberg’s request for ideas to address the current Medicare appeals backlog.

Instead of making substantive administrative recommendations to improve the Medicare appeals process, the AHA makes suggestions that are not only redundant based on existing Centers for Medicare and Medicaid Services (CMS) rules. It also clearly demonstrate that the AHA is more interested in sidelining the Recovery Audit Contractor (RAC) program than fixing the Medicare appeals backlog.

{mosads}In their brief, the AHA focuses on restricting the Medicare billing oversight work done by the RACs — despite the Department of Health and Human Services (HHS) demonstrating that the RAC “program simply was not, and is not, the primary source of the [Medicare appeals] backlog.”

In fact, two years ago, the CMS implemented numerous enhancements to the RAC program to address concerns about the Medicare appeals backlog, address perceived “provider burden, enhance program oversight and increase transparency.” As a result of those reforms, appeals of Medicare RAC claim decisions have been at lowest historical levels — just 9.5 percent in fiscal 2016 and are likely even much lower now, two years after CMS implemented its changes.

In their brief, the AHA recommends the court implement a financial penalty against the RACs if their appeal overturns exceed 40 percent. This is a puzzling recommendation considering CMS already financially penalizes RACs if their appeal overturn rate exceeds 10 percent and ensures RAC claim review accuracy by incentivizing contractors to maintain a 95 percent accuracy rate as determined by an independent validation contractor.

The AHA also asks the court to hold back a percentage of RAC payment, which would then only be disbursed if the contractors maintain an appeal overturn rate below 40 percent at the third level of appeal (ALJ). CMS currently holds back the entire RAC payment until claim decisions are upheld up to the second level of appeal. And again, RACs are currently financially penalized if their appeal overturn rate exceeds 10 percent.

Finally, the AHA recommends Medicare hospital claims be reviewed by a different program integrity contractor, the Quality Improvement Organizations (QIOs).

By law, the mission of the QIO Program is to improve the effectiveness, efficiency, economy, and quality of services delivered to Medicare beneficiaries.

While this has enabled them to conduct RAC-legacy reviews, in the interim where clinical judgment is a necessary part of determining overpayments, they are not however equipped to help Medicare safeguard against all payment errors that may arise in hospital billings. In addition, the QIO fixed fee payment structure will lead to higher costs to perform overpayment reviews and are contrary to national calls to move healthcare towards pay-for-performance models.

Unfortunately, the AHA has a significant incentive to continue attacks on the RAC program. Over the past three years, Medicare providers have enjoyed an audit holiday due to significant restrictions placed on Medicare billing oversight. During this time, only 5 percent of Medicare fee-for-service claims have been reviewed for billing accuracy and as a result, the program has lost more than $120 billion in overpayments due to ongoing provider billing errors.

Meanwhile, Chief Administrative Law Judge Nancy Griswold, the HHS Office of the Inspector General and the Government Accountability Office (GAO) have all reported that providers are responsible for causing the Medicare appeals backlog.

The GAO reports that among the four levels of appeal, Level 3 (ALJ) experienced a sharp and sudden increase in appeals overall, as well as the largest increase in Part A appeals. This increased 2,000 percent between fiscal years 2010 and 2014.

This spike in appeals has been attributed to a number of providers, called “frequent filers,” intentionally working to game the system by appealing all claims at the ALJ in an effort to secure a different ruling. Judges at the ALJ level are afforded wide discretion in their rulings, do not have to follow Medicare policy, and can review new evidence that was not previously shared with the earlier levels of appeal.

In Congressional testimony, Chief ALJ Nancy Griswold shared that 51 percent of appeals filed in 2015 were filed by the same five appellants.

Despite dire predictions about Medicare’s financial future, the AHA seems to be working on overdrive to further restrict Medicare payment oversight so billions in much needed program resources fund their member’s bottom lines instead of extending full coverage and care for American seniors.

Ultimately, Medicare solvency concerns must be a shared responsibility among all Medicare stakeholders. Therefore, we must have balance between program integrity efforts and due process. Program integrity, quality of care and Medicare financial solvency should not suffer while appeals reform continues to evolve.

For the Medicare appeals backlog to be addressed, there must be meaningful reform of the actual appeals process. First, there must be mutual accountability for all appellants. We agree with Chief Administrative Law Judge Nancy Griswold, who recommended, a tiered, volume-based refundable filing fee be imposed on appellants to curb documented frequent filers. Other reforms should include limits on the introduction of new evidence, transparency in audit scenarios and consistent education for all those who are determining cases.

The Medicare appeals backlog can only be reduced by addressing the systemic issues, not by hampering effective Medicare program oversight.

Kristin Walter is the spokesperson for the The Council for Medicare Integrity, which educates policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.