Medicare Administrative Law Judge Hearings Update Report
February 14, 2014 10:02 AM
In early January, it was revealed that Medicare appeal hearings before an Administrative Law Judge (ALJ) would be facing significant delays due to a huge backlog of cases. On February 12, 2014, the Office of Medicare Hearings and Appeals (OMHA) held a public forum to detail the extent of the delays and its plans for expanding its ability to handle the increased caseload.
While OMHA appears to be doing everything within its power to schedule and hold hearings as soon as possible, it is very apparent that significant changes are necessary to address the growing crisis. Even with all the initiatives underway at OMHA, there is no way the backlog of nearly a half million appeals can be cleared.
In her December 31, 2013 letter, OMHA Chief Administrative Law Judge Nancy L. Griswold indicated that at that time there were 457,000 appeals awaiting assignment to an ALJ with 15,000 new cases added to the backlog every week. OMHA has only 65 administrative law judges to hear all of its cases.
NAHC earlier learned that approximately 26,000 of the backlogged cases involve home health services. The vast majority of the rest are hospital and DME appeals.
At the Forum, Chief ALJ Griswold explained that the backlog is due to an unanticipated increase in appeals volume. That increase is directly related to the expansion of post-pay claims reviews by the Medicare MACs, ZPICs, and particularly the RACs. She cited the sudden change in the number of appeals filed from 2012 to 2013 where ALJ hearing requests rose from 117,371 to 351,629. OMHA already was backlogged in 2012 because of the appeal growth in preceding years.
At this point, average ALJ appeal processing time has increased from 94.9 days in 2009 to 329.8 days in 2014. That extension of processing time will only get worse as the demand far outpaces the supply of ALJs.
OMHA has made great strides in increasing ALJ productivity through a number of efficiency measures. In 2009, ALJs handled an average of 2.2 cases per day and 551 per year. In 2013, productivity rose to 4.9 cases a day and 1,220 per year. However, even with that gain, it would take 375 ALJs to clear out the backlog in 12 months and 640 more to handle the new incoming cases each year. That translates to a conclusion that there is no readily available remedy to clear the backlog in the near term.
Griswold reported that OMHA has received an 18.6 percent increase in its budget for FY2015. That appears to be a proverbial “drop in the bucket” in comparison to what is needed.
Griswold and staff outlined several initiatives that are underway or under consideration. These include:
Issuance of an Adjudication Manual to improve decision consistency and production
The use of statistical sampling to resolve large groups of appeals
Employing Alternative Dispute Resolution and mediation to reach “Agreed Upon” decisions
Expanding the role of the ALJs’ Attorney Advisors including possible decision-making authority
Improving case management efficiencies through technological improvements such as web-based electronic case filing and processing
OMHA has limited authority as to what it can do under Medicare appeal rules. It is highly likely that amendments to Medicare laws and regulations will be necessary to achieve any significant improvement in resolving the appeal backlog and delays in addressing new appeals. The bottom-line is that productivity improvements alone cannot meet the appeal volume. With nearly 5 hearing decisions a day already issued by the ALJs, any productivity gains will be marginal. The quality of the hearing will suffer if ALJs are expected to produce more decisions.
NAHC has expressed that real solutions to the ALJ hearing crisis lie at the source of the problem. ALJ hearings are sought because appellants believe that earlier decisions by Medicare contractors are flawed. At the Forum, OMHA presented data on claim denials and appeals at earlier stages of the process. In FY2012, there were 15.9 million claim denials on 207 million claims under Part A Medicare with 120 million denials on 1 billion claims under Part B. RACs issued 634,000 of the Part A denials and 850,000 of those under Part B. At the first level of appeal, there were 583,000 processed under Part A and 2.9 million under Part B. Home health appeals represented 19% of the Part A appeals with only a 3.9% reversal rate. There were 234,000 Reconsideration appeals under Part A with 26% coming from home health at a paltry 1.4% reversal rate.
Clearly, the ALJ workload is directly related to the increased volume of claims denied by MACs, ZPIC, and RACs along with the low reversal rates at Redetermination and Reconsideration appeal steps. An improvement in the quality of initial decisions and the early-stage administrative appeals could greatly mitigate the need for ALJ hearings.
NAHC has recommended the following reforms to address the current appeal crisis and future appeal needs:
Improve initial claim determinations by Medicare contractors. NAHC recently presented CMS with hard evidence that a ZPIC is using wholly illegal coverage criteria to review home health services claims. CMS is working to correct the ZPIC’s wholesale misunderstanding on Medicare coverage standards. Reducing erroneous initial determinations addresses the root cause of the high increase in appeals volume.
Improve the quality and accuracy of Redeterminations and Reconsiderations. The very low reversal rates on home health claims at the early appeals stages triggers more appeals to ALJs. Home health agencies report a high success rate before ALJs. If more appropriate decisions are issued at the earlier appeals, the need for ALJ hearings decreases.
Reduce post pay claims reviews. HHAs report a surge in claims reviews combined with unsupportable decisions. The volume of face-to-face encounter related denials has grown exponentially. If CMS revised and clarified its documentation demands, claims reviews and denials would drop significantly.
Offer a settlement option on ALJ appeals that is correlated with average reversal rates. This approach would reduce appeals greatly although a settlement would not provide a 100% win for providers.
Withhold recovery of alleged overpayments and waive interest charges pending the ALJ decision. With expected wait times of 30+ months, providers should not have to pay back a disputed claim until the appeal is completed.
Require state Medicaid programs that pursue Medicare payment on dual-eligibles to use a sampling process for appeal adjudication. CMS offered a demonstration project for several years where states could reconcile disputes with Medicare through a sample of appeals. CMS abandoned that effort despite its efficiency.
All provider sectors are concerned about the ALJ hearing backlog. NAHC has met with Congressional committees that are looking for solutions to this crisis. It is apparent that the hiring of legions of new ALJs is not happening in the near term. Even if there were funding for hundreds of more ALJs, the training and implementation time is such that the backlog would grow by multiples of 3 to 5 before it is under control. NAHC will continue to press for systemic changes throughout the Medicare decisions process to bring about effective improvements.