HHS: Recovery Auditors Not Responsible For Medicare Appeals Backlog

Only 9.5% of Appeals Related to Recovery Audit Determinations

The U.S. Department of Health and Human Services (HHS) last week released a briefsharing new data that demonstrates that the RAC “program simply was not, and is not, the primary source of the [Medicare appeals] backlog."

Refuting claims by the hospital industry that the Recovery Audit Contractor (RAC) Program is the cause of the claim review backlog within the Medicare appeals system, HHS also revealed:

• RAC-related appeals made up only 9.5% of all appeals filed with the Office of Medicare Hearings and Appeals (OMHA) in FY2016 and only 14.1% in FY2015, and
• Appeals from State Medicaid agencies continue to make up a significant portion of the backlog. 

The data was released in HHS’s most recent formal response to the litigation pertaining to the Medicare appeals backlog put forward by the American Hospital Association (AHA). Contrary to the blame shifted onto the RAC Program by the AHA, the current backlog of appeals has been widely credited to a small number of Medicare providers that dispute nearly every claim denial at the Administrative Law Judge (ALJ) level in an attempt to game the system and secure higher payouts. Unlike other levels of appeal in the process, ALJs have broad discretion and do not have to follow Medicare policy – spawning an epidemic of “frequent filer” providers. According to Chief ALJ Nancy Griswold, 51 percent of appeals filed in 2015 were filed by the same five appellants.

“The data shared by HHS puts to rest the AHA’s false claim that RAC audits were a factor in the cause of the appeals backlog,” said Kristin Walter, spokesperson for the Council for Medicare Integrity (CMI). “All stakeholders agree that the Medicare appeals process is in dire need of reform, which is why we are urging Congress to pass the Audit and Appeals Fairness, Integrity and Reforms in Medicare (AFIRM) Act to support the current needs of the Medicare program.”

Passed by the Senate Finance Committee last year, AFIRM seeks to make much needed programmatic changes to decrease the backlog and prevent this situation from happening again. The AFIRM Act would send claims back to the first level of appeal when new evidence is introduced later in the process.  The legislation would also create new Medicare Magistrates to perform reviews and render decisions on particular types of cases, and ensure fairness by requiring that all parties involved be notified in advance of a hearing to allow for the participation of all stakeholders.

While the AFIRM Act addresses many of the issues facing the struggling Medicare appeals process, CMI recommends some additional safeguards be added to the bill to further promote expediency and prevent future backlogs, specifically:

• Inclusion of an appeals filing fee, refundable if a provider wins its appeal, as championed by the President’s Budget, the HHS Secretary and Chief ALJ;
• Penalties for providers who fail to bill a claim within 3 months of the date of service;
• Requirements recommended by Congress that ALJs make decisions consistently and in accordance with Medicare policy; and,
• Expedition of claims where no facts are disputed.

Congress mandated the creation of the Recovery Audit Contractor (RAC) Program to review Medicare claims, identify billing errors and return mis-billed funds back to the Medicare Trust Funds. Since the program began in 2009, RACs have returned more than $10B in improper payments and more than $800M in underpayments back to providers. Recovery auditing has been credited with extending the life of the Medicare program by two full years.

For more information, visit www.medicareintegrity.org.

About The Council for Medicare Integrity
The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.