On June 9, 2016, the Government Accountability Office (GAO) publicly released a report published May 10, 2016, regarding the continuing challenges surrounding the backlog of the administrative appeals process for Medicare fee-for-service claims.  In evaluating the four administrative levels of review from fiscal years 2010 to 2014, the GAO noted a significant growth of appeals at the third level of review, which increased from 41,733 to 432,534 (936 percent) mainly as the result of increased program integrity efforts.  The GAO specifically evaluated the following:  (1) appeal trends for fiscal years 2010-2014; (2) HHS’s use of data to monitor the appeals process; and (3) HHS’s efforts to reduce the number of outstanding appeals filed and backlogged.

In its report, the GAO analyzes certain of the factors that have contributed to the significant backlog resulting in most appeal decisions remaining undecided well beyond the statutory timeframes and recommends key actions that HHS should implement to improve the consistency and efficiency of the administrative appeals process.  In declining only one of the GAO’s five recommendations, HHS generally concurs with the following four GAO recommendations:

• Modify Medicare appeals data systems to collect information on the reason for appeal decisions at level 3 (the ALJ level);
• Modify the Medicare appeals data systems to capture the amount, or an estimate, of Medicare allowable or payable amounts at issue instead of the provider’s billed charges to more accurately measure the amount in controversy;
• Modify the Medicare appeals data systems to collect consistent data across systems, including appeal categories and appeal decisions; and
• Implement a more efficient way to adjudicate certain repetitive claims, such as by permitting appeal bodies to reopen and resolve appeals.

HHS declined the GAO’s fifth recommendation, which was to determine the costs and benefits of delaying CMS’s collection of overpayments until after a level 3 decision is made, and if the benefits exceed the costs, request such authority from Congress.  In declining this recommendation, HHS noted that delaying the collection of debts until after level 3 would increase the number of appeals filed at this level and result in more challenges in reducing the backlog of appeals at levels 3 and 4.  The GAO agreed that the proposed change would increase the number of filed appeals and declined to include the recommendation in its final report.

Senate Finance Committee Chairman Orrin Hatch (R-Utah), Ranking Member Ron Wyden (D-Ore.), and Finance Committee member Richard Burr (R-N.C.) commented on the GAO’s report in a press release issued on June 9, 2016 (available here) and noted a bipartisan Finance Committee bill aimed at reforming the process, the Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015, S. 2368.  Additional information about the AFIRM Act is available here.

The GAO report and an overview are available here.

Reporter, Juliet M. McBride, Houston, +1 713 276 7448, jmcbride@kslaw.com.