Healthcare Business News

RAC appeals backlog cause for frustration

By Joe Carlson
Posted: January 10, 2014 - 7:00 pm ET

Appealing bad decisions by Medicare's recovery audit contractors has never been easy. But the system has become so overloaded in recent months that some are calling it an administrative quagmire that is denying basic due process rights because it takes so long.

In December, HHS' Office of Medicare Hearings and Appeals began notifying hospitals around the country with high numbers of appeals that they would not be able to submit new cases until the existing backlog clears—which could take two years or more.

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“This is unconscionable,” wrote Daniel Landon, senior vice president of government relations for the Missouri Hospital Association, in a Jan. 9 letter to the state's congressional delegation. “Providers aggrieved by a RAC payment denial—and who are twice as likely to win the appeal as lose it—are placed in administrative purgatory for years. There is no conceivable way this can constitute adequate due process.”

(Click here (PDF) to read the association's letter, which also includes a copy of the notification from the Medicare office.)

The nation's 65 administrative law judges have a collective backlog of 357,000 appeals to work through before they can even start to accept most new kinds of appeals from hospitals. (Medicare patients, who use the same legal process, can still file new cases.)

And the rate of appeals filed by hospitals is growing faster than ever. In January 2012, the office received about 1,250 new cases per week. In December 2013, the number had swelled to 15,000 appeals per week.

“Due to this rapidly increasing workload, OMHA's average wait time for a hearing before an administrative law judge has risen to 16 months and is expected to continue to increase as the backlog grows,” wrote Nancy Griswold, chief administrative law judge with the Office of Medicare Hearings and Appeals.

The recovery audit contractors are four private companies that work for Medicare to find overpayments made to hospitals and get the money back. A large share of their work involves taking back money for short hospital stays for patients who, in retrospect, weren't sick enough to have needed overnight hospital stays and should have been treated in cheaper outpatient settings.

The companies receive between 9% and 13% of the money they get back from hospitals, which critics including the American Hospital Association say incentivizes them to file specious challenges in the hopes hospitals won't use the laborious and time-consuming appeals process.

Medicare officials have said repeatedly that the auditors are an effective tool to prevent hospitals from over-billing Medicare. In 2011, the companies identified 888,000 incorrect payments to hospitals, totaling about $800 million in overpayments. Of that amount, $488 million was returned to the Medicare Trust Fund, after taking into account fees and appeals.

Follow Joe Carlson on Twitter: @MHJCarlson

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