The troubled appeals process for Medicare payments came under particular scrutiny. Agrawal testified that the first two levels of appeals, which are handled directly by the agency, are functioning efficiently, with most determinations made within 60 days. But administration officials acknowledged that the process breaks down when providers seek further review by the Office of Medicare Hearings and Appeals (OMHA). Last year, the agency introduced a two-year moratorium on assigning new appeals to administrative law judges because they couldn't handle the caseload. OMHA expects the backlog of appeals to top 1 million this year.
“A concerted effort by all key players—including CMS, OMHA and Congress—is needed to address this issue and to maintain the integrity of the appeals system,” said Brian Ritchie, acting deputy inspector general for evaluation and inspections at HHS' Office of Inspector General, during the hearing.
In January, the American Hospital Association sent a letter to the CMS Administrator Marilyn Tavenner (PDF), decrying the moratorium and mounting backlog of appeals. Rick Pollack, the AHA's executive vice president, pointed out that hospitals prevail in nearly 70% of their OMHA appeals. “Excessive inappropriate denials by Medicare Recovery Audit Contractors (RACs) are a direct driver of the ALJ backlog,” Pollack wrote. “Hospitals have been put in an untenable position in which the nearly unfettered ability of RACs to churn out erroneous denials forces them to pursue appeals in order to receive payment for medically necessary care, while the inability of OMHA to manage the appeals process within the timeframes required by the Social Security Act holds that payment hostage.”
Legislators voices similar concerns. In particular, they worried that small facilities with tight margins might not be able to afford the laborious appeals process and will therefore be denied proper payments. “Large hospitals and large hospital groups can afford to wait a decade potentially,” Grisham said. “Small hospitals cannot.”
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