A U.S. District Court judge has dismissed a lawsuit by hospitals seeking to compel HHS to meet statutory timelines for processing appeals to recovery audits. The American Hospital Association said in a statement that it disagrees with the court's decision and expects to file an appeal.
“While the court itself recognizes that hospitals simply cannot afford to have billions of dollars that are needed for patient care tied up indefinitely in the appeals process, its decision means that hospitals will be compelled to endure a prolonged “waiting game,” the AHA said. “We are extremely disappointed that a court entirely insulated from the devastating effects of multiyear delays in payments for medical care as a result of bureaucratic mismanagement would find in favor of the government.”
The American Coalition for Healthcare Claims Integrity, the trade group representing RACs, said in a statement Friday on the case’s dismissal that RACs are not responsible for the appeals backlog. The court “has identified the true motivation behind the AHA lawsuit, to reduce oversight of Medicare billing,” the coalition statement said. “We understand that auditing can be unpopular with providers, but the backlash against auditing has interfered with the implementation of good government programs like the Recovery Audit Contractor program.”
The AHA sued HHS Secretary Sylvia Mathews Burwell in May alleging that the appeals process, which allows hospitals and doctors to challenge claims by recovery auditors for allegedly incorrect payments made by the CMS, is excruciatingly sluggish—so slow that they say it's against the law. The program has had a backlog that stretches as long as two years. Hospitals say they may have to wait as long as five years to complete the process because of delays in adjudication.
The association argued in its initial complaint (PDF) that the CMS is in violation of the Medicare Act, which requires hospitals to process appeals within about one year. They blame the delay on the government's use of recovery audit contractors, or RACs, private auditors that investigate Medicare claims and get a cut of any improper payments recovered, who the AHA says have increased the workload of appeal adjudicators.
HHS claims that it doesn't have enough funding to properly address the situation. For that and many other reasons, the delays are not enough to warrant judicial action, according to a dismissal ruling issued Thursday by Judge James Boasberg of the U.S. District Court for the District of Columbia.
“While the Court sympathizes with Plaintiffs' plight, for the time being the waiting game must go on,” Boasberg wrote. “HHS' delay in processing their administrative appeals, while far from ideal, is not so egregious as to warrant intervention.”
Boasberg noted in his ruling that, although the delays may affect hospital financials, they aren't severe enough that they present a danger to patients. More importantly, the court will not intervene in a situation where an agency is underfunded and is processing claims on a first-come, first-served basis, he writes.
The hospitals' ultimate goal in filing the suit seems to be to challenge the effectiveness of the RAC program, Boasberg added. RACs returned more than $3 billion in incorrect payments to Medicare in 2013, according to a September report.
The CMS announced in late August that it would pay hospitals 68% of inpatient-status claims that are yet to be resolved, in exchange for the withdrawal of all outstanding RAC appeals. Two weeks after this offer was made, four providers had applied.
Follow Adam Rubenfire on Twitter: @arubenfire
