The federal government has until the end of 2020 to wipe out the backlogged glut of Medicare claims appeals from hospitals, a federal judge ruled this week.
By Jan. 1, 2021, HHS must fully clear all pending appeals by hospitals challenging the findings of Medicare's recovery audit contractors. In addition, HHS must file progress reports every 90 days.
HHS must make gradual progress in clearing the administrative complaints over the next four years. By the end of 2017, the logjam of pending cases—which stood at 800,000 in February—must be reduced by 30%. That figure increases to 60% by the end of 2018 and 90% by the end of 2019. The judge viewed the plan, proposed by hospitals that sued HHS, as a happy medium between wide-scale settlements and the stagnant status quo.
“Plaintiffs could have chosen to demand immediate relief,” U.S. District Judge James Boasberg wrote. “Instead, they have commendably offered a thoughtful and reasonable four-year plan for this complex problem.”
Hospitals have vocalized their disdain of Medicare RACs, arguing the contractors are “bounty hunters” that are overzealous in finding payment denials and aren't penalized if their overpayment determinations prove to be wrong.
The government hires RACs to comb through providers' medical records to ensure Medicare payments are accurate. Often, inpatient coding errors cause denials. RACs receive a cut of each overpayment they find, and they protect the “integrity” of the Medicare program, according to their lobbying group.
Hospitals, which routinely appeal RACs' decisions, say more than half of medical records reviewed by RACs don't contain an overpayment. But hospitals wanted relief from the current standstill that has tied up their revenue streams.
“Today's decision is a victory for hospitals that continue to have billions of dollars in Medicare reimbursement tied up in a heavily backlogged appeals system,” Melinda Hatton, general counsel of the American Hospital Association, said in a statement. “To meet the court-ordered backlog reductions, we trust that the HHS will implement real reforms critical to resolving the backlog, including fundamental reforms of the RAC program.”
Last year, the feds and more than 2,000 hospitals settled to resolve a large tranche of billing disputes with RACs. That settlement was cumulatively worth about $1.5 billion, and 35 hospitals received more than $5 million each. The government is offering another round of settlements in exchange for hospitals dropping their appeals of denied inpatient claims.