HHS warns providers won't settle Medicare appeals if judge imposes deadline

HHS urged a federal judge on Tuesday not to set a deadline to wipe out its Medicare appeals backlog, claiming it would make providers less willing to settle claims.

While the agency has cut its appeals backlog by nearly a third in the last year, forcing it to decide hundreds of thousands of appeals by a certain date would be dangerous, according to Nicholas Cartier, an attorney with the Department of Justice.

"Our view is that any [mandate] order is not going to improve the on the ground situation at all. It actually carries a lot of dangers," Cartier told U.S. District Judge James Boasberg at the hearing. "If providers know the backlog has to be reduced by a certain time it reduces the incentives to settle or the rate of new appeals could surge."

HHS estimated that it eliminate the backlog—which stood at 444,894 at the end of July, down from 652,243 a year ago—by fiscal 2022. However, that timeline depends on provider behavior and Congress giving the agency continued enhanced funding to hire more administrative law judges, Cartier said.

But the American Hospital Association told Boasberg that the backlog is still too high. Without a court ordered deadline, HHS will not have the motivation to eliminate it quickly, according to Cate Stetson, a partner at Hogan Lovells who represents the association.

AHA sued HHS in November 2012 over the appeals backlog, alleging the agency was illegally denying hospitals Medicare payments for audited outpatient procedures. The association alleged the payment uncertainty "wreaks havoc" on hospital financial planning and smaller hospitals often choose not to appeal Recovery Audit Contractor decisions because of the costly appeals process.

Boasberg previously ordered HHS to cull its Medicare appeals backlog by Dec. 31, 2020, but the agency has said it cannot meet that deadline.

"The situation on the ground is there are still hundreds of thousands of backlogged claims and we need to figure out how to get that number to zero as expeditiously as possible," Stetson said.

AHA called on Boasberg to set a mandatory deadline for HHS based on the agency's current projections. In addition, the agency asked the judge to relieve hospitals' financial pressures stemming from the backlog by reducing interest charges on appealed claims. Currently, HHS charges 10.25% interest on claims it flagged as improper if they aren't repaid within 30 days. Appeals can take as long as three years to resolve, leaving hospitals with a potentially massive bill.

Having that cash being tied up during the appeals process can hurt struggling hospitals, the trade group said.

On the other hand, HHS proposed submitting status reports every 90 days on its progress or setting incremental deadlines for reducing the backlog.

Boasberg appeared open to imposing a new deadline, but skeptical about AHA's other requests.

"There is no clear right to less pain but, there is the right to appeal to have [HHS] meet statutory requirements," he said.

Boasberg will issue a ruling on the matter soon he said.