Healthcare Providers’ Access to ALJ Hearings Delayed two Years

Jessica C. Forster, Esq.
Kevin R. Miserez, Esq.

Recently, the Office of Medicare Hearings and Appeals (OMHA) announced that due to the “overwhelming increase in claim appeals,” effective July 15, 2013, OMHA temporarily suspended the assignment of most new Administrative Law Judge (ALJ) hearing requests for 24 months. These delays to a hearing fly in the face of 42 CFR 405.1016, which requires an ALJ to issue a decision no later than 90 days from the date OMHA receives a timely filed request for hearing. OMHA attributed the delay to the dramatic increase in appeals which has caused a significant backlog in appeals pending at the ALJ level. According to OMHA, the backlog in pending appeals grew from 92,000 two years ago, to over 460,000 currently. Between 2010 and 2013, OMHA’s claims and entitlement workload increased by 184%. Despite the increased workload, OMHA’s resources were recently reduced due to budgetary sequestration. Although the backlog at the ALJ level of appeal is significant, the two year moratorium in assigning appeals to ALJs and the even longer delay before the appeal is heard for hearing dramatically affects healthcare providers nationwide.

Despite the delays, there has been no indication from the Centers for Medicare & Medicaid Services (CMS) that the Medicare contractors, including recovery audit contractors (RACs), will slow or cease their auditing efforts. Although OMHA did not connect the increase in the backlog of appeals to Medicare contractors’ auditing efforts, the connection is clear. According to the American Hospital Association’s (AHA) RACtrac, hospitals that appealed RAC denials had a 67% success rate. In our experience defending all types of healthcare providers during the audit appeals process, the highest likelihood for a fully favorable decision is at the ALJ level of appeal. Therefore, with the increased scrutiny by Medicare contractors, more providers are appealing their claim denials. Further, since the redetermination and reconsideration levels of appeal are often “rubber stamp” denials, healthcare providers are incentivized to continue their appeal to the ALJ level to have access to a full and impartial hearing and the opportunity to present witnesses. The fact that the ALJ level of appeal is often the most successful level for healthcare providers further emphasizes the adverse effect OMHA’s announcement that ALJ hearing assignments will be delayed for two years has on healthcare providers. Not only do healthcare providers have to be subject to aggressive auditing practices by Medicare contractors and avail themselves to initial appeal levels that are often unsuccessful, but now healthcare providers must wait even longer to have access to a fair and impartial hearing before an ALJ.

In an attempt to address the procedural issues affecting appeals at the ALJ level, OMHA announced that it will hold a Medicare Appellant Forum on February 12, 2014. The forum will provide further information to OMHA appellants and providers on initiatives that are underway to make the appeals process work more efficiently, including suggestions to providers to encourage efficiency. Providers and providers’ representatives are also looking forward to the forum to have an opportunity to ask OMHA leaders specific questions regarding procedural inconsistencies. Although not finalized at this time, OMHA announced that it hopes to make the forum available via webinar so that healthcare providers nationwide can participate. The healthcare provider community is hopeful that the forum will provide healthcare providers and their representatives with clarification regarding OMHA’s efforts to improve efficiency and consistency.

The current delays create an important opportunity for providers to use this time to galvanize support for much needed reform. It is unconstitutional for CMS to subject providers to prepayment claim reviews while failing to comply with the statutory protections that provide a meaningful avenue to receive payment timely.