Forget the denials, reduce the appeals
The U.S. Senate Finance Committee heard testimony and expressed dismay yesterday about the humongous backlog of appeals at the Office of Medicare Hearings and Appeals (OMHA), now totaling over 870,000 appeals, according to testimony of Chief Administrative Law Judge Nancy Griswold, as of April 28, 2015. The hearing included statements by several Senators and testimony from two Medicare claims administrators, plus Judge Griswold. No providers were heard from during the hearing.
By the end of the hearing, it was obvious that the Senators — with one notable exception, see below — as well as the three witnesses testifying, were all of the opinion, spoken or not, that the main problem with the “appeals system” is the fact that too many appeals are being filed, particularly by healthcare providers. It reminded this reporter of an old narcissistic joke: “The United Nations would be a great thing if they’d just get rid of all those foreigners.” Isn’t the reason you have an appeals process is to file appeals?
Not a single comment spoke to the deeper issue that causes so many appeals: erroneous denials. The proof of that assertion is that in 2013, when over 384,000 appeals were sent to OMHA (per Judge Griswold’s testimony), 77% of those denials were overturned or remanded, after being considered improper by an Administrative Law Judge (ALJ). In fact, using numbers from both CMS and OMHA, 55.8% of all denials made by Recovery Audit Contractors (RACs) were improper.
Do we know the root cause of the backlog?
So are those denials the cause of the backlog instead of the appeals? The root cause is actually the Fee-for-Service system itself. We’ve commented before about what our world will be like without such a system. Regardless, all payors are moving toward bundling and outcome-based payments. So the system will change, eventually, just not while we’re young. In the meantime, the appeals system is certainly broken and in need of some kind of action. Hence, the Senate hearings.
The Hearing & Testimony
Opening statements were given by Committee Chairman Senator Orrin Hatch (R-Utah) and by Ranking Member Senator Ron Wyden (D-Oregon).
Testimony was given by:
- Sandy Coston, CEO and President, Diversified Service Options, Inc., of Jacksonville, Florida. (aka First Coast Service Options, a MAC)
- Thomas Naughton, Senior Vice President, MAXIMUS Federal Services, Inc., Reston, Virginia. (a Qualified Independent Contractor, or QIC)
- The Honorable Nancy Griswold, Chief Administrative Law Judge, Office of Medicare Hearings and Appeals, United States Department of Health and Human Services, Washington, DC.
The complete video record of the hearing can be found here, on the Senate website. Links to the testimonies in PDF form are at the end of this article. Below, we provide some short clips as highlights.
Two main recommendations but no surprises
There were no real surprises in the testimony yesterday, but there were some memorable highlights from the 90-minute hearing, and we have included them below for your convenience.
One of the suggestions offered by OMHA to reduce the number of appeals receipts is to charge a filing fee when submitting an appeal. The fee would be refundable for favorable appeals. While the concept of paying fees for filing an appeal or lawsuit in a court of some kind is not at all unusual throughout the country, this would be unprecedented for Medicare appeals. While the fees charged in small cities may be small ($5 to $50 in Harris County, Texas), the total could quickly add up, and there is no mention of being “refundable” if your case is won. Also, the fees in a city like New York City start at $210, just to get an index number, which puts you in line to come before a judge. So the concept and process is pretty ubiquitous: you have to pay to file a claim/lawsuit in our court system.
The Filing Fee at OMHA
This first clip includes Judge Griswold talking about how a refundable filing fee would reduce the number of appeals “coming in the door” and you’ll hear her declare that only five (5) appellants filed over 50% of the appeals filed in FY2015 to date (7 months).
Logic? In this city?(I didn’t say it… the Senator did!) This clip presents the most interesting comment made by one of the Senators, during the hearing, and we hear Ms. Coston suggesting that all evidence be included at the first appeal level, to provide the MAC with the same evidence usually seen by an ALJ.
“Gamers” liveIn this next clip, Senator Wyden speaks to his belief that “most providers are honest” but that a small percentage are “gaming” the system. Again, while I would not deny that small number of providers are indeed gaming the system, the underlying belief of the Senator and all the others is that it is the providers, albeit a small percentage, who are the problem, while the system is fine.
The Senator from Michigan seems to get itThe best questions of the day, in our last clip, came from Senator Debbie Stabenow (D-Michigan), who appears to have been paying attention to what really happens, and came pretty close to suggesting that the denials, especially those by the RACs, are something that really needs to be addressed. She actually did suggest that providers need to be better educated on filing proper claims and what to truly expect for payments, and that there are no consequences on the auditors’ end for filing denials that get overturned. At one point she even interrupts to ask painfully, “Do you think it makes sense that the Recovery Audit Contractors are paid on a contingency basis for each claim that they deny? Is that the right incentive?”
Ms. Coston’s reply to that question completely missed the point, and Mr. Naughton’s suggestion about replacing contingency fees with payments on a claim-by-claim basis only serves to again reveal the underlying assumption that the providers are the problem, not the system itself.
The hearing simply ended at the appointed time, and Senator Hatch signed off. Perhaps there will be some legislation to be run up the flagpole as a result of the hearing, but no such comments were made. We’ll just have to keep watching, and hoping that pay-for-performance will one day be at least a better system that the current one.
Be sure to watch live or review the recording of our Finally Friday! discussion for Friday, May 1st, 2015, when we review the hearing and discuss the issues.
Care to make comments to the Senators?
Anyone can submit a statement for the record using this link.
Further Reading: The President’s FY2016 Budget
Related to the appeals process but not directly discussed at this hearing were the appeals reforms included in the President’s budget, which if enacted, may significantly increase the ability of OMHA to handle more appeals. Judge Griswold submitted them into the record and they may be found in her written testimony. (See links below)
Of the seven (7) proposed reforms, there were three that are worth watching out for:
- Establish a Refundable Filing Fee. This proposal would institute a refundable per claim filing fee for providers, suppliers, and Medicaid State Agencies, including those acting as a representative of a beneficiary, at each level of appeal. Appeals filed by beneficiaries or representatives of beneficiaries other than providers, suppliers, and Medicaid State Agencies would be exempt from the fee. Fees will be returned to appellants who receive a fully favorable determination. Under current law, there is no administrative fee paid to the adjudicating entity for filing an appeal. A filing fee would encourage those who frequently file to more carefully assess the merits of their appeals before filing.
- Sample and Consolidate Similar Claims for Administrative Efficiency. This proposal would allow the adjudication of large numbers of appeals through the use of sampling and extrapolation techniques without appellant consent. Additionally, this proposal would authorize the consolidation of similar appeals into a single administrative appeal at all levels of the appeals process for purposes of adjudicative efficiency. This provision would also require that all appeals that were included within an extrapolated overpayment or were consolidated previously would remain a part of the extrapolated or consolidated file on appeal.
- Remand to Redetermination Level upon Introduction of New Evidence. This proposal would require remand of a Medicare appeal to the first level of review at CMS when new documentary evidence is submitted into the administrative record at the second level of appeal or above. The proposal would include exceptions to mandatory remands if the basis for the submission is that new evidence was provided to the lower level adjudicator but erroneously omitted from the record, or an adjudicator denies an appeal on a new and different basis than earlier determinations. This proposal provides a strong incentive for all evidence to be produced early in the appeals process and to ensure the same record is reviewed and considered at the second and subsequent levels of appeal.
Links to Member Statements:
Orrin G. Hatch (R-UT)
Ron Wyden (D-OR)
Links to Witness Testimony:
Ms. Sandy Coston
CEO and President, Diversified Service Options, Inc., Jacksonville, FL
Mr. Thomas Naughton
Senior Vice President, MAXIMUS Federal Services, Inc., Reston, VA
The Honorable Nancy Griswold
Chief Administrative Law Judge, Office of Medicare Hearings and Appeals, United States Department of Health and Human Services, Washington, DC
[Note: Thanks to Dr. Ron Hirsch for alerting us to this important hearing, which we had forgotten about!]