Updated on: November 29, -0001

Frequent Filers: Scapegoats for the Appeals Backlog?

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Original story posted on: June 17, 2015

Ever since the Office of Inspector General (OIG) raised the topic of “frequent filers” in its 2012 report, “Improvements Needed at the Administrative Law Judge Level of Medicare Appeals,” there has been a steady swell of distaste for this subtype of appellant. 

While there is no standing definition for frequent filers, the OIG defined them in the report as those providers who “file appeals much more frequently than others.”1 As a practical matter, the OIG defined frequent filers as providers who filed at least 50 appeals in FY 2010. The OIG identified 96 providers who met the criteria for their frequent filer universe and the OIG asserts that those providers accounted for nearly one-third of all Administrative Law Judge (ALJ) appeals in FY 2010.2 

More recently, Chief ALJ Nancy Griswold testified before the United States Committee on Finance that 51 percent of incoming ALJ appeals in 2015 have been filed by five appellants. Senator Claire McCaskill (D-Missouri) shared the same statistic in a hearing for the Committee on Aging, except the Senator substituted “health systems” where Chief Judge Griswold said “appellants.”3 While they probably mean the same thing, the statistic can be misleading because even one health system/appellant could comprise more than 100 hospitals. 

With the Office of Medicare Hearings and Appeals (OMHA) processing a record number of cases, including a backlog that that now tops 870,000 pending appeals, providers, fairly or not, are now being targeted as complicit actors in the current instability of the Medicare appeals process.4 Unsurprisingly, the Council for Medicare Integrity, a Recovery Audit Contractor (RAC) lobbying group, issued a press release in February 2015 touting frequent filers as being the root problem of the ALJ backlog.5

In a recent hearing for the Committee on Aging, Senator McCaskill stated that, “[Providers] are deliberately gumming up the appeals system by instituting a policy of appealing everything, regardless of merit.”6 Senator Ron Wyden (D-Oregon), in a Senate Finance Committee hearing earlier this year, said, “… clearly, there is a small number [of providers] that has figured out a way to really hotwire the system, to just game it, and … play the odds.”7

The treatment of frequent filer appellants runs the gambit from accusatory to downright hostile. And yet, without considering whether the perception of those providers who frequently submit appeals is appropriate, or providing a single shred of evidence to support that providers are “gaming” the system or “deliberately gumming up” the appeals system with meritless cases, legislative proposals have been introduced to combat the so-called serial appellant.

The FY 2016 President’s Budget for the Department of Health and Human Services (HHS) proposes to establish a refundable filing fee at each level of Medicare appeal. In a written statement, Chief Judge Griswold held forth that, “A filing fee would encourage those who frequently file to more carefully assess the merits of their appeals before filing.”8 The goal of the proposal, “to invest in the appeals system to improve responsiveness and efficiency9,” is meaningful, but in an effort to promote efficiency, it is hard to conceive of a more administratively burdensome task than instituting a refundable filing fee at each level of appeal. Although the details of this proposal’s implementation has not been released, it bears asking whether providers and adjudicative bodies at each level of the Medicare appeals process are equipped to handle the impending deluge of appeals-related transactions.

Another question that needs to be asked is whether the threat of frequent filers to the efficacy of the appeals process justifies the introduction of new hurdles and potential barriers to due process.

Thomas Naughton, Senior Vice President, MAXIMUS Federal Services, recently testified that in most appeal programs 20 percent of the population is responsible for 80 percent of the appeals, but in the audit contractor world, “Five (5) percent is probably responsible for the majority of all appeals.”10

However, the American Hospital Association (AHA) released a RACTRAC survey on March 30, 2015, and its results show that provider appeals are up nationwide, and not just limited to a small fraction of the Medicare provider population. In the nationwide survey, hospitals reported appealing 45 percent of all Recovery Auditor denials and of the report’s 88,705 completed appeals, 69 percent of were overturned in favor of the provider.11

In light of testimony provided by the Deputy Administrator and Director for the Centers for Medicare and Medicaid Services (CMS) and HealthDataInsights, the CMS Recovery Auditor for Region D, that only 9 percent12 of all Recovery Auditors’ determinations were ultimately overturned upon appeal, it is understandable that even well-intentioned Senators, such as McCaskill and Wyatt, who sit at the forefront of hugely important Medicare reform initiatives, tend to view providers who frequently challenge claim denials with a degree of suspicion. The 9 percent figure sounds like a very successful rate, but the number is misleading; it assumes that an unchallenged denial is never inappropriate, overreaches by not limiting itself to Part A appeals, and is tough to reconcile with the almost 70 percent overturn rate for appealed claims, according to the AHA, its member hospitals, and the OIG.

The number is also misleading because it is designed to not measure the actual claim overturn rate, but rather measures appeals determinations at each level of appeal. For example, if a provider were to appeal a claim and lose at the redetermination and reconsideration levels of appeal, but win at the ALJ level, CMS reports that three appeals were decided with two losses and one win, and would report an overturn rate of 33 percent. The reality is that the claim is favorable and the overturn rate should be 100 percent – that is the number that really matters.

Interestingly, the OIG report provided Medicare Part A overturn rates for frequent filer providers and non-frequent filer providers with each group having identical, 67 percent overturn rates.13 This number is particularly important, as it appears to validate the frequent filers’ appropriate use of the appeals process. 

Recovery Auditors are plainly incentivized to deny claims and hospitals are understandably compelled to challenge inappropriate denials. The regulations are unambiguous; hospitals should never deliberately submit a meritless claim to Medicare for payment. It is conceivable that knowingly submitting and thereafter appealing meritless claims could rise to the level of a violation under the False Claims Act. 

The evidence suggesting that providers are engaging in this type of behavior is sorely lacking. After all, appeal volume alone is not indicative of provider wrongdoing and a proposal to establish a refundable filing fee will not stop the relatively small number of frequent filer providers from disputing claims that should never have been denied in the first place. If anything, it sure will make that process a lot more challenging, administratively burdensome, and expensive for all Medicare participating hospitals and CMS.     

About the Author

Steven Greenspan serves as Vice President of Regulatory Affairs at Executive Health Resources (EHR) and is responsible for overseeing EHR’s regulatory research and hospital advocacy efforts, and collaborates closely with the EHR’s appeals management teams to offer support on complex Medicare, Medicaid, and Commercial Appeals matters.

Contact the Author

sgreenspan@ehrdocs.com

Comment on this Article

editor@racmonitor.com

 

 

References:

1 “Improvements Needed at Administrative Law Judge Level of Medicare Appeals.” November 2012, p8.

2 Ibid.

3 “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare” (unofficial transcript; oral testimony). April 28, 2015.

4 Ibid.

5 “Hospital Industry’s ‘Frequent Filers’ at Root of ALJ Backlog.” http://medicareintegrity.org/hospital-industrys-frequent-filers-at-root-of-alj-backlog/. February 17, 2015.

6 “Challenging the Status Quo: Solutions to the Hospital Observation Stay Crisis,” McCaskill testimony, (unofficial transcript). May 2015.

7 “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare,” Wyden testimony (unofficial transcript; oral testimony). April 28, 2015.

8 “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare,” Griswold written testimony. April 28, 2015.

9 Fiscal Year 2016 Budget in Brief: Strengthening Health and Opportunity for All Americans. http://www.hhs.gov/about/budget/budget-in-brief/cms/medicare/index.html.

10 “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare,” Naughton testimony (unofficial transcript; oral testimony), April 28, 2015.

11 “Exploring the Impact of the RAC Program on Hospitals Nationwide,” American Hospital Association, RACTRAC Survey, 4th Quarter 2014. March 30, 2015.

12 “Challenging the Status Quo: Solutions to the Hospital Observation Stay Crisis.” Written testimony of HDI for Committee on Aging. Also referenced by Sean Cavanaugh, Deputy Administrator and Director of CMS in the same hearing. May 2015.

13 “Improvements Needed at Administrative Law Judge Level of Medicare Appeals.” November 2012, p24.

 

Steven Greenspan, JD, LLM

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