October 26, 2016

The Medicare Appeals Backlog Crisis, Part II

By

Attorney Adjudicators Proposed to Help Administrative Law Judges

The backlog in appeals is currently so large that for all practical purposes, the entire system has come to a halt. It has crashed.

In Part I of this series, we examined a few statistics behind the backlog. We noted that much of the appeals backlog can be explained by the astounding number of errors made by the federal audit contractors. In Part II, we will examine the proposal to add a new role for attorney adjudicators (AAs), who can take over part of administrative law judges' (ALJs’) work during the appeals process. In Part III we will examine the proposal for bulk settlements based on a simple percentage of claims, but with no review of the claims themselves: the “80 percent rule.” In Part IV we will examine financial strategies being used by hospitals to handle the massive impounding of their claim payments.

The Centers for Medicare & Medicaid Services (CMS) recently published in the Federal Register a proposal to relieve the burden on ALJs by adding AAs to the equation. As reviewed previously, the number of pending appeals now is more than 1,100,000 cases, and there are only 77 ALJs. From 2009 until 2014, the number of requests for an ALJ hearing went up 1,222 percent! In 2014, ALJs issued averages of 1,048 decisions and 456 dismissals. There is a capacity for around 77,000 appeals per year, and that is expected to go up to 92,000 appeals per year by the end of 2016. Still, it is not enough. It does not take much math to realize there is a crisis. 

The Office of Medicare Hearings and Appeals (OMHA) has three strategies to address this backlog. The first is to try to get a larger budget. The second is to “take administrative actions to reduce the number of pending appeals” (but we don’t know what these actions will be). And the third is to hire more adjudicators and “streamline” the appeals process.

Another part of the proposed solution will involve the aforementioned attorney adjudicators. It is noted that “well-trained attorneys” should be able to do a number of things that today are done by the ALJ; these include a) performing reviews of the administrative record; or b) drafting the appropriate orders. Examples of orders that might be drafted by the AAs include issuance of dismissals, remanding appeals in order to obtain additional information needed for a decision, or carrying out reviews of qualified independent contractor (QIC) dismissals.

An attorney adjudicator is defined as a licensed attorney “employed by OMHA having knowledge of Medicare coverage and payment laws and guidelines.”

Consideration also is being given to allowing AAs instead of ALJs to decide cases that are submitted without a request for an oral hearing, or when oral hearings are not required.

An AA decision would have the same authority as one issued by an ALJ. For example, it would be possible to reopen or appeal AA decisions, just as if they were issued by an ALJ. The time frames involved, escalation options, or rights of appeal to the Medicare Appeals Council would remain the same as well. By the way, from now on, the Medicare Appeals Council is to be referred to only as “the Council.” 

This proposal also includes a pathway for the AA to pass along a case to an ALJ. For example, say the party or parties involved have agreed to waive their right to an oral hearing. Then presume that the AA would review the case and conclude that an oral hearing may be needed in order to clarify some crucial issue. The AA then could refer the matter to an ALJ, asking them to determine if an oral hearing should be ordered.

In sum, the AA proposal takes several important parts of the appeals work that today is done through the ALJ and hands it over to non-judges who have authority to make a narrow range of decisions. Not much is known about whether any aspect of the appeals process, as seen from the outside, will change significantly. We must assume that appeals would be submitted the same way, and under the same set of statutory guidelines for timing that now are impossible to fulfill. 

In addition, it is not clear why the proposal is not simply to hire more ALJs instead of creating an even more complex process. It may be a case of simply hiring judge-like people on the cheap, or outsourcing part of the work of the ALJs so that they can focus more on complex matters.

The comment period for this change has recently expired, so we are waiting for the outcome. Apparently several important provider associations opposed the creation of attorney adjudicators. 

Again, in Part III of this series we will examine the proposed "80 percent rule," and in Part IV we will look at emerging financial bridge strategies being used by hospitals. 

About the Author

Edward M. Roche is the founder of Barraclough NY LLC, a litigation support firm that helps healthcare providers fight against statistical extrapolations. Prior to joining the California Bar, Dr. Roche served as the chief research officer of the Research Board (Gartner Group) and chief scientist of the Concours Group, both leading IT consulting and research organizations.

Contact the Author 

roche@barracloughllc.com 

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