More than half of all Medicare claims denial appeals are overturned by administrative law judges according to a recent report by the Office of Inspector General.
Examining some 40,000 Medicare appeals filed in the 2010 fiscal year, the OIG found about 35,000, or 85 percent, were filed by hospitals, physicians and other providers, with about one-third filed by 96 "frequent filers" appealing at least 50 claims. One unnamed provider filed more than 1,000 appeals.
About half of all appeals made it to the third appeals level of administrative law judges, or ALJs, the penultimate authority on Medicare claims appeals, following two levels of Medicare contractors and preceding the Medicare Appeals Council.
The OIG found ALJs reversed 56 percent of appeals in favor of appellants, overturning appeals rejections by qualified independent contractors (QICs).
The rates varied across Medicare program areas, in part because the ALJ and QIC decisions were based on policies open to some wide interpretation. When officials from the Centers for Medicare & Medicaid Services participated in appeals, the OIG noted, administrative law judges were less likely to rule in favor of the appellants.
In the OIG research, staff from the Office of Medicare Hearings and Appeals (OHMA), where the ALJ is based, raised concerns over how evidence is evaluated, how cases are organized and how suspicions of financial fraud are addressed, citing inconsistency across the levels of appeals.
The OIG made 10 recommendations for CMS and the OMHA, broadly revolving around clarification and standardization, such as using electronic files for appeal cases.
For OHMA, the OIG recommended establishing a filing fee (a potential deterrent against frivolous appeals), implementing quality reviews, considering specialization for ALJs and better training for staff.
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The OIG also recommended that OMHA and CMS look for statutory authority to postpone appeals hearings in certain cases, such as when fraud is expected.
CMS and OMHA officials agreed with most of the recommendations but also raised potential pitfalls and some legal conflicts.
In a letter attached to the OIG report, Nancy Griswald, OMHA's chief administrative law judge, said having judges focus on Medicare program areas could improve efficiency, but might conflict with federal laws requiring appeals cases to be assigned randomly.
CMS acting administrator Marilyn Tavenner agreed in part with the recommendation of postponing appeals in cases of suspected fraud, but expressed concern over conflict with due rights processes and the possibility of hampering fraud prosecution.