The federal government and a number of hospitals may want to transition to a new Medicare reimbursement model. But there are still billions of dollars in disputed fee-for-service claims waiting to be settled, sowing some animosity between health systems and the feds.
The American Hospital Association and three medical centers are suing to force the Department of Health and Human Services to meet the deadlines set by Congress for administrative review of denied Medicare claims -- amid a backlog of some 460,000 appeals at the close of last year.
"At that time, the average wait for a hearing -- to say nothing of a decision -- was approximately sixteen months and was expected to continue to rise as the backlog grew," lawyers for the AHA and the hospitals write in a complaint filed in the U.S. District Court for the District of Columbia.
The HHS unit handling the five levels of claims appeals, the Office of Medicare Hearings & Appeals (OMHA), recently announced a moratorium on the assignment of cases to administrative law judges -- for at least two years.
The current backlog should be "startling," argue lawyers for the AHA, Baxter Regional Medical Center, Covenant Health and Rutland Regional Medical Center, in part because "billions of dollars in Medicare reimbursement hang in the balance."
Hospitals with pending appeals "will likely have to wait up to five years, and possibly longer, to have their claims proceed through a four-level administrative appeals process that could otherwise conclude in less than a year according to statute," they argue.
Backlogged appeals, hospital hardship
The workload of Medicare's 65 administrative law judges has increased by some 300 percent between fiscal years 2012 and 2013, following the rise of the controversial recovery audit program in 2010. There were about 39,000 pending appeals at the end of fiscal year 2009, the year before the permanent RAC program took effect, and by the end of fiscal year 2013, there were ten times as many -- 384,600 -- according to the complaint.
Health systems across the country are facing varying levels of financial hardship as a result of backlogged appeals, the lawsuit argues.
Baxter Regional Medical Center, in Mountain Home, Ark., has "so much tied up in the appeals process that it cannot afford to replace a failing roof over its surgery department, purchase new beds for its Intensive Care Unit, engage in other basic upkeep, or purchase other necessary capital items."
Baxter Regional is the nation's fifth most Medicare-dependent hospital, with the program accounting for 65 percent of gross revenue. It currently has some $4.6 million tied up in the Medicare appeals process, about $1.7 million of that pending at the hearing level, according to the lawsuit.
Covenant Health, in East Tennessee, is a nine-hospital community a community-owned health system with 45 percent of revenue dependent on Medicare, and some $7.6 million in claims pending in the appeals process. The 133-bed Rutland Regional Medical Center, Vermont's second largest hospital, relies on Medicare for 47 percent of revenue and currently has more than $500,000 worth of appealed claims pending at the hearing level.
When those recovery audit appeals do get around to a hearing, a majority of them are probably bound to be decided in a hospitals' favor, the AHA argues. According to the association's data, more than 70 percent of appealed audit recovery denials through the first quarter of 2013 were overturned.
The association of recovery audit contractors, the Coalition for Healthcare Claims Integrity, argues that federal data shows that more than 95 percent of RAC determinations are deemed accurate by CMS and that few RAC clawbacks are actually challenged.
With those disputes growing, the Centers for Medicare & Medicaid Services has tried to make some headway on addressing provider concerns with the recovery audit program.
According to recent tweaks, RACs now have to give providers 30 days for discussion before adjusting claims, which could stop a number of disputes from even going on to appeal. CMS is allowing for reviews of more diverse claims sources, while limiting the RACs' volumes of documentation requests based on a provider's claims denial rate. RACs also won't be able to get paid until after the second level of a claim appeal.