On April 28, 2015, Nancy J. Griswold, the Chief Administrative Law Judge for the Office of Medicare Hearings and Appeals (“OMHA”), issued a statement to the United States Senate Finance Committee on “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues In Medicare.” The statement described the need for more efficient appellate review at the Administrative Law Judge (“ALJ”) level of review, noting the implementation of certain programs to reduce the backlog of appeals and requesting an increase to the budget of the Department of Health and Human Services (“HHS”).

OMHA, established in 2005, is a division within HHS that is tasked with facilitating the appeals process for the Medicare program. According to Chief Judge Griswold, OMHA “was established to improve service to appellants” and to reduce the then-average 368-day decision timeframe to the 90-day timeframe currently stated in the regulations. At its inception, OMHA was to share equally the workload among appeals resulting from denials under the Medicare Part A, B, C, and D Programs, in addition to appeals of income-related monthly adjustment amounts. For 10 years, according to Chief Judge Griswold, OMHA generally met its 90-day deadline for issuing decisions, but, beginning in 2010, OMHA experienced a significant increase in the number of appeals being filed. This significant increase in appeals was due in large part to the Recovery Audit Program, which the government expanded nationwide in 2010, causing a substantial backlog of appeals at the ALJ level.

Over the past few years, HHS has offered numerous solutions to reduce the backlog of appeals, including, more recently, its offer to settle appeals at 68 cents on the dollar to hospitals for pending patient-status appeals. Also, prior to the settlement, funding increases allowed OMHA to add an additional field office in Kansas City and to add 12 Administrative Law Judge teams, resulting in an adjudication capacity of 77,000 appeals. Even with the increase in adjudication capacity, however, providers can expect HHS to continue the implementation of certain “solutions” aimed at reducing the average workload for each ALJ team.

A few specific solutions mentioned in the statement issued by Chief Judge Griswold include judicial education training, statistical sampling, a filing fee for filing appeals, an increase to the minimum amount in controversy, and the addition of 119 ALJ teams. Dubbed as “joint training,” the judicial education training involves collaborative training among several departments of HHS, which, since implementation, has resulted in a decrease in the overturn rate at the ALJ level of appeal from 63.2 percent in 2010 to the current rate of 43.0 percent. Griswold touts this decrease as “reflecting a more consistent application of policy at all levels.” But many providers are pointing out the obvious—that more consistent results should have yielded something close to the average overturn rate, not a 20-point decrease in the Recovery Auditors' favor. Providers are also asking what curriculum is taught at these joint training sessions that would result in a 20-point decrease? The answer cannot be consistent application of policy alone. Considering the currently stated overturn rate of 43.0 percent, providers may warily, if at all, participate in statistical sampling at this point in time. And while the filing fee would be refundable upon a favorable decision, and the minimum amount of controversy would divert claims below a certain amount to a newly established magistrate system, HHS is clearly placing the burden on providers—and not the Recovery Auditors, who work off of a commission—to reduce the amount of appeals in this program.

As providers have seen year after year, when HHS and the Centers for Medicare and Medicaid Services issue regulations for the purpose of reducing the backlog of appeals, providers will be stuck footing the bill.