The Department of Health and Human Services (HHS) is ahead of schedule to reduce its Medicare Administrative Law Judge (ALJ) appeals backlog, as required by court order, but lawmakers are still looking for ways to improve the efficiency of the Medicare appeals process.

Following a November 1, 2018 federal district court order in American Hospital Association [AHA], et al., vs. Azar (C.V. No. 14-cv-00851) to reduce the Medicare appeals backlog, HHS reported a reduction of 31.4% through the end of the fourth quarter of 2019, according to the third status report[1] (the “Status Report”) filed by HHS to the United States District Court for the District of Columbia on December 31, 2019. The Status Report identifies 292,517 appeals remain pending at the Office of Medicare Hearing and Appeals (OMHA). The 2018 court order requires HHS to achieve a 49% reduction by the end of FY 2020 and to clear the backlog entirely by the end of 2022.

At the time of the court’s decision, OMHA had 426,594 appeals pending and providers were waiting up to five years for an ALJ decision, notwithstanding a 90-day deadline under 42 U.S.C. 1395ff(d)(1)(A). With a 31% reduction so far, HHS is currently approximately 12% ahead of the court’s projected pace for reducing the backlog – at the time of the order, the court projected a 19% reduction by the end of fiscal year (FY) 2019.

The court order comes after several years of litigation between the parties. In 2014, the AHA filed suit to compel HHS to comply with the 90-day deadline. As we previously reported, the district court initially decided to impose yearly deadlines with targeted backlog reductions that would require HHS to eliminate the backlog by 2020. HHS appealed, however, arguing that it was impossible to comply with the order without “rubber-stamping” appeals and violating the Medicare statute. The circuit court remanded the case to the district court to determine whether compliance would be impossible. Following the grant of $183.2 million in funding from Congress in March 2018, the court determined that the task of reducing the backlog was not impossible and ultimately issued the November 2018 order.

In a post on its website following HHS’s second status report in September 2019 (which identified a 25% reduction in appeals), AHA noted that most resolutions are coming from increased OMHA resolutions and settlement facilitation conferences[2] and also observed that that recovery audit contractor receipts “remain low”. During litigation, AHA argued that recovery audit contractors are one of the main drivers of the Medicare appeals backlog. According to the Status Report, RAC appeal receipts have consistently shrunk — for FY 2019 there were 485 RAC appeal receipts – compared to 774 in FY 2018 and a whopping 13,782 in FY 2017.

Separately, on December 17, 2019, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) reintroduced legislation to “improve the efficiency of the Medicare appeals process.” Specifically, under S. 3078, the “Audit & Appeals Fairness, Integrity, and Reforms in Medicare Act of 2019” (referred to as the “AFIRM Act”), ALJs would handle cases in which the amount in controversy is equal to or greater than $1,630, while magistrates would handle cases in which the amount in controversy is at least $160 but less than $1,630. The AFIRM Act would require HHS to appoint a “Medicare Reviews and Appeals Ombudsman” to, among other things, identify and investigate in the resolution of complaints and inquiries related to Medicare audits and appeals process from providers under Part A or B and publish data regarding the number of review determinations appeals, each appeal’s outcome, and aggregate appeal statistics. The AFIRM Act would also permit ALJs to issue expedited decisions on the record when there are no material issues of fact in dispute.

The AFIRM Act proposal follows new appeals regulations from HHS in 2017 to permit administrative law judges to delegate certain tasks to “attorney adjudicators” and clarify various procedural aspects within the Medicare administrative appeals process to streamline the current appeals process. The 2015 version of the Act was not considered by the full Senate after receiving unanimous consent by the Senate Finance Committee. Given the progress HHS has demonstrated in reducing the backlog and recent modifications to the appeal regulations in 2017, it is unclear whether this proposed legislation will have better success this time around.

We will continue to monitor HHS and Congressional efforts to reduce the appeals backlog.