Changes Proposed to Medicare Appeals Process

July 13, 2016

Current Process Description – Every year, Medicare Administrative Contractors process an estimated 1.2 billion fee-for-service claims on behalf of the Centers for Medicare & Medicaid Services (CMS) for more than 33.9 million Medicare beneficiaries.  When beneficiaries or providers disagree with a coverage or payment decision made by Medicare, they have the right to appeal and the Social Security Act established five levels to the Medicare appeals process:

  1. Redetermination by a Medicare Administrative Contractor
  • No minimum amount in controversy to appeal
  • 60-day target to complete the process
  1. Reconsideration by a Qualified Independent Contractor (QIC)
  • No minimum amount in controversy to appeal
  • Filing deadline 180 days from issuance of a MAC redetermination
  • 60-day target to complete the process
  1. Hearing Before an Administrative Law Judge at the Office of Medicare Hearings and Appeals (OMHA)
  • Minimum amount in controversy required for a hearing is adjusted annually based on a formula prescribed by the statute; currently $150
  • Filing deadline 60 days from date of receipt of QIC determination
  • 90-day target to complete the process
  1. Medicare Appeals Council Review
  • Minimum amount in controversy required for a hearing is adjusted annually based on a formula prescribed by the statute; currently $150
  • Filing deadline 60 days from date of receipt of OMHA determination
  • 90-day target to complete the process
  1. Judicial Review in U.S. District Court
  • Minimum amount in controversy required for a hearing is adjusted annually based on a formula prescribed by the statute; currently $1,500
  • Filing deadline 60 days from date of receipt of Medicare Appeals Council determination; or a party may request judicial review by the federal court is the Council does not render an action within 90 days of when the appeal is filed with them

Of the 1.2 billion claims filed in 2015, 123 million or about 10 percent, were denied, and 3.7 million of those (about three percent of total claims) were appealed.

Current Backlog

At Levels 1 and 2, CMS is currently meeting its statutory timeframes to process appeals and is not experiencing a backlog.

At Level 3, the OMHA is currently receiving more than a year’s worth of appeals every 18 weeks.  At the end of 2015, the pending workload exceeded 880,000 appeals while annual adjudication capacity with current level of resources was approximately 75,000 appeals.

At Level 4, the Council is currently receiving more than a year’s worth of appeals every 11 weeks.  At the end of 2015, the pending workload exceeded 14,000 appeals while annual adjudication capacity with current level of resources was approximately 2,300 appeals.

HHS has identified four primary drivers of the increase in volume:

  1. Increases in the number of beneficiaries;
  2. Updates and changes to Medicare and Medicaid coverage and payment rules;
  3. Growth in appeals from State Medicaid Agencies; and
  4. National implementation of the Medicare Fee-for Service Recovery Audit Program.

Action Taken

In a report issued on June 9, 2016, the Government Accountability Office (GAO) stated that U.S. Department of Health and Human Services (HHS) should take more steps to improve its oversight of the Medicare fee-for-service appeals process and to reduce the volume of appeals.

On June 28th, the HHS issued a Notice of Proposed Rulemaking (NPRM) proposing changes to the Medicare claims appeal process, and has recently released a Primer on the Medicare Appeals Process that describes its three-pronged strategy to improve the Medicare Appeals process:

  1. Invest new resources at all levels of appeal to increase adjudication capacity and implement new strategies to alleviate the current backlog.
  2. Take administrative actions to reduce the number of pending appeals and encourage resolution of cases earlier in the process.
  3. Propose legislative reforms that provide additional funding and new authorities to address the appeals volume.

The proposed regulatory changes that appear in the NPRM are the latest in a series of administrative actions designed to reduce the number of pending appeals and encourage resolution of cases earlier in the Medicare appeals process.  In the NPRM, HHS is proposing additional administrative action to: expand the pool of available OMHA adjudicators; increase decision making consistency among the levels of appeal; and improve efficiency by streamlining the appeals process so less time is spent by adjudicators and parties on repetitive issues and procedural matters.

In addition to these administrative actions, the FY 2017 President’s Budget requests additional funding to bring capacity for processing and resolving appeals in line with current appeal volume.  The budget request also includes a comprehensive legislative package aimed at both helping HHS process a greater number of appeals and encouraging resolution of appeals earlier in the process before they reach the OMHA and the Medicare Appeals Council.

If the administrative authorities set forth in the NPRM are implemented in conjunction with the proposed funding increases and legislative actions outlined in the FY 2017 President’s Budget, HHS estimates that the backlog of appeals could be eliminated by FY 2021.

The proposed changes will be posted on the Federal Register website and open to comments through August 29th.

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