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Frustration Grows Over ALJ Backlog—Could CMS Do More?

We recently reported on the "Low Volume Appeals (LVA) Settlement" process initiated by the Centers for Medicare and Medicare (CMS) that was implemented during March and April 2018. (See February 2, 2018 Health Law Advisory.) Many, including the American Hospital Association (AHA), have asserted that the LVA process is insufficient to address the scope of the problem and that CMS must do more and more quickly.

In response to a growing backlog of claims principally caused by increases in the number of audit contractors and varying types of claims' audits, the Office of Medicare Hearings and Appeals (OMHA) suspended the assignment of appeals in early 2014 for a period of up to 28 months. The suspension was applied retrospectively to cases received by OMHA after July 15, 2013.

The moratorium prompted AHA to file a lawsuit against the Department of Health and Human Services (HHS) on May 22, 2014 in an attempt to force the Secretary of HHS to meet the deadline required by statute for reviewing denials of Medicare claims. Later, another lawsuit was filed in December 2016, American Hospital Association v, Alex Azar, Civil Action 14-CV-851-JEB, (U.S. District Court for the District of Columbia). A federal judge in that case ordered HHS to clear pending appeals by the end of 2020. HHS appealed and a U.S. Appeals Court for the District of Columbia overturned the order in August 2017. The case was remanded to the lower court to decide whether or not HHS's assertion that it would be impossible to comply with the court's timetable was true.

AHA recently (February 2018) renewed its request to the district court to reinstate the deadline for clearing ALJ appeals based on the assertion that HHS has not shown that it is impossible to comply with the deadline. On March 22, 2018, the court issued an order stating that the case would be stayed until June 22, 1018 on which date, AHA would "submit specific proposals (and reasons therefor) that they wish the Court to impose via mandamus and explain why current procedures are insufficient." HHS will have until July 6, 2018 to "[p]rovide a status update on current reforms and contesting why the defense proposals are impossible or unhelpful." AHA will then be permitted to file a reply by July 13, 2018.

AHA previously submitted the following suggestions to HHS for clearing the backlog in a Reply Memorandum of Law in Support of Plaintiffs' Cross Motion for Summary Judgment dated February 15, 2018:

--Further curtail the RAC program;
--Do more to settle outstanding cases;
--Delay repayment of denied claims;
--Toll interest accrual of all backlogged appeals for all periods beyond the statutory minimum of 90 days.

The outcome of this case will be material to the circumstances of many providers and supplier with cases in the ALJ queue. The suggestions involving delay of repayment/recoupment and tolling of the accrual of interest would provide immediate financial relief regardless of whether or not reduction of the backlog is accomplished in a timely manner.


Julie A. Knutson

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