Affirming the Need to Fix the Medicare Appeals Backlog: The AFIRM Act of 2015

If you are one of the many health care providers wanting to appeal a Medicare contractor’s reimbursement decision, you may need to be prepared for a long wait.  Over the last few years, the backlog of appeals to the administrative hearing level has grown into an untenable situation: according to the chief administrative law judge at the Department of Health and Human Services’ Office of Medicare Hearings and Appeals (“OMHA”), the agency administering these hearings, the average wait time, as of February 2015, was 572 days.[1]

A hearing before an Administrative Law Judge (“ALJ”) is the third level of the Medicare appeals process for both beneficiaries and providers.  The first level of appeal is the “redetermination,” where the petitioning individual requests that the Medicare Administrative Contractor (“MAC”) evaluating the claim reconsider its decision.  Then, the provider can seek “reconsideration” from the Qualified Independent Contractor (“QIC”).  After a provider has proceeded through the reconsideration and redetermination phases, or if the time period for filing for a redetermination has lapsed, the provider can request a hearing before an ALJ.[2]  

The ALJ hearing phase is critically important because the reconsideration and redetermination phases are known for returning unfavorable results to providers and beneficiaries, with MACs and QICs rarely overturning the MAC’s initial determination.  However, once the provider reaches the ALJ level, providers and beneficiaries have a significant chance of success at having the lower level decisions overturned.[3]

With OMHA reporting that it receives hundreds of thousands of new hearing requests per year, if the circumstances described above persist, then so will OMHA’s massive backlog.[4]  Recently, Congress has taken steps to create legislation designed to ease the burden of all participating in the Medicare appeals process.

The Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015[5] was introduced in the Senate Finance Committee by Committee Chair Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Oregon), and aims to reform the appeals process in order to protect federal funds and beneficiaries while easing the burden on providers.  The provisions of the AFIRM Act would include the following:

• Improve coordination and oversight between Centers for Medicare & Medicaid Services (CMS) and its audit contractors and require CMS approval for guidelines for Medicare claims audits prior to their use by contractors;
• Create an Ombudsman for Medicare Reviews and Appeals to guide potential appellants, investigate and resolve complaints;
• Require CMS and the Ombudsman to publish appeals statistics and other information  to achieve greater transparency;
• Increase the monetary threshold to appeal to an ALJ from the current threshold of $150 to the amount of the threshold for Medicare claims to be heard at the federal court level, with the development of a magistrate program to allow smaller claims to be heard by qualified attorneys;
• Require remand of cases to the MAC for redetermination when an appellant (provider or beneficiary) introduces new evidence at an appeal stage;
• Implement an alternative dispute resolution process which would be voluntary and would handle groups of similar claims to be decided together; and
• Use extrapolation and statistical sampling, with the appellant’s approval.

The AFIRM Act passed out of the Senate Finance Committee on June 4, 2015 as an amended Chairman’s Markup, which summarizes the provisions that will be drafted into the formal bill.  The next steps for the AFIRM Act would be the development of such formal legislation and its introduction in the Senate.  Providers, beneficiaries and other stakeholders should monitor the AFIRM Act’s progress.  In the meantime, with respect to their appeals to OMHA, they must continue to sit and wait to be heard.