Budget Includes Changes to the Appeals Process

One aspect of the Department of Health and Human Services fiscal year 2016 budget proposal that is sure to impact laboratories addresses changes the Centers for Medicare and Medicaid Services (CMS) want to make in the appeals process. The changes include a multi-pronged comprehensive strategy that includes increased funding, administrative actions and legislative proposals. The budget makes investments at all levels in the appeals process, focusing on the Office of Medicare Hearings and Appeals (OMHA). The funding adds resources to handle the increasing volume of claims and to alleviate the current backlog in the appeals system, which is estimated to reach over a million appeals by the end of fiscal year 2015.
Changes to the Medicare Appeals Process Some of the changes are helpful without negatively impacting providers and may bring more efficiency to the process. One proposal would give OMHA and the Departmental Appeals Board authority to retain part of the money from Recovery Audit Contractors recoveries. Another proposes using attorney adjudicators in certain circumstances, reserving Administrative Law Judges (ALJ) for more complex cases. Other proposals designed to ease the bottleneck at the ALJ level include increasing the amounts in controversy thresholds for an ALJ review and returning claims that are in a higher appeal level to the redetermination level if new evidence is provided by the appellant. In the current system, appellants often wait until later in the appeals process to submit critical evidence that would allow the appeal to be resolved earlier, before they reach the ALJ level. This proposal is designed to provide incentive for providers to file all relevant documents as early in the appeals process as possible. When appellants do not provide all the relevant documents in the early stages of an appeal, the appeal may get elevated to later stages or levels of appeal unnecessarily. One of the more concerning proposals establishes a “refundable filing fee” for each claim at each level of the appeals process. According to HHS, the fee would allow it to invest in the appeals process to make it more responsive and efficient. The fee would be refunded to appellants who “receive a fully favorable appeal determination.” There is no mention of what happens to the fee in the case where the final outcome is not fully favorable, or, for that matter, what constitutes “fully favorable.” Laboratories that often submit may find problematic a proposal that allows consolidation of claims and the use of sampling and extrapolation techniques for adjudication purposes. This proposal would allow the Secretary to consolidate claims at all levels of the appeals process. The efficiency provided here benefits CMS in that it only has to make one decision, while each of the claims in any extrapolation or consolidation batch could have unique aspects that would make it payable while some other “similar” claim may not be. In the current process, each claim is considered on its own unique properties such as supporting documentation or diagnosis code. This proposal potentially could help clear the current backlog that causes claims to take as many as 400 days to be resolved, which would benefit laboratories and others. However, there is no mention of what happens after the backlog is cleared. Are these consolidated appeals going to become a permanent part of the appeals process going forward? It may not be good for laboratories or other providers in the long run if some of these proposed solutions become a permanent part of the process.
Impact on Laboratories For the most part, laboratories should benefit from improving the appeals system. As things stand today, there is effectively no appeals process after the first and second levels because the delays and resources needed do not make it cost effective for laboratories to pursue appeals. There are other things at work that affect the number of appeals that are filed, not the least of which is the numerous errors and misinterpretations made by CMS auditors, particularly when it comes to laboratories because of the variations in the applicability of some regulations when applied to laboratory claims, or, because Medicare manuals contain incorrect or out-of-date information. The proposals should have included more effective training for auditors to reduce errors and misinterpretations and additional CMS resources to review and correct information in the Internet only manuals, on which many auditors rely when reviewing claims and their support documents. Takeaway: Laboratories should avoid the upper levels of the appeals process as much as possible until the backlog of appeals is resolved, by submitting all documentation related to the denied claim up front, making it easier for Medicare reviewers to resolve the appeals earlier in the process.