Legislators Voice Concerns Over Troubled Medicare Appeals Process

Legislators voiced concerns over aggressive Medicare audit contractors and the current Medicare appeals process in a congressional hearing on May 20, 2014. As reported by Modern Healthcare, legislators from both sides of the aisle voiced concerns regarding federal investigations into potential Medicare fraud having the collateral effect of unfairly punishing providers who have done nothing wrong. While there is a strong desire to stop Medicare fraud, there is also serious concern that the current Medicare appeals process used by providers to appeal wrongly denied reimbursement is broken. And the time and financial impact of appealing can be significant, particularly for small providers.

The Director of CMS’ Center for Program Integrity, Dr. Shantanu Agrawal, faced questions regarding the agency’s enforcement actions and reportedly explained that “CMS must strike an important balance while overseeing the Medicare program: limiting the administrative burden on legitimate providers and suppliers to preserve beneficiary access to necessary healthcare services while fulfilling our obligation to ensure taxpayer dollars are not lost to waste, abuse and fraud.”

The current Medicare appeals process also came under scrutiny. Dr. Agrawal testified that the first two levels of appeal, redetermination and reconsideration, which are handled by CMS contractors, are functioning efficiently. The breakdown occurs when providers appeal to the third level, seeking an administrative law judge (ALJ) hearing from the Office of Medicare Hearings and Appeals. In July 2013, CMS implemented a two-year moratorium on the assignment of new appeals to ALJs due to the existing backlog of cases. This delay in hearings and appeal determinations forces providers to wait extended periods of time in order to receive payment for services and treatment they provided, often placing significant strain on financial resources. In the post-payment audit context, providers may be subject to recoupment of the alleged overpayment amount from their current Medicare payments following the second-level reconsideration determination. While the situation is problematic for all providers, the delayed appeal adjudications may have disastrous effects on small practices and facilities.

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