Taxpayer Watchdogs Urge Senators to Protect RAC Program Amid Concerns Over Medicare ALJ Appeals Backlog

WASHINGTON--()--Today, the Council for Citizens Against Government Waste (CCAGW) was joined by the National Taxpayers Union in a letter to members of the Senate Finance Committee, urging them not to use the claims backlog within the Department of Health and Human Services Office of Medicare Hearings and Appeals as cover to further damage the Recovery Audit Contracting (RAC) program. RACs are the most effective tool taxpayers possess to stem the tide of improper payments in Medicare, which resulted in $46 billion in losses to the Medicare Trust Fund in fiscal year (FY) 2014. Co-signatories to the letter are: Tom Schatz, President of the Council for Citizens Against Government Waste and Pete Sepp, President of National Taxpayers Union. The letter reads in part:

“The Senate Finance Committee is holding a hearing tomorrow on ‘Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare.’ You are scheduled to hear the testimony of the Honorable Chief Administrative Law Judge (ALJ) for the Office of Medicare Hearings and Appeals (OMHA) at the U.S. Department of Health and Human Services Nancy Griswold; CEO and President of Diversified Service Options Sandy Coston; and Senior Vice President of MAXIMUS Federal Services Thomas Naughton.

While OMHA is struggling with a severe claims backlog, the Council for Citizens Against Government Waste (CCAGW) and the National Taxpayers Union (NTU) are both concerned that the ALJ appeals crisis may be a manufactured or artificially exaggerated component of an effort to lay the groundwork to dismantle the Centers for Medicare and Medicaid Service’s (CMS) Recovery Audit Contracting (RAC) program.

Between fiscal year (FY) 2010 and FY 2013, the number of claims denials that were appealed jumped 766 percent, from 44,361 to 384,151. The vast majority of the appeals are related to RAC post-payments review denials and originate with hospitals. However, some sources in the provider community have persistently disseminated misinformation about the number of RAC claims denials that are overturned on appeal, asserting that 60 percent of hospital claims denied by RACs are in error. According to CMS, only 9.3 percent of the total number of RAC claim denials appealed to the ALJ level were overturned in FY 2013. Yet, providers have continued to flood the system with specious appeals, thereby bringing it to a grinding halt and agitating for a complete gutting of the RAC program.

CMS has documented that the RACs deliver a 97 percent accuracy rate. In fact, before a claim denial reaches the third level of appeal at the administrative law judge level, it has already been denied twice by two lower post-payment auditors, both of which are required to make decisions based upon CMS’s rules on medical necessity. A November, 2012 HHS Office of Inspector General report noted that “[m]any ALJ staff raised concerns about the frequent filers. Several staff noted that some of these appellants appeal every payment denial. A few staff said that these appellants have an incentive to appeal because the cost is minimal and a favorable decision is likely.”

CCAGW and NTU are very concerned about CMS’s proposed solution to this OMHA backlog: CMS is offering a “hospital settlement” to reduce the volume of inpatient status claims currently pending in the appeals process. The settlement will permit hospitals that enter into an administrative agreement with CMS to receive a one-time partial payment of 68 percent of the net allowable amount of claims currently under adjudication, in exchange for dropping their appeals.

Taxpayers and Medicare beneficiaries have a right to know how many hospitals have met the October 31, 2015 settlement application deadline, how many hospitals were given extensions on the deadlines, the total costs associated with the settlements so far, and the anticipated total cost to taxpayers of this administrative agreement.

While CCAGW and NTU recognize the need to address the serious ALJ claims backlog, reform must begin with repair of CMS’s post-payment auditing system, which is characterized by overlap, duplication, uncertainty over CMS’s rules, and inconsistent application of those rules at the third level of appeals. We urge the committee to not allow the ALJ workload issue to become an excuse to undermine or weaken the RAC program, which is the most successful tool at the taxpayers’ disposal to mitigate Medicare improper payments and recover billions for the Medicare Trust Fund.”

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation’s largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.

Contacts

CCAGW
Curtis Kalin, 202-467-5318

Release Summary

CCAGW urges Senate Finance Committee not to use the claims backlog within the HHS as cover to further damage the Recovery Audit Contracting (RAC) program.

Contacts

CCAGW
Curtis Kalin, 202-467-5318