June 09,2016

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Hatch, Wyden and Burr Highlight GAO Work on Medicare Audit and Appeals Process

Finance-Advanced AFIRM Act Poised to Alleviate Non-Partisan Watchdog’s Concerns

WASHINGTON – Senate Finance Committee Chairman Orrin Hatch (R-Utah), Ranking Member Ron Wyden (D-Ore.), and Finance Committee member Richard Burr (R-N.C.) today highlighted a new report from the Government Accountability Office (GAO) detailing inefficiencies with the Medicare Audit and Appeals process and noted a bipartisan Finance Committee bill aimed to reform the process.  The report details a dramatic increase in appeals at the Centers for Medicare & Medicaid Services (CMS), resulting in a backlog at the third and fourth levels of appeals where independent hearings are conducted. A bipartisan bill reported out by the Finance Committee, the Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015, S. 2368, if enacted into law, would improve many of the deficiencies highlighted by GAO. 

“Reforming the Medicare audit and appeals system with smart changes will provide better service for patients and responsible protection for health providers,” Hatch said. “Today’s non-partisan report on the appeals process lists a number of issues with the current system and underscores the need to cut the red tape ensnarling the process. Fortunately, the Finance Committee has a bipartisan product in place that does just that.  If enacted into law, the AFIRM Act would make needed reforms to the Medicare appeals process and bring increased transparency to the Medicare audit process.  That’s a win for taxpayers, patients and health providers.”

“The voices of too many patients, providers, and states are going unheard because the gears of the Medicare audit and appeals system have ground to a halt,” Wyden said. “Today’s news is a clear reminder of the ongoing dysfunction plaguing the appeals process, which comes at the expense of those stuck in the system. It’s high time Congress end this bureaucratic water torture by passing the Finance Committee’s bipartisan reform bill.”

“Medicare’s audit and appeals processes are clearly not working,” said Senator Burr. “GAO’s report echoes concerns raised by North Carolinians and is the latest wake-up call for the need for commonsense reforms. We must address the audit and appeals challenges so that doctors and hospitals can focus on what’s most important—providing quality care to Americans. I will keep working with my colleagues to fix this broken system.”

Additional information on the AFIRM Act can be found here.

Findings from the GAO appeals report include:

  • The third appeal level, in which Administrative Law Judges (ALJ) hear the appeal, experienced a 936 percent increase in filed appeals from fiscal year 2010 to fiscal year 2014. A significant portion of the increase in filed appeals at the third level was driven by appeals of hospital and other inpatient stays, which increased from 12,938 to 275,791 appeals (over 2,000 percent).
  • Appeal decisions exceeding statutory time frames at the first four levels generally increased from fiscal years 2010 through 2014, with most frequent delays occurring at the third and fourth levels. For example, the third level issued 96 percent of their decisions after the 90-day statutory time frame in fiscal year 2014.
  • The data systems that the HHS agencies use to monitor the appeals process do not collect other important data that could help identify trends. For example, the third level does not collect in its data system information on whether specific Medicare policies were among the issues that contributed to the appeal decision, which is information that could be used to help identify payment or claim review policies in need of clarification or additional guidance for appeals bodies or appellants.
  • HHS agencies have taken several actions aimed at reducing the total number of Medicare appeals filed and the current appeals backlog. Despite those actions, the backlog of appeals is growing at a rate that outpaces the capacities at the third and fourth levels.
  • HHS efforts do not address inefficiencies regarding the way appeals of certain repetitious claims—such as claims for monthly oxygen equipment rentals—are adjudicated, which is inconsistent with federal internal control standards. GAO recommended that the Secretary of Health and Human Services implement a more efficient way to adjudicate certain repetitive claims, such as by permitting appeals bodies to reopen and resolve appeals.

The nonpartisan analysis follows a previous report from the watchdog, released in May, that found CMS’s claims review process lacks reliable cost and savings data for Medicare Administrative Contractors (MACs), preventing the agency from having necessary information to evaluate MAC cost effectiveness and performance.