A new report commissioned by the American Orthotic & Prosthetic Association (AOPA) shows that the Centers for Medicare & Medicaid Services (CMS) could save more than $10 million by taking specific steps until the backlog of Administrative Law Judge (ALJ) hearings is resolved. The ALJ hearing is the third of four levels of appeal offered by the Recovery Audit Contractor (RAC) audit program.
The report “Estimated Impact of Deferring Provider Payment for RAC Appeals Until After Administrative Law Judge (ALJ) (Level 3) Determinations,” was completed by Dobson Davanzo & Associates, Vienna, Virginia, and can be found on the AOPA website. According to the report, testimony from Nancy Griswold, chief ALJ, estimated that in July 2013, the Office of Medicare Hearings and Appeals’ (OMHA) Central Operations Division received 15,000 ALJ hearing requests per week. Further, the handling of the appeals has been delayed from the 90 days required by law to three years or longer. As the RAC program currently stands, in order for a RAC claim to enter the ALJ-appeal process, the provider must first reimburse CMS for the payments in dispute. If the ALJ hearing rules in the provider’s favor (fully or partially favorable disposition), CMS becomes responsible for reimbursing the provider for the submitted payment plus interest at above-market rates for the time period between provider repayment and the ALJ determination.
According to the analysis from Dobson DaVanzo, by postponing reimbursement of disputed payments until the disputes are resolved, CMS would not recoup payments from providers for possible overpayments until the ALJ disposition is determined. This would eliminate the need for CMS to make interest payments, estimated to be $7.57 million for O&P services over ten years, or $12.37 million for all of Part B services in the appeal system (including those yet to be recognized by OMHA). Furthermore, providers with successful appeals would not have their resources withheld by CMS for upward of 30 months before they received their repayments.
AOPA said that it is formulating a legislative policy that would delay the recoupment date for RAC audits until after the ALJ hearing and determination. Under this policy, CMS would not hold providers’ payments while the ALJ hearing is in process, and therefore, CMS would not accrue interest to be paid to providers with favorable (or partially favorable) determinations.