The U.S. Government Accountability Office (GAO) released a report [http://www.gao.gov/assets/680/677034.pdf]on June 9 stating that the audit appeals process needs further improvement. The appeals process for Medicare fee-for-service (FFS) claims consists of four levels of review within the U.S. Department of Health and Human Services (HHS), and a fifth level in which appeals are reviewed by federal courts:
- Level 1: Redetermination by a Medicare Administrative Contractor (MAC)
- Level 2: Reconsideration by a Qualified Independent Contractor (QIC)
- Level 3: Hearing before an Administrative Law Judge (ALJ)
- Level 4: Review by the Medicare Appeals Council
- Level 5: Judicial review in U.S. District Court
Findings
The GAO examined trends in the appeals process from 2010 through 2014, data HHS uses to monitor the appeals process, and HHS efforts to reduce the number of appeals filed and backlogged. According to the report, from 2010 to 2014, the number of Level 1-4 appeals increased substantially, with Level 3 experiencing the largest rate of increase-936 percent (from 41,733 to 432,534 appeals). A significant portion of the increase was driven by appeals of hospital and other inpatient stays as well as by denied claims of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS); the largest increases in DMEPOS appeals were related to oxygen supplies and diabetic glucose testing supplies. HHS attributed the growth in appeals to its increased program integrity efforts and that providers are now more apt to appeal claims, among other things. GAO also found that the number of appeal decisions issued after statutory time frames generally increased during this period, with the largest increase in and largest proportion of late decisions occurring at appeal Levels 3 and 4. For example, in fiscal year 2014, 96 percent of Level 3 decisions were issued after the 90-day statutory time frame. This delay has resulted in the Centers for Medicare & Medicaid Services (CMS) paying $17.8 million in interest payments from 2010 through 2015 to Part A and B providers that it would not have paid had Level 3 issued appeal decisions within statutory time frames.
HHS and CMS use three appeal data systems to monitor the Medicare appeals process, and there are inconsistencies in the data that is collected. Further, these systems do not collect data that other HHS agencies could use to monitor appeal trends, such as the reasons for Level 3 appeal decisions and the amount of Medicare reimbursement at issue. GAO also found variation in how appeals bodies record decisions across the three systems, including using different categories to track the type of service at issue. “Absent more complete and consistent appeals data, HHS’ ability to monitor emerging trends in appeals is limited and is inconsistent with federal internal control standards that require agencies to run and control agency operations using relevant, reliable, and timely information,” the report stated.
GAO also found that while HHS agencies have taken several actions to reduce the number of Medicare appeals filed and the current appeals backlog, the backlog continues to grow at a rate that outpaces the adjudication process and will likely persist. Further, HHS efforts do not address inefficiencies regarding the way appeals of certain repetitious claims are adjudicated, which is inconsistent with federal internal control standards.
GAO Recommendations
In light of these findings, GAO recommended five actions for HHS to take. HHS agreed with four recommendations and disagreed with a fifth one, citing potential unintended consequences. GAO agreed and dropped that recommendation. The four actions HHS agreed to are below:
- Collect information on the reasons for Level 3 appeal decisions
- Calculate the amount of Medicare allowed charges at issue in the appeals
- Collect consistent data across the systems, including appeal categories and appeal decisions
- Implement a more efficient way to adjudicate certain repetitive claims
