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Administrative Law Judge Hearings - Major Delay

February 21, 2014
AAA Member Advisory
TO: AAA Membership
FROM:      American Ambulance Association
RE:           AAA Member Advisory - Major Delays ALJ hearings

By:  David M. Werfel, Esq.

The Department of HHS Office of Medicare Hearings and Appeals (OMHA) issued a Memorandum (undated) and then published a Notice in the Federal Register on January 3, 2014 (http://www.gpo.gov/fdsys/pkg/FR-2014-01-03/pdf/2013-31461.pdf) that indicated that OMHA has temporarily suspended the assignment of requests for Administrative Law Judge hearings as of July 15, 2013. OMHA indicated this measure was necessary to address a rapid increase in its case backlog, citing the following statistics:

• its caseload increased by 184% from 2010 to 2013.
• weekly requests for hearings increased from 1,250 in January 2012 to more than 15,000 in November 2013.
• Part B appeals increased 67% from 2011 to 2012 and then at least 93% from 2012 to 2013 (more when the 4th quarter of 2013 is included).
• the backlog now stands at more than 480,000 claims.
• wait times for a hearing have risen to over 16 months.

To address this backlog, OMHA temporarily suspended the assignment of certain appeals to ALJs. The suspension will apply to newly filed requests from providers and suppliers. The suspension will not apply to appeals filed directly by Medicare beneficiaries. These appeals will continue to receive priority over appeals filed by providers and suppliers. 

The assignment of cases involving providers and suppliers will resume once the current backlog has been alleviated. However, OMHA did not anticipate general assignments to resume for at least another 24 months, with an additional 6 months expected before a hearing would actually take place. Thus, at this point in time, you should expect that it will take approximately 3 years from the time you request an ALJ hearing until the time you receive a decision. 

OMHA recognizes the hardship this will, but has indicated its 65 ALJs are simply overwhelmed by requests for hearings. The reasons for the backlog include:

• Recovery Audit Contractors denying claims, particularly on the Part A side.
• increased pre- and post-payment reviews by various Medicare contractors.
• increased denials of initial claims by Medicare Administrative Contractors.
• changes in Medicare Administrative Contractors that resulted in new local policies, different edits, different interpretations of coverage, etc.
• an increased number of denials at the Redetermination and Reconsideration levels.
• an increased number of Medicare beneficiaries.
• more active Medicaid agencies.

On February 12, 2014, OMHA held what was called a “forum” in Washington, D.C. to discuss the situation. At the forum, OMHA provided the background for the problem, its planned procedures going forward and held a Question and Answer session.

Aside from the background noted above, OMHA indicated it is looking at partial solutions that would include:

• opening a new OMHA office in the Central Time zone.
• creating an OMHA Adjudication Manual.
• seeking statistical sampling when there is a large number of claims in issue, if the Appellant consents.
• considering alternative dispute resolution options, e.g. arbitration, mediation, etc.
• IT solutions, e.g. to eliminate paper case files.

Major trade organizations have already communicated to OMHA, CMS and Congress that the current system is not only unacceptable but that it is against the law as ALJ decisions are supposed to be issued within 90 days of receiving the request for a hearing. Some members of Congress are calling for major changes in the RAC program. 

The reality is that it will take almost 3 years from the time a hearing is requested until the ALJ decision is reached. If this was a post-payment audit, with a large overpayment, and you can not afford to refund the claimed overpayment, you are facing extended installment payments of principal and interest (currently 10.25%). Of course, if the issue involves on-going claims denied incorrectly, you are facing a long cash flow problem, if the issue is not resolved at the Redetermination or Reconsideration level.

In order to alleviate the problem, as best you can, place an even greater emphasis on the initial claims. Use the claim narrative fields to list the applicable information to establish medical necessity, the elevated level of care to be obtained in inter-hospital transports, etc. If denied, obtain and provide the maximum evidence you can at the Redetermination and Reconsideration appeal levels. In sum, the best way to avoid the delay is to win, if at all possible, at the earlier stages of appeal.

Guaranteed cash flow during transition.