What is supposed to happen and what actually happens for level three conditional payment appeals?
At level three of the conditional payment appeals process, you may have a hearing before an Administrative Law Judge. Pursuant to 42 C.F.R. § 405.1016(a), when a request for an ALJ hearing is filed appropriately, the ALJ will issue a decision, dismissal order, or remand to the Qualified Independent Contractor (QIC) “no later than the end of the 90 calendar day period beginning on the date the request for hearing is received by the office specified in the QIC’s notice of reconsideration.” So, in theory, if you file your request in a timely fashion and confirm the Office of Medicare Hearings and Appeals (OMHA) received the request, then you should have a decision, dismissal order, or a remand to the QIC within 90 days, right? If you travel back in time to 2009, then yes. But not so fast ten years hence.
The average processing time of ALJ cases in 2009 was 94.9 days, just beyond the 90 day requirement. By 2017, it took an average of 1,142 days for a case to be processed, or just over three years. The average for the first three quarters of 2018 (the most recent data available for OMHA) was 1,187 days, so the trend is creeping ever closer to three-and-a-half years. Some have called this an “extreme backlog.[i]”
The U.S. Department of Health and Human Services (HHS) has provided some insight into the issues faced by OMHA at level three of the overall Medicare appeal process in its “HHS Primer: The Medicare Appeals Process.” “OMHA was receiving more than a year’s worth of appeals every 18 weeks at the end of FY 2015. At the end of FY 2015, the pending workload at OMHA exceeded 880,000 appeals while annual adjudication capacity was approximately 75,000 appeals.” With the resources available to OMHA at that time and assuming no additional appeals, HHS estimated it would take OMHA eleven years to process its backlog. This was the state of the OMHA backlog before workers’ compensation, no-fault, and liability carriers (i.e. applicable plans or non-group health plans (NGHPs)) had a chance to start feeding conditional payment appeals into this system.
What does this all mean?
Conditional payment cases at level three are but a drop in the bucket for the overall OMHA backlog. Applicable plans did not find a need to appeal to the ALJ level until widely reported issues with processing and backlogs occurred starting in October 2015 with Medicare’s first Commercial Repayment Center contractor, CGI Federal. Self-inflicted processing issues dogged CGI Federal during its entire tenure, which resulted in a tremendous backlog that could not be cleared by the termination of their contract in February 2018.
This left the new Commercial Repayment Center contractor, Performant Financial Corporation, in a tough spot right from the start. It took the balance of 2018 for Performant to clear the backlog and to ramp up its own recovery efforts, which means many more cases wound their way to the Treasury program and into level three of the Medicare appeals process.
Performant has largely stabilized, so we will keep watch to gauge whether cases will continue to flow to level three. Given the success at resolving cases at levels one and two, it is possible we have seen the largest wave of ALJ appeals already and they are currently pending at level three. We expect there will be some residual filings made by applicable plans as the last of the conditional payment CGI Federal backlog ages through Performant’s processes. Beyond that, we expect and hope ALJ appeal filings to be rare.
However, if and when the cases currently pending at level three do make their way to hearing, the industry will spend precious time educating the ALJs about the conditional payment process itself, explaining the conditional payment backlog, and making arguments for each individual case based on its unique facts. Three-and-a-half years is a long time in the claims world, so this assumes carriers and self-insureds are willing and able to wait that long, of course.
What is driving volume at OMHA and what does it look like today?
The four volume drivers CMS identified at the end of FY 2015 were:
- Increases in the number of beneficiaries overall;
- Updates and changes to Medicare and Medicaid coverage and payment rules;
- Growth in appeals from State Medicaid Agencies; and
- National implementation of the Medicare Fee-for-Service Recovery Audit Program.
The HHS primer outlined strategies (not wholly relevant to NGHP appellants) to improve the Medicare Appeals process and ultimately the agency secured additional funding from Congress to hire additional judges and implement some initiatives to expedite certain types of appeals. As of January 26, 2018, OMHA advised its appeals pending fell from around 880,000 in FY 2015 to 502,000, and its disposition capacity for FY 2018 was 93,500[ii]. That means in 2018 OMHA had 5.4 times as many appeals pending than could be decided in 2018. The outlook isn’t any better for 2019 and beyond, so applicable plans seeking adjudication at the ALJ level should expect continued delays.
How do you avoid the level three time trap?
CMS relies heavily on Section 111 reporting data for accepted workers’ compensation and no-fault claims. It is imperative to report accurate data and appeal CMS demands in a timely fashion. The ICD 10 code(s) reported should closely match the description of the claimed injury to ensure the best chance at accurate recovery correspondence. The recovery contractor will input the Section 111 data into its algorithm to compile a list of dates of services potentially related to the claim. Once the recovery contractor compiles the list and sends it as a recovery demand, the burden shifts to the applicable plan as the debtor to appeal or pay the amount due. ExamWorks Compliance Solutions stands at the ready to assist our clients in all manner of conditional payment research, appeal, and resolution, even (and especially) if it means stepping into the level three ALJ time trap here and there. We are with you each step of the way.
Following passage of the SMART Act in 2012, the Centers for Medicare and Medicaid Services (CMS) promulgated a formal rule that extended its five-level appeal process to applicable plans with respect to conditional payment matters. The final rule became effective on April 28, 2015.
In the conditional payment realm, CMS may choose to identify an applicable plan as the debtor to be targeted for recovery. CMS defines applicable plan to include non-group health plans like liability, no-fault, and workers’ compensation insurance, including self-insurance. In order to recover, a contractor on behalf of CMS must issue an “initial determination” (an MSP recovery demand letter). Once an applicable plan receives a demand, it may engage the formal five-level process to appeal the amount of the debt and/or the existence of the debt:
- A “redetermination” by the contractor issuing the recovery demand;
- A “reconsideration” by a Qualified Independent Contractor;
- A hearing by an administrative law judge;
- A review by the Departmental Appeals Board’s Medicare Appeals Council; and
- Judicial review.
The vast majority of cases are resolved at level one or two, but there are some cases that, for various reasons, wind their way to the ALJ level. Again, ExamWorks Clinical Solutions stands at the ready to assist.
About ExamWorks Compliance Solutions
ExamWorks Compliance Solutions is a leader in Medicare Secondary Payer compliance, combining Medicare Set-Aside, conditional payment, and post-settlement services. The company provides comprehensive clinical mitigation programs and medical and vocational case management to insurers, self-insureds, and third-party administrators. ExamWorks Compliance Solutions, an ExamWorks Company, is headquartered in Lawrenceville, Georgia.
[i] Andrew B. Wachler and Erin Diesel Roumayah, Updates on the Medicare Appeals Backlog and New Opportunities in Medicare’s Appeals Process, Volume 30, Number 5, The Health Lawyer, p.36, June 2018.