On June 3, 2015, the Senate Finance Committee passed an original bill that aims to streamline and improve the Medicare Audit and Appeals Process. The Medicare appeals process has recently faced scrutiny from industry leaders for inefficiencies and a growing, almost two-year backlog of requests at the Office of Medicare Hearings and Appeals (OMHA) for hearings in front of an administrative law judge (ALJ).

Critics of the proposal note that the bill does not adequately address underlying issues in the Medicare appeals process. Nevertheless, providers should remain cautiously optimistic that proposed changes in the bill may address inefficiencies that have prevented timely recovery of improperly denied claims.

Medicare and Medicaid Payment Suspensions

The Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015 proposes an extensive overhaul of the current process. Proposed changes in the bill include:

• Establishing a new Medicare Magistrate program, which would allow attorneys with expertise in Medicare law to review claims with an amount in controversy less than $1,460.
• Raising the amount in controversy for review by an ALJ to $1,460, to match the amount for review by a district court.
• Accelerating the appeals process by allowing for the use of sampling and extrapolation of claims. OMHA previously introduced a pilot program for statistical sampling in 2014.
• Establishing a voluntary alternate dispute resolution process, which allows for multiple claims with similar issues to be settled together instead of separately. OMHA previously introduced a pilot for this initiative, called the Settlement Conference Facilitation Pilot, in 2014.
• Creating a system of eligibility for hospitals with low error rates to receive one-year exemptions from post-payment audits by recovery audit contractors (RACs) and Medicare Administrative Contractors.
• Improving oversight for the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid (CMS) over the auditors and claims appeals process.
• Creating an independent Ombudsman for Medicare Reviews and Appeals to assist in resolving complaints. The Ombudsman would also be responsible for publishing statistics regarding the appeals process.

Background on Medicare Audit and Appeals Process

The Medicare Audit and Appeals Process allows providers and individuals who are dissatisfied with Medicare decisions about benefits or eligibility to have a hearing in front of an ALJ. There are five levels in the Medicare appeals process at which a beneficiary can challenge a prior decision before proceeding to a higher level decision-maker. Currently, Medicare's Recovery Audit (RAC) program is also facing significant delays, and the program has been in flux since last year. After a five-month hiatus, the program restarted some reviews in August 2014, but only on a limited basis. There has also been a significant delay in awarding new auditor contracts, adding to the uncertainty and criticism surrounding the program.

Polsinelli will continue to monitor the status of the proposed reforms.