On April 28, 2015, the Senate Finance Committee held a hearing titled “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare.”  The hearing included testimony from Office of Medicare Hearings and Appeals  (OMHA) Chief Administrative Law Judge (ALJ) Nancy Griswold, as well as representatives of two Medicare contractors. 

Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) expressed continued concern regarding the backlog of more than 500,000 Medicare appeals at the ALJ (or third) level of appeal.  Chairman Hatch acknowledged that OMHA has taken steps to address the backlog, but recognized that the agency is limited by its current resources.  Senator Wyden expressed similar concerns and noted potential solutions such as allowing less complicated cases to be handled by different adjudicators, instead of ALJs.

Judge Griswold testified that although OMHA has received funding for 12 additional ALJ teams, OMHA’s appeal adjudication capacity is significantly outpaced by the number of incoming appeals.  Specifically, Judge Griswold reported that adjudication timeframes have increased to 572 days (as of February 2015), and are projected to continue increasing absent significant changes.  In addition to highlighting administrative actions taken by OMHA including technology improvements, Judge Griswold requested additional resources to further increase adjudication capacity and alleviate the backlog.  In addition, Judge Griswold noted legislative reforms proposed in President Obama’s 2016 budget designed to address the appeals backlog, such as the establishment of a filing fee (refundable if the appeal is successful) and the creation of a Magistrate adjudication process for claims with smaller amounts in controversy.

Sandy Coston, chief executive officer and president of Diversified Service Options, which has subsidiaries that serve as Medicare Administrative Contractors, as well as Thomas Naughton, a senior vice president with MAXIMUS Federal Services, a Qualified Independent Contractor, also testified at the hearing.

Hearing statements and testimony are available here.

Reporter, Lauren S. Gennett, Atlanta, +1 404 572 3592, lgennett@kslaw.com.