Medicare Stops Hearing Provider Appeals in Hopes of Clearing Backlog

When Medicare refuses to cover a treatment (such as inpatient hospitalization) or device (like diabetes testing supplies), the statute gives the disappointed beneficiary the right to appeal.  Furthermore, there are mechanisms by which the provider–which may be a hospital, doctor, durable medical equipment manufacturer, etc.–that recommended the treatment (and often stands to profit if it is covered) can appeal on the beneficiary’s behalf (or on their own if the claim is assigned).

The statute sets deadlines for decisions on appeal, but in recent years a flood of new cases has led to a growing backlog and long delays.  (The backlog is caused in large part by the Recovery Audit Contractor program, through which Medicare has been revisiting and revising coverage determinations from the past several years.   That is a subject for another day.)

On Christmas Eve, the office in the Department of Health and Human Services responsible for hearing appeals (that is, the Office of Medicare Hearings and Appeals), adopted a controversial mitigation measure: They’ve stopped hearing new appeals, while they work to clear the backlog.  Which will take at least two years.  (See recent coverage here.)

Yes, the law says that Medicare must hear appeals, so yes, this temporary measure is technically inconsistent with the law (which is not to say it is illegal, more below on that).  But in my view it is actually a good idea, and consistent with what I think is the best ultimate solution to the “backlog” problem.  Here’s why:

Medicare has not stopped hearing all appeals, rather it will continue to process appeals filed directly by beneficiaries.  So it is the providers—doctors, hospitals, durable medical equipment manufacturers, and so on—who are temporarily being deprived of their right to appeal by the decision.  (See explanation here.)  That’s a big deal, because only 10% of appeals are filed directly by beneficiaries.  So this temporary measure will cut off 90% of appeals.

As I argue in my work in progress (will be sharing draft soon!), “Against Process in the Administration of Healthcare,” this distinction makes sense.  From the perspective of hospitals, doctors, and equipment manufacturers, appeals are about fixing errors, about getting payment decisions right.  From that perspective, alternative means of avoiding errors—like auditing through random sampling and process controls—are just as good, if not better.  Seriatim appeals are an inefficient and costly means of improving accuracy.

Appeals are about more than just accuracy to patients, however.  Unlike audits or process controls, the right to appeal gives a patient voice; an opportunity to air his or her grievance.  The beneficiary’s participation has inherent value that may justify what is an otherwise inefficient means of ensuring accuracy.

So understood, Medicare’s temporary solution aligns with what I argue in my work-in-progress should be the system’s ultimate solution to the growing backlog problem: Cut back significantly on provider appeals, leave beneficiary appeal rights largely intact, and use alternative mechanisms to increase accuracy and make sure providers are being paid what they deserve.  That’s the approach to accuracy that Medicare has taken when it comes to deciding whether to reopen claims (upheld recently by the Ninth Circuit in Palomar Med. Ctr. v. Sebelius), and it is an approach that should be used much more broadly.

Of course, none of that means that CMS has authority under the statute to refuse to hear provider appeals until it has cleared the backlog. The American Hospital Association, at least, has argued that the move violates the statute.  (See its letter disagreeing with the move here.)  A lot has been written lately about agencies’ power to delay action (which I like to think of as their power to triage) (see Jacobs here, Sunstein & Vermeule here), and I plan to follow up with a blog post on the legality of this particular delay sometime soon.

Be Sociable, Share!