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From Health Law Daily, December 6, 2016

Court sets a timeline for Medicare claims backlog

By Bryant Storm, J.D.

HHS will reduce the backlog of Medicare claim-reimbursement appeals in accordance with a timeline containing scheduled backlog reduction targets. The District Court for the District of Columbia issued a writ of mandamus ordering the HHS Secretary to resolve appeals in accordance with a timeline—which runs from December 31, 2017, through December 31, 2020—in order to resolve longstanding appeals backlog which, the court held, the agency has thus far taken inadequate measures to resolve (American Hospital Association v. Burwell, December 5, 2016, Boasberg, J.).

Background. In 2014, the American Hospital Association (AHA) and three hospitals filed suit asking the court to issue a writ of mandamus to compel HHS to process their long-pending Medicare claim-reimbursement appeals in accordance with statutory timelines. The court, although sympathetic, declined to intervene (see HHS’ stay request denied in Medicare appeals backlog case, September 20, 2014). In February 2016, however, the D.C. Court of Appeals revived the case and sent it back to the district court because the backlog of delays had grown worse. The appellate court instructed the district court that "in all likelihood," it should order HHS to comply with the appeals deadlines if HHS or Congress failed to make meaningful progress toward solving the problem within a reasonable period of time. The court pointed to the close of the next appropriations cycle (September 30, 2016) as the deadline for resolution (see Court must decide whether to clear the RAC appeal logjam with mandamus, February 10, 2016).

Brief. The AHA filed a brief proposing three solutions to the problem: (1) offer reasonable settlements to hospitals and other Medicare providers; (2) delay repayment of some disputed Medicare claims and toll the accrual of interest on those claims; and (3) impose penalties on recovery audit contractors (RACs) for poor performance. The AHA also proposed numeric reduction targets through 2020:

  • 30 percent reduction from the current backlog of cases pending at the administrative law judge (ALJ) level by December 31, 2017;
  • 60 percent reduction from the current backlog of cases pending at the ALJ level by December 31, 2018;
  • 90 percent reduction from the current backlog of cases pending at the ALJ level by December 31, 2019;
  • elimination of the backlog of cases pending at the ALJ level by December 31, 2020; and
  • on January 1, 2021, default judgment granted in favor of all claimants whose appeals have been pending at the ALJ level without a hearing for more than one calendar year.

The HHS Secretary responded by asserting that a solution to the backlog was in sight, and, therefore, the backlog should not be an issue requiring mandamus. The Secretary asserted that good faith and the success of prior backlog remediation should constitute grounds to avoid mandamus.

Mandamus. Although the court noted improvement in the appeals backlog, it determined that the backlog numbers remained "unacceptably high." It also noted that the Secretary proposed no new administrative actions to reduce the backlog. Accordingly, the court found equitable grounds for mandamus.

Relief. The court agreed with and adopted the majority of the AHA’s timetable—30 percent reduction from the current backlog of cases pending at the ALJ level by December 31, 2017; 60 percent by December 31, 2018; 90 percent by December 31, 2019; and 100 percent by December 31, 2020. The court declined to adopt the last bullet point of the AHA plan, agreeing with the Secretary that automatic defaults could "create perverse incentives for providers and suppliers to appeal non-meritorious claims." Instead, the court held, if the HHS fails to meet the deadlines, hospitals may move for default judgment or to otherwise enforce the writ of mandamus. The court also ordered HHS to submit quarterly status reports (every 90 days) communicating its progress in reducing the backlog and including figures for the current and projected backlog.

The case is No. 1:14-cv-00851-JEB.

Attorneys: Adam K. Levin (Hogan Lovells US LLP) for American Hospital Association, Baxter Regional Hospital, Inc. d/b/a Baxter Regional Medical Center, Rutland Hospital, Inc. d/b/a Rutland Regional Medical Center, and Covenant Health. Caroline Lewis Wolverton, U.S. Department of Justice, for Sylvia M. Burwell, Secretary, U.S. Department of Health & Human Services.

Companies: American Hospital Association; Baxter Regional Hospital, Inc. d/b/a Baxter Regional Medical Center; Rutland Hospital, Inc. d/b/a Rutland Regional Medical Center; U.S. Department of Health & Human Services

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