Wachler & Associates Health Law Blog

On November 1, 2018, a U.S. District Court ordered the United States Department of Health and Human Services (“HHS”) to eliminate the Medicare appeals backlog by the end of fiscal year 2022.  There are currently 426,594 backlogged appeals. The recent ruling imposes a timetable for reducing the backlog of appeals. Specifically, 19% of the appeals must be cleared by the end of fiscal year 2019; 49% of the appeals must be cleared by the end of fiscal year 2020; 75% by the end of fiscal year 2021; and the backlog must be eliminated entirely by 2022. To demonstrate its progress, HHS must file quarterly status reports beginning on December 31, 2018.

The Court’s order arises from a lawsuit that was filed by the AHA in 2014. AHA alleged that HHS was violating federal law by failing to process appeals within 90 days from the date of the Office of Medicare Hearings and Appeals’ receipt of the request for hearing.  In 2016, the District Court entered summary judgment in favor of the AHA and ordered HHS to comply with a timetable to eliminate the backlog of appeals by 2020.  In 2017, the D.C. Circuit reversed the District Court and ordered the District Court to evaluate HHS’ claim that compliance with the timetable would be impossible.

HHS has implemented some backlog-reduction efforts to try complying with the previous ruling to eliminate the backlog by fiscal year 2020. Settlement Conference Facilitations (“SCF”) are an example of one of these initiatives. Medicare Part A and Part B providers and suppliers who have appeals pending before an ALJ are encouraged to participate in SCF. SCF uses a facilitator to help the appellant and CMS find a mutually agreeable resolution. Initiatives like SCF are a step forward in reducing the backlog, as it takes people out of the long waiting period and resolves cases in a simpler matter.

The Centers for Medicare & Medicaid Services (“CMS”) recently announced a review of Inpatient Rehabilitation Facilities (“IRFs”) that will focus on the “reasonable and necessary” requirement that IRFs are required to meet. An IRF provides rehabilitation services to patients who have suffered an injury, illness, or surgery that has left them in need of intensive rehabilitation.  Services provided by IRFs include physical therapy, occupational therapy, rehabilitative nursing, speech-language pathology, and the procurement of prosthetic and orthotic devices.

IRF services are considered “reasonable and necessary” if: (1) the patient requires therapeutic intervention in multiple therapy disciplines, (2) the patient actively participates in and benefits from the therapy program, (3) the patient is sufficiently stable at the onset of the program, (4) the patient is supervised by a physician, (5) the patient’s chart has the correct documentation within it, and (6) the patient requires an interdisciplinary team approach to care and the team has weekly meetings.

IRFs are not meant to be used as an alternative to a full course of treatment.  Patients who are still completing their treatment in the hospital and cannot fully participate in intensive rehabilitation therapy will not have their IRF service determined to be reasonable or necessary. Furthermore, IRF is not appropriate for patients who have finished their hospital treatment and no longer need intensive rehabilitation.

The Provider Reimbursement Review Board (“PRRB”) is an independent panel that a Part A provider can appeal to if it is not satisfied with any final determination. In order to appeal, the amount in controversy for a single hospital must be at least $10,000, and at least $50,000 for a group of hospitals.  The PRRB’s decision is considered the final administrative remedy for providers.  If a provider is dissatisfied with the PRRB decision, it can seek judicial review before a federal district court.  Last month, the PRRB released 90 pages of updated rules without advanced notice, which providers and attorneys are expected to comply with in their appeals.  These significant changes to the PRRB rules could be catastrophic for providers because they may waive their entire appeal if they fail to follow a new rule.

Hospitals tend to utilize the PRRB appeals process by challenging disproportionate-share hospital payment calculation, or by challenging the amount of Medicare bad-debt payment they receive. These are generally complex issues that require a significant amount of time to investigate and fully develop.  Unfortunately, the parties will no longer be afforded the ability to develop their case as it proceeds through the appeals process. The new rules require a preliminary position paper (and the corresponding exhibits) to be filed with the PRRB at the beginning of the appeal process. This new requirement forces providers to have their argument in its most complete form at the beginning of the process because additional arguments and evidence cannot be added later, except for good cause. Additionally, if anything is missing in the initial submission of materials, the entire appeal will be dismissed.

Another extremely important change is that providers may now simultaneously file appeals with the PRRB and then withdraw them if they believe their claims can be resolved with the Medicare Administrative Contractor (“MAC”).  If a resolution is not reached, providers can reinstate their appeals with the PRRB. Furthermore, if a provider appeals the same issue arising from different Notice of Program Reimbursements (“NPRs”) in the same year, it must be brought in the same appeal.

The Centers for Medicare and Medicaid Services (“CMS”) recently released a final rule that is meant to empower patients and reduce administrative burdens by advancing the MyHealthData and the CMS Patients Over Paperwork initiatives.  Payment policies and reimbursement rates are updated under the “Medicare Hospital Inpatient Prospective Payment System (“IPPS”) and Long-Term Acute Care Hospital (“LTCH”) Prospective Payment System Final Rule,” which will modernize Medicare by aiding in the shift from a fee-for-service to value-based payment system.  The final rule also creates greater transparency surrounding hospital prices, increases accessibility to Electronic Health Records (“EHR”), and allows providers to spend less time on paperwork and more time with patients.

The final rule reveals that CMS has finally decided to put an end to a special payment adjustment policy, known as the 25% rule.  The 25% rule was introduced in 2004, but its implementation had been postponed for years due to concerns about reimbursement.  The 25% rule would have reduced LTCH Medicare reimbursement if more than a quarter of the LTCH hospital had patients from a single acute-care hospital. The National Association of Long-Term Hospitals estimated that the reduced rate would have caused LTCHs to receive 50% to 60% less in reimbursement.

The rule was originally crafted by CMS because LTCHs often failed to follow payment criteria that defined qualifications for prospective payment system rates. This issue was addressed in the Bipartisan Budget Act of 2013 with the site-neutral payment policy. AHA Executive Vice President, Thomas Nickels said in a letter to CMS, “given the scale of LTCH cuts under site-neutral payment, implementing the 25% rule… would unjustifiably exacerbate the instability and strain on the field, which would threaten access for the high-acuity, long-stay patients that require LTCH-level care.” Furthermore, alternative payment models are now in place, which incentivize hospitals to follow the payment criteria.