The Federal Office of Medicare Hearings and Appeals (OMHA) was established in July 2005 to administer the Medicare appeals program.  OMHA adjudicates appeals regarding Medicare entitlement and Medicare provider reimbursement.  OMHA assigns appeals to one of 65 Administrative Law Judges (ALJs).  Beneficiaries and providers file thousands of appeals every month, many of which are under statutory or regulatory timelines for action.

In July 2013, OMHA “temporarily suspended the assignment of most new requests” for an ALJ hearing so as to allow OMHA to address a backlog of claims.  However, OMHA did not provide a public notice of the moratorium until five months later. 

Justification for Moratorium

In a December 24, 2013 memo posted on its website, OMHA acknowledged the moratorium and asserted that it was necessary based on a dramatic growth in OMHA’s workload, including:

• A two year workload increase of 184%;

• A backlog of appeals that has grown 500% in the past two years; and

• The fact that in January 2012, OMHA received approximately 1250 appeals per week, but by December 2013 it was receiving over 15,000 per appeals week. 

OMHA has faced this increased workload with no additional resources and, in fact, the sequestration diminished its resources.  In its December memo, OMHA did not address the causes of the workload increase, but others have not hesitated to point the finger at the Recovery Auditor Contracting (RAC) program.

The Role of RACs

In a recent letter to CMS Administrator Marilyn Tavenner, the American Hospital Association (AHA) asserted that “excessive inappropriate denials” by RACs were a “direct driver” of the OMHA backlog, and that “erroneous RAC denials force hospitals to shoulder the significant administrative burden of pursuing appeals in order to receive payment” for medically necessary Medicare services.  According to the letter, AHA’s own surveys establish that:

• Hospitals have seen a 30-fold increase in RAC denials since 2010;

• The average number of hospital appeals of RAC denials per year has increased from approximately 17 per year in 2010 to more than 300 per year in 2013; and

• Hospitals have won nearly 70% of RAC appeals that have been completed.

These figures and the moratorium clearly were not taken into account by CMS in its recent Medicare Parts C and D proposed rules.  The proposed rules institutionalize the RAC program for Parts C and D and propose a 60-day time period for issuance of RAC appeal decisions. 

What Happens Next?

OMHA’s website stresses that it will prioritize beneficiary appeals, especially those that may involve exigent circumstances.  But Medicare providers should expect (i) an 18-22 week delay in docketing new appeal requests, and (ii) a delay of up to 28 months for assignment to an ALJ of a new request for hearing. 

OMHA is hosting a Medicare Appellant Forum on February 12, 2014 to discuss the status of OMHA operations and the moratorium.  The deadline to register for the forum is January 28th.  While OMHA has capped attendance at 400 individuals, providers should nonetheless consider registering to let the government know how many entities and organizations wish to be heard on the status of the Medicare appeals process. 

Additionally, entities filing comments with CMS regarding the proposed Part C and D rules may wish to raise the inherent senseless of institutionalizing a RAC process in Parts C and D that is broken before it even begins.