A federal judge has dismissed a lawsuit the American Hospital Association filed against the Department of Health and Human Services after new appeals of decisions by Medicare Recovery Audit Contractors were halted in early 2014.

Administrative law judges handling RAC appeals have been overwhelmed and a backlog of hundreds of thousands of appeals compelled the Office of Medicare Hearings and Appeals to stop taking more appeals for two years or more. AHA filed suit to force the government to adhere to statutory deadlines for ruling on RAC decisions that were appealed.

On December 18, Judge James Boasberg in the U.S. District Court for the District of Columbia accepted a government request to dismiss the lawsuit, but acknowledged that “no one likes the waiting game and Plaintiffs in this care are no exception.” While sympathizing with hospitals’ plight, he ruled: “HHS’s delay in processing their administrative appeals, while far from ideal, is not so egregious as to warrant intervention.”

Boasberg noted that the Office of Medicare Hearings and Appeals is hopelessly overworked, as the backlog of appeals to administrative law judges quintupled between 2012 and 2013. “In 2013, for instance, OMHA received 350,629 appeals and decided only 79,303 of them.” At the moment, he added, OMHA receives enough appeals in four to six weeks to keep it busy for an entire year.

The AHA argued that creation of the Recovery Audit Contractors program caused the backlogs because the RACs are gaming the system to make more money. “As Medicare’s only contingency-fee-based contractors, RACs have engaged in wide-ranging audits of Medicare claims, frequently questioning the medical judgment of health care providers and denying claims for the types of services that qualify for the largest amount of reimbursement,” the AHA told the court.

Boasberg noted that OMHA does not deny that RACs contributed to increased appeals, but OMHA also says that more Medicare beneficiaries, increased use of covered services and additional appeals from Medicaid agencies also contributed.

In his ruling, Boasberg said Congress created the RAC program and it is Congress and HHS who should address the problem. “In the end, here is the state of affairs: Congress is well aware of the problem and Congress and the Secretary are the proper agents to solve it. In such situations—where an agency is underfunded and where it is processing Plaintiffs’ appeals on a first-come, first-served basis—the Court will not intervene.”

Full text of the 21-page order is available here.

Register or login for access to this item and much more

All Health Data Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access