The American Hospital Association is reacting angrily to a decision of the Centers for Medicare and Medicaid Services to suspend appeals to administrative law judges of decisions from Medicare Recovery Audit Contractors for two years to clear up a massive 357,000 claims backlog, and says the move is illegal.

In a memo from the Office of Medicare Hearings and Appeals, the agency said it expected hearing wait times will continue to exceed six months after the two-year suspension. That’s a 30-month period during which hospitals won’t be paid for pended claims that reflect care provided to Medicare beneficiaries, the AHA says in a letter to members of Congress. “The need for fundamental RAC relief has become even more apparent and urgent,” the association noted.

In a letter to CMS Administrator Marilyn Tavenner, the AHA contends the agency is breaking the law. “Delays of at least two years in granting an ALJ hearing for an appealed claim are not only unacceptable, they are a direct violation of Medicare statute that requires ALJs to issue a decision within 90 days of receiving the request for hearing. Further, this is not a new problem; prior to OMHA’s suspension of appeals assignments, ALJs were not adhering to their statutory deadline.”

Excessive inappropriate denials by RACs, the association told Tavenner, “are a direct driver of the ALJ backlog.” In the letter to Congress, the AHA contends that hospitals win more than 70 percent of inpatient denials, “meaning that the majority of appealed inpatient claims that were denied by RACs are accurate, necessary and supported by clinical guidelines.” The association is asking Congress to urge CMS to adopt RAC reforms in the proposed Medicare Audit Improvement Act of 2013 (S. 1012 & H.R. 1250), which was introduced in March 2013 and remains in House and Senate committees. AHA also calls for Congress to pressure CMS to not recoup disputed funds until after an appeal ruling.

Citing CMS data, the American Coalition for Healthcare Claims Integrity, representing RACs and contractors for other audit programs, contends RACs have an average accuracy rate across all auditors of 95.2 percent.

In AHA’s letter to Tavenner, the organization asks for suspension of RAC audits “until all levels of the determination and appeals process catch up with their current workloads.” The association also recommends that CMS not recoup funds until an ALJ determination is made, enforce statutory deadlines, address systemic issues with RACs that lead to avoidable claim denials and appeals, lower the allowable number of records requested to reduce the number of claims that could end up in appeal, and enforce RACs’ deadline to issue a decision on a claim by denying the contingency fee for claims that have missed the deadline.

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