HHS Issues New Rules to Unclog Medicare Appeals Pipeline

After a damning report from the U.S. Government Accountability Office (GAO) on the rising number of Medicare claims appeals and the resulting dramatic backlog of unresolved cases, the latest proposed changes to clear out the backlog have appeared.

Medicare Administrative Contractors (MACs) process an estimated 1.2 billion fee-for-service claims on behalf of the Centers for Medicare & Medicaid Services (CMS) for more than 33.9 million Medicare beneficiaries annually. When Medicare beneficiaries or providers disagree with a payment or coverage decision—if a claim was denied, for example—they may appeal these decisions through the Medicare FFS appeals process. Earlier this year, the GAO found that appeals rates had gone through the roof across all provider levels, including home health.

In 2015, 123 million Medicare fee-for-service claims were denied, or roughly 10% of the more than 1.2 billion claims processed during the year. Of these denied claims, 3.7 million, or 3%, were appealed.


“Several factors, including the growth in Medicare claims—partially driven by the aging population—and HHS’ continued investment and focus on ensuring the program integrity have led to more appeals than Office of Medicare Hearings and Appeals (OMHA) and the [Medicare Appeals] Council can process within the contemplated time frames,” HHS’ primer on its proposed appeal process changes reads.

There are five levels in the appeals process for Medicare Part A and Part B claims, with the first level involving redetermination by a MAC or similar party, and level five involving judicial review in a Federal District Court. For home health and other provider types, appeals at the third level and higher have become especially problematic, due to a shortage in the number of administrative law judges needed to handle ballooning appeals.

For home health and hospice, the number of appeals filed at Level 3 increased from 7,013 in 2010 to 33,816 in 2014, according to the GAO report. For Medicare Part A overall, the number of appeals at this level jumped from 12,938 to 275,791 during that time period.


To mitigate the gloomy appeals process findings, the Department of Health and Human Services (HHS) issued a proposal for new rules in order to address the “unprecedented and sustained increase in the number of appeals.”

The Department is taking a three-pronged approach to tackle the issue, which topped 880,000 cases by the end of fiscal year 2015:

1) Invest in new resources at all levels of appeal to increase adjudication capacity and implement new strategies to alleviate the current backlog

2) Reduce the number of pending appeals and encourage the resolution of cases earlier in the process through new administrative actions

3) Propose legislative reforms that provide additional funding and new authorities to address the appeals volume

HHS is also requesting additional funding for the fiscal year 2017 to increase the agency’s capacity to process and resolve appeals in line with the current volume of cases.

HHS pointed out that “while the volume of appeals has increased dramatically, funding has remained comparatively stagnant,” according to the primer. “Under current resources, it would take 11 years for OMHA and 6 years for the Council to process their respective backlogs.”

However, even with the administrative changes and additional funding, HHS estimated the current backlog of appeals couldn’t be eliminated until 2021.

The proposed changes will be posted to the Federal Register July 5, 2016, and will open for comment until August 29, 2016.

Written by Amy Baxter

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