Health Law Daily HHS’ stay request denied in Medicare appeals backlog case
Tuesday, September 20, 2016

HHS’ stay request denied in Medicare appeals backlog case

By Harold Bishop, J.D.

A request by the HHS Secretary to delay further proceedings in a case brought by the American Hospital Association (AHA) and three hospital organizations, seeking to compel HHS to meet its congressionally mandated deadlines for reviewing Medicare claims, was denied by a D.C. district court. The Secretary requested a delay until September 30, 2017, to pursue administrative and legislative fixes to the Medicare claims appeal backlog problem. The court decided that the Secretary’s current proposals to reduce the claims review backlog and comply with statutory review deadlines would not result in meaningful progress. The court concluded that there were equitable grounds for it to order HHS to review the claims and eliminate the backlog, and it would not issue a stay and further delay the proceedings (American Hospital Association v. Burwell, September 19, 2016, Boasberg, J.).

AHA response. Melinda Hatton, AHA senior vice president and general counsel, praised the court’s decision, saying that it "rightly recognizes that HHS has neither developed nor even offered any realistic plan for resolving the backlog of appeals and that only a court order will ensure that it takes the immediate, concrete, and feasible steps necessary to come into compliance with the mandatory deadlines."

Background. More than two years ago, the AHA, Baxter Regional Medical Center, Covenant Health, and Rutland Regional Medical Center (Medicare providers) asked the court to issue a writ of mandamus to compel HHS to process their long-pending Medicare claim-reimbursement appeals in accordance with statutory timelines. In December 2014, the D.C. district court declined to intervene to resolve the backlog of Medicare reimbursement appeals, stating that "the waiting game must go on." Although the court agreed that HHS had violated its statutory obligations and reasoned that Recovery Audit Contractors (RAC) audits may have been worsening the problem, the court determined that it was not in a position to address the massive and growing administrative backlog because the problem required cooperation between Congress and HHS (see Court refuses to break the ‘logjam’ of Medicare appeals, December 22, 2014).

In February 2016, however, the D.C Court of Appeals revived the case and sent it back to the district court because the backlog of delays had gotten worse. At that time, the Court of Appeals instructed the district court that "in all likelihood," it should order HHS to comply with the appeals deadlines if HHS or Congress failed to make meaningful progress toward solving the problem within a reasonable period of time. The court pointed to the close of the next appropriations cycle (September 30, 2016) as the deadline for resolution (see Court must decide whether to clear the RAC appeal logjam with mandamus, February 10, 2016).

In response, the Secretary asked the district court to stay the proceedings until September 30, 2017, to allow HHS to move forward on various efforts designed to tackle the backlog of reimbursement appeals.

Analysis. In its argument to obtain a stay and to avoid a writ of mandamus, the Secretary offered two categories of interventions intended to combat the backlog: (1) administrative fixes; and (2) legislation to reform to the appeals process and to provide the agency with additional funding. The district court examined each.

The proposed administrative actions included: (1) efforts to promote settlements of claims awaiting administrative law judge (ALJ) review; (2) waiver of an oral hearing before an ALJ and instead having the appeal adjudicated on the record by a senior attorney advisor and then reviewed by an ALJ on the papers; (3) front-end limitations on provider activity, such as requiring providers and suppliers to obtain authorization from a Medicare Administrative Contractor (MAC) before providing particular items or services; and (4) modifications to the RAC program.

The court concluded that even assuming each one of the administrative fixes for which HHS could project impact numbers was implemented according its plan, the backlog will still grow every year between fiscal year (FY) 2016 and FY 2020—from 757,090 to 1,003,444 appeals.

With regards to possible legislative reforms to solve the backlogs, the AHA and the Medicare providers scoffed at the notion that this Congress would deliver on the fixes the Secretary wants, and certainly not within the period of time requested for the stay, which includes the upcoming elections, a lame-duck congressional session, and the new President’s first eight months in office, when he or she will be focused on his or her most critical legislative priorities. The court agreed that Congress was unlikely to come to the rescue of the Secretary’s Medicare claims review backlog.

Conclusion. The court was unable to conclude that the Secretary’s current proposals would result in meaningful progress to reduce the backlog and comply with the statutory deadlines. The court also found that the balance of interests indicate that there are equitable grounds for mandamus (ordering an agency to perform a function—in this case to eliminate the backlog). As such, the court refused to issue a stay and further delay the proceedings.

The court also expressed its understanding that its ruling would not miraculously eliminate the backlog. As a result, the court asked the parties to appear for a status conference to discuss how next to proceed.

The case is Civil Action No. 14-851 (JEB).

Attorneys: Adam K. Levin (Hogan Lovells LLP) for American Hospital Association, Baxter Regional Hospital, Inc. d/b/a Baxter Regional Medical Center and Rutland Hospital, Inc. d/b/a Rutland Regional Medical Center; Caroline Lewis Wolverton, U.S. Department of Justice, for Sylvia M. Burwell, Secretary, U.S. Department of Health and Human Services.

Companies: American Hospital Association; Baxter Regional Hospital, Inc. d/b/a Baxter Regional Medical Center; Rutland Hospital, Inc. d/b/a Rutland Regional Medical Center; U.S. Department of Health and Human Services

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