Volume 29, No. 5 June 2014

Hospitals and American Hospital Association Sue HHS Over ALJ Appeals Delays

By: Michelle K. Buford, J.D., RHIA

Angry and frustrated over long delays in the Medicare appeals process, several hospitals filed suit on May 22, 2014, seeking to compel the Secretary of Health and Human Services (HHS) to meet the statutory deadlines for administrative review of Medicare claim denials at the Administrative Law Judge (ALJ) level. Baxter Regional Medical Center (Arkansas), Covenant Health (Tennessee), Rutland Regional Medical Center (Vermont) and the American Hospital Association (AHA) filed the lawsuit. A copy of the lawsuit may be found at file:///C:/Users/mbuford/Downloads/140522complaint-appeals.pdf.

Over the past few years, lengthy, systemic delays in the Medicare appeals process, far exceeding statutory timeframes, are causing substantial harm to providers of Medicare services. These extraordinary delays have effectively obstructed providers from challenging payment denials.

In the lawsuit, the plaintiff-hospitals contend that they are suffering financially from HHS’ refusal to render appeal decisions within the statutorily mandated timeframes. Compounding this problem, once a healthcare provider completes the second level of administrative appeal, funds associated with denied claims can be recouped from the provider. HHS issued a moratorium on assigning new appeals to Administrative Law Judges (ALJ) until the enormous backlog of appeals is brought current. Delays are currently ranging from 24-28 months and beyond. All the while, the plaintiffs and other healthcare providers must cope with huge financial deficits created by HHS. Those deficits have had a crippling effect on the hospital-plaintiffs’ cash flow, tying up funds in the appeals process and preventing them from utilizing those funds to meet patients’ and the hospitals’ operational needs.

The plaintiff-hospitals and many other healthcare providers not involved in this lawsuit are faced with cutting back on services to their patients, other cost-cutting measures, and, for some, closing their doors altogether.

The plaintiff-hospitals in the lawsuit allege that HHS breached its duty by acting contrary to statute, permitting its delegate, the Office of Medicare Hearings and Appeals (OMHA) to suspend assignment of appeals to ALJs for a minimum of 24 months, and by failing to hold hearings and render decisions within 90 days at the ALJ level. The hospitals’ suit also contends that these delays affect human health and welfare by compromising the economic wellbeing of hospitals across the country.

Lastly, the plaintiff-hospitals ask the court to formally declare that HHS’ delays in adjudication of Medicare appeals violates federal law, and ask HHS to provide them with ALJ hearings on all of their pending appeals.