Health Information Management

News: Denials suit dismissed; AHA says process improvements needed

CDI Strategies, January 22, 2015

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The battle over timely reviews for Medicare claims denials continues despite a federal court’s decision to dismiss an American Hospital Association (AHA) lawsuit in December.

The suit, brought by the AHA and several hospitals, sought to have the courts compel the Department of Health and Human Services to meet statutory deadlines for timely administrative review of denials. But while court seemed to sympathize with hospitals, it placed responsibility back on the Office of Medicare Hearings and Appeals (OMHA).

“No one denies that OMHA’s [administrative law judges] are unable to render decisions in accord with the statutory guidelines laid out by Congress [and] that this is a problem in need of a fix,” according to the court opinion, as reported in the AHA News Now.

The AHA expects to appeal the decision, AHA President and CEO Rich Umbdenstock said in a statement.

Recovery Audit Contractor (RAC) reform is needed to stop the “excessive” and “inappropriate” number of denials by RACs, the AHA says. Although the OMHA hopes to find ways to clear the growing backlog of appeals at the Administrative Law Judge Level, the AHA says the problem isn’t the appeals system but the number of denials themselves.

To combat this problem, the AHA wants to see a number of reforms put in place to modify RAC behavior, such as:

  • For medical necessity denials, limiting reviews to documentation available at the time the physician made the admission decision.
  • Eliminating the one-year filing limit to rebilled Part B claims. “When a Part A claim is denied because the admission was not reasonable and necessary, the hospital should be able to submit a subsequent Part B claim for the services provided,” said Linda Fishman, AHA senior vice president of public policy analysis and development, in a written statement.
  • Limiting RACs to a specified time period to audit approved issues, such as short inpatient stays.
For its part, CMS released a number of proposed RAC improvements applicable to contracts related to durable medical equipment and home health and hospice RAC awarded on December 30. (Read the related article in the January 6 edition of Medicare Insider.)

Unfortunately, improvements for hospitals won’t take place until the next RAC contracts are in place, possibly not until late summer 2015.

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