The American Hospital Association sued the U.S. Department of Health and Human Services, claiming its process for appealing payment denials is too cumbersome and lengthy.
The lawsuit stems in part from HHS' decision late last year to impose a moratorium on adjudicating mid-level disputes between hospitals and recovery audit contractors (RACs), according to AHA News Now. Such cases are typically heard in front of an administrative law judge and are often when providers prevail. There are now a backlog of 480,000 RAC appeals cases waiting for judges.
"Wait times for an ALJ hearing could exceed three years when the moratorium is lifted, delaying billions of dollars in Medicare reimbursements to hospitals," AHA News Now reported.
Hearings are supposed to take place within 90 days of a request, but it can take up to six months to get a hearing on a calendar--and that was before the moratorium, according to the lawsuit. Prior to the HHS suspection, there were an average of 15,000 appeals to RAC clawbacks filed every week.
Along with the AHA, the plaintiffs in the suit are Baxter Regional Medical Center in Arkansas, Rutland Regional Medical Center in Vermont, and Covenant Health, which operates nine hospitals in Tennessee. Combined, the two hospitals and the hospital system have $8.9 million in RAC appeals pending at the administrative law court level.
Hospitals and hospital systems faced claims denials and the often arduous appeals process since the government introduced RAC reviews in 2009. Under pressure from lawmakers, the Centers for Medicare & Medicaid Services announced that it would reform its contracts with RACs, moving them away from an incentive-based system in the coming years.
"Hospitals (and) healthcare officials and lawmakers have brought Medicare oversight to a grinding halt, allowing billions in taxpayer funds to go down the drain," wrote Becky Reeves of the American Coalition of Healthcare Claims Integrity in a recent opinion article in Forbes. In addition, she said that the current moratorium on RACs would cost the Medicare program $6 billion.