California rehab hospital sues HHS over backlogged appeals for denied claims

The Casa Colina Hospital and Centers for Healthcare in Pomona, California, has filed a suit against the U.S. Department of Health and Human Services, claiming its backlogged process for resolving Medicare payment disputes has removed sorely needed revenue from its coffers.

Casa Colina filed the suit in late May in U.S. District Court in Los Angeles, but did not announce it until earlier this week. It asks the court to address Casa Colina's disputed appeals over denied Medicare payments in a timely manner. Officials say some of the appeals are in their second year of being processed. Altogether, Casa Colina says that more than $1 million in disputed claims are currently tied up in the appeals process. A spokesperson said that most of the disputes claims center around the medical necessity of the care delivered and technical denials.

"The lengthy delay in addressing our appeals could threaten our ability to serve the rehabilitation needs of Medicare beneficiaries in California," Casa Colina CEO Felice Loverso said in the statement. "With this suit, Casa Colina intends to hold Medicare to the rules established by Congress."

Hospitals have been in a bitter dispute over clawed back payments from recovery audit contractors in recent years, and the five-step process for appealing a clawback--which includes a hearing in front of a federal administrative law judge--has all but ground to a halt. A recent study about the Recovery Audit Program concluded that  the process overburdens hospitals.

"Hospitals recognize the need for careful payment review to protect the integrity of the Medicare Program. However, the flood of audit contractors has resulted in a surge of redundant audits, unmanageable medical records requests and erroneous payment denials for hospitals. Further oversight is needed to ensure auditing efforts are accurate, timely, transparent and administratively reasonable," Jennifer Bayer, a spokesperson for the Hospital Association of Southern California, told FierceHealthFinance in an email.

"The average appeal takes nearly 600 days to complete and is extremely costly, leaving many hospitals to believe that they have no other choice than to accept the CMS proposed settlement offer on patient status claims currently in the appeals process."

The Centers for Medicare & Medicaid Services offered to settle claims over short-stay hospital claims last year for 68 cents on the dollar, and evidence suggests many providers have accepted that offer. Becker's Hospital Review has reported that the agency paid $1.3 billion to more than 1,900 hospitals as of June 1. But a Casa Colina spokeswoman told FierceHealthFinance that rehabiliation facilities were not included in the settlement. 

To learn more:
- read the Casa Colina statement 
- check out the Becker's Hospital Review article

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