March 18, 2014
–In a letter to Department of Health and Human Services (HHS) Secretary
Kathleen Sebelius, Representative Jim McDermott (D-WA), ranking member of the
House Ways and Means Health Subcommittee, cited his concerns for the sheer
volume of backlogged appeals before the Office of Medicare Hearings and Appeals
(OMHA). He praised OMHA for recognition of this problem and their transparency
regarding the backlog of “nearly 357,000” appeals.
cited his understanding of Medicare policy to “move to the front of the line”
beneficiary appeals. But, “first and most importantly” is that the
beneficiaries were having trouble even being heard simply due to the sheer
number of appeals. He stated, “As you know, while a hospital may be able to
absorb losses associated with a denial of payment, beneficiaries are on fixed
incomes and cannot do so.” He urged “continued vigilance and new processes
established” to ensure that beneficiaries are not unduly delayed by the current
backlog, by placing specific staff to collate and push beneficiary appeals to
He goes on to
say that he is “troubled” that Recovery Auditors (RAs) were the immediate cause
of the increased workload within OMHA. Rep. McDermott further asserted “While I
am aware of legislative efforts to modify the RA program, which I have not supported because I believe many of the proposed
bills are quite prescriptive, there are several steps that can be taken
administratively without any intervention
from congress.” (Italics are mine)
suggestions were proposed:
Modify the RA program instead of implementing the two midnight policy:
In a previous letter written in July 2013 regarding
the proposed two midnight rule, Rep. McDermott indicated “that the policy was
flawed and unworkable.” This March, 18, 2014 letter goes on to say “I believe
the underlying issue that is driving the need for more concrete admission
standards – the RA program – be re-examined and modified.” CMS is in the
process of determining how this policy and issues related to it will be
addressed and has placed a “pause” on RA activity but Medicare Administrative
Contractors (MACs) may still deny claims they identify as part of the “probe
and educate” reviews. Reconsideration as to whether this policy is ready for
even limited enforcement was requested in light of a lack of understanding
of important issues and how exactly they will be addressed.
Require Enhanced Accountability for RAs:
RAs receive a percentage of all monies recouped, “(earning 9% to 12% commissions on what they
Rep. McDermott addresses a financial penalty if an
appeal is overturned; “I suggest that there needs to be some financial
penalty associated with RA collections that are overturned on appeal. If
providers are winning these appeals by large margins, which seems to be the
case, this seems only fair…I also suggest that going forward, the contracts
include performance standards for accuracy of collections from providers.”
His suggestion included two financial penalties to
consider; have the RA pay the appeal cost or a penalty percentage. His
statements were firm in the belief that regardless of the type of penalty,
“some penalty should be assessed.”
Ensure the Newly-imposed “Pause” Address the Problem;
McDermott expressed pleasure that CMS recognized
fundamental problems with the RA program and agreed with the “pause” in
document requests. He acknowledged that due to RA retrospective reviews that
these claims could still be audited. He added the suggestions that the “pause”
be continued until a clear plan was in place to (a) modify the RA program,
(b) address the existing backlog of appeals and (c) consider limiting
the lookback period on claims submitted during the pause.
Monitor the Impact of Change Request (CR) 8425 Policy
This policy allows contractors expanded authority to
automatically deny related claims
Basically, Rep. McDermott was calling for these backlogged
appeals to be eradicated soon and to address the driving forces behind the
backlog – the RAs and the Two Midnight Policy.
It is my
opinion, that there are many hospitals and providers that simply can’t continue
to absorb the financial losses of imposed overpayment recoupment by the RA’s.
There are providers facing two alternatives, neither of which will assist
Medicare beneficiaries in obtaining quality medical care. The first is to
simply close their doors as an alternative to spending more money in an effort
to retain revenue from being recouped or they can decide not to accept patients
covered by Medicare. Consider these statistics compiled by the AHA RACTRAC
Survey for the 4th quarter of 2013;
$2.6 billion in denials were reported through the 4th quarter of 2013.
68% of all hospitals reported spending more than $10,000 managing the RAC process during the fourth quarter of 2013, 50% spent more than $25,000 and 12% spent over $100,000.
The average dollar value of a complex denial was $5,659.
50% of hospitals indicated short-stay medical necessity denials were the most costly complex denials.
67% of all cumulative claims appealed are still sitting in the appeals process.
Of the claims that have completed the appeals process, 64% were overturned in favor of the provider. 
I do not think our President in 1965, the Members and
Leadership of the House, the House Ways and Means Committee nor the American
people would recognize Medicare today!
I reviewed the history of Medicare through vision blurred by
tears, but it renewed in me the zeal to protect those for whom it was intended.
I challenge you to visit the website listed below, read the history of Medicare
and not be moved. I will end with this short excerpt of President Lyndon B.
Johnson’s news conference announcing the approval of Medicare.
“When the conference has
completed its work, a great burden will be lifted from the shoulders of all
Americans. Older citizens will no longer have to fear that illness will wipe
out their savings, eat up their income, and destroy lifelong hope of dignity
and independence. For every family with older members it will mean relief from
the often–crushing responsibilities of care. For the Nation it will bring the
necessary satisfaction of having fulfilled the obligations of justice to those
who have given a lifetime of service and labor to their country.
This is a
great day for older Americans. And it is a great day for America. For we have
proved, once again, that the vitality of our democracy can shape the oldest of
our values to the needs and obligations of today.”
 The painful new trend in Medicare: By Amanda Gengler @Money August 7, 2012: 5:22 AM ET
 AHA RACTRAC
Survey, 4th Quarter 2013 March 5, 2014
 PRESIDENT LYNDON B. JOHNSON APRIL 8, 1965 STATEMENT BY THE PRESIDENT
FOLLOWING HOUSE APPROVAL OF THE MEDICARE BILL