U.S. District Court Grants Judgement to Hospital Association, Mandates HHS Remedial Action to Reduce ALJ Waiting Period

In mid-2014, the American Hospital Association (AHA) filed suit against HHS challenging the long delays—far in excess of the statutory limit of 90 days—before RAC audit appeal cases are heard by an administrative law judge (ALJ).  Early on, the District Court ruled against AHA, but was overruled by the Court of Appeals.  In now ruling in favor of AHA, the Court clearly demonstrated its impatience with the long delays, but also was careful not to try to force the hand of HHS with specific steps.  Instead, the Court adopted a remedy with four threshold dates at which HHS is instructed to have reduced the back-up in ALJ hearings by set percentages.

By December 31, 2017 – 30% reduction in the backlog
By December 31, 2018 – 60% reduction in the backlog
By December 31, 2019 – 90% reduction in the backlog
By December 31, 2020 – 100% reduction in the backlog

AHA had also proposed the remedy that the Court automatically issue rulings for defendants as January, 2021 for any cases where there was a backlog of more than one year.  The Court refused that request, at least for the present, though it left the door open to reconsider that if HHS fails to meet the above targets.

How will this potentially impact O&P RAC claims?  O&P RAC claims comprise a disproportionately high percentage of all Part B RAC claims.  The lawsuit by AHA involved Part A hospital claims.  Nonetheless, AHA is very likely to set some new mechanisms—possibly the opportunity for those appealing audit decisions to accept settlements based on the history of success in appeals.  Such a mechanism was previously crafted by HHS and extended to hospitals, but it did not succeed in markedly reducing the ALJ backlog.

Stay tuned, and AOPA will keep you apprised as finally, the courts demand that HHS/CMS take seriously the statutory requirement that entitles a provider who is audited, to receive an ALJ decision within 90 days of filing the appeal.  The Court readily acknowledged that, “(T)he agency is also bound by statutorily mandated deadlines, of which it is in flagrant violation as to hundreds of thousands of appeals.”

Read the memo from United States District Judge James E. Boasberg.