United States: CMS Proposes ALJ Hearing Changes

As most hospice providers know all too well, CMS faces an ever growing backlog of ALJ cases.  This backlog stems in large part from aggressive audit procedures employed by ZPICs, RACs, and MACs that issue sweeping numbers of pre- and post-payment denials, often on less than substantive or meritorious grounds, leading to more appeals.

Presently, the OMHA ALJ panel has 750,000 cases pending.  At top speed, the ALJ panel can only decide 77,000 per year (1,500 cases per ALJ; about 7 per work day per judge).  The math is discouraging and results in denial of basic statutory due process, both on timing and level of substantive review.  Courts have begun to take notice, issuing injunctions against collection efforts in some cases based upon delayed appeals.

As part of an effort to resolve this crisis, CMS has proposed regulatory changes to the hearing process discussed below (to be formally published in the Federal Register on July 5, 2016).

The most significant proposed regulatory change is to allow "adjudication attorneys," something less than an independent administrative law judges, to decide any matter not requiring an actual oral hearing.  This would include review of QIC dismissals, decisions to remand, any case where appellant wins on all issues, and, most notably, any case where all parties waive an oral hearing.  So beware, if a provider waives an oral hearing, the provider will have a decision entered by an "adjudication attorney."

There is no indication that the adjudication attorneys will be subject to ALJ oversight of any kind.  In short, the adjudication attorneys may well be subject to the substantial control of CMS, whereas ALJs enjoy a degree of independence.

CMS also proposes to allow the Departmental Appeals Board to designate opinions as precedential, setting up binding authority that could more promptly resolve certain types of appeals (perhaps not likely to affect hospices very substantially).

CMS proposes many changes to the technical procedures around an ALJ hearing.  Of some note, CMS proposes:

  • To provide that service of request for hearing must be made to any party that receives notice of the reconsideration decision. Many hospices have previously faced arguably senseless dismissals or delays based upon determination that a hospice did not serve a beneficiary, even where such beneficiary is not remotely interested in the outcome of the case (for instance, where the beneficiary has passed away or received service already).
  • To provide that requests for hearings must identify each beneficiary and dates of service at issue.
  • To provide that on extrapolation appeals, providers must specifically state grounds for challenging the extrapolation in the request for hearing (and not merely present such specific grounds at the hearing).
  • To require that in response to a notice of hearing from an ALJ, providers must identify each witness to be called.
  • To relieve ALJs of duty to prepare the record, transferring the task to the OMHA (the Office).

These regulatory changes could marginally improve the situation, but will by no means resolve the current backlog.  No changes are proposed to the redetermination or reconsideration processes.

CMS indicates that it will seek funding to expand the ALJ panel (long overdue) and seek statutory changes.  Statutory changes could further restrict the right to hearings, for instance by increasing amount in controversy requirements or giving "adjudication attorneys" broader duties, so must be watched carefully.  A cornerstone of due process is the right to a hearing before an independent judge; in the administrative law context, only the ALJ can be considered independent.

If CMS wishes to decrease the ALJ backlog it could do so by:

  • Requiring audit contractors to preview results with providers and ensure that such contractors afford providers a full opportunity to submit additional documentation where the auditor, on initial review, believes documents to be missing. Although statutes require these actions, audit contractors regularly ignore these requirements, leading to appeals that could have been avoided.
  • Precluding audit contractors from issuing flimsy technical denials that will not support recovery of payment. ALJs regularly and properly reverse technical denials of payment.  CMS should acknowledge this consistent message and voluntarily vacate such denials and instruct its audit contractors to stop issuing such denials.
  • Making clear in the hospice context that substantial deference is due to hospices and their medical staff and doctors that must make real time decisions on terminal illness. CMS acknowledges this is not an exact science (for instance, refusing to promulgate NCDs).  Courts have repeatedly told CMS that substantial deference is due to these real times decisions.  Yet, in the audit context, CMS' contractors show virtually no deference.
  • Establishing a meaningful settlement process. CMS could compromise claims, waive accrued interest, and offer favorable repayment terms.  In civil litigation between private parties, 95% of cases settle.  In administrative appeals, virtually nothing settles.  The civil system would also breakdown if there were no efforts toward compromise and settlement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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