In an effort to prevent healthcare providers from experiencing significant financial losses while appealing disputed claims for repayment to Medicare, The American Orthotic & Prosthetic Association (AOPA) is proposing a change to Medicare’s Recovery Audit Contractor (RAC) program. The RACs claim that billing errors by medical equipment, prosthetic, orthotic and supplies are responsible for $5.1 billion in Medicare costs each year. When RACs identify overpayments, they may require that the disputed amount be repaid while the provider appeals that decision. The AOPA has recommended that providers should not have to refund overpayments identified by a RAC until after an administrative law judge has reached a decision on the merits of the healthcare provider’s appeal.
Allen Dobson, president of Dobson Devanzo & Associates, and co-author of a study about appeals of RAC repayment demands, has reported that Medicare’s appeals system, at the administrative law judge level, is an unproductive system that does not function efficiently.
Providers can face significant financial losses due to the backlog of appeals. According to Charles Dankmeyer, president of the AOPA, over 100 orthotic and prosthetic providers have closed their businesses due to financial pressures created by delays in the Medicare appeals process. In addition, with CMS receiving 15,000 new appeals each week, it is estimated that the backlog of reimbursements could skyrocket to up to 1.5 million. Typically, other types of Medicare appeals are resolved within 90 days, whereas appeals for orthotic and prosthetic practices take an average three years to resolve.
In 2014, the American Hospital Association sued the Department of Health and Human Services to correct this problem, claiming that the extreme backlog of appeals resulted in hospitals waiting up to five years for resolution. However, the AHA’s suit was dismissed by a judge who said the cost and inconvenience to the Hospitals did not warrant the court’s involvement in changing the Department’s administrative process.
Dankmeyer also said that the proposed change could save Medicare money. If the administrative law judge rules in favor of the provider, the CMS must return the payment with interest. According to Dobson DeVanzo & Associates’ report, in 2013, the Centers for Medicare and Medicaid Services (CMS) owed orthotic and prosthetic providers an estimated $85,661 in interest alone after losing appeals before an administrative law judge. This was almost one-third of the total amount the CMS kept from orthotic and prosthetic providers after that level of appeals.
Reactions to Provider Payment Report
Reactions to the proposed changes in the appeals procedures from CMS and the Council for Medicare Integrity – a RAC lobbying group – have been mixed. The CMS declined to comment since it claimed they did not receive the report, and that it would require legislation. The Council for Medicare Integrity criticized the report. Moreover, in a statement released by the RAC council, they questioned the AOPA’s report, claiming that it did not adequately address the steps durable medical equipment (DME)/home health hospice (HHH) providers are taking to prevent waste within their sector of the nation’s healthcare system.
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