Healthcare News & Insights

Court decision could speed RAC appeals process

The appeals process for Medicare payments is a big headache for hospitals right now. But a recent court ruling could make life easier if your facility is waiting for a resolution for any claim denials. 

ThinkstockPhotos-178628817Currently, Medicare’s Recovery Audit Contractor (RAC) program is dealing with a significant backlog of appeals.

In fact, according to an article from Modern Healthcare, there are currently 800,000 appeals waiting in its system. And RACs only have the resources to deal with about 10% of them.

Legal battle

Because of the slow response to appeals, the American Hospital Association (AHA) teamed with several hospitals to bring a lawsuit alleging that the claims process unfairly keeps hospitals from getting the reimbursement they deserve for rendering patient services.

Initially, the AHA and the hospitals lost their case. A lower court ruled that the delay in resolving appeals wasn’t bad enough to warrant a court order. It said Congress should work with the Department of Health and Human Services (HHS) to come up with a solution.

But on appeal, this decision was reversed. The rationale was, in the time between the original decision and the appeal, the RAC appeal backlog didn’t seem to be getting better. In fact, given how robust RAC audits have become, the appeals court said things are likely worse.

So it said the district court must take another look at the case. And if it finds the situation hasn’t improved, or if Congress and HHS haven’t taken “meaningful steps” to find a viable solution, the court may order the feds to give hospitals some form of financial relief, either through faster appeal resolution or some other approach.

According to an AHA news release, billions of dollars in revenue are currently tied up in the RAC appeals process, so the appeals court’s decision is a step in the right direction for hospitals to recoup some of that money – perhaps through a financial settlement with the feds.

Factors to consider

A settlement from HHS wouldn’t be unprecedented, either.

Per the Modern Healthcare article, in 2014, HHS offered hospitals that were in the middle of the appeals process a compromise: It would pay them 68% of the value of those claims. In all, this move resolved 300,000 claims – distributing over $1.3 billion to 1,900 hospitals.

There’s one development that could prevent a court order from mandating this arrangement, though: Pending legislation in Congress could revamp the Medicare appeals process altogether. The Audit and Appeals Fairness, Integrity, and Reforms in Medicare Act of 2015 has several provisions that could reduce the backlog if it’s passed.

The court may decide the existence of this bill is enough to prove that Congress and HHS are making steps to resolve the appeals backlog. And all the attention the RAC appeal process is getting may inspire Congress to pass this legislation soon – a move that could ease hospitals’ financial woes.

We’ll keep you posted.

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