American Hospital Association Sues HHS over Timely RAC Hearings

On May 22, 2014 The American Hospital Association (AHA) filed a lawsuit to compel the U.S Department of Health and Human Services (HHS) to ensure that its Administrative Law Judges (ALJs) meet statutory deadline for deciding Medicare claim appeals timely.  The AHA is joined in it suit by hospital plaintiff: Baxter Regional Medical Center, Mountain Home, Arkansas; Covent Health, Knoxville, Tennessee; and Rutland Regional Medical Center, Rutland Vermont. Recovery Audit Contractors (RACs) have created excessive and inappropriate denials which has caused the current backlog.  RACs, also known as "Bounty Hunters" by many in the health care industry, are charged with identifying improper Medicare and Medicaid fee-for-services payments.  They are compensated between 9 and 12.5 percent of the value of the payments which they deny.  The Office of Inspector General of HHS has previously stated that hospitals successfully overturn 72 percent of the denials when they appeal to the ALJs. Rampant and inappropriate denials by RACs have severely overloaded the ALJ system.  The Medicare statue directs that an ALJ must render a decision within 90 calendar days of the date of a proper request for hearing.  In December of 2013 HHS announced a complete moratorium of assigning provider appeals to individual ALJs because of the significant increase in the number of appeals moving through the system.  Hospitals and other providers and suppliers could have to wait three to five years to obtain hearings.  Currently the ALJs have a massive backlog of more than 460,000 pending appeals.  This backlog grows every day.  Billions of dollars are at stake for hospitals and the health care industry.  Failure to resolve this issue could create havoc in the hospital and healthcare industry. We support the AHA in its lawsuit and encourage our clients, subscribers and friends to also support this lawsuit.