Appeals court gives RAC lawsuit new life

Reverses lower court dismissal of case to clear appeals backlog
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A hospital-backed lawsuit intended to compel the federal government to review denials of Medicare claims has been given new life, AHA News Now reported

The American Hospital Association filed the suit in 2014 to try and clear a backlog of recovery audit contractor (RAC) appeals at the administrative law court level. There were at least 800,000 appeals at that level as of 2014. A lower federal court had dismissed the lawsuit due to lack of jurisdiction--essentially concluding because Congress was working on trying to procure more funding to review claims, it did not yet have the authority to act further. However, the case was recently reinstated by an appeals court.

The Office of Medicare Hearings and Appeals (OMHA) has the capacity to handle only about 72,000 appeals per year, even though it received more than five times that amount in 2013, according to the appellate court decision.

"If the vast majority of these delayed appeals were ultimately denied, they might amount to little more than an unfortunate nuisance. The record suggests, however, that many have merit," the court wrote. It noted that despite disputes between the AHA and the federal government regarding the success of such appeals, more than 40 percent are successful. And, it noted that several hospitals have claimed financial hardship by having claims money tied up in an appeals case.

Hospitals have long claimed that the RAC appeals process is overly burdensome, devoting on average more than five employees for such appeals, and taking more than 18 months to resolve an appeal. An appeal at the administrative law court level is supposed to be resolved within 90 days.

As a result, the court ruled, the lower court should decide whether the U.S. Department of Health and Human Services should held to the statutory time limits to resolve such cases.

"The appeals court affirms that hospitals simply cannot afford to have billions of dollars that are needed for patient care tied up indefinitely in the appeals process," said Melinda Hatton, the AHA's senior vice president and general counsel in a statement. "(It) confirms that the agency has a clear duty to comply with the congressionally mandated deadlines and that the statute gives hospitals a corresponding right to demand compliance. And, it refutes attempts by the agency to excuse compliance because of the Recovery Audit Contractor program, noting that congressional mandates trump discretionary decisions."

The AHA has long objected to RACs, claiming they act more like bounty hunters than impartial reviewers.

To learn more:
- read the AHA News Now article 
- check out the court decision (.pdf)

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AHA: Time to rein in Recovery Audit Contractors 
Hospitals push to clear RAC appeals backlog