Quarterly Newsletter - SUMMER EDITION 2016 - #20
Medical Appeals Backlog Spiraling Out–of-Control Despite Uncle Sam’s efforts, the number of Medicare appeals from health care providers and patients challenging denied Medicare claims continues to rapidly spiral out-of-control. The jaw-dropping increase in the backlog of cases is setting off alarms in the health care industry. According to a recent Government Accountability Office (“GAO”) study, the delays are pushing many Medicare decisions well beyond the timeframes set by law. The study, according to a Kaiser Health News article, made it perfectly clear that the staggering backlog “shows no signs of abating.” The study called for the Department of Health and Human Services (“HHS”) to improve its oversight of the appeals process so that it is more streamlined to allow prior decisions to be taken into account, while repetitive claims are handled more efficiently. So just how bad is it? In 2009, the average Medicare appeal wait time for a provider was 94.9 days. That number grew to 220.7 days in 2013. Then the wait time exploded to 661.1 days in 2015. The current wait time for the second quarter of 2016 set a new all-time high of 860.6 days (or 2.5 years). In other words, a newborn baby is walking and speaking in full sentences by the time a claim is now resolved. The GAO investigators “cited significant increases in cases filed at each of four stages of appeals.” The investigators found a 62 percent increase in the first level from 2010 through 2014. For the same time period, appeals filed by providers and patients at the third stage — which
are heard by an administrative law judge (“ALJ”) had a nearly 10-fold increase. HHS officials have acknowledged the problem. Although a judge is required to issue a decision within 90 days, the average time from hearing a request to making a decision is slightly more than two years, according to the report. With the Medicare population continuing to explode, there is no sign of the backlog improving any time soon. The GAO report also indicated that HHS attributed the rapid rise in appeals to a greater interest by hospitals and physicians to file appeals, coupled with Uncle Sam’s stepped-up efforts to check for inappropriate payments, including a controversial program known as recovery audits (“RAC”), in which contractors inspect hospital payment records to find any errors. The recipe for disaster was almost inevitable. U.S. Senators Orrin Hatch, Ron Wyden, and Richard Burr requested the GAO report. The bipartisan effort noted that the report’s findings underscore the need for Congress to fix the problem. The Senators have offered a bill, approved by the Senate Finance Committee, that the politicians say would address many deficiencies by improving HHS oversight and establishing a voluntary dispute resolution process, among other solutions. “The voices of too many patients, providers and states are going unheard because the gears of the Medicare audit and appeals system have ground to a halt,” said Senator Ron Wyden to Kaiser Health News.
In response to the findings, HHS issued an 11-page response describing how federal government officials have tried to manage the situation. One well-known solution included an intervention that let hospitals settle their disputed Medicare claims for 68 percent of the value in 2014. HHS officials also offered ideas for streamlining the appeals process. These solutions include: investing in new resources at each level of appeal; administrative actions to encourage resolution of cases earlier in the dispute process; supporting legislation by providing additional funding; and expanding the agency’s powers. For example, the agency is proposing that Medicare claims involving disputes of less than $1,500 should be reviewed by its senior government attorneys rather than holding a hearing before an Administrative Law Judge (“ALJ”) . The appeals office is already working to help curb the backlog by converting to an electronic case management system. Beginning in August of 2016, Medicare appeals can be filed by computer. One can only hope Uncle Sam selects a software program that can handle the volume of appeals and be efficient. For hospitals and physicians, the exasperating appeals delay has tied up billions of dollars in disputed claims, according to the American Hospital Association (“AHA”). Not surprisingly, the AHA is suing dear old Uncle Sam to speed up the decisions. The hospitals have argued that Medicare’s RACs have unnecessarily rejected payments with statistics showing that hospitals frequently win the RAC appeals. “We are skeptical that anything short of fundamental reform that addresses the RACs’ contingency fee structure, which encourages them to inappropriately deny claims, will have a lasting impact on the backlog,” said Melissa Jackson, the AHA’s senior associate policy director, to Kaiser Health News. At least Uncle Sam admits there are serious issues. The question still remains if the federal government can solve the crush before the economic damage to U.S. hospitals forces more to close.
Why Hospitals Should Ensure Smart Glove-Changing Practices are Being Followed By pH Health Care Professionals
resistant ones can.
Health care providers wear gloves, gowns and protective gear to prevent infections, for both themselves and their patients. The last thing they want to think about is how their protective gear may actually be double-agenting as an infection spreader. But unfortunately, it is something you need to be aware of. Lapses in glove changing may be putting patients at risk.
What’s the solution? •
Why? Because bacteria can easily be transferred from health care providers’ examination gloves onto hospital surfaces — especially the Acinetobacter baumannii bacillusbug, a common cause of infections in hospitals, according to a new study.
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How are infections spread this way? Even though health care workers wear protective gear to prevent the spread of harmful infections, when the contaminated gloves aren’t removed or changed, they may be agents in spreading harmful bacteria and viruses, rather than preventing them. The bacteria seem to gravitate toward gloves and polypropylene plastics in particular, explained study author Kazue Fujita, M.D., from Nippon Medical School in Japan, Medscape Medical News reported. What are polypropylene plastics? Examples of polypropylene plastic surfaces in hospitals include disposable plastic aprons, basins and bowls, gowns, shoe covers and sutures used during surgery; countertops; syringes; and beakers and test tubes. While many bugs don’t survive on hospital surfaces long, the more durable and
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Health care workers should follow best practices for changing gloves. “Improving glove use compliance will decrease the risk of healthcareassociated infections. It is also important to establish a basis for a risk assessment and a management approach to each [type of] bacteria,” Dr. Fujita said said at a briefing at the American Society for Microbiology (ASM) Microbe 2016. Hospitals should ensure health care workers are educated on glove-changing technique. Doctors and health care staff need to follow best practices for changing gloves, but that’s not the end of the story. While changing gloves, health care professionals may be contaminated on their skin and clothes. Following proper techniques for removal of clothes and protective clothing may help reduce the instances of contamination. Here are a few examples: Workers should ensure there is no exposed skin and that their wrists are completely covered by the gown; they should not pull the gown over their head; and they should put the gown on before the glove. In a study published last year, researchers found that educating health care workers on how to put on and take off protective equipment reduced skin and clothing contamination significantly – from 73 percent to 5 percent. Patients should be proactive and be informed. Patients should make it a priority to be informed about these issues so they can advocate for safer care, and feel more confident asking their health care providers questions.
REFUND?! What a Provider Should Do When Health Plans Want Refunds on Paid Claims By Chuck Acquisto Breaking Away is one of my all-time favorite movies. In the 1979 film, there is an allAmerican scene with four young Indiana University guys pushing a red Corvette back to the used car dealership lot. As the ‘Vette is being pushed, the used car dealership owner, Ray Stoller, quickly confronts the preppy-attired guys. The upset student who purchased the lemon car pleads to Ray, “All I want is a refund.” Ray, played by the great character actor Paul Dooley, replies with the classic response, “Refund?! Refund?! Refund?!” For emphasis, the scene quickly cuts to Ray in his bed screaming the same thing. “Refund?! Refund?!” At his bedside, a house-calling physician calmly prepares a sedative shot for Ray. Often, providers are struck with the same reaction as Ray when a payor pushes a previously paid claim back to the provider’s business office via a letter asking for a refund. But what should a provider do when this happens? Recently, our law firm received an award for our provider client in a hospital v. major health plan underpayment case. Despite a positive result, there was a secondary issue involving refund requests and interest owed by the hospital made by the health plan. This issue is becoming more common in arbitration. This most recent case involved the issue of interest on the refund requests the health plan had allegedly sent to the hospital. The arbitrator ruled that the health plan is owed interest if refund requests are not contested regardless of whether or not there is an offset provision in the health plan’s contract with the provider. The health plan argued it cannot offset selffunded claims with other self-funded claims because there are issues of comingling funds.
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The key here is that the hospital must submit refund contest letters. It is imperative to clearly say “no refund” to the health plan. Documentation of a dispute is a big step in negating the possibility of having to pay interest down the road. Healthcare experts point out that overpayments to providers may occur for a variety of reasons. A health plan may simply make a calculating mistake and pay a provider more than the contracted amount for a service. Or a provider may be paid for a service that was not covered under the patient’s health insurance policy.
This quarter’s Spotlight is on attorney Barbara V. Lam.
In many states, an insurer may pursue most overpayments for no more than a couple of years. However, self-insured companies, which are those that pay their own employees’ health claims directly rather than buy insurance for that purpose, are not bound by such state laws.
My area of practice is business litigation with a concentration in healthcare contractual issues. I am involved in most recent matters relating to SAC’s Northern California clients.
A provider must set up a mass response system for any health plan refund request. A key step would be for the provider to create a spreadsheet of all refund letters from the health plan every 25 days. Then, once a month, the provider should send one response letter, incorporating the spreadsheet of refund requests. This provider action will preserve the right to contest the overpayment. What is perfectly clear is the financial ramifications of hospitals not responding to health plan refund requests. Whether the alleged overpayment by the health plan is valid or not does not matter when it comes to the clock starting on the interest owed to the health plan. In the recent arbitration, the arbitrator ruled that the contract language addressed the provider’s responsibilities. First, if the health plan overpays a claim, the hospital has 30 working days to refund the overpayment. If the provider contests the overpayment request, it must do so within 30 working days of receiving notice. In this case, the provider argued that the contract mandated that the health plan offset any alleged overpayments. The arbitrator disagreed and said the health plan has the option to either offset or submit the claim to arbitration. The arbitrator then ruled that the interest on these uncontested refund requests would commence 60 working days after the provider receives notice from the health plan. An entirely separate issue involved the definition of “working days,” which ultimately was ruled to be the equivalent of “business
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Barbara V. Lam
Spotlight Q&A What is your area of expertise within SAC?
What one piece of sage advice can you offer to our clients that can help them in the future? Compromising on certain contractual benefits in the facility services agreement in order to obtain higher rates does not equate to higher revenue recovery in the long run. A number of facility services agreements are written to tilt more in the health plan’s favor. For example, there are a number of recent contracts that released the plan of complete financial responsibility when the plan identified the claim as the responsibility of another “payor” (i.e., affiliates, employer groups, capitated medical groups, etc.). Some of the older contracts terms had language where the plan remained liable by requiring it to compel the “payor” to compensate the provider. However, in some of the more recent contracts, those obligatory languages were watered down to only requiring the plan to make “reasonable efforts” to assist the provider to obtain payment. Ultimately it would be up to the provider to pursue the other payor in a civil litigation separate from the facility services contract. Another example is when a provider agreed to a shorter statute of limitations (SOL) period to bring a legal action than the four (4) years allowed under California law. We see facility services agreements with SOL of 2 years, 1 year or 6 months from the plan’s initial denial or payment. Those shortened SOL periods severely impaired the provider’s revenue recovery process. That is because before a legal action can be initiated, the provider must complete the contractual mandatory appeal process, which can be prolonged
for months. Accordingly, when negotiating a new contract, the provider should recognize that in addition to the contract rates, other contractual terms will also have significant impacts on higher revenue recovery.
Can you talk about a recent success story of yours? What was the challenge and how were you able to overcome it? I finally received a compliment from one of my in-laws on a dish I made. Every time they visit, I would spend many hours preparing all sorts of dishes but no seconds were ever requested. Last month, after a very long day from work, I threw a handful of shrimps on a baking sheet with a glob of butter in the oven. Well that simple dish was such a success that they requested for it the following 3 consecutive weeks. My take away from that is to keep things simple.
Do you have any hobbies or interests outside of work? My time outside the office is spent with my family.
Do you have any charitable causes that interest you and events you have participated in recently? I volunteered as a kindergarten monthly reader at my kids’ school.
Do you have family and/or pets you’d like to tell us about? My son is 8 years old and my daughter is 6.
Do you have any guilty pleasure television shows, movies or other activities to tell us about? When I have some alone time, I would treat myself to an Agatha Christie’s Hercule Poirot story.
What are your favorite Colors? Other favorites?
foods?
I enjoy food of all sorts, especially those that are hot & spicy.
REFUND?!- Cont’d days.” But that is a blog for another day. To mitigate additional financial damage, it is imperative for a provider to always challenge in writing any and all refund requests. So instead of just saying “Refund?!” like Ray Stoller, put it clearly in writing in a timely manner – NO REFUND – and make sure the health plan receives it.
UPCOMING EVENTS September 15, 2016 - HFMA Northern California Fall Conference, Concord, CA Charles Acquisto, Kate Broderick and Barbara Lam will be speaking at this years conference on the Art of Arbitration. Tickets available at www.hfma-nca.org. October 5-7, 2016 - AAHAM Annual National Institute, Las Vegas, NV SAC’s Partner Geroge Colman and Managing Litigation Attorney and Partner, Richard Lovich will both be on a panel at this years event. October 10, 2016 - 5th Annual Vincent Acquisto Memorial Golf Tournament, Blackhawk Country Club, Danville, CA Join us for a day of fun and networking, as we raise funds for The Bili Project Foundation in memory of Vincent Acquisto.
All articles are written by the SAC Litigation team. The SAC Litigation team includes attorneys, nurses and physicians with extensive experience in all areas of law related to healthcare matters. Additionally, SAC partners hold legal advisory positions with healthcare organizations and sit on the boards of numerous healthcare-related organizations and monitor all out-going SAC client marketing materials and related content.
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Quarterly Newsletter SUMMER Edition 2016 Enclosed
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