Medicare providers with pending cases at the administrative law judge (“ALJ”) level received positive news last week as a federal judge for the United States District Court for the District of Columbia (the “Court”) granted summary judgment in favor of the American Hospital Association (“AHA”) in its case against the Secretary of the Department of Health and Human Services (“HHS”).1

Since 2014, AHA has been litigating with HHS regarding HHS’ failure to meet statutorily-imposed deadlines for Medicare administrative appeals.2 On remand from the D.C. Circuit3 with instructions for further proceedings, the Court determined that there were equitable grounds to issue a writ of mandamus. The Court reasoned that even with certain good faith efforts made by HHS to reduce the backlog (such as a Proposed Rule4 issued this past summer), the appeals backlog was “still unacceptably high.”5 In its decision, the Court found that HHS did not “point to any categorically new administrative actions” and continues “to promise the elimination of the backlog only ‘with legislative action’ — a significant caveat.”6

Consequently, after considering various proposals from AHA with respect to reducing the backlog, the Court ordered HHS to achieve the following reduction thresholds, as proposed by AHA, from the current backlog of cases pending at the ALJ level:

  • 30% by December 31, 2017;
  • 60% by December 31, 2018;
  • 90% by December 31, 2019; and
  • 100% by December 31, 2020

Additionally, the Court ordered HHS to file status reports every 90 days. The Court noted that a goal-based timeline was the best solution as it did not seek to intrude on how the agency operates.7

According to HHS, the Office of Medicare Hearings and Appeals (“OMHA”) had more than 750,000 pending appeals as of April 30, 2016, while it has only an adjudication capacity of 77,000 appeals per year.8 Given this immense backlog, it remains to be seen how HHS will implement the Court’s mandate in adjudicating the vast number of appeals remaining. HHS has not publicly commented on the Court’s order as of yet, however. As we monitor this development, we speculate that in order for HHS to meet the Court-ordered thresholds it may (1) expand its ongoing hospital appeals settlement program9 to other Medicare providers, such as skilled nursing facilities, (2) finalize certain procedural changes raised in its Proposed Rule – including the use of “attorney adjudicators” and “precedential decisions” (explained further, here), and of course (3) seek additional legislative resources from Congress.

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[1] American Hospital Association et al. v. Burwell, case number 1:14-cv-00851, in the U.S. District Court for the District of Columbia.

[2] There is a 90-day limit for a decision at the ALJ level (the third level of the administrative appeal process). See 42 C.F.R. § 405.1046.

[3] Am. Hosp. Ass’n v. Burwell (AHA II), 812 F.3d 183, 192 (D.C. Cir. 2016).

[4] 81 Fed. Reg. 43790 (July 5, 2016).

[5] American Hospital Association et al. v. Burwell, case number 1:14-cv-00851, in the U.S. District Court for the District of Columbia.

[6] Id.

[7] Id.

[8] 81 Fed. Reg. 43790 (July 5, 2016).

[9] See Hospital Appeals Settlement Process, December 2016, available athttps://www.cms.gov/Medicare/Appeals-and-Grievances/OrgMedFFSAppeals/Hospital-Appeals-Settlement-Process-2016.html