Senate Finance Committee Approves Medicare Audit and Appeal Reform Bill

As we’ve previously reported, on April 28, 2015 the Senate Finance Committee held a hearing about the tremendous backlog of cases piled up at the Office of Medicare Hearings and Appeals (OMHA), the office that oversees Administrative Law Judges (ALJs), the third level of appeal in Medicare’s administrative appeals system.[1]  The Finance Committee hearing also touched on the primary cause of this backlog, claims audits conducted by Medicare contractors known as Recovery Auditors. 

In an effort to address both the audits that have led to the dramatic increase in appeals filed the resulting backlog of cases, the Committee marked up a bipartisan bill entitled the Audit & Appeal Fairness, Integrity, and Reforms in Medicare Act of 2015 (AFIRM) on June 3, 2015.[2]   The bill was approved by voice vote, and now heads to the full Senate.

In developing the AFIRM Act, the Committee considered a number of proposals, including those offered in the President’s FY 2016 budget that would significantly alter access to ALJ hearings.[3]  In response to the President’s budget, the Center for Medicare Advocacy raised concerns about four specific proposals that were also offered by OMHA at the April Senate Finance Committee hearing.[4]  The AFIRM Act retains two of these proposals – a significant increase in the Amount in Controversy (AIC) required to obtain a hearing before an ALJ, and the creation of a new cadre of Medicare Magistrates to review claims with AICs between the current AIC and the proposed higher AIC.  The Committee significantly improved the OMHA proposals, however, by dropping a refundable filing fee provision, and exempting Medicare beneficiaries from a provision that would remand appeals to a lower level when new evidence is introduced. 

In crafting various changes to both the Medicare audit and appeals systems, the Act, including through amendments offered by Senator Sherrod Brown, reiterates that efforts to streamline Medicare policies, claims reviews and audits shall not be construed to undermine the crucial independence of Medicare Magistrates, ALJs and the Departmental Appeals Board (the fourth level of review). 

While there are provisions in the AFIRM Act that continue to concern the Center, we applaud the Committee’s efforts to mitigate some of the potentially negative impacts on Medicare beneficiaries.  As noted by Senator Brown and others at the June 3^rd mark-up, though, more can be done to fix the “underlying issues that continue to plague the audit and appeals system in Medicare” including addressing the primary cause of the audit-based appeals backlog, the practice of the Recovery Auditors.   

We share Senator Brown’s hope that the Committee will take up his bill, the Improving Access to Medicare Coverage Act (S. 843), which addresses the primary focus of RAs, hospital observation status.[5]  We also urge the Committee to address the quality of review, or the lack thereof, at the lower levels of appeal that lead to staggering rates of denials for beneficiaries.[6]  

D. Lipschutz – June, 2015