Gov't also takes hit under 'monster backlog' of appeals

WASHINGTON - The years-long delay in the appeals process at the administrative law judge level is costly for both providers and CMS, says a new report.

More than half of claims are overturned on appeal and when they are, CMS must pay interest back to providers, according to the American Orthotic & Prosthetic Association, which commissioned the report.

“This is a crisis that should never have happened,” said Charles Dankmeyer, president of AOPA. “We need to fix this in a way that saves the government money on needless interest payments and allows small providers to avoid being crushed by the system.”

The report by Dobson DaVanzo and Associates found that CMS could save an estimated $7.5 million in interest payments for O&P services and an estimated $12.4 million in interest payments for all Part B services over 10 years if the agency allowed providers to keep their money until the ALJ rules on their appeal.

“For every $10 that Medicare collects, they are paying 20% to 30% in interest, which makes no sense at all,” said Alan Dobson, president of Dobson DaVanzo and study co-author. “As the backlog increases—15,000 claims are entered into the queue every week—so do CMS's interest payments.”

O&P providers are particularly vulnerable to overzealous RAC auditors because of the high-dollar value of many of their claims. Case in point: Since 2012, Nelson Prosthetics and Orthotics Laboratory has had four audits in appeal with a total value of $44,000, including a single service of $23,000 for a prosthetic leg.

“That may not sound like a lot of money in Washington but it's a heavy burden,” said Mary Palmer, business manager for the Buffalo, N.Y-based provider, which has had to lay off two employees. “We'd like to see this broken system fixed before it forces hundreds, if not thousands, of small providers to shut their doors.”

More than 100 O&P providers have been forced to shut down due to the delays, says AOPA.

The appeals backlog first came to light in Dec. 2012, when Chief ALJ Nancy Griswold released a memo outlining the issue and suspending the assignment of hearings for appeals. Since then, the backlog has only increased and providers must wait 28 to 30 months before they are even assigned a hearing.

“There's no end in sight to this monster backlog,” said Dankmeyer. “It's a worsening situation for all small healthcare providers that are unable to provide services and survive the cash flow nightmare in this hostile environment where they wait years for their day in court.”