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AHA v Burwell Questioned by DC Circuit Court

On August 11, 2017, a further development came in the Medicare appeals backlog saga, as the D.C. Circuit Court reached a decision on the Department of Health and Human Services’ (HHS’) appeal to the case American Hospital Association (AHA) v Burwell. The decision (“Appeal Decision”) handed down last week was decidedly pro-HHS, and is a setback for the AHA and healthcare providers with appeals pending at the administrative law judge (ALJ) level. The Appeal Decision has the potential to completely undo any progress created by the original December decision.

The Circuit Court came to a 2-1 decision, ordering the District Court to reconsider its mandate that HHS completely eliminate the Medicare appeal backlog by the end of 2020. The Circuit Court based its decision on the idea that the District Court decision had the potential of mandating that HHS violate its legal duty to only pay out legitimate Medicare claims. HHS is required to “protect” the Medicare trust fund, and in the process taxpayer dollars. However, HHS is also required by law to process ALJ appeals within 90 days, a duty which has gone unmet for years and was the basis of the District Court’s decision.

The AHA filed its initial suit in 2014, and after being initially dismissed, the AHA received a favorable decision in December 2016, a decision that is now in jeopardy of being undone. The December decision dictated certain yearly “targets” for HHS and the Center of Medicare and Medicaid Services (CMS) to meet regarding decreases to the number of backlogged appeals at the ALJ level. HHS objected to these benchmarks, and in fact to any mandated reduction, based on several arguments, including that the backlog cannot be eliminated without arbitrary settlements regardless of the actual merits of the claims.

This assertion of impossibility was one of the arguments which the Circuit Court cited, in addition to HHS’ arguments that a pre-determined time table for backlog reduction would create certain incentives for providers to file frivolous appeals on payment denials with the hopes of them being included in a settlement program.

Following the Appeal Decision, the AHA stated doubts that HHS could meet the burden of proof required to show that eliminating the backlog would be impossible. Despite this confidence, it is unclear how the lawsuit will ultimately be settled. If the set timeline for the processing of ALJ claims is disallowed, it is uncertain what resolution the parties would be able to reach. The timeline was considered to be the most significant part of the December decision, and eliminating it would run the risk of taking pressure off of HHS and CMS and allowing for minor settlements and programs to be deemed sufficient efforts to eliminate the backlog.

Whatever the ultimate resolution is, Medicare providers and others in the healthcare industry should follow any developments closely in order to determine what impact the AHA v Burwell rehearing will have on providers and beneficiaries, and the Medicare system in general.

Wachler & Associates will continue to monitor the AHA v Burwell case and other developments in connection with the Medicare appeal backlog.  If you or your entity have any questions pertaining to Medicare audit compliance and appeals, please contact an experienced healthcare attorney at (248) 544-0888, or via email at wapc@wachler.com. You may also subscribe to our health law blog by adding your email at the top right of this page.