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  • Washington Highlights

    Senate Finance Passes Medicare Audit and Appeals Reform Legislation

    Len Marquez, Senior Director, Government Relations

    The Senate Finance Committee June 3 passed by voice vote the Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015. The bill, sponsored by Committee Chair Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.), reforms the Medicare audit and appeals process to expedite the current appeals backlog and alleviate the considerable burden for both health care providers and government recovery audit contractors (RACs).

    The AFIRM Act would improve oversight of Medicare audit contractors, streamline methods to address the abundant number of appeals, and promote coordination between the Centers for Medicare and Medicaid Services (CMS) and audit contractors by ensuring both receive data related to appeal outcomes and review practices. Additionally, it would require CMS to develop incentives to ensure auditor accuracy and allows multiple pending claims with similar issues to be settled as a unit.

    The Chairman’s mark was revised to include two amendments supported by the AAMC. The first amendment, offered by Sen. Ben Cardin (D-Md.), provides for better RAC data collection and reporting to analyze RAC performance more accurately. An additional amendment from Sen. Debbie Stabenow (D-Mich.) directs the Secretary of Health and Human Services (HHS) to submit a report to Congress with recommendations to change the recovery audit payment structure from an incentive-based model to a non-incentive based approach without adding additional financial burdens on providers.

    In a letter commending the committee for addressing the challenges related to the Medicare audit and appeals process, AAMC Chief Public Policy Officer Atul Grover, M.D., Ph.D., said, “The legislation includes policies intended to streamline the audit and appeals process with the goal of making it less costly and less burdensome for providers and beneficiaries.” Dr. Grover added, “The legislation aims to increase oversight of Medicare audit contractor programs and address ongoing concerns about the significant Medicare appeals backlog. The AAMC appreciates the Committee’s focus on addressing these very serious issues.”

    Outlining the need for reform, Chairman Hatch opened the markup stating, “An unintended consequence of the increasing number of audits has been a dramatic increase in the number of Medicare appeals,” further citing that “in fiscal year 2015, it will take, on average, 604 days to process an appeal.”

    He continued, “Adding to this problem is the fact that large portions of the initial payment determinations are reversed on appeal. The Department of Health and Human Services Office of Inspector General reported that, of the 41,000 appeals made to Administrative Law Judges in FY 2012, over 60 percent were partially or fully favorable to the defendant. Such a high rate of reversals raises questions about the quality of initial determinations and whether providers and beneficiaries are facing undue burdens on the front end. In order to safeguard beneficiaries and ensure the solvency of the Medicare Trust Fund, we need to address these issues now.”

    Ranking Member Wyden agreed with Chairman Hatch adding, “Here’s the bottom line: this legislation will streamline the appeals and audits process so cases are considering a strong, bipartisan bill that will ease the tremendous backlog of Medicare appeals that have been frustrating seniors and providers.” He urged, “It’s important to remember that behind each case is a patient paying out-of-pocket while their appeal is being considered, or a provider who would rather focus on giving care than dealing with billing issues.”