The two-year backlog of Recovery Audit Contractor (RAC) appeals is unacceptable and the Centers for Medicare & Medicaid must come up with a long-term plan to clear it up, according to the American Hospital Association.

The AHA this week urged CMS to collaborate with the Office of Medicare Hearings and Appeals (OMHA) to fix the problems that led to the backlog of appeals of Recovery Audit Contractor (RAC) inappropriate denials.

“Without fundamental reform, the RAC program will continue to improperly harm Medicare beneficiaries and hospitals,” AHA Executive Vice President Rick Pollack said in an open letter to the 177 members of Congress who are co-sponsoring the Medicare Audit Improvement Act.

“Delays of at least two years in granting an ALJ [Administrative Law Judge] hearing for an appealed claim are not only unacceptable, they are a direct violation of Medicare statute that requires ALJs to issue a decision within 90 days of receiving the request for hearing,” Pollack wrote in a separate open letter to CMS Administrator Marilyn Tavenner. “Further, this is not a new problem; prior to OMHA’s suspension of appeals assignments, ALJs were not adhering to their statutory deadline.”

Until the CMS can develop a lasting solution, Pollack made several recommendations as to how it can temper the negative effects of RAC denials, including:

• Suspending RAC audits until all levels of the determination and appeals process clear their backlogs;
• Enforcing timeframes for appeals decisions by entering default judgments in favor of the provider if an appeal is not made by the deadline;
• Addressing the underlying structural issues with RACs that result in avoidable claim denials; and
• Lowering the additional documentation request (ADR) limit to minimize the number of claims that end up in the appeals system (similar to the ADR adjustment made last year).

The AHA endorses the bipartisan Medicare Audit Improvement Act, but RACs have sharply criticized it, saying it will “send Medicare crashing to the ground”.