The backlog of appeals pending with the Office of Medicare Hearings and Appeals has grown so large that it is beginning to affect Medicare beneficiaries directly, and that has gotten the attention of Rep. Jim McDermott (D-Wash.), a ranking member of the powerful Committee on Ways and Means Subcommittee on Health.

In an official letter, McDermott this week urged the U.S. Department of Health and Human Services to act quickly to ease the backlog, which currently includes nearly 357,000 appeals, and not wait for Congress to make legislative changes to the Recovery Auditor program or the Two Midnight policy that are behind much of the backlog in appeals.

The Recovery Auditor Contractors (RACs) are of course the four private companies that review Medicare claims for the government to find overpayments made to hospitals. The government does not pay the RACs a flat fee for this service. Instead the RACs collect a percentage of money returned as overpayments. If the RAC is proven wrong on appeal, it does not make any money. However, it also is not penalized. This, critics of the system say, creates an incentive for RACs to flag every claim they can as problematic and not worry that most are eventually overturned on appeal.

Aiding the RACs in this is a Centers for Medicare and Medicaid Services (CMS) decision made last December to bar hospitals that appeal a large number of RAC decisions from appealing any more decisions until the backlog is cleared. Hospital group representatives, including Daniel Landon, senior vice president of government relations for the Missouri Hospital Association, have charged that this is a serious violation of hospitals legal right to due process.

McDermott wants HHS to do four things as soon as possible to help ease the backlog process:

1. Tell CMS to either fix or not implement the Two Midnights Policy to identify patients that should not have been admitted for an inpatient stay. “I continue to have serious reservations about this policy and believe that it will only exacerbate the appeals backlog,” he wrote.
2. Make RACs more accountable by forcing them to pay the cost of the appeal or some other penalty if a claim denial finding is overturned.
3. Continue the “pause” in document requests associated with the Recovery Auditor program until there is a real plan to modify the program and address the current backlog.
4. Study the impact of a CMS’s request to permit its audit contractors to automatically deny related claims. McDermott wants HHS to make sure giving audit contractors this expanded power does not make the backlog in appeals worse.

In addition, he wants every effort to be made to make sure Medicare beneficiaries’ appeals are moved to the front of the line ahead of hospitals’ appeals.