pharma health iStock_000049247842_DoubleOn January 4, 2017, the U.S. District Court for the District of Columbia rejected a request by the Secretary of HHS asking the court to reconsider its decision that requires HHS to eliminate the backlog of Medicare claims appeals pending at the Office of Medicare Hearings and Appeals (OMHA) by 2021. While “not unsympathetic to [the Secretary’s] plight,” the court nevertheless affirmed the order that Secretary Burwell begin a phased reduction of the agency’s appeals backlog at the Administrative Law Judge level. As of July 2016, claims submitted to OMHA for review experience an average wait for adjudication of more than two and a half years.

On December 5, 2016, the court granted summary judgment in American Hospital Association v. Burwell and ordered the Secretary to reduce the Medicare-appeals backlog annually by specific numeric targets through 2020. Noting that Congress had not taken any action on the AFIRM Act since it was introduced in the Senate on December 8, 2015, the court concluded that Congress was “unlikely to play the role of the cavalry here, riding to the rescue of the Secretary’s besieged program.” As a result, the court adopted the plaintiffs’ proposal for a structured reduction in the backlog: 30 percent by the end of 2017; 60 percent by December 31, 2018; 90 percent by December 31, 2019; and 100 percent the following year.

In doing so, the court avoided the Fourth Circuit’s reasoning in Cumberland County Hospital System, Inc. v. Burwell that granting relief to a single provider would simply put the provider “at the head of the queue, where doing so would simply move all others back one space.” 816 F.3d 48, 51 (4th Cir. 2016). The court also rejected the Secretary’s argument that such systemic relief would force HHS to make payment on Medicare claims regardless of their merit, noting that “[s]atisfying the statutory demands for both accuracy and timeliness will no doubt prove challenging, but such is the task at hand.”

Declining to implement the plaintiffs’ proposal that the court enter default judgment on January 1, 2021 for claims pending at OMHA for more than a year, the court agreed with HHS that this action could “create perverse incentives for providers and suppliers to appeal non-meritorious claims,” and determined that if the deadlines were not met, the plaintiffs could instead move for default judgment against the government in the instant court action.

Under the court’s December order, the Secretary must file status reports updating the court on HHS’s progress every 90 days. The first report is due March 6, 2017.