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The Senate Finance Committee recently passed the Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015 (S. 2368).  The Act, intended to improve the Medicare audit and appeals process, would not, in fact, improve the appeals process for beneficiaries and leaves key beneficiary concerns unaddressed.

The Bill does not address the overwhelming denial rates at the first two levels of appeal or eliminate one of these burdensome, and largely useless, steps. Further, people with cases valued at less than $1,500 would no longer have access to an Administrative Law Judge hearing.  The ALJ Hearing level is currently the third and fairest level of appeal.  It is the first chance for most beneficiaries to actually make a case for, and obtain, coverage. Instead, these cases would be heard by a new class of adjudicators known as Medicare Magistrates.  How these Magistrates will perform is unknown.  While the law includes a provision confirming the decisional independence of Magistrates and ALJs, it also includes many more provisions that encourage adherence to Medicare policies, and those policies have historically been more restrictive than the law and regulations.

Ironically, the real reason for the tremendous backlog of cases pending ALJ hearings – CMS’ hospital “outpatient” Observation Status – remains unresolved. While the law would adjust the auditing process, and study the auditor payment systems, the overwhelming use of Observation Status would continue.

Unfortunately, it seems most of the incentives for AFIRM, and many of its provisions, are intended to provide a manageable provider audit system, not to improve the appeals process for older and disabled Medicare beneficiaries.

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