Bradley Olsen-Ecker was a Medicare beneficiary who required home care after a hospitalization. He received care from a Medicare-certified home health agency, including skilled nursing visits and physical therapy. After a few months, Medicare informed him that it would no longer cover home care because unskilled caregivers could meet his needs. Mr. Olsen-Ecker appealed the decision. Medicare denied the appeals at three levels of review. Finally, Mr. Olsen-Ecker's physical therapist submitted a "demand bill" to Medicare, and Medicare reimbursed the physical therapist for its services. Mr. Olsen-Ecker passed away during the appeal process.
The current Medicare appeals process involves four separate levels of review. First, Medicare beneficiaries who wish to appeal a decision receive a paper review redetermination by the original contractor who made the determination. A "paper review" is a review of the documents alone, without an in-person hearing. If that review fails, the beneficiary requests reconsideration by a separate entity that contracts with HHS (known as the Qualified Independent Contractor, or QIC). If a beneficiary does not obtain relief from the QIC‘s review, he may request a hearing before an Administrative Law Judge (ALJ). Finally, if the claim is denied by the ALJ, a beneficiary may receive a paper review by the Medicare Appeals Council. There is also an expedited process available, of which Olsen-Ecker took advantage of in his appeals process.
The current review process went into effect in 2010. Previously, a Medicare beneficiary who wanted to appeal an initial adverse determination first obtained a paper review by the original contractor. If that appeal was denied, then the beneficiary could either receive a hearing in front of an ALJ or a "carrier hearing" involving a complete review of the record before a hearing officer, depending on the type of Medicare benefits the beneficiary received. Either way, the second level of review under the old review system involved a hearing and not just another paper review. Then, if the beneficiary still wanted to appeal, he either received a paper review by the Medicare Appeals Council, or an ALJ hearing if he had not had one before, and then a paper review by the Medicare Appeals Council.
Changes in the review process have resulted in a drastic reduction in the number of appeals that result in a favorable coverage determination for beneficiaries at the first two levels of review, i.e., the redetermination by paper review by the original contractor, and the reconsideration by paper review by the QIC. These two levels of reconsideration have success rates for claimants as low as .61% each year, or as high as 2.2%. The total number of redetermination requests has also increased nearly ten-fold from 13,385 in 2008 to 112,844 in 2012. The change has also placed a great burden on the ALJs, increasing their workload by 184%. In the meantime, the reversal rate by ALJs -resulting in favorable coverage decisions- is about 70% across all of Medicare, and 62% on home health care and hospice decisions, according to HHS. Simply, despite rhetoric of HHS to the contrary, it appears that HHS is agressively hostile to both home health care, and hospice care.
Mr. Olsen-Ecker's estate filed a class action lawsuit against the Department of Health and Human Services (HHS) for violating Mr. Olsen-Ecker's constitutional due process rights, alleging that the agency has a secret policy to deny home health services claims at the first two levels of review. According to the estate, HHS denies up to 99 percent of claims at the first two levels of review and that at the administrative hearing level of review, administrative law judges (ALJs) reverse the lower levels of review 62 percent of the time. HHS filed a motion to dismiss for failure to state a claim.
The U.S. District Court, District of Connecticut, denied the motion to dismiss. The court certified the class and ruled that there is plausible evidence that policies exist that deprive some Medicare beneficiaries of meaningful review. According to the court, the high number of reversals at the ALJ level of review suggests that "whatever review occurred at the first two levels of review could have plausibly contained defects, because absent some aberration, the first two levels of review should have granted coverage to a far greater proportion of beneficiaries." Moreover, the Court cited the "somewhat unnerving alleged facts...that his first two levels of review found that tasks like assessing the effectiveness of medication and performing body system assessments could be performed by [Mr. Olsen-Ecker] or by unskilled care," suggesting to the Court that "it is not implausible to believe that there may have been some policy put in place that, when administered by the care providers and QICs, resulted in improper denials. Sherman v. Burwell at p. 13.
Attorneys from the Center for Medicare Advocacy represented the estate. “We hope,” said Judith Stein, the Center’s Executive Director, “that this case will eventually result in Medicare beneficiaries’ receiving fair and accurate appeal decisions, without having to present their case at a hearing.”
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