oversight

Medicare Part A Reimbursements: Processing of Appeals Is Slow

Published by the Government Accountability Office on 1990-02-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      __-_ - -,_...“-,_.l---- -.-I_lJllit,wi   Statw ~-(ktrt~ral   Accorrnt,ing   Of’f’iw
                                   13rief’ing Report to the Chairman,
GAO                                Commit,t,ee on Appropriations,
                                   TJ.S. Senat,e



                                   MEDICARE PART A
                                   REIMBURSEMENTS
                                   Processing of
                                   Appeals Is Slow
              United States
              General Accounting Office
              Washington, DC. 20648

              Human Resources Division

              B-233662

              February 9,199O

              The Honorable Robert C. Byrd
              Chairman, Committee on Appropriations
              United States Senate

              Dear Mr. Chairman:

              This study of the adequacy of staffing levels at the Provider Reimburse-
              ment Review Board (PRRB) was prepared in response to a directive in
              Senate Report No. 100-399. That report, dated June 23,1988, concerns
              the fiscal year 1989 appropriations bill for the Department of Health
              and Human Services (HHS).

              A five-member, quasijudicial body, PRRB was established under the hos-
              pital insurance portion (Part A) of the Medicare program. PRRB conducts
              hearings and issues decisions on appeals by hospitals, skilled nursing
              facilities, and home health agencies on the amount of reimbursement
              Medicare allowed for beneficiaries’ care.

              As agreed with Committee staff, we addressed specific concerns about
              PRRB, including (1) whether the Health Care Financing Administration
              (IICFA), which administers Medicare, has impaired PRRB'S ability to pro-
              cess cases by limiting staff allocations and (2) its timeliness in process-
  /           ing cases.


              In conducting this study, we reviewed statutes, regulations, and legisla-
Methodology   tive history pertaining to the relationship of PRRB to HHS and HCFA. In
              addition to reviewing data on PRRB'S staffing levels, we met with HCFA
              officials to discuss the agency’s rationale for PRRB'S current staff alloca-
              tions We also interviewed PRRB board members, paralegal specialists,
              and legal technicians about staffing issues.

              To determine case disposition, we analyzed data from PRRB'S automated
              and manual data systems as of February 1989. The manual system
              included information on about 1,600 cases, most filed prior to the
              November 1987 implementation of the automated system. About 2,499
              cases are tracked in the automated system.




              Page 1                        GAO/HRD-99-23BR   Medicare   Part A Appeals Process Slow



                                                     8’
                                      /.
                       B-233662




                       In summary, we found that
Results in Brief
                   l  PRRB and HCFA are functioning in a manner consistent with their legisla-
                     tively prescribed roles for administering Part A of the Medicare pro-
                     gram. While PRRB’S ability to process cases has been impaired by HCFA’S
                      allocation of resources, we found no evidence that HCFA set the Board’s
                     staffing levels or denied PRRB’S requests for additional staff with the
                     intent of deliberately impairing its effectiveness. HCFA has attempted to
                     support the Board by providing contract funds for data processing
                     support.
                   . PRRB’S reported inventory, about 4,000 cases as of February 1989, was
                     not an accurate indicator of its workload. Because of staffing shortages,
                     PRRB had taken no action since November 1987 or earlier on most of the
                     cases it was monitoring in its manual data system. Of the approximately
                      1,080 cases filed in the first 5 months of fiscal year 1989, PRRB had not
                     tracked two-thirds because it had not entered them in the inventory. In
                     addition, some sampled cases in the manual system were inactive, dupli-
                     cated cases in the automated system, or could not be verified because
                     files were missing.
                   . PRRB’S processing of cases was slow. Of about 3,370 cases, most were
                     concentrated in the first 2 steps of PRRB’S 17-step appellate process. Fur-
                     ther, cases in PRRB’S automated data system’ took longer to move
                     through the early steps of the appellate process than the time allowed.
                     (See app. I for a description of the 17-step process and app. II for sup-
                     plemental information on the disposition of cases.) Although the number
                     of cases resolved through decisions and dismissals and removed from
                     inventory had increased steadily between fiscal years 1975 and 1987, it
                     decreased between fiscal years 1987 and 1988. During this time, PRRB’S
                     staff decreased from 27 to its ceiling level of 24, and two employees who
                     were processing cases were transferred to supervisory positions. Addi-
                     tionally, responsibility for making initial jurisdictional determinations
                     was shifted from paralegal specialists (GS14s) to legal technicians
                     (GS-6s). Finally, the actual workload of PRRB legal technicians greatly
                     exceeded that recommended by a HCFA management study.
                   . In its annual budget appropriation request, HHS combines PRRB’S and
                     HCFA’S staff and monetary needs but does not identify PRRB separately.


                       We found no evidence that HCFA, in setting the Board’s staffing levels
Conclusions            and denying PRRB’S requests for additional staff, deliberately intended to
            ”

                       ’L3ecause
                               of the difficulty in extracting information from the manual data system,we analyzed
                       processingtime only for 2,289casesin the automateddata system.



                       Page 2                               GAO/HRD-90-23BR     Medicare   Part A Appeals Process Slow
                       B-233662




                       impede its effectiveness. PRRB is but one of several components that
                       must compete for limited HCFA resources. Nevertheless, HCFA'S allocation
                       of resources did impair PRRB'S ability to process cases.

                       For PRRB and HCFA to determine accurately the appropriate number of
                       staff E'RRRneeds to process cases in a timely manner is difficult. PRRB has
                       no accurate count of the cases in inventory and may not have realistic
                       time frames for each step in the process. HHS'S current format for budget
                       submissions does not provide the information the Committee on Appro-
                       priations needs to directly monitor the resources requested for PRRB'S
                       operations.


                       We recommend that the Secretary of HHS direct HCFA and PRRB to work
Recjommendationsto     together to establish an accurate case inventory, determine the number
the1Secretary of HHS   of staff needed to process cases in a timely manner, and reevaluate time
                       frames for each step in the process.

   I
                       If the Committee on Appropriations wishes to directly monitor the level
Matter for             of resources requested for PRRB'S operations, it may want to consider
Consideration          directing that PRRB be identified separately in the HHS appropriation
                       request.


                       In a letter of November 29, 1989, commenting on our draft report, HHS
Agency Comments        indicated that it was encouraged and pleased by our findings that MCFA
                       and ~RRB are functioning in a manner consistent with their legislatively
                       prescribed roles and that HCFA had not attempted to interfere with the
                       functioning of the Board by restricting staff allocations. HHS also stated
                       that our findings accurately assessed the status of PRRB'S cases during
                       the time of our review (October 1988 through February 1989).

                       Hut IIIIS concluded that changes PRRB has made, or is in the process of
                       making, “have for the most part rendered these findings moot.” While
                       IIIIS'S comments indicate that PRRB has already responded to the portion
                       of our recommendation concerning the need to assess staff job skills, HHS
                       provided very little information that allowed us to assess the nature or
                       extent of PRRB'S actions regarding the remaining portions of our recom-
                       mendation. Appendix III contains the full text of HHS'S comments.




                       Page 3                       GAO/HRD-90.23BRMedicare Part A Appeals ProcessSlow
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 I
 I
         ,“-~‘~~‘-“‘.-   ..-. - . ..--   ~-
     I
                                              R-233662




                                              W h ile the operational improvements PRRB has made thus far are impor-
                                              tant, alone they have not corrected the problems we identified, thus ren-
                                              dering our recommendations “moot.” W e continue to recommend that
                                              I'RRD establish an accurate case inventory, determine the number of staff
                                              needed to process cases, and reevaluate tim e frames for each step in its
                                              process.


                                              As arranged with the Committee staff, unless you publicly announce its
                                              contents earlier, we plan no further distribution of this report until 30
                                              days from the date of this letter. At that time, we will send copies to the
                                              Secretary of HHS, the Administrator of HCFA, the Chairman of I’RRR, and
                                              other interested parties.

                                              Please contact m e at 275-1655 if you or your staff have any questions
                                              concerning this briefing report. Other major contributors to the report
                                              are listed in appendix IV.

                                              Sincerely yours,




                                              Linda G. Morra
                                              Director, Intergovernmental and
                                                Management Issues




                                              Page 4                       GAO/HRD-90.23BR   Medicare Part A Appeals Process Slow
I
    ..,   .I_.   _.   ..“.   .   ..-   --




                                            Page 5   G A O / H R D - 9 0 - 2 3 B R M e d i c a r e Part A A p p e a l s Procrss S l o w
                                                                                                                 !-



                                                                                                             1




1 COntents


  Leiter                                                                                                 1

 Section 1                                                                                               8
 Introduction           Objectives                                                                       8
                        Scope and Methodology                                                            9
                        Background-Provider    Reimbursement Review Board                               11
                        Hearing Process an Adversarial Proceeding                                       13
                        Staffing: HCFA Provides Support Staff                                           14
                        Organizational Composition                                                      16

 Section 2                                                                                              19
 Nature of PRRB’s
 Relationship to HCFA
 and HHS

 TQnelinessof Case      Reported Inventory Increasing
                        Reported Inventory Inaccurate
                                                                                                       21
                                                                                                       23
 Processing             Case Inventory Concentrated Early in Appellate Process                         25
                        Cases Stayed in Early Steps Long Periods of Time                               27
                        PRRB’s Case Output Down Over S-Year Period                                     29
                        Several Factors Contribute to Drop in Case Output                              31

 Section 4                                                                                             33
 Conclusions,           Conclusions
                        Recommendation to the Secretary of HHS
                                                                                                       33
                                                                                                       33
 Recom m endation,      Matter for Consideration                                                       33
 Matter for             Agency Comments and Our Evaluation                                             33
 Consideration, and
 Agency Com m ents
 Appendixes             Appendix I: Description of the 17 Major Processing Steps                       36
                            in PRRB’s Appellate Process
                        Appendix II: Supplemental Case Information                                     39
                        Appendix III: Comments From the Department of Health                           40
                            and Human Services
                        Appendix IV: Major Contributors to This Report                                 45



                        Page 6                     GAO/HRDSO-23BR   Medicare   Part A Appeals Process Slow
          Contents




Tables    Table II. 1: Average Number of Days Cases Were in Each                           39
              Step of the Appellate Process (As of Feb. 2, 1989)
          Table 11.2:Projected Disposition of Cases in PRRB’s                              39
              Manual Data System (As of Feb. 17,1989)
          Table 11.3:Projected Distribution of “Active” Cases From                         39
              PRRB’s Manual Data System by Step in the Appellate
   I          Process (As of Feb. 17, 1989)

Figbres   Figure 1.1: Objectives                                                            8
          Figure 1.2: Methodology                                                           9
          Figure 1.3: Background-PRRB                                                      11
          Figure 1.4: Hearing Process                                                      13
          Figure 1.6: Staffing                                                             15
          Figure 1.6: Organizational Composition                                           16
          Figure 2.1: Nature of PRRB’s Relationship to HCFA and                            19
               HHS
          Figure 3.1: Reported Inventory Is Increasing                                     22
          Figure 3.2: Reported Inventory Is Not an Accurate                                23
               Indicator of Workload
          Figure 3.3: Cases Concentrated in Early Steps of                                 26
               Appellate Process
          Figure 3.4: Cases Were in Early Steps Long Periods of                            28
               Time
          Figure 3.5: PRRB’s Case Output Has Decreased                                     30
          Figure 3.6: Decline in Case Output Due to Several Factors                        31




          Abbreviations

          GAO        General Accounting Office
          HCFA       Health Care Financing Administration
          HHS        Department of Health and Human Services
          PRRB       Provider Reimbursement Review Board


          Page 7                      GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
!

    Sectiion 1

~ titroduction


    Fiaude 1.1:



         (G-          Objectives

                  l   Has HCFA’s relationship with
                      PRRB impaired PRRB’s
                      effectiveness in processing
                      cases?
                  l   How timely is PRRB in
                      processing cases?




                                 Concerned about recent Provider Reimbursement Review Board staffing
    Objectives                   reductions, the Committee on Appropriations asked that we report on
                                 whether the Health Care Financing Administration was unwilling to
                                 provide PRRB with the staff it needs to function effectively. As a result
                                 of this request and subsequent discussions with Committee staff, we
                                 agreed to determine

                             .   whether WXA'S relationship with PHRB impaired PRRB'S effectiveness in
                                 processing cases by limiting staff allocations and
                             l   how timely PRRH has been in processing cases.



                                 Page 8                      GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
                             Section 1
                             Introduction




Figui re



           ~0       Methodology

                0 Review relationship between
                  HCFA and PRRB
                l   Analyze authorized and actual
                    staffing levels
                l   Analyze cases as of
                    February 1989
                l   Interview PRRB staff


                             In its June 23, 1988, report directing our study, the Committee on
Scope and                    Appropriations expressed concern over the potential appearance of a
Methodology                  conflict of interest in HCFA'S unwillingness to allow the Board adequate
                             staff. We did not address the conflict of interest question because the
                             term generally applies, not to agencies, but to individuals whose per-
                             sonal interests conflict with the responsibilities of their positions. To
                             address the Committee’s concerns, however, we sought to determine
                             whether HCFA impaired PRRB'S effectiveness in processing cases by limit-
                             ing its staff allocations.




                             Page 9                       GAO/HRD-90s23BR   Medicare   Part A Appeals Process Slow
Section 1
Introduction




In accomplishing this objective, we reviewed statutes, regulations, and
legislative history pertaining to the relationship between PRRB, the
Department of Health and Human Services, and HCFA. In addition to ana-
lyzing I'RRB'S actual and authorized staffing levels, we discussed the
rationale for PRRB'S current staff levels with HCFA officials.

We analyzed the distribution of about 3,370 cases in PRRB'S 17-step
appellate process. This number excluded the cases we determined were
inactive, duplicative, missing supporting documentation, or in suspen-
sion. In addition, we excluded 111 cases that PRRB indicated were being
considered for dismissal. PRRB uses both manual and, starting in Novem-
ber 1987, automated data processing systems to monitor this disposition
of cases.

Our analysis included all cases in the automated system and a sample of
 1,582 cases from the manual system as of February 1989. We sought to
determine the distribution of the cases in the appellate process and the
time taken to move through major steps of the process. This type of
information was unavailable for about 1,600 cases in the manual system
that were filed between fiscal years 1975 and 1988. Therefore, after
reviewing a randomly drawn representative sample of 100 cases from
the 1,582 that were filed between fiscal years 1980 and 1988, we pro-
jected the results to the cases from which the sample was drawn. In
addition, we reviewed the records for all 19 cases filed between fiscal
years 1975 and 1979 that were still in the manual data system in Febru-
ary 1989. We determined the number and type of staff responsible for
processing cases at each major step in the appellate process. Using a
structured interview guide, we interviewed PRRB board members, para-
legal specialists, and legal technicians about staffing issues.

Our review was performed between October 1988 and June 1989 in
accordance with generally accepted government auditing standards.




Page 10                     GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
                             sectIon 1
                             Introduction




Figure 1.3:



     im
     I                Background--PRRB

              l   Established to review
                  payment disputes under part A
              l   Serves as an administrative
                  appeals forum for providers
              l   PRRB’s jurisdictional thresholds
                  $lO,OOO for a single provider
                  ~$50,000 for a group of
                   of providers


                             In 1972, the Congress authorized the establishment of PRRB to review
Background-                  payment disputes under the hospital insurance portion (Part A) of the
Provider                     Medicare program. A federal health insurance program authorized by
Reimbursement                title XVIII of the Social Security Act, Medicare helps most Americans
                             age 65 and over and certain disabled individuals under 65 pay for their
Review Board                 health care. Medicare Part A pays for services provided by hospitals,
                             skilled nursing facilities, and home health agencies. In fiscal year 1988,
                  v          Part A covered about 32 million enrollees and paid benefits amounting
                             to about $52.7 billion.




                             Page 11                      GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
.“--+.---   -..-~.   -.. .---
                                Section 1
                                Intruduction




                                I’HHBprovides an administrative appeals forum for Part A providers dis-
                                satisfied with intermediaries’ determinations of reimbursement
                                amounts. Intermediaries are HCFA-contracted organizations that process
                                Medicare claims and make payments to Part A providers. PRRH,which
                                comprises five members, including a chairman, conducts hearings and
                                issues decisions on providers’ appeals, For a single provider, the amount
                                in controversy must be $10,000 or more for a year and, for a group of
                                providers with a common question of fact or law, $50,000 or more. For
                                claims not meeting these jurisdictional threshold amounts, providers
                                may request reconsideration by the Medicare intermediary that initially
                                reviewed the claim.




                                Page 12                     GAO/HRD-SO-23BR   Medicare   Part A Appeals Process Slow
                            Section 1
                            Introduction




Figure 1.4:


     JGGAQHearing Process

              l   PRRB can affirm, modify, or
                  reverse intermediaries’ initial
                  cost decisions
              0 HCFA can review PRRB
               decisions
              l   Providers can appeal PRRB or
                  HCFA decisions to the courts



                            The parties to a I'RRB hearing are the provider and the intermediary that
Hearing Process             made the cost determination under appeal, or the provider and IKSA in
an Adversarial              situations where there is no contracted intermediary.’ PRRH'S hearing
Proceeding                  process is an adversarial proceeding during which the parties involved
                            can be represented by counsel, introduce and cross-examine witnesses,
                            and challenge all matters applicable to the issues in controversy.

                            At the conclusion of the hearing, PRRB affirms, modifies, or reverses the
                            intermediary’s decision. In turn, the Secretary of HHS has delegated to

                            ’IIWA has not actedas intermediary since 1982.



                            Page 13                             GAO/HRD-90-23BR   Medicare   Part A Appeals Prncess Slow
                       Section 1
                       Introduction




                       the IICFA Administrator the authority to affirm, modify, or reverse
                       PRRB'S decision. The HCFA Administrator has redelegated this authority
                       to the Deputy Administrator of HCFA. While the Administrator or Deputy
                       Administrator may review a decision in response to a request from HCFA
                       or a party to a Board’s decision, the determination to review a case is
                       made solely at the discretion of the Administrator or Deputy Adminis-
                       trator. A ruling by PRRB or HCFA that the intermediary’s determination of
                       the amount due the provider is too low results in an additional payment
                       to the provider from the Federal Hospital Insurance Fund. Providers
                       dissatisfied with the decision of PRRB or HCFA can appeal the decision to
                       the federal courts.


                       DHRH'S board members are appointed by the Secretary of HHS to serve a
Staiffing: HCFA        term of 3 years. One member is required to be a certified public account-
P&ides Support Staff   ant, two must be representatives of providers, and all must be knowl-
                       edgeable in the field of cost reimbursement. PRRB'S enabling legislation
                       also provides that the Secretary of HHS make available the technical, sec-
                       retarial, and other support the Board may require to fulfill its responsi-
                       bility. While retaining the authority to appoint board members, the
                       Secretary of IIHS has delegated responsibilities for supporting the Board
                       to the HCFA Administrator. The annual HHS budget appropriation request
                       does not identify PRRB'S staff and monetary needs separately but incor-
                       porates them with HCFA'S.




                       Page 14                     GAO/HRD-SO-23BR   Medicare   Part A Appeals Process Slow
.------+-
                                 Section 1
                                 Introduction




Figure 1.5:



            GA3 Staffing

                l       Board members are appointed
                        by the Secretary of HHS
                l       Support staff are allocated
                        by HCFA




                    Y




                                 Page 16        GAO/HRD-fJOI3BR   Medicare   Part A Appeals Process Slow
                     Section 1
                     Introduction




Figurg 1.6:



     ~GA0 Organizational Composition


                      Chairman                        Board

                 \                  \        \




                     ur~amza~iona~~y, kww nits two componems, one ror Jurisaicnon ana case
Organizational       management, the other for hearings and decisions (see fig. 1.6).
Composition




                     Page 16                     GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
-
                             Section 1
                             Introduction




Jurisdiction and Case        The jurisdiction and case management component consists primarily of
Management                   legal technicians (GS-6 and -7 employees) and paralegal specialists
                             (GS-14 employees). The staff determine which cases the Board has juris-
                             diction over and manage such cases until they are ready for a hearing,
                             dismissed, or withdrawn. For example, the legal technicians in the juris-
                             diction and case management component

                         .   receive incoming requests for hearings, identify the provider, and assign
                             a case number and other required identification;
                         .   review cases to determine whether they have been properly filed and
    ,                        assure that each case includes all required material;
                         .   solicit omitted information and respond to routine inquires from provid-
                             ers and intermediaries;
                         .   analyze cases when it is clear that PHRB has jurisdiction and refer cases
                             to a paralegal specialist when they cannot determine jurisdiction; and
                         .   request position papers from the providers and intermediaries on the
                             issues to be adjudicated.

                             The paralegal specialists

                             provide advice to the Board and legal technicians on whether or not
                             IWB has jurisdiction and
                             develop complex jurisdictional issues on whether the Board can rule on
                             a case and present them to the Board with recommendations on whether
                             PIZKIIshould accept or reject it.


Hearings and Decisions       The hearings and decisions component is composed primarily of GS-14
                             paralegal specialists. This component manages cases from the time a
                             hearing is scheduled until the decision has been issued. For example,
                             hearings and decisions staff members

                         .   obtain agreements and stipulations from the providers and
                             intermediaries prior to the hearing on the issues in dispute and the perti-
                             nent facts;
                         .   prepare for each case a comprehensive summary that sets forth the
                             essential facts, significant contentions, evidence, relevant law, and
                             precedent;
                         .   attend and assist the Board at conferences and hearings;
                         .   participate, advise, and assist the Board in its deliberations in light of
                             their personal knowledge and research of legislation, regulations, and
                             Medicare principles of reimbursement; and
                         .   prepare, develop, and draft decisions for the Board’s review.


                             Page 17                      GAO/HRD-90.23BR   Medicare   Part A Appeals Process Slow
    Section 1
    Introduction




    At the beginning of fiscal year 1989, PRRB had 23 staff members, includ-
    ing 4 board members, 9 jurisdiction and case management staff, and 6
    hearings and decisions staff. The remaining four staff members included
    the Executive Director and administrative personnel.




Y




    Page 18                     GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
- -_--.-
  Section 2

 N@ureof PRRB’sRelationshipto HCFA
 and HHS

Figure 2.1:



     ~m           Nature of PRRB’s Relationship
                  to HCFA and HHS
              l   Relationship is consistent
                  with their l&gislatively
     I            prescribed roles
              l   HCFA can impair PRRB’s
                  operations by limiting staff
              l   No evidence HCFA set staffing
                  levels with the intent of
                  impairing PRRB’s effectiveness

                           In its June 23, 1988, report directing this study, the Committee on
                           Appropriations expressed concern that by exercising control over PRRB'S
                           resources, especially staffing levels, HCFA could impaired PRRB'S effec-
                           tiveness in processing cases. While HCFA has impaired the functioning of
                           the Board by limiting its staff allocations, we found no evidence that
                           IICFA had acted deliberately to impair the Board’s effectiveness.

                           For fiscal year 1988, HCFA, citing agency-wide reductions, denied PRRB'S
                           request for additional staff to handle a larger than anticipated work-
                           load. HCFA officials indicated that most components, including PRRB, had
                           experienced decreases in their staffing levels. Since 1981, demands on



                           Page 19                     GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
Section 2
Nature of PRRB’s Relationship   to HCFA
and HHS




the agency have increased substantially as a result of new legislative
requirements and administrative initiatives. Because IICFA'S staff com-
plement decreased 21 percent over the same period, most components
have been forced to do more with less. Faced with staffing constraints,
IICFA has attempted to support the Board through other means. For
example, in fiscal year 1989, HCFA approved $230,000 in contract sup-
port for the Board. At the time of our review, PRRR had used $80,000 of
the funds for data processing support.

PRRB and IICFA are functioning in a manner consistent with their legisla-
tively prescribed roles for administering Part A of the Medicare pro-
gram, our review indicates. Although the Secretary has delegated
certain responsibilities to HCFA, including providing support staff to the
Board, ultimately the Secretary of HHS is responsible for insuring that
HCFA performs its delegated responsibilities in accordance with applica-
ble law and regulations.

IICFA has no direct monetary stake in the outcome of the Board’s cases. If
PRRI~rules that a provider is due additional reimbursement, the money
comes from the Federal Hospital Insurance Fund-not IICFA-
appropriated funds. The Secretary also has delegated to the HCFA
Administrator authority to review PRRR decisions. While PRRI~reaches its
decisions independently, it functions as part of the administrative proc-
ess within III& as does IICFA, for resolving provider disputes.




Page 20                              GAO/HRD-90.23BR   Medicare   Part A Appeals Process Slow
Tbeliness of CaseProcessing


                     Although the number of cases that PRRB resolved and removed from
                     inventory through the issuance of decisions and dismissals increased
                     steadily between fiscal years 1975 and 1987, it decreased between
                     fiscal years 1987 and 1988. As of February 1989, cases were concen-
                     trated in the early steps of the appellate process for periods of time
                     that exceeded PRRB-established criteria. While no single factor
                     explains these occurrences, several events occurring around the
                     same time may have contributed.


                     Between fiscal years 1975 (when PRRB began operations) and 1988, the
Reported Inventory   number of cases filed with PRRB increased from 107 to about 1,500 (see
Increasing           fig. 3.1). The number of cases filed peaked in 1986, then decreased in
                     1987, due largely to HCFA policies for handling malpractice cases. The
                     number of cases in inventory at the end of each fiscal year also grew at
                     a rapid pace. At the end of fiscal year 1975, only 81 cases were in inven-
                     tory; by the end of fiscal year 1988, about 3,600 were.




                     Page 2 1                     GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
                                                        Section 3
                                                        Timeliness     of Case Processing




Figure 3.1:



      CYQDReported Inventory is
          Increasing
              3530


              am0


              am0

              aooo


              1900


              loo0

               WQ


                 0

                 ,076          1878        wl7            1978       1979    IWO      lQ81   1982     1983     1984      1989     1988    1987     1980
                 Fiscal Vow

                        B        End-al Year Invmtory
                        mm.-     Filed




                                                        Note: Number of cases filed and end-of-year inventory levels for FY 1976 are based on a ISmonth
                                                        period.




                                                        Page 22                                 GAO/HRD-90.23BR       Medicare   Part A Appeals Process Slow
                          Section 3
                          Timeliness   of Case Processing




Fiaute 3.2:



    ~w            Reported Inventory is Not an
                  Accurate Indicator of Workload
              l   Some cases were not in
                  inventory
              l   Large number of cases
                  may be inactive




Reported Inventory        was inaccurate. Some cases received in fiscal year 1989 had not been
Inaccurate                added to inventory, and PRRB officials were unsure whether a number of
                          the cases in its inventory were still active.

                          About 1,600 cases, filed between fiscal years 1975 and 1988, were being
                          monitored in PRRB'S manual data system. Most were filed before the
                          November 1987 implementation of the automated system, which con-
                          tained information on the disposition of the remaining 2,400 cases.




                          Page 23                           GAO/HRD-90.23BR   Medicare   Part A Appeals Process Slow
Section 3
Timeliness   of   Case Processing




But PRRB'S inventory was understated by about 690 cases. Although
some 1,080 cases were filed in the first 5 months of fiscal year 1989,
only 390 had been added to inventory. At the time of our review, PRRB
was in the process of contracting for data entry support to enter the
new cases. According to PRRB officials, they lacked the number of staff
necessary to perform this task in a timely manner.

Of the approximately 1,600 cases in the manual system, 1,572 had had
no activity since November 1987 or earlier. PRRB officials said they were
unsure whether these cases were still active and lacked the staff neces-
sary to follow up on their disposition. From our sample of the 1,582
cases in the manual system filed between fiscal years 1980 and 1988,’
we estimate that 16 percent (252) were inactive and should have been
deleted from inventory. (See tables II.2 and II.3 for the projected dispo-
sition of the fiscal years 1980-1988 cases.) For example, PRRB counted in
inventory a case filed in 1980, even though the parties involved had
resolved it in 1984. Another case, received in 1983, was counted in
inventory even though a decision had been issued in 1986. In addition,

An estimated 32 cases were duplicates of those in PRRB'S automated
system.
An estimated 206 cases could not be traced because files were missing.
An estimated 16 cases were in suspension pending the outcome of court
decisions.

Of the 19 cases filed between fiscal years 1975 and 1979 that were still
in the manual system in February 1989, 10 were inactive and should
have been deleted from the inventory. Most were inactive because PRRB
had issued a decision. For example, PRRB included in inventory a case
filed in 1975, on which a decision had been issued in 1977. Of the
remaining cases, five were missing all supporting documentation and
four were active.




‘The samplingerror for theseprojectionsdo not exceed-+ 10 percentat the 95percent confidence
interval.



Page 24                             GAO/HRD-90-23BR     Medicare   Part A Appeals Process Slow
                            Section 3
                            Timeliness   of Case Processing




                            I'RRB'S inventory of cases was concentrated in the early (prehearing)
Case Inventory              stages of the 17-step appellate process, which begins with the receipt of
Copcentrated Early in       a request for hearing and ends with the issuance of a decision (see
Aplpellate Process          app. I). The distribution of the approximately 3,370 cases we analyzed
                            (depicted in fig. 3.3) was as follows:

                        .  Three-quarters, or about 2,500 cases, were in steps 1 and 2, in which
                           I'RRI3 staff document the receipt of a case and review case documenta-
                          tion to determine if additional information is needed to determine
                          jurisdiction.
                        . About 22 percent, or 730 cases, were in steps 3-5, in which PRRR deter-
                          mines its jurisdiction over a case and staff identify the issues underlying
                          it.
                        . Only 3 percent (112 cases) were in later stages of the appellate process,
                          i.e., steps 6-17, during which PRRB conducts the hearing and writes and
                          finalizes its decision. Of these, 37 cases were scheduled for a hearing, 1
                          decision was being drafted, and 9 draft decisions were being reviewed
                          by board members.




                            Page 25                           GAO/HRD-9@23BR   Medicare   Part A Appeals Process Slow
____ .,i__- .._ - ----_I-.     _
                                                                     Section 3
                                                                     Timeliness        of Case Processing




         -
Figure 3.3:



       GM                    Cases Concentrated in Early
                             Steps of Appellate Process
                             1000      Numbw     01 Cases


                             1400


                             1200


                             1000


                              ooo


                             ooo


                             400


                             zoo


                                0




                                    Slopa In Adjudhtlon     Pmcaaa


                                       El         Cases ProJected from Manual System
                                                  Cases In Automated System




   .- ._._ _“.-__-
                                                                     Note: Analysis IS based on 2,290 cases in the automated system and an estimated 1,076 cases pro-
                                                                     jected from the manual system. PRRB’s database does not include information on cases in steps 7 and
                                                                      11 of the adjudication process. Step 4 was added to the adjudication process in Nov. 1988, and as of
                                                                     Feb. 1989, few appeals had reached this step. The sampling error for cases projected from the manual
                                                                     system does not exceed + 10 percent at the 95percent confidence interval.


                                                                     At least half of all cases are resolved prior to a hearing, PRRB officials
                                                                     have estimated. (See tables II.1 and II.3 for supplemental information on
                                                                     PRRB'S distribution of cases.)




                                                                      Page 26                                GAO/HRD-90-23BR      Medicare   Part A Appeals Process Slow
                        Section 3
                        Timeliness   of Case Processing




                        Most PRRB cases were in the early steps of the appellate process for long
CasesStayed in Early    periods of time, our analysis of the 2,289 cases?showed. (See fig. 3.4 and
Stqps Long Periods of   table II.1 for the average lengths of time cases remained in each step of
The                     the process.) For example, for steps 1, 2,3, and 5,:’cases had been in
                        each step an average of at least 200 days. In the later parts of the proc-
                        ess, cases remained in a step for significantly shorter periods, For exam-
                        ple, cases in steps 6-17 were in a step for an average of 4 to 89 days.
                        Although PRRB has established time frames for moving cases through the
                        early steps of the process, these criteria may not be realistic, given staff-
                        ing levels and the volume of cases in PRRB’S inventory.




                        ‘Becauseof the difficulty in extracting information from the manual data system,we analyzed
                        processingtimes only for casesin the automateddata system.
                        %cp 4 was addedto the adjudicationprocessin November1988.As of February 1989,few caseshad
                        reachedthis step.



                        Page 27                              GAO/HRD-90.23BR     Medicare   Part A Appeals Process Slow
                        Section 3
                        Timeliness      of Case Processing




Figure 3.4:



      w       Cases Were In Early
              Steps Long Periods of Time
     1
                    -
              200



              200



              130



              100



               50
                        -
                0
                    I




                            Note, Analysis IS based on 2,289 cases in the automated system. PRRB’s database does not include
                            lnformatlon on cases in steps 7 and 11 of the adjudication process. Step 4 was added to the adjudlca-
                            tlon process in Nov 1988, and as of Feb. 1989, few cases had reached this step. The sampling
                            error for cases projected from the manual system does not exceed + 10 percent at the 95percent
                            confidence level


                            For example, PHIUS allows 30 days from receipt of a case for identifica-
                            tion of the documentation necessary to determine jurisdiction and
                            request missing documentation (step 1). However, the 1,283 cases in this
                            step had been there an average of 278 days.

                            For step 2, PHKB’Scriteria is 30 days for providers to submit the docu-
                            mentation requested in step 1 and 30 days from its receipt for PRRR staff
                            to determine jurisdiction. For cases in this step, PRRB had not received


                            Page 2R                                 GAO/HRD-90-23BR       Medicare   Part A Appeals Process Slow
-
                     section 3
                     Timeliness   of Case Processing




                     documentation within the 30-day time frame nor, for cases with com-
                     plete documentation, had PRRB adhered to its 30-day limit for determin-
                     ing jurisdiction. While PRRR'S criteria would suggest that cases should
                     remain in step 2 no longer than 60 days total, the 370 cases in step 2 had
                     been there an average of 210 days.

                     PRRI3had determined jurisdiction for 38 of the 59 cases in step 3. For the
                     remaining 21 cases, I'RRB had scheduled hearings for 8 and held hearings
                     for 13 to determine jurisdiction. On average, cases had been in step 3 for
                     212 days.

                     For cases in step 5, PRKH requires that within 60 days both parties sub-
                     mit documents showing their positions on the issues. For 225 of the 414
                     cases in this step, documentation had not been received from the pro-
                     vider within the established time, the intermediary, or both. On average,
                     these cases awaiting documentation had been in step 5 for 237 days. For
                     the remaining 189 cases, documentation was completed but they had not
                     progressed to the next step. They had been in this step an average of
                     232 days from the receipt of position papers, When cases reach this
                     step, time extensions often are granted if the parties indicate that they
                     are negotiating a settlement, according to PHHR staff.


                     In terms of the numbers of decisions issued and cases dismissed,
PRRB’s Case Output   case output decreased between fiscal years 1987 and 1988. Previously,
Down Over            its case output had shown a steady increase, as figure 3.5 shows. For
Z-Year Period        example, between fiscal years 1975 and 1987 the numbers of decisions
                     issued increased from 3 to 115 and cases dismissed from 23 to 1,197.
                     However, between 1987 and 1988 the number of decisions the Board
                     issued dropped 65 percent to 40-the lowest since 1975-and the
                     number of cases it dismissed by 39 percent, to 734.




                     Page 29                           GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
                                                       Section 3
                                                       Timeliness     of Case Processing




Figure 3.5:



     W        PRRB’s Case Output Has
              Decreased
              1200        Number of Wmm



              loo0



               800



               503



               400



               200



                   0

                   ,975          1975          1Qi-f    lQ75        lQ7Q    1880     lQ51   1QW     1983     1984     1QM      198(1   1057       1M5
                   Fiecal Yun

                          -       Dlemlsaals
                          1-11    Dedsions




                                                       Note: The numbers of decisions and dismissals in FY 1976 are based on a 15.month period.




               Y




                                                       Page 30                                GAO/~-QO-23BR         Medicare   Part A Appeals Process Slow
                               Section 3
                               Timeliness   of Case Processing




Figwe 3.6:



    ~G&l Decline in Case Output Due to
         Several Factors
             l       Staff attrition and
                     reassignment
             l       Realignment of staff
             0 Heavy workload




                               While no single factor explains the decrease in case output, several fac-
Seiveral Factors               tors may have contributed to it. For example, the large number of deci-
C&tribute to Drop in           sions (some 25 on one issue-labor delivery room costs) and the record
Case Output                    number of dismissals issued in 1987 somewhat inflated that year’s case
                               output. A change in HCFA'S reimbursement policy for malpractice insur-
                               ance costs led PRRB to dismiss a record number of cases for lack of
                               jurisdiction.

                               Recent staff attrition has made it difficult to perform their mission, PRHH
                 i             officials said, Between fiscal years 1987 and 1988, the number of staff
                               decreased from 27 to its ceiling level of 24. A staff reorganization




                               Page 31                           GAO/HRD-QO-23BR   Medicare   Part A Appeals Process Slow
Section3
Timeliness   of Case Processing




intended to improve the timeliness of case processing and provide addi-
tional staff supervision also affected output. In the reorganization,
implemented in February 1988, two staff previously responsible for
processing cases were transferred to supervisory positions. Lacking the
29 staff authorizations needed to fully implement their reorganization
plan, the officials said, they have been unable to keep cases moving in
the early steps of the process when PRRR action is required or to follow
up on requested information.

Output of cases was further affected by the realignment of staff respon-
sibilities, which occurred at the same time the complexity of the cases
was increasing. For example, the number of times the full Board con-
vened to settle jurisdictional matters increased between fiscal years
1987 and 1988 from 28 to 73-161 percent. PRRB'S legal technicians
(GS-fis), who prior to the reorganization had provided clerical support
for the Board, were made responsible for initial jurisdictional determina-
tions. Their clerical functions had consisted largely of typing, they said,
but also included answering phones and duplicating materials. Before
the reorganization, the paralegal specialists (GS-14s) made the jurisdic-
tional determinations.

Case processing has been impaired because there are not enough staff to
manage cases in the early steps. A HCFA management study indicates
that the appropriate size of a technician’s workload is about 220 cases.
However, when we interviewed the three technicians, each was respon-
sible for about 800 cases. Cases managed by the three technicians were
in the initial steps of the appellate process significantly longer than the
allowed time.

Although I'RRB began fiscal year 1989 with five technicians, two-
whose combined workload was about 1,230 cases-resigned. The super-
visory legal technician, who normally is not directly involved in process-
ing cases, stated that she handles all inquiries pertaining to these cases,
as they have not been reassigned. The paralegal specialists in this com-
ponent, who handle problem cases referred to them by the legal techni-
cians, also said they had large case loads.

The five GS-14 paralegal specialists in the hearings and decisions com-
ponent, who depend on the output of technicians and staff in the juris-
diction and case management component for cases, had a combined
work load of 112 cases. Cases managed by these paralegal specialists
were remaining in steps 6 through 17 for significantly shorter periods of
time than those managed by staff in the jurisdiction and case manage-
ment component. The latter are receiving fewer and fewer cases to pro-
cess through to the hearing and decision steps.



Page 32                           GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
Section 4

Conclusions,Recommendation,Ma-r for
Consideration,and Agency Comments

                        No single factor explains the long time PRRB takes to process cases or the
Codclusions             recent drop in case output, but a lack of staff is one cause. Although
                        IICFA has denied PRRB'S requests for additional staff, it did not do so with
                        the intent of impairing PRRB'S effectiveness. While HCFA'S staff comple-
                        ment has decreased, demands on the agency have increased, forcing it to
                        do more with less. Thus, HCFA'S apparent unwillingness to provide the
                        Board with staff is related to the allocation of scarce resources among
                        competing demands.

                        PRRB and HCFA have not established an accurate case inventory or
                        assessed the number of staff needed, and may not have realistic time
                        frames for each step in the process. Thus, it is difficult for them to
                        determine the proper number of staff necessary to effectively operate
                        the Board.

                        The Committee on Appropriations does not receive routinely the infor-
                        mation needed to monitor the resources provided PRRB because HHS'
                        annual budget appropriations request does not identify PRRB'S monetary
                        needs separately from that of HCFA'S.


                        We recommend that the Secretary of HHS direct that HCFA and PRRB work
Recommendation to       together to establish an accurate case inventory, determine the number
thel’secretary of HHS   of staff needed to process cases, and reevaluate time frames for each
                        step in the process.


Matter for              of resources requested for PRRB'S operations, it may want to consider
Consideration           directing that PRRB be identified separately in the HHS appropriation
                        request.


                        In its November 29, 1989, letter commenting on our draft report, HHS
Agency Comments and     indicated that it was encouraged and pleased by our findings that HCFA
Our Evaluation          and PRRB are functioning in a manner consistent with their legislatively
                        prescribed roles and that HCFA had not attempted to interfere with the
                        functioning of the Board by restricting staff allocations. It also stated
                        that our findings accurately assessed the status of PRRB'S cases during
                        the time of our review from October 1988 through February 1989.




                        Page 33                      GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
    Section 4
    Conclusions, Recommendation, Matter   for
    Consideration, and Agency Comments




    HHS concluded, however, that changes PRRB has made, or is in the process
    of making, “have for the most part rendered these findings moot.”
    These changes include

. restructuring PRRB'S appellate process to give providers and
  intermediaries more responsibility for determining jurisdiction and pre-
  paring cases for hearing, eliminating steps 2 and 3 of the process, and
  adjusting time frames;
. recruiting lawyers or legally trained analysts, and
l hiring a contractor to enter and update cases in its automated data
  system.

    HHS indicated that PRRB has already responded to the portion of our rec-
    ommendation concerning the need to assess staff job skills by working
    with HCFA to establish new staff positions, which have resulted in the
    recruitment of more highly trained and skilled employees. HHS reported
    that these changes already have increased the Board’s overall effi-
    ciency. We have revised the recommendation contained in this report to
    reflect PRRB'S progress in this area. However, HHS provided little infor-
    mation that allowed us to assess the nature or extent of PRRB'S actions
    regarding the remaining portions of our recommendation.

    For example, although HHS indicated that steps 2 and 3 of PRRB'S process
    have been eliminated and previously established time frames no longer
    apply, it provided little information to show that time frames for other
    steps experiencing delays had been reevaluated. HHS'S letter noted that
    significantly more decisions were issued during fiscal year 1989 than
    during fiscal year 1988 and that efforts are underway to determine the
    status of older cases. But HHS provided no information that would allow
    us to evaluate whether PRRB has established an accurate inventory as we
    recommended. Furthermore, HHS provided no response to our recommen-
    dation that HCFA and PRRB work together to define the number of staff
    needed to process cases in a timely manner.

    The changes made thus far are important improvements to PRRB'S proc-
    ess and could help to reduce case inventory levels and improve case
    management. We do not believe, however, that these changes alone can
    be presumed to have automatically corrected the problems we identi-
    fied, thus rendering our recommendations “moot.” As HHS acknowl-
    edges, PRRB will not be able to assess the effectiveness of its revised
    appellate procedures until it has operated under the new process for a
    period of time. Furthermore, the information contained in HHS'S letter
    does not respond to major portions of our recommendation. Thus, we


    Page 34                           GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
Section 4
Conclusions, Recommendation, Matter   for
Consideration, and Agency Comments




continue to recommend that PRRB establish an accurate case inventory,
determine the number of staff needed to process cases, and reevaluate
time frames for each step in its process.




Page 36                           GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
D&miption of the 17 Major ProcessingSteps
in PRRB’sAppellate Process

                         A mail technician reviews the hearing request to determine the case
step 1.                  type (i.e., individual or group). The supervisory legal technician assigns
Ac’knowledgement and     the request to a legal technician, who sends a letter to the provider and
                         intermediary acknowledging PRRB'S receipt of the hearing request.
Assignment of a Case
                                                                                                            -
                         Within 30 days of the receipt of the hearing request, the legal technician
Step 2. Request for      identifies the documentation to determine PRRB'S jurisdiction over the
Jurisdiction             case. If the documentation is insufficient to make this determination, the
Dacuments                legal technician requests that the provider submit additional documen-
                         tation within 30 days.

                                                                                                                -
                          Within 30 days of the receipt of all documentation, the legal technician
Step 3. Jurisdictional   evaluates the information and determines whether the case meets PRHII’S
Determination            jurisdictional requirements. When there are complex issues or jurisdic-
                         tion is questionable, the case is reviewed by a paralegal specialist or, if
                         the paralegal specialist cannot determine jurisdiction, the Board.


                         After PRRB accepts jurisdiction, the legal technician requests that within
Step 4. Request for      120 days both parties submit statements indicating their joint agreement
Joint Agreement on       on the issues to be adjudicated.
Issues

                         After receipt of the joint agreement statement, the legal technician
Step 5. Request for      requests that within 60 days both parties submit papers showing their
Position Papers          positions on the issues to be adjudicated.


                         IJpon receipt of position papers from both parties, a legal technician
Step 6. Review of        reviews them to determine whether the issues addressed are the same as
Position Papers          those in the joint agreement statement. If so, the file is forwarded to the
                         hearings and decisions staff for further processing.




                         Page 36                      GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
                          Appendix I
                          Description of the 17 Major Processing Steps
                          in PRRB’s Appellate Process




                          The hearings and decisions staff review all documentation to familiarize
ste@7eReview Of Case themselves
                           withthecase.
by Hearings and
Decisions Staff
                          If all documentation supporting the case is in order, a paralegal special-
Step 8. Scheduling the    ist arranges a date for the hearing.
Heqring
                                    -----
                          Both parties are notified of the date selected for the hearing.
Step 9. Notification of
Hearing

                          The paralegal specialist drafts the Chairman’s opening statement and a
Step 10. Opening          list of all correspondence and documents submitted by both parties prior
Statement                 to the hearing.


                          The hearing includes the board members, the paralegal specialist
Step 11. Hearing Is       assigned to the ease, and representatives of the provider and the
Helid                     intermediary.


                          The paralegal specialist       confirms that each party has received a copy of
Step 12. Confirmation     thetranscript
of Receipt of
Transcript

                          The paralegal specialist ensures that both parties have submitted
Step 13. Posthearing      posthearing briefs.
Briefs Submitted




                          Page 37                             GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
                         Appendix I
                         Description of the 17 Major Processing Steps
                         ln PRRJYs Appellate Process




                         Following the hearing, the Board schedules a conference to discuss the                          ,
Step 14. Decision        outcome of a case.
Conference Scheduled
                         During the conference, the paralegal specialist presents the facts, con-
Step 15. Decision        tentions, and HCFA rulings pertinent to the case and the Board makes its
CoxkferenceHeld          decision to either affirm, modify, or reverse the intermediary’s decision.


                         The paralegal specialist drafts the decision.
Step 16. Decision
Drkfted

Step 17. Draft Decision finaldecision
Reviewed; Final
Decision Issued




                         Page 38                              GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
Appc#dix II

SUpplementalCaseInformation


Table 11.1:Average Number of Days
Csses’Were in Each Step of the                                                                              Average no. of               Standard
Appellate Process (As of Feb. 2, 1989)      Step            _-.- ---..-__.___            No. of casesa               days                deviation
                                             1                                                   1,283                   278                   341
                                            2                                                      370                   210                   169
                                            3                                                       59                   212                   116
                                            4                                                       52                    37                    22
                                            5                                                      414                   241                   213
                                            6                                                       19                    89                    61
                                            8                                                       36h                   44                    81
                                            9                                                       15                    64                    52
                                            10               . ..-___-                               5                    83                    87
                                            12                                                      12                    34                    20
                                            13                                                       2                    17                     4
                                            ------..-
                                            14                                                       9                     4                     4
                                            15                                                       3                    21                    22
                                            16                                                       1                    29
                                            17                                                       9                    46                    44
                                            Total                                               2,289
                                            “Analysis was limited to appeals in the automated data system
                                            “In total, there were 37 cases in this step. We excluded one case because the average number of days
                                            in step was not known.


Table 111.2:
           Projected Disposition of Cases
In PRfkB’s Manual Data System (As of        Status                                                                                             No.
Feb. 17, 1989)                              -.__
                                            Active                                                                                           1,076
                                            -.-----
                                            In suspension                                                                                       16
                                            _--_..-___
                                            Also counted    in automated        system                                                          32
                                            Inactive            ----                                                                           252
                                            Unknown                                                                                            206
                                            Total                                                                                            1,582


Table, 11.3:Projected Distribution of
“Actltie” Cases From PRRB’s Manual          Stepa ----._-----                                                                                  No.
                                            ___-.
Data System by Step in the Appellate        1                                                                                                  190
Process (AsofFeb.l7,1989)
                                            2                                                                                                  680
                                            5                                                                                                  206
                                            Total                                                                                            1,078
                                            “All cases in the manual data system were in step 1, 2, or 5.




                                            Page 39                                      GAO/HRD-90.23BR    Medicare   Part A Appeals Process Slow
Appendix III

CommentsFrom the Department of Health and
Human Services


                          DEPARTMENTOF       HEALTH   & HUMAN    SERVICES




                   Mr.   Lawrence H. Thompson
                   Assistant      Comptroller       General
                   United States General
                       Accounting    Office
                   Washington,      D.C.      20548

                   Dear    Mr.   Thompson:
                   Enclosed  are the Department's      comments on your draft       report,
                   "Medicare  Part A Provider    Reimbursements:       System for Processing
                   Cases Weeds Improvement."      The comments represent       the tentative
                   position  of the Department     and are subject     to reevaluation      when
                   the final  version of this    report   is received.
                   The Department    appreciates    the opportunity            to comment      on this
                   draft report   before    its publication.




                                                                Richard   P. Kusserow
                                                                Inspector   General
                   Enclosure




               Y




                           Page 40                                GAO/HRD-90.23BR   Medicare    Part A Appeals Process Slow
           Appendix III
           Comments From the Department   of Health
           and Human Services




-

              c2oment.sof the Ceoartmentof HealthandHumanServices
                  on the General Accountim office Draft Fkatmrt,
                     Medicare Part AProviderPeimbursemets:
                  System for Processing Oases Needs Improvement"

    Wehave reviaJedGAo'sdraftreportandareencouragedby             GAO's overall
    conclusiohsthattheHealthCareFimncingAdrninistration           (HCFA) andthe
    Provider ReimbursementReviewBoard(PRRB,Board)arefunctioningina
    manner consistent with their legislatively    prescribed roles. We are also
    pleased that the report reflects the fact that HOF'Ahas not attempted to
    interfere with the functioning of the Board by restricting     staff
    allocations.
    TheOA findingsmadeduringits      on-site audit at the PPPSbetween
    October 1988 and February 1989 appear to be an accura te assessmeht of the
    PRRBduringthatperiod.      However, chahges inplwBprccess,   implemented in
    May1989, andtherestructuring    oftheJurisdictionandCaseManag~t
    Staff have forthemstpart     renderedthese findingsmoot.
    In early 1987, the prior Chainmn of the Board determined that a
    reorganization of the support staff was necessary to facilitate     the
    processing of an increased workload (1,864 requests for hearing were
    received in FY 1986) and to address the new problems presented by the
    implementation of the hospital prospective payment system (PPS). The
    reorganization plan divided the E?oardsupport staff into two divisions.
    Itaddedsupervisors     amlsubjectmtterexperts      andrestructured staff
    duties with the intent of enabliq the Ekxmdto continue to met its
    respmsibilities    with lower graded employees. For example, in addition to
    having advisors at lower grade levels (a classification     audit proposed a
    reduction in the journeyman advisor position from a OS-14 to a GS-13), the
    Board planned to train a part of the clerical staff to handle legal
    techniciantypeduties     in the jurisdictionandcasemanagemntprocess,
    relieving the Board advisors of this responsibility.     At the time this
    reorganization was planned, the on-board strength was 26 full time
    equivalents (FTEs), and the board estimated that 29 FTEs were needed to
    effectuate the reorganization.
    This reorganization was implemented in March 1988. The additional !?IEs,
    hmever, were not forthcoming, and, in fact, the staff allocation of the
    Boardwas reducedalohgwith theallocations      ofotherHOFAcmponents.      At
    the sametimethen~ofappealstotheBoard,wfiichhaddropped                in
    Fy 1987 to 855 frcnn an all-time high of 1,864 the previous year, began to
    increase onrx more and rose to 1,519 in FY 1988 and to 2,241 in FY 1989.
    WhenGAOinitiated its study in October 1988, the Board had just completed
    a year of low productivity.  Factors that ccmbined to severely impact the
    productivity of the Board in FY 1988 were: (1) the inpact of the
    reorganization - new duties were added to sme positions and there were
    changes in supervision: (2) staff losses in critical  areas - Board
    advisors and legal technicians left for retirement or new jobs: (3) the
    implementation of an automated proces sing and managementinformation
    system which necessitated diverting the efforts of mny of the staff to




           Page 41                           GAO/HRD90-23BR   Medicare   Part A Appeals Process Slow
             Appendix III
             Comments From the Department   of Health
             and Human Services




    Page 2
    reviewing and sortingcases, determining statusofcases,         etc., for
    con-ectenteringofthereguisitecasedata;            (4) agrowingworkload;and,
     (5) the relative inexperience of staff that were assigned new duties in
    the juriedictionandcasemanagemshtarea        -the jurisdictional     questions
    thatarosewiththe      inflwrofnewcaseswereofunprecedentedcamplexity
    becauseofPFS.      At the sametime that GAOwas beginning its study, the
    E@ardleack-shipwasevaluatingtheEkoaxd's         IT1988 performance. Despite
    the unique, nonrepetitive nature of the elements affecting the low 1988
    output, the Chainmn and the Executive Director decided that the Hoard's
    operating process should and could be further inproved to more effectively
    processtheincomingcasesandmaximizethentrmberofBoardhearings.
    GAO's study and probing guestions reinforced this idea.
    In May 1989, the Board issued instructions to intermediaries and provider
    representatives that drastically &anged the way the Eoard managedand
    processed appeals. More responsibility       has been given to the
    intermediaries andthe providers inpreparingappeals          forhearing.      Under
    the newprccedure, once the F!oarddetemines thatatimely             appeal has been
    filed, the parties are responsible for meeting to agree on the issues in
    question, andthe intenri&iaryis      askedtoadvisethe       Ekmdofany
    impediments thatexistto     Doard jurisdiction.     Ifthereareno
    jurisdictional   impediments, and a jointagreemm t on the issues statement
    has been submitted, thecaseis     assignedamnth        forhearing.     No further
    action is required of the parties until position papers are due 2 months
    beforethe first day of themonthofhearing.           (No action is required at
    the Soar-d during this time period either.)      Questions or problems that
    arise during this process are handled by Hoard analysts with legal
    backgrounds.
    Thesetiificationstotheprocesshavechanged              the job skills neededby
    thepxsonnelof       theJurisdictionandC!aseManagemehtStaff.          Legal
    technicians are no longer required since the routine decision making is
    hahdledbytheparties         inthe case. The non-routine problems or questions
    reguiremrehighlytrainfxlandskilledemployeesnecessitatingthe
    recruitmntoflawyers         orlegallytrainedanalysts.      The Boarclworkedwith
    HCFAin establishirq new legal analyst positions to replace the legal
    technicians.    This has resulted in an overall increase in job proficiency
    inthecritical      jurisdictionandcase~g~tarea.
    A contractor was hired to input data into the Board's automated system.
    Ihis contractor entered all backlogged appeals and related information
    into the system. Itn~entersnewappealsanddocketsallcorrespondence
    upon receipt.    Cases in the systemarebeing autmatically   screened, and
    status requests, in the form of letters generated by the autmatic
    screeningproces s, are being sent to the providers where no current action
    has taken place. Cases are being closed where appropriate. Old cases
    that are stillactivearebeingconsolidated      intothenewprocess    inan
    orderly fashion. Conseguently, the replies to status reguests and the
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             Page 42                           GAO/HRD-90.23BR   Medicare   Part A Appeals Process Slow
         Appendix III
         Comments From the Department   of Health
         and Human Services




Page 3

consolidation of old, active cases intothenewprocess         have enabled the
EUardtogetamreaccurate           asxsmeht of its workload. In addition, the
modifications to the proms shaveeliminatedprocessingste~            2 and3,
whichwere specificallymentioned       intheGAOreport,     andthetime frames
forthosepartsofthecasemnagemntprocessthatremainhavebeen
changed. In m,           theGA0 studypointedup       scmeproblernareas inthe
Board'spIofx?ss whichhavebeehmitigatedby          subseguentprocedural
changes. More importantly, the Board was able to mke significant gains
inthenuzbersofhearingsandconferences           held at-d decisions issued in
FY 1989. In that year, the first full year under the reorganization and
under the direction of the new Chairman, overall productivity increased
significantly    over the previous year, i.e., 75 decisions were issued, an
increase of 87 percent; 76 hearings were held, an increase of 41 percent:
and, 132 conferences were held, an increase of 21 percent. These
significant gains, in areas that the Board considers itsmost important
endeavor, were not directly reflected in the segments of the operation
thatwere reviewedbyGA0.         While it is certainly important for the Board
tohavea reliablemethod for controllingitsbacklogand             tomaintain
realistic    time frames for its processing steps, one can't lose sight of
the Board's ultimate purpose which is to give those providers that want a
timelyhearingtheopportunitytohaveone.
TheBoardhasdeteminedthatas         currently configured, it can hear a
maximumof 123 cases (live or on the record) during a year, based on the
number of available days and the average length of the hearings and
conferenc3es. In FY 1989, 85 live hearings were scheduled and 29 record
hearings held. Thus, 114 hearingswerescheduledoutofamaximmof123
whichwouldbepossibleduringayear.           Hmever, 38 live hearings (45
percent) were canceled after the schedulehadbeen set because the parties
settled the issue(s).   The majority of these settlements occurred
virtually on theeve   ofthescheduledhearihg.      l'heselasttiute
drop-outshavea significantimpactonthenmberof            cases that the Board
can hear and are the one factor over all others that ultimately affects
thenmberofhearings      andconseguentlythenmberofdecisions         that the
Ekxxdcahissue.
These last minute resolutions occur because providers and intenxdiaries
rarely seriously attempt to settle a case until after it has been
scheduled by the Board. Thepartiesmayhavewhatthey           consider
legitimate reasons for this approach (workload problems, etc.), but this
phenatmon    virtually destroys the Board's ability to maximize its
scheduling potential.    ThenewBoafdprocessisanatte@toestablishan
environment where the parties will met and seriously attempt to resolve
their dispute before position papers are developed and hearings scheduled.
If the E!oar.dis successful in this endeavor, it will be able to provide
timelyhearingstothosepravidersthattrulywantandneedtheircaseto
beheardtiwillalsobe          able to reducethependingcaseload.       Response
fromtheintenxdiazyandprovider          connnunitieshasbeen exkemely
positive.    Hmever, the Board will not be able to assess the effectiveness
of its plan until it has operated under this process for a period of time.




         Page 43                           GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow
-...   .-c   _---   .___.-_.-


                                           A p p e n d i x III
                                           C o m m e n t s F r o m the Department of Health
                                           a n d H u m a n Services




                                P a g e4

                                Finally, withmspecttothegrclwing                               inventory o f FIXFIB-,                       webelieve
                                th a tth e r e a r e s te p .5 th a tco r tgressmighttalceto                       incrase th e B o a r d 's
                                p r o d u c tivity a n d e fficiency.           CmgressaxldaddasixthBoardmmker
                                whichwculdallowtheE&mItoholdcc                                  n c u r r e n th e a r i n g s w i t h 2 p a n e l s
                                o f 3 m e m b e r s e a ~ ,th e r e b y d c x l b l i n g t h e B o a r d ~ s ~ ~ tp o te n tial.
                                C o n c u r r e n ttle a r ~ s a r e n a tworkablewiththeBoard'spresent
                                c o n fig u r a tio n b e c a u s eo f a x r e n t r e q u i r e m e n tsfo r decisions. W e i n t e n d to
                                e x p l o r e this s q g e s tio n fu r th e r i n t h e n e a r fu tu r e .




                                           Page 44                                     G A O /HRD-90.23BR M e d i c a r e Part A A p p e a l s P r o c e s s S l o w
~Md,jorContributors to This Reprt


                   Susan D. Kladiva, Assistant Director
Human Resources    W. Stuart Fleishman, Assignment Manager
Division,          Sherri K. Doughty, Evaluator-in-Charge
Washington, D.C.   Veronica Scott, Evaluator
                   William A. Eckert, Social Science Analyst
                   Virginia T. Douglas, Reports Analyst


                   Jonathan A. Barker, Senior Attorney
Offike of
General Counsel




            Y




(IIH2*5H)          Page 45                     GAO/HRD-90-23BR   Medicare   Part A Appeals Process Slow