overwhelming consensus among their own scientists that they were different and of high risk. >> a house subcommittee recently looked into the medicare appeals process, and according to officials, there's a current backlog of about 460,000 medicare appeal claims that are waiting to be heard by administrative law judges. by statute appeals should be completed within 90 days, but due to the current backlog, some claims are taking up to 28 months to process. this is just under 90 minutes. >> good afternoon. we apologize for a little bit of delay. we'll have additional delays this the moments ahead. ms. speier and i both were on the floor doing some debates. the votes, we understand, will be called for that in the next 15-20 minutes, so this is an opportunity for us to be able to go through our opening statements, get us established.

when votes are called, we'll reset for a short period of time, then come back and finish up with questions. this is the energy policy health care and entitlements hearing on medicare mismanagement part two. the chair is authorized to declare a recess of the committee at any time. i'd like to begin by stating the mission statement. we exist to secure two fundamental principles; first, that americans have the right to know that washington takes from them is well spent, second, americans deserve an efficient, effective government that works for them. our duty is to protect these rights. our solemn respondent is to hold government accountable to the taxpayers because taxpayers have the right to know what they get from their government. we will work tirelessly to deliver the facts to the american people and bring genuine reform to the federal bureaucracy. this is the mission of the oversight and government reform committee. this conversation is, as i mentioned already, the second part of a two-part conversation about how things are going. we have multiple different entities that have a significant backup.

they're wading through the appeals process, some of them for years in the appeals process. health care providers, hadn'ts -- hospitals, individuals who do not have a large cash flow and individuals and businesses that do. so the issue today is why does that exist, how do we actually resolve this, what are the fixes that are needed legislatively, and what can we take care of right now. i'd like to yield additional time to mr. meadows from north carolina who's been very, very involved in this process as well. >> thank you, mr. chairman, and thank you for your leadership on this particular issue. and really this comes down and boils down to people. and what we have to do is make sure that as government agencies that we do the very best we can to go after waste, fraud and abuse which the chairman has so eloquently around the ticklated. articulated. yet at the same time, make sure that the rule of law and fairness to everyone is upheld. and right now i think that there is great question.

and not singling you out, ms. griswold, because i've had some great conversations with really folks within the alj. there seems to be a very compassionate desire to fix the problem, and so that's what we're looking for here today. my ore concern -- other concern, though, and i think the concern of the american people is this whole process in terms of when we go after waste, fraud and abuse. if we cast such a wide net, then we're taking the decision making away from doctors, health care providers, hospitals, many people who make their decisions, who are trained, who go to years of training to do that. and we're transferring that decision-making capability because of reimbursements, actually, to a bureaucrat. for me, i have a lot more trust in the nurse or the doctor that cares for me than i do somebody that works here in washington

d.c. i think that polls would show that to be the fact as well. so what i'm looking for specifically, and it will be difficult, i know, because you're all part of an agency, but there's this wall of separation that somehow goes up that the american people don't understand. they all see you part of hhs or part of cms, and yet you have a wall, cms has a wall. what i need to do is have as much finger pointing as possible to say this is what will solve it knowing that i'm not asking you to throw anybody under the bus. as the chairman pointed out, we're looking for legislative fix, for appropriations that need to be done so that we can help this to quit being a problem and so we can to way the law the way -- obey the law the

way that it is written. so i thank the chairman, and i yield back. >> thank you, mr. meadows. i have additional comments few an opening statement i'll submit for the record to protect our time. i'd also like to ask unanimous concept to insert for the record a chart giving disposition outcome rates that was given to us by the office of medicare hearing and appeals just last night. like to be able to add this to the record to be able to share it with all vims that are here as well -- individuals that are here as well. i'd like to recognize the gentlelady from california, mrs. speier, for her opening statement. >> i want to thank chief judging dwriz world for appearing before us today on this important issue. you know, i think we can all agree that medicare providers are entitled to have their claims administered fairly, efficiently and without undue delay so that they can focus on their core mission of providing care to our nation's seniors. if they are billing incorrectly, they deserve to know sooner than

later. unfortunately, that is not the situation facing providers today. medicare providers appealing payment decisions made by contractors are waiting on average 387 days to have their claims adjudicated by the office of medicare hearings and appeals. for providers submitting new claims, the wait could be as long as 28 months just to have an appeal assigned to an alj. the current claims backlog at omha is unacceptable and unsustainable. omha must make significant changes in how it does business. i look forward to hearing from the chief judge about the initiatives omha is implementing to improve efficiency and alleviate the backlog. but ial want to remind my -- i also want to remind my colleagues that the claims backlog is a problem that congress created. congress has required cms -- appropriately -- to be increasingly vigilant in

detecting and reducing the amount of waste, fraud and abuse in the $600 billion medicare program that covers 51 million beneficiaries. this emphasis on program integrity is critical both to the health of our nation's seniors and to the protection of our taxpayer dollars. but this increased scrutiny has not been coupled with additional funds to address the influx of claims and appeals that have resulted. with the medicare prediction drug act, congress created the medicare administrative contractors, the zone program integrity contractors and the recovery auditor contractors' pilot program. in 2010 the rak program was made permanent and expanded nationwide. all of these conduct audits of medicare providers. each of these contractors have increased the number of claims being audited for payment accuracy in recent years. according to a 2013 gao study,

the volume of post-payment claims reviews increased by 55% between 2011 and 2012. more audits means, obviously, more appeals. that is an inevitable result of the additional program integrity functions that we here in congress have asked cms to implement. congress has not provided omha with more funding for more judges to adjudicate claims, so when we wring our hands about the number of days that these providers have to wait, we have to wring our hands and look directly at ourselves. despite the sixfold increase in the number of appeals since 2006, the number of aljs at omha has remained relatively constant. in 2007 omha received 20,000 rac claims, in 2013 omha received 192,000 rac claims yet received no additional funding to handle this workload.

i joined a number of any colleagues in sending a letter to the secretary of hhs citing concerns about the rac program and expressing the need for reform. but it's also important to note that racs have led to the exposure of many questionable billing practices such as billing for hospital readmissions on the same day with the same diagnosis, durable medical equipment items delivered but never ordered by a physician, hospital claims coded with illness a patient did not possess and excessive units of medication ordered especially where the billed dose would be harmful or lethal to the patient who received it. we may need to consider reforms to the rac program that reduces the burden of audit on providers, but we must also preserve the central program integrity funks of the racs who perform the critically important congressionally-mandated function of reducing improper payments in the medicare

program. finally, an important part of reducing the burden on providers is insuring that appeals from adverse rac determinations are adjudicated in a timely manner. congress must do its part by insuring that omha's budget request is fully funded. we have to give the resources commensurate with the workload that we have asked them to perform, and with that i yield back. >> members will have seven days to submit additional statements if they choose to add statements for the record. ms. griswold, you are the sole individual in this hearing today, and we are grateful that you are here. pursuant to all committee rules, all witnesses are sworn in before they testify. if you'd please stand, raise your right hand. do you solemnly swear or affirm the testimony you're about the give will be the truth, the whole truth and nothing but the truth, so help you god? thank you, let the record reflect that the witness

affirmed. we are very grateful that you are here to have time for discussion. your written testimony was already received and will be a part of the permanent record as well. we have not called votes yet, so we're not in a hurry at this point be, so i'm grateful to be able to receive your testimony. you may begin. >> chairman lankford, members of the subcommittee, i want to thank you for the invitation to to discuss the workloads of the office of medicare hearing and appeals or what we call omha. omha administers the nationwide medicare administrative law judge hearing program and is responsible for conducting the third level of review of medicare appeals. in order to insure that omha's adjudicators have decisional independence from cms, omha was established as a separate agency within the department of health and human services and reports directly to the secretary. accordingly, we operate under a separate appropriation, and we are both functionally and

firstally separate from cms -- fiscally separate from cms. what had previously been a gradual, upward trend took an unexpectedly sharp turn. and omha experienced an overall 545% increase in our appeals. the rise in the number of appeals resulted both from increases in the number of beneficiaries utilizing covered services and also from the expansion of omha's responsibility to include the adjudication of appeals resulting from new audit workloads undertaken by cms, including the nationwide implementation of the recovery audit program. there have also been increases. we are pleased that omha's 2014 funding level has brought our adjudication capacity to 72,000 appeals per year. however, this capacity pales in comparison to the adjudication

workload. in fiscal year '13 alone, omha is received 384,151 appeals, and in fiscal year 14, receipt levels through july 1st are approximately 509,124 appeals. as a result, omha had over 800,000 appeals pending on july 1 of 2014. although alj team productivity has more than doubled from fiscal year '9 through '13, omha has been receiving rxly one year's worth of appeals every four to six weeks, driving adjudication time frames to their current high of 387 days. omha recognizes the need to adjudicate appeals with greater efficiency. by the end of the fiscal year, we will release a manual which utilizes best practices to standardize our business process. we are using -- [inaudible] from paper to electronic, an

effort which will culminate in its first release in the summer of 2015. we have also developed a the template system which simplifies the work of our staff by providing standardize, fillable formats for routine word processing. omha also proposed and former secretary sebelius established a departmental interagency work group which conducted a thorough review of the appeals process and developed additional initiatives that both omha and cms are currently implementing. on june 30th omha posted on its web site two new options for appellants. the first allows them to have their claims adjudicated using havetist call sampling meds. the second option used dispute resolution techniques during a facilitated settlement conference. finally, omha has redirected the efforts of its senior attorneys to assist in the prioritization of beneficiary appeals.

any beneficiary who believes their case is not receiving priority consideration at omha may contact us directly at medicare.appeals@hhs.gov or at our toll-free number, 855-556-8475. although omha is functionally and organizationally separate, i can provide a general outline of initiatives that are being undertaken at cms. these include beginning global settlement discussions involving similarly-situated appellants, requiring the new recovery auditors to provide -- to offer providers and suppliers a 30 day discussion period, allowing for recovery audit payment only after a qualified independent contractor has determined that an overpayment exists, issuing a proproposed rule requiring prior authorization for certain durable medical equipment and requiring prior authorization for two particular part b

services under cms' demonstration authority. although the department is working to address the backlog and the number of prospective appeals within current resources and authorities, the initiatives that i've discussed today will be insufficient to the close the gap between workload and resources at omha. although all workloads at omha have experienced rapid growth, a significant portion of the increase is a consequence of the department's effort to implement legislation designed to combat medicare fraud and to reduce improper payments. the department is committed to crafting solutions which will bring these efforts and the resulting appeal workload into balance. we look forward to working with this committee and with our stakeholders to develop and implement these solutions. i thank you for your time and concern. >> chair recognizes dr. goeser for questioning. >> thank you, mr. chairman. mrs. griswold, can you walk us through the five levels of medicare appeals process?

>> yes. the first two levels are conducted at cms. they are administered by cms, and cms' contractors. they, the third level is at the office of medicare hearings and appeals and is conducted by administrative law judges. the fourth level is at the medicare appeals council which is part of the departmental appeals board. and it's also a separate agency within health and human services. and the final level is with the federal district courts. >> gotcha. can you describe the different types of appeals heard by the aljs? >> yes. we hear both part a and part b appeals under medicare, and we also hear the part d appeals. this was part of our original charge, the prescription drug appeals. we hear irma appeals, we hear appeals on entitlements. we also hear the part c medicare

advantage appeals. >> in percentages of those, what do you hear more often, most often in those appeals for aljs? >> well, it does, it varies. in recent years we have heard a significant number of appeals under part a. which are the acute care hospital, the acute hospital appeals. >> and does that happen, would you say, 30, 40, 50% of the time? and then the alj workload? >> i can get you that number. hold on just one minute. >> i mean, trends really help you out trying to figure out what the problem, you know, being a health care provider, i mean, you always look at trends about what's happening. so that gives you kind of a workload basis which to delegate resources to. >> most of our recovery audit appeals have been part a, and so you can kind of use that as a gauge. in 2014 41.2% -- oh, i'm sorry.

i have the wrong number there. 54.2% to date were recovery audit appeals, and those are predominantly those part a appeals. >> part a. so 50 -- according to hhs office of inspector general in 2010, 56% of the appeals were decided as fully favorable to the appellants, a reverse previous lower level decision. what is the current rate? >> and are you asking about the rac decisions, the rac appeals or just overall -- >> just overall. >> -- overall otrs? all right. in 2014 fully favorable otr rate

for the fiscal year to date is 193%. >> gotcha. -- 19.3%. >> gotcha. now, has omha conducted an analysis on what factors are really driving this backlog? i mean, you made mention of a few of them, but i'd like to be a little bit more specific. >> there are a number of things. all of our workloads are going up. we track what we call our traditional workload which is, you know, the part a/b workload. we also have been tracking the rac workload, and we've tracked the dual-eligible or medicaid and medicare beneficiary workload. all three of those have been going up. the traditional workload has been driven largely, partly by demographics. i mean, there are just more beneficiaries on the rolls who are utilizing more services. it has also been driven by increases in cms' audit efforts,

zone program integrity contractors, identification of improper payments. anything that results in more denials at lower levels is going to result in more appeals at the alj level. of course, the recovery audit program is the one that gets a lot of attention. it was a new program in 2010, so it was a start-up, and the increase in receipts in that program was, of course, dramatic. that incurred -- occurred primarily at our level between 2011 and 2013. that's when we saw the largest spikes in that workload. we've also seen increases in this dual-eligible workload, beneficiaries that are eligible for both medicare and medicaid. and those workloads have gone up as well. >> i thank you, and i yield back, mr. chairman. >> we're going to reserve our questions until after the voting time, so the chair would like to

recognize mr. meadows for his questioning. >> thank you, mr. chairman. ms. griswold, is it not true that the efficiency of your adjudicators has actually increased, you're happening before cases on an annual basis, is that not true? >> it is true. >> all right. so you're actually more efficient by 20% if you really look at the real numbers that your adjudicators are actually being a lot more efficient than they've ever been before. >> well, and since 2009 our adjudicators have actually doubled their productivity. >> right. and so if we look at that, this is not a problem of administrative law judge just sitting back eating bonbons. >> no. >> okay. all right. >> we have a very dedicated work -- >> i think we can both agree on that. at this particular point, and you've dope your homework -- done your homework, you've rooked at the previous hearings,

would you say an estimate under our current rates right now based on the estimates of potential backlog of a million cases, i guess, was in the budget assessment that we got, that that is an eight-ten year backlog to adjudicate them based on current staffing and current workload? efficiency? >> i think if you do the simple math, which is -- >> i'm a simple guy, so simple math. >> divided by adjudicators, owk you know, of course that is the number you come up with. it does not, however, take into account the efficiencies that we are putting in place, the initiatives both at cms and within our pilot program. >> so, granted, you've got the guy smiling, so he's part of your efficiency thing there. i see that, and so i'm encouraged by that. you are familiar with the fact that the law says that you're

required to have a 90-day turn around. that's the i law. >> yes. that is -- >> that is the law. >> the statute envisions a 90-day processing. >> yeah. and you're also familiar with the fact that the intent of congress was to have that 90-day turn around. >> yes. >> okay. because -- go ahead. >> i was just going to say i think that's part of why omha, if you look back at the legislative history, that's part of why we were established in the first place, was to deal with processing delays in medicare cases that existed in social security. >> and you are familiar with the fact that you, because the intent of congress is that, that there is a law out there that authorizes you to take monies from other trust funds to do three things; hire additional administrative law judges, provide additional training and increase the staff of the department of appeals board. those three things, you are

familiar with that? >> i think you're talking about the reprogramming authority? >> well, it's public law 108-173. subtitle d if your counsel would like to look at it. i mean, i've got a copy of it. but with that even the budget requirement or request that you guys have made i guess require for an additional seven units, is that correct? >> we, our fiscal year '14 -- >> yeah -- >> -- level allows for seven additional aljs. >> so what are we doing on 2015? >> the president's budget -- >> yeah. >> -- for 2015 would give us an additional 17. >> right. so i've done simple math based on the president's budget and based on where we are, and does that get you to 90 days? >> no. >> okay. does it get you to, does it get you to less than three years?

the answer's no. >> well, the initiatives -- i want to qualify that. if we're talking about given current, current authorities and current funding, then the answer is, no. >> well, your request. it's the president's request. so is your request -- so your request at this particular point how many years would somebody have to wait for justice? >> i think it is -- >> 5.3 years? >> i think it is impossible at this point to really pin down how long they will have to wait. >> okay. >> we are, you know, we do the math as, i think, an outside limit. >> all right. well, let me close with this then. how many businesses have to go out of his before we start abiding by the law? >> the 90-daytime frame that's

envisioned -- >> 90-day law, it is law. i can give you a copy. 90-day law. >> i also have to point out, and it is in the statute, we recognize that. there is, however, a safety valve in that statute as well which i need to point out which is the right to escalate claims. and i think that also envisions. >> so we just moved the ten-year backlog up to number four or number five? >> well -- >> that won't work either. i mean, i've looked at their budgets. >> that is what the statute end visions. >> okay. >> the interesting thing in this, though, is that people have chosen not to escalate. this year we had 152 requests to date which i believe indicates that providers and suppliers are still finding value in our alj hearing process and choose to remain in the queue. >> so your recommendation is for all those that are watching here today to escalate their claims if they're in this ten-year backlog? i can't imagine you would say that. >> no. it is an option for them.

>> will okay. all right. i yield back. i thank the patience of the chair. >> thank you. we're going to take a recess. vote have been called, and so we're headed that direction, and we will recess until the conclusion of the votes. the votes, i would estimate, are going to take somewhere around 30 minutes, maybe a little bit longer. then we'll go through, and we will reconvene at that time. >> great. [inaudible conversations] >> apologize for the delay there with the votes.