Wednesday, April 16, 2014

Can OMHA do math? Do they want to?

OMHA stands for the Office of Medicare Hearings and Appeals.   Generally, if you appeal a denied Medicare claim, seek reversal of an audit, or appeal a provider enrollment denial, you will end up here, before an administrative law judge.

OMHA is not in good shape.  Because of the booming business in Medicare audits over the last several years, the case load for this department has grown enormously, but its professional staff has only grown very slowing.   How bad is it?   A few months ago, the head of OMHA (Nancy Griswold)announced a moratorium on new cases for two years into the future (!).   (For a blog explaining this, click here.)

What does the data tell us?

I put together some data released by OMHA with the President's Proposed HHS FY2015 budget, and the result doesn't look good.

FY2014 Proposal / Data:
FY2015 Proposal / Data:

FY 2011: 234,000 Claims
FY 2012: 313,000 Claims
FY 2013: Projected: 368,000 Claims
FY 2014: Projected: 392,000 Claims

Rise projected from 2012 to 2014: Claims + 25% (392/313), and Staff + 10% (514/466)

FY 2012:  320,000 Claims
FY 2013:  600,000 Claims
FY 2015: Projected: 850,000 Claims

Rise projected from 2013 to 2015:  Claims, +265% (850/320), and Staff +28% (629/492)

Basically, for the 2013 to 2015 period, claims are projected to rise by 265%, while staff will increase by 28%.    If we assume, for the sake of argument, that staff and claims appealed were in balance in FY2012, we get the following data:

Q.E.D., which is Latin for "eeeek"

It appears that OMHA is a “business” which can process about 670 claims per year per staff at $230 per claim (FY2012).  And now, it expects to clear a nearly 500,000 claim backlog while increasing productivity to 1350 claims per year per staff at half the cost ($118) CY2015 ... just a year in the future.  

The "Show Your Work" section.   In other words, in 2015, they will have the capacity to process about 500,000 claims (of which I'm skeptical), but, 850,000 claims arrive at OMHA during 2015 in addition to the 700,000 claims left over from deferrals in 2014.  Or worse.  So they might end 2015 with 1,550,000 claims - of which they seem to claim that 500,000 will be processed, or leaving about a million claims in boxes in December, 2015.  Happy New Year, 2016.

Unless CMS has some colossal increase in productivity in the system, the outlook seems frankly nutty.  But if you read what they're writing, they think they won't have a problem.  Think of the Titanic, which was taking in water faster than he could pump it out.  It had a math problem, too.


I titled this "Can they do math? Do they want to?"  It looks like they will enter 2015 or 2016 with only incrementally enlarged staff, an enormous backlog of claims (this year's claims, for example, that aren't being logged due to the moratorium), and no way to catch up.   As a character in the movie Up in the Air says, it's not a problem, if you don't have a solution.  Unfortunately, that was just a movie line, and in the real world, it is still a problem even if you don't have a solution.  It's like the classic joke about the check list for flying a single engine plane at night and having an engine failure.  (1) Establish best glide speed.  (2) Radio an emergency.  (3) Change fuel tanks.  (4) Toggle battery switches.  (5) Glide toward an area without lights/buildings.  (6) When you reach 100 feet above ground level, turn on the landing light.  (7) If you see trees, turn it off.

Update (May 23, 2014)
The American Hospital Association filed a lawsuit against CMS/HHS for violations of statutory timelines and demanding a court demand immediate relief.  Press release here and court case here.

Update (September 9, 2014)
An interesting blog at Incidental economist on the RAC problem and a recent bid to mass adjucate some appeals for a fixed amount.   Also, a Harvard Law fellow, Matthew Lawrence, discusses fair alternatives to OMHA as we know it.

Update (January 18, 2015)
The blog above, from April 2014, predicted that despite "happy talk" written into the budget prolog, the increase in budget and staff at OMHA would be drastically inadequate and anyone with a 7th grade education in math could demonstrate the problem.   In the January 2015 budget for FY2016, HHS proposes to raise the headcount at OMHA from 564 to 1,475 within one year, and almost double the budget (from $87M to $140M).   (See here, FY2016 HHS budget, at pages 12, 72, 115, and 139).

Update (February 10, 2016)
The DC Circuit Court reverses a lower ruling and says HHS must take action on the backlog and the Court has authority to intervene.  Here.  The court points out that the HHS math is hopeless, just as this blog did in April 2014.