The backlog of appeals of recovery audit contractor (RAC) decisions “has reached a crisis point” says the American Hospital Association (AHA) and three hospitals who have brought suit against outgoing U.S. Department of Health and Human Services Secretary Kathleen Sebelius over the length of time it now takes to have an appeal of a claim denial decided by an adiminstrative law judge.

According to the AHA, which was joined in its suit by Baxter Regional Medical Center in Mountain View, Arizona; Covenant Health in Knoxville, Tennessee; and Rutland Regional Medical Center in Rutland, Vermont, Medicare law requires that when a disputed claim is brought to an administrative law judge in the third level of the denied claim appeals process, that judge must hold a hearing and render a decision within 90 days.

However, because of the current long backlog in appeals, on December 24, 2013, the chief administrative law judge of the Office of Medicare Hearings and Appeals (OMHA), Nancy Griswold, announced that OMHA had suspended the assignment of all new provider appeals to administrative law judges. According to the suit filed in the Federal District Court for the District of Columbia, the suspension will likely last for at least two years, with additional post-assignment hearing wait times most likely exceeding six months when the suspension is eventually lifted and possibly going as long as three years. Currently, nearly half a million claim denial cases are awaiting assignment to an administrative law judge and billions of dollars in reimbursement for provided services are at stake, notes the AHA.

The suit seeks a court order forcing HHS to meet the statutory deadlines for timely review of Medicare claims denials.

“The ALJ backlog problem is egregious and growing more so as appeals continue to mount without resolution by HHS,” the suit says. “OMHA has admitted that it is not meeting its statutory deadlines and will not be able to do so any time in the near future. In the meantime, hospitals are deprived of crucial funds and stuck in endless administrative holding patterns or forced to opt out of the only meaningful opportunity for hearing by undertaking attempts at escalation.”