(February 12, 2011): Over the last year, we have noted an important trend when representing Medicare providers in post-payment overpayment cases at the Administrative Law Judge (ALJ) level of appeal. Medicare contractors are actively attending and participating in many ALJ hearings. In fact, it is now common for a Zone Program Integrity Contractor (ZPIC) to participate in these proceedings. The virtual "Courtroom" where ALJ hearings are typically held (most ALJ hearings are now held by teleconference or video-teleconference -- few are conducted in person) are no longer attended by only a provider, its attorney and the Judge. Instead, it is now relatively crowded, requiring the scheduling of experts and the testimony of various clinical specialists -- representing not only the provider, but also one or more government Medicare contractors. Although mostly limited to "big-box" cases where the amount at issue ranges from $100,000 to several million dollars, we have even had ZPIC participation in ALJ hearings involving alleged overpayments of only a few thousand dollars.
This "sea change" in how the government and its contractors view their role in working to help ensure that alleged overpayments stay in place demands that providers reconsider their decision to represent themselves in ALJ appeals hearings. While many health care providers feel comfortable handling an ALJ hearing on their own when the only parties on the teleconference or on the video-teleconference are the Judge and the Medicare providers themselves, it is a completely different situation when one or more contractors elects to participate in the hearing and present their denial reasons to the ALJ. The purpose of this article to examine this trend and discuss a number of considerations that Medicare providers should be taking into account when deciding whether or not to represent themselves at ALJ hearing, without an attorney.
I. Rights / Limitations of a ZPIC or Other Contractor When Acting as a "Participant" in an ALJ Hearing:
Pursuant to 42 C.F.R. § 405.1010, both representatives from the Centers for Medicare and Medicaid Services (CMS) and its contractors may participate in an ALJ hearing. Moreover, an ALJ may request that CMS or its contractors participate in a hearing. As the regulatory provisions provide:
- An ALJ may request, but may not require, CMS and/or one or more of its contractors to participate in any proceedings before the ALJ, including the oral hearing, if any. CMS and/or one or more of its contractors may also elect to participate in the hearing process.
- If CMS or one or more of its contractors elects to participate, it advises the ALJ, the appellant, and all other parties identified in the notice of hearing of its intent to participate no later than 10 calendar days after receiving the notice of hearing.
- Participation may include filing position papers or providing testimony to clarify factual or policy issues in a case, but it does not include calling witnesses or cross-examining the witnesses of a party to the hearing. (emphasis added).
- When CMS or its contractor participates in an ALJ hearing, the agency or its contractor may not be called as a witness during the hearing.
- CMS or its contractor must submit any position papers within the time frame designated by the ALJ.
- The ALJ cannot draw any adverse inferences if CMS or a contractor decides not to participate in any proceedings before an ALJ, including the hearing.
While ZPICs and other contractors may not "cross-examine" a Medicare provider or its witnesses during an ALJ hearing, contractors have easily worked around this regulatory obstacle. Rather than confront a provider directly, a contractor will merely point out their concerns or make a specific point to the Judge. The presiding ALJ will often then merely ask the provider the same questions first raised by the ZPIC. As a result, a Medicare contractor never has to cross-examine the provider but his points and questions are still ultimately answered. For instance, the following very simple exchange might occur during an ALJ hearing:
"ALJ: I would like to hear the Medicare contractor's views regarding the medical necessity of this E/M claim.
ZPIC: Your honor, the 1997 E/M Guidelines clearly reflect the types of situations which would qualify as "High Complexity." We don't believe that the facts here represented that level of complexity. Additionally, the physician is now alleging that the patient suffered from multiple serious co-morbities which complicated the medical decision-making required. Where is there proof that the patient had these conditions?
ALJ: Dr. Smith, can you point out where these medical conditions are documented in the medical records submitted?"
In most instances, a provider should expect ZPIC participation in their ALJ hearing. Moreover, a provider should expect for the ZPIC to point out weaknesses in the provider's case. ALJ's are seeking to determine the facts and decide whether the claims at issue qualify for coverage and payment. When a ZPIC raises a concern, most ALJ's will want to follow-up with the provider in order to obtain an answer regarding the points raised.
Over the last year, we have also seen a marked increase in the number of ZPIC participation cases, either at the hearing stage or where the ZPIC seeks permission to file a post-hearing brief with the Court. This can be especially problematic for providers who choose to represent themselves at hearing because the ZPICs have used this as an opportunity to present new evidence and/or new arguments that were never introduced at lower levels of the case or at ALJ hearing. As a result, the provider is often placed in the position of trying to respond to new arguments, never before presented by the ZPIC or other contractors, at the last minute in the ALJ hearing process.
II. The Nature of ZPIC Participation:
Medicare providers should keep in mind that both ZPICs and Program Safeguard Contractors (PSCs) are quite sophisticated and are becoming more and more active in the ALJ hearing process, often replying to arguments presented to the Judge by a Medicare provider. Moreover, it is not uncommon for a ZPIC to send as many as three professionals to participate in an ALJ hearing -- all of whom may ultimately defend the ZPIC's initial denial of the provider's Medicare claims. One of the ZPIC representatives very well may be an attorney. A ZPIC contractor against whom we regularly litigate often sends a licensed attorney to respond to pro-provider arguments that the claims qualify for payment because they were not reopened in a timely fashion or that even if the claims do not meet all of the applicable coverage requirements, any overpayment would still qualify for "waiver." The ZPIC's attorney may also respond to a number of limited arguments presented by a provider when trying to get a statistical extrapolation declared invalid by an ALJ. It has been our experience that the ZPIC's attorney is typically polished, smart and prepared. When facing an unrepresented physician, the ZPIC's lawyer would likely easily address any non-medical arguments presented by a Medicare provider. A second ZPIC or PSC representative likely to participate in an ALJ hearing is the contractor's statistician. He is responsible for defending the legitimacy of the statistical sampling and extrapololation methodology employed by the ZPIC or PSC when extrapolating the damages in a case. While a significant number of physicians and other health care providers are knowledgeable in statistics and mathematics, few know or understand the regulatory requirements which must be met before a contractor may engage in statistical sampling and seek to extrapolate damages. As a result, few unrepresented providers have been able to convince an ALJ that an extrapolation is invalid. While the additional cost of engaging a statistical expert to review a ZPICs extrapolation actions can be costly, it is likely required if a provider hopes to have a reasonable chance of challenging an extrapolation. Finally, it is quite common for a ZPIC to send a third representative (typically a Registered Nurse) to provide clinical testimony in support of the ZPIC's decision not to cover and pay certain claims, often citing the ZPIC's own unique interpretation of LCD and LMRP requirements (an interpretation with which we often disagree). Overall, an unrepresented provider is often unprepared to address and respond to the many legal, statistical and clinical arguments presented by the various ZPIC participants in an ALJ hearing.
While ZPIC and PSC representatives are now regularly participating in ALJ hearings, they are not the only contractors who are prepared to rise to the challenge. Representatives of the Qualified Independent Contractor (QIC) have also been participating in some ALJ hearings. In cases we are aware of, the QIC representative has been an attorney working for the contractor. Nevertheless, there is nothing to prevent a clinician working for the QIC from attending the ALJ hearing and presenting the QIC's arguments why certain claims did not qualify for coverage and payment. Additionally, in at least one fairly recent case we handled on behalf of a provider, a Medicare Administrative Contractor (MAC) clinical reviewer chose to participate in the ALJ hearing.
III. What are the Differences Between a"Party" to a Hearing and a "Participant" in a Hearing?
As 42 C.F.R. § 405.1010(c) reflects, there are significant differences between a "party" to an ALJ hearing and a "participant" in an ALJ hearing. As we previously discussed, a "participant" does not have the right to call witnesses or cross-examine parties or their witnesses. Additionlly, participants do not have the right to object to the issues described in the ALJ’s "Notice of Hearing." As CMS has argued, these elements are "cornerstones" of the adversarial process. In the absence of these cornerstones, a proceeding is not considered to be adversarial, even though multiple Medicare contractor representatives may participate in an ALJ hearing. As a result, since the proceeding was not adversarial in nature, a provider will be precluded from seeking to have its attorney’s fees paid under the "Equal Access to Justice Act," even though it ultimately prevailed at hearing. While perhaps technically correct, the idea that ALJ hearings are truly "non-adversarial" when Medicare contractors choose to join as a "participant" is flatly untrue. ZPIC lawyers, clinical reviewers and expert statisticians have proven themselves to be highly capable and effective when arguing their positions, despite the fact that their role in the hearing was considered to be "non-adversarial" in nature. To their credit, even though both sides may be passionate about their position on the issues, all of the ALJs we have practiced before have kept a strict rein on the proceedings.
IV. Providers Should Consider Engaging Experienced Legal Counsel to Represent them in an ALJ Appeal:
When faced with an administrative overpayment case that is highly complex, involves a significant alleged overpayment or is based on a statistical extrapolation of damages, we recommend that a Medicare provider retain experienced legal counsel to represent the provider's interests. While it is possible for an experienced attorney to step in and handle a case at a later level of administrative appeal (such as the QIC and ALJ levels), it becomes more and more difficult to do so in an effective fashion as the case progresses. We have seen a number of cases where a provider has failed to properly establish the record in a case and important supportive documentation stood the chance of not being admitted in the record because the provider failed to introduce it at lower levels of appeal. An experienced attorney can help ensure that the record is properly constructed and no important legal defenses or payment arguments have been left out of the case. Additionally, legal counsel will be able to assess the coverage requirements, identify possible holes in the provider's case and work with the provider to identify witnesses and obtain supportive evidence to hopefully fill any gaps in the provider's case.
As a final point, it essential to remember that the trier of fact, the ALJ responsible for presiding over the provider's case, is a lawyer, not a clinician. Arguably, an experienced health law attorney-- rather than a clinician -- is uniquely trained to analyze the legal issues presented, organize the provider's facts and present the relevant evidence to the ALJ (another attorney). Having said that, an experienced attorney is no substitute for a qualified clinician who can directly address the clinical profiles of the beneficiaries and the medical necessity issues presented. Together, a supporting clinician and a skilled attorney can be a formidable team when arguing a Medicare provider's case. Moreover, this team is best equipped to respond to any arguments raised by participating ZPIC representatives during the overpayment hearing.
Robert W. Liles serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Attorneys in the Firm's Health Law Practice have extensive experience representing health care providers around the country in ZPIC, PSC and RAC overpayment appeals cases . Should you have any questions about your case or the overpayment appeals process, please feel free to call us for a complimentary consultation. We can be reached at 1 (800) 475-1906.