(February 11, 2014): Has a Zone Program Integrity Contractor (ZPIC) denied your home health claims? If you believe that these denials are unwarranted, your home health agency (HHA) may challenge the denials through Medicare's administrative appeals process. Medicare's appeals process provides five levels of appeal. The first four levels of appeal are before different administrative bodies. The fifth level of appeal requires that an aggrieved provider file suit in federal court. The levels include: Redetermination (conducted by the Medicare Administrative Contractor); Reconsideration (conducted by a Qualified Independent Contractor, or QIC); after reconsideration, a dissatisfied provider may file for ALJ appeal; next, a provider may seek review by the Medicare Appeals Council; and finally, an appeal to federal court. The purpose of this article is to describe certain considerations peculiar to the ALJ review process from the point of view of a Home Health Agency (HHA), or its legal representative. The article focuses on the initial steps to be taken before an ALJ hearing and how to proceed during the hearing.
I. Engaging a Qualified Expert to Challenge an Extrapolation of Damages Related to Home Health Claims:
The extrapolation of alleged overpayment amounts using an error rate calculated by statistical sampling is one of the most powerful weapons a ZPIC can bring to bear against a home health provider. In our experience, it is often difficult for Medicare contractors to properly conduct sampling in the statistically-valid manner required by law. Where extrapolation is used in Medicare enforcement audits, long-standing CMS program materials and Federal caselaw require that the sample in which the error rate is determined to be from established in a statistically valid manner. See HCFA Ruling 86-1 at 4, and Ratansen v. California 11 F.3d 1467 at 1471 (CA 9 1993).
If alleged overpayment amount in your case is large enough to justify it, a home health agency should engage a statistician familiar with Medicare's processes to examine and critique any extrapolation that have been applied by a ZPIC. If significant flaws are identified, the home health agency may be able to have the extrapolation reversed by the ALJ. In order to assess and critique the extrapolation, the expert must be able to review the statistical data and methodology used in the sampling. The home health agency's representative should communicate in writing with the ZPIC or other audit contractor to request in all of the statistical sampling data and records used by the ZPIC when calculating the extrapolation of damages. If the requisite data is not forthcoming, your attorney should extend its requests to all administrative and appeals contractors who enter into the audit or appeals process. Although reversals of extrapolations are infrequent at the redetermination and reconsideration levels of appeal, they are possible. Our firm has succeeded in getting extrapolations thrown out at every level of administrative appeal.
Occasionally the Medicare contractors involved in an audit and a subsequent appeal will refuse or merely fail to provide the extrapolation sampling data sufficiently for an expert to evaluate and challenge the extrapolation. When this happens, a home health agency has an argument for the reversal of the extrapolation entirely independent from issues of statistical validity. The contractors inevitably supply claim-line and similar spreadsheets which, while irrelevant to statistical sampling, can bear a superficial similarity to sampling data. The provider must therefore never assume that the absence of extrapolation and sampling data from the documents produced by the contractors will be conceded by the CMS parties, and must be prepared to prove that absence in its appeal just like any other disputed fact.
With this in mind, in any case where the full set of necessary data is given to the provider in an untimely manner or not at all, the statistical expert should examine all data provided by the contractors, and report in writing on its sufficiency for determination for determining statistical validity. The expert should be ready to testify about sufficiency in these cases, and his reports and testimony must be kept separate from those addressing the merits of statistical validity.
II. Engage a Skilled Nurse Expert to Report & Testify on Clinical Issues:
Unless the dollars at issue are small, or the issues in an appeal are exclusively legal in nature, a home health agency can benefit from engaging a skilled nurse as an expert witness. The nurse expert can provide written reports on clinical issues for submission to the ALJ, and testify at the hearing. If the home health agency has a skilled nurse on staff, he / she may be able to perform these tasks. Otherwise, forensic nurses can be engaged for this purpose who are familiar with home health Medicare claims. In any case, the nurse expert should have education, other training and work experience sufficient to survive a challenge of their qualifications at the hearing.
Because the ALJ’s review in an appeal is a determination de novo of all legal and clinical issues of payability of each claim appealed,the nurse expert’s written report should address all clinical issues in each claim, not just those cited as a grounds for denial in the decision being appealed. Accordingly, the nurse expert’s report should address the homebound status of the beneficiary, and the medical necessity of the services billed to Medicare.
In her testimony at the hearing, however, the nurse should avoid mention of clinical issues that aren’t being argued. The home health agency's attorney or other representative conducting the hearing must communicate in advance so the nurse expert knows what clinical issues he expects to argue about, can organize her testimony to be concise and effective on those issues, and avoid other topics. The balance of the nurse expert’s report will be in the record if a contractor or the ALJ strays off into clinical issues not addressed by the QIC. If that happens, of course, she should be ready to give verbal testimony on the additional issues as well.
Often during an ALJ hearing, questions will arise about the real-world practices of a home health agency. The nurse expert can be useful to offer advice and explanations in such cases to the ALJ. This boosts the judge’s trust and confidence in the nurse, and tends to enhance her credibility on clinical issues.
III. Preparation For Hearing: Planning a Method to Streamline the Hearing of Clinical Issues:
Home health cases appealed to the ALJ level typically involve a large number of home health claims. Most ZPIC overpayment audits employ statistical sampling, where a sample of home health claims is audited, and the resulting error rate (as determined by the ZPIC), is applied to all billings by the home health agency over a multi-year period. To constitute a statistically valid random sample, the sample usually consists of 30-90 individual home health claims. Although individual home health claims may be relatively small, it may not appear to be cost-effective to file an appeal. We recommend you challenge single claim denials if you believe that the services qualify for coverage and payment. This can help keep your overall error rate low and reduce the likelihood of future audits and reviews.
Medicare ALJs strive to conclude all appeal hearings in a single day; and every hearing will require at least two hours of arguments on procedural, statistical and legal issues of general application to all claims. Meaningful oral arguments on medical necessity of a single home health claim denial will consume 10-20 minutes. So an actual hearing of oral arguments on medical necessity issues in 30 or more individual claims would simply be too time-consuming to be feasible. Accordingly, most ALJs will seek to establish a method early in the hearing by which separate oral arguments on each claim at issue can be avoided. Working with your attorney, a home health agency may be able to formulate a method of grouping its claims into a small number of categories, so that representative claims in each category can be argued exhaustively. The separate written arguments on the various claims will remain for separate consideration by the ALJ, but in this way a favorable impression in a stronger claim can be extended to a weaker one.
Meritless arguments run the risk of getting noticed here, in which case they will harm a home health agency's credibility on the stronger claims. There is little chance a meritless argument will prevail, and having them present hurts the persuasiveness of a home health agency's other arguments.
An appeal to the ALJ is, strictly speaking, an appeal of the denial reason cited by the QIC in its reconsideration decision. Nevertheless, since the ALJ level of appeal is a de novo review, you must be prepared to address the alleged errors identified by the ZPIC and the MAC if requested to do so by the judge.
IV. The ALJ’s Record -- Consider Citing Risk of Change Factors in Prior Episodes of Care:
Where a home health agency is supporting the medical necessity of skilled nursing services for Observation and Assessment by pointing to factors in the medical record which show a “likelihood of change” as defined in Medicare Program Benefit Manual Ch. 7, §220.127.116.11, dangerous and unstable medical conditions evident in the Beneficiary’s medical record are often cited. If the episode in question is a follow-on episode, it is more convincing to point to dangerous and unstable conditions in earlier episodes. This is because medical necessity must be determined as of the date of the physician’s order for the skilled care in question.Conditions which were already documented in the record at the time of the order will be more persuasive in establishing the reasonableness of the physician’s judgment.
To do this, obviously the records of the prior episodes must be available for review and submission to the appeal record; but the need for this sort of argument won’t normally be evident at the start of the case when medical records are being gathered. So for this and for other reasons, it is wise to gather the records of all episodes of care for the Beneficiaries in the appeal, not just the episodes at issue.
The handling of medical records by contractors in Medicare enforcement audits and appeals is notoriously sloppy. Although audit denials are generally based on an audit contractor’s review of medical records it receives from a provider or seizes, and CMS regulations require each contractor handling an appeal to turn over its entire file to the provider upon request,contractors evidently find it impossible to comply. For this reason, providers appealing an overpayment determination must include a full set of all medical and billing records at issue, provided separately with each redetermination, reconsideration, and ALJ appeal filing.
A home health agency should therefore collect all medical billing and other records pertaining to all beneficiaries in the relevant audit sample, "Bates Label" them at the start of the appeal, and include the Bates labeled set with each appeal filing . The same labeling must be used at every level of appeal. Efforts to organize each set of records in a logical and consistent manner will pay off later as well. The nurse expert and statistical expert must use Bates references for all document identification in their reports and live testimony. Judges always appreciate this, as it vastly speeds and simplifies testimony on any records.
V. Keep Your Experts’ Live Testimony Short and Concise:
The live hearing before the ALJ is no place for a verbose treatment of a technical subject. Make sure each expert handles his written report, which can and should be a complete coverage of all issues, very differently from his verbal testimony which will be most effective if short. Complex subjects can seldom be communicated exhaustively in a 1-day hearing, and the expert will quickly lose the ALJ if he insists on trying to do that. Make sure your experts plan their testimonies accordingly.
CMS contractors can and do participate in ALJ hearings, but they can do so only as non-parties. Medicare regulations require non-parties to give notice of their intent to participate within 10 days of an ALJ’s notice of a hearing date. When contractors give late notice, or appear at a hearing without notice, your legal representative may choose to object on the record at the start of the hearing. These objections will be more successful if the representative can plausibly argue that he would have prepared differently for the hearing if timely notice had been given.
A sizable appeal to an ALJ may involve submissions to the judge after the filing of the initial appeal. In any case, evidence submitted subsequent to the issuance of the reconsideration decision can be admitted to the ALJ record only on a motion and showing of good cause.[7 Keep in mind, it is getting more difficult each year to show the requisite requirement of "good cause." Therefore, every effort should be made to submit relevant evidence into the record BEFORE the QIC has issued its reconsideration decision.
A seldom-addressed issue in Medicare enforcement audits is non-physicians being allowed to challenge, years after the fact, the medical judgment of physicians who saw the patients and have cared for them. Ostensibly, payment denials for lack of medical necessity are based on “lack of adequate record,” but in practice Medicare audits involve just this sort of second-guessing. The provider’s representative should try to make this point occasionally during the hearing, and not let the ALJ forget that the treating physician’s medical judgment is reflected in the medical records he is reviewing.
A recognized goal of home health care is keeping beneficiaries out of nursing homes and other long-term care facilities; and Medicare Benefit Policy Manual Ch. 7, §30.5.2 expressly provides that the number of re-certification periods for Home Health Care is unlimited as long as the beneficiary remains qualified. CMS contractors however often look askance at successive recertification periods, and suggest they are disfavored. Providers’ representatives should not allow a suggestion along those lines at an ALJ hearing to go unchallenged, and be prepared to explain why and by what authority home health care is not limited to any specific time period.
David Parker practices in the business transaction and healthcare areas. In the health law area, Mr. Parker represents providers in Medicare, Medicaid, and private payor administrative proceedings involving overpayment, revocation and other audit matters, and buyers and sellers in healthcare related transactions. He also gives advice on False Claims Act, Stark, and Anti-Kickback Statute issues. For a free consultation, call: 1 (800) 475-1906.
. Medicare Program Integrity Manual Ch. 8, §18.104.22.168.1. lists the extrapolation statistical data which the contractor must preserve in its files and make available to the provider.
. 42 CFR 405.1032(a). The ALJ cannot however re-open claims in an audit which are not appealed to him.
. See Medicare Claims Processing Manual Ch. 29, §300.3
. See 42 CFR §405.1010(b)
. See 42 CFR §405.1018 & 1028
. Several CMS contractors disseminate program materials which state, without citing any authority, that Home Health Care should be provided only for short periods. For example, one enforcement contractor in the Southwest includes in its standard form Educational Letter on Medicare HHC the statement “We must preserve …HHC services [for] people who, for a short period of time, are too… infirm to leave their homes…to receive physician…services.”