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AdQIC: A Brief Refresher on the Role This Contractor Plays

(June 15, 2012): If you have ever been involved in a Medicare postpayment audit, or even a prepayment audit, you may have heard of the “QIC” – the Qualified Independent Contractor. This contractor for the Centers for Medicare & Medicaid Services (CMS) is responsible for adjudicating reconsideration appeal requests from appellants still unhappy with a re-determination decision. As background, when a Medicare claim is denied (either initially or after a ZPIC or RAC review), there are several levels of administrative appeal available to a health care provider. These include:

1. Redetermination Appeal.
2. Reconsideration Appeal.
3. Administrative Law Judge (ALJ) Appeal.
4. Medicare Appeals Council Review.
5. Federal District Court Review.

I.  Recent Findings in QIC Report:

A recent report promulgated by a QIC indicated that the vast majority of appellants in Medicare post-payment appeals decide “throw in the towel” and effectively stop their appeal efforts if they lose at the  2nd level (the reconsideration oe “QIC” level of appeal).  As we discuss later, this is often not a good appeals strategy.  However, if appellants do choose to go further, they may later be confused by another CMS contractor, known as the “AdQIC” – the Administrative Qualified Independent Contractor. While Q2 Administrators currently serves as both a QIC and as the AdQIC, these two contracts have very different roles and responsibilities.

II.     Responsibilities of the QIC:

As previously discussed, QICs serve as the mid-level adjudicator in Medicare post-payment appeals. They accept reconsideration appeal requests filed by appellants, gather relevant documents from the appellants and from the lower-level Medicare Administrative Contractor (MAC) who conducted the redetermination review, and actually adjudicate whether the claims qualify for coverage and payment under Medicare’s program rules. Notably, like MACs and ZPICs, they are bound by both National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs). In addition, QICs may review the propriety of a statistical extrapolation, if one was conducted in the case being reviewed.  Once the QIC issues a reconsideration decision, an appellant may appeal to an ALJ, at which time the QIC then forwards (or at least is supposed to) all of its records to the ALJ for use in those proceedings.

III.     Responsibilities of the AdQIC:

The AdQIC serves a very different purpose than the QIC.  The AdQIC only starts its work after an ALJ has made his or her decision in a case.  While an AdQIC is supposed to “effectuate” the decision of an ALJ (which presumably refers to the AdQIC coordinating the decision with CMS, the relevant ZPIC, and the relevant MAC to either pay monies back to the provider which are owed as a result of the ALJ decision, or modify the amount due from the provider because of a decision), the AdQIC has effectively become the government’s appellate unit and appears to be reviewing nearly every ALJ decision to determine if there is any error or misapplication of the facts by the ALJ.  If there is, the AdQIC may make a referral to the Medicare Appeals Council for the Council to review the case “on its own motion.” This is especially true if some of the issues found favorably for a provider involve the extrapolation or one of the many waiver provisions contained in the Social Security Act. While providers have a chance to rebut the AdQIC’s referral, the Council will often take notice of the AdQIC’s action and choose to review a case. The case may then be reversed, upheld, or remanded back to the ALJ for further proceedings and clarification. This can add considerable time and expense to appeals and take what appears a victory for the provider and completely reverse it. As a result, you should take it seriously when the AdQIC contacts you.

IV.     Appeal Strategies for Providers:

Prior to appealing a claim, we believe that a health care provider should first carefully assess the services at issue and determine whether they were medically necessary, properly administered and should, in fact, have been paid.  If not, the health care provider should not pursue an appeal.  If the health care provider believes that these services should have been paid, the provider should keep in mind that the appeals process is a long, drawn-out process.  Moreover, it is essential to remember that the first time a provider will have an opportunity to “tell his side of the story” is at the ALJ level of appeal.  Prior to that point, only the administrative file is considered by reviewers at the re-determination and reconsideration levels of appeal.  As a result, in most instances, a provider’s best chance of success is at the ALJ level, which is the first chance the provider gets to speak with an actual person, instead of merely sending in documentation and written arguments in support of payment. While the QIC may be an “independent” contractor, it has been our experience that they tend to strictly apply the rules and are not readily willing to overturn decisions made by lower reviewers. As a result, while providers may occasionally win some claims at the QIC level, their best opportunity to present their case remains at the ALJ level.

To be clear, providers should not just assume that an ALJ will rule in their favor.  The ALJs we have practiced before are extremely knowledgeable and experienced in practically every area of Medicare practice.  Providers will likely find that the ALJ hearing their case has already thoroughly read their case-file and is prepared to ask the provider a number of tough questions.  Further complicating matters is the fact that in most cases involving over $100,000 a representative of the ZPIC will also be present during the ALJ hearing presenting the reasons why the claims were denied.  Despite these challenges, the ALJ level of appeal is a health care provider’s best opportunity to identify out any points missed by other reviewers and explain why the services at issue should be paid.  As you can imagine, the administrative appeals process has become quite complicated.  If your practice is subjected to a significant post-payment audit, we recommend that you contact a qualified health attorney for assistance.

Healthcare LawyerRobert Liles is the managing member of Liles Parker PLLC, a Washington D.C.-based health law and business transactions firm. Robert represents clients in Medicare and Medicaid administrative appeals, fraud and abuse issues, Compliance Plan drafting and implementation, and training of healthcare professionals in legal issues which might affect them. For a complimentary consultation about your case, call today at 1-800-475-1906.

Lose Your Appeal at Reconsideration? Consider an ALJ Hearing

If you lose a Medicare appeal at Reconsideration, you can file for an ALJ Hearing.(June 18, 2011): As a review of the last several quarters of Medicare appeals statistics reflects, an overwhelming percentage of Medicare providers appealing alleged overpayments through the Medicare administrative appeals process have chosen to “throw in the towel,” so to speak, when they have lost at the reconsideration level.  As you will recall, at the reconsideration level, Medicare claims are assessed by a Qualified Independent Contractor (QIC) selected by the Centers for Medicare & Medicaid Services (CMS) to hear the second level of administrative appeals.

According to statistics kept by Q2 Administrators, the contractor selected to serve as the Administrative QIC (AdQIC), most Medicare providers have chosen not to appeal claims denials issued by the QIC at the reconsideration level.  Nationwide, in the last eight quarters, the percentage of Part B QIC cases not being appealed has risen to an astounding 86%. This trend is also occurring in Part A QIC cases, where the numbers of non-appealed cases have grown from roughly half to 75%

The purpose of this article is to examine possible reasons why Medicare providers have chosen not to appeal claims denials to the Office of Medicare Hearings and Appeals (OMHA) to be heard by an Administrative Law Judge (ALJ).  We also examine points to be considered by providers if choosing to be represented by legal counsel in the ALJ hearing process.

I.  The Third Level of Appeal: ALJ Hearing:

For 2011, if at least $130 remains in controversy following a QIC’s denial decision at the reconsideration level, a Medicare provider may request an ALJ hearing within 60 days of receipt of the reconsideration denial decision. ALJ hearings are intended to be non-adversarial proceedings aimed at determining the facts so that questions of coverage and payment may be properly addressed.  It has been our experience that the ALJ level of appeal is a provider’s best opportunity to present its arguments in support of coverage and payment.

ALJ hearings are usually held by video-teleconference or by telephone, but you may also ask for an in-person hearing. While an ALJ hearing is the third level of the administrative appeals process, it is the first time that a provider is given an opportunity to testify, clarify points missed by reviewers at lower level of appeal and answer any questions that may be raised by the ALJ.

 II.  Why Are Most Medicare Providers Not Appealing Reconsideration Denials? 

When facing an overpayment determination levied by a Zone Program Integrity Contractor (ZPIC), a Recovery Audit Contractor (RAC) or in some instances a Medicare Administrative Contractor (MAC), the first question to be addressed by a Medicare provider is:

“Based on the record and the facts, should we have been paid for the services rendered and / or the products / devices provided to this Medicare beneficiary?” 

The answer to this question isn’t always as easy as it may initially seem.  Were the services medically reasonable and necessary?  Did you properly document the services? When faced with this question, the basic rule we recommend that providers follow is fairly simple – if it doesn’t belong to you, give it back.  In such a situation, a provider should examine the various reasons why the claim allegedly does not qualify for coverage and payment and should take steps to better ensure that any deficiencies are remedied. Additionally, any other overpayments noted must be promptly repaid to the government, with the 60 day period mandated under the Affordable Care Act (ACA).

In cases where a provider (or their representative) contends that a claim does, in fact, qualify for payment, it typically appeals an overpayment assessment issued by a ZPIC, RAC or MAC.  Nevertheless, as previously discussed, the vast majority of providers who lose an appeal at the reconsideration level choose not to further appeal the denial. In speaking with Medicare providers, the primary reasons for not appealing any further include:

  • Cost / benefit considerations. By the time a provider reaches the ALJ level, the provider has already endured the time, expense and frustration of unsuccessfully arguing its case through two levels of appeal.  By this time, many providers conclude that the amount in controversy does not justify the time and expense of further appealing the QIC’s denial to the ALJ level.
  • Many providers are intimidated by the hearing process and do not feel comfortable participating in an ALJ hearing.  Despite the fact that ALJ hearings are typically conducted by teleconference, the process can still be quite intimidating.  ALJs almost always place testifying providers and their designated “experts” under oath before taking their testimony.  Additionally, if a provider has introduced new evidence into the record, it will be required to show “good cause” for its admission at this late stage of the proceedings.  Finally, most providers find that the ALJ handling their case is quite knowledgeable and typically has extensive experience analyzing coverage requirements and assessing the adequacy of a provider’s documentation.  Providers who have failed to adequately prepare for the hearing are likely to find that the process can be quite difficult.
  • The ALJ hearing process has become considerably more complicated due to the participation of ZPIC personnel. Over the past year, the ALJ hearing process has become quite complicated when dealing with large, “big box” overpayment cases.  For instance, in cases when damages have been extrapolated, it is quite common for representatives of the ZPIC who issued the initial denial decision to attend the hearing as a “participant.”  When this occurs, ZPIC representatives often include an attorney representing the ZPIC, a statistician who will be prepared to support the extrapolation applied in the case, and a clinician (typically a Registered Nurse) who will testify why the claims allegedly do not qualify for coverage.
  • In cases where a provider’s third-party biller has agreed to handle claims appeals, few billers have agreed to pursue a denial past the reconsideration level of appeal.    

III.  Consequences of Not Filing for ALJ Hearing:

Assuming that no extended repayment plan has been established and the alleged overpayment has not already been repaid, the MAC will initiate recoupment of the alleged overpayment 30 days after the QIC issues its denial decision. Unfortunately, this will occur regardless of whether a request for ALJ hearing is filed in a timely fashion.

Should a provider choose not to further appeal, its important to recognize that its “claims denial ratio” will increase.  As the government and its contractors increasingly rely on “data mining” when identifying potential targets for audit, providers with a high error rate will likely find their practices subject to further scrutiny.

 IV.  Don’t Give Up on Properly Billed Claims – Consider Your Options:  

As Medicare claims audit and assessment efforts increase (through CMS’ use of ZPICs, PSCs and RACs), health care providers will be under increasing pressure to ensure that all statutory and regulatory medical necessity, documentation, coding and billing requirements are met.  Despite a provider’s best efforts to remain compliant, it may find that its practice or clinic is alleged to have been overpaid by a Medicare contractor. Should that occur, we strongly recommend that you retain qualified, experienced legal counsel to represent your interests as early in the appeals process as possible.

Should you choose to handle the appeal yourself and lose at the reconsideration level, contact experienced legal counsel before deciding to discontinue the appeal.  Depending on the facts, you may find that it is both cost-effective and advisable to have your case handled at the ALJ level by experienced legal counsel.  When retaining counsel,  there are several important questions that you should ask:

  • How much of your law practice involves health law issues?
  • Please describe the extent of your experience handling large, complex administrative appeals of denied Medicare claims.
  • Please describe your experience in challenging statistical extrapolations applied to an alleged overpayment in a case.
  • How often have you responded to AdQIC appeals of favorable ALJ decisions?
  • How often have you handled MAC appeals?
  • Can you provide provider references?

Hopefully, your practice will not face a large administrative appeal of denied Medicare claims.  However, should such an event occur, you need to be ready to respond to the contractor’s audit.

V.  Conclusion:

 In addition to representing a wide variety of providers in the administrative appeals process, our Firm has been retained by a number of other law firms to assist them with large, complex administrative appeals.  After representing health care providers for many years in administrative hearings, involving literally tens of thousands of claims, it has been our experience that the ALJ level of appeal is the single best opportunity that a provider has to present its arguments in support of payment.

 While there are no guarantees in litigation, working with qualified clinical personnel, experienced legal counsel can effectively present a provider’s arguments to an ALJ assigned to hear the provider’s case.  Keep in mind, the trier of fact is an attorney – not a clinician or a consultant. Experience, coupled with an in-depth knowledge of the statutory and regulatory requirements at issue, may prove essential in proving your case. The ALJs we have practiced before have been attentive, knowledgeable, willing to listen to the provider’s viewpoint, and perhaps most importantly, fair If facing an ALJ hearing, consider the benefits of retaining experienced counsel when considering your options.

Healthcare AttorneyRobert W. Liles, J.D., M.B.A., M.S. serves as Managing Partner at Liles Parker, Attorneys & Clients at Law.  Liles Parker attorneys have extensive experience representing Home Health, Hospice, CMHC, DME, Ambulance, Physician Practices, Nursing Homes, SNFs, and PT / ST / OT Therapy providers in the Medicare administrative appeals process. Our attorneys also work with providers to help better ensure that their Compliance Program addresses applicable statutory and regulatory requirements.   Need assistance?  Call us for a complimentary initial consultation.  We can be reached at:  1 (800) 475-1006.

Keeping an Eye on Medicare’s AdQIC

AdQIC(December 29, 2010): At the outset, it is important to keep in mind that the following observations merely reflect our opinions, nothing more, regarding the participation of an AdQIC in the Medicare appeals areas.  These observations are based on our experiences working on  health care provider post-payment audits of Medicare claims, over many years.


I.    Overview of the AdQIC’s Stated Responsibilities:

Many health care providers are familiar with the revised administrative appeals process for contesting denied Medicare claims.  In exercising their appeal rights, many providers (or their legal counsel) have appealed denied claims through the second level of appeal, submitting their claims and arguments in support of payment to the Qualified Independent Contractor (QIC) responsible for hearing reconsideration appeals. Q2 Administrators (Q2A) is one of the contractors selected by the Centers for Medicare and Medicaid Services (CMS) to serve as a QIC.

Notably, Q2A has also been awarded the first task order to serve as Administrative Qualified Independent Contractor (AdQIC). Q2A’s responsibilities as AdQIC are separate and distinct from its responsibilities as one of the general QICs chosen by CMS to serve as the reconsideration reviewer of denied Medicare claims.

The role played by Q2A as AdQIC is often misunderstood by many health care providers.  Officially, Q2A performs its AdQIC duties out of its headquarters in Columbia, South Carolina.  As Q2A’s reflects, in its role as AdQIC, is responsible for performing a number of essential administrative appeal functions.  As AdQIC, QA2 notes that the unit is responsible for:

  • Developing training and standard work protocols.
  • Analyzing appeal outcomes.
  • Recommending improvements to the appeals process.
  • Managing case files.

Sounds fairly innocuous doesn’t it?  Unfortunately, the current AdQIC system represents a major challenge for prevailing providers to overcome.  Rather than merely “analyzing appeal outcomes,” as Q2A’s website reflects, the AdQIC has effectively become CMS’ appellate counsel, challenging favorable decisions by Administrative Law Judges (ALJs) with which it disagrees (typically because the decision is not supported by the record or allegedly incorrectly applies the law).   At this time, we have not seen any cases where an ALJ ruled against a health care provider but the AdQIC chose to appeal the negative determination, irrespective of any action that the provider might choose to take.  Instead, our review of the cases referred to the Medicare Appeals Council (MAC) by the AdQIC suggests that unit is only interested in cases where the presiding ALJ has ruled in favor of the provider.

 II.     So What Does as AdQIC Really Do?

As Q2A’s website reflects, the company’s stated mission is to:

“[P]rovide support and services to the Federal government and other customers that reflect our ideal of ‘Quality to the Next Level.’ Q2A delivers consistent, quality outcomes and solutions for our customers by utilizing sound processes and a stringent quality assurance program. (emphasis added).

On its face, Q2A’s mission expressly reflects where its interests lie – the company’s focus is on delivering “consistent, quality outcomes and solutions” for its “customers.”  In the case, the customer is CMS, not health care providers.  As the “Frequently Asked Questions” section Q2A’s website reflects:

Question:  What happens after I receive a favorable (emphasis added) ALJ Decision? 

Answer:  Favorable rulings by an Administrative Law Judge (ALJ) do not result in immediate payment of claims.

Once an ALJ rules favorably on an appeal, the Office of Medicare Hearings and Appeals (OMHA) forwards the decision and case file to the Administrative Qualified Independent Contractor (AdQIC).

The AdQIC subsequently has 10 days to update the appeals tracking system and to decide whether the case requires further review by the Medicare Appeal Council or is sent to the Medicare contractor for payment. The AdQIC’s review cannot begin until it receives the case file. Regulations do not require the OMHA to forward case files within a given amount of time.

If the AdQIC refers the case to the Medicare Appeals Council, the Medicare contractor that processed the original claim is notified. Effectuations (payment of claims) made by the contractor are then contingent upon the Medicare Appeal Council’s decision.

For ALJ decisions that require no further review, the AdQIC sends an effectuation notice to the contractor, who must then pay specified claim amounts within 30 days. Effectuations in which the contractor must calculate the amount may take up to 60 days.

While an AdQIC doesn’t have the authority to appeal a favorable ALJ decision to the MAC, it can (and often will) refer a case (where the provider prevailed) to the MAC and ask that the Council review the decision.  Two primary points of contention have been typically been appealed by the AdQIC:

(1)   Cases where the ALJ has overturned an extrapolation of damages.

(2)   Cases where the ALJ has held that a provider is not liable for alleged overpayments associated with one or more claims under Section 1870 of the Social Security Act.

In many (but not all) cases, the MAC will, in fact, open and review an ALJ’s favorable decision.  We have handled cases where the MAC chose not to review a favorable case holding, depsite the fact that it was referred by the AdQIC.  When the MAC chooses to review a holding, it may issue its own judgment or it may choose to remand the case back to the presiding ALJ for his / her reconsideration of the contested points.

III.     Don’t Go Into This Process Alone – Retain Experienced Legal Counsel:  

As Medicare claims audit and assessment efforts increase (through CMS’ use of ZPICs, RACs and PSCs), health care providers will be under increasing pressure to ensure that statutory and regulatory coding and billing requirements are met.  Despite your best efforts to remain compliant, you may find that your practice or clinic is subjected to review.  Should that occur, we strongly recommend that you retain qualified, experienced legal counsel to represent your interests.  In a number of cases, we have been retained by other law firms to assist with administrative appeals.  When working with other law firms, the level of our involvement has varied from case to case.

IV.     When is a “Win” Truly a “Win”?

Unfortunately, it is becoming more and more difficult each year to rely on a favorable ALJ ruling.  Over the past year, the AdQIC has become more aggressive than ever in challenging holdings with which it disagrees.  As a result, it is important that your counsel plan for beyond the ALJ level when asserting defenses to the government’s arguments.  While a number of arguments may be persuasive to an ALJ, the same arguments may also automatically generate a referral by an AdQIC to the MAC. When hiring an attorney to handle your Medicare claims case, be sure and ask prospective counsel the following:

  1. How much of your law practice is devoted to health law issues?
  2. Please describe the extent of your experience handling large, complex administrative appeals of denied Medicare claims.
  3. How often have you responded to AdQIC appeals of favorable ALJ decisions?
  4. How often have you handled MAC appeals?
  5. Can you provide provider references?

Hopefully, your practice will not face a large administrative appeal of denied Medicare claims.  However, should such an event occur, you need to be ready to respond to the contractor’s audit.  While there are no guarantees in this business, knowledge of the rules and experience handling administrative appeals may prove essential to increasing the likelihood of your success.

Robert W. Liles Healthcare LawyerRobert W. Liles, J.D. represented healthcare providers and suppliers around the country.  Liles Parker attorneys have extensive experience handling complex Medicare administrative appeals.  Our attorneys have represented Home Health Agencies, Hospice Companies, Ambulance Companies, Chiropractic Clinics, Physical / Occupational / Speech Therapy Clinics, Nursing Homes, Physician Practices (E/M Claims), Psychology Practices, DME Companies and a wide variety of other Medicare Part A and Part B providers.  Should your practice or clinic be audited by a ZPIC, RAC or PSC, give us a call for a free consultation.  We can be reached at: 1 (800) 475-1906.