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HHS Issues Final Rule to Address Record High Medicare Appeals Backlog

Medicare appeals backlog(January 20, 2017): The Medicare appeals backlog has reached its all-time worst. If you’re a healthcare provider or supplier waiting for a hearing before an Administrative Law Judge (ALJ) at the Office of Medicare Hearings and Medicare Appeals (OMHA) – the third level of the Medicare appeals process – you’ve likely been waiting years to have your case heard or, at least, you’re expecting such a wait. This wait time has persisted despite that ALJs are statutorily required to issue a decision within 90 days of receipt of a hearing request. The reasons for the backlog depend on who you ask: the American Hospital Association (AHA) and others have contended that the Recovery Audit Program is the “primary culprit in creating and sustaining” the backlog because Recovery Audit Contractors (RACs) “receive a cut of any improper payments they recover […] and can challenge claims going back as far as three years.”  The U.S. Department of Health and Human Services (HHS) agrees that the Recovery Audit Program has contributed to the backlog, but believes there are other reasons as well, like an increase in Medicare beneficiaries and a growing practice among some providers to appeal virtually every claim denial through ALJ review (coupled with only modest increases in funding for the agency, thereby limiting their ability to address the growing number of appeals and backlog).

I.  Statistical Overview of the Medicare Appeals Backlog:

In any event, the statistics are astounding:

  • The number of ALJ appeals filed grew 936%, from 41,733 to 432,534, between fiscal years (FY) 2010 and 2014.
  • By the end of FY2014, 767,422 appeals were pending at ALJ.
  • ALJ decisions are issued well after the 90-day statutory deadline: in FY2014, it took OMHA an average of 415 days to process an ALJ appeal; in FY2015, it took OMHA an average of 662 days to process an ALJ appeal; and in FY2016, it took OMHA an average of 877 days to process an ALJ appeal.

The backlog has been a significant source of frustration for healthcare providers and suppliers (and their representatives) stuck in the lingering appeals process – and not just because it takes so long to achieve a final judgment by the Secretary. The delay often has significant financial consequences because Medicare can statutorily recover the alleged overpayment shortly after a second level (reconsideration) appeal decision issues, despite that the appeals process is not over and despite that the first two levels of appeal are littered with problems (e.g., we see chronic misapplication of Medicare coverage and payment rules by appeals contractors at the first two levels of appeal).

II.  Order by the U.S. District Court:

Thanks to the efforts of AHA and other plaintiffs who sought relief in court, we may see the backlog resolve over the next few years. On 12/05/2016, the United States District Court for the District of Columbia ordered that the HHS Secretary reduce the backlog according to the following timeline:

  • 30% reduction from the current backlog of cases pending at the ALJ level by 12/31/2017;
  • 60% reduction by 12/31/2018;
  • 90% reduction by 12/31/2019; and
  • 100% reduction by 12/31/2020.

III.  Other HHS Efforts to Address the Medicare Appeals Backlog:

In an effort to meet these mandated backlog reduction timelines, HHS issued a final rule on 01/17/2017 titled “Medicare Program: Changes to the Medicare Claims and Entitlement, Medicare Advantage Organization Determination, and Medicare Prescription Drug Coverage Determination Appeals Procedures”. The final rule includes an assortment of initiatives to reduce the backlog which become effective 03/17/2017, including:

  • Giving select Medicare Appeals Council decisions precedential effect. The final rule provides that designated “Medicare Appeals Council decisions […] have precedential effect and are binding on all CMS components, on all HHS components that adjudicate matters under the jurisdiction of CMS, and on the Social Security Administration to the extent that components of the Social Security Administration adjudicate matters under the jurisdiction of CMS.” This is significant because, currently, even if the Medicare Appeals Council interprets a Medicare authority or provision in a specific way in a decision, that interpretation only applies to the case at hand (even though the decision represents the final decision of the Secretary). In other words, an Appellant can’t contend that the interpretation of a Medicare authority or provision in a previous Medicare Appeals Council matter is binding in their case as well, even if the facts and issues are very similar. HHS hopes the precedential nature of Medicare Appeals Council decisions as of 03/17/2017 will create consistency in the appeals process. It’s possible, though, that the discretion given to the Departmental Appeals Board (DAB) Chair to decide which cases have precedential effect may impact how effective this change will ultimately be.
  • Expanding the pool of adjudicators at OMHA to include attorney adjudicators. An attorney adjudicator is a licensed attorney employed by OMHA with knowledge of Medicare coverage and payment laws and guidance, and authorized to take the actions on requests for ALJ hearing and requests for reviews of QIC dismissals. HHS estimates that the expansion of the pool of adjudicators at OMHA could redirect approximately 24,500 appeals per year to attorney adjudicators who would be able to process these appeals at a lower cost than would be required if only ALJs were used to address the same workload.
  • Creating process efficiencies. These include, for example, allowing ALJs to vacate their own dismissals rather than requiring Appellants to appeal a dismissal to the Medicare Appeals Council and using telephone hearings for certain Appellants.

For more information on these and numerous other initiatives, please refer to the Federal Register. The hope is that the finalization of this rule and the Secretary’s accountability to the District Court – the Court retained jurisdiction of the case to review the quarterly status reports the Secretary is required to prepare and to rule on any challenges to unmet deadlines – will achieve the intended result: complete elimination of the backlog by 2020.

The Centers for Medicare and Medicaid Services (CMS) has taken steps in the past to improve the appeals process, and these steps have not always achieved the intended result. For example, with regard to appeals stemming from a post-payment review, CMS directed redetermination (first level) and reconsideration (second level) appeals contractors – effective August 2015 – to restrict their review on appeal to (in most cases) only the issues alleged by the reviewing contractor (i.e., the contractor that requested the records and issued the initial audit results). The purpose was to avoid a moving ball – where one Medicare contractor alleges one issue and the Appellant addresses it, but then another contractor alleges another issue, requiring the Appellant to then address a different issue with regard to the same claim. However, we have seen the redetermination and reconsideration appeals contractors repeatedly disregard this CMS directive and continue to try and add new denial reasons to the administrative record. We have also seen the initial auditing contractors increasingly allege more than one denial reason, throwing everything but the kitchen sink at providers and suppliers. It seems that Medicare is hoping for at least one denial reason to persist through the appeals process.

Judicial oversight is the difference this time around and could be the key to reducing the backlog. We’ll be monitoring HHS’s progress closely and hoping for expeditious relief for our current and future clients, and healthcare providers and suppliers everywhere.

Lorraine Ater, JDHealthcare Lawyer is a health law attorney with the firm Liles Parker.  She is also a Certified Medical Compliance Officer (CMCO) and a Certified Medical Reimbursement Specialist (CMRS).  Lorraine represents healthcare providers and suppliers around the country in connection with Medicare audits and appeals.  Liles Parker is a boutique health law firm with offices in Washington, DC; across the State of Texas; and in Baton Rouge, LA.  Need assistance?  For a free consultation, please call: (202) 298-8750.

 

Sources:

AHA v. Burwell, 2016 U.S. Dist. LEXIS 126840 (D.D.C. Sept. 19, 2016).

AHA v. Burwell, 2016 U.S. Dist. LEXIS 167291, 2016 WL 7076983 (D.D.C. Dec. 5, 2016).

Federal Register, Volume 82, Number 10, Pages 4974-5140, “Medicare Program: Changes to the Medicare Claims and Entitlement, Medicare Advantage Organization Determination, and Medicare Prescription Drug Coverage Determination Appeals Procedures” (01/17/2017). Available at https://www.federalregister.gov/documents/2017/01/17/2016-32058/medicare-program-changes-to-the-medicare-claims-and-entitlement-medicare-advantage-organization.

HHS, “FACT SHEET: HHS Issues Final Rule to Improve the Medicare Appeals Process”.

HHS, OMHA, “Average Processing Time By Fiscal Year” (11/18/2016). Available at https://www.hhs.gov/about/agencies/omha/about/current-workload/average-processing-time-by-fiscal-year/index.html#.

CMS Seeks to Overhaul Medicare Claims Appeal Process

(July 18, 2016): The Centers for Medicare and Medicaid Services (CMS) has announced a series of proposed changes to the Medicare claims appeal process. The new rules primarily impact the Administrative Law Judge (ALJ) level of review, and CMS has indicated that the purpose of these changes is to help reduce the backlog of pending ALJ hearing requests. As many Medicare providers are aware, the claim appeal process consists of five steps:

  1. A request for redetermination by a Medicare Administrative Contractor;
  2. A request for reconsideration by a Qualified Independent Contractor;
  3. A request for a hearing before an ALJ;
  4. A request for review by the Medicare Appeals Council; and
  5. A request for review in Federal district court

Due to the frenetic auditing activities of CMS’ contractors in recent years – particularly the recovery audit contractors – this system has become overloaded with appeals. This is particularly true with respect to ALJ hearing requests filed with the Office of Medicare Hearings and Appeals (OMHA), where the enormous backlog has prevented OMHA from fulfilling its legal duty to decide appeals within 90 days. As of April 30, 2016 CMS estimates that there are more than 750,000 pending hearing requests. And the backlog only appears to be worsening: the average processing timeframe for an ALJ appeal has increased from 661 days to 819 days between 2015 and 2016.

CMS has stated that the changes to the claim appeals process have two main objectives: to streamline the ALJ hearing process and to increase the number of available adjudicators. Although these new changes impact most of CMS’ existing ALJ appeal regulations, the most significant revisions are summarized below.

  • The Medicare Appeals Council may render binding decisions. In many types of appeal systems, lower courts are required to follow the decisions of higher appellate courts. For example, the decisions of the U.S. Supreme Court are binding on all other Federal courts.

The Medicare Appeals Council is the highest level of appeal within the Department of Health and Human Services, and it is responsible for reviewing ALJ decisions. The Council’s decisions are currently not binding on ALJs or any of CMS’ contractors. The new rules would change this and permit the Council to designate certain decisions as precedential, which means that all of CMS’ contractors and the ALJs would be required to follow them. CMS believes that permitting the Council to render binding decisions would streamline the appeals process and allow for uniformity of some coverage and procedural issues.

  • Attorney Adjudicators will assist with appeals processing. ALJs do not just conduct hearings and write decisions, they also perform a variety of other tasks related to each case, such as: determining if the provider’s appeal is timely, valid, and complete; reviewing the record to ensure all pertinent case materials are present; and determining if good cause exists to admit new evidence offered by a provider.

CMS’ new rules would create new positions within OMHA called “Attorney Adjudicators,” who will be responsible for assisting ALJs with pending appeals. These new decision makers would perform most of the ancillary tasks currently undertaken by ALJs, thereby allowing the judges to focus on holding hearings and issuing decisions.

  • The amount in controversy requirement will increase for some providers. In order to file an ALJ hearing request, the current “amount in controversy” must be at least $150. When determining whether this requirement has been met under the existing regulations, an ALJ will consider the amount billed by the provider to Medicare for the item / service / claim in question.

The new regulation will change the amount in controversy rule for providers who are reimbursed according to a fee schedule, such as physicians, labs, or suppliers of durable medical equipment. In those cases, the amount in controversy will be changed from the amount billed to the amount allowed per the fee schedule. CMS believes that this will reduce the number of appeals submitted to OMHA. It is important to note that, under this new proposed rule, providers will still be permitted to bundle claims together to meet the amount in controversy requirement for an ALJ appeal. For providers who are not reimbursed based on a fee schedule, the amount in controversy rule will continue to be determined according to the amount billed for the claim or service.

These are only three examples of the changes sought by CMS. Many other aspects of the ALJ hearing process will also change, such as when new evidence may be admitted into the record, how cases involving statistical sampling and extrapolation should be handled, and how CMS’ contractors may participate in an ALJ hearing.

In practice, some of these changes may work to the detriment of providers. For example, deeming certain Council decisions precedential would mean that the contractors and ALJs would be required to follow those decisions in identical or similar cases. This could deprive ALJs of independence and flexibility to decide cases based on the unique facts and circumstances of each appeal. CMS does not appear to have offered an estimate as to how many appeals may be affected by this portion of the new rules.

Similarly, the involvement of attorney adjudicators in the process may increase the procedural hurdles encountered by providers during the appeals process. Failure to adhere to most of the procedural requirements for an ALJ hearing request may result in dismissal of the appeal. This increased focus on procedural aspects of the process will likely lead to more providers seeking assistance from attorneys to navigate the increasingly complex hearing process.

Time will tell whether these adjustments to the claim appeal regulations will actually help alleviate the backlog of pending ALJ appeals. The most direct way for CMS to accomplish that result would be to rein in the contractors responsible for the never-ending stream of audits as opposed to tweaking the rules for appeals.

If you have questions about the Medicare claims appeal process or need help with an appeal, you should contact an experienced attorney to discuss your questions and explore your options.

Medicare Claim AppealLiles Parker attorneys assist providers across the country with all matters related to claim appeals, reimbursement, enrollment, compliance, and corporate formation / transactions. If you have questions or concerns about a pending Medicare claim appeal, please contact Adam Bird for a free consultation.  He can be reached at:  1 (800) 475-1906.

CMS Expands ALJ Appeal Claim Settlement Process to Include Part A Providers

SCF Process(April 4, 2016) In an effort to reduce the enormous backlog of pending Administrative Law Judge (ALJ) appeals, the Centers for Medicare and Medicaid Services (CMS) recently announced that it has expanded the pilot Settlement Conference Facilitation (SCF) process to include Part A claims. This process, which was previously only available to providers with pending Part B appeals, is conducted by the Office of Medicare Hearings and Appeals (OMHA). OMHA is responsible for adjudicating ALJ hearing requests and is organizationally separate from CMS.  The SCF is performed by an OMHA staff attorney, who will use mediation principles in an effort to help the provider and CMS reach a settlement agreement. Because the SCF process is still a pilot program, OMHA has announced several limitations on SCF eligibility:

  • The provider must have filed its ALJ hearing request on or before 12/31/15, and the request must meet all applicable requirements for a complete and timely ALJ appeal.
  • SCF must include all claims for the same or similar services for which the provider has filed an ALJ appeal.
  • The provider must have at least 50 claims at issue with a total amount in controversy of more than $20,000 but less than $100,000.
  • The claims must not currently be scheduled for an ALJ hearing.

To initiate SCF, a provider may submit an “Expression of Interest” form to OMHA, which will then perform a review of its system to ensure the provider meets eligibility requirements. Alternatively, OMHA may send notice to a provider that it is eligible for the SCF process. The provider and CMS then have 15 days to respond to the notification and agree to participate in the conference. If a settlement conference is conducted and the parties reach an agreement, the provider will be required to stipulate to the dismissal of its pending ALJ appeal(s) as to all claims subject to the settlement. Otherwise, both the provider and CMS may decline to participate in SCF or decline to accept any offer extended by the other party. If no agreement is reached, the provider’s claims will be returned to the hearing process for adjudication before an ALJ.

This expansion of the pilot SCF program appears to be aimed principally at high volume appellants, i.e. individual Medicare providers with dozens or hundreds of pending claim appeals. Aside from those types of providers, it is unclear how many appellants may avail themselves of the expanded SCF process due to the narrow eligibility criteria. For example, many Part A claims can be worth several thousand dollars each. Therefore, it would be difficult for a provider to meet the minimum 50-claim threshold while also not simultaneously exceeding the $100,000 amount in controversy ceiling.

If you believe that you may be eligible for this new SCF program, you should carefully consider whether to submit an Expression of Interest to OMHA. On the one hand, the financial strain resulting from non-payment of claims denied on a pre-payment basis or the recoupment of monies for claims denied upon post-payment review could make SCF an attractive option for you. This is particularly true if you are not inclined to wait 27 months for OMHA to process and decide your appeal. On the other hand, there could be some drawbacks to SCF. For example, OMHA has announced that, even if a settlement amount is agreed upon by the parties and payment is made for some claims, those claims will still be considered “denied” in Medicare’s claims processing systems. Furthermore, providers will not be able to selectively submit some claims to SCF while moving forward with ALJ hearing requests for others; SCF must include pending appeals for all claims for the same or similar services from a given provider.

If you have questions regarding the new SCF process, you should contact an experienced attorney to help weigh your options. In the event you elect to move forward in an effort to settle your pending claims, we strongly recommend that you retain counsel to represent you during that process in order to help reach a settlement that is as beneficial to you as possible.

SCF ProcessLiles Parker attorneys assist providers across the country with all matters related to claim appeals, reimbursement, enrollment, compliance, and corporate formation / transactions. If you have questions or concerns about a pending Medicare claim appeal, please contact Adam Bird for a free consultation.  He can be reached at:  1 (800) 475-1906.

 

Update on American Hospital Association v. Burwell

ALJ Appeals(February 23, 2016):  The U.S. Court of Appeals for the District of Columbia Circuit recently issued a decision the Administrative Law Judge (ALJ) level of the administrative appeals process that breathes new life into efforts to resolve the backlog of ALJ appeals cases currently pending around the country.  The case, American Hospital Association v. Burwell, was originally filed by the American Hospital Association (AHA) to obtain a court order to force ALJs in the Office of Medicare Hearings and Appeals (OMHA) to adjudicate ALJ appeals within the 90 days mandated by law. The lower court initially refused AHA’s request and dismissed the case. On appeal, the D.C. Circuit reversed the lower court’s decision and remanded the case for further consideration. The appellate court instructed the district court to weigh all of the facts in favor of and against the AHA’s request and to issue a new decision. Although the case has now been returned to the lower court for further review, the D.C. Circuit appeared to suggest in its own decision how the district court should decide the case. The appellate court wrote, “…the clarity of the statutory duty [for Medicare ALJs to hear and decide cases within 90 days] likely will require issuance of the writ [ordering ALJs to timely adjudicate appeals] if the political branches have failed to make meaningful progress within a reasonable period of time – say, the close of the next full appropriations cycle.”

The importance of this decision for Medicare providers whose claim appeals are or may be stuck in “limbo” at OMHA cannot be overstated. The D.C. Circuit has clearly acknowledged the mandatory duty of ALJs to hear and decide claim appeals within 90 days. The court also strongly implied that the order sought by the AHA should be issued in the relatively near future unless Congress acts in the interim.

Meanwhile, the logjam at OMHA has continued to grow even since the AHA first filed suit. According to the agency’s own statistics, the average processing time for ALJ appeals hearing requests increased from 661 days in 2015 to 791 days in the first quarter of 2016. This fact may contribute to the court’s decision as to whether to order the ALJs to begin timely processing of cases.

It is likely that industry and trade groups representing other types of Medicare providers will take action to capitalize on the AHA’s success. CMS will also almost certainly step up efforts to lobby Congress to help fix the issue and to resolve the backlog of pending ALJ appeals. Ultimately, whether the ALJ appeala backlog is resolved by court order or through meaningful efforts by Congress and CMS, this is spectacular news for Medicare providers across the country.

ALJ AppealsLiles Parker attorneys assist providers across the country with all matters related to claim appeals, reimbursement, enrollment, compliance, and corporate formation / transactions. If you have questions or concerns about a pending Medicare claim appeal, please contact Adam Bird for a free consultation.  He can be reached at:  1 (800) 475-1906.

 

CMS Issues New Instructions to its Contractors Regarding the Scope of Claim Appeals

Doc Prescription(October 15, 2015): In an effort to stem the ever-increasing tide of claim appeals, CMS recently issued new guidance (MLN Matters SE1521) to its Medicare Administrative Contractors (MACs) and Qualified Independent Contractors (QICs) regarding the conduct of requests for redetermination and reconsideration, respectively. Effective 08/01/15, MACs and QICs may no longer review claims denied during postpayment audits and develop their own bases for unfavorable appeal decisions. Instead, the contractors are now required to review claims in light of the denial reason set forth by the entity that performed the initial audit. This rule will not be applicable in cases where claims are denied on a post-payment basis because the providers failed to submit medical records.

MLN Matters SE1521 should work to the benefit of providers who are subject to sloppy Zone Program Integrity Program (ZPIC) audits and reviews by recovery auditors, MACs, and the Supplemental Medical Review Contractor (SMRC). For example, we often encounter cases where ZPIC audit contractors have erroneously denied claims due to a purported lack of documentation or review claims using a patently unreasonable interpretation of a coverage standard. In years past, the MACs and QICs would simply ignore these flawed denial rationales and develop new bases for their unfavorable decisions. Moving forward, this will no longer be a possibility.

It is important to emphasize that Administrative Law Judges (ALJs) who conduct hearings at the third level of the appeals process are not subject to this rules discussed in MLN Matters SE1521. Medicare regulations are clear that ALJs are free to conduct de novo reviews of claims and are not bound by the decisions of prior adjudicators / auditors.

Unfortunately, MLN Matters SE1521 will not afford any relief to providers who are subject to prepayment reviews of their claims. CMS has made clear that MACs and QICs may still develop their own issues and articulate new reasons for denial in appeals of claims denied on a prepayment basis.

Providers whose claims are reviewed or subjected to a SMRC, RAC or ZPIC audit should contact qualified counsel to ensure that they maximize their chances for success at redetermination and reconsideration given this new guidance.

Bird,Adam-WebAdam Bird is a health law attorney with the firm, Liles Parker, Attorneys & Counselors at Law.  Liles Parker has offices in Washington DC, Houston TX, McAllen TX and Baton Rouge LA.  Our attorneys represent health care professionals around the country in connection with government audits of Medicaid and Medicare claims, administrative appeals of denied claims, licensure matters and transactional projects.  Need assistance?  For a free consultation, please call: 1 (800) 475-1906.

The Medicare Appeals Process is Broken

The Medicare Appeals Process is Broken(May 5, 2015): As the health care providers and suppliers we represent can easily attest, there are serious problems plaguing the current Medicare appeals process. Rubber-stamp denials by contractors[1] at lower levels of appeal, the failure of Medicare contractors to apply the correct coverage rules and requirements when assessing a claim, and lengthy delays in obtaining a hearing before an Administrative Law Judge (ALJ) are just a few of the problems facing health care providers who appeal the denial of their Medicare claims.

I.  The Medicare Appeals Process is Broken:

On April 28, 2015, the Senate Finance Committee conducted a hearing entitled “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare.[2] Committee Chairman, Senator Orin Hatch, set the focus of the hearing in his opening statement. Several of Senator Hatch’s comments included:

“CMS has, of course, taken steps to identify and recover improper payments, including hiring contractors to conduct audits of the more than one billion claims submitted to the Medicare program every year.  These auditors have recovered billions for the Medicare program – over $3 billion in 2013 alone.  However, the increase in audits has led to a seemingly insurmountable increase in appeals, with a current backlog of over 500,000 cases, evidenced by this chart.

This increase in appeals has resulted in long delays for beneficiaries and providers alikeThere are so many appeals that the Office of Medicare Hearings and Appeals can’t even docket them for 20 to 24 weeks.  In FY 2009, most appeals were processed within 94 days.  In FY 2015, it will take, on average, 547 days to process an appeal – far too long for beneficiaries to find out whether their medical services will be covered or for providers to find out if they will be

Additionally, large portions of the initial payment determinations are reversed on appeal. The HHS Office of Inspector General reported that, of the 41,000 appeals that providers made to Administrative Law Judges in FY 2010, over 60 percent were partially or fully favorable to the defendant. 

Such a high rate of reversals raises questions about how the initial decisions are being made and whether providers and beneficiaries are facing undue burdens on the front end.  On the other hand, we need to recognize that ALJs have more flexibility in their decision-making than Medicare contractors do.” (emphasis added).

As this testimony suggests, the current system of administrative appeals is broken. Unfortunately, many health care providers are finding their organizations facing bankruptcy (primarily through mandatory recoupment) long before the provider has an opportunity to argue the merits of their case before an ALJ.

II.  The Current ALJ Hearing Backlog Has Increased 10-Fold in Two Years:

As Senator Ron Wyden noted during the Senate Finance Committee hearing, increases in the number of Medicare claims audits performed by CMS contractors have resulted in a ten-fold increase in the number of appeals cases ultimately being filed with the Office of Medicare Hearings and Appeals (OMHA). As Senator Wyden testified, the number of cases filed with OMHA in Fiscal Year (FY) 2011 was 60,000. By FY 2013, the number of filings had risen to 654,000.

III. What Does the Future Look Like?

A number of proposals intended to alleviate the current appeals backlog have been proposed by OMHA and included in the President’s proposed FY2016 budget. Unfortunately, a number of these proposals will likely result in additional hardships for small and mid-sized health care providers and providers. During the Senate Finance Committee hearing, OMHA’s Chief Administrative Judge outlined these proposals, which include:

Provide Office of Medicare Hearings and Appeals and Departmental Appeals Board Authority to Use RA Collections. This proposal would expand the Secretary’s authority to retain a portion of Recovery Audit (RA) program recoveries for the purpose of administering the recovery audit program and will allow RA program recoveries to fully fund the appeals process for RA related appeals at the OMHA and the DAB.

Comments: We recognize that the primary purpose of this proposal is to fund additional ALJ slots and support positions and to reduce the massive backlog of cases currently pending at OMHA. Nevertheless, we believe this proposal would create a conflict of interest for the OMHA. ALJ’s are supposed to give health care providers and suppliers a fair hearing and issue a ruling based on the merits. Under this proposal, the OMHA would essentially benefit (through the receipt of additional funding) from each ruling in which it ruled that an RA program denial was justified.  

Establish a Refundable Filing Fee. This proposal would institute a refundable per claim filing fee for providers, suppliers, and Medicaid State Agencies, including those acting as a representative of a beneficiary, at each level of appeal. Appeals filed by beneficiaries or representatives of beneficiaries other than providers, suppliers, and Medicaid State Agencies would be exempt from the fee. Fees will be returned to appellants who receive a fully favorable determination. Under current law, there is no administrative fee paid to the adjudicating entity for filing an appeal. A filing fee would encourage those who frequently file to more carefully assess the merits of their appeals before filing.

Comments: As discussed during the hearing, much of the current backlog can be traced to appeals filed by a relatively small number of providers. The purpose of this proposal is to encourage providers to conduct a careful review of claims denials before automatically filing an appeal. Unfortunately, this proposal will disproportionally affect small health care providers and providers, for whom a limited number of claims represent a significant portion of their overall revenues. Moreover, if enacted, a per-claim filing fee would be charged at each level of appeal.   This proposal will adversely impact small and mid-sized health care providers who wish to assert their appeal rights. Moreover, by discouraging the filing of appeals, the overall error rate of small and mid-sized providers will rise, making them an even larger target for Zone Program Integrity Contractor (ZPIC) and Medicare Recovery Auditor (RA)[3] data-mining efforts.

Sample and Consolidate Similar Claims for Administrative Efficiency. This proposal would allow the adjudication of large numbers of appeals through the use of sampling and extrapolation techniques without appellant consent. Additionally, this proposal would authorize the consolidation of similar appeals into a single administrative appeal at all levels of the appeals process for purposes of adjudicative efficiency. This provision would also require that all appeals that were included within an extrapolated overpayment or were consolidated previously would remain a part of the extrapolated or consolidated file on appeal.

Comments: Once again, this proposal is intended to streamline the appeals process and reduce the current backlog by consolidating similar claims into a single appeal. We are concerned with this proposal for several reasons. First, it places the responsibility for deciding what constitutes a “similar claim” in the hands of the CMS contractor. Past experience has shown that ZPICs and Program Safeguard Contractors (PSC) may fail to properly stratify samples prior to calculating estimated extrapolated damages.  

Remand to Redetermination Level upon Introduction of New Evidence. This proposal would require remand of a Medicare appeal to the first level of review at CMS when new documentary evidence is submitted into the administrative record at the second level of appeal or above. The proposal would include exceptions to mandatory remands if the basis for the submission is that new evidence was provided to the lower level adjudicator but erroneously omitted from the record, or an adjudicator denies an appeal on a new and different basis than earlier determinations. This proposal provides a strong incentive for all evidence to be produced early in the appeals process and to ensure the same record is reviewed and considered at the second and subsequent levels of appeal.

Comments: While we generally support this proposal, we are concerned that if abused by a CMS contractor, it could lead to significant delays in having a case heard by an ALJ. During this period of delay, the alleged overpayment would continue to accrue interest (at a rate far above the current market rate of interest), thereby making it even harder for a health care provider or supplier to make periodic payments on the debt while they are working their way through the appeals process.

Increase Minimum Amount in Controversy for ALJ Adjudication of Claims to Equal Amount Required for Judicial Review. This proposal would increase the minimum amount in controversy required for adjudication by an ALJ to the Federal district court amount in controversy requirement ($1,460 in 2015). It would also clarify the circumstances under which claims can be aggregated to meet the amount in controversy limit.

Comments: This proposal is intended to filter out small claims appeals that are currently contributing to the ALJ hearings backlog. We generally do not oppose this proposal. However, we have seen a number of cases where a Medicare Administrative Contractor (MAC) and / or a Qualified Independent Contractor (QIC) has broken an appeal into discrete claims and issued separate decisions for each claim. This could lead to the dismissal of appeals later in the case for failure to meet the amount in controversy requirement.

Establish Magistrate Adjudication for Claims with Amount in Controversy Below New ALJ Amount in Controversy Threshold. This proposal would allow OMHA to use attorney adjudicators to resolve those appeals that meet the current ALJ amount in controversy threshold ($150 in 2015) but fall below the amount currently required to file an appeal in federal district court ($1,460 in 2015), reserving ALJs for development of a record in more complex cases involving higher amounts in controversy, which have the potential for appeal to federal district court. Decisions of a Medicare Magistrate could be appealed to the DAB, but would not meet the amount in controversy required to be appealable to federal district court.

Comments: As with several of the other proposals, this recommendation would tend to adversely impact small to mid-sized health care providers and suppliers, effectively taking away their right to bring in federal court if they disagree with the denial of a claim that fails short of the new amount in controversy.

Expedite Procedures for Appeals with No Material Fact in Dispute. This proposal would allow OMHA to issue decisions without holding a hearing when there is no material fact in dispute and the decision is governed by a binding authority. These cases include, for example, appeals in which Medicare does not cover the cost of a particular drug or the ALJ cannot find in favor of an appellant due to binding limits on authority. This proposal would increase the efficiency of the Medicare appeals system and result in faster adjudications of appeals at the ALJ level of appeal.”

Comments: This proposal would effectively permit the OMHA to dismiss appeals it believes would be covered by one or more “binding authorities.” In doing so, a health care provider or supplier would be unable to effectively challenge an ALJ’s beliefs in this regard, thereby depriving the provider of an opportunity to show the ALJ why particular claims are not covered by a binding authority. 

IV.  Conclusion:

Small to mid-sized sized health care providers and suppliers are again slated to be adversely impacted by pending proposals to the current Medicare administrative appeals process. As you will recall, an earlier remedy of CMS to address the current case hearing backlog was to offer hospitals a “settlement” if they would drop their appeals. Physicians, small practices, dentists, home health agencies, hospices and other non-hospital providers were not given this option. We remain concerned that the current proposals will only further reduce the ability of small and mid-sized providers to contest the improper denial of Medicare claims by ZPICs, PSCs and RAC.

Robert Liles represents health care providers in RAC and ZPIC appeals.Robert W. Liles, JD, MS, MBA serves as Managing Partner at Liles Parker, Attorneys and Counselors at Law. Robert represents home health agencies of all sizes around the country in connection with a full range of ZPIC prepayment reviews, postpayment audits and suspension actions. He also handles home health False Claims Act cases. For a complimentary consultation, please call Robert at: 1 (800) 475-1906.

[1] Private contractors working for the Centers for Medicare and Medicaid Services (CMS).

[2] A video of the April 28, 2015 hearing, along with written witness statements, are available online at: http://www.finance.senate.gov/hearings/hearing/?id=d29af43d-5056-a032-526a-1de427f91aeb

[3] Previously referred to as Recovery Audit Contractors (RACs) by CMS.

Medicare Administrative Appeals Process – An Overview for New Providers

(August 15, 2012):  Is this your first time being audited by a Medicare Administrative Contractor (MAC) or a Zone Program Integrity Contractor (ZPIC)?  If so, the brief outline below can provide a handy summary of the Medicare appeals process.

I.  Step 1 – Request for Information:

Medicare Administrative Appeals ProcessIn most instances, a health care provider will receive notice of a Medicare post-payment audit by mail, either from the provider’s MAC or the ZPIC responsible for handling that region. This initial correspondence is significant. From this letter, a provider can usually surmise whether the initial review is merely a probe audit or an allegedly statistically relevant review.  Perhaps most importantly, a provider can typically learn the scope of the contractor’s review.  While many requests for documentation are limited to medical records and claims-related documentation, we are now seeing an increase in the number of audits where the ZPIC or MAC has also requested copies of “business” records, such as a listing of current and past employees, copies of contracts, and other materials which can assist the government in determining whether a provider is currently (or has) engaged in conduct which might violate the federal Anti-Kickback Statute or the Stark law.

While many providers feel comfortable responding to a MAC or ZPIC’s request for information, they do not always realize that pre-emptive steps can be taken at this point to help them present their documentation in its best light.  Equally important, a provider may not fully appreciate the importance of maintaining an accurate record for the Medicare appeals process.  Efforts to improperly supplement or correct an incomplete medical record can expose a provider to criminal liability. Providers must understand the rules. Don’t inadvertently turn a mere overpayment matter into a criminal case.

II.  1st Level of Appeal – Re-determination:

After assessing the documentation submitted, a MAC or ZPIC will then notify a provider in writing of their results.  Please note, if the initial Medicare audit was conducted by a ZPIC, you will first receive the ZPIC’s results – a demand letter from your MAC will likely arrive within a few days.  The Medicare audit decision letter and its attachments will identify any claims found to qualify for coverage and payment and should discuss why any denied claims did not Medicare’s payment requirements.

The MAC’s demand letter serves as a “revised initial determination.”  Unfortunately, a large part of the Medicare post-payment audits conducted by ZPICs find that the majority of claims should not have been paid.  Upon receipt of the MAC’s demand letter, you have 120 days to file an appeal with your MAC for re-determination. However, to avoid recoupment, you should file this appeal within 30 days of the date written on the MAC’s letter.  Rather than risk having monies recouped, the best practice is just to ensure that your appeal is received within 30 days of the date of the demand letter.  The first level of the Medicare administrative appeals process involves a contractor from the Centers for Medicare & Medicaid Services (CMS), highlighted on the HHS organizational chart in yellow.

III.  2nd Level of Appeal – Reconsideration:

After receiving a re-determination decision from the MAC (which, like the ZPIC’s finding, is usually unfavorable), you have 180 days to file a request for reconsideration with the Qualified Independent Contractor (QIC) assigned to your area. During this process, the QIC will review the documents you’ve submitted and make an independent determination about the propriety of coverage and payment for the claims at issue. To avoid recoupment at this level, you need to file an appeal within 60 days of the date of the re-determination decision.  Once again, the best practice is to base your filing deadline on the date of the QIC’s decision letter. This level of the Medical administrative appeals process  also involves a CMS contractor, again highlighted on the HHS org chart.

IV. 3rd Level of Appeal – Administrative Law Judge Hearing:

While the QIC sometimes issues favorable decisions, it often agrees with the contractors below and upholds the denial of your Medicare claims. At this point, you should file an appeal with an Administrative Law Judge (ALJ). This must be done within 60 days from the date of receipt of the QIC’s reconsideration decision letter. Keep in mind, in order to qualify to file the ALJ appeal, you must meet all other statutory requirements (such as an amount in controversy over $130). Notably, it has been our experience that the ALJ level of the Medicare appeals process has been the most reasonable and provider-friendly, although each ALJ is different. This level of appeal goes through the Office of Medicare Hearings and Appeals (OMHA), which is highlighted on HHS’ org chart.

V.   4th Level of Appeal – Medicare Appeals Council

If the ALJ decision is unfavorable and you choose to appeal (or in some cases, the decision is provider-favorable and the Administrative QIC (the AdQIC) asks for a review), the next level of the Medicare appeals process is the Medicare Appeals Council (the Council). The Council is made up of senior ALJs with significant skill and experience in Medicare administrative matters. The Council generally looks at errors of law and abuses of discretion, similar to an appellate court. There are also a number of statutory bars that an appellant must overcome to have the Council review its case. The Council is part of the Departmental Appeals Board (DAB), which is highlighted on the HHS chart here.

VI. 5th Level of Appeal – Federal District Court

If a provider has not yet obtained the relief they seek at the lower levels of appeal, they may appeal the unfavorable Medicare claims decision to a Federal District Court (usually the district the provider’s office is in, although it is possible that a provider may also appeal to the Federal District Court for the District of Columbia, since the Secretary of HHS is located here). Importantly, the District Court looks at Medicare appeals cases with a high degree of deference to the Agency’s determination. That is, the District Court Judge will often side with CMS and HHS unless the lower ALJ’s decision was “arbitrary and capricious” or “against the substantial weight of the evidence.” In the legal world, these are incredibly difficult standards to overcome, and providers generally do not have a great deal of success in court, especially considering the costs of the litigation. Nevertheless, it is an option that exists for dissatisfied providers. Since the District Court is not a part of HHS, it is not included in HHS’ organizational chart.

VII.  Final Remarks:

As you can imagine, the Medicare appeals process is ultimately much more complicated than this brief outline may suggest.  Representatives of the auditing ZPIC, the MAC and / or the QIC may choose to participate in the ALJ hearing in order to present their arguments in support of denial. Although these proceedings are technically non-adversarial,” these hearings can be both stressful and complicated, especially when both sides support their arguments with statistical and clinical experts. In any event, ALJs are experts at cutting through the smoke and determining whether claims do, in fact, qualify for coverage and payment.

While we recommend that providers avail themselves of the Medicare post-payment appeals process, it is essential that prior to filing an appeal, providers critically examine their claims and associated documentation.  Like it or not, sometimes the Medicare contractors are right – some claims shouldn’t be paid.   At the end of the day, providers need to conduct an honest assessment.  Does a particular claim truly qualify for coverage and payment?  If not, its post-payment denial should not be appealed.  As we always say, “if it’s not yours, give it back.” That is, if you can’t make a good faith argument about why certain claims are payable, they probably aren’t. Similarly, unrelated to the appeals process, have you identified claims that were erroneously paid?  It is often a good idea to consult with qualified health law counsel before reporting and returning an overpayment or going through the Medicare appeals process.

Robert LilesHealthcare Lawyer represents providers in Medicare post-payment audits and appeals, and similar appeals under Medicaid. In addition, Robert counsels clients on regulatory compliance issues, performs gap analyses and internal reviews, and trains healthcare professionals on various legal issues. For a free consultation, call Robert today at 1 (800) 475-1906.

OMHA Changes ALJ Hearing Case System

(March 2, 2012):  Likely recognizing the enormous disparity in Administrative Law Judge (ALJ) hearing workloads for its various Field Offices, the Office of Medicare Hearings and Appeals (OMHA) recently switched to a Central Docketing System for all pending and new appeals. Under this new system, all ALJ hearing requests will be sent to OMHA’s Central Office in Cleveland, OH. Each ALJ appeal will subsequently be assigned to one of the Field Offices – Irvine,  CA, Miami, FL or Arlington, VA – or to ALJs in the Central Office. Despite assigning appeals to different offices, OMHA is not breaking these appeals into their component parts – individual claims –  so “big box” cases will still be handled during one ALJ hearing.

OMHA While each appeal will likely be assigned to an office randomly, OMHA will likely base these assignments on current workloads at each of its offices. Therefore, a provider in Texas, Oklahoma  or Louisiana, who would previously have always gone before an ALJ in the Miami Field Office, may end up at an ALJ hearing in any of OMHA’s four offices. While this may be disconcerting at first, the typical ALJ hearing is conducted by phone or video-teleconference nowadays, meaning that the ALJ’s location doesn’t substantially affect how a case is handled. While it may be more difficult to ascertain the procedural habits of a single ALJ (such as in what order to present information or how formal each ALJ hearing session is), an experienced health lawyer will still be able to ably represent your interests since appeals and hearings are generally handled in the same fashion,

In any event, regardless of whether the assigned ALJ is in Cleveland, OH, Arlington, VA, or in one of the other Field Offices, you should seriously consider retaining qualified legal counsel.  In recent years, representatives of the Zone Program Integrity Contractor (ZPIC), the Medicare Administrative Contractor (MAC) and / or the Qualified Independent Contractor (QIC) are frequently choosing to participate in ALJ hearings, arguing why the claims at issue should not be paid (and effectively supporting the results of their earlier ZPIC audit).  Although the proceeding is technically “non-adversarial,” ALJ hearings can become quite contentious.  An experienced lawyer can assist you in understanding the process so that you may more effectively present your arguments in support of payment.  As new rules and administrative guidance comes out regarding the Medicare post-payment audit appeals process, check back with us for more information.

Healthcare LawyerLiles Parker is a full service health law firm with several offices around the country. Representing providers in all stages of Medicare post-payment appeals, including ALJ hearings, our attorneys are well-versed in the administrative appeals process and capable of aggressively handling your case. In addition, we conduct compliance program advising and implementation, as well as mock audits, staff training and health care business transactions. Please call Robert W. Liles at 1 (800) 475-1906 for a complimentary consultation today.

Are Medicare ALJs Truly Independent Fact Finders?

Medicare ALJs wield considerable power. Be prepared when participating in an ALJ hearing.(February 20, 2011):  Over the years, we have represented a wide variety of health care providers in the administrative appeals process.  Our duties have regularly included representation before Administrative Law Judges (ALJs) presiding out of the Western, Southern, Midwestern and Mid-Atlantic Field Offices of the Office of Medicare Hearings and Appeals.  (OMHA).  In the course of our work, we have routinely been asked by our health care provider clients for our opinion regarding the “independence” of ALJs from the pressures exerted by the Centers for Medicare and Medicaid Services (CMS) and its contractors (including, but not limited to the Qualified Independent Contractors (QICs), Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs)).  The purpose of this brief article is to examine this issue in more detail.

I.  Medicare ALJs Background:  

As many of you will recall, prior to the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Medicare administrative appeals were heard by Judges working for the Social Security Administration’s (SSA’s) Office of Hearings and Appeals.  For much of that time, the SSA was an agency of the Department of Health and Human Services (HHS).  In 1994, the SSA was officially separated from HHS and was made an independent agency.  Although the SSA was no longer part of HHS, its Judges continued to hear Medicare administrative appeals.

Despite the fact that SSA used to a part of HHS (and for a short period was independent of HHS), in our opinion, SSA Judges were generally thought to be “independent” adjudicators of the facts, not impacted by, or bowing to, the effects of outside agency pressures.

With the enactment of the MMA, the responsibility for hearing Medicare administrative appeals was transferred over to HHS, with OMHA reporting solely to the Secretary, HHS.  In doing so, the OMHA was placed completely outside of CMS’ organizational structure, ostensibly free from any agency pressures that CMS might informally care to exert.  This also placed the OMHA independent of the various contractors working for CMS.  As a review of the Congressional Record reflects, the issue of independence was carefully considered by Congress and the separation of the OMHA from CMS was consistent with their concerns. (See Congressional Record, V. 149, Pt. 22, November 20, 2003 to November 23, 2003, Page 30400). As set out in the June 23, 2005 issuance of the Federal Register (70 Fed.Reg. 36386), titled “Office of Medicare Hearings and Appeals; Statement of Organization, Functions, and Delegations of Authority,” the OMHA is under the direction of a Chief Administrative Law Judge who reports directly to the Secretary, HHS.  This organizational structure was specifically intended to meet the “independence” requirements of the Section 931(b)(2) of the MMA.

II. What Can You Expect from Medicare ALJs?

In terms of functional authority, ALJs are comparable in many respects, to that of an Article III Judge, who is appointed by the President and confirmed by the Senate.  While ALJ’s are not Article III Judges, it has been our experience that they are strongly independent, adjudicating over Medicare proceedings in a formal, professional fashion, similar to what you would expect to encounter in a Federal District Court proceeding.

Pursuant to 42 C.F.R. § 405.1026, ALJs cannot even conduct a hearing if they are prejudiced or partial to any party, or if they have an interest in the matter pending for resolution.  To date, we have not seen an ALJ that has been “prejudiced or partial to any party.”

To be clear, health care providers do not always prevail — every case stands or falls based on its merits.  Moreover, just because you have experienced a positive outcome with a particular ALJ on one occasion does not mean that you should expect a similar result when you are next in front of the same judge.  ALJs are trained to weigh the facts and the evidence.  While in past years it was rare for CMS or its contractors to participate in a hearing, it is now commonplace for representatives of the Zone Program Integrity Contractor (ZPIC) or the Program Safeguard Contractor (PSC) to now attend the hearing and seek to provide support for their initial denial actions.  As a result, the job of ALJ is now more complicated than ever.

In summary, the current administrative appeals system has been specifically designed to insulate ALJs from the actual and / or implied pressures which could conceivably be exerted by CMS and its various contractors.  When appearing before Medicare ALJs, it is important to remember that the process has become significantly more complicated now that CMS contractors are now regularly attending and participating in the process.  In light of these changes, it is recommended that you engage experienced legal counsel to represent your interests in  hearings in front of Medicare ALJs.  Although the system and its Judges are set up to provide a fair opportunity for you to present your case and be heard, it is much more difficult to prevail when up to three representatives of the ZPIC (a lawyer, a statistician and a clinician) are also participating in the proceedings, providing support and explanations for their prior Medicare claim denial decisions.

Robert Liles Healthcare AttorneyRobert W. Liles, J.D., has extensive experience representing a wide variety of Part A and Part B providers in the administrative appeals process, including the ALJ hearing stage.  Please feel free to contact Robert for a complimentary consultation.  He can be reached at 1 (800) 475-1906.

 

ZPIC Participation in ALJ Hearings is Increasing

ZPIC Participation(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:

“(a) 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.

(b) 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.

(c) 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).

(d) 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.

(e) CMS or its contractor must submit any position papers within the time frame designated by the ALJ.

(f) 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.

V.          Conclusion:

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 Liles Healthcare LawyerRobert 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.

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