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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.