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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.