The Medicare Appeals Process and Strategies for Successful Appeals by:Andrew Wachler

Introduction

Introduction

The Centers for Medicare and Medicaid Services (CMS) issued its final rule regarding changes to the Medicare appeal procedures on March 5, 2005. This final rule was effective May 1, 2005. Legal counsel for providers and suppliers undergoing Medicare audits are well advised to understand the new appeals process, as many of the changes adopted by the final rule impact not only the procedure, but also the substantive rights of providers and suppliers, during the appeals process. Counsel should understand that there may be many effective strategies that can be successfully employed in the appeals process.

The Medicare Appeals Process

The regulations governing the new uniform Medicare Part A and Part B appeals process are contained in 42 CFR Part 405 subpart I. The first level in the new appeals process is the redetermination. A provider must submit redetermination requests in writing within 120 calendar days of receiving notice of initial determination. There is no amount in controversy requirement.

Notably, under the current regulations, a carrier or intermediary is not permitted to recoup any monies it has determined have been paid in error once a request for redetermination has been filed until there is a decision rendered at the second stage of appeal, the reconsideration stage. Counsel for providers in the appeals process should be aware that many carriers and intermediaries are initiating withholds in the days following an initial determination, well before 120-day timeframe in which the provider must file its request for redetermination has elapsed. In essence, this forces the provider to file its request for redetermination before the 120-day timeframe has expired, if the provider wishes to avoid a withhold. In addition, some carriers and intermediaries are also taking the position to re-initiate a withhold after an unfavorable decision has been issued on redetermination and before a request for reconsideration has been filed.

A provider dissatisfied with a carrier's redetermination decision may file a request for reconsideration to be conducted by a Qualified Independent Contractor (QIC). This second level of appeal must be filed within 180 calendar days of receiving notice of the redetermination decision. There is no amount in controversy requirement.

Prior to the establishment of the new appeals process, Part B providers were afforded an in-person Carrier Hearing upon receiving an initial determination from the carrier. The QIC reconsideration replaces the Carrier Hearing. Importantly, the QIC reconsideration is an "on-the-record" review, as opposed to the previous in-person hearing. In conducting its review, the QIC considers evidence and findings upon which the initial determination and redetermination were based plus any additional evidence submitted by the parties or the QIC obtains on its own.

If an initial determination involved a decision regarding the medical necessity of an item or service, the QIC's reconsideration must involve consideration by a panel of physicians or appropriate healthcare professionals, and must be based on clinical experience, the patient's medical records, and medical, technical, and scientific evidence on record. Where the claim involves physician services, the reviewing professional must be a physician. However, the physician reviewer need not be in the same specialty as the physician whose claims have been denied.

Importantly, physicians must submit a full presentation of evidence in the reconsideration stage. When filing a reconsideration request, a provider must present evidence and allegations related to the dispute and explain the reasons for the disagreement with the initial determination and redetermination. Absent good cause, failure of a provider to submit evidence prior to the issuance of the notice of reconsideration precludes subsequent consideration of the evidence. Accordingly, providers may not be permitted to introduce evidence in later stages of the appeals process if such evidence was not presented at the reconsideration stage.

The third level of appeal is the Administrative Law Judge (ALJ) hearing. A provider dissatisfied with a reconsideration decision or who has exercised the escalation provision at the reconsideration stage may request an ALJ hearing. The request must be filed within 60 days following receipt of the QIC's decision and must meet the amount in controversy requirement. ALJ hearings can be conducted by video-teleconference (VTC), in-person, or by telephone. The final rule requires the hearing to be conducted by VTC if the technology is available; however, if VTC is unavailable or in other extraordinary circumstances the ALJ may hold an in-person hearing. Alternatively, the ALJ may offer a telephone hearing.

The fourth level of appeal is the Medicare Appeals Council (MAC) Review. The MAC is within the Departmental Appeals Board of the U.S. Department of Health and Human Services. A MAC Review request must be filed within 60 days following receipt of the ALJ's decision. Among other requirements, a request for MAC Review must identify and explain the parts of the ALJ action with which the party disagrees. Unless the request is from an unrepresented beneficiary, the MAC will limit its review to the issues raised in the written request for review.

Upon request, the MAC will grant the parties a reasonable opportunity to file briefs or written statements. Additionally, a party may request an opportunity to present oral argument. The MAC will grant this request if the case raises an important question of law, policy or fact that cannot be readily decided based upon the written submissions. If the MAC fails to issue a decision or remand the case within the mandatory timeframe, the provider may request the appeal be escalated to federal district court.

The final step in the appeals process is judicial review in federal district court. A request for review in district court must be filed within 60 days of receipt of the MAC's decision. In a federal district court action, the findings of fact by the Secretary of HHS are deemed conclusive if supported by substantial evidence.

Legal and Other Strategies for Defending Payor Audits

Many strategies exist that can be successfully employed in the appeals process to effectuate meaningful results. These strategies involve effectively advocating the merits of the underlying services as well as employing legal defenses.

When advocating the merits of a claim in the audit process, it may be beneficial to engage the services of a qualified expert, particularly when the audit involves medical necessity denials. Other strategies that can prove successful include the use of medical summaries and other similar types of color-coded charts that are user-friendly for the decision maker. The summaries should focus on the services that were denied and the medical explanation for why the services were medically necessary and appropriately billed.

In addition to advocating the merits of a claim, certain legal defenses are available. The Medicare laws contain two important defenses for physicians: the "Waiver of Liability Defense" and the "Provider without Fault Defense."

Pursuant to the Medicare "Waiver of Liability" defense, providers may be entitled to payment for claims deemed not reasonable and necessary by the carrier during an audit. The statutory authority for waiver of liability is set forth in Section 1879(a) of the Social Security Act. Under waiver of liability, even if a service is determined to be not reasonable and necessary, nonetheless payment may be rendered if the provider did not know and could not reasonably have been expected to know payment would not be made. The relevant inquiry focuses on whether the provider "knew or could have reasonably been expected to know" payment would not be made. Therefore in defending an audit, a physician must have access to all relevant carrier communications with the provider community and communications with the particular provider. The waiver of liability provisions generally only apply to determinations that a service was not medically necessary or that it was custodial care.

Additionally, the "Provider without Fault" defense may be employed in the case of post-payment review denials. The Medicare provider without fault provisions, section 1870 of the Social Security Act, state that payment will be made to a provider if the provider was without "fault" with regard to billing for and accepting payment for disputed services. As a general rule, a provider will be considered without fault if he exercised reasonable care in billing for and accepting payment, i.e., the provider complied with all pertinent regulations, made full disclosure of all material facts, and on the basis of the information available, had a reasonable basis for assuming the payment was correct. Physicians also will be deemed to be without fault in the absence of evidence to the contrary, if the overpayment was discovered subsequent to the third calendar year after the year of payment. Counsel for providers in the appeals process should be aware that many audits contain denials with claims paid dates well over the three year time period, and thus the provider without fault argument should be asserted in these cases in an attempt to eliminate these denials.

Moreover, it may be appropriate in many audit settings involving medical necessity denials to assert the "Treating Physician Rule." The treating physician rule involves the legal principle that the treating physician, who has examined the patient and is most familiar with the patient's condition, is in the best position to make medical necessity determinations. The treating physician rule as adopted by some courts reflects that the treating physician's determination that a service is medically necessary is binding unless contradicted by substantial evidence, and is entitled to some extra weight, even if contradicted by substantial evidence, because the treating physician is inherently more familiar with the patient's medical condition. Thus, counsel for providers subject to a Medicare or other third party payor audit should reference the treating physician rule to demonstrate that the provider's medical judgment as to the medical necessity of the service provided should prevail absent substantial contradictory evidence.

Summary

Legal counsel for healthcare providers subject to an audit must be cognizant of the changes made to the Medicare appeals regulations, as the changes impact the rights of providers to challenge an audit determination. For example, a provider that is unaware of the early presentment of evidence requirement could be precluded from raising valid and often successful defenses as it moves through the appeals process. In addition, counsel should also be aware of the successful appeals strategies and defenses available to challenge and adverse audit determination.

About the author

Wachler & Associates, P.C., is a law firm providing healthcare legal services to healthcare providers, suppliers and entities nationwide. Since 1980, the attorneys of Wachler & Associates, P.C., have successfully defended thousands of Medicare, Medicaid and other third party payor audits. Our lawyers are recognized as authorities in this area of healthcare law. http://www.racattorneys.com

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