Recovery Audit Contractors (RACs)

Published on: April 15, 2021

A Primer on Medicare Claims Appeals

Appealing Medicare claim denials and overpayments is a common yet often misunderstood part of providing care to Medicare beneficiaries. Any healthcare provider should be familiar with the appeals process and some common issues that may arise. Although Medicare audits were temporarily suspended due to the COVID-19 pandemic, they have since resumed.

When a Medicare contractor denies a claim, whether as part of a pre-pay, post-pay, or other type of review or audit, the provider generally has a right to a lengthy appeal process. The process often begins before the denial of the claim itself. The provider may receive Additional Document Requests (ADRs) from the contractor demanding information or documentation on a claim or claims. These requests should be reviewed carefully, however they often contain boilerplate language and it may be difficult to determine which specific documentation the contractor is requesting.

Once a claim has been denied, the first level of appeal is Redetermination before the same contractor that made the initial denial. A provider must request Redetermination within 120 days of the claim denial, or the appeal may be forfeit. A shorter deadline applies to stop recoupment on overpayment demands stemming from the denials. The second level of appeal is Reconsideration before a Qualified Independent Contractor (QIC). The QIC is separate from the contractor that initially denied the claims. A provider often has the opportunity to submit additional documentation at Redetermination and Reconsideration. A provider may also retain an expert to review the contractor’s assertion or submit write-ups on the individual claims.

Published on: August 27, 2020

CMS Audits Resume During Public Health Emergency

by Wachler & Associates, P.C.

Despite the ongoing public health emergency from the 2019 Novel Coronavirus (“COVID-19” or “COVID”), the Centers for Medicare & Medicaid Services (“CMS”) were encouraged by the Center for Program Integrity (“CPI”) to resume conducting Recovery Audit Contractor (“RAC”) and Medicare Administrative Contractor (“MAC”) audits. Some of the audits that are of high priority are post-payment reviews of COVID claims submitted prior to March 1, 2020. CMS has not yet stated when they will be auditing claims submitted after March 1, 2020 and throughout the current public health emergency, but experts expect these audits to begin in the coming months.

In fact, the CMS “Coronavirus Disease 2019 Provider Burden Relief FAQ” states that even if the public health emergency continues, it will lift the suspension of audits beginning on August 3, 2020 (though most providers will not see requests for review until at least a month after that). The audits will be done pursuant to existing statutory and regulatory provisions, but any waiver or flexibility allowed for any date of service which is under review will be considered in the audit.

In addition to those audits, CMS has also announced a new requirement to obtain reimbursement for COVID patients. Beginning on September 1, 2020, in order to receive the 20% Medicare reimbursement add-on payment for a COVID patient, the provider must document a positive COVID test in the patient’s chart. This new guidance applies only to Inpatient Prospective Payment Systems (“IPPS”), Long-Term Care Hospitals (“LCTHs”), and Inpatient Rehabilitation Facilities (“IRFs”). The guidance states that CMS will continue to automatically apply the 20% add-on payment for COVID-19 claims and will enforce the requirement through post-payment audits. The 20% add-on payment will be recouped if no positive COVID test is found in the patient’s chart.

Published on: August 18, 2017

AHA v Burwell Questioned by DC Circuit Court

by Wachler & Associates, P.C.

On August 11, 2017, a further development came in the Medicare appeals backlog saga, as the D.C. Circuit Court reached a decision on the Department of Health and Human Services’ (HHS’) appeal to the case American Hospital Association (AHA) v Burwell. The decision (“Appeal Decision”) handed down last week was decidedly pro-HHS, and is a setback for the AHA and healthcare providers with appeals pending at the administrative law judge (ALJ) level. The Appeal Decision has the potential to completely undo any progress created by the original December decision.

The Circuit Court came to a 2-1 decision, ordering the District Court to reconsider its mandate that HHS completely eliminate the Medicare appeal backlog by the end of 2020. The Circuit Court based its decision on the idea that the District Court decision had the potential of mandating that HHS violate its legal duty to only pay out legitimate Medicare claims. HHS is required to “protect” the Medicare trust fund, and in the process taxpayer dollars. However, HHS is also required by law to process ALJ appeals within 90 days, a duty which has gone unmet for years and was the basis of the District Court’s decision.

The AHA filed its initial suit in 2014, and after being initially dismissed, the AHA received a favorable decision in December 2016, a decision that is now in jeopardy of being undone. The December decision dictated certain yearly “targets” for HHS and the Center of Medicare and Medicaid Services (CMS) to meet regarding decreases to the number of backlogged appeals at the ALJ level. HHS objected to these benchmarks, and in fact to any mandated reduction, based on several arguments, including that the backlog cannot be eliminated without arbitrary settlements regardless of the actual merits of the claims.

Published on: June 12, 2017

HHS’ 2nd Update on Appeals Backlog Shows Little Progress

by Wachler & Associates, P.C.

In early June 2017 the Department of Health and Human Services (HHS) issued its second status report on the Medicare appeals backlog. The December 2016 case American Hospital Association v Burwell, in addition to dictating that HHS clear the backlog by 2020, required that HHS release a quarterly status report every 90 days to detail the progress being made toward eliminating the backlog.

The Burwell case was a significant victory for healthcare providers in their attempts to get the Medicare backlog reduced and have administrative law judge (ALJ) appeals processed within the statutory timeframes. In addition to status reports every 90 days and the complete elimination of the backlog by 2020, HHS is also required to observe several intermediary benchmarks: 30% reduction by the end of 2017, 60% by the end of 2018, 90% by the end of 2019, and then ultimately 100% elimination by the end of 2020.

However, despite these court mandated benchmarks, it has become clear to all parties involved that these goals are unlikely to be met without significant developments; HHS itself has maintained since the requirements were instituted that the elimination of the backlog would not be possible. This prediction is supported by the facts: HHS released its first status report in March, with the somber prediction that a backlog of 1,009,768 appeals would be pending by the end of 2021. June’s report saw a slightly improved projection of 950,520 claims remaining by that time, but this projection is still very far from meeting the court order.

Published on: October 3, 2016

CMS Reopens Hospital Appeals Settlement

by Wachler & Associates, P.C.

On September 28, 2016, the Centers for Medicare & Medicaid Services (“CMS”) announced that it intends to reopen the hospital inpatient status settlement that was initially released in 2014. CMS’ announcement means that eligible providers will be able to to settle their inpatient status claims currently pending appeal. While specific details of the settlement have yet to be released, if the upcoming program has terms similar to CMS’ 2014 68% settlement, it may provide a viable opportunity for eligible providers to resolve their pending appeals without enduring the delay for an administrative law judge (ALJ) hearing due to the appeals backlog.

CMS’ decision to reopen the settlement is the result of the efforts from several actors including the Office of Medicare Hearings and Appeals (OMHA), American Hospital Association, RAC Monitor, Steven Greenspan of Optum Executive Health Resources, and Wachler & Associates, P.C. Specifically, OMHA participated in communications with CMS and supported the proposal for CMS to reopen the 68% settlement. In addition, the American Hospital Association’s (“AHA”) lawsuit challenging the excessive appeals backlog that has resulted in delays of over two years past the statutory requirement is likely an important factor in CMS’ decision to reopen the appeals backlog.

Furthermore, the combined efforts of RAC Monitor, Steven Greenspan, and Andrew Wachler of Wachler & Associates, P.C. also likely aided in the reopening. RAC Monitor provided a platform for Steven Greenspan and Andrew Wachler to present the concept of reopening the appeals settlement to RAC Monitor listeners and RAC Monitor listeners responded in full force. Through these combined efforts, it is hoped that the reopened appeals settlement will help to clear the appeals backlog of the approximately 200,000 inpatient site of service pending of appeals. Although this solution will not completely eliminate the backlog, it can assist hospitals that chose not to participate in the original settlement and hopefully help other non-eligible providers move through the appeals process at a slightly more efficient rate.

Published on: September 28, 2016

Mounting Pressure on HHS to Remedy Backlogged Medicare Appeals

by Wachler & Associates, P.C.

September 19^th saw the Washington D.C. District Court (the Court) pass down a decidedly pro-Medicare provider decision, ultimately holding that the Department for Health and Human Services (HHS) would not be granted a stay of proceedings as they had yet to make significant progress in reducing the Medicare appeals backlog. The case is American Hospital Association (AHA) v. Burwell (acting in her official capacity as HHS Secretary), and it was before the Court for the second time following an Order of Remand by the D.C. Circuit in February of 2016.

The Court’s September 19^th decision came as a response to Secretary Burwell (the “Secretary”)’s motion to stay proceedings on remand. The motion was based on the Secretary’s claim that significant progress had been made toward reducing the Medicare appeals backlog. A decision in the Secretary’s favor would have suspended the case until the last day of September, 2017. However, the Court rejected the purported progress by HHS, finding that more extreme measures had to be taken, ultimately concluding the stay in proceedings was not warranted.

The Secretary’s motion for a stay was heavily supplemented with examples of the efforts the government has been taking to reduce the appeals backlog. The Secretary cited administrative actions such as efforts to promote settlements, changes to the administrative appeals process, front-end limitations on provider activity and changes to the Recovery Audit Contractor (“RAC”) Program. Two specific programs mentioned were CMS’ 68% settlement, which resolved 260,000 inpatient hospital claims; and the settlement conference facilitation program, which is projected to reduce the number of appeals pending by 27,000 by the end of the 2020 fiscal year.

Published on: September 21, 2016

Noridian Announces CMS Approved “Cross Recoveries” for Related Claims

by Wachler & Associates, P.C.

On July 12, 2016, Noridian Healthcare Solutions announced a new policy on denial of related claims, termed “Cross Recovery.” Noridian purports that this policy will help it to fulfill its obligations to the Centers for Medicare and Medicaid Services (CMS) by assuring that all Medicare claims are for medically necessary and reasonable services. Whatever the motivation behind Cross Recovery is, it reawakens the specter of related claim denials for Medicare providers, and is a development which should be watched closely in the coming months.

Noridian’s new program comes in the wake of several previously released CMS transmittals regarding the denial of related claims. Though later rescinded, CMS originally introduced a policy which broadly allowed MACs to deny related claims when issuing an adverse determination of an original claim. After receiving feedback from the provider community regarding concerns about the policy, CMS narrowed the scope of “related claims” power to only Part B surgery claims via Transmittal 541. Transmittal 541 allowed for such Part B surgeon services to be recouped following a denial of a Part A inpatient surgical claim as not reasonable and necessary. However, since the issuing of Transmittal 541, MACs have only very rarely invoked their discretion to deny such Part B surgical claims on Transmittal 541 grounds. Noridian’s new Cross Recovery policy may change this trend, and it is yet to be seen whether other MACs will take the opportunity to expand their own related claim denials.

Noridian’s statement (as linked above) was very brief, but significant. The statement cites section 3.2.3(A.) of CMS’ Internet Only Manual 100-008 Chapter 3, which states in relevant part that “MAC[s] and ZPIC[s] have the discretion to deny other “related” claims submitted before or after the claim in question, subject to CMS approval [.]” Noridian announced that it has received such CMS approval to “Cross Recover” professional claims related to denied institutional facet injection services (CPT codes: 64493— 64495; 64635—64636).

Published on: February 25, 2016

OMHA Expands the Settlement Conference Facilitation Pilot to Part A Claim Appeals

by Wachler & Associates, P.C.

The Office of Medicare Hearings and Appeals (OMHA) recently announced its Phase III expansion of the Settlement Conference Facilitation (SCF) pilot program. The SCF pilot was originally launched in July 2014 to provide an alternative dispute resolution process for eligible Medicare providers to settle appealed Medicare claim denials pending at the Administrative Law Judge (ALJ) level of the Medicare appeals process. Under the SCF pilot, Medicare providers have the opportunity to enter into open settlement discussions with the Centers for Medicare & Medicaid Service (CMS) with the goal of coming to a mutually agreed upon resolution for the pending ALJ claims. Initially, the program was limited to Part B claims that met specific eligibility criteria. In October 2015, OMHA implemented Phase II of the SCF pilot, which expanded the eligibility requirements for Part B claims. Recently, OMHA announced that it will open Phase III of the SCF pilot, expanding the program to Part A claim appeals. Much like the previous phases, OMHA has provided eligibility requirements for participating in the SCF pilot, which include:

The appellant must be a Medicare provider (for the purposes of this pilot, “appellant” is defined as a Medicare provider that has been assigned a National Provider Identifier (NPI) number);
A request for hearing must appeal a Medicare Part A Qualified Independent Contractor (QIC) reconsideration decision;

Published on: October 1, 2015

OMHA to Expand the Settlement Conference Facilitation Pilot

by Wachler & Associates, P.C.

On October 15, 2015, the Office of Medicare Hearings and Appeals (OMHA) will be hosting an open door teleconference to discuss the expansion of its Settlement Conference Facilitation (SCF) Pilot. The pilot program was originally launched in July 2014 to provide an alternative dispute resolution process for eligible Medicare providers to settle appealed Medicare claim denials pending at the Administrative Law Judge (ALJ) level of the Medicare appeals process. Under the SCF pilot program, Medicare providers had the opportunity to enter into open settlement discussions with the Centers for Medicare & Medicaid Service (CMS) with the goal of coming to a mutually agreed upon resolution for the pending ALJ claims. Since the SCF pilot program’s inception, the program was limited to providers that met specific eligibility criteria (e.g., the ALJ hearing must have been filed in 2013). However, OMHA appears set to expand the SCF program, which will be discussed in greater detail during the open door teleconference scheduled for October 15th at 1:00pm-2:00pm EST. Any parties interested in participating in the call should fill out the registration form and submit it no later than 5:00pm on October 14, 2015.

Wachler & Associates has already participated in multiple settlement negotiations on behalf of health care providers under the SCF pilot program. We will also be attending the open door teleconference to ensure our experienced attorneys are up-to-date on all matters related to the SCF program. If you or your health care entity needs assistance in pursuing the SCF program or appealing Medicare claim denials, or if you have any questions relating to the SCF program, please contact an experienced healthcare attorney at (248) 544-0888, or via email at wapc@wachler.com.

Published on: May 20, 2015

Bill Introduced to Reform the RAC Program

by Wachler & Associates, P.C.

Recently, United States Representative Sam Graves introduced the bill HR 2156, otherwise known as the Medicare Audit Improvement Act of 2015. Currently pending, the Medicare Audit Improvement Act addresses the aggressive nature of recovery audit contractors (“RACs”). Since the beginning of the RAC program, contractors have been paid on a contingency fee basis, thus incentivizing them to find improper payments.

The Medicare Audit Improvement Act is intended to curb such practices. The bill would eliminate the contingency fee for RACs and replace it with a flat fee rate–similar to other Medicare integrity contractors. Additionally, the bill would reduce a RAC’s payment at the end of each fiscal year if the RAC had a high overturn rate resulting from the Medicare appeals process. The bill defines a “high overturn rate” as 10% or more in a contract year. Under these circumstances, the RAC’s payment would not only be reduced, but would also have increasing levels of reduction. The Center for Medicare and Medicaid Services (“CMS”) would be required to calculate the fee reduction for each RAC within six months at the end of each contract year. CMS would have the discretion to determine how to apply the reduction to a RAC’s fees–either a per-claim reduction or a reduction in the overall fee paid.

The Medicare Audit Improvement Act also includes a measure that would create a statutory exception for the timely filing requirements for Part B rebilling. Currently, hospitals are permitted to rebill denied Part A inpatient stay claims as Part B outpatient claims, but are required to do so within one year of the date of service (“DOS”). The exception would allow these denied Part A claims to be rebilled under Part B within 180 days after a final determination by the contractor or 180 days following the exhaustion of the provider’s appeal rights.