Medicare Appeal

When a healthcare provider’s claims are reviewed or audited by a payor or insurance plan, the payor often asserts various deficiencies in the provider’s claims or documentation. The payor then alleges that the provider has received an overpayment for those claims and demands the provider pay it back. Appealing claims audit determinations can be a costly and tedious endeavor, leading a provider to wonder: Can we negotiate and settle this, like we would most other commercial disputes? The answer generally depends on who the payor is.

Medicare overpayments, in general, are unlikely to be subject to settlement. While there is statutory authority for federal agencies, such as Health and Human Services (HHS) and Treasury, to settle debts allegedly owed to the federal government, they are authorized to do so only in a few narrow circumstances and are generally very hesitant to actually do so. The Centers for Medicare & Medicaid Services (CMS) are particularly resistant to settling overpayments in most cases. Providers are generally left to choose between appealing the overpayment on the merits or applying for an Extended Repayment Schedule (ERS), under which CMS may agree to a payment plan, but generally will not reduce the amount owed. Simply ignoring or paying back a Medicare overpayment without contesting the findings is generally not advisable as it can be construed as an admission of non-compliance that can be used against the provider later.

Medicaid overpayments are also unlikely to be subject to settlement. Even where a state Medicaid agency acknowledges that an overpayment demand will bankrupt the provider and the Medicaid program is unlikely to ever collect, the agency may nonetheless be restricted from settling by the “federal share.” The federal share is the 50% to 80% of Medicaid reimbursement that is funded by the federal government. Because it is the federal government’s money, the federal government generally requires the state Medicaid program to repay the full amount of the “federal share” to the federal government for denied claims, regardless of the state’s desire to settle. That is, a state Medicaid program generally will not settle, even if it wants to, because it has to repay the full “federal share” whether it collects the full amount from the provider or not.

The most complex step in the Medicare claims appeals process is generally the third step, a hearing before an Administrative Law Judge (“ALJ”). The ALJ hearing represents both the first time in the claims appeal process that the case is reviewed by a party other than a Medicare contractor and the first time that the provider can offer testimony during a live hearing. An ALJ hearing presents many important strategic considerations for the appealing provider, including before, during, and after the hearing itself.

Before the hearing, the provider must appeal through the first two steps of the Medicare claims appeals process, Redetermination and Reconsideration. Both of these steps involve claim review by a Medicare contractor and are conducted exclusively by written submissions and correspondence. A provider that is dissatisfied with a Reconsideration Decision has a right to request ALJ review of that decision. However, a provider should usually attempt to submit all evidence, especially medical records, prior to the Reconsideration Decision. A provider who waits to submit new evidence until the ALJ level generally must prove why they did not submit it earlier, or else may be barred from submitting new evidence. The formal Request for ALJ also must meet certain regulatory requirements to be effective, especially where the provider is appealing a statistically extrapolated overpayment.

During the hearing and leading up to it, an ALJ hearing is much like a miniature trial. Witnesses must be selected and prepared, evidence organized, important issues briefed, and strategy formulated. Depending on the nature of the case, a provider may have the treating physician testify, or an outside clinical expert may testify in support of the claims. If there is a statistical extrapolation, it may be appropriate to retain an expert statistician to testify regarding any errors in the extrapolation. CMS or its contractors may appear as an opposing party or may submit materials to the ALJ, and may or may not follow the regulatory requirements for doing so. The ALJs themselves are not employed by CMS, but are employed by the Office of Medicare Hearings and Appeal (“OMHA”), another sub-division of HHS.

Articles Posted in Medicare Appeal

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Guide to a Medicare Claims Appeal ALJ Hearing