That Medicare Audit Appeal May Be Worth More Than You Think

When a Medicare provider or supplier receives claims denials or an overpayment demand as a result of a Medicare audit, the decision whether and how to appeal the decision, or to simply repay the amount demanded by the Medicare contractor, is usually a business decision. In some cases, it may initially appear that the value of the demand simply does not justify the effort and cost of pursuing an appeal. However, a Medicare provider in this position should be aware that forgoing an appeal may have consequences far above and beyond paying back the amount demanded by Medicare.

In many cases, choosing to forego an appeal is not simply a matter of repaying funds to the Medicare program, but the Centers for Medicare & Medicaid Services (CMS) and its contractors will generally take a decision not to appeal as an admission by the provider that the audit results are correct and that the claims were properly denied. CMS and its contractors may use this perceived admission of ‘guilt’ against a provider later, long after it is far too late for the provider to appeal the audit findings.

For example, a provider may receive a Medicare probe audit. The contractor conducting the probe audit reviews medical records for 10 claims and denies all 10, claiming that the provider did not meet Medicare requirements for coverage. The repayment demand is ‘only’ $3,000. The provider strongly disagrees with the contractor’s allegation, but decides it is not worth it to appeal and simply pays the $3,000. A few months later, the provider receives another probe audit. The contractor reviews 12 claims and denies all 12 for the same reasons as in the first probe audit. Again, the repayment demand is ‘only’ $4,000, so even though the provider strongly believes their claims meet Medicare requirements, the provider chooses to repay the $4,000 rather than expend the time and resources to pursue the lengthy and complex Medicare claims appeal process.

Several more months pass, until the provider receives a notice from CMS stating that the provider’s Medicare billing privileges are being revoked for an “abuse of billing privileges.” CMS alleges that two prior reviews of the provider yielded a 100% claims denial rate and that these denials constitute a pattern or practice of submitting claims that fail to meet Medicare requirements. The provider appeals, stating that their claims were payable all along, it just wasn’t worth it at the time to appeal the seemingly minor probe audits. CMS denies the appeal because the claims denials are final and it is too late to appeal them directly. The provider remains revoked and unable to bill Medicare.

While every case is different, providers should be aware that un-appealed Medicare claim denials and audits can be held against them later. Medicare revocations, suspensions, placement on the CMS Preclusion List, the decision to audit a provider further, and other consequences can all be based on upon past claims denials, especially after the denials become “final” because the provider has not appealed them. Medicare providers choosing whether to appeal Medicare claim denials should consider that there may be more at stake than simply the dollar value of the claims themselves.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, including Medicare audits, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to Medicare audits or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.