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Recent MAC decision creates additional obstacles for Medicare provider appeals
Medicare Appeals Council takes an aggressive stand on the recovery of alleged overpayments.
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Any provider who has experienced a post-payment medical review conducted by one of the Centers for Medicare & Medicaid Services Program Safeguard Contractors is familiar with the frustration that is inherent in the process and the financial consequences of an inflated overpayment demand that may result from a PSC review.
Recently, the Medicare Appeals Council (MAC) issued a ruling that may erode one of the provider community’s primary defenses to an untimely post-payment review.  Andrew B. Dahlinghaus |
I would like to address the MAC’s recent decision and how it may impact providers’ appeals of contractor (carrier) overpayment demands.
Background
In the late 90s, the Centers for Medicare & Medicaid Services (CMS – formerly HCFA) began to contract with program safeguard contractors (PSCs) to help combat fraud, waste and abuse in the Medicare Program. PSCs perform program safeguard functions associated with medical review, cost report audit, fraud detection and prevention, data analysis and provider education.
As part of its responsibilities, a PSC frequently analyzes claims data associated with claims paid under Medicare Part B. If the PSC detects a billing irregularity, it often conducts a post-payment audit from a sample of claims. It then uses this sample to determine an error rate that it applies to a universe of claims that the particular provider submitted to yield a sum of money that CMS allegedly overpaid to the provider. The results of these post-payment reviews are then referred to the provider’s Part B contractor who typically issues an overpayment demand to the provider.
Challenging a determination
A provider may challenge an overpayment determination by appealing through CMS’s five-level administrative appeal process. The five-step appeal process entails:
- a Request for Redetermination, which includes another review by the contractor (carrier);
- a Request for Reconsideration, which includes a review by a Qualified Independent Contractor (QIC);
- a review and hearing before an administrative law judge (ALJ);
- an appeal to the MAC; and
- an appeal to federal court.
Defenses
Providers have a number of defenses that they may raise to contest a PSC’s audit results. Specifically, providers may:
- challenge the findings of the PSC/carrier as they pertain to each individual claim included in the PSC’s post-payment review;
- challenge the validity of the statistical analysis that the PSC used to extrapolate the results of its sample to the universe of claims from which it calculated the overpayment;
- move the carrier, QIC, ALJ or other appellate body to set aside the carrier’s overpayment determination because the carrier’s review of the claims in the sample constitute improper reopening under 42 C.F.R. Part 405;
- move to set aside the carrier’s overpayment determination because the provider is deemed to be without fault under section 1870 of the Social Security Act with respect to the claims reviewed in the PSC’s/carrier’s sample; and
- challenge the demand based on other carrier error.
By raising any combination of the foregoing defenses, many providers have successfully avoided the harsh financial impact of PSCs’ post-payment reviews and the resulting carrier overpayment demands.
The recent MAC decision
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Recently, the fourth-level appellate body, the MAC, issued a decision that may dramatically affect a provider’s ability to challenge overpayment demands on the reopening grounds codified at 42 C.F.R. Part 405. Let us examine the reopening defense and how the MAC’s decision may affect that defense.
A reopening is an action taken by a carrier to modify a prior payment, determination that resulted in an overpayment or underpayment to a provider. A contractor may only reopen and re-examine a payment decision after 1 year and within 4 years from the date of the original payment if the carrier establishes that there exists good cause to reopen the payment determination, according to 42 C.F.R. 405.980. It also says a carrier may not reopen a claim paid to a provider more than 4 years from the date the carrier made payment absent a showing that payment was procured by fraud.
For years, providers and their counsel have challenged successfully overpayment or recoupment demands on the grounds that the particular carrier failed to establish good cause to reopen claims that were included in the sample on which an overpayment determination was based. Carriers typically failed to establish good cause for re-examining claims paid more than a year prior to their overpayment demand and, therefore, ALJs frequently sustained providers’ counsels’ arguments based on the foregoing improper reopening argument.
Case example
On February 29, the MAC examined the ALJ’s Decision in the case of Critical Care of North Jacksonville. In that case, the ALJ issued wholly and partially favorable and unfavorable decisions for the provider determining that the contractor in the case failed to show good cause for reopening the claims that were part of the provider’s appeal.
The MAC, on its own motion, reviewed and vacated the ALJ’s decision and remanded the case to the ALJ. In its decision, the MAC stated that the ALJ erred in concluding that the contractor improperly reopened claims paid to the provider beyond the 1 year limitation. It contended that “[a] contractor’s decision on whether to reopen is final and not subject to appeal.” In addition, the MAC stated, “CMS has expressly stated that the enforcement mechanism for good cause standards lies within CMS’s evaluation and monitoring of contractor performance, not the administrative appeals process.”
A ‘devastating effect’
The above decision may have a devastating affect on providers’ appeal rights. Specifically, providers may now have difficulty challenging overpayment determinations on the grounds that carriers have failed to establish good cause for reopening claims.
Absent a contrary ruling from the federal court, providers’ reopening arguments may be limited to challenging reopenings that involve claims that were paid more than 4 years prior to the date of the overpayment determination. Since most overpayment determinations involve claims that were paid within 4 years of the overpayment demand, the above decision will basically render the reopening defense useless to providers.
While providers continue to possess numerous formidable defenses to contractors’ overpayment demands, the foregoing MAC decision illustrates the MAC’s aggressive position toward providers with respect to recovering alleged overpayments. Providers should be mindful of the foregoing MAC decision when preparing their appeals and deciding whether to advance an ALJ’s decision to the MAC for review.
For more information:
- Andrew B. Dahlinghaus, JD, can be reached at Arent Fox LLP, 1050 Connecticut Ave., N.W., Washington, D.C. 20036; 202-775-5751; e-mail: dahlinghaus.andy@arentfox.com.