Providers challenging audit claim denials through the Medicare appeals process can expect to encounter varying degrees of contractor involvement at each stage of appeal. Providers should be aware of the contractor’s role in each stage, the information requests to make at each level and the limits on the scope of the contractor’s participation.
Requests for Information
Providers undergoing a Medicare or RAC audit typically are notified of the contractor’s findings by way of an audit results letter. Often this letter will provide general conclusions about the audit, and it may include a spreadsheet listing each claim or claim line determination.
After reviewing the audit letter, providers often are left with unanswered questions about the claim denials and the nature of the audit review conducted by the contractor, information that would be helpful in deciding on an appeal. In our audit experience, it is important to begin requesting additional information that may be available in the contractor’s audit file. This information may include reviewers’ credentials, data necessary to recreate the statistical sampling and applied projection, internal notes, memos, correspondence addressing the audit denials, plus guidelines or policies referenced in making the claim determinations. These requests can be made to the contractor by the provider in connection with the appeal and may reference the federal Freedom of Information Act (FOIA) as a basis for the release of information. Providers are advised to calendar the date they submit their requests and to continue to follow up with the contractor on the status of the release of information. Documentation of a provider’s ongoing efforts to procure requested information may provide future support of a good-cause argument for the admission of additional evidence at subsequent levels of appeal.
At the Administrative Law Judge (ALJ) stage of appeal, providers may request a copy of the audit file. Throughout the appeals process, the appeal record is developed as the audit file is passed on to the various contractors at subsequent levels of appeal. Providers should direct their requests for audit files to the office of the ALJ assigned to hear the appeal. The Medicare appeal regulations at 42 CFR 405.1042 provide that a party may request and receive a copy of all or part of a record. Obtaining a copy of the audit file can reveal internal contractor correspondence, including the guidelines and policies applied in their review, which also may reveal inappropriate standards or inconsistencies that can be used to challenge the claim denials. Furthermore, the audit file allows the provider to see what documentation the ALJ has in his or her possession going into the hearing so that a determination can be made whether additional information should be submitted.
In a recent audit appeal, review of an audit file revealed that the Medicare contractor that conducted the initial audit review ultimately had discarded the statistical sampling and extrapolation originally applied in favor of a claim review. In a conclusion based on the language of the audit letters and appeal decisions, the provider understood the audit to involve an extrapolated overpayment. It was not until a review of the audit file was performed at the ALJ hearing that the claim-by-claim overpayment calculation was discovered. This type of information is vital to challenging the propriety of an audit.
In recent audit appeals, we also have experienced increased contractor participation in ALJ hearings. CMS contractors may elect to participate either as parties or non-party participants in an ALJ hearing (the nature of the contractor’s involvement in the hearing often is impacted by how they choose to participate). In our experience, contractors more commonly participate as non-party participants. As participants, contractors may not call witnesses or cross-examine a provider’s witnesses, nor may the provider call the contractor as a witness. Pursuant to 42 C.F.R. 405.1010, participation as a non-party participant may include filing position papers and providing testimony to clarify factual or policy issues of the case.
ALJs vary on the scope of involvement they permit from contractors acting as non-party participants. In some instances the ALJ simply will allow the contractor to listen to the hearing or will pose a few questions to the contractor’s representatives for clarification. In other instances ALJs have allowed a contractor representative to offer testimony on the substance of the audit review. This can be problematic when the contractor is not placed under oath and when the provider or their attorney is not permitted to engage in cross-examination. That said, contractor participation does not always have a negative impact on a provider’s appeal; in some instances contractor testimony and position papers actually have been helpful in revealing shortfalls in an audit review. Regardless, it is helpful for providers to know in advance of the hearing whether contractors plan to participate.
CMS or its contractors also may elect to act as parties to an ALJ hearing on a provider appeal. When acting as a party, the contractor is permitted to call witnesses or cross-examine the witnesses of other parties as well as submit position papers and provide testimony to clarify issues. Notably, limited discovery rights are permitted when a contractor acts as a party to a hearing. While contractors are required to advise the ALJ and the provider of their intent to participate in the hearing as a party or non-party participant within 10 days of receiving a notice of hearing, it is not uncommon to have a contractor attend on the day of the hearing with little or no prior notice. Providers should contact the ALJ’s office in advance of the hearing to determine if any of the CMS contractors involved have indicated their intent to participate in the hearing or submit a position paper.
Providers and their attorneys must recognize the potential impact of contractor involvement during the appeals process and utilize to their advantage contractor contact through information requests and hearing appearances. Providers are advised to monitor contractor participation in light of current Medicare regulations and to raise objections when their involvement goes beyond the permissible scope.
About the Authors
Andrew B. Wachler is the principal of Wachler & Associates, P.C. He graduated Cum Laude from the University of Michigan in 1974 and was the recipient of the William J. Branstom Award. He graduated Cum Laude from Wayne State University Law School in 1978. Mr. Wachler has been practicing healthcare and business law for over 25 years and has been defending Medicare and other third party payor audits since 1980. Mr. Wachler counsels healthcare providers and organizations nationwide in a variety of legal matters. He writes and speaks nationally to professional organizations and other entities on a variety of healthcare legal topics. Mr. Wachler is a member of the American Health Lawyers Association and American Bar Association (Health Law Section). He sits on the Editorial Board of the ABA Health Law Section publication The Health Lawyer, Fraud and Abuse Section and is the Vice Chair of the ABA Health Law Section Payment and Reimbursement Interest Group. Mr. Wachler is a member of the State Bar of Michigan, Health Care Law Section.
Jennifer Colagiovanni is an attorney at Wachler & Associates, P.C. Ms. Colagiovanni graduated with Distinction from the University of Michigan and Cum Laude from Wayne State University Law School. Upon graduation, Ms. Colagiovanni was nominated to the Order of the Coif. Ms. Colagiovanni devotes a substantial portion of her practice to defending Medicare and other third party payer audits on behalf of providers and suppliers. She is a member of the State Bar of Michigan Health Care Law Section.
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