New instruction from Medicare prevents contractors from developing new reasons to deny a claim in the middle of most appeals.  

On May 9, the Centers for Medicare & Medicaid Services (CMS) issued Medicare Learning Network Matters SE1521. The document is titled “Limiting the Scope of Review on Redeterminations and Reconsiderations of Certain Claims.” That may sound ominous, especially since there has been a concerted effort of late to reduce the ability of providers and suppliers to appeal Medicare findings. However, in this case, the limit is helpful.  

CMS is instructing Medicare auditors to limit review of claims in most appeals to the reason given for the denial. There are a few small exceptions, but generally, in a complex medical review (that is, a review that requires the contractor to examine medical records), if the claim was denied for a particular reason during an audit, during the appeal the reviewer should only determine whether that reason was valid. If the initial denial was incorrect, the contractor is not supposed to consider whether there may be other new reasons to deny the claim. 

One of the exceptions is situations in which the provider or supplier failed to submit medical records. When there is a denial based on insufficient documentation, if subsequent documentation is submitted, the reviewing body is allowed to examine that documentation to determine if the service was medically necessary and whether it met the other criteria of coverage. In addition, if the newly allowed claim triggers a system limit such as a frequency limit or a Correct Coding Initiative audit, it may still generate a new denial, but it would be a new denial, with full appeal rights invoked. Presumably, that means you would be back at the redetermination level again on that claim rather than continuing to climb the appeal ladder.  

In other words, if you are being audited because a contractor determined that an E&M service was not medically necessary, when you appeal to the Qualified Independent Contractor (QIC), the QIC should not be examining the service to determine if the E&M code met the level of history, exam, and medical decision-making necessary to support the code. If chemotherapy administration was denied because a drug was experimental, for example, the auditor is not permitted to newly question whether the “incident-to rules” were satisfied or some criteria of a local coverage determination (LCD) were satisfied. 

In the appeals I’ve handled over the last 20 years, administrative law judges (ALJs) typically applied this principle, being reluctant to allow new reasons for denial, but there hasn’t been any instruction from Medicare to cite when a contractor relied on a new denial rationale. 

Interestingly, CMS asserts that this instruction will only be applied starting with redetermination and reconsideration requests received on or after April 18, 2016, and not retroactively. Perhaps we should just be grateful that the new instruction was issued, but it does seem odd that CMS would seek to impose an implementation date on this policy. 

The news, however, is mostly good. And in most audits, when you get a denial articulating a reason, you can focus all of your effort on that rationale, comfortable that if you prevail, you won’t find yourself confronting yet another denial. 

About the Author 

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board. 

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