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The story below is true and represents all that is wrong with the appeals options.

EDITOR’S NOTE: RACmonitor is continuing its series “RAC Rants,” wherein leading industry figures are given an opportunity to express their frustrations over a variety of topics. In this “rant,” the past president of the Healthcare Business and Management Association (HBMA), Holly Louie, decries abuses by auditor contractors. Additional entries to the series are welcome, and can be emailed to at

It surely comes as no surprise to hear that our physicians and providers have long complained about the various federal audit programs – and the accuracy and knowledge of the auditing contractors. Yet I will be the first to say that fraud should always be targeted aggressively. 

Sophisticated analytics can certainly target aberrant behavior. However, the vast majority of audits our physicians and entities face do not uncover fraud. First, allegedly, there are false claims, upcoding, or similar errors identified, or a national project begins targeting specific services. Thus, the chart reviews begin. If there is no disagreement with the contractor findings, issues can be addressed through education, auditing, and normal compliance assessments. However, if the contractor findings are erroneous, the path to pain and suffering begins. The story below is true, and represents all that is wrong with the appeals options.

A Medicare Administrative Contractor (MAC) audited medical necessity for a small number of admissions to a psychiatric facility, and determined a 100-percent error rate. Unfortunately, this is incredibly common, but rarely accurate. The facility and counsel retained experts to review the documentation and justification for denials. A redetermination was prepared. MAC errors included but were not limited to incorrect dates that were not part of the admission, failure to follow the Centers for Medicare & Medicaid Services (CMS) manual rules on required documentation, refusal to accept signature logs, comingling patients in error, failure to review all documents provided, and misinterpretations of medical terminology. 

The redetermination was a verbatim clone of the initial findings, including typos, mixed-up patients, wrong dates specified, etc. Not one rebuttal, authoritative citation, explanation, clarification, or mistake pointed out was acknowledged. Even the fact that the first-level appeal included specific chart pages, identified by Bates number, was ignored. We were certain that a reconsideration would resolve the matter, and so more physician expense was required to pursue a fair and accurate result.

In theory, reconsideration is performed by “a qualified independent contractor” (QIC). Certainly, that was not the situation in this case. The QIC was neither qualified, nor apparently independent. In fact, the response was a regurgitation of the first two levels of appeals and findings. Again, there was no attempt to acknowledge or address any of the appeal documents. 

At this point, the path for possible satisfactory resolution becomes very steep and very expensive. Recoupments are already in process or planned. The next level of appeal is before an Administrative Law Judge (ALJ). At this appeal level, rulings in the providers’ favor are historically very common.  

However, the ALJ backlog has been four to five years! While myriad excuses for the backlog have been published, I believe the very fact that so many cases had to be appealed to the ALJ level speaks for itself. The first two levels of appeal are incestuous and designed to fail; it was built that way. At the most basic level, it’s a review of auditors’ own work, and declaring it good. 

Although the ALJ backlog is being resolved, the appeals to that level will not diminish until CMS takes a hard look at what is wrong with the appeals structure and methodology. This is truly a case where the baby does need to be thrown out with the bathwater. Let’s have a system that is accurate, fair, and reasonable. Our physicians and providers can be held accountable without bankrupting them. Let’s replace redetermination and reconsideration with real, objective subject experts, with no agenda or vested interest in the outcome.

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