ZPIC Contractors are Turning Up the Heat.

(September 1, 2010):

I.     Introduction — ZPIC Contractors Are Likely to Participate in Your ALJ Hearing:

As previously discussed, after representing health care providers for many years in administrative hearings, involving well over 10,000 Medicare claims this year alone, it has been our experience that Administrative Law Judges (ALJs) remain a provider’s single best opportunity to present its legal, regulatory and factual arguments in support of payment.  While there are no guarantees, the ALJs we have practiced before have been attentive, knowledgeable, willing to listen to the provider’s viewpoint, and perhaps most importantly, FAIR.  In recent years though, it has become more complicated for a health care provider to present it case during an ALJ hearing.  This is due, at least in part, to the fact that ZPIC auditors are now often showing up at the ALJ hearing to advise the Judge the reason(s) they decided to deny your Medicare claims.

 II.     The Medicare Appeals Hearing Process:

 Once a request for an ALJ hearing is filed, the Court generally takes one of three actions.  It either:\

Conducts the hearing and issues a decision (either Favorable, Partially Favorable or Unfavorable),

Issues an order of dismissal of the appellant’s request for ALJ hearing, or

Remands a case back to the Qualified Independent Contractor (QIC) for additional necessary action.

When appealing individual claims, a Court may choose to rule on behalf of the provider, without the necessity of a hearing.  However, in “big box,” multiple-claim, high dollar cases, a hearing is almost always held unless the appellant requests that the Court base its decision solely on the record, without the benefit fo testimony.  When hearings are held, they are usually conducted by teleconference or video-teleconference.  Upon request, the Court may (but is not required to) grant an “in-person” hearing.  However, it has been our experience that ALJs prefer to conduct hearings by other means.

If a favorable (or, for that matter, unfavorable) ruling is issued by the Court, a number of steps remain before the decision can be effectuated.  Medicare contractors (such as Intermediaries and Carriers — now, combined into entities known as “Medicare Administrative Contractors” (MACs)) do not immediately take action based the decision of the Court.   Instead, once an ALJ issues the Court’s decision regarding a case, a copy of the ruling is sent by the respective Office of Medicare Hearings and Appeals (OMHA) to an organization known as the “Administrative Qualified Independent Contractor” (AdQIC).  The AdQIC is then responsible for reviewing the decision and sending it to the responsible MAC for effectuation.

 III.     Rise of the AdQIC — A New Factor to Consider in the Medicare Appeals Process:

In 2004, Q2 Administrators (Q2A) was awarded the first task order to serve as an AdQIC under the new administrative appeals process by the Centers for Medicare and Medicaid Services (CMS).  As Q2A’s website reflects, in its capacity as an AdQIC, the contractor is required to develop training and standard work protocols, analyze appeal outcomes, recommend improvements to the appeals process and manage case files.

 While the AdQIC does, in fact, perform all of the above functions, the likelihood of their involvement in your case appears to have greatly increased over the past year.  In a number of the cases we have handled, the AdQIC has aggressively sought to overturn both favorable legal arguments and holdings by ALJs invalidating fatally flawed statistical extrapolations applied by a Zone Program Integrity Contractor (ZPIC) or Program SafeGuard Contractor (PSC) in a case.  While AdQICs do not have the authority to file an  appeal with the Medicare Appeals Council (also referred to as the “MAC”  — but not to be confused with Medicare Administrative Contractors which are are referred to by CMS as a “MAC”), they have gotten around this pesky issue by sending notices to the MAC outlining their concerns.  The MAC has then been reviewing the decisions on its own authority.  As a result, the AdQIC has effectively been granted administrative appeal authority, despite the fact that this function is not one of the enumerated tasks outlined for the entity by CMS or by statute.

In light of these developments, it is imperative that you retain counsel who is experienced responding to AdQIC notices (de facto appeals) to the MAC.  Unlike other steps in the administrative appeals process, if your ALJ’s decision is challenged by an AdQIC to the MAC, you will have a short, limited amount of time to respond to the AdQIC’s arguments.  It is strongly recommended that you work with an attorney who is experienced responding to an AdQIC challenge.  An attorney who is knowledgeable of the MAC appeals process can properly advise you of your options at this point in the appeals process.

 While the AdQIC’s new perceived role – as overseer and critic of the ALJs – can make the process even more costly and frustrating than usual, it has been our experience that the AdQIC’s legal arguments often mimic the positions taken by other contractors earlier in the process.   Notably, we have yet to see (or even hear) of an AdQIC “appeal” of an ALJ decision that was unfavorable to the provider.  As a result, we believe it is quite clear that the AdQIC is far from being a “disinterested” party.

 IV.     Don’t Handle a Medicare Appeals Hearing Alone – Hire an Experienced Attorney:  

As Medicare claims audit and assessment efforts increase (through CMS’ use of ZPICs, PSCs and RACs), health care providers will be under increasing pressure to ensure that statutory and regulatory coding and billing requirements are met.  Despite your best efforts to remain compliant, you may find that your practice or clinic is subjected to review.  Should that occur, we strongly recommend that you retain qualified, experienced legal counsel to represent your interests.  Even if you prevail before an ALJ, depending on the reasons relied on by the Court, there is a real chance that the AdQIC may seek to have the Court’s decision overturned by the MAC.  When hiring an attorney, be sure and ask him the following:

How much of your law practice involves health law issues?

Please describe the extent of your experience handling large, complex administrative appeals of denied Medicare claims.

How often have you responded to AdQIC appeals of favorable ALJ decisions?

How often have you handled MAC appeals?

Can you provide provider references?

V.     Conclusion:

Hopefully, your practice will not face a large administrative appeal of denied Medicare claims.  However, should such an event occur, you need to be ready to respond to the contractor’s audit.  While there are no guarantees in this business, knowledge of the rules and experience handling administrative appeals may prove essential to increasing the likelihood of your success.

Robert W. Liles and other Liles Parker attorneys have extensive experiences representing Part A and Part B health care providers in connection with Medicare appeals.  Should you  require additional information regarding these issues, call Robert for a free consultation.  He can be reached at: 1 (800) 475-1906.