Has Your “Win” Before an ALJ Been Referred to the Medicare Appeals Council by the AdQIC?

(December 29, 2010): 

I.    Introduction: 

Many health care providers are familiar with the revised administrative appeals process for contesting denied Medicare claims.  In exercising their appeal rights, many providers (or their legal counsel) have appealed denied claims through the second level of appeal, submitting their claims and arguments in support of payment to the Qualified Independent Contractor (QIC) responsible for hearing reconsideration appeals. Q2 Administrators (Q2A) is one of the contractors selected by the Centers for Medicare and Medicaid Services (CMS) to serve as a QIC.

Notably, Q2A has also been awarded the first task order to serve as Administrative Qualified Independent Contractor (AdQIC). Q2A’s responsibilities as AdQIC are separate and distinct from its responsibilities as one of the general QICs chosen by CMS to serve as the reconsideration reviewer of denied Medicare claims.

III.    Official Duties of an AdQIC: 

The role played by Q2A as AdQIC is often misunderstood by both health care providers and attorneys alike.  Officially, Q2A performs its AdQIC duties out of its headquarters in Columbia, South Carolina.  As Q2A’s reflects, in its role as AdQIC, is responsible for performing a number of essential administrative appeal functions.  As AdQIC, QA2 notes that the unit is responsible for:

• Developing training and standard work protocols.
• Analyzing appeal outcomes.
• Recommending improvements to the appeals process.
• Managing case files.

Sounds fairly innocuous doesn’t it?  Unfortunately, the current AdQIC system represents a major challenge for prevailing providers to overcome.  Rather than merely “analyzing appeal outcomes,” as Q2A’s website reflects, the AdQIC appears to primarily serve as CMS’ appellate counsel, challenging favorable decisions by Administrative Law Judges (ALJs) with which it disagrees.   To be clear, we have seen no evidence that the AdQIC serves as an impartial reviewer of ALJ decisions.  Instead, our review of the cases referred to the Medicare Appeals Council (MAC) by the AdQIC suggests that unit is only interested in cases where the presiding ALJ has ruled in favor of the provider.

So what does as AdQIC really do?  As Q2A’s website reflects, the company’s stated mission is to:

“[P]rovide support and services to the Federal government and other customers that reflect our ideal of ‘Quality to the Next Level.’ Q²A delivers consistent, quality outcomes and solutions for our customers by utilizing sound processes and a stringent quality assurance program. (emphasis added).

On its face, Q2A’s mission expressly reflects where its interests lie – the company’s focus is on delivering “consistent, quality outcomes and solutions” for its “customers.”  In this case, the customer is CMS — not health care providers, and frankly, that’s undersandable.  As the “Frequently Asked Questions” section Q2A’s website reflects:

Question:  What happens after I receive a favorable (emphasis added) ALJ Decision? 

Answer:  Favorable rulings by an Administrative Law Judge (ALJ) do not result in immediate payment of claims.

Once an ALJ rules favorably on an appeal, the Office of Medicare Hearings and Appeals (OMHA) forwards the decision and case file to the Administrative Qualified Independent Contractor (AdQIC).

The AdQIC subsequently has 10 days to update the appeals tracking system and to decide whether the case requires further review by the Medicare Appeal Council or is sent to the Medicare contractor for payment. The AdQIC’s review cannot begin until it receives the case file. Regulations do not require the OMHA to forward case files within a given amount of time.

If the AdQIC refers the case to the Medicare Appeals Council, the Medicare contractor that processed the original claim is notified. Effectuations (payment of claims) made by the contractor are then contingent upon the Medicare Appeal Council’s decision.

For ALJ decisions that require no further review, the AdQIC sends an effectuation notice to the contractor, who must then pay specified claim amounts within 30 days. Effectuations in which the contractor must calculate the amount may take up to 60 days.

While an AdQIC doesn’t have the authority to appeal a favorable ALJ decision to the MAC, it can (and often will) refer a case (where the provider prevailed) to the MAC and ask that the council review the decision.  Two primary points of contention have been typically been argued by the AdQIC:

(1)   Cases where the ALJ has overturned an extrapolation of damages previously imposed by a Zone Program Integrity Contractor (ZPIC), as part of its initial audit.

(2)   Cases where the ALJ has held that a provider is not liable for alleged overpayments associated with one or more claims under Section 1870 of the Social Security Act.

In many (but not all) cases, the MAC will, in fact, open and review an ALJ’s favorable decision.  The MAC may then remand the case back to the presiding ALJ for reconsideration of the contested points.

IV.     Be Prepared — Don’t Go Into this Process Alone – Retain Experienced Legal Counsel:  

As Medicare claims audit and assessment efforts increase (through CMS’ use of ZPICs, RACs and PSCs), 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.  In a number of cases, we have been retained by other law firms to assist with administrative appeals.  When working with other law firms, the level of our involvement has varied from case to case.

V.      When is a “Win” Truly a “Win”?

Unfortunately, it is becoming more and more difficult each year to rely on a favorable ALJ ruling.  Over the past year, the AdQIC has become more aggressive than ever in challenging holdings with which it disagrees.  As a result, it is important that your counsel plan for beyond the ALJ level when asserting defenses to the government’s arguments.  While a number of arguments may be persuasive to an ALJ, the same arguments may also automatically generate a referral by an AdQIC to the MAC. When hiring an attorney to handle your Medicare claims case, be sure and ask prospective counsel the following:

• How much of your law practice is devoted to 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?

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.

Liles Parker attorneys have extensive experience handling complex Medicare administrative appeals.  Our attorneys have represented Home Health Agencies, Hospice Companies, Ambulance Companies, Chiropractic Clinics, Physical / Occupational / Speech Therapy Clinics, Nursing Homes, Physian Practices (E/M Claims), Psychology Practices, DME Companies and a wide variety of other Medicare Part A and Part B providers.  Should your practice or clinic be audited by a ZPIC or RAC, give Robert W. Liles for a free consultation.  He can be reached at: 1 (800) 475-1906. 

Recoupment, Extended Repayment and Strategies in Medicare Appeals Cases.

(December 3, 2010):  In recent years, Medicare Administrative Contractors (MACs) have become much more likely to initiate recoupment of alleged overpayments in connection with post-payment audits as soon as they are permitted to do so.  The purpose of this article is to examine steps that a health care provider should consider when it is faced with a Medicare appeal and must consider how it will handle the recoupment / repayment issue.

I.      Recoupment Considerations When Filing a Medicare Appeal at the Redetermination Level.

CMS’ current recoupment rules effectively vitiate the ability of a provider to use the 120-day period to prepare their case before filing for redetermination appeal.  As the limitation on recoupment rules are currently applied, if a health care provider does not file for redetermination appeal within 30 days of the date of the MAC’s demand letter, then on day 41 the contractor will begin recouping the overpayment that is allegedly owed.

As a result, instead of having 120 days to file for redetermination appeal, providers are under significant pressure to file for appeal within the 30 days of the date of the contractor’s overpayment determination letter.  To be clear, the 30-day clock does not start when the ZPIC sends out their decision letter.  Rather, the clock starts as of the date that is indicated at the top of the MAC’s demand letter, not as of the date that the provider actually receives the demand letter.  If the mailing of a MAC post-payment demand letter is delayed, or if the U.S. Postal Service takes longer than normal to deliver the demand letter to the provider (I know, that’s a real stretch of the imagination – nevertheless, just work with me so I can illustrate the problem), the  provider won’t even have 30 days to file for redetermination appeal in order to avoid recoupment.  Unfortunately, this example is all too real.

In a recent “big box”[1] case we defended, for whatever reason the demand letter was not received by the provider until almost 10 days after the demand letter was dated.  As a result, the provider (and our Firm) had to fully assess the ZPIC’s reasons for denial and work up compelling arguments in support of payment in less than 20 days, despite the fact that a provider is supposed to have 120 days after the receipt of the MAC’s demand letter to file for Medicare appeal at the redetermination level.

Notably, if a provider is willing to enter into an extended repayment plan with the MAC (whereby the alleged overpayment is paid out over a 12 – 60 month period), the provider can then take advantage of the full 120 day period to assemble relevant documents, assess applicable coverage and payment guidance and prepare arguments in support of payment.  While most providers prefer not to pay anything in recoupment until it is absolutely necessary that they do so, such an approach may be short-sighted.  In a number of cases, providers have been unable to track down supporting documentation and assemble persuasive arguments within the 30-day period.

II.       Recoupment Considerations When Filing Your Medicare Appeal at the Reconsideration Level.

Once reviewed at redetermination appeal and the MAC sends out its redetermination decision, a health care provider only has 60 days to file for reconsideration appeal if it wishes to avoid any recoupment. Once again, if the provider is willing to enter into an extended repayment plan, it can use the 180-day period permitted by regulation to file its appeal for reconsideration. In many cases, however, the provider insists that we file for reconsideration appeal within the 60 day deadline. Unless the record has been fully assembled, this can be quite problematic. Providers are required to show “good cause” if they wish to have new information (typically in the form of medical records) after the reconsideration level of appeal.

Applying an appeals strategy which attempts to avoid recoupment until the last possible moment only postpones the inevitable.  Once a reconsideration decision is issued, most MACs will seek to recoup the overpayment owed by a provider 30 days from the date of the reconsideration decision (not 30 days from the provider’s receipt of the reconsideration decision). While in some cases, we have seen the MAC wait until the current amount owed is recalculated by the ZPIC, the most prudent strategy is to expect for recoupment to begin 30 days from the date of the reconsideration decision letter.  Importantly, recoupment will take place regardless of whether a provider files for Administrative Law Judge (ALJ) appeal.  Therefore, if the provider has not already done so, it is highly recommended that the provider apply for extended repayment as soon as the reconsideration decision has been received.

III.     Impact of CMS’ Current Recoupment Policies on Your Medicare Appeal.

Overall, the recoupment policies currently in place provide a short-term “fix” that is all to often taken by providers, possibly to the detriment of the provider’s case.  In many cases, the desire to put off any recoupment merely delays the inevitable by a few months. As a result, it is recommended that providers discuss these options with experienced legal counsel and carefully weigh the benefits and disadvantages of each approach before choosing a course of action in connection with your Medicare appeal.

Robert W. Liles and his team of attorneys and paralegals in Washington, D.C., Houston, TX., and San Antonio, TX have handled a wide variety of post-payment Medicare audits around the United States.  Our legal professionals have represented health care providers in front of ALJ in each of the four Offices of Medicare Hearings and Appeals handling ALJ level appeals.  Please feel free to call us for a free initial consultation.  We can be reached at: 1 (800) 475-1906.

[1] The term “big-box” case is typically used by ALJs and Medicare contractors to described large, multi-claim post-payment audit cases.  In approximately 90% of the big-box Medicare appeal cases handled by our Firm, the ZPIC or PSC has taken an allegedly statically relevant sample of between 25 and 200 claims and has extrapolated the overpayments found in this sample to the entire universe of claims.  As a result, in a majority of the cases we have handled, the extrapolated damages sought by Medicare often range from $100,000 to $5,000,000.

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.