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

December 29, 2010 by  
Filed under Featured, Guidance

(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. 

A Look at RACs — How Should Physicians and Other Providers Respond to a RAC Audit?

June 28, 2010 by  
Filed under Medicare Audits

(June 28, 2010): In Part I of this series, we reacquainted you with the design and purpose of the now permanent Recovery Audit Contractor (RAC) Program.  Although RACs largely focused on inpatient care during CMS’ demonstration program, RACs are a real threat to small providers that don’t have the intensive compliance programs in place that most hospitals do.  In this Part II, we will look at how physicians, home health, hospice, and durable medical equipment (DME) suppliers can prepare for and respond to RAC audits.

Even if no demands are issued, the RAC audit process exposes providers to substantial risks and administrative costs.  Fortunately, both can be managed with thoughtful implementation of effective compliance measures and a well-planned response to an audit.

I.              How Should Physicians and Other Small Providers Prepare for a RAC Audit?

It is essential that the preparation for a RAC audit begins before the RAC ever knocks on the door.  Deadlines are tight and so physicians without effective compliance programs in place run the risk of claims being denied simply because they can’t show that they crossed all the “T’s” and dotted the “I’s” in time.

Physicians, home health, hospice, and DME suppliers can begin to target their compliance efforts by examining the reasons for denials issued during the recently concluded RAC demonstration program.  During the course of that program, of improper payments identified,

  • 35% were the result of incorrect coding;
  • 8% were the result of insufficient documentation (including failure to submit information on time or to submit enough information); and
  • 17% were the result of other issues, such as basing claim payments on outdated fee schedules or duplicate claims.  Meanwhile,
  • 40% were deemed medically unnecessary.

In other words, 60% of denied claims had nothing to do with patient care.  No one goes into health care to spend their time creating and perfecting paper trails but long experience with Medicare tells us that doing so cannot be avoided.

Thus, to prepare for a RAC audit, as a provider you can:

  • Implement and continuously review your compliance plan;
  • Review the documentation requirements for each item or service you provide;
  • Maintain your files thoroughly and consistently;
  • Do NOT rely on other suppliers or providers for record-keeping; and
  • Make sure all your documentation is legible.

II.         How Should Physicians and Other Small Providers Respond to a RAC Audit?

The RAC audit process starts with a request for records, upon which the provider has a strictly enforced 45 days (plus mail time) to respond.  Upon receiving a request for records, providers can take several steps to protect yourselves:

  • Take care before conducting an internal review of the claims requested.  While an internal analysis can be invaluable, you want to avoid creating a non-privileged paper trail of identified problems that could later be referred to law enforcement if a RAC makes a fraud referral.
  • Review past claims audits and evaluations to determine whether the requested claims have been previously evaluated.
  • Remember that filing deadlines are strictly enforced so calculate early on when appeals must be filed and begin to gather supporting documentation.
  • Consider retaining an expert in extrapolation.
  • Do NOT assume the contractor’s arguments are meritorious.  Carefully review Medicare policy to see if the RAC cited it correctly.
  • Retain duplicates of any information that you submit to the RAC.

 III.        Is Anything Different in the Permanent Program?

Small providers with experience being audited in the demonstration program should be on the lookout for the several changes implemented under the permanent program that may help protect them.  For instance,

  • RACs’ Contractor Medical Directors are now required to speak with a provider regarding a claim denial, if requested, and a reviewer must provide credentials upon request.
  • The reason for the review must be listed on a request for records letters and overpayment letters.
  • The look-back period is reduced to 3 years from 4.
  • CMS has set uniform limits on the number of records that can be requested in a 45 day period (sliding scale).

 More details concerning these and other changes to the permanent program can be found in the CMS RAC Demonstration Evaluation Report, available at

robert_w_lile-150x1501Robert W. Liles and other Liles Parker attorneys have extensive experience handling complex Medicare appeals cases.  We represent health care providers in the administrative appeals process.  Are you being audited?  Call us for a complementary consultation regarding your case.  We can be reached at: 1 (800) 475-1906.