The Centers for Medicare and Medicaid Services (CMS) recently implemented a new Final Rule that will substantially revise the process used to contest a disputed decision from a Fiscal Intermediary (FI) on a case involving Medicare payments before the PRRB--the Administrative tribunal appointed by Congress to adjudicate disputes. Designed to reduce PRRB backlog, the new regulations reaffirm the Board's authority to dismiss appeals for failure to follow procedures and deadlines and significantly change procedures and adopt detailed model forms for almost every action on an appeal. The new process will require early focus and attention.

Key changes to the process, published in the may 23, 2008, Federal Register and spelled out in the 80-page Final Rule that took effect on August 21, 2008, were made in the six areas discussed below. Several alerts have been issue since the new rule took effect and providers should note that the PRRB is still working through "transition issues" and may issue additional alerts to clarify matters.

There are three fundamental jurisdictional requirements for appeals:

  • Dissatisfaction with the final Medicare payment determination
  • Timely appeal within 180 days of receipt of notice of that determination
  • Amount of the controversy--$10K for an individual provider appeal and $50K for group appeal on a common issue

Protest Items

Providers will now be required to conduct a comprehensive review of the cost report and NPR in order to identify all the issues that should be appealed. They will have to try to identify every item with which they may later disagree; however, as they don't know in advance which will be disallowed and have an effect on their Medicare reimbursement, it will result in providers appealing more issues in their hearing requests as a "protective filing" or place holder.

What this means is that a provider must have a thorough grasp of the merits of its challenges very early in the appeals process--at the time it submits its request for a hearing. That is, in order to preserve its appeal rights, a provider must either claim an item on its cost report when seeking reimbursement or self-disallow (file the cost report "under protest") the item when seeking reimbursement that it believes may not be in accordance with Medicare policy. However, the Final Rule requires that in order to self-disallow an item, the provider must follow the procedures for filing a cost report under protest. These procedures require a provider to identify the disputed item and amount for each issue in footnotes to the settlement worksheet.

Filing Hearing Requests

A significant aspect of the new rules is that information and documentation must be submitted with a provider's request for a hearing. Providers are required to present in their initial request, the explanation and documentation previously required in the preliminary position paper, including the material facts supporting the claim. This greatly increases the burden on providers in the early stages of the appeal.

In addition, providers must follow new regulations and PRRB instructions for appeals filed on or after 8-21-08 and must use Model Forms A for an individual hearing appeal and Model Form B for group appeal hearing requests. They also must file an NPR for the individual hearing request. For an individual appeal, they also must file a "statement" with specified details for each appealed issue and for a group appeal, they must submit the "statement" of the single issue, listing of initial participants, and the jurisdictional documentation and provider representation letter.

Addition of Issues

The addition of issues for consideration before the PRRB at a scheduled hearing also was a significant change in the process. However, according to Stephanie Webster, JD, Counsel in the Healthcare Practice Group at King and Spaulding. Webster, who practices in the areas of Medicare and Medicaid Reimbursement, notes that going forward, "Now that October 20, 2008 has passed, the addition of issues is a moot point for most hospitals, unless the NPR for the hospital was issued last Spring and the appeal was filed before the change in rules."

Group Appeals for Related Providers

Under the new regulations, CMS has revised a number of procedural matters related to group appeals. A group appeal is when a matter is brought before the PRRB by several providers on a common issue. In some cases, the providers are connected by shared ownership or control. In other cases, the connection is simply a shared common issue to be addressed. A salient point to remember here is the related providers must appeal a common issue in a group appeal and unrelated providers may appeal a common issue.

Under the new regulations, a provider must demonstrate that it satisfies the jurisdictional requirements for a PRRB hearing. Webster adds that one matter covered in an alert from CMS is a requirement to qualify for a group appeal; the pertinent issue is whether the providers were related during the period at issue, not at the time when the appeal is filed.

When in doubt, it's better to err on the side of forming a group rather than not forming one and it's better to form the group immediately from the first NPR for a year.

Position Papers

In the future, position papers will need to be a great deal more detailed than before the new procedure went into effect, according to Webster," Providers will need to present their entire case in the position paper." She adds that, the "PRRB has instituted a new mechanism that allows providers to manage their own cases. Previously, the Board issued preliminary position paper due dates that providers had to meet or risk dismissal of their cases. Now, there is an option for filing a joint scheduling order (JSO) -an agreement between the intermediary and the provider that's intended to increase the resolution of issues before the hearing date--instead of the paper."

Webster adds that the PRRB does seem to be implementing this provision as intended. "However, it does involve more front-end work. A provider has to think about the case and decide what it needs to bring to the hearing. It forces the provider to think through the case even if it's not putting it down on paper.

The preliminary position paper must now present the provider's fully developed position on each issue under appeal, include all available documentation, and identify what additional documentation is required to resolve the case. Arguments and documents not included in the preliminary position paper may be excluded at the hearing.

Discovery from CMS

Obtaining Evidence or Testimony from CMS has become more difficult since the new rule went into effect. CMS has attempted to effectively immunize itself
from requests for discovery or testimony relevant to matters at issue in appeals before the PRRB, even if CMS made the determination at issue. The new rules generally limit discovery to the parties to an appeal and CMS may assert it is not a party to an appeal. This will create major challenges for providers contesting CMS determinations through the appeal process. Depending on the nature and magnitude of the issue in dispute, it may be critically important to develop and implement a strategy for prosecuting the appeal and pursuing discovery early in the process.

Potential strategies for dealing with these issues are complex so it's prudent to identify sources of information other than CMS. In addition, the following steps will help document the process

  •  Build a record of attempts to obtain information from CMS (even if requests are likely futile)
  •  File a Freedom of Information Act request
  •  Request CMS witness testimony
  •  Request PRRB subpoenas (even though it will likely be denied)
  •  Request same information in discovery requests directed to the intermediary
  •  Notify Board when the intermediary fails to meet deadlines or to produce requested discovery


Reopening requests must be delivered within three years of date on NPR. To ensure they are, file a timely appeal even if reopening is requested (reopening request does not extend appeal deadline). It's also important to appeal issues from original NPR and not expect
to appeal from revised NPR.

The Intermediary may reopen on its own initiative by mailing notice within three years of date of NPR. Revisions may be made on reopening after three years if reopening is timely and requested by the provider or initiated by the intermediary within three years and may reopen even if the issue has been appealed to the Board. However, the Intermediary is not required to reopen a case. The following considerations are important to keep in mind in relation to reopening appeals:

  • Appeals from revised NPRs are limited to matters that were actually adjusted in the revised NPR
  • The new rules will not permit an appeal from a revised NPR with respect to an issue that was reopened but not adjusted in the revised NPR upon conclusion of the reopening
  • Questionable validity, but plan accordingly
  • The right to add issues within 240 days of receipt of the NPR or revised NPR does not create a right to appeal matters that were not addressed in that determination


The New Process in the Real World

So what does all this mean for providers in practice? Michelle Carrothers, Director of Debt Management and Revenue Cycle for OSF HealthCare in Downstate Illinois, notes that providers will have to be more pro-active and not miss the opportunity for appeals. "Providers have so many areas on which they focus, that it can be difficult to stay on top of things, but we'll have to do it." Carrothers, who is responsible for the revenue cycle process-which includes third-party reimbursement-adds that the organization tries to be pro-active in reviewing cases and determines whether it needs to request an appeal. "We file cost reports that are compliant and have been completed to the best of our ability to meet regulatory requirements, but sometimes things come up after those have been submitted. For example, we rely on information provided from states, such as a state claims report, and sometimes those are not readily available or current."

Carrothers also notes that OSF conducts additional reviews of cases and identifies opportunities for appeals and attempts to file them promptly. What implementation of the Final Rule means to providers is that they will have to use more advance planning in preparing Medicare appeals. From including items properly on the initial cost report to submitting the appropriate documentation in the hearing request, the burden will increasingly be on providers to satisfy additional requirements on the front end of the appeal process.

Nevertheless, Carrothers points out that the process can work smoothly. She mentions that OSF has several outstanding appeals and that the organization works well with the FIs. "We have an established relationship and reputation with a good track record, and we do our homework, so when we do appeal, we have a strong case. Overall, our success rate on appeals has been very good."

More on New Medicare Payment Appeal Process...

Publication Date: Wednesday, February 11, 2009