Denials Management

Appealing Medicare Denials in an Age of Reform

February 1, 2018 11:43 am

Hospitals can temporarily stop Medicare from withholding payment by filing redeterminations within 30 days, instead of the standard 120 days, and reconsiderations within 60 days, instead of the standard 180 days.

Denials Management

In this interview, Andrew B. Wachler, a partner at Wachler & Associates, P.C., offers some best practices for providers on appealing Medicare denials.

On a changing appeals environment. In January 2017, the Centers for Medicare & Medicaid Services (CMS) released a final rule outlining several reforms to the appeals process. The changes come following a 2016 decision, American Hospital Association v. Burwell, by the U.S. District Court for the District of Columbia that requires CMS to make significant reductions in its backlog of appeals. Specifically, the decision requires CMS to reduce its appeals backlog—estimated to be more than 1.9 million by the end of 2020—by 30 percent by 2018, 60 percent by 2019, 90 percent by 2020, and 100 percent by 2021.

Under the decision, CMS and the Office of Medicare Hearings and Appeals (OMHA) must reduce their appeals backlog at the administrative law judge (ALJ) level (the third key level of appeal after redetermination and reconsideration). To that end, OMHA has introduced changes to make the appeals process more efficient, including using attorney adjudicators at OMHA when ALJ hearings are not necessary.

However, in August 2017, the D.C. Circuit Court ordered the D.C. District Court to reconsider its mandate to reduce the appeals backlog, Wachler says. At press time, it was unclear how the issue would be resolved, yet Wachler continues to see new reforms to reduce the backlog that may be motivated by the pending case.

Despite this uncertainty, finance leaders should work aggressively with their legal teams to develop comprehensive strategies for their appeals. “It is important to understand what your options are, and providers don’t always know them,” Wachler says. “The appeals process is evolving, with these reforms offering new opportunities for resolution.” This includes new settlement options as well as OMHA’s new statistical sampling initiative, which allows providers to aggregate claim disputes for settlement or hearing purposes.

On the importance of early preparation.  Wachler urges providers to put together their appeals cases early on. He also encourages providers not to get discouraged during the redetermination stage when claims often come back as disallowed. “Don’t assume you won’t prevail, because you seldom prevail at the reconsideration stage,” he says.

Providers also should be aware of the early presentation of evidence rule at reconsideration, which requires submission of all evidence at this stage of the appeal. Under the final rule, evidence can be excluded from the record in the subsequent ALJ appeal if good cause for late filing of evidence is not demonstrated. The final rule also offers examples of when good cause may be found for providers to submit new evidence, such as previously submitted but missing evidence.

During the reconsideration stage, providers also should submit any similar ALJ decisions or recovery audit contractor (RAC) reviews that were approved, as these will help demonstrate that the services should be approved and can provide material evidence in what is known as the “waiver of liability” defense. However, evidence required to be submitted at the reconsideration level need not include expert testimony. “You can bring in experts later,” Wachler says.

Taking early action also is important because providers can stop Medicare from withholding payments by filing redeterminations within 30 days, instead of the allowed 120 days. The same is true if providers file reconsiderations within 60 days, instead of the allowed 180 days. By comprehensively submitting an appeal promptly, organizations may be able to reduce some of the overpayments several years sooner than at the ALJ level, as the typical appeal lasts three years. “The more you can reduce that amount through the reconsideration level, the lower the withheld payment will be, and the fewer denials you will have to appeal at the ALJ level,” he says.

On recouping overpayments.  Many providers also fail to understand what is known as 935 interest, which refers to the overpayment recoupment process outlined in Section 935 of the 2003 Medicare Prescription Drug, Improvement, and Modernization Act. This is interest providers can gain if they ultimately win an appeal. For example, on $1 million in denied claims, a provider could receive an additional 9.75 percent a year, or almost $300,000, if the provider prevails on an appeal that lasts three years. However, providers are not eligible to receive this interest if they enter payment plans. Therefore, providers need to know whether they are leaving dollars on the table before negotiating a payment plan, Wachler says.

On assembling the right team.  The right appeals team depends on the type of case, Wachler says. Providers can leverage internal experts, external experts, or a combination of both. For inpatient/outpatient cases involving the two-midnight rule, teams might include clinical experts such as physicians who can discuss the medical necessity of the lengths of stay. For DRG cases involving coding issues, coding experts can augment teams to provide expert testimony on and support the DRG billed. In statistically projected cases, statisticians may be appropriate experts to challenge the validity of the statistical projection.

On best practices. Consider the following during the early stages of an appeal:

  • Become familiar with the OMHA Case Processing Manual, which lays out important procedural steps in the appeals process.
  • Be assertive and submit even what you think may be “imperfect” claims for appeals. New reforms allow you to settle many cases, and the more cases you have to settle, the higher the settlement figure will be.
  • Review the outcome of previous audits for similar claims that were approved in the past, which can help you support a specific strategy known as a “waiver of liability” and/or a “provider without fault” defense.
  • Hold regular meetings with internal and external expert teams, if applicable, to prepare and monitor progress on appeals.
  • Assign team members to track communications and deadlines.
  • In general, wait until an ALJ is assigned and submit appeals directly to the ALJ, rather than OMHA Central Operations.
  • List beneficiaries’ full health insurance claim numbers on appeals.

On process improvements to reduce appeals. When your organization is audited—especially by a zone program integrity contractor—carefully examine documentation procedures. “Take action and tweak your compliance if you find a pattern of documentation or coding that should be addressed,” Wachler says.

Interviewed for this article:

Andrew B. Wachler, Esq., partner, Wachler & Associates, P.C., Royal Oak, Mich..


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