The appeal process can be cumbersome, and during the time it takes to run its course, suppliers are subject to recoupment. The first step is the review. A review is an independent and critical reexamination of a claim.

The information on the claim is reviewed along with the additional information submitted with the review request. The review must be requested within 120 days from the date of the remittance notice for original claims. A review may be requested in writing or by telephone.

If a review request is submitted with only the information originally submitted with the claim and no new or additional documentation, the original determination will be upheld. While a statement explaining the reasons for the review is essential, that statement must have supporting documentation.

A review decision is usually made within 45 days of the review date. If the determination is upheld, a letter stating the decision is mailed to the requester. If the decision is favorable, payment will be issued. If the decision upholds the original claim determination, the supplier must determine if he will appeal.

Carrier Fair Hearing
A Carrier Fair Hearing is a de novo review of the denied claim. It may be conducted by the DMERC’s employee or an independent contractor. The fair hearing is an important time when the supplier may provide additional information. The fair hearing request must be filed within 6 months of the date of the remittance notice denying the claim or the final determination letter that results from an audit. The amount at issue must be at least $100.

A supplier may combine several beneficiaries and/or claims to achieve the $100 threshold. The hearing officer is bound by the Carrier’s Manual and the Supplier’s Manual. The hearing must be completed within 120 days of the date of the request for a hearing.

Administrative Law Judge (ALJ)
An administrative law judge (ALJ) is a federal judge in the Social Security Administration (SSA). The ALJ typically handles appeals on denials of Social Security benefits and, thus, may not be familiar with the medical necessity issues that usually arise during hearings involving DME suppliers. An ALJ has the right to call expert witnesses, and many ALJs do. Often, the expert witness is a physician.

An ALJ hearing is a de novo hearing, meaning the ALJ is not bound by the decision of the hearing officer and can look at any issue involving the claim being appealed. An ALJ is not bound by the Carrier’s Manual and Supplier’s Manual;  he or she can consider whether the item or service is reasonable or necessary, even if it is not specifically addressed in the Carrier’s or Supplier’s Manual. However, if the appeal seeks to prove that the Carrier’s or Supplier’s Manual provisions are incomplete or overly restrictive, the supplier will have an uphill battle. An ALJ appeal must be filed within 60 days of the carrier hearing decision letter. The amount in controversy must be at least $100.

The MAC Review
The Medicare Appeals Council (MAC) review is performed by three federal judges who are appointed to review the appeal. The supplier must file the request within 60 days of the ALJ’s decision. The supplier must file this request directly with CMS. The amount in controversy must be at least $500.

Judicial Review
A judicial review requires suppliers to file a lawsuit in federal district court. In other words, the supplier actually sues the federal government. The appeal must be filed within 60 days of the MAC decision. At least $1,000 must be at issue.

Changes to the Appeal Process
The current process, while cumbersome, can eventually provide fairly good results for suppliers. For example, after reaching the ALJ level, it is not unusual for a supplier to see a significant reduction in the overpayment. However, there are a number of disadvantages that can be found in the process. Currently, it can take a supplier in excess of 3 years to go from an initial overpayment request to receiving a MAC decision. This is extremely frustrating for suppliers because they are required to make payment arrangements or have their Medicare payments subject to recoupment during the appeal process. In addition, once a supplier obtains a positive result during the appeals process, Medicare is often slow in returning amounts collected.

There have been several changes to the Medicare claims appeal process. In particular, Section 521 of the Medicare/Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) provides for a major restructuring. BIPA includes structural and procedural changes to the appeals process including:

• making uniform decisions for both Part A and Part B in claims;
• reducing, and in some cases establishing, decision-making time frames for portions of the appeals process;
• creating a right to escalate the appeal to the next level if a decision-making time frame is missed;
• establishing a new entity known as a qualified independent contractor (QIC) to conduct reconsiderations;
• using QIC review panels that include medical professionals to reconsider cases involving medical necessity;
• requiring appeal-specific data to be collected by CMS.

In addition to the BIPA changes, the Medicare Prescription Drug, Improvement, and Modernization Act 2003 (MMA) included a number of provisions that affect the Medicare claims appeals process such as:

• revised determination and reconsideration for the decision-making time frame;
• a reduction in the minimum required number of QICs from 12 to 4;
• a requirement to transfer the ALJ function from the Social Security Administration to the Department of Health and Human Services (HHS) no earlier than July 1, 2005, but no later than October 1, 2005;
• revised requirements for appeals decision notices;
• requirements for providers and suppliers to present any evidence for an appeal no later than the QIC reconsideration level, unless there is good cause that prevented the timely introduction of the evidence;
• a process for the correction of minor errors or omissions without pursuing an appeal.

CMS anticipates that these changes will reduce the time frame for processing an appeal from close to 3 years down to 300 days. While some of the changes have already been put in place, others will be implemented in the next several months.

Redetermination
Effective October 1, 2004, if a supplier disagrees with the initial claim determination, he has 120 days from the date he received the initial determination in which to file a request for redetermination. This 120-day period may be extended if the provider files a written request showing good cause as to why the redetermination request was not filed in a timely manner.

The request for redetermination must be in writing and filed with the carrier. CMS states the preferred method for filing a request for redetermination is on a standard CMS form, but other written requests will be accepted if they contain the following required elements: (i) the beneficiary’s name; (ii) the Medicare health insurance claim number; (iii) specific items and/or services and the applicable dates of service; and (iv) the name and signature of the supplier or the supplier’s representative. When filing the request, the supplier must explain why he disagrees with the initial determination and should include any additional evidence to be considered by the carrier when making the redetermination.

In conducting the redetermination, an employee of the carrier who was not involved in the initial determination reviews the evidence and findings upon which the initial determination was based, and any additional evidence submitted by the supplier or obtained by the carrier, and makes a redetermination decision. The redetermination decision must be mailed or otherwise transmitted within 60 days of the date the carrier received the request for redetermination. This 60-day period is extended by 14 days each time the supplier submits additional evidence after filing the request for redetermination.

Reconsideration
The QIC reconsideration appeal process applies to redetermination decisions issued on or after January 1, 2006. For redetermination decisions issued prior to January 1, 2006, the current carrier fair hearing procedures apply.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, an Amarillo, Tex-based law firm. He represents HME companies, pharmacies, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached via e-mail: jbaird@bf-law.com.
Paula S. Klotzbach, JD, is an attorney with the Health Care Group at Brown & Fortunato PC. She represents HME companies, pharmacies, and other health care providers throughout the United States. Prior to joining Brown & Fortunato, Klotzbach was a federal prosecutor in West Virginia. She can be reached via e-mail: pklotzbach@bf-law.com.