Half of providers win in Medicare appeals

As many providers have long argued, the Medicare appeals process is notoriously inconsistent. And a new Office of Inspector General report released yesterday revealed that different levels of appeal did not apply the same standards, suggesting that Medicare appeals are also "inefficient."

In 2005, the administrative law judge (ALJ) level--the third and most common level that providers use to appeal Medicare recoupments--came under the responsibility of the U.S. Department of Health & Human Services from the Social Security Administration. HHS established the Office of Medicare Hearings and Appeals and implemented a number of changes, allowing the Centers for Medicare & Medicaid Services to participate in ALJ appeals. It also added new restrictions to appellant-submitted evidence, in which the appellant must show "good cause" for submitting new evidence.

In its first report assessing the 2005 ALJ changes, OIG found that in fiscal year 2010, providers filed 85 percent of appeals at the ALJ level. At this level, the appellant has the right to a hearing, testify and submit case file evidence, unlike the first two levels (with Medicare administrative contractors and qualified independent contractors). Out of those providers, more than half (56 percent) resulted in the providers' favor, in which ALJs reversed prior level decisions. In another 6 percent, ALJs ruled in partial favor to the appellant, while 24 percent were unfavorable, according to the report. However, 14 percent of cases were dismissed, remanded or even escalated.

The American Hospital Association has long encouraged hospitals to fight recoupments. With the OIG data, hospitals may want to consider spending the time to appeal.

In fact, nearly one-third of all ALJ appeals were initiated by 2 percent of providers. One provider even filed 1,046 appeals that year.

Part of the reason providers find success at this level is that ALJs tend to interpret Medicare policies less strictly than qualified independent contractors, OIG said.

"ALJ and QIC staff commonly noted that some Medicare policies are unclear," OIG said. "Several staff cited examples of policies with vague defiintions, such as coverage for beneficiaries who have 'unique characteristics' or are 'declining.' Many ALJ staff emphasized the need to write policies more narrowly or more clearly, noting that unclear policies lead to more fully favorable decisions and to more variation among ALJs."

OIG said Medicare should clarify its rules and recommended that all the different levels of appeal apply the same standards. OIG also suggested CMS increase its participation at the ALJ level.

For more information:
- check out the OIG summary and the report (.pdf)

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