Medicare overpayments and underpayments can cause unique headaches and lost revenues for DPMs. This author provides a comprehensive guide to what you should know about appealing claims to maximize your reimbursement and avoid unnecessary legal entanglements.
A few years ago, the federal government established a three-year pilot program to recover Medicare overpayments. That pilot program ended in 2008 and the program netted almost $1 billion. A recovery audit contractor (RAC) program took place in California, Florida, New York, Massachusetts, South Carolina and Arizona. Medicare notes this RAC collected over $900 million in overpayments and returned $38 million in underpayments to healthcare providers.
If you round these numbers out to $1 billion in overpayments and $40 million in underpayments, this is a 25/1 ratio in favor of overpayment recoveries. Is this program here to stay? You bet.
That is the bad news. Now embrace the bad news. You have to because in order to successfully fight the unavoidable future Medicare demands for repayment of “overpayments,” you must know the rules of engagement.1
What is the relationship between the RACs and the claim processing contractors? The RACs use requested samples of your progress notes on a limited number of patients. The RACs also use their software program(s) to find likely overpayments and then write the initial demand letters to the providers based on their progress notes/software audits of payments. After writing the demand letters, the claim processing contractors handle the appeals process through the redetermination and reconsideration stages.
An underpayment occurs when Medicare denies a provider either partial or full payment for services that it should have paid. Underpayments may arise when Medicare down-codes or denies evaluation and management (E&M) codes and/or denies the payment of separately identifiable CPT codes that should have occurred.
You can appeal an underpayment by timely submitting a request for a redetermination appeal to your regional contractor (e.g. Palmetto-GBA for California). If Medicare denies the redetermination appeal, you can submit the underpayment for a reconsideration appeal to the qualified independent contractor (QIC) cited in the written redetermination denial.
If the QIC denies the reconsideration appeal, you can submit the underpayment for an administrative law judge (ALJ) hearing appeal. If the judge denies the ALJ appeal, you can submit the underpayment to the Medicare Appeals Council (MAC) in Washington, D.C. If the MAC denies the appeal, the underpayment can receive a hearing in federal district court. Although the time and dollar requirements are different at each level of appeal, this brief description provides a sequential overview of the appeal process.
You cannot skip the lower levels of appeal to go straight to the ALJ hearing. The “exhaustion of remedies” doctrine requires you to submit every denied claim, or group of claims, up the appeal ladder — without skipping a single rung on that ladder.
A Medicare overpayment occurs when a provider receives too much payment for a service (e.g. multiple payments for the same service). Another example is a provider receiving payment for a service that Medicare, in the opinion of the recovery audit contractor, should not have paid in the first place. Although the RACs can cite many reasons in their initial notice of overpayment letter to the provider, the most common reason given following a sample review of charts is “lack of medical necessity.” The most common reasons given following software review of billing patterns are “E&M codes billed at too high a level of complexity” and/or “procedure codes billed too frequently.”
Who should represent you in an overpayment dispute? Your malpractice insurance policy most likely has an administrative law rider that will provide up to $30,000 for legal fees when you need representation in an overpayment dispute.
As soon as you receive a request for copies of charts, you should make the call to your insurance company. There is no such thing as a benign request for progress notes so accept the Medicare demand for progress notes for what it is: the first shot taken in a battle that is about to unfold.
“Recoupment” means the contractor (e.g. Palmetto GBA) withholds future Medicare payments until the demanded overpayment and accrued interest get paid. When Palmetto gets a check from the provider for the full overpayment demand amount (which is always inadvisable), this is not a recoupment. When Palmetto gets a check from the provider for a negotiated, reduced amount (this should be a last resort), this is not a recoupment either. A recoupment only occurs when Medicare takes your future earnings to pay the overpayment plus the accrued interest amount.
Allowing recoupment is the best course of action when you have a defensible case because the ALJ will make the contractor refund the full amount taken from you along with the accrued interest for each and every claim on which you prevail.
You should never respond by writing a check when you receive the overpayment demand, even when the demanded amount is small. Even if you think the amount in question is so small that it is not worth the fight, there is an implied admission of guilt.
Appeals for overpayments occur in exactly the same way as underpayment appeals. However, in order to stop the recoupment process in its tracks during the redetermination appeal, you must submit your redetermination appeal within 30 days of receiving the notice of overpayment. In order to stop the recoupment process in its tracks during the reconsideration appeal, you must submit your reconsideration appeal within 60 days of receiving the redetermination decision.
In either case, if you exceed the statute of limitations, the carrier will start recoupment of the full overpayment amount, plus interest, from your future earnings. Do not let them do this. Get your appeals in early.
There is no chance that the carrier will decide in your favor at the redetermination appeal level. The carrier gets to pocket a portion of the overpayment amount recovered.
There is almost no chance that the QIC will decide in your favor at the reconsideration appeal level. The QIC wants to keep CMS happy so the QIC can get to keep the lucrative CMS contract.
However, there is an excellent chance that the ALJ will decide in your favor at the ALJ hearing appeal level. The administrative law judges are truly neutral parties who are not bound by the decisions of the carrier or the QIC. Your hearing is a new “de novo” trial and the ALJ will consider all of the evidence as though being presented for the first time.
Moreover, with rare exception, the ALJs are not only fair, they also understand the financial motivation of the carriers as well as the difficulties inherent with record keeping in the day-to-day practice of medicine. Your records do not have to be perfect. They just have to be legible and show what you did and why you did it in a way that makes sense to the ALJ.
When you receive a Medicare repayment of overpayment demand, you have nothing to lose and everything to gain by refusing to pay and, instead, methodically appealing every Medicare (RAC) demand for repayment of any alleged overpayment. Why?
First, Change Request (CR) 6183 limits (controls) the conduct of the RACs and the claim processing contractors (e.g. Palmetto) during the recoupment process. Currently, the RACs and the claim processing contractors are paying little if any attention to the CR 6183 rules (see “A Closer Look At Overpayment Regulations” below). This works in your favor because the ALJs will not tolerate this behavior on the part of the RACs and claim processing contractors.
Second, you likely will win at the ALJ level if you have anything that even approaches the level of a reasonable argument in defense of the procedure codes billed.
Third, you will get back every dollar recouped by Medicare along the way. This includes interest on that money and any additional interest taken by Medicare during the recoupment process.
The CR 6183 protects the providers by stating the RACs and the carriers are not allowed to violate your civil “due process” rights. Due process can be divided into procedural due process and substantive due process. Procedural due process refers to how Medicare takes the overpayment money from you. Substantive due process refers to why Medicare takes the overpayment money from you.
There are a number of procedural due process rights under CR 6183. These rights are as follows.
1. For each and every claim deemed to be an “overpayment,” the RACs and the carriers must tell the providers: the name of the patient, the date of service and the procedure code(s) at issue.
2. When a provider files a valid (first level) and timely redetermination appeal, the carrier must stop recoupment. In addition, the carrier must send an acknowledgement of the receipt of the redetermination appeal request.
3. When a provider files a valid (second level) and timely reconsideration appeal, the carrier must stop recoupment. The carrier must also acknowledge receipt of the reconsideration appeal request.
4. When a provider wins (e.g. the entire amount of the overpayment claim) at the ALJ hearing level, the carrier must pay the provider the principal amount recouped by the carrier as well as interest.
There are substantive due process rights under CR 6183. For each and every claim deemed to be an “overpayment,” the RACs and the carriers must tell the providers:
• why the provider should not receive payment for the submitted item or procedure code, which is now considered to be an overpayment;
• why the provider should have known the services would not be covered; and
• why the provider was not found to be without fault in causing the overpayment.
What happens when the RACs and/or the claim processing contractors violate the CR 6183 rules?
In an e-mail exchange, Connie Leonard, the Director of the Division of Recovery Audit Operations for CMS, stated CR 6183 is only a “guide” for the RACs and the claim processing contractors. She thinks there are no “teeth” to enforce the rules of CR 6183 (against the RACs and the claim processing contractors).
I strongly disagree with Ms. Leonard. Since Congress took the time to add paragraph (f) to section 1893 of the Social Security Act and because CR 6183 addresses the due process rights of the providers, I am willing to bet the ALJs will look very, very unfavorably at CR 6183 due process violations committed by the RACs and the claim processing contractors.
In fact, if the CR 6183 due process violations committed by the RACs and the claim processing contractors are egregious enough, the provider should ask the ALJ to dismiss the entire overpayment demand. This is the exact point in the process where you get to create the “evidence” that will make the ALJ outright angry with the behavior of the RAC and the claim processing contractor.
In order to best understand how you should apply the CR 6183 rules apply, let us follow what happens during a hypothetical appeal of a $10,000 repayment of overpayment demand your office has just received. Hypothetically, you receive a letter from the RAC requesting copies of progress notes on a limited number of patients.
Staple the RAC envelope to the RAC letter and put them into a separate file. Send the RAC the exact copies of the progress notes requested and do this without adding to or altering the notes in any way.
Several months later, you will receive a demand letter from the RAC stating the amount of the “overpayment” you must now repay to Medicare. Keep the envelopes containing all of the correspondence from Medicare. An ALJ will not let Medicare bully a provider who can prove the provider responded to Medicare within the statutory period of time — as proven by the postmark on the Medicare envelope — no matter what Medicare says.
Read the demand letter very carefully. Note whether for each and every claim deemed to be an “overpayment,” the RAC has specifically listed the name of the patient, the date of the service and the procedure code(s) at issue. Also note that for each and every claim deemed to be an “overpayment,” the RAC should explain why the provider should not receive payment for the submitted item or procedure code, which is now considered to be an overpayment.
In regard to procedure codes denied on the basis of medical necessity, the RAC should explain for each code why the provider should have known the services would not be covered. In regard to each procedure code now considered to be an overpayment, the RAC should explain why the provider was not found to be without fault in causing the overpayment.
As soon as you receive the overpayment letter from the RAC, send a request for a redetermination appeal. Your redetermination appeal letter will include a demand for any of the aforementioned information not included in the RAC letter demanding repayment of overpayment. You will specifically list each missing piece of information on each patient and demand the carrier respond with that information. Send the redetermination appeal request to the address designated in the overpayment letter you receive. Be careful since several addresses are included in the overpayment letter.
You can stop the recoupment process in its tracks by sending the request for a redetermination appeal within 30 days of the date you receive the demand for repayment of overpayment. Although interest on the demanded amount will continue to accrue, Medicare cannot take any recoupment from future Medicare earnings for the duration of the redetermination appeal as long as you appeal within the 30-day time limit.
Keep the envelopes containing all of the correspondence from Medicare. If you do not have the capability to scan all documents into pdf files on your computer, keep two identical folders of documents regarding the overpayment dispute.
The first folder will contain the original documents from Medicare along with copies of the final, signed letters you sent to Medicare. Do not use the first folder of documents for anything other than as a repository of original documents in the case. The second folder will contain exact duplicate copies of the documents in the first folder, but you are free to make notes anywhere on the second folder documents and use the second folder as your work folder. Believe me, you will be very sorry if you have to submit a scribbled-on document to a judge so you will be happy to have two sets.
When you receive the carrier’s redetermination response, which upholds the RAC determination, immediately send a request for a reconsideration appeal. If you have not received the answers to the due process questions cited in your letter to the carrier, repeat every single one of those questions to the QIC in your request for a reconsideration appeal.
You should demand every missing piece of information required of the RAC and the claims processing contractor. You have a right to this information and the failure of the RAC and the claims processing contractor to provide the answers to these questions amounts to a denial of your due process rights.
When you send the request for a reconsideration (QIC) appeal, you must send every piece of evidence you want the ALJ to accept as part of the appeal process. Any piece of evidence you fail to send with your reconsideration appeal request will not be accepted into evidence when you get to the ALJ hearing. Although you may be lucky enough to appear before an ALJ who is lenient and who will allow the additional evidence to be admitted, the last thing you want to rely upon is judicial leniency.
What evidence should you submit for the reconsideration appeal? In order of significance, here is what you should send to the QIC.
In regard to medical records, send anything that substantiates the patient’s “at risk” status (e.g. imaging study reports including arteriogram reports, vascular surgery operative reports, vascular lab reports, endocrinology and/or neurology consultation/progress notes, extremity electrical study reports, and rheumatology and/or oncology reports). Also send anything that substantiates the chronicity and severity of the patient’s foot problem(s), with a special emphasis on the previous progress notes that document the patient’s pain associated with the keratomas and nails, etc.
Also send short articles and selected pages of textbooks and journals that substantiate the treatment at issue. If you send journal articles, send the complete articles. If you send pages from a textbook, send a copy of the title page of the textbook
Send letters from the authors of the articles or textbooks you have cited. Most medical authors are very willing to help a doctor who is being mistreated by an insurance entity. Do not hesitate to write a letter or e-mail to an author, spelling out the treatment details regarding your patient and asking for his or her response. Be careful with this request. You must be scrupulously honest in describing the facts of your provider dispute in your letter/email to the author because you can bet the judge will want to see exactly what you sent to the author that elicited a response favorable to your position.
It is optional to send complimentary copies of other local coverage determinations (LCDs) on the topic at issue where the LCDs from other jurisdictions are supportive of your position. However, you do not have to do this. The LCDs are considered internal to Medicare and the ALJ will have the staff dig up any LCD you reference during the hearing. If you quote a sentence from another jurisdiction’s LCD, be sure you quote it in context. Lifting a sentence out of context from an LCD will be looked at very unfavorably by the ALJ.
A carrier advisory committee (CAC) representative from your Medicare jurisdiction should be the expert witness appearing on your behalf at the ALJ hearing.
If you have an attorney through your malpractice policy, why keep track of any of this yourself? There are a few reasons. No matter how great your attorney is, that attorney has lots of clients and lots of cases.
You are the only person who can and will keep track of the documents in your overpayment case. If you review your overpayment file for ten minutes once a week, from the time you first receive the demand for chart copies right up until the ALJ hearing, you will have every fact at your fingertips. You will be able to help your attorney during the last few days of preparation before the hearing so your attorney will be best able to represent you at the hearing.
Dr. Mullens is an attending podiatric surgeon at Stanford University Hospital in Stanford, Calif., and has been in private practice for over 30 years. He has authored numerous articles and book chapters on lower extremity impairments, and has served as both a Clinical Associate Professor at Stanford University School of Medicine and as a Professor of Podiatric Medicine at the former California College of Podiatric Medicine.
1. Medicare Learning Network. Available at: http://www.cms.hhs.gov/MLNMattersArticles/downloads/MM6183.pdf .