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.
Knowing The Basics On Underpayment And Overpayment
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.