Appeals

In 1978, Congress passed the Inspector General Act “[t]o create independent and objective units to provide leadership and coordination and recommend policies for activities designed (A) to promote economy, efficiency, and effectiveness in the administration of, and (B) to prevent and detect fraud and abuse in, such [Government] programs and operations;…” A November 14, 2012 report issued by the Health and Human Services Inspector General arguing for “improvements” in the activities of Medicare Administrative Law Judges suggests that the Inspector General is anything but “independent and objective.”

The OIG’s report is based upon an analysis of appeals decided by ALJs between October 2009 and September 2010 (fiscal year 2010). The OIG found that providers filed 85% of the appeals decided, that the ALJs rendered fully favorable decisions in 56% of the appeals (62% of all Part A appeals but 72% of Part A appeals filed by hospitals). The OIG calculated that about two-thirds of the ALJs rendered fully favorable decisions in between 41 and 70 percent of the appeals they considered. The question raised by these statistics is why is there such a large discrepancy between the decisions reached by the QICs in their review of the claims and the ALJs, since presumably both groups had the same information and were interpreting the same regulations. The obvious answer is that either the QICs or the ALJs are not doing their job correctly.

One might suspect that the first step in finding out which group is incompetent would be to have an independent entity review a statistically valid sample of the appeal records and offer an opinion as to whether the decision of the QIC or the ALJ was correct. Surprisingly, the OIG did not do that. Instead, the OIG appears to have assumed that the decision of the QICs was correct and then makes suggestions as to how to “improve” the decision making of the ALJs so that it will be more in line with that of the QICs. The result of such improvements, of course, will be a savings to the Government and reduced payments to providers. In case it is ultimately determined that the ALJ’s decisions are in fact correct, another “improvement” suggested by the OIG is that CMS impose a fee only on providers who want to appeal to the ALJ with the hope that this will result in fewer providers filing fewer appeals.

Last month CMS published statistics on appeals of RAC repayment demands. According to CMS, between October 1, 2010 and September 30, 2011, the RACs determined that 903,372 claims had been overpaid. During that period, providers filed appeals from 56,620 of these repayment demands. Separately, CMS says that for appeals decided during the same period, the RAC’s repayment demands were overturned in 24,548 or 43.4% of the decided appeals.

The CMS statistics indicate that 31,297 or 55.3% of the appeals were from automated reviews and 22,188 or 39.2% of the appeals were from complex reviews. CMS was unable to identify the type of review from which the remaining 3,135 or 5.5% of the appeals were filed.

CMS also sorted the claims by provider type. Of the 903,372 claims that the RACs alleged were overpaid, 197,739 or 21.8% came from Part A providers, 410,208 or 45.4% were submitted by Part B providers and 295,425 or 32.8% originated with DME providers. During FY 2011, CMS’s statistics indicate that Part A providers appealed 13.7% of the repayment demands while Part B and DME providers appealed 4.9% and 3.1% respectively of the RAC’s repayment demands.

Why did CMS publish this report?

From its inception, providers have been justly concerned that because the RACs are being paid a contingent fee for their work, they would demand repayment of large numbers of perfectly proper claims. To demonstrate that this is not the case, CMS has published a number of reports on provider appeals in an attempt to demonstrate that the overwhelming number of RAC repayment demands are justified and that providers should have no concern that the RACs are lining their pockets with provider money. To justify this position, CMS points to this latest report concluding that only 2.7% of the RAC repayment demands for FY 2011 were overturned on appeal.

Articles Tagged with Appeals

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RAC APPEALS IN FY 2011