Reports from the Trenches: Increasing the Need for Healthcare Providers to “Police” Medicare Contractors

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Original story posted on: February 15, 2013

With Recovery Audit Contractor (RAC) audits in full swing, many healthcare providers are entrenched in the Medicare audit process, and likely the appeals of claim denials as well.

Those functions are burdensome on healthcare providers of all sizes. Completing even the most basic of audit functions, such as fulfilling additional documentation requests, can be extremely time-consuming, particularly given the volume of records often requested under the current medical-record limits. Likewise, tracking audit results and appealing claim denials in a timely fashion can place a considerable burden on providers. The impacts of these audit and appeals processes are significant even when the Medicare contractors involved are satisfying their regulatory and contractual obligations.

But what about the growing number of instances in which the contractors fail to review medical records tied to appeal requests, fail to send or misdirect appeals correspondence, or even fail to reimburse a claim following a favorable appeal decision? Faced with these issues, there is a deepening realization among healthcare providers and their legal representatives that providers essentially must “police” the contractors to ensure they comply with such obligations; to identify errors connected to claim reviews, appeals and recoupment; and to raise these issues with each offending contractor, and often the Centers for Medicare & Medicaid Services (CMS), to ensure that appropriate corrective action is taken. The added responsibility of “policing” the contractors places another unnecessary burden on healthcare providers and their resources. 

Through our audit appeal work we have encountered multiple examples of healthcare providers being forced to keep a close eye on contractors, particularly as it pertains to Medicare Administrative Contractors (MACs). From our experience in representing healthcare providers, and particularly hospitals, it is evident that providers and their representatives must identify and pursue issues or concerns with the MACs diligently in order for any resolution to be reached. 

A common thread among many of these issues is a lack of communication. Whether the communication failure occurs internally among a contractor’s departments, or externally between two different contractors, we have found that it is usually the healthcare provider that identifies the lapse and pursues a solution. Specifically, in our experience representing hospitals being subjected to RAC audits, our clients have identified multiple instances of contractors failing to send appeals correspondence, sending appeals correspondence to the wrong mailing address, or failing to send such correspondence to the providers’ authorized representatives.

For instance, a hospital often will authorize our firm to file appeals on its behalf. Despite our filing a redetermination request and including an authorization form, the contractor sometimes only sends notice of the appeals decision directly to the hospital. Assuming the hospital plans to appeal the claim for reconsideration, the failure to direct correspondence to the authorized representative filing the appeal can have a serious impact on the provider’s ability to satisfy the time frame for the next level of appeal. This is particularly true if the hospital is not anticipating receipt of the appeals decision from the contractor.

Likewise, we have encountered multiple instances in which no appeal decision is received for a particular claim after it has been pending at the redetermination stage for an extended period of time. In this case, our office or the provider is forced to contact the contractor to try to determine if an appeal decision has been issued yet not received, or risk failing to meet the time frame for the next level of appeal. Often a contractor will indicate that a decision was issued despite the fact that no decision was received by the provider. As a result, the responsibility falls to the provider to track decisions not received, to follow up with the contractor, and to request that a copy of the decision be provided. Despite promises that previous issues like this have been remedied, contractors often make the same errors again and again, and the provider’s diligence is required to reach a solution each time around. 

Another serious contractor error that was the result of failed communication occurred when a MAC denied redetermination requests for Part A inpatient admission claims because it claimed that no medical records had been reviewed – this was despite the fact that the hospital had submitted supporting medical documentation for each claim to its RAC, pursuant to an additional documentation request. The RAC Statement of Work clearly states that all Medicare contractors shall coordinate with each other and forward supporting medical documentation upon a provider’s appeal of a claim denial. However, in this case, the RAC failed to forward the documentation, the MAC did not identify the error, and the requests for redetermination were denied, with the generic rationale of “no medical records reviewed” leveraged. This resulted in the provider identifying each claim that had been denied on this basis improperly, requesting that the claims be reopened and reviewed at redetermination, and then monitoring the reopening process to ensure that each claim received a revised, substantive redetermination decision. The process was very time-consuming for the hospital, especially because the provider continued to receive additional documentation requests from the RAC and had other claims pending at various levels of the Medicare appeals process. 

Similar errors have been identified at the reconsideration level of appeal when there is a failure by the MAC to transfer medical records to a qualified independent contractor (QIC) in the event of a reconsideration request. This is particularly noteworthy because redetermination decision letters typically include language expressly indicating that the provider does not need to submit documentation that was submitted as part of the redetermination, as this information will be forwarded to the QIC as part of the case file used in the reconsideration process. Given the failure on the part of the Medicare contractors to satisfy their obligation to transfer records upon an appeal, providers are faced with the question of whether they need to submit copies of the medical records at each stage of appeal, independently, in an effort to prevent a denial based on
“no medical records reviewed.” Doing so almost certainly increases both the burden and the costs of appeal. Either way, encountering this issue requires diligent follow-up with the contractor to try to remedy the previous claim denials and resolve the issue for the purposes of potential future appeals.


 

Recoupment of alleged overpayments is another issue that requires vigilant monitoring by providers. The limitation on recoupment provides an opportunity for providers to stop a withholding of current Medicare payments at both the redetermination and reconsideration levels of appeal, as long as early appeal time frames are met. That being said, on multiple occasions providers have identified claims for which the applicable appeal time frame to prevent recoupment was met, but the claim reimbursement was recouped anyway following the receipt of subsequent remittance advice.

These instances of improper recoupment seem to result from either an internal breakdown in communication between the MAC’s appeals, finance and overpayment recovery departments – or a breakdown in the communication between the QIC and the MAC regarding the status of a reconsideration appeal for recoupment purposes. The result is yet another issue that the provider is forced to deal with by monitoring any withholding of payments to ensure it is not improper or premature, and then identifying claims for which any improper recoupment occurred, keeping an eye on what needs to be remedied by the contractor. 

In addition to external communication errors, we also have witnessed contractors’ failures to fulfill their internal responsibilities with regard to reimbursement. For example, healthcare providers that obtain a favorable appeals decision at the reconsideration, ALJ or Medicare Appeals Council stage of appeal at times have not received prompt payment for the corresponding claim, requiring them to pursue the MAC in order to obtain appropriate reimbursement. This delay is frustrating to any provider that must continue to monitor the claim for payment even after going through the arduous audit and appeals process.

In our experience, if a provider encounters these types of difficulties with a Medicare contractor, we typically first have tried to address the contractor with the appropriate form of contact. This often requires diligent follow-up with the contractor to keep the issue on the table until it is addressed adequately. However, if the contractor does not resolve the issue in a timely manner, or the problem arises again, we have had success involving regional or central office contacts with CMS.

Although it is certainly beneficial for the problem to be resolved at the contractor level, it is also important that CMS be made aware of situations in which Medicare contractors fail to satisfy their regulatory and contractual obligations, resulting in serious errors that can impact provider appeal rights and unnecessarily drain provider resources. 

About the Authors

Jennifer Colagiovanni is an attorney at Wachler & Associates, P.C.  Ms. Colagiovanni graduated with Distinction from the University of Michigan and Cum Laude from Wayne State University Law School.  Upon graduation, Ms. Colagiovanni was nominated to the Order of the Coif. Ms. Colagiovanni devotes a substantial portion of her practice to defending Medicare and other third party payer audits on behalf of providers and suppliers.  She is a member of the State Bar of Michigan Health Care Law Section.

Jessica Forster is an associate at Wachler & Associates, P.C.  Ms. Forster dedicates a considerable portion of her practice to defending healthcare providers and suppliers in the defense of RAC, Medicare, Medicaid and third party payer audits.  Her practice also includes the representation of clients in Stark, anti-kickback, and fraud and abuse matters.

Contact the Authors

jcolagiovanni@wachler.com

jlange@wachler.com

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