RAC Appeal Process Strategies
Patrick C. Devine, Jr.
Courtney A. Miller
Demonstration Results
» RACs identified $1.03 billion in
improper payments
› 96% of identified improper payments
= overpayments
› After appeals, etc., $693 million
returned to Medicare Trust Fund
› 34% of provider appeals successful
Demonstration Project
» Take Aways:
› Take steps to limit exposure for
improper payment claims
› Before a RAC review
› Understand the review and appeals
process if subject to RAC review
Limit Exposure
» Develop a RAC Response Team Now
› Include members from all areas of risk
› On-going duties
» Team responsible for entire RAC process
›
›
›
›
Assessing areas of risk
Keeping track of all record requests
Implementing compliance strategies
Handling all RAC reviews and appeals from start to
finish
› Key person for all RAC communications
Limit Exposure
» Educate staff on Medicare billing issues
› Focus on areas of known weaknesses
» Learn from colleagues, the
Demonstration Project and other
sources
› Medical necessity
› Coding errors
› RAC Status Documents
(www.cms.gov/rac)
Audit Areas and Top Error by Provider
Type
Source: Medicare RAC Program: An Evaluation of the 3-Year Demonstration
Limit Exposure
» Self Audits
› Self Disclosure
› Important to work with legal counsel
› Legal obligations
› Process for Voluntary Refunds
› Benefits and Consequences
› Voluntary refunds will exclude the claims
from RAC review
Overview of the RAC
Review/Appeal Process
» RAC Review
› Initial Determination
› Recoupment
» Informal Appeal: Rebuttal
» Formal Appeal
› 5 levels
Overview of Review and Appeals Process
Source: American Hospital Association
RAC Review
» 2 Types of reviews
› Automated (software searching for
clear errors)
› Complex (review of patient records)
› RAC’s authority to request records
is subject to limits
› All requests should be channeled
through RAC Team
RAC Review
» Provider must provide requested
records within 45 days
› Failure = RAC authorized to find
improper payment
› Failure = potential loss of right to
appeal
› RAC Team should control this
process
› Extensions possible
Initial Determination
» RAC’s Initial Determination
› Timeframe for RAC determination
› 60 days after receiving records
› Failure to respond = ???
› Possible defense
› Written notice to provider
› Reason for denial
Recoupment
» If RAC identifies overpayment, Medicare
typically uses recoupment to recover
› Begins 41 days after date of demand
› Provider can delay recoupment until the 3rd
stage of appeal process
› Deadlines: appeal v. delay of
recoupment
› After Reconsideration stage, provider can
delay recoupment through an extended
repayment plan
Recoupment Timeline
Timeframe
Day 1
Medicare Contractor
Provider
Date of Demand Letter (Date demand letter
mailed)
Provider receives notification
by first class mail of
overpayment
determination
Day 1-15
Day 15 deadline for Rebuttal request. No
recoupment occurs
Provider must submit a
statement within 15 days
from the date of demand
letter.
Day 1-40
No recoupment occurs
Provider can appeal and
potentially limit
recoupment from
occurring
Recoupment begins
Provider can appeal and
potentially stop
recoupment
Day 41
REDETERMINATION DECISION
Day 60 following revised notice of
overpayment following
redetermination
Day 61- 75
Day 76
Date Reconsideration request is Stamped in
Mailroom, or Payment Received from the
revised overpayment notice
Provider Must Pay
Overpayment or Must
have submitted request
for 2nd level appeal
Recoupment could begin on the 61st day
Provider appeals or pays
Recoupment Begins or Resumes
Provider Can Still Appeal.
Recoupment stops on
date receipt of appeal
Recoupment & Interest
» Interest accrues from date of final
determination, unless paid within
30 days
› Continues to accrue during appeal
process
› Fixed interest rate (currently 11.38%)
› Factor to consider before appealing
» Pay and then appeal?
Rebuttal
» Provider can rebut RAC’s initial
determination
› File with RAC within 15 days after
receipt
» When to consider: New documentation
to support the claim
» Not required
» Does NOT toll deadline for filing formal
appeal
Formal Appeals Process
» 5 Levels (Medicare Appeals
Process)
›
›
›
›
›
Redetermination
Reconsideration
Administrative Law Judge Hearing
Medicare Appeals Council Review
Federal Court
Appeals Timeline
180-194
Days
Notice Letter
120 Days
to File
FI, carrier
60 days+14 day extension
180 Days to File
240
Days
780794
Days
QIC
60-day time limit
60 Days to File
150
Days
ALI
90-day time limit
60 Days to File
150
Days
MAC
90-day time limit
60 Days to File
60+
Days
US District Court
Last Level- No time limit
Results of the
Demonstration
Claim RAC
Claims with
Overpayment
Determinations
#
appealed
to FI
#
appealed
to QIC
#
appealed
to ALJ
#
appealed
to DAB
#
appealed
(all levels)
%
appealed
(all levels)
#
favorable
to
provider
%
favorable
to
provider
% of all
claims
overturne
d on
appeal
Connolly
110,635
8,852
1,123
113
18
10,106
9.1%
5,462
54.1%
4.9%
All RACs
525,133
88,721
23,775
5,357
198
118,051
22.5%
40,115
34.0%
7.6%
» Connelly v. Viant??
Factors to Consider
» Time
» Cost of appeal
» Resources
» Quality of documentation
» Implications
» Clinical support
» Legal involvement
Outcomes
» Full Reversal
› No further action, RAC cannot appeal
› RAC must refund contingency fee
› Provider may be paid interest
» Partial Reversal
» Denial
Level 1: Redetermination
» File request for redetermination
with FI
› If not inpatient hospital, then with
Carrier
» Rebuttal not required
» Must file within 120 days of receipt
of RAC determination
› Exception for “Good Cause”
Level 1: Redetermination
» Request must be in writing
› Use CMS form 20027 or develop your
own
› Provide evidence explaining why
provider disagrees
› Raise all issues and submit all relevant
documents
» No hearing, decision based on written
appeal
Level 1: Redetermination
» No minimum requirements for
amount in controversy
» FI has 60 days to approve/reverse
initial determination
Level 2: Reconsideration
» File with Qualified Independent
Contractor (“QIC”)
› Virginia = Maximus
» Must file within 180 days after
receipt of notice of Redetermination
› Use CMS Form 20033 or develop
your own
Level 2: Reconsideration
» Written appeal; no appearance
necessary
» Raise all issues and submit all
evidence
› If not, excluded from consideration in
subsequent appeals
» No minimum amount of controversy
Level 2: Reconsideration
» QIC conducts an independent, on
the record review
› Medical necessity reviewed by panel
of MDs
» QIC authority
› Must follow LCDs, CMS rulings, laws
Level 2: Reconsideration
» Within 60 days of receipt of
request, QIC must mail written
notice of action:
› Reconsideration
› Inability to complete the
reconsideration
› Dismissal of claim
» If QIC fails to act within 60 days,
Level 3: ALJ Hearing
» Must be filed within 60 days of
receipt of notice of QIC’s
reconsideration
› Use CMS Form 20034A
› $120.00 min. amount in controversy
» Hearing typically by tele-conference
› Usually within 90 days
› Develop good oral testimony
› No new evidence
ALJ Hearing
» Evidence is limited to what was
presented for reconsideration (QIC)
› Exception for good cause
» ALJ can subpoena
witnesses/documents
» ALJ will consider all issues
previously considered
ALJ Hearing
» Within 90 days of the hearing, ALJ
must issue written decision
› Remand to QIC
› Dismissal
› Approve
Level 4: MAC Review
» Must file request within 60 days
after receipt of ALJ’s decision
› MAC may review ALJ decision on its
own motion or based on referral by
CMS
» MAC will issue its final decision
within 90 days of receipt of request
for review
Level 4: MAC Review
» MAC reviews the ALJ’s decision de
novo
› Limited to the evidence in the ALJ’s
administrative record
› In some cases, briefs requested
» No right to a hearing
» MAC may adopt, reverse, modify or
remand the case to ALJ
Level 5: Federal Court
» File appeal within 60 days of
receipt of MAC’s decision
» Min. amount in controversy $1,220
» File in USDC in the provider’s
district
Level 5: Federal Court
» Limited purpose: questioning the
decision of the MAC and the
findings of the ALJ
» Evidence limited to ALJ record
» No deadline for decision
» No appeal from this level
› Entire process can take up to two
years
Appeal Strategies
» Advocate the Merits
» Treating Physician Rule
» Waiver of Liability
» Provider Without Fault
» Reopening Not Based on Good
Cause
» Challenging the Statistics
» Constitutional Challenge
Advocating the Merits
» Not technically a “defense”
» Factual and legal arguments
supporting payment
› Prepare position paper
» Use qualified expert to confirm
medical necessity
Treating Physician Rule
» Medical necessity
» Treating physician in the best
position to judge
» Physician’s determination should
be given more weight than RAC
› RAC uses medical professionals who
have never met or assessed the
patient
Waiver of Liability
» Medical Necessity
» Section 1879(a) of the Social
Security Act
» Payment permitted if provider “did
not know, and could not reasonably
have been expected to know, that
payment would not be made for
such services”
Waiver of Liability
» Maintain records of all
communications with Medicare
representatives
› i.e. Overpayment claim overturned in
past
Provider Without Fault
» Medical Necessity
» Section 1870 of the Social Security
Act
» Provider entitled to payment when
the provider is without fault and
denial of the claim is deemed be
against equity and good
conscience
Provider Without Fault
» Generally, provider considered to be
without fault if:
› Exercised reasonable care
› Made full disclosure of all material
facts
› Had a reasonable basis for assuming
payment was correct
Provider Without Fault
» Considers various factors
› Age, linguistic limitations, etc.
» Document phone calls, guidance
from CMS or carrier.
› Individual communications
› General communications to provider
and supplier community
Reopening Not Based on
Good Cause
» RACs must adhere to regulatory timeframes
for reopening initial determinations
» For Medicare generally:
› Within 1 year – for any reason
› Within 4 years – for good cause
› No deadline if reliable evidence of fraud
» RAC limited 3-year look-back period
› Only back to October 2007
Reopening Not Based on
Good Cause
» Good Cause:
› New and material evidence
(not readily available or known)
OR
› Obvious error made at the time of
determination
» Recent Transmittal: A contractor’s decision to
reopen based on the existence of good
cause, or refusal to reopen after determining
good cause does not exist, is not subject to
Challenging the Statistics
» RACs may extrapolate in certain
circumstances
» Must follow Medicare’s statistical
guidelines
» Use a third party expert to
challenge the validity of the
extrapolation
Constitutional Challenge
» Possible Argument?
Conclusion
» Take steps to prepare NOW
› Establish a RAC Team
› Limit exposure
› Maintain adequate records
» Appeals process
› Deadlines
› Defenses
Questions
» Patrick C. Devine, Jr.
pdevine@williamsmullen.com
757.629-0614
» Courtney A. Miller
cmiller@williamsmullen.com
757.629.0665