Odds favor physicians in appeals of Medicare denials

However, an OIG report says administrative law judges who adjudicate the third level of appeals are ruling inconsistently and need better training.

By — Posted Dec. 3, 2012

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Physicians facing Medicare claims denials have a good chance of having such decisions overturned even if they lose the initial rounds of administrative appeals, according to a report by the Dept. of Health and Human Services Office of Inspector General.

An OIG study, released Nov. 14, of more than 40,000 appeals in 2010 found that administrative law judges reversed claims denials in favor of appellants 56% of the time. ALJs administer appeals of claims decisions that are upheld first by the Medicare claims contractor and then by a qualified independent contractor. If an ALJ upholds a denial, a physician or beneficiary can appeal once more to the Medicare Appeals Council. Any further challenges of the decision require filing suit in federal court.

The findings should encourage doctors and other health professionals who want to fight coverage denials, said Betsy Nicoletti, a physician practice coding consultant and auditor based in Springfield, Vt. “If you get a denial and you really think it’s wrong, and it’s a significant piece of money, I’d take it up to the ALJ level. Even if the circumstances are not completely clear, the ALJ might still rule for you.”

The OIG declined to comment for this story. At this article’s deadline, messages left with HHS were not returned.

A small number of medical professionals made the OIG’s “frequent filer” list because of habitual visits to the third level of appeals. On average, health professionals utilizing the ALJ process filed six appeals each. However, 96 health professionals filed at least 50 appeals each, with one filing 1,046 appeals. Although these health professionals represented 2% of those investigated by the study, they accounted for nearly one-third of ALJ appeals.

“Many ALJ staff raised concerns about the frequent filers,” the OIG report said. “Several staff noted that some of these appellants appeal every payment denial. A few staff said that these appellants have an incentive to appeal because the cost is minimal and a favorable decision is likely.”

The OIG also was concerned about significant inconsistencies in Medicare policy interpretations among ALJs and qualified independent contractors. ALJs differed from QICs in their understanding of Medicare rules, in their degree of specialization and in their use of clinical experts when considering appeals, the report found. ALJs tended to interpret Medicare policies less strictly than QICs, contributing to the significant percentage of QIC denials overturned by ALJs.

In a statement, the Centers for Medicare & Medicaid Services said CMS is evaluating appeals decisions to help identify policies that are being interpreted inconsistently by ALJs and Medicare contractors. CMS will use this information to develop future appeals training programs, an agency spokeswoman said.

“CMS plans to look for ways to help ensure that all contractors are evaluating the outcomes of their appeals at the ALJ level and appropriately considering the applicable ALJ reversal rates in developing any future strategies for reviewing Medicare policies,” she said.

Rulings tend to favor doctors

ALJ rulings were more favorable to health professionals than to Medicare beneficiaries lodging the appeals, the OIG report found. Overall, ALJs reversed claims denials in 56% of appeals. For health professionals, the rate of favorable decisions was 61%, compared with a favorable rate of only 28% for beneficiaries and 22% for state Medicaid agencies.

Health professionals filed 85% of the 40,682 appeals that ALJs decided in 2010. This group included physicians, suppliers and hospitals. Beneficiaries filed 11% of the appeals, and state Medicaid agencies filed 3%.

Based on its findings, the OIG recommended that CMS and the Office of Medicare Hearings and Appeals develop and provide better training on Medicare policies to ALJs and QICs, and clarify policies that are unclear and interpreted differently. Recommendations also included standardizing case files and making them electronic, revising regulations to provide more guidance to ALJs on the acceptance of new clinical evidence and improving the handling of appeals from appellants who are under fraud investigation.

The Office of Medicare Hearings and Appeals said in an emailed statement that it already was implementing many of the OIG’s recommendations but would consider the report when making further improvements to the ALJ hearings process.

“Each case has its own set of facts, and each beneficiary’s condition and treatment have to be examined in the context of the applicable Medicare guidelines,” the office stated. “Like courts of law with judges and juries, there will always be some variance in how the trier of fact interprets the facts in a given case. The challenge for ALJs is understanding the unique, varied fact patterns and applying them to the law.”

The Center for Medicare Advocacy, a New York-based patients rights group, said the report could lead to ALJs upholding claim denials more often.

“We are very concerned that the report will result in pressure on ALJs to deny coverage rather than to question why the Medicare contractors are denying so often,” said Judith Stein, executive director for the center. “Further, we note that providers apparently get better results than beneficiaries and state Medicare agencies. All this is unfair and not how the system should work.”

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External links

“Improvements Are Needed At the Administrative Law Judge Level of Medicare Appeals,” Dept. of Health and Human Services Office of Inspector General, Nov. 14 (link)

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