Medicare and RAC Appeal Process

When Medicare claims are denied or a Recovery Audit Contractor (RAC) identifies a previous Medicare overpayment, physicians may initiate an appeal with their Medicare carrier. Appealing a denied claim or RAC audit can be a multi-step process as outlined below. AAPM&R is providing this document in order to assist its membership in navigating these procedures.

Claims Reviewed by Recovery Audit Contractors

Medicare continues to use RACs to help identify overpayments. RAC is a Medicare auditing program that utilizes private firms to examine physician, hospital, nursing home, and other claims to find instances in which the government has overpaid providers. Once a RAC determines there has been an overpayment, the physician or hospital is required to reimburse Medicare, even if they plan to appeal the decision. Sometimes this can be large amounts of money.

The RACs are paid by Medicare based on the amount of money they recover from physicians or hospitals. Until recently, the RACs have operated in only a few states. However, starting in 2008, the RAC program is being expanded to additional states.

An appeal to a RAC determination is essentially the same as any other Medicare appeal. However, a RAC initial determination is not appealed to the RAC – rather it is appealed to the Medicare carrier (or intermediary, in the case of hospital claims).

Defending a Medicare Overpayment - Documentation

The first line of defense in a Medicare overpayment, whether initiated by the RAC or the Medicare Part B carrier (the organization or company which is administering Medicare Part B), is having adequate documentation to establish the medical necessity of the service. If the service is governed by a local or national coverage determination, it is important to review that determination and make sure that the patient met the criteria set forth. For evaluation and management services, the documentation should reflect the level of service billed, based on either the 1995 or 1997 evaluation and management coding guidelines.

Unfortunately, the first and second levels of appeal are often rubber stamps of the initial determination. However, many cases can be successfully overturned at the Administrative Law Judge (ALJ) level. Therefore, depending on the dollar amount at issue, it may be worth it to pursue the case up to the ALJ level (see below for more information).

First Level of Appeals

Written Requests for Redetermination

Once the claim denial has been reviewed by the Medicare carrier, it may be appealed by requesting a redetermination of the claim within 120 days of the initial decision. Medicare carriers are required to respond to a request for redetermination within 60 days of receipt. The review determination letter will indicate the carrier’s rationale for its decision. If the claim denial is overturned, the carrier must include the appropriate payment with the letter. If the claim denial is upheld, the carrier will provide an explanation.

Phone Appeals

Providers are no longer given the option to appeal a denial via telephone. Carriers may choose to reopen a claim by telephone for clerical errors or omissions only.

Second Level of Appeals

Reconsideration

If a provider or beneficiary (patient) is dissatisfied with the outcome of the redetermination process a request for a reconsideration may be filed within 180 days. The requests for reconsideration are required to be processed within 60 days by qualified independent contractors (QICs). There is no minimum dollar amount for the claim in controversy to qualify for reconsideration.

Requests for reconsideration must be made in writing either on a standard CMS form or the reconsideration request form included with the redetermination. If neither of these forms are used, the request for reconsideration must contain the following items: 1) the beneficiary’s name; 2) Medicare heath insurance claim number; 3) the specific service(s) and item(s) for which the reconsideration is requested and the specific date(s) of service; 4) the name and signature of the party or representative of the party; and 5) the name of the contractor that made the redetermination.

Third Level of Appeals

Administrative Law Judge

If a provider is not satisfied with the result of the reconsideration, a hearing before an ALJ can be requested if the amount in controversy is at least $110. Requests for a hearing from an ALJ must be filed in writing with the entity specified in the QIC’s reconsideration notice and be received within 60 days of its receipt.

ALJs are attorneys who work for the Department of Health and Human Services (HHS). Hearings are held in the Office of Medicare Hearings and Appeals (OMHA) field offices around the country. The physician, as well as the beneficiary, typically attends the hearing to present testimony. Following the hearing, the ALJ is required to issue a written ruling. The ruling is due within 90 days from the date that OMHA receives the hearing request. The ALJ’s decision is binding unless revised at a later date by the ALJ, the federal district court, or the Medicare Appeals Council.

An ALJ hearing may be conducted either in-person, or through Videoteleconference (VTC) or telephone. Most hearings are held by VTC or telephone unless the ALJ determines that there are special or extraordinary circumstances. Written notice of the hearing date and location should be received at least 20 days prior to the scheduled hearing.

Fourth Level of Appeals

Medicare Appeals Council

The provider may file a request for review with the Medicare Appeals Council if the ALJ’s decision is not favorable to the provider. Requests for an Appeals Council review must be filed within 60 days of receipt of the ALJ’s decision. The Appeals Council may either modify or reverse the ALJ’s decision or send the case back to the ALJ for another hearing. The Appeals Council must issue a determination within 90 days of the review.

Fifth Level of Appeals

If the decision of the Appeals Council is unfavorable to the provider, the final option is to file a suit in federal district court, 60 days from the Appeals Council decision and if the amount in controversy is at least $1090. This is the last level of appeals available to providers.

For additional information or assistance regarding appealing Medicare or RAC denials, please contact the Academy at (312) 464-9700 or wchill@aapmr.org.