Audit appeals process under fire

Monday, March 31, 2003

WASHINGTON - As providers anxiously await relief from the arduous ordeal of Medicare audits in a new act scheduled to go into effect next year, the industry is still calling for more changes to an appeals process that, they say, is running providers out of business for reasons that have more to do with clerical errors than fraud.

Currently, providers who receive an audit and must return overpayments, can request a hearing from a carrier hearing officer. If the provider is not satisfied with the outcome, an appeal can be made to an administrative law judge. If the provider still is unsatisfied there’s the Health and Human Services Departmental Appeals Board and then to the federal district court, although appeals rarely go beyond the ALJ level.

With the advent of BIPA, Benefits Improvement and Protection Act of 2000, now scheduled for implementation next year and given a $129 million budget, DMERC carrier hearings will be eliminated. That’s welcome news for providers who’ve never been comfortable with auditors who are employed under contract wit the carriers. Under BIPA, appeals will instead be heard by “qualified independent contractor,” or QICemployed by CMS.

Although the QIC must decide an appeal within 30 days, providers in the meantime can file a request for a hearing at the ALJ level. About 78% of DME appeals are reversed at the ALJ level, according to a 1999 report by the OIG. Why? The ALJ is not bound by local medical review policies; ALJs lack Medicare training; and, the hearings, quite simply, are not adversarial, say industry sources.

The ALJ is also much more likely to base its decision on the treating physician’s recommendation rather than the carriers’, said Valerie Eastwood, an attorney at Eastwood and Azia in Washington, D.C. “That’s why we advise our clients to forward an appeal to the ALJ,” she said.

One issue BIPA doesn’t address is considered very detrimental to providers: They are considered guilty until proven innocent. In some cases, particularly for power wheelchair companies, a provider can go bankrupt paying back the recoupment before an appeal even reaches the ALJ level.

“The fundamental problem is not in the appeal process, but the fact that a supplier can be required to pay back large amounts of money because of insufficient documentation,” said Timothy Webster, an attorney with the Health Care Group of Brown & Fortunato PC in Amarillo, Texas.

Tom Antone, a now returned HME attorney, agrees and said many of the auditors are not trained properly on the rules and how to apply them. Although auditors might commit the errors, the provider still must suffer through the appeal and could end up going bankrupt in the process, even if no violations were found, he said.

“There is no sanction or incentive brought forth that penalizes DMERC for its errors,” Antone said. “There is no harm, no foul, when they screw up. I’m seeing the DMERCs make mistakes in greater numbers and severity than in the past. And they are more cavalier about it.

“No one wants to grab the bull by the horns,” Antone continued. “What we need to do is increase the noise, backed up by hard facts and hard examples.” HME