Corporate Compliance

Note from the instructor: Defending Medical Review Decisions at ALJ Hearings

Medicare Insider, October 7, 2014

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This week’s note from the instructor is written by Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro.  

As providers seek answers and further clarification while they consider taking CMS up on their 68% solution, a transmittal has been published regarding a CMS contractor’s obligation to participate in ALJ hearings going forward. Transmittal 543 creates a new section to Chapter 3 of the Medicare Program Integrity Manual and directs MACs to assign a physician to take part in ALJ hearings when the claim is directly related to their own determination or redetermination.
In November 2012, the OIG published a report for FY 2010 asserting ALJs reversed Qualified Independent Contractor (QIC) decisions 56% of the time and decided in favor of appellants due to different interpretations of Medicare policies. However, when MACs participated in appeals at the ALJ level, the tables were turned in favor of the MAC. It is no surprise the OIG recommended that CMS increase its participation at the ALJ level of appeals and that CMS concurred. Transmittal 543 now directs the MACs to do so. Other contractors, such as Recovery Auditors, Zone Program Integrity Contractors (ZPICs) and the new Supplemental Review Contractors (SMRCs) will also be participating in more ALJ hearings as directed through their scope of work.
According to CMS, a significant amount of time and effort is spent by its contractors to ensure that review staff are making quality decisions and they have taken the position that a decision to deny a claim at any level should be more consistently justified. In this transmittal, CMS identified several factors to be considered in defense of their medical review findings including CMS and MAC policies, the amount of the claim being appealed, and if the claim at issue is a part of a recurring theme seen in past and current ALJ appeals. In most circumstances, the Contractor Medical Director (CMD) or other employed physician will have oversight of the MAC’s participation in the ALJ hearing with additional support provided by an attorney, nurse reviewers or other clinicians, as needed.  
When a provider appeals at the second level, the QIC makes the reconsideration decision based on all pertinent information, both information previously submitted to the MAC and any new evidence. When the provider or Medicare contractor chooses to appeal to the third level, all previously submitted information is passed along to the ALJ and a hearing date is set. Beginning on October 27, 2014, all Medicare contractors will need to coordinate with the QIC to receive the notice of ALJ hearing. Unfortunately, this transmittal does make reference to the two-year moratorium on scheduling ALJ hearings that was imposed earlier this year. Once the hearing notice is issued, a MAC must elect to participate in the hearing process within 10 calendar days of the notice. The QIC may also participate with the MAC so collaboration on their position statements and timing between the two entities is critical to defending their case.
There are two ways that the MAC can become involved in a case at the ALJ level.
·         Electing ‘party status’ requires CMS approval. As a party, the MAC can file position papers, call or cross-examine witnesses of other parties, and request discovery. The MAC may also be questioned by the ALJ or other parties regarding any issue related to the claim under appeal. If CMS does not approve the MAC’s request for party status, the MAC may be a participant instead. 
·         Electing ‘participant status’ allows the MAC to file position papers and provide testimony to clarify CMS and MAC policies related to the case. However, they may not call or cross examine witnesses of another party. The MAC must respond to ALJ questioning but may defer answering questions by the appellant.
With either type of participation, the MAC must be able to confidently discuss the details of each claim under appeal, as well as the background on earlier appeal decisions and provide clarification on coverage policies and payment requirements. And just as providers anticipate to what level they may take their appeal to before accepting an adverse determination, CMS has directed the MACs to also be more proactive in evaluating if providers can be expected to appeal up through the ALJ hearing level. The current rule of thumb for providers is to write the initial appeal letter as if the intent was to take it to the ALJ level. This method has proven to be very effective and efficient for providers and we can expect to see the same from MACs.
Since providers also spend a more than a significant amount of time and money appealing cases to the ALJ level, it is difficult to say if providers will see a decrease in their success rate as MACs become more involved in the ALJ hearings as the OIG found in FY 2010. However, it can be assumed that providers will need to put more weapons in their cache to maintain their current level of effectiveness. This new mandate will not be affected by the 68% solution being offered and it could prove to be very time consuming for MACs and their CMDs given the volume of current ALJ appeals written by savvy and aggravated providers and mired in this very broken system.

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