Latest News

Tips and tricks for appealing an audit

Dr. Michael E. Nelson, FCCP

Michael E. Nelson, MD, FCCP, comments: The most effective way to handle an audit is not to be involved in one. This requires an appropriate knowledge of coding and billing tempered with a strong dose of honesty. While CMS rules for coding and billing can occasionally be confusing, they are not intended to “trick” physicians into making errors. Rather, either through lack of understanding, poor documentation, or dishonesty (upcoding), mistakes can be made. Unfortunately, the physician is considered guilty until proven otherwise. The 37% success rate of appeals argues that this is true more often than not. As noted in the article, a CMS audit can be a very anxiety-provoking, time-consuming, and expensive process that one should avoid at all costs. The key to doing this and improving the physician success rate if one is audited is through education of the providers and advocating to amend poorly written CMS policy. Dishonesty will have to correct itself.



CHICAGO – The question is not if a physician will face a Medicare or Medicaid billing audit, but when, according to Abby Pendleton, a New York–based health law attorney. That’s why it pays to know how to handle an audit before one probe disrupts your practice. At a recent American Bar Association meeting, Ms. Pendleton and H. Rusty Comley, a Jackson, Mississippi–based health law attorney, offered answers to top audit questions and provided guidance on how physicians can successfully appeal an audit.

When should you appeal?

There are a number of factors to consider when deciding whether to appeal audit findings. For starters, consider the cost of the payback amount and the basis of the findings.

Abby Pendleton

Abby Pendleton

If the amount of money is nominal, the audit involves a one-time mistake and the decision is not really disputable, a doctor may just want to pay the audit request, Mr. Comley said in an interview.

“In other words, the provider would spend more money and time to appeal the audit than to pay the audit, and the issue or mistake is not likely repeated in past or future claims,” it might make sense to just pay, he said.

H. Rusty Comley, health care attorney in Mississippi

H. Rusty Comley

On the other hand, if the findings are arguable, the monetary amount is significant, and/or the audit could affect more than just one billing, the doctor may want to consider appealing. Paying a small monetary amount could become problematic when the audit issue or “mistake” may have been repeated or will be repeated, Mr. Comley cautioned, adding that paying without dispute could create a precedent for future audits.

If the basis of the findings stem from an interpretation of a local coverage decision that the physician disagrees with, he or she may also want to appeal, Ms. Pendleton added.

“If you don’t fight it, there’s an argument that, ‘Well, guess what? You had that issue going back 6 years for all these other claims, and now we get into the [Medicare] 60 day overpayment identification [rule],’ ” she said at the meeting. “If a physician is [not] aware of payments they’re not entitled to, even if they think they were right on the front end, but they later become aware, they have 60 days to refund it or its a false claim. Those are considerations that really need to be looked at.”

What should you expect from an appeal?

Expect to go through more than one appeals process step to succeed. There are five stages to the appeals process .

“At the redetermination stage, I don’t see a whole lot of movement in terms of great success at that first stage,” Ms. Pendleton said. “So, don’t think, ‘If we get to that first level of appeal, we’re expecting to win.’ If you look at the statistics, it’s not really that realistic.”

Although a provider has 120 days to file an appeal, it’s smarter to file within the first 30 days, Ms. Pendleton advised. If an appeal is filed within 30 days, the government cannot recoup it’s demand from a doctor’s current Medicare payments.

Expect a lengthy time frame for a final outcome. Under federal law, once an appeal gets to the administrative law judge (ALJ) stage (the third stage), the appellant should receive a hearing decision within 90 days. However, because of heavy case backlogs, physicians typically don’t get a hearing for 3 years, Ms. Pendleton said.

“The problem is, your MAC [Medicare administrative contractor] can start taking your money after the [second] stage,” she said. “If it’s a huge dollar amount, you’re probably going to have to enter into a payment plan [with the government]. You will eventually get your money back, if you win, three to four years later.”

Note that physicians generally experience a higher degree of success at the ALJ stage, so it may be worth continuing the appeal through this stage, she noted.

Overall, more than one-third of audit findings are reversed in providers’ favor during the appeals process. Of 170,482 Medicare appeal decisions in 2015, 37% were made in favor of the health provider, an increase from 23% in 2014, according to 2015 Medicare data and 2014 reports.

The cost to appeal varies significantly between Medicaid and Medicare and depends largely on the complexity of the audit, Mr. Comley said. A Medicaid audit appeal, through an ALJ hearing and written appeal to a court, may cost between $20,000 to $60,000 depending on the circumstances, he said. By contrast, a Medicare appeal resolved in the first stage of appeal may only cost a few thousand dollars for a relatively simple audit.

“Of course, the costs will rise at each level of the Medicare appeal process, especially in the third stage involving the ALJ telephonic hearing, but, in most cases, the Medicare appeal costs will still be below a similar Medicaid appeal,” he said.

What strategies can help you win?

Consider reaching out to your congressional representative or senators, Mr. Comley advised. Particularly if the issue involves a medical treatment decision or a medically necessary determination, it may be helpful to copy “your favorite Congressman or senator’s office” on correspondence with the MAC. Clearly state your argument against the findings and how/why the medical decision was made. Legislators will often get involved and could help your appeal, Mr. Comley said.

Further, don’t just review the claims that auditors denied. Also evaluate the claims they have approved in the past, he added.

“In almost every case I’ve been involved in, they’ll approve claims that, on the other hand, they deny,” Mr. Comley said. “Under most legal standards, that’s a good way to win – it’s called arbitrary and capricious.”

Find the best experts to back your case, Ms. Pendleton advised. Consider including expert opinions in written responses to the government that support the services provided and/or have medical experts ready to testify during hearings. If the government based its findings on statistics or cited statistics in its review, involve a statistical expert who can argue against the government’s conclusion.

If the case is significant enough, consider skipping steps in the appeals process to get the case before a federal court sooner. Appellants can escalate their appeal through the process at nearly every stage if the government fails to respond within a timely manner. At the second stage, for example, if the qualified independent contractor does not issue a decision within 60 days, an appellant generally has the right to escalate the case to an administrative law judge. If the ALJ does not issue a decision within 90 days, the appeal can generally be escalated to the Appeals Council level, and, if the council does not issue a decision within 90 days, appellants can seek judicial review.

It may be worth it to have your day in court sooner, Ms. Pendleton said.

“It might be an option for providers if you have a large audit with a lot at stake,” she said. “Escalate it through. Get it to federal court and argue it.”

The 5 steps of the Medicare appeals process

There are five stages of the Medicare audit appeals process, according to the Centers for Medicare & Medicaid Services. They include:

1. Redetermination by the Fiscal Intermediary. A redetermination is an examination of a claim by a Medicare administrative contractor (MAC) separate from the personnel who made the initial claim determination. The appellant has 120 days from the date of initial claim determination receipt to file an appeal.

2. Reconsideration by a Qualified Independent Contractor (QIC). A QIC is an independent contractor who didn’t take part in the level 1 decision. The QIC will review the request for a reconsideration and make a decision. An appellant must file a request for reconsideration within 180 days of Medicare redetermination notice or remittance advice receipt.

3. Administrative Law Judge (ALJ) hearing. Appellants present their case to an ALJ who will review the facts of the appeal and listen to testimony before making a decision. An ALJ hearing is usually held by phone or video conference. Appellants can ask the ALJ to make a decision without a hearing. The ALJ may also issue a decision without holding a hearing if evidence in the record supports a decision that’s fully in the appellant’s favor.

4. Medicare Appeals Council review. If you disagree with the ALJ decision or wish to escalate the appeal because the ALJ ruling time frame has passed, a request for a Medicare Appeals Council review can be made. A request for a Medicare Appeals Council review must be made within 60 days of receipt of the ALJ’s decision or after the ALJ ruling time frame expires.

5. Judicial review in U.S. District Court. A party may file an action in federal district court within 60 calendar days after the date receiving notice of the Medicare Appeals Council’s decision or after a council notice that it is not able to reach a decision. To get a judicial review in federal district court, the case amount must meet a minimum dollar amount ($1,560 in 2017).

Each state has its own Medicaid appeals process. Contact your state’s Medicaid office to find out how to appeal a Medicaid audit finding.

On Twitter @legal_med

Next Article: