Providers Win 64% of RAC Appeals

BALTIMORE — Medicare providers won 64 percent of the claims they appealed during the three-year Recovery Audit Contractor demonstration, according to a CMS update on the program released June 18.

From the inception of the demonstration through March 9 this year, the RACs determined overpayments on 598,238 claims and providers appealed 76,073 of those, or 12.7 percent overall.

Of the appeals, 48,993 — or 64.4 percent — were decided in the provider’s favor.

“The percentage is high but it should be higher,” said Wayne H. van Halem, president of the van Halem Group, a Medicare consulting and auditing firm based in Atlanta. “If a company legitimately feels the service they provided was reasonable and necessary, then they should appeal. Clearly, if they had proper internal controls and compliance practices, they would not have billed Medicare for it in the first place if they felt it wasn’t medically necessary.”

What the number of favorable appeal decisions does do, van Halem said, is “call into question the program itself. In the RAC report, providers chose to appeal 12.7 percent of the RAC determinations and they received favorable determinations in 64.4 percent of the appeals. This should only serve as an incitement for other providers to appeal.

“So,” he continued, “if the number of appeals increase and the favorable rate remains as high as it does, the RACs’ profit margins and overall efficacy of the program will be negatively impacted and it brings into question the long-term sustainability of the program. Of course, I think we’d have to see a significant increase in appeal requests before that occurs.”

There could be an increase, van Halem said, especially since the RACs are starting more complex reviews and making clinical determinations.

“For example,” he said, “if a claim denies because of insufficient physician documentation, a supplier can take it to the [Administrative Law Judge], and while the ALJs will give substantial deference to the coverage policies, they aren’t bound by them, so … suppliers have a good chance of getting denials overturned if they are able to present their case clearly to the ALJ.”

Should HME providers should appeal all audit overpayment determinations?

“Absolutely, 100 percent, yes,” van Halem emphasized, adding that going to an ALJ is the first chance providers have “to actually speak and present your case to another person. On redetermination and reconsideration, they are under very tight timeframes, and I’m not confident you always get a comprehensive review of the documentation. Of course, they are also bound by coverage policies.”

Van Halem used to work with Medicare, and he oversaw the department that manages DME reconsiderations nationally. Now, he said, because “they are rushing to get decisions out on the 60th day,” it’s tougher to win and many providers quit at that point.

But, he noted, “We have an overwhelmingly high percentage of claims overturned at ALJ. So if the supplier legitimately feels the claim should be paid, they should appeal all the way up to ALJ.

“The Medicare appeal process is a broken one,” van Halem stated. “The time constraints on the contractors make getting a comprehensive and fair redetermination or reconsideration difficult, but at least you have the ALJ level to represent yourself and present your facts to someone.”

CMS’ full update on the RAC demonstration is available at www.cms.gov/RAC/Downloads/DemoAppealsUpdate61410.pdf.