Know the auditors and audit process, you’ll be audited someday

Providers and suppliers will be audited by CMS at some point, so it is important to understand the various types of audits and the appeals process, according the presenter of a Health Care Compliance Association (HCCA) webinar titled “Medicare Audits & Audit Appeals—From A to Z(PIC).” Scott R. Grubman, Esq., of Chilivis Cochran Larkins & Beyer LLP, focused his discussion on recovery audit contractors (RACs) and zone program integrity contractors (ZPICs) and the various steps of the audit appeals process, from the initial determination to judicial review.

RACs

Charged with “identifying and correcting improper payments through detection and collection of overpayments,” the RAC program started as a demonstration project and completed its first audits in 2011-2013. As new RAC contracts were awarded in October 2016, RAC audits will continue into the future. RACs are paid a contingency fee (somewhere between 7 and 17 percent of the recovery), but only when a favorable reconsideration is made, so they have a financial incentive to find and recover overpayments. According to Grubman, RACs “may not work on the side of fairness for providers.” But RACs are limited in the number of claims they can audit per provider per year and must maintain a 95 percent accuracy rate and an overturn rate of less than 10 percent. RAC audits, as well as MAC audits, are desk reviews, contrary to ZPIC audits.

ZPICs

Grubman warns to be careful when going through a ZPIC audit. ZPICs are tasked, for example, to investigate potential fraud and abuse and to refer parties for CMS administrative actions or for law enforcement; conduct investigations (not just as desk audits, but through interviews and onsite visits, too) and data analysis under the CMS Fraud Prevention System; and to identify the need for administrative actions such as payment suspensions. While RACs typically look at unintentional overpayments, ZPICs respond to intentional overpayments.

Audit process

Whatever the auditor that reviews the claim, an initial determination is first made as to whether the item and services are covered and the amount payable. The auditor then notifies the provider/supplier of the decision following specific notice requirements. A provider or supplier may appeal that decision, following this chronology:

1. Redetermination. A request for a redetermination must be filed within 120 calendar days from receipt of the initial determination, and within 30 calendar days to avoid CMS starting to recoup the overpayment. (Grubman suggests starting the count on the date listed on the determination, not receipt, to avoid running into any issues.) The redetermination involves an “independent review” performed by the same contractor (but a different individual). New issues may be raised by the contractor during redetermination, but a redetermination must be issued within 60 days from receipt of request.
2. Reconsideration. Within 180 days of the redetermination (or within 60 days to avoid recoupment), a party may file a request for reconsideration, which is an independent review of the evidence and findings conducted by a qualified independent contractor (QIC). QICs are bound by national coverage determinations (NCDs), CMS rulings, precedential Medicare Council decisions, and applicable laws and regulations. (Local coverage determinations (LCDs) and CMS program guidance is not binding but given substantial deference.) A QIC has 60 days to issue its reconsideration, and if the deadline isn’t met, the appellant can escalate to the next level of appeal.
3. Administrative law judge (ALJ). If the amount at issue exceeds $160, a request for an ALJ decision may be filed within 60 days of the reconsideration (recoupment cannot be avoided). A hearing is typically held either in person, video conference, or telephone, and parties may submit evidence and/or present witnesses. An ALJ decision is a de novo review and ALJs have wide discretion over the hearing. ALJs are bound by the same NCDs and laws and regulations and must give deference to non-binding authority as with reconsiderations. An ALJ must issue a decision within 90 days, however, there exists an immense backlog in issuing decisions, which has even become the subject of a legal challenge (see Court sets a timeline for Medicare claims backlog, December 6, 2016).
4. Medicare Appeals Council. Within 60 calendar days of the ALJ’s decision, a review by the Medicare Appeals Council may be requested. The Council’s review is limited to those issues the appellant claims to disagree with. Briefs are filed by the parties but no new evidence is provided. Typically a decision is made with no oral arguments and must be made within 90 calendar days.
5. Judicial review: Within 60 calendar days of receipt of the Council’s decision, a suit may be filed in the district court where the provider/supplier resides or has its principal place of business, with the Secretary of HHS named as defendant.