By now you’ve probably heard a lot about the Centers for Medicare and Medicaid Services (CMS) Medicare Recovery Audit Contractor (RAC) program, scheduled to crank up in North Carolina in late 2009 or early 2010. Under the program, private contractors called RACs will review paid Medicare claims as far back as three years for CMS and identify alleged "overpayments," which it will seek to recover from the affected provider. A provider that receives a demand letter for recoupment can appeal that decision through several levels of appeal.

The overpayment determination appeals process is relatively complex and technical, involving five distinct levels of appeal. In this article, we will help you understand certain aspects of these levels of appeal should you find your facility with a RAC overpayment determination that you want to appeal.

While data regarding the likelihood of successful RAC appeals is still being evaluated by CMS, preliminary data suggests that it may be worthwhile for providers to appeal overpayment determinations. As of August 2008, approximately 34% of RAC appeals filed during the three-year demonstration project resulted in a favorable decision for the provider and 7.6% of the determinations were overturned entirely on appeal. However, this data may not be representative of the final results, because the appeals filed during the demonstration project continue to work their way through the appeal process. CMS will continue to update the appeal statistics until all appeals are resolved. Connolly Consulting Associates, Inc., the RAC contractor in Region C, which includes North Carolina, had the highest percentage of combined Part A and Part B appeal decisions favorable to the providers (54.1%). Since the RACs do not get paid if an overpayment determination is overturned at any level of appeal, it’s in the RACs’ best interests if you choose not to appeal their determinations.

Once the RAC concludes that you received an overpayment, you will be sent a demand letter, also known as an initial determination letter, explaining how the overpayment was determined and the amount due. The demand letter will also explain your appeal rights and inform you of how to stop recoupment from occurring. Recoupment is defined as the recovery of outstanding Medicare debt by reducing present or future payments and applying the amount withheld to the indebtedness. Despite language in the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), which provides that recoupment will not occur until a decision on reconsideration is rendered, CMS has taken the position that it may recoup alleged overpayments before a request for redetermination or reconsideration has even been filed.

Following is how the five levels of appeal work.

Redetermination

In the event you wish to appeal an overpayment determination, you must first request a redetermination from your fiscal intermediary (FI) or carrier, as the case may be, within 120 days from the date you receive the demand letter. However, in order to stop recoupment of the alleged overpayment, you must file your request for a redetermination within 30 days from the date of the demand letter; otherwise, withholding will occur on the 41st day. You will also be given the opportunity to "rebut" the findings in the demand letter by submitting a statement within 15 days from the date of the demand letter disputing the debt. However, it is important to remember that the rebuttal or "discussion" period is in addition to, not in lieu of, the appeal process. Only a timely and valid request for a redetermination or reconsideration, as discussed below, will stop the recoupment process. No minimal monetary amount must be in dispute in order to request a redetermination.

In the event you request a redetermination more than 30 days after the date of the demand letter, recoupment may begin on the 41st day but will stop once you file a valid appeal. However, any amounts already recouped will be retained and will not be refunded unless you are successful in your appeal.  Interest accrues on overpayments throughout the appeal process. The FI’s or carrier’s decision is usually issued within 60 days from receipt of the redetermination request. You may wish to consider filing your appeal well before the 120-day deadline to prevent recoupment from occurring for cash flow purposes.  

Reconsideration  

Assuming you receive a partially favorable or unfavorable decision by your FI or carrier, you have 180 days from the date you receive the redetermination notice, or revised demand letter, to request a reconsideration by your qualified independent contractor (QIC). However, recoupment may occur on the 61st day unless you request a reconsideration within 60 days of the date of the notice. After recoupment begins, it can only be stopped by a timely and valid appeal. As is the case with redeterminations, there is no minimal monetary threshold for this appeal. The QIC’s decision is usually issued within 60 days from receipt of the reconsideration request.  

Administrative Law Judge Hearing  

If the QIC issues a partially favorable or unfavorable reconsideration decision, recoupment may begin regardless of whether you proceed to the third level of appeal with an administrative law judge (ALJ). You have 60 days from the date of receipt of the reconsideration to file an appeal with an ALJ. However, there must be at least $120 in controversy (this amount will be increased annually). The ALJ hearing will most likely be held by video-teleconference or telephone, and you may also request the ALJ to make a determination without a hearing based on the record. The ALJ will generally issue his or her decision within 90 days of receipt of the hearing request.  

Medicare Appeals Council  

If you receive an unfavorable decision by the ALJ, you may then appeal to the Medicare Appeals Council (MAC). You must file your MAC appeal within 60 days from the date of receipt of the ALJ hearing decision, and n minimal amount is required to be in controversy. The MAC will generally issue its decision within 90 days from receipt of your request for review.  

Federal District Court  

The final stage of appeal is in a federal district court. This judicial appeal must be filed no more than 60 days from the date of receipt of the MAC decision or declination to review. At least $1,220 must be in controversy following the MAC review, and this amount will be increased annually. Navigating the Medicare appeals process, and preventing or limiting recoupment during the early stages of appeal, will require timely responses to notices and careful attention to detail. However, since more than 30% of the RAC appeals filed thus far have resulted in favorable decisions for the providers, it may be worth your effort to invest the time and resources to challenge RAC overpayment determinations if you disagree with the RAC determination that an overpayment was made.