(December 3, 2010): In recent years, Medicare Administrative Contractors (MACs) have become much more likely to initiate recoupment of alleged overpayments in connection with post-payment audits as soon as they are permitted to do so. The purpose of this article is to examine steps that a health care provider should consider when it is faced with a Medicare appeal and must consider how it will handle the recoupment / repayment issue.
I. Recoupment Considerations When Filing a Medicare Appeal at the Redetermination Level.
CMS’ current recoupment rules effectively vitiate the ability of a provider to use the 120-day period to prepare their case before filing for redetermination appeal. As the limitation on recoupment rules are currently applied, if a health care provider does not file for redetermination appeal within 30 days of the date of the MAC’s demand letter, then on day 41 the contractor will begin recouping the overpayment that is allegedly owed.
As a result, instead of having 120 days to file for redetermination appeal, providers are under significant pressure to file for appeal within the 30 days of the date of the contractor’s overpayment determination letter. To be clear, the 30-day clock does not start when the ZPIC sends out their decision letter. Rather, the clock starts as of the date that is indicated at the top of the MAC’s demand letter, not as of the date that the provider actually receives the demand letter. If the mailing of a MAC post-payment demand letter is delayed, or if the U.S. Postal Service takes longer than normal to deliver the demand letter to the provider (I know, that’s a real stretch of the imagination – nevertheless, just work with me so I can illustrate the problem), the provider won’t even have 30 days to file for redetermination appeal in order to avoid recoupment. Unfortunately, this example is all too real.
In a recent “big box” case we defended, for whatever reason the demand letter was not received by the provider until almost 10 days after the demand letter was dated. As a result, the provider (and our Firm) had to fully assess the ZPIC’s reasons for denial and work up compelling arguments in support of payment in less than 20 days, despite the fact that a provider is supposed to have 120 days after the receipt of the MAC’s demand letter to file for Medicare appeal at the redetermination level.
Notably, if a provider is willing to enter into an extended repayment plan with the MAC (whereby the alleged overpayment is paid out over a 12 – 60 month period), the provider can then take advantage of the full 120 day period to assemble relevant documents, assess applicable coverage and payment guidance and prepare arguments in support of payment. While most providers prefer not to pay anything in recoupment until it is absolutely necessary that they do so, such an approach may be short-sighted. In a number of cases, providers have been unable to track down supporting documentation and assemble persuasive arguments within the 30-day period.
II. Recoupment Considerations When Filing Your Medicare Appeal at the Reconsideration Level.
Once reviewed at redetermination appeal and the MAC sends out its redetermination decision, a health care provider only has 60 days to file for reconsideration appeal if it wishes to avoid any recoupment. Once again, if the provider is willing to enter into an extended repayment plan, it can use the 180-day period permitted by regulation to file its appeal for reconsideration. In many cases, however, the provider insists that we file for reconsideration appeal within the 60 day deadline. Unless the record has been fully assembled, this can be quite problematic. Providers are required to show “good cause” if they wish to have new information (typically in the form of medical records) after the reconsideration level of appeal.
Applying an appeals strategy which attempts to avoid recoupment until the last possible moment only postpones the inevitable. Once a reconsideration decision is issued, most MACs will seek to recoup the overpayment owed by a provider 30 days from the date of the reconsideration decision (not 30 days from the provider’s receipt of the reconsideration decision). While in some cases, we have seen the MAC wait until the current amount owed is recalculated by the ZPIC, the most prudent strategy is to expect for recoupment to begin 30 days from the date of the reconsideration decision letter. Importantly, recoupment will take place regardless of whether a provider files for Administrative Law Judge (ALJ) appeal. Therefore, if the provider has not already done so, it is highly recommended that the provider apply for extended repayment as soon as the reconsideration decision has been received.
III. Impact of CMS’ Current Recoupment Policies on Your Medicare Appeal.
Overall, the recoupment policies currently in place provide a short-term “fix” that is all to often taken by providers, possibly to the detriment of the provider’s case. In many cases, the desire to put off any recoupment merely delays the inevitable by a few months. As a result, it is recommended that providers discuss these options with experienced legal counsel and carefully weigh the benefits and disadvantages of each approach before choosing a course of action in connection with your Medicare appeal.
Robert W. Liles and his team of attorneys and paralegals in Washington, D.C., Houston, TX., and San Antonio, TX have handled a wide variety of post-payment Medicare audits around the United States. Our legal professionals have represented health care providers in front of ALJ in each of the four Offices of Medicare Hearings and Appeals handling ALJ level appeals. Please feel free to call us for a free initial consultation. We can be reached at: 1 (800) 475-1906.
 The term “big-box” case is typically used by ALJs and Medicare contractors to described large, multi-claim post-payment audit cases. In approximately 90% of the big-box Medicare appeal cases handled by our Firm, the ZPIC or PSC has taken an allegedly statically relevant sample of between 25 and 200 claims and has extrapolated the overpayments found in this sample to the entire universe of claims. As a result, in a majority of the cases we have handled, the extrapolated damages sought by Medicare often range from $100,000 to $5,000,000.
(August 30, 2010):
I. Introduction — “Medical Necessity” Issues Presented:
Health Data Insights (HDI), the Centers for Medicare & Medicaid Services (CMS) Recovery Audit Contractor (RAC) responsible for auditing health care providers in Region D, has announced it will immediately begin reviews on previously approved projects which involve the medical necessity of selected inpatient DRG payments. A complete list of the medical necessity “issues” currently being examined by HDI can be found on its Website.
II. Scope of Responsibilities Assigned to Health Date Insights:
RACs, such as HDI, contract with the CMS to perform post-payment reviews of Medicare claims to find overpayments (and theoretically, underpayments in return for a percentage (from 9 percent to 12.5 percent) of the amounts recovered. Put simply, they “eat what they kill.” HDI was awarded responsibility for handling Region D audits. Region D consists of 17 States and 3 U.S. territories (Alaska, Arizona, California, Hawaii, Iowa, Idaho, Kansas, Missouri, Montana, North Dakota, Nebraska, Nevada, Oregon, South Dakota, Utah, Washington, Wyoming, Guam, American Samoa and Northern Marianas). HDI’s contingency fee contract award dollar amount is 9.49% according to CMS. The 29 DRGs where HDI will be examining “medical necessity” requirements, include certain procedures related to:
Nervous System Disorders
Endocine, Nutritional & Metabolism Disorders
Kidney & Urinary Tract Disorders, and
Blood & Immunological Disorders
III. Provider Concerns:
A continuing concern of health care providers is that the RAC determinations of medical necessity will be performed by personnel with little, if any, specific knowledge of the specific claims at issue. Given the RAC business model, providers remain worried that audits will not reflect a fair and reasonable application of applicable coverage requirements. This is especially worrisome in light of the fact that approximately 41 percent of overpayments in the demonstration project were due to medical necessity determinations.
III. Audit and Appeal Considerations:
As set out CMS’ June 2010 reported entitled “The Medicare Recovery Audit Contractor (RAC) Program — Update to the Evaluation of the 3-Year Demonstration,” as of 03/09/10, the cumulative number of claims with overpayment determinations identified by RACs has grown to 598,238. Notably, only 76,073 of these overpayments were appealed by health care providers. Of the claims appealed, over half were decided in favor of the health care provider. Interestingly, HDI had one of the highest number of claims denials overturned on appeal, in favor of the appealing provider. Four basic steps to be taken when preparing for a RAC audit include:
(1) Monitor issues of interest to the government and its contractors. Are the services you provide currently under scrutiny by RACs and other Medicare contractors? You should keep abreast of current enforcement initiatives and mistakes made by other providers. Learn from their mistakes.
(2) Know where your current weaknesses are and fix them. This typically requires that you conduct an internal audit of your coding, billing and operational practices. Take care when engaging an outside “consultant.” We have seen numerous cases where the consultant conducts an internal assessment and identifies multiple problems with the provider’s prior and current practices. Unfortunately, few consultants consider the fact that their adverse report to the provider will likely not be privileged. As a result, if the provider is ever investigated, the report could easily serve as a roadmap for the government. Prior to conducting an internal audit – call your attorney!
(3) Know your rights. If your practice is audited, know your rights both during the audit and once the audit results are issued by the contractor. There is a fine line between exercising your rights as a provider and being perceived by a contractor as refusing to cooperate in their review. You should immediately call your attorney to clarify which actions must be taken if your practice is subjected to a site visit by a Medicare contractor. The best practice would be for you to call your attorney today and discuss how you should respond in the event of a site visit. CMS takes allegations of non-cooperation very seriously. Should the contractor argue that you refused to cooperate in their efforts, you could find the action taken by the contractor is to seek a revocation of your Medicare number. This is an especially sensitive issue.
(4) Have a firm understanding of how the Medicare appeals process works. Depending on the amount in controversy, you may choose to handle Medicare claims denials internally. As the use of data-mining increases, Medicare contractor reliance on provider profiling will continue to increase. While mere errors or mistakes should be returned to the government (or not appealed is properly denied by the contractor), should you find that claims were improperly denied, we recommend that you appeal such denials. RACs and other Medicare contractors will likely focus on providers with high error rates.
While every case is different, health care providers should consider the following when faced with a RAC audit:
- The scope of RAC audits is expanding. In the past, hospitals and other “low-hanging fruit” were the focus of HDI and other RACs around the country. As a result, some physicians, small practice groups, clinics and other smaller providers have grown complacent in their compliance efforts. This is a mistake, as more issues are identified and approved, the RACs will be expanded the scope of their reviews. Now is the time to get your practice in order.
- ZPICs and PSCs continue to represent a greater danger to small physician practices and health care provider groups. Zone Program Integrity Contractors (ZPICs) and Program SafeGuard Contractors (PSCs) are not subject to the time, audit and service scope limitations imposed on RACs. The implementation of effective compliance efforts will help reduce the likelihood of liability should the practice be audited by a ZPIC, PSC or RAC.
- Beware of “canned” consultant solutions. As a search on Google will readily attest, consulting firms around the country are touting the latest RAC audit “tool” or audit response “template.” We recommend that you exercise caution when retaining any organization that “guarantees” results or seeks to dissuade you from engaging legal counsel support.
- Retain experienced health care counsel. Under the current appeal structure, there is a significant likelihood that your case will eventually be heard by an Administrative Law Judge (ALJ). Importantly, ALJs are lawyers — not typically clinicians. In defending your case, it is strongly recommended that you retain legal counsel, regardless of whether you ultimately decide to work with a consultant or employ a clinician as an expert witness. Legal counsel will be best situated to understand and argue the various legal arguments which may prove essential in winning your case.
While RACs have not represented much of a threat to individual physicians and small practice groups in the past, the future is likely to be quite different. Physicians must already contend with audits by ZPICs, PSCs, Medicaid Integrity Contractors (MICs), Medicaid Fraud Control Unit (MFCU) investigators and Comprehensive Error Rate Testing (CERT) contractors. The expansion of the RAC program will further increase the need for statutory and regulatory compliance. Physicians and small practice groups and organizations should avoid the misconception that their limited size and / or relative billings will keep them “off the radar,” thereby limiting their chances of being audited.
IV. ZPICs and PSCs are Continuing to Rely on Statistical Sampling in an Effort to Extrapolate Damages:
In our practice, we have seen a marked increase in the number of solo physicians and small providers groups who have been subjected to pre-payment and post-payment audits of their Medicare billings.
In the case of post-payment reviews, the vast majority of Medicare audits we have worked on have included the statistical extrapolation of damages by ZPICs and PSCs. We expect RACs to follw suit as the number of their audits increase. In defending a post-payment audit, it is essential that you examine the statistical methodology utilized and identify any flaws in the contractor’s approach. We have successfully convinced both Qualified Independent Contractors (QICs) and ALJs to invalidate statistical extrapolations based on mistakes in the process committed by the ZPIC or PSC. Arguments can be legal and / or methodology-based. In many cases, it is necessary to engage the assistance of a qualified statistical expert. Should you succeed – be ready to defend this decision before the Medicare Appeals Counsel (MAC). Over the past year, practically every invalidation of the statistical extrapolation of damages was appealed to the MAC by the Administrative QIC (AdQIC).
Health care providers must be proactive in their efforts to better comply with applicable Medicare coding and billing practices. Should your practice be placed on pre-payment audit or have its post-payment Medicare claims reviewed, we recommend that you immediately contact your health care attorney for assistance.
Robert W. Liles and other Liles Parker attorneys have extensive experience representing health care providers around the country in large Medicare administrative overpayment appeals cases. We would be happy to discuss your case, give our initial assessment and provide client references for you to call. Should you have questions regarding RAC, ZPIC or PSC audit processes, you may contact us for a complimentary consultation. We can be reached at 1 (800) 475-1906.
(June 25, 2010): The purpose of this series of articles is to assess the Recovery Audit Contractor (RAC) Program from the perspective of physicians, home health, hospice, durable medical equipment (DME) providers, and other relatively small Medicare providers. As many non-hospital providers will acknowledge, early cries of wolf by law firms and consultants did a fine job of initially publicizing the RAC threat. Unfortunately, the threat of a RAC audit now appears to be largely ignored by non-hospital providers due to the seemingly widespread sense that RACs will likely continue to focus their efforts on large, institutional Medicare providers – the ultimate “low hanging fruit” in terms of potential Medicare overpayments.
I. Should Non-Hospital Providers Worry About a RAC Audit?
RACs are, in fact, a real threat to physicians and other small Medicare providers, despite the fact that these particular contractors have passed over these providers in the past.
Over the last six weeks, the Centers for Medicare and Medicaid Services (CMS) has sponsored nationwide conference calls titled “Nationwide RAC 101 Call” specifically aimed at physicians, home health, hospices, and DME providers. Further, CMS conducted two general nationwide conference calls discussing the RAC program that were open to all Medicare providers.
These seemingly innocent informational calls were in fact extraordinarily significant, servicing almost as a “touchstone” for CMS and its RAC auditors. With the completion of these nationwide teleconferences, outreach has now been completed and CMS can affirmatively state that these non-hospital providers have been given multiple opportunities to learn about the program and prepare for an audit. All states are now eligible for review.
While CMS must still approve “issues” prior to their widespread review by the RACs, the contractors now have the billing data that they need to analyze and identify possible targets.
II. What Have Other Provider Experiences with RACs Been?
As physicians and other non-hospital providers prepare for possible audit, it is helpful to review hospitals’ experiences when preparing for and responding to a RAC audit. On June 22, 2010, the American Hospital Association (AHA) released its findings that the RAC program is having a widespread impact on almost all hospitals, even though many have not even been subjected yet to a RAC audit. In fact, for the first quarter of 2010 alone:
84% of responding hospitals reported that RACs impacted their organization;
49% of responding hospitals reported increased administrative costs; and
17% of the hospitals using external resources to address RACs hired consultants at an average cost of almost $92,000.
So, what do providers and non-hospital Medicare providers need to know about RACs? This multi-part series will address the following: First, the purpose and impact of RACs; Second, how to respond to RACs when they come calling; Third, some of the emerging issues for physicians and other small Medicare providers regarding RACs.
III. What’s a RAC?
The program was created by Section 306 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). Operating under the direction of the Department of Health and Human Services (HHS), RACs are independent third-party contractors tasked with identifying and correcting improper past Medicare payments. Each of four RACs has jurisdiction over a separate region of the United States.
After a three year demonstration in which RACs identified $1.03 billion in improper Medicare fee-for-service payments, the program became permanent earlier this year. CMS created the following table to clarify the role that these contractors are supposed to play compared to others, such as ZPICs. However, as we will see later in this series, these roles are not clearly delineated and the overlap in the review process can create substantial confusion and waste.
Role of Medicare Review Contractors
Improper Payment Function
|Contractor Performing Function|
|Preventing future improper payments through pre-pay review and provider education||Medicare claims processing contractors|
|Detecting past improper payments||RACs, ZPICs, PSCs|
|Measuring improper payments||CERT [Comprehensive Error Rate Testing]|
|Performing higher-weighted DRG [diagnosis related group] reviews and expedited coverage reviews||QIOs [Quality Improvement Organization]|
RACs are incentivized to hunt for evidence of overpayments in high-cost categories of service and to needle out errors that have nothing to do with actual patient care.
IV. How Are These Types of Contractors Paid?
RACs are paid on a contingency basis so it stands to reason that, during the initial program demonstration, only 4% of improper payments identified were underpayments. This “bounty hunter” approach also helps to explain why prior audits have focused almost exclusively on high-cost inpatient care services. Recent GAO testimony shed light on this situation and may cause RACs or other contractors to shift their focus to entities that do not have hospitals’ long history of review and compliance, namely physicians and other relatively small Medicare providers. Finally, a substantial percentage of overpayments collected by RACs during the demonstration program resulted from preventable coding errors, countering the myth that CMS is primarily focused on weeding out unnecessary service claims.
Providers in Region C may want to consider that the AHA found hospitals in that region, encompassing nearly 40% of all U.S. hospitals including those in Texas, Florida, and Virginia, reported the highest number of medical records requested, the highest amount of dollars targeted in medical record requests, and the highest number of denied claims (47% of the $2.47 million in denied claims reported in the first quarter of 2010).
V. Are There Any Safeguards to Protect Physicians and Other Small Group Providers?
Based on the demonstration program, numerous providers and others have expressed concern that RACs are overly aggressive auditors. Despite some improvements, concerns about the RAC process are likely to persist. As recent testimony by the GAO Health Care Director pointed out, the oversight of RACs leaves something to be desired.
Changes have been made to reduce the RACs unintended incentive to drive up fees (through the improper denial of claims). RACs are now required to pay back their contingency fee if the claim is overturned at any level of appeal, rather than just the first level as in the demonstration program.
Additionally, there are some limitations in place regarding the RACs ability to overwhelm providers with record requests. RACs may not request records more frequently than every 45 days and, for institutional providers, their requests are limited to 1% of all claims submitted for the previous calendar year. This is an overall limit, however, meaning that a RAC may determine the composition of the records in an additional document request. They can – and do – request categories of records up to the limit even if the request is disproportionate the provider’s business.
Finally, none of these improvements address the concern that the first several levels of the appeals process do not provide meaningful recourse for the overly aggressive auditing.
Robert W. Liles and Liles Parker attorneys have extensive experience representing health care providers around the country in Medicare appeals cases. Should you have any questions regarding these issues, don’t hesitate to contact Robert. For a complementary consultation, you may call us at: 1 (800) 475-1906.
 Available at http://www.aha.org/aha/content/2010/pdf/Q1RACTracResults.pdf
 Available at http://www.racaudits.com/uploads/RAC_Demonstration_Evaluation_Report.pdf.
(March 11, 2010): Medicare audits can be extraordinarily stressful for your organization. Are your documentation practices compliant? If not, you should take immediate steps to address any deficient practices you might have. New Medicare audits are on the way!
According to the White House, President Obama has announced that he intends to back bipartisan plans to stamp out waste in government-run medical programs for the elderly and needy. The White House said the new effort to root out improper payments in the Medicare and Medicaid programs could double taxpayer savings over the next three years to at least $2 billion.
I. The White House is Committed to Fighting Health Care Fraud and Abuse.
As the White House noted, “We cannot afford nor should we tolerate this waste of taxpayer dollars,” The government believes that approximately $54 billion was lost through improper Medicare and Medicaid payments in 2009. Medicare is the government-run program covering elderly Americans and Medicaid is for the country’s poorest.
President Obama is seeking to crack down on waste and fraud as his administration strives to secure an overhaul of the $2.5 trillion healthcare system to contain costs and expand coverage to tens of millions of more Americans. The action endorses Republican-backed proposals on alleged health care wrongdoers.
II. Are More RAC-Type Medicare Audits Ahead of Us?
The plan will offer private auditors a share of the money that they recoup in order to encourage them to work harder to uncover improper payments under Medicare and Medicaid. President Obama is also expected to back bipartisan legislation to expand the ability of government agencies to undertake these so-called payment recapture audits by providing more funds.
As many health care providers will readily attest, over the past year, it appears that there has been a marked increase in ZPIC post-payment Medicare audits, almost all of which are accompanied by demands for extrapolated damages. Once again, this points to the importance of sefl-assessment and an effective compliance strategy.
III. Steps You Should Take to Prepare for a Medicare Audit.
If you have not already done so, we strongly recommend that you implement an effective Compliance Plan — one that has been specifically designed to help present the “risks” that your practice face from day-to-day. Over the years, our firm has represented a number of health care providers around the country in an effort to improper claims denials overturned. This new risk will increase the likelihood that providers who have not been subjected to ZPIC or RAC audits in the past may now find themselves being examined by RAC-like auditors in the future.
Coupled with existing audit risks, sole practitioners, small practice groups and clinics will find their coding and billing practice under the spotlight. Unfortunately, based on recent cases we have handled, it appears that some ZPICs appear to impose their own views regarding what is required, well beyond the four corners of CMS-authorized provisions set out under LCDs and LMRPs covering the services at issue. Fortunately, when faced with the facts, ALJs have applied a reasonable approach.
We recommend that health care providers carefully review their documentation practices. How would your documentation look to you if you were in the place of an outside auditor? In order to lessen the likelihood that ZPICs, PSCs, RACs and other third-party reviewers will deny your claims — you need to fully understand and apply the coverage and payments which apply to your claims / services. Don’t wait until you are facing a Medicare audit. Take action now.
(March 1, 2010): The number of auditors, reviewers, investigators and prosecutors going after health care providers is increasing and signals an alarming, unprecedented effort by the government to uncover and recover alleged overpayments to health care providers.
Health care providers now face not only simple repayment demands, but also civil False Claims Act cases and criminal Medicare / Medicaid fraud claims identified by various new government contractors. Regrettably, we have seen unintentional mistakes, incomplete documentation and technical errors cited as the basis for seeking the repayment of millions of dollars, representing Medicare services rendered long ago, in some cases as many seven years before the demand letter was sent. Perhaps most troubling is the fact that no one, including the ZPIC and / or PSC conducting the medical review, doubts that the medical services were rendered and in most cases, the Medicare beneficiary benefited from the care and treatment provided. Today, every health care provider must beware of:
- “RACs” or Recovery Audit Contractors.
- “ZPICs” or Zone Program Integrity Contractors.
- “MICs” Medicaid Integrity Contractors.
- “MCFU” Medicaid Fraud Control Unit.
- “HHS-OIG” Department of Health and Human Services, Office of Inspector General.
- “DOJ” U.S. Department of Justice, and
- “HEAT” Healthcare Fraud Prevention & Enforcement Task Force (in a number of U.S. Attorney’s Offices around the country).
RACs and the havoc they are expected to wreak is old news, quite frankly. The newest players in town, ZPICs, MICs and HEAT Teams should be at the top of your current list of concerns. As you will recall, CMS consolidated functions of all Program Safeguard Contractors (PSCs) and Medicare Prescription Drug Integrity Control (MEDIC) contracts into ZPIC contracts. ZPICs are designed to combine claims data (FIs, Regional Home Health Intermediary, Carrier, DMERC) and other data to create a platform for documenting complex data analysis. While RACs (until recently) have focused solely on recovering money, ZIPCs also look for fraud.
MICs are just now revving up around the country. Unburdened by many of the restrictions placed on RACs, providers with a heavy Medicaid beneficiary base should diligently review their Medicaid coding and billing efforts to better ensure compliance with applicable statutory and regulatory requirements.
HEAT Teams are made up of top level law enforcement and professional staff from DOJ and HHS. HEAT was implemented to prevent fraud and enforce current anti-fraud laws and prevent waste that focuses on improving data and information sharing between the Center for Medicare & Medicaid Services and law enforcement agencies. HEAT is working to strengthen program integrity activities to monitor and ensure compliance and enforcement. HEAT’s tools to identify fraud include hotlines and web sites for healthcare workers and ordinary citizens. Furthermore, HEAT officials are helping state Medicaid officials conduct better audits and provide better monitoring to detect fraudulent activities.
How should you respond? The best response is to follow the rules. If you don’t already have an effective Compliance Plan in place, we recommend you take steps to immediately implement one.
Liles Parker attorneys represent health care providers around the country in complex Medicare overpayment appeals cases. Should you have any questions regarding your case, give us a call. We can you our initial assessment and provide client references. You may call us for a complimentary consultation at: 1 (800) 475-1906.
National Coverage Determination (NCD) and Local Coverage Determination (LCD) Guidance – How will an ALJ view these coverage guidelines when the Court is assessing whether my Medicare claims should be paid?
(February 1, 2010): When treating patients, it is not uncommon for a physician to prescribe or utilize certain drugs and / or diagnostic treatments in an “off-label” fashion. Depending on the insurance policy at issue, this may or may not be covered and paid by a third-party payor. In the case of Medicare, the Centers for Medicare and Medicaid Services (CMS) has endeavored to better define Medicare’s coverage limits.
National Coverage Determination (NCD) guidelines describe the extent to which Medicare will cover specific services, procedures, or technologies on a national basis. Medicare coverage is limited to:
- Items and services that are reasonable and necessary for the diagnosis or treatment of an illness or injury (and within the scope of a Medicare benefit category).
- Determinations developed through an evidence-based process, with opportunities for public participation. In some cases, CMS’ own research is supplemented by an outside technology assessment and/or consultation with the Medicare Evidence Development & Coverage Advisory Committee (MEDCAC).
Importantly, once an NCD is finalized and published, its coverage guidelines are binding on all Medicare contractors (including Program SafeGuard Contractors, Zone Program Integrity Contractors, Recovery Audit Contractors, Medicare Administrative Contractors (formerly Fiscal Intermediaries and Carriers) and Qualified Independent Contractors). Notably, NCDs are also binding on ALJs and the Medicare Appeals Council.
As set out in the Code of Federal Regulations:
42 C.F.R. § 405.1060 Applicability of National Coverage Determinations (NCDs).
(a) General rule. (1) An NCD is a determination by the Secretary of whether a particular item or service is covered nationally under Medicare.
(2) An NCD does not include a determination of what code, if any, is assigned to a particular item or service covered under Medicare or a determination of the amount of payment made for a particular item or service.
(3) NCDs are made under section 1862(a)(1) of the Act as well as under other applicable provisions of the Act.
(4) An NCD is binding on fiscal intermediaries, carriers, QIOs, QICs, ALJs, and the MAC.
(b) Review by an ALJ. (1) An ALJ may not disregard, set aside, or otherwise review an NCD.
(2) An ALJ may review the facts of a particular case to determine whether an NCD applies to a specific claim for benefits and, if so, whether the NCD was applied correctly to the claim.
(c) Review by the MAC. (1) The MAC may not disregard, set aside, or otherwise review an NCD for purposes of a section 1869 claim appeal, except that the DAB may review NCDs as provided under part 426 of this title.
(2) The MAC may review the facts of a particular case to determine whether an NCD applies to a specific claim for benefits and, if so, whether the NCD was applied correctly to the claim.
In the absence of a national coverage policy, an item or service may be covered at the discretion of the Medicare contractors based on a Local Coverage Determination (LCD).
An LCD (as established by Section 522 of the Benefits Improvement and Protection Act), is a coverage decision by a Medicare Administrative Contractor (previously issued by a Fiscal Intermediary (Part A) or Carrier (Part B) contractors). LCDs are drafted to cover a particular service as reasonable and necessary on a contractor-wide basis in accordance with Section 1862(a)(1)(A) of the Social Security Act.
Unlike an NCD, ALJs are not bound to follow an LCD. Nevertheless, ALJs will give LCD coverage guidelines considerable weight. In representing health care providers, we work hard to persuade an ALJ that the services at issue do, in fact, qualify for coverage.
As set out in the Code of Federal Regulations:
(a) ALJs and the MAC are not bound by LCDs, LMRPs, or CMS program guidance, such as program memoranda and manual instructions, but will give substantial deference to these policies if they are applicable to a particular case.
(b) If an ALJ or MAC declines to follow a policy in a particular case, the ALJ or MAC decision must explain the reasons why the policy was not followed. An ALJ or MAC decision to disregard such policy applies only to the specific claim being considered and does not have precedential effect.
(c) An ALJ or MAC may not set aside or review the validity of an LMRP or LCD for purposes of a claim appeal. An ALJ or the DAB may review or set aside an LCD (or any part of an LMRP that constitutes an LCD) in accordance with part 426 of this title.
Liles Parker attorneys have extensive experience representing health care providers in ALJ hearings. Call us to discuss your case. Your initial consultation is complementary. We can be reached at: 1 (800) 475-1906.