Business Briefs: Navigating the Medicare Appeals Process

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Since the publication of the October issue of Today’s Wound Clinic that focused on audit guidance, this author has received many questions about navigating the Medicare appeals process. Therefore, this month’s Business Briefs column features an interview with Gloria Miller, CPC, CPMA, CPPM, certified coder and current vice president of revenue cycle management for Comprehensive Healthcare Solutions Inc. (Tacoma, WA), about this topic.

Comprehensive is a wound care and hyperbarics consulting/management company that partners with hospitals throughout the United States to establish a clinically sound and financially viable wound care and hyperbaric oxygen therapy service line. Prior to joining Comprehensive, Miller worked for TrailBlazer Health Enterprises, located in Dallas, as a Medicare fair hearing officer for three years.  Trailblazer’s was a Part A and Part B fiscal intermediary in Pennsylvania and other states prior to the establishment of the Medicare Administrative Contractor (MAC) model. Therefore, Miller has the unique perspective of experiencing the appeal process from both sides (the provider and the payer). We are thrilled to share her guidance with our readers through this question-and-answer format as well as through the Table found at the end of this column, which will prove to be very helpful to those readers navigating the Medicare appeals process.

Kathleen Schaum (KS): Thank you for participating in this interview. Many of our readers have asked if appealing Medicare is worth the effort. Will you please give us your opinion?

Gloria Miller (GM): Readers may be surprised to learn that 56 percent of the Medicare claims taken through the Medicare appeals process by healthcare providers were paid in full in 2012! Another 6 percent of the appealed claims were partially paid. So, you can see that the Medicare appeals process is an important part of the revenue cycle and not to be ignored or minimized in any way. If claims are not appealed when the service/procedure/product is/are medically necessary, the wound care hospital-based outpatient department (HOPD) or the qualified healthcare professional (QHP; eg, medical doctor, doctor of osteopathic medicine, doctor of podiatric medicine, nurse practitioner, physician assistant, clinical nurse specialist) may continue to receive more claim denials.

KS: Readers often ask about the various types of Medicare denials/reviews they can experience and how they will be informed about the denials/reviews. Would you give the readers a short primer on this topic?

GM: Yes, the HOPD/QHP may receive various types of Medicare denials/review requests. One type of review is the Medicare Remittance Advice, which is a list of claims that were paid in full, partially paid, or not paid for some reason. The RA also includes a code that correlates with the reason for the denial. Other common types of Medicare denials/reviews include: Additional Documentation Requests, Comprehensive Error Rate Testing requests, pre-payment review requests, and post-payment review requests. Regardless of the type and form of the denial/review, the objective of the HOPD/QHP response should be to provide the contractor with written medical justification for any denials believed to be incorrect. HOPDs/QHPs should think of their responses as “painting the picture” or “telling the story” of what helped the patient to progress in his/her wound healing process during the visit in question. HOPDs/QHPs should be aware that no matter how they receive the denial or request for review, the appeal process is similar: Follow up, follow up, and follow up some more!

KS: What about claims that are denied but are not reviewable? What can be done about these types of denials?

GM: In addition to Medicare denials/reviews, the MACs have computer edits in place that may prevent claim payment. These edits are either the National Correct Coding Initiative (NCCI) edits or the medically unlikely edits (MUEs). NCCI edits dictate which services can be separately billed and which are bundled. The NCCI edit tables can be found at www.cms.gov/medicare/coding/nationalcorrectcodinited/index.html. For example: A current NCCI edit prohibits separately billing a multilayer high-compression bandage system used for edema control during the same encounter when a surgical or medical debridement is performed on the same anatomic location. The NCCI edit considers the multilayer high-compression bandage system as the “dressing” after the debridement procedure. 

Information regarding the published MUEs can be found at: www.cms.gov/medicare/coding/nationalcorrectcodinited/mue.html. Some MUEs are published while others are not. A common MUE that is not published, but has become known to many HOPDs, is the edit that prohibits add-on payments greater than 60 sq cm in addition to the base payment for selective debridement. In my experience, many of the MACs edit the claim for more than three add-on codes to a selective debridement. The MACs assume the QHP made a billing error that caused the large number of add-on codes to be charged, and the MAC sees this as a way to hold back on a possible large overpayment to the QHP.

KS: If the HOPD and/or QHP receive(s) Medicare denials, who should review the denial reason(s), who should gather the appropriate documents to support the appeal, who should write the cover letter, and who should submit the actual appeal?

GM: To operationalize the claim-denial process, it is critical that the HOPD/QHP establish a contact person or group of people in the patient financial services department of the hospital (or in the QHP’s office) who will notify the HOPD/QHP of claim denials, partial payments, and/or documentation requests. In this way, the HOPD staff/QHP can provide the billing team with the necessary medical justification documents to be successful on appeal. Because much of the appeal process is electronic, it is critical to involve the financial services team in it. Additionally, there needs to be a follow-up process in place to make sure the claims are either paid or moved to the next level of appeal. This follow-up process is most effectively done by staff in the patient financial services department. I recommend the patient financial services team should decipher the reason for denial and notify the HOPD/QHP of the denial. Then, the HOPD team/QHP can gather the appropriate documentation and send it to the patient financial services group to actually complete the appeal process cycle. At each level of appeal the financial services team should check with the HOPD/QHP to see if any additional evidence to include in the appeal can be provided.

KS: What are some of the major reasons for denial of wound care services/procedures/products?

GM: One major reason for denial is called “lack of medical necessity.” Your MAC may use a variety of other terms to describe this denial reason. For example: “missing documentation” to process the claim and “not meeting the local coverage determination (LCD) or national coverage determination (NCD) requirements.” No matter which terminology the MAC uses to describe this denial reason, HOPDs/QHPs will not receive payment for their work unless a decision is made to appeal the denial. For example: The diagnosis codes are critical to the claim payment process for hyperbaric oxygen therapy (HBOT). This is because the HBOT NCD and LCD (in some MAC jurisdictions) provide guidance regarding the covered indications deemed appropriate for HBOT. Specifically, consider a patient who lives with a diabetic foot ulcer and an underlying condition of diabetes mellitus. That alone will not get the HBOT claim paid. Some MAC’s LCDs specify other care components that must also be addressed and must be documented. For example: The patient has controlled diabetes; vascular assessment shows HBOT will be valuable to the patient; the patient’s foot ulcer is of a Wagner Grade III severity or higher; the patient underwent 30 days of standard wound care including moist dressings, appropriate debridement, offloading of affected foot, etc. The states of New Jersey, Michigan, and Illinois are feeling this HBOT documentation pain most acutely because they are required to participate in the Medicare HBOT prior authorization pilot project. For those states, this means that, prior to the patient beginning HBOT, all the appropriate medical documentation must be obtained and sent to the MAC for prior authorization of services of up to 40 treatments. Many MACs have also written LCDs that dictate when a cellular and/or tissue-based product for wounds (CTPs; outdated term “skin substitute”) will be deemed medically necessary. For example: The patient’s ulcer is free from underlying infection, other less-expensive therapies have been tried and documented as “failed response,” and some MACs are now requiring that the patient receive smoking cessation education prior to the application of the CTP. (See Novitas skin substitute LCD for this information. LCD No. is L27549; dated Aug. 1, 2015.)

KS: What steps should the HOPD/QHP take to understand the reason for the denial?

GM: First, the HOPD/QHP should carefully read the reasons for the denial and should review: 1) the Current Procedural Terminology, Healthcare Common Procedure Coding System, and diagnosis codes that are on the claim; 2) the number of units that are on the claim for each line item; 3) modifiers; and 4) narrative record submitted on claim, etc. Many times, HOPDs/QHPs find the claim was missing a diagnosis code, a modifier, or information in the narrative field that would have allowed payment. If this is the case, the HOPD/QHP should ask the billers to simply resubmit the claim with the corrected information.

Second, if the claim was submitted correctly, the HOPD/QHP compiles the medical record documentation that justifies the medical necessity of the denied service/procedure/products. This documentation must include the physician’s order and the physician’s progress note. As a reminder, the physician’s order must be signed and dated, and a signature stamp is not acceptable. The documentation may also include previous test results, pictures of the patient’s ulcer or wound, and clinical trials/case studies that substantiate the use of the service/procedure/products. A word of caution:  HOPDs/QHPs should choose the clinical trials/case studies that are most current and most clinically appropriate. In addition, HOPDs/QHPs should read the clinical trials/case studies to be sure the study outcome aligns with the denied use of the service/procedure/product. 

Other documents that may be helpful to include are applicable NCDs and LCDs that pertain to the denial date of service. Highlight the medical-necessity criteria, utilization guidelines, and documentation guidelines that prove all the coverage requirements were met.

Third, before the HOPD/QHP provides the compiled documents to the billing team, the HOPD/QHP should make and keep copies of all the information compiled for each denial. Having access to this information will be helpful if the HOPD/QHP needs to follow up on a denial and/or if the HOPD/QHP decides to escalate the denial to the next level of appeal. In other words, this information will be needed repeatedly throughout the appeals process. MACs commonly tell HOPDs/QHPs, “We didn’t receive your information.” Therefore, it’s a good idea for HOPDs/QHPs to include (on the front of each appeal packet they are keeping in house for follow-up purposes) a checklist of the documentation that was enclosed in their appeal packet and a notes section about where this date of service is in the appeals process. A sample appeal letter can be found online at www.cms.gov/medicare/cms-forms/cms-forms/downloads/cms20027.pdf.

Fourth, HOPDs/QHPs should provide clear copies of each appeal packet to their billing group. Make sure each copy has the patient’s name and date of service on it. As a reminder, each date of service stands alone as a claim to be paid. Therefore, if four dates of service are denied for one patient, four appeal packets (one for each date of service in question) must be prepared and sent to your billing group.

KS: What are the different levels of appeals, and how should the HOPD/QHP navigate each level?

GM: There are five different appeal levels. (See Table on page 11.) The first level of appeal is called a redetermination. It is a second look at the claim. HOPDs/QHPs must file the request for redetermination in writing. The redetermination request will be reviewed by the MAC staff that was not associated with the initial claim denial. The second level of appeal is called reconsideration and is filed if the redetermination request decision is not favorable. The request for reconsideration must be filed in writing and will be reviewed by a qualified independent contractor (QIC), formerly known as a fair-hearing officer. The QIC provides an independent review of the initial denial, renders the negative redetermination decision, and handles all issues related to payment of the claim. The reconsideration may include review of medical-necessity issues by a panel of physicians or other healthcare professionals. The QIC will send a decision (either “favorable,” “non-favorable,” or “partially favorable”) to the MAC, to the patient, and to the HOPD/QHP. 

The third level of appeal is called an administrative law judge (ALJ) hearing. The ALJ is appointed through the U.S. Department of Health and Human Services (HHS) and, as such, is an impartial adjudicator of the appealed claims. When the QIC reconsideration is unfavorable or the HOPD/QHP wishes to escalate the appeal because the reconsideration period decision deadline has passed, an ALJ hearing may be requested. An ALJ hearing request must be filed in writing. 

The ALJ’s office staff contacts the HOPD’s/QHP’s point person who signed the request for hearing and sets the method of hearing, the date, and the time. HOPDs/QHPs should be aware that the Centers for Medicare & Medicaid Services (CMS) or the MAC that handles the claim may decide to become a party to, or participate in, an ALJ hearing. If CMS or the MAC will be present at the ALJ hearing, the HOPD/QHP will be notified prior to the hearing date. If the HOPD/QHP learns that CMS or the MAC will participate in the ALJ hearing, it is advisable to seek legal counsel and possibly appoint a legal representative to assist with the hearing. When CMS or the MAC gets involved, the denial usually involves larger dollar amounts or possible fraud or suspected abuse. In these types of cases, HOPDs/QHPs need extra representation. Because this is a chance to get the claim paid (remember that 56 percent of Medicare claims get paid on appeal), I recommend the HOPD/QHP request the ALJ hearing not to be performed “on the record.” If HOPDs/QHPs choose an on-the-record hearing, they will not have an opportunity to discuss the reasons they believe the claim should have been paid. Whereas, if the HOPD/QHP requests an ALJ hearing by video teleconference, on the telephone, or in person, the HOPD/QHP has the best chance to explain the reason(s) the claim should be paid. If HOPDs/QHPs have additional information they want the ALJ to consider, they should send it to the appointed ALJ prior to the ALJ hearing. On the day of the ALJ hearing, the HOPD/QHP should be prepared with paper copies of the patient’s medical documentation, the applicable LCD, and any other clinical evidence that may help to prove medical necessity at the ALJ hearing. Because the ALJ will look to HOPDs/QHPs as the experts in their field, they should bring a clinical person with them to the hearing so that the clinical expert can clarify why the service/procedure/product was medically necessary. 

The fourth level of appeal is called Medicare Appeals Council review. If the ALJ hearing decision was not favorable or HOPDs/QHPs wish to escalate their appeals because the ALJ hearing ruling timeframe has passed, a Medicare Appeals Council review may be requested. Similar to the ALJ appeals, these appeals are administered through HHS. A request for a Medicare Appeals Council Review may be written or may be submitted on Form DAB-101. The link for the form can be found online at www.hhs.gov/dab/divisions/dab101.pdf. HOPDs/QHPs must send a copy of the Medicare Appeals Council review request to all parties involved in the claim dispute: the MAC, the QIC, and the ALJ. If the Medicare Appeals Council does not issue a decision within the applicable timeframe, it is appropriate to ask the council to escalate the case to the judicial review level.

The fifth and final level of appeal is called judicial review in U.S. District Court. The HOPD/QHP must request a judicial review within 60 days of receipt of the Medicare Appeals Council’s decision. The council’s decision will contain information on how to file a claim in district court. In 2015, there is a $1,460 threshold per claim dollar amount (or per dollar amount of a group of similar claims) that must be met to escalate an appeal to this level. Because the threshold amount increases slightly each year, HOPDs/QHPs should research the threshold minimum when deciding whether to undertake this final level of appeal. Of note, this appeal level is time consuming, can be costly due to legal representation costs, and, in most cases, is not frequently pursued.

KS: At what level of appeal should HOPDs/QHPs consider using a lawyer to assist with their appeals, and how is this done?

GM: When contemplating the use of legal representation, HOPDs/QHPs should consider the reasons for the denial, the dollar amounts involved with the denial, and the availability of in-house counsel.  Most HOPDs/QHPs decide to use legal representation when the denials involve either large dollar amounts or more technical denial reasons (eg, accusations of fraud or abuse).  If HOPDs/QHPs decide to use a lawyer at any point in the appeals process, they must submit the Appointment of Representative (Form CMS-1696) form along with the appeal request. The Appointment of Representative form is valid for one year. During this year, the legal representative may represent the HOPD/QHP in any subsequent appeal levels and for any appeals of other claims, unless the HOPD/QHP specifically withdraws the representative’s authority. This form can be found online at www.cms.gov/medicare/cms-forms/cms-forms/downloads/cms1696.pdf.

KS: Do you have any final tips for our readers who wish to file Medicare appeals?

GM: Sure, I have six filing tips for navigating the Medicare appeals process:

1. Be cognizant of the filing deadlines because the contractor or its agent will strictly adhere to the timely filing requirements. Be ready at each level to prove your request was filed before the deadline: Keep copies (in-house with the patient financial services team) of all the documents sent for each appeal, keep postal receipts, and keep written or electronic notes regarding the appeal process (eg, who you spoke to; how you reached the person; date, time, and outcome of the discussion).
2. Always include a copy of the previous level of appeal decision letter when escalating to the next level of appeal.
3. Always include a copy of any demand letters if appealing an overpayment.
4. If a lawyer or appeals expert is handling the appeal process for you, always include a copy of the Appointment of Representative form.
5. Respond promptly to the MAC or the appeal representative if documentation is requested.
6. Always sign and date your request for appeal and give the reviewer your contact information. 

Kathleen D. Schaum & Associates Inc., Lake Worth, FL; and director, medical products, reimbursement, biotherapeutics at Smith & Nephew.