Guest Column: Medicare appeal process is untapped opportunity

There’s a good chance to overturn, expert says

By Linda Fotheringill
Siegel & Fotheringill, LLC

When a Medicare intermediary or a carrier denies payment for a claim, a provider may appeal the denial. The chance of overturning a wrongful denial in the appeal process is high, yet providers are apparently not taking advantage of the appeal process.

How do I know this? The Office of the Inspector General (OIG) issued a report on Medicare administrative appeals in September 1999 for purposes of evaluating the administrative law judge (ALJ) appeal process for Medicare Part A and Part B fee-for-service claims. The report indicated that of the 142,086,669 claims processed in 1996, 13,547,514 were denied. Only 60,680 reconsiderations were sought by providers for these denied claims, and fewer than 0.1%, or 12,155 claims, went on to be appealed at an ALJ hearing.

According to the OIG report, the rate of reversal during the appeal process in the mid-1990s was high enough to cause concern for Centers for Medicare & Medicaid (CMS) and its contractors. Amazingly, at least from my perspective, the OIG appeared to conclude that the high rate of reversal was due to providers taking unfair advantage of the carriers in a system that is weighted in favor of the providers. For instance, the report stated: "According to [CMS] representatives, the high rate of reversal may provide an incentive for uninformed or abusive providers to submit claims for services and items that are not covered."

The report went on to say that "contractor staff are increasingly demoralized by a high incidence of ALJ reversals. Contractors report seeing providers who have been in the Medicare program for years use the administrative appeals process to beat the system’ and obtain payment for services and supplies which are not payable under contractor guidelines."

From my perspective as an attorney who represents providers in the Medicare appeals process, the most plausible explanation for the high rate of reversal at the ALJ hearing level is the fact that the contractor/intermediary improperly denied the claim in the first place. Nevertheless, this is not even suggested by the OIG as an explanation for its high rate of reversal.

If you find that your hospital is receiving inappropriate denials from your Medicare intermediary, I suggest that you appeal those denials for two reasons. First, your voice should be heard by Medicare. Second, you stand a good chance of getting an inappropriate denial overturned if you implement the process.

The rules for Medicare appeals currently are found in Chapter 42 in the Code of Federal Regulations, Part 405.701 through 405.753 for Part A appeals, and Part 405.801 through 405.877 for Part B appeals. However, the recently enacted Medicare, Medicaid, and SCHIP Benefit Improvement and Protection Act of 2000 (BIPA) significantly revises the Medicare appeals process.

The new appeals process set forth in BIPA provides the same rules for Part A and Part B appeals, eliminating the current distinctions between the two. Section 521 of BIPA establishes a uniform process for handling all Medicare Part A and Part B appeals and specifies time frames for filing appeals and rendering decisions. Significantly, BIPA mandates that at least 12 qualified independent contractors (QICs) conduct reconsiderations. The QIC promptly would notify beneficiaries and Medicare claims processing contractors of its determinations. A beneficiary could appeal the decision of a QIC to an ALJ. In cases where the ALJ decision is not rendered within the 90-day deadline, the appealing party would be able to request a Departmental Appeals Board hearing.

Although BIPA takes effect Oct. 1, 2002, Congress has not appropriated the necessary funds to implement the program. QICs do not currently exist. I have been informed by Medicare’s Division of Hearings, Appeals, and Dispute Resolution that providers should watch the Federal Register for instructions as to how to proceed in the appeals process beginning Oct. 1, 2002.

It is not necessary to be an attorney to pursue the appeals process or to participate in an ALJ hearing. However, it is recommended that you retain an attorney for this purpose, as it should increase your chance for success. A provider should be able to locate competent counsel who will be willing to handle Medicare appeals on a contingency-fee basis.

[Editor’s note: Linda Fotheringill is a partner in Siegel & Fotheringill, a law firm that specializes in using contract law to help hospitals get paid, and a founder of the Denial Management Institute. She can be reached at The Susquehanna Building, 29 W. Susquehanna Ave., Baltimore, MD 21204. Telephone: (410) 821-5292 or (800) 847-8083. E-mail: In next month’s issue of Hospital Access Management, Fotheringill will provide a step-by-step description of the Medicare appeals process and the crucial time frames involved.]