OIG Reports on The First Level of the Medicare Appeals Process

by King & Spalding
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The HHS Office of Inspector General (OIG) recently published the results of a study regarding the first level of the Medicare Parts A and B appeals process, or redeterminations, for years 2008 through 2012.  The report addresses volume, outcomes and timeliness of redeterminations. 

In 2012, contractors processed 2.9 million redeterminations involving 3.7 million claims, which represented an increase of 33 percent since 2008. (Because redeterminations may involve multiple claims and service types, the number of redeterminations is smaller than the number of claims.)  This 33-percent increase in Medicare redeterminations between 2008 and 2012 far exceeded the three-percent increase in the total number of Medicare claims processed.  The number of claims involved in redeterminations in 2012 were only 2.6 percent of denied claims and only 0.3 percent of the 1.2 billion claims processed in that year.  (Redeterminations processed in a given year may involve claims from prior years.)

Although 80 percent of all redeterminations in 2012 involved Part B claims, redeterminations of Part A services have increased at a more rapid rate.  In 2012, redeterminations of Part A services amounted to fewer than 600,000, in comparison to 2.3 million redeterminations for Part B claims.  However, from 2008 to 2012, Part A redetermination requests increased by 136 percent, contrasted with a 20-percent increase for Part B.

Appeals of inpatient hospital claims, which are the most commonly appealed Part A services, primarily drove the large increase in Part A redeterminations.  Appeals for Part A home health claims also grew dramatically, by 700 percent between 2008 and 2012.  The growth of appeals involving the Recovery Audit Contractor (RAC) program, which CMS fully implemented in 2009, resulted in increased appeals of Part A RAC claims, which increasingly were decided unfavorably to appellants.

The study also examined redetermination outcomes.  From 2008 to 2012, the rate of fully or partially favorable decisions of Part A appeals decreased significantly from 50 percent to 24 percent.  Outcomes of Part A redeterminations varied across types of claims appealed.  In 2012, only four percent of redeterminations for home health claims, and 10 percent of redeterminations for inpatient hospital claims, were fully or partially favorable to appellants, compared to 54 percent of redeterminations for claims for outpatient hospital services. 

From 2008 to 2012, the rate of fully or partially favorable decisions of Part B appeals decreased from 65 percent to 51 percent.  Physician claims, which represent the largest volume of Part B appeals, maintained steady favorable rates during the period, but the percentage of appealed durable medical equipment claims decided in favor of appellants dropped from 51 percent in 2008 to 38 percent in 2012.

The study revealed that contractors largely met required timeframes for processing redeterminations, although the median timely completion rate for Part A redeterminations decreased from 98 percent in 2008 to 89 percent in 2012.  Contractors cited the increased demand on medical review staff and fluctuating workloads as contributing to their difficulty in meeting processing deadlines.  Contractors’ annual median timely completion rate for Part B redeterminations was 99 percent in 2008 and 100 percent from 2009 to 2012.

OIG recommended, among other things, that CMS continue to foster information sharing regarding best practices for redetermination processing among contractors and that CMS continue to monitor contractor performance.

To read the entire report, click here.

Reporter, Lauren Slive, Atlanta, + 1 404 572 3592, lslive@kslaw.com.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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