Home Health News

It has just become far more likely that Medicare will take disputed money while healthcare providers pursue payment denial appeals instead of waiting to collect it until a decision has been reached at the end of the process. On September 16, 2009, CMS published a Final Rule implementing Section 935 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) that dramatically changes its previous working interpretation of the rule.

Section 935 deals with limitations on the federal agency’s recoupment of overpayments during the Medicare appeals process. The final rule substantially changes the way in which CMS had previously interpreted the intent of Congress, empowering Medicare to recoup payments up front instead of after a final determination has been issued. Implications for many agencies will be profound.

As we have explained in this column in the past (see “Payment Denials and the Appeals Process: A Pre-RAC Primer“),  appealing a Medicare denial is a 5-step process. The first two steps, “redetermination” and “reconsideration,” are the responsibility of your Regional Home Health Intermediary and its close associate the “Qualified Independent Contractor (QIC).”

When you receive notice of a payment denial, you have 120 days to request a redetermination.  When the RHHI returns its answer, reconfirming the original decision 99.9% of the time, you have 180 days to file a reconsideration request, which is typically accompanied by supporting documentation from the patient chart. Reconsiderations are handled by the QIC, which almost always confirms the denial, though using new reasons, often unrelated to the ones your RHHI gave you for denying payment.

After the QIC confirms the denial, you have another 180 days to submit an appeal to the Administrative Law Judge (ALJ). More often than not, denials are overturned by the judge. On occasion, judges have been known to conclude their decisions with harsh words for QICs and RHHIs for either pursuing frivolous cases or for misunderstanding Medicare rules entirely.

Odd journey from Congress to final rule
Before the MMA became law in 2003, CMS and its contractors were allowed to take and keep payments it suspected of being overpayments at the beginning of the process. Section 935 of the MMA prohibits the recoupment of an overpayment if a provider requests a redetermination or reconsideration of an overpayment determination within their respective time limits, until a decision on the redetermination or reconsideration request is rendered. New protections under Section 935 provided incentives for agencies to file redetermination and reconsideration requests at the last minute in order to retain control of the monies in question until the entire process had played out, sometimes after a year or more.

CMS implemented Section 935 by publishing a Proposed Rule on September 22, 2006, followed by various explanatory program instructions. Practice followed the clear wording found in the MMA and in those CMS documents, such as:

• “Medicare contractors shall cease recoupment or not begin recoupment at the normally scheduled time when a valid first level appeal (redetermination) or a valid second level (reconsideration) is received from providers, physicians, and suppliers on an overpayment subject to these limitations. During this appeal process, the Medicare contractor cannot recoup or demand the debt; however, the debt continues to age.”
• “In the case of a provider of services or supplier that is determined to have received an overpayment…that seeks a reconsideration by a qualified independent contractor on such determination…, the Secretary may not take any action (or authorize any other person, including any medicare contractor,…) to recoup the overpayment until the date the decision on the reconsideration has been rendered…” (emphasis added)
• In addition, House Report 108-391 of the MMA states that, “The Secretary is prohibited from recouping any overpayments until a reconsideration-level appeal (or a redetermination by the fiscal intermediary or carrier if the QICs are not yet in place) was decided, if a reconsideration was requested…”

Medicare regulations at 42 C.F.R. 405.370 define the term “recoupment” as the recovery by Medicare of any outstanding Medicare debt by reducing present or future Medicare payments and applying the amount withheld to the indebtedness.

A program instruction known as CMS Transmittal 141 provides for recoupment to begin on the 41st day from the date of the first overpayment demand letter if a valid redetermination request is not received within 30 days of the date of the demand letter. It also dictates that recoupment will begin no earlier than the 61st day (and no later than the 76th day) from the date of a redetermination notice unless a valid reconsideration request is received within 60 days of the date of a subsequent demand letter. It also says recoupment must cease if and when a timely, valid redetermination or reconsideration request is received, though amounts already recouped do not have to be returned.

This new policy raises questions. If Section 935 allows 120 days to request a redetermination, does Transmittal 141 violate that rule — and Congressional intent — by permitting recoupment to begin on day 41?  If Section 935 allows 180 days to file a reconsideration request, does Transmittal commit the same offenses by permitting recoupment to begin on day 61? Effectively, Transmittal 141 shortens the previously allotted times to submit appeals without bothering with the messy business of Congressional debates and votes and Presidential signatures.

In the Final Rule issued last month, CMS incorporates the provisions of Transmittal 141 into its reinterpretation of Section 935 of the MMA. It does offer its own rationale for the reinterpretation, found in its responses to public comment. It states that its responsibility to collect Medicare debt is important enough that it does not need to wait until a court determines whether the funds are justifiably owed back to the government or not.

“Response:…The statute is clear that recoupment is either stopped, or may not begin, when a valid request for a reconsideration is filed. However, the statute is silent with regard to actions CMS may take after an initial demand is issued and before a request for reconsideration is filed.  CMS has a fiduciary responsibility to timely and aggressively collect Medicare debt…Using our discretionary rulemaking authority, CMS is also limiting recoupment when the provider requests a redetermination…” (emphasis added)

“In both cases, the provider or supplier must take some decided affirmative action, (that is, requesting a redetermination or reconsideration). Moreover, to wait until the expiration of the appeals filing periods would adversely impact providers and suppliers who do not wish to appeal, because they would be subject to several months of interest. To avoid this, these providers and suppliers would have to take some affirmative action to indicate that they do not want to appeal which unfairly places a burden on these providers and suppliers who want to pay their overpayments and do not want to appeal.”

Self absolution
Lastly, in its explanation of why it altered the original meaning of MMA and Section 935, CMS declares itself to be in compliance with the rule it just changed:

Therefore, CMS has determined that the timeframes established for recoupment are both reasonable for allowing providers sufficient time to initiate a timely appeal and are also consistent with our fiduciary responsibility for collecting Medicare debt. CMS is in compliance with the statute…”