Category Archives: Medicare Appeal

RAC Bullying of Physical Therapy


RAC Bullying of small health care providers is an epidemic.

A line of crumpled elderly patients hobble into the office.  Some are permanently bent over, supported by a walking cane.  Others walk unsteadily, wobbling back and forth. They are of all ages, but mostly old. Lines criss-crossing their faces betray constant joint and muscle pain. For some it is the shoulder, for others the neck, or the hips, or chest, or knees, or lower back. All are patients of Dr. Nguyen.

The work is boring and repetitive, but Dr. Nguyen is cheerful, and listens to each patient as they express the frustrations with the fall season of their lives.

Parked out back is her 2007 Honda Civic. She purchased it used.  A few dents, and duck tape covering a few holes in the seats, but it works. The office is drab, but spotlessly clean. Being a doctor is not making her rich.

RAC-BULLYINGFigure 1 – Examples of RAC Bullying Tactics

On the wall, a small black and white photo taken from the time when she was trapped in an internment camp in Thailand. It seems like ages ago, but also like yesterday. This is what her life was like before coming to the United States, learning English, then working her way through medical school while serving Pho at a Vietnamese restaurant, scrubbing the floors at night, cleaning the grease traps and helping the owner with other matters.

For each of her patients, the procedure is the same.  First, a conversation to record the patient’s history. Then a diagnosis followed by treatment. The doctor either performs manipulation of the tissue or if the pain is severe, she will relax the muscles with an injection.  Apart from extraordinary knowledge of anatomy and an appreciation of true pain, for her the practice is not complicated. There are only three Medicare codes in her billing.

I am visiting because of a RAC audit.  She explained the situation. The RAC had demanded a number of records, then wrote back denying almost 100% of the claims.

A hastily assembled extrapolation jacked-up the claw-back value. The money was due, pending appeal, and the doctor was very concerned about the interest that was being accumulated.

At the first level appeal, Dr. Nguyen had carefully written back to the RAC.  Everything had been explained and documented in detail. LCDs were quoted, specific errors in the RAC’s analysis were pointed out, and reference was made to the voluminous documentation that had been submitted. The doctor had experienced a fleeting sense that since everything had been clearly explained, the RAC would see what should at first have seen, and then things would be ok.

But the RAC had merely mailed back a form letter rejecting outright her first level appeal. The RAC was in no mood to reverse its own judgment. They rarely are. In contrast to the detail and specificity provided in the doctor’s first level appeal, the RAC letter was 99% boiler-plate, repeating platitudes about billing and responsibility. There was no analysis at all. Only cut-and-paste of off-the-shelf language of a general nature explaining the policies. There was no discussion of specifics. The wait was difficult, but the first level decision was discouraging.

Now it was time to make the second level appeal to the QIC. Even after being warned that the QICs usually are little more than a rubber stamp, she wanted to make every good effort to submit an even better appeal to this next level.

“I’m not worried.  Once we explain everything, it will be OK.
America is a fair place,” said she.

The QIC appeal document was a masterpiece. The doctor hired at attorney who instructed her to start with the rules and then show how the elements of each rule were satisfied in her documentation. She worked closely with the attorney. In order to save money, she made a deal to do most of the work with the attorney only directing what needed to be done.

The appeal was impressive. It started with each Local Coverage Determination (LCD) applicable to the appeal. For each LCD, she listed out the specific elements that must be present in order for a claim to be compliant. There are two types of elements: mandatory and advisory. Both types of elements were specified for each relevant LCD. In some cases, scientific articles were quoted to provide additional insight, and also a few notations from the Federal Register to supplement the record and clarify the applicable rules.

Then for each denied claim, the doctor showed with specificity exactly how the required elements were met, and pinpoint referenced where the information was located in the claim documents already filed with the RAC. Every single element was justified, and every single element was documented. The doctor was able to show also that even for those elements that were advisory and not mandatory, the bulk of those elements were met also.

Not only was the pinpoint reference made, but the actual information from the claim was quoted, so the RAC did not even need to look it up.

It had become clear that the RAC had made numerous mistake when it rejected so many claims. In some cases, it had mis-interpreted the LCDs; in others, it had simply not bothered to read through the documentation. But the RAC did more than that. It fabricated rules where none exist. It did this by taking many of the advisory elements and claiming that they were mandatory.

When Dr. Nguyen mailed the QIC submission, it was more than 1,300 pages. She took the large bundle down to the Sutter Street Post Office herself, a package almost as big as she.

Again, the doctor allowed herself to feel relieved. The second level appeal to the QIC was comprehensive, detailed, and able to match each element documented to specific requirements of the LCDs. She could not imagine that the result would be anything else but complete reversal of the denials. Nothing could be so clear.

But also nothing could be so straight. After the statutory time, the response from the QIC came back. The excitement felt upon opening the letter quickly faded. Like the RAC letter, the QIC response was mostly boiler plate. And like usual, the QIC rubber-stamped the RAC.

The QIC work was disturbing, and there were a number of anomalies. From the claim-by-claim spreadsheet supplied by the QIC, it was obvious that some denials were never even considered.

RAC demands treatment without diagnosis

One problem in the audit involved claims what included an evaluation component. It is standard for any doctor to examine patient before making a diagnosis. But when a patient came back for an entirely different problem, the RAC had rejected the need for an evaluation. They claimed the next visit was a “follow up” visit, and if a visit is a follow-up, then there can be no evaluation.

The problem is that each visit was to address pain in a different part of the body, and of course this was clearly documented, because each part of the body has a different diagnostic code. The doctor explained: “You will note that each evaluation was for a completely different condition,” she said, “We have a policy never to schedule follow-up treatments.”

It is important to understand the implications of the RAC’s decision. It means, in effect, that doctors are required to engage in prescribing treatment without having made an evaluation of the problem. Treatment without a diagnosis would be a classic case of malpractice, but that is what the RAC is demanding.

Arbitrary Time Cuts

Another policy of the RAC was to arbitrarily shorten all patient encounters to 15 minutes instead of the 45 minutes that were consumed. Every single patient encounter was documented completely with begin times and end times, and it is easy to see from the doctor’s calendar that she never engaged in the crooked practice of billing for large numbers of patients that would be impossible to service in the day. But in spite of all the documentation, and for no reason whatsoever, the RAC just said it would pay for 15 minutes, but not for the actual amount of time consumed, 45 minutes.

There is no justification for the RAC cutting back the time like this, and the RAC didn’t provide any justification, it just did it.

Re-writing the LCDs

The RAC also changed the LCD rules by making optional elements required. And the irony in all of this was that even in those cases where optional elements had been made mandatory, still the doctor had met those elements as well in her documentation. Yet still the claims were denied.

So first the RAC made some optional elements mandatory, and when the doctor met even those elements, still the RAC denied the claims. What is going on?

The bottom line is that there was simply nothing wrong with the doctor’s claims. Nothing.

As the doctor started to prepare the documentation to the third level appeal to the Administrative Law Judge (ALJ), a FedEx package arrived. It was from the RAC. The doctor was notified that she was being put on pre-payment review. Note that this is before any resolution of her outstanding case. Again, the RAC just decided to do it. It was a shock out of the blue.

The doctor’s cash has started to run short. In the last meeting, we discussed her future. The doctor looked off into the distance to a place known only to her. “I went into medicine to help people. Perhaps I’ll drop out of this and just go to an all-cash system.”

Something needs to be done to regulate the activities of the RACs or develop an entirely new approach to auditing.

Hospitals Face Medicare Appeal Backlog Crisis

Part II — Attorney Adjudicators (AAs) Proposed to Help Administrative Law Judges (ALJs) handle Medicare Appeal Backlog Crisis

The backlog in appeals is so long that for all practical purposes the entire system has come to a halt. It has crashed. In Part I of this series we examined a few statistics behind the backlog. We noted that much of the appeals backlog can be explained by the astounding number of errors made by the audit contractors. In Part II we will examine the proposal to add a new role for Attorney Adjudicators (AAs) who can take over part of the Administrative Law Judge’s (ALJ) work during the appeals process. In Part III we will examine the proposal for bulk settlements based on a simple percentage of claims, but with no review of the claims themselves — the “Eighty Percent Rule”. In Part IV we will examine financial strategies being used by Hospitals to handle the massive impounding of their claim payments.

CMS recently published in the Federal Register(*) a proposal to relieve the burden on ALJs by adding a new class of persons to be called Attorney Adjudicators (AAs). As reviewed previously, the number of pending appeals now is more than 1,100,000 cases, and there are only 77 Administrative Law Judges. From 2009 until 2014, the number of requests for an ALJ hearing went up 1,222 percent! In 2014, each ALJ issued 1,048 decisions and 456 dismissals. There is a capacity for around 77,000 appeals per year, and that is expected to go up to 92,000 appeals per year by the end of 2016.  Still it is not enough. It does not take much math to realize there is a crisis.

OMHA has three strategies to address this backlog. First, try to get a larger budget; Second, “take administrative actions to reduce the number of pending appeals” (but we don’t know what these actions will be); Third, hire more adjudicators and “streamline” the appeals process.

Attorney Adjudicators

Another part of the proposed solution will involve Attorney Adjudicators. It is noted that “well-trained attorneys” should be able to do a number of things that today are done by the ALJ.  These include (1) performing reviews of the administrative record; or (2) drafting the appropriate orders.  Examples of orders that might be drafted by the AAs include (a) issuance of dismissals, (b) remanding appeals in order to obtain additional information needed for a decision, or (c) carrying out reviews of QIC dismissals.

The Attorney Adjudicator is defined as someone who is a licensed attorney “employed by OMHA having knowledge of Medicare coverage and payment laws and guidelines”.

Consideration also is being given to allowing AAs to decide cases that are submitted without a request for an oral hearing. This would allow the AAs instead of ALJs to issue decisions when it is not required that an ALJ conduct an oral hearing.

An AA decision would have the same authority as one issued by an ALJ. For example, it would be possible to reopen or appeal AA decisions, just as if they were issued by an ALJ. The time frames involved, escalation options or rights of appeal to the Medicare Appeals Council would remain the same. By the way, from no on, the Medicare Appeals Council is to be referred to only as “The Council”.

The proposal also includes a pathway for the AA to pass along a case to an ALJ.  Example: The parties have agreed to waive their right to an oral hearing. The AA reviews the case and concludes that an oral hearing may be needed in order to clarify some crucial issue in the case. The AA then can refer the matter to an ALJ asking them to determine if an oral hearing should be ordered.

In sum, the Attorney Adjudicator proposal takes several important parts of the appeals work that today is done through the ALJ and hands it over to non-judges who have authority to make a narrow range of decisions. Not much is known about whether or not any aspect of the appeals process as seen from the outside will change significantly.  We must assume that appeals would be submitted the same way, and under the same set of statutory guidelines for timing that now are impossible to fulfill.

In addition, it is not clear why the proposal is not simply to hire more ALJs instead of creating an even more complex process. It may be a case of simply hiring judge-like people on the cheap, or “outsourcing” part of the work of the ALJs so that they can focus more on complex matters.

The comment period for this change has recently expired, so we are waiting to see the outcome. Apparently several important provider associations opposed creation of Attorney Adjudicators.

In Part III we will examine the proposed “80% rule”, and in Part IV we will look at emerging financial bridge strategies being used by hospitals.

(*) See Federal Register 81(128):43790, July 5, 2016. See also comments by the American Bar Association here.

This was previously published in RACmonitor.