Appealing a CMS Claim Denial

Appeals are an unfortunate but necessary stage in the claims submission process. Therefore, it’s vital to understand the basics.

After earning your healthcare license, you might have assumed that the most significant challenges you’d face would involve treating a complex patient condition. In reality, ensuring you receive payment for that treatment can be equally challenging.

Whether you’re a hospital employee or practice independently, it’s vital to understand how to appeal a claim denial by a third-party payor. Such an appeal may help you recapture funds and mitigate legal exposure. Moreover, it can also bring you a sense that your position was heard and understood by a neutral third party.

Why Appeal a Claim Denial?

When a third party denies your claim, it’s usually in your best interest to defend it as properly payable. If you don’t appeal a claim denial, the payor may recoup those payments. Declining to challenge a claim denial, while not an admission of guilt, conveys that your practice or hospital accepts the denial as warranted.

Public funds account for a sizeable share of American healthcare spending.  Therefore, many providers will face denials of Medicare claims. Ultimately, appeals are an unfortunate but necessary stage in the claims submission process.

In an April 2022 report, the Office of the Inspector General raised concerns that improper claim denials by the Medicare program limit beneficiaries’ access to medically necessary care. Improper denials also burden providers.  By exercising your rights to appeal a denial, you promote predictability in the healthcare system for your practice and patients.

On the other hand, If you have a reason to believe you received an overpayment, promptly report it to the Medicare Administrative Contractor in your jurisdiction. Failing to report an overpayment runs the possible risk of exposure to a federal audit, monetary penalties, and even criminal liability.

The Basis For Claims Denials

Like any commercial insurance contract, public funds come with conditions that determine whether payment is justified. Conditions range from general (e.g., is that service medically necessary?) to very specific (e.g., was the treatment to address a systemic condition or an isolated illness unrelated to any underlying condition?). Following the requirements set by the Medicare program — such as giving Medicare beneficiaries an ABN before treatment — can determine whether you recover payments or find yourself on the hook for them.

Each time you submit a claim to the Medicare program, you are making representations about the services rendered. These representations can include your specific assessment of the patient’s overall health, conclusions about the patient’s presenting condition(s), and whether the presenting conditions qualify as routine or non-routine. When the Centers for Medicare and Medicaid Services (CMS) denies a claim, it disagrees with the conclusions based on your representations. 

Often, CMS will deny a claim because documentation was insufficient to support the code billed, the service was not reasonable or medically necessary, or the service was a non-covered service under the Medicare program.  By appealing a CMS claim denial, you assert that the basis for the denial is improper and reiterate why the service is reimbursable for the beneficiary treated.

Many of your representations involve calculations that happen at lightning speed in the treatment room and evolve over the course of the relationship with a patient. Therefore, recording your decision-making in the patient’s medical chart is crucial. An appeal could involve claims for patients you treated months or years ago. Keeping precise records of your decisions in real-time will lay the foundation for robust appeals in the future.

Stages of the Appeals Process

The parties to an appeal are the provider and CMS or one of its contractors, such as a Medicare Administrative Contractor (MAC) or Qualified Independent Contractor (QIC). 

(To learn more about the function of MACs and QICs, read the related article “My DME Company Received a Letter From a UPIC. What Should I Do?)

A provider can appeal for a claim denial up to five times by submitting a written letter. The first appeal will be to the MAC for it to redetermine its conclusions. If the provider receives an unfavorable ruling, the provider is entitled to review by a QIC. If the first two stages are unsuccessful, the third level of an appeal reaches an administrative law judge (ALJ) for CMS. The decision at the fourth stage involves review by the Medicare Appeals Council. After that, the provider can bring the dispute into the judicial realm for a hearing in a federal district court.

With every review, the arbiter can give varying degrees of weight to decisions reached in prior levels of review. However, at some levels (such as with an ALJ or Medicare Appeals Council), the arbiter must complete a de novo review of the materials. De novo is Latin for “from the new.” This means that the arbiter may reach a decision without being bound to any legal conclusion or assumption made by a previous arbiter. Thus, even if you receive a favorable ruling in an earlier phase, the ALJ could overturn the ruling depending on the facts and arguments presented and the ALJ’s analysis of the case.

Get Support

Providers often ask if they need a claims expert to analyze their claims before initiating an appeal. Typically, this isn’t necessary. A healthcare attorney, armed with supporting documentation and the provider’s explanation of their medical reasoning, can help defend a claim as properly payable.

An experienced healthcare law firm such as Jackson LLP can help you formulate your appeal and adhere to the strict deadlines for each level (or seek extensions, called “continuances,” as needed). If you operate in a state where we have licensed attorneys, reach out to us to schedule a consultation to learn more.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.