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CMS Update Indicates High Provider Success Rate for Appealing Denials

James Carroll, for HealthLeaders Media, June 25, 2010

It pays to appeal. A recently released CMS report indicates that providers have been winning more appeals since the last update.

The June 14 report updates information from its January 2009 report, which included data through of March 27, 2008. The new report, titled "The Medicare RAC Program: Update to the evaluation of the three-year demonstration," contains statistics through March 9, 2010, and reveals that the number of appeals claims dropped significantly from the 118,051 reported in January, to the 76,073 in the new data. This came as a result of claims no longer being counted individually at each level of appeal, but rather being counted only once if appealed to any level.

Additionally, CMS removed claims from the appealed category if the denial was reversed by the claims contractor when additional documentation was submitted by the provider. However, since the claims contractor decides the first level of RAC appeals, it is unclear why these are not considered appeals, according to Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc. Hoy says each one of these claims would have been considered an overturned determination and would have shown that providers were even more successful than they were in appealing denials.

"It would be interesting to see how much higher the overturned percentage would be if these cases were included," she says. "Already, the stats show RACs were overturned in about two-thirds of appealed cases."

In addition, CMS increased the number of overall RAC determinations by 73,000 claims. The effect of including more claims in the determinations number caused the overall percentage of overturned cases to appear lower than it otherwise would have been, according to Hoy.

"The new report shows a much lower number of appealed claims from 22.5% to 12.5%," she says. "By excluding claims that were overturned by the contractor, this number shows a more favorable picture of the overall accuracy of the RAC than previous reports demonstrated."

The updated statistics indicate that providers are winning a higher percentage of appeals than had been suggested by previous reports (all RACs had a 64.4% favorable result for providers in the new report compared to 34% in the prior) according to Michael Taylor, MD, senior medical director, government appeals and regulatory affairs at Executive Health Resources in Newtown Square, PA.

"Judging by the dramatically increased percentage of decisions in favor of the provider, I would infer that appellants are experiencing a much higher level of success at the more advanced levels of appeal, such as hearings before the administrative law judges (ALJs)," Taylor said.

Taylor continued, "Of the thousands of medical necessity overpayment determinations we've helped hospitals appeal from the RAC demonstration, we've seen greatest overturn success at the ALJ level of appeal. However, many hospitals appealing denials on their own will often become discouraged after failing to overturn an appeal during the first two levels, and will abandon the appeals process prior to the ALJ level."

In light of these numbers indicating high rates of success, providers should be more proactive in their appeals going forward, Taylor continued.

"These new numbers suggest that providers should feel confident in using the Medicare appeals process to reverse RAC medical necessity determinations when the provider believes that the RAC's decision is not consistent with the regulatory authority or with CMS guidance," explained Taylor. "These numbers support our experience that providers often receive a more thorough and well-reasoned review at the higher levels of the Medicare appeals process."


James Carroll is associate editor for the HCPro Revenue Cycle Institute.

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