Five Provider Options for Medicare and Medicaid Appeals and Audits

By guest blogger Libby Burke


It’s no secret that audits by Medicare and Medicaid contractors are on the rise and at an increasing rate. What started as a “demonstration” by the Federal government has evolved into a very costly and confusing program that continues to burden health care provider resources.

Health care providers generally respond to Medicare audits in five primary ways:

  1. Utilizing internal clinical staff
  2. Utilizing in-house attorneys
  3. Outsourcing to clinicians
  4. Outsourcing to law firms
  5. Outsourcing to a legal services provider (newest option)

Let’s dig a little deeper into these five options:

  1. Utilizing internal clinical staff:  At first glance, this model appears to have the benefit of minimizing the costs associated with Medicare and Medicaid appeals because the provider is using resources it is already paying for to pursue these appeals. But, the reality is that many clinicians are reluctant to testify at hearings before Administrative Law Judges (ALJs), particularly where the opposition is represented by an attorney, without representation. Their reluctance is well founded – if the contractor appears as a party then the clinician may be subject to cross-examination by the contractor’s attorney.  What’s more, the clinician lacks the training necessary to object appropriately, or effectively cross-examine the contractor’s witness.
  2. Utilizing in-house attorneys:  Like using internal clinical staff, this model appears to be cost-effective and without the potential challenge of subjecting a clinician to cross-examination without representation. Additionally, many providers have yet to experience high volumes of appeals at the ALJ level, and therefore it may appear manageable to just loop in an in-house attorney for the ALJ hearing. However, because the rate of denials is substantial, when those appeals reach the ALJ level it is no longer feasible for already over-worked in-house attorneys to attend these ALJ hearings. Also, in-house attorneys are best employed handling the most sophisticated legal work that would otherwise cost the company thousands of dollars to outsource, not repeatable, high-volume administrative appeals.
  3. Outsourcing to clinicians:  Like internal clinical staff, outsourced clinicians are not trained advocates, and therefore are not able to appropriately object to improper testimony or cross-examination by the contractor, or to cross-examine the contractor’s witness. While it is true that attorneys are not “required” for an ALJ hearing, it is important to recognize that Administrative Law Judges are attorneys, not clinicians, by training. And, they are permitted to question witnesses as they deem appropriate. Thus, even if the opposing contractor’s attorney does not appear and offer testimony or cross-examination, the ALJ may question the witness. Having an attorney advocate to prepare the witness for that questioning, and to rehabilitate the witness following any adverse questioning, is invaluable. 
  4. Outsourcing to a law firm:  Like in-house attorneys, law firm attorneys are able to effectively cross-examine and advocate to attorney decision makers (ALJs). However, as many providers have learned already, outsourcing a claim worth only a few thousand dollars to a law firm that bills at a minimum $200 per hour simply is not cost-effective. By the time an attorney has prepared the case for argument before the ALJ, the provider has paid the law firm as much as the claim was worth. 
  5. Outsourcing to a legal service provider (like Counsel On Call):  In light of the shortcomings of each of the four above approaches, leaders in the health care field are increasingly taking a fifth approach – outsourcing to a legal services provider.  Through this option the provider works with contract-based attorneys who have targeted Medicare/Medicaid appeals experience to provide a comprehensive approach to Medicare and Medicaid appeals at Levels III and IV. The attorneys handle appeals for multiple providers, which enables them to disseminate information among their team as quickly as possible, and to implement “best practices” for addressing the ever changing landscape of Medicare and Medicaid appeals. In addition, these attorneys work with on-site clinicians (typically case managers) to develop the case and prepare the clinicians for their testimony, which creates real-time feedback for a provider’s clinical staff. This serves as a valuable training tool for proper front-end documentation. Moreover, on-site clinicians make more credible witnesses than “hired gun” experts who are brought into the case for the sole purpose of offering testimony. And perhaps most importantly, the outsourcing approach typically costs one-third of what a law firm would charge and in many cases is less expensive than outsourcing to clinicians.

Medicare and Medicaid audits are here to stay. Understanding the options for responding and the costs associated with these audits, and developing a cohesive strategy for handling them at Level III – where your chances are the greatest at prevailing – and Level IV appeals is going to be critical for the future of health care facilities.


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