The HHS Office of Inspector General earlier this month released a report which studied the shockingly high overturn rate of provider generated appeals to private contract auditors employed by CMS to the Administrative Law Judge level. The OIG found that 56% of the appealed cases for all medical providers, including part A and B providers, that made it to the ALJ level were overturned in FY 2010. A key caveat to the 56% statistic, the report did not make this distinction, but the ALJ overturn rate for just Part B orthotics and prosthetics is considerably higher than 56%.
HHS OIG discovered a considerable difference in how Qualified Independent Contractors (QIC) decided cases prior to the appeal getting to the ALJ level. ALJs differed from QICs in their interpretation of Medicare policies, their degree of specialization and their use of clinical experts, OIG found. Among other actions, the report recommends that Centers for Medicare & Medicaid Services provide coordinated training on Medicare policies to ALJs and QICs who decide appeals; identify and clarify Medicare policies that are unclear and interpreted differently; and revise regulations to provide more guidance to ALJs regarding the acceptance of new evidence.
OIG also recommended a quality assurance process to review ALJ decisions, and determine whether specialization among ALJs would improve consistency and efficiency. Lastly, the report recommends that CMS increase its participation in ALJ appeals. When CMS did participate, ALJs were less likely to decide fully in favor of the provider.
Now, more than ever, we need to press CMS on how they view the clinical nature of orthotists and prosthetists. Depending on how CMS interprets this latest OIG report, many of the recommendations could be a positive step for O&P. At the very least, a more watchful eye over audit contractors hired by CMS would be a step in the right direction.
However CMS could also make things worse for Part B providers depending on their interpretation of the OIG recommendations. For example, revised regulations on the inclusion of new evidence at the ALJ level would be positive if they rule for the inclusion of more new evidence not considered by QIC, but the inclusion of new evidence at the ALJ level is the reason so many of the Part B claims involving orthotics and prosthetics are being overturned. A ruling to limit the inclusion of new evidence at ALJ level would be extremely detrimental to O&P.