Opportunities for JDs and EJDs in Administrative Litigation: Medicare Appeals

August 7, 2017 | Purdue Global Law School

Due to the aging up of the baby boomer generation, Medicare appeals are an increasingly common area of administrative litigation in which both JD and EJD graduates may be eligible to practice. (For an introduction to the opportunities in administrative litigation for lawyers and non-lawyers, see the post "Opportunities for JDs and EJDs in Administrative Litigation: An Overview."

A Brief Medicare Primer

Medicare is the federal government's health insurance program for people age 65+, as well as certain disabled individuals under age 65 and anyone with end-stage renal disease (kidney failure in people who need dialysis or a kidney transplant). It consists of four major components:

Part A-Hospital Insurance, funded largely through payroll tax contributions. Part A covers inpatient care in hospitals and nursing facilities (except custodial or long-term care), as well as hospice and some home health care.

Part B-Medical Insurance, for which most recipients pay a monthly premium. Part B covers doctor visits and outpatient care, plus certain medical services not covered by Part A, e.g., physical and occupational therapy and some home health care expenses.

Part C-Medicare Advantage Plans. A beneficiary must have both Part A and Part B coverage in order to join a Medicare Advantage plan, which provides all Part A and Part B services and generally also provides certain additional services. Plan members pay a monthly premium as well as copayments.

Part D-Prescription Drug Coverage. These plans are offered by private insurance companies approved by Medicare. Costs and benefits vary by plan. Plan members pay a monthly premium.

The Numbers

Medicare appeals is a growing and evolving practice, one that is likely to increase significantly due to the Baby Boom age wave. Each year, more than 1 billion Medicare claims are processed, and this volume is rising rapidly. Payments are approved for approximately 90% of claims at either the Level 1 or Level 2 determination stage (see below). Payment is denied for approximately 10% of Medicare claims, primarily because:

  • The services were determined not to have been medically necessary.

  • Medicare did not cover the services.

  • The beneficiary was not eligible for services.

The potential numbers are stunning. A 10% denial rate translates to 100 million claims denied; currently, only around 100,000 of these-one-tenth of 1%-are appealed! The 99.9% of claims not appealed represents an untapped potential of massive proportions. The reasons why the overwhelming majority of individual Medicare claimants do not appeal is that they:

(1) tend to trust the decisions of institutional authorities such as insurance companies and supposedly independent government contractors,

(2) lack sophistication to jump through the necessary bureaucratic hoops to challenge denial of a claim,

(3) are often elderly and to some extent intimidated by the "system," or

(4) do not always understand their appeal rights.

Sixty-five percent of Medicare Parts A, B, and C claims are fully or partially approved on appeal, and 40% of Part D claims win on appeal. The reasons for these reversal rates on appeal are rather apparent. Initial claims determinations (Level I) are performed by Medicare insurance carriers who would have to pay out the money if the claim were approved. Level 2 reviews are conducted by private contractors to the insurers. They, of course, also have a financial incentive to deny claims if they want their contracts with the Medicare carrier to be renewed. Little wonder, then, that there is a Level 1 and Level 2 bias against claimants.

Medicare appeals must be heard within 90 days, a timeframe more favorable to practitioners than the SSDI appeals process.

The current official hearing statistics also show a huge and growing hearings backlog, now approaching 400,000. The backlog has become so bad that OMHA has temporarily stopped accepting hearing applications from institutional claimants.

Medicare Appeals Practice

Medicare appeals are heard by ALJs at the relatively new federal Office of Medicare Hearings and Appeals (OMHA). Individuals and organizations dissatisfied with Medicare determinations may administratively appeal adverse determinations to OMHA, which has four offices: Arlington, VA; Cleveland, OH; Miami, FL; and Irvine, CA.

Like SSDI, Medicare appeals practitioners and claimants do not have to travel to one of these four appeals offices in order to have their cases heard. Virtually all Medicare hearings are conducted via videoconference at one of hundreds of video-teleconference (VTC) sites. In the rare instance when a VTC site is not available, an ALJ may authorize a telephone hearing.

Medicare cases can go through five levels of determination. A claimant files an initial claim (Level 1) that, if rejected, goes to automatic reconsideration (Level 2). If the claim once again rejected, either the claimant or the "Appointed Representative" can request a Level 3 hearing before an OMHA ALJ. Level 4 is a Medicare Appeals Council review, and Level 5 is judicial review in a U.S. District Court.

Like SSDI hearings, Medicare hearings are non-adversarial, i.e., there is no opposing counsel. A claimant may have an Appointed Representative at any stage of the claims process. The Appointed Representative's fee must be approved by the presiding ALJ.

The Medicare appeals process varies somewhat depending on which Medicare Part an appeal is filed under, as well as whether an individual or institution is filing the claim.

To the extent that Medicare appeals are handled by attorneys, they are largely the province of sole practitioners and small law firms. However, some larger law firms provide these services to their institutional health care clients who are pursuing disputed reimbursement claims.

Synergies With Related Practice Areas

There is a natural, almost seamless process and evidentiary rules affinity between SSDI claims and Medicare appeals, thanks to the Administrative Procedure Act. If you decide to practice in one area, it may make sense to expand your practice to the other one.

About The Author

Purdue Global Law School

Established in 1998, Purdue Global Law School (formerly Concord Law School) is Purdue University's fully online law school for working adults.

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