Medicare appeals board drops under-the-radar rule changes

Hospitals can appeal certain Medicare payment decisions to an independent board, but with all the landmines involved, it's kind of like playing the board game Operation.

"You're walking this fine, thin line; one false move and the red light goes on," said Ken Marcus, a partner with the law firm Honigman Miller Schwartz and Cohn in Detroit.

That board, the Provider Reimbursement Review Board, last week issued 90 pages of updated rules that, if not followed to the letter, could scrap appeals worth millions of dollars. The new rules were issued without notice and took effect when they were issued last week.

"The changes are significant, and because they're effective immediately, a provider could risk waiving their appeal rights if they don't follow some new provision," said Elizabeth Swayne, an associate in King & Spalding's healthcare practice group.

A CMS spokesman said the new rules are expected to "improve the appeals experience."

Attorneys familiar with the new rules say they're being released in conjunction with the board's shift to using an electronic filing system like that of the federal courts. It's a shift many agree will make the filing process easier. Currently, appeals can be submitted to the board both electronically and via the mail while kinks in the e-filing system are worked out, but Swayne said eventually that will all be done electronically. The CMS has released a manual to help providers transition to electronic filing.

The PRRB has jurisdiction over Medicare Part A, and most of its appeals come from hospitals, Marcus said. The majority of appeals are challenges over hospitals' disproportionate-share hospital payment calculation from the CMS. Hospitals also commonly appeal the amount of Medicare bad-debt payment they receive, or payments for graduate medical education.

One of the biggest changes in the new rules is that parties filing appeals must now send a cover letter, called the preliminary position paper, and exhibits, to the board at the outset of an appeal. Previously, those materials were only shared between the hospital and the Medicare administrative contractor, the third-party firms the CMS uses to audit and issue reimbursement notices.

This means that a hospital's arguments have to be fully developed at the beginning, and no further arguments or documents can be added later on, Swayne said. A hospitals' failure to include all materials will result in a dismissal, she said.

"The parties are really going to have to make sure that everything is on the record at the very start of their appeal," Swayne said.

Hospitals used to have to file final position statements at the end of an appeal, but those are now optional, said George Breen, who chairs Epstein Becker Green's national healthcare and life sciences practice steering committee.

"I think there is the reflection of the notion of putting the issues upfront and before the board much earlier on in the process," Breen said. "I think that is a significant change."

Marcus said he believes the most significant rule change is one that allows providers to simultaneously file appeals with the board and then withdraw them if they believe their cases can be resolved with the Medicare administrative contractor. If those resolutions ultimately don't materialize, providers can then reinstate their appeals down the road.

"That enables the provider to essentially have their cake and eat it," Marcus said.

Attorneys said it takes a fair amount of time and money to go through an appeal with the board, so hospitals should ensure those costs don't outweigh the amount of money they're disputing. The exception would be if they're disputing a payment decision that could affect future payments and add up over time.

The minimum statutory amount individual hospitals can appeal to the board is $10,000, and the minimum amount groups of hospitals can appeal is $50,000. Swayne said her clients' appeals are often worth millions of dollars.

For his part, Marcus doesn't recommend his clients go forward with appeals unless there is at least $250,000 at stake and a good chance of winning. In his experience, waiting for a hearing and then a decision can take years. And even if the board issues a favorable decision, the CMS administrator reverses it 90% of the time, giving the hospital the right to go to federal court, he said.

"The PRRB appeals process is a tortuous, lengthy, expensive and to some extent futile process," Marcus said.

The goal behind moving to an electronic filing system is to make the board's appeal process more efficient, Breen said. Whether that ultimately reduces the backlog of cases waiting to be heard remains to be seen.

"It's a question of the board being able to rule on these issues and it's a question of manpower and the parties actually getting before the board and having appeals heard or ruled on," Breen said. "That issue of manpower, having sufficient resources, isn't really impacted by the changes."