Frier Levitt recently achieved two significant victories in appeals before the Centers for Medicare & Medicaid Services (CMS), obtaining fully favorable decisions totaling more than $8 million on behalf of two laboratory clients.
These cases involved allegations that COVID-19 laboratory testing services were improperly billed because patients had not expressly requested the tests. CMS sought to recoup nearly $6 million in one matter and more than $2 million in the other.
By presenting a strong, evidence-based defense and leveraging our team’s deep expertise in healthcare law, compliance, and medical coding, Frier Levitt successfully overturned the CMS’s findings, prevailing at the third level of appeal before an Administrative Law Judge (ALJ).
Understanding the CMS Appeals Process[1]
The CMS appeals process is notoriously complex and can span years. Providers faced with alleged overpayments must navigate five levels of appeal:
- Redetermination by a Medicare Administrative Contractor (MAC).
- Reconsideration by a Qualified Independent Contractor (QIC).
- Hearing before an Administrative Law Judge (ALJ).
- Review by the Medicare Appeals Council.
- Judicial review in federal district court.
While the first two levels are almost always unfavorable to providers, the ALJ level represents the first true opportunity for a neutral and independent de novo review of the case. Achieving fully favorable outcomes at this stage is significant, as ALJs carefully weigh both the factual record and the legal standards applicable to the claims.
CMS Allegations During the Pandemic
In both disputes, the CMS alleged that documentation was insufficient because patient records did not always explicitly reflect a direct request for COVID-19 testing. The agency sought to apply strict documentation standards after the fact, despite the unique and rapidly evolving circumstances of the pandemic.
During 2020 and 2021, the CMS issued multiple policy updates that permitted streamlined testing processes and allowed providers to prioritize timely care over rigid documentation. However, in post-pandemic audits, the CMS unilaterally rewrote the previously relaxed standards, instead adopting strict documentation guidelines that prejudiced laboratories.
Frier Levitt’s Appeal
Frier Levitt mounted a comprehensive defense that highlighted both the clinical realities of the pandemic and cited the applicable CMS guidance that existed at the time the services were rendered. Our appeal strategy included:
- Policy Analysis: We demonstrated that CMS’s own policies during the COVID-19 public health emergency acknowledged flexibility in documentation and permitted providers to conduct tests without the same preconditions normally required.
- Expert Coding Review: We engaged senior coding experts with decades of experience to analyze the documentation in question. Their review confirmed that the records met CMS requirements during the public health emergency standards.
- Challenging Extrapolations: In one case, CMS used a small sample of claims to extrapolate alleged overpayments across thousands of claims, inflating liability into the millions. We successfully challenged both the methodology and assumptions underlying the extrapolation, undercutting the agency’s conclusions.
- Evidence Presentation: We compiled clear, organized proofs demonstrating that testing was medically appropriate, consistent with CMS policy at the time, and adequately supported by the available documentation.
Fully Favorable ALJ Outcomes
Ultimately, the ALJs agreed with our arguments in both appeals. Each case resulted in a fully favorable decision, eliminating alleged overpayments of $6 million and $2 million respectively, and overturning the statistically invalid extrapolations.
These results not only prevented devastating financial harm to our clients but also underscored that providers should not be penalized retroactively when they acted in good faith under unprecedented circumstances and in reliance on CMS’s own guidance.
What This Means for Laboratories and Providers Nationwide
These victories highlight several important takeaways for healthcare providers facing audits or payment suspensions:
- Policy Effective Dates Are Critical: CMS and other payors issued unique, often relaxed rules during the public health emergency. Those rules remain highly relevant in defending audits conducted years later. However, every policy has an effective date, so when a payor seeks recoupment based on a specific policy, Local Coverage Determination, or statute, it is imperative to cross-reference the effective date with the audit period.
- ALJ Review Can Turn the Tide: Although the early stages of the appeals process are often unfavorable, persistence pays off. The ALJ stage frequently provides the first meaningful opportunity for a fair review. Do not give up after the first two levels of appeal.
- Extrapolations Are Vulnerable: Extrapolated demands may rest on flawed extrapolations. With the right strategy, those findings can be successfully challenged.
- Experienced Advocacy Makes the Difference: Combining regulatory insight with clinical and coding expertise gives providers the best chance to prevail.
How Frier Levitt Can Help
Frier Levitt’s audit defense team defends laboratories and healthcare providers nationwide who delivered critical services but now face overpayment demands from CMS and private payors. Our team of audit defense specialists can guide you through every level of a CMS appeal or handle disputes with private payors.
If your practice or laboratory is facing an audit, overpayment demand, or payment suspension, Frier Levitt’s dedicated team of healthcare attorneys can help you mount a strong defense. Contact us today to learn how we can protect your practice and revenue.
[1] https://www.frierlevitt.com/articles/a-deep-dive-into-the-cms-audit-appeals-process-a-comprehensive-guide-for-medical-professionals/
