Healthcare Audit Lawyers

In the current regulatory environment, healthcare providers are under greater scrutiny than ever before. While the Centers for Medicare and Medicaid Services (CMS) always had the right to review and deny services deemed to be inappropriately billed, health care reform and other recent initiatives have added even more programs and contractors that will be looking at providers’ claims.

We know that receiving notice of an alleged “overpayment” from one of CMS’ contractors or another payor can be a stressful experience for healthcare providers. While healthcare providers do not necessarily need an attorney to appeal claims, the appeals process can be confusing and burdensome to those who are unfamiliar with it. There are legal and procedural arguments that can be advanced most effectively by attorneys with experience in this area.

At Wachler & Associates, we devote a substantial portion of our practice to handling appeals on behalf of Medicare providers. We are intimately familiar with the process. We work on Medicare and other payor appeals daily and can navigate the system for you, or help you to navigate through the system.

We have successfully defended thousands of Medicare, Medicaid, and third party payor audits on behalf of healthcare entities, providers and suppliers nationwide. We assist providers in various ways, from “full service” handling of all levels of the appeals submissions, to assisting with the drafting of templates, position papers or briefs for healthcare providers who want to handle the appeals on their own.

Recovery Audit Contractors (RACs)

RACs are companies contracted by CMS to identify Medicare overpayments and underpayments and return Medicare overpayments to the Medicare Trust Funds. RACs review claims submitted in an attempt to identify improper payments. Although tasked to identify both overpayments and underpayments, RACs are highly motivated to identify improper payments, as RACs are compensated on a contingency-fee basis. Experience has shown us that RACs tend to be very zealous and identify overpayments far more frequently than underpayments.

The RAC program is also being expanded to include Medicaid claims, Medicare Advantage (Part C) and Prescription Drug plans (Part D).

Medicare Administrative Contractors (MACs)

Medicare Administrative Contractors or MACs have taken the place of the former carriers and fiscal intermediaries and are contracted by CMS for many reasons. The MACs have many functions, such as handling enrollment issues and claims processing. They are also responsible for addressing billing errors involving services that are not covered or not coded correctly. MACs can identify healthcare providers who they deem to be “outliers” through data analysis and often conduct probe audits on select providers. MACs review claims to determine proper payment amounts and adjust or deny payments if the reviewers find the services to be not reasonable or medically necessary, or find that the claims submitted do not properly reflect the services furnished. If the MACs find healthcare providers whose claims have high error rates, they can put the providers on additional post-payment or prepayment reviews.

Zone Program Integrity Contractors (ZPICs)

Zone Program Integrity Contractors or ZPICs are responsible for implementing the Medicare Benefit Integrity program, which involves the identification of suspected fraud. This program is in contrast to the MACs’ task discussed above, which is primarily concerned with preventing and identifying errors. ZPICs use a variety of proactive and reactive techniques to identify and address any potentially fraudulent billing practices. These techniques include pre-payment review and additional development requests (ADRs), which can be detrimental for a healthcare provider because the provider must submit documentation and oftentimes complete the appeals process before being paid. ZPICs may receive referrals from other contractors, such as RACs or MACs or they may conduct their own data analysis to identify potential fraud. Leads also may be identified using a variety of contractor functions including claims processing, data mining, audit and reimbursement, appeals, medical review, and enrollment.

Targeted Probe and Educate (TPE) Audits

Medicare’s Targeted Probe and Educate (TPE) program authorizes Medicare Administrative Contractors (MACs) to conduct Medicare audits of providers and suppliers with billing practices, utilization rates, or claim error rates that vary from their peers. TPE audits also target Medicare providers and suppliers that bill for services or items with high national error rates. Following the successful TPE audit pilot program, which was limited to home health care claims and hospital inpatient admissions, CMS authorized MACs to perform TPE review of all types of Medicare providers for all types of services and items billed to Medicare. TPE audits subject Medicare providers and suppliers to up to three (3) rounds of medical reviews and overpayment determinations. In the event the MAC denies claims during the initial round of the TPE review process, the MAC will conduct an education session with the provider or suppler and wait forty-five (45) days prior initiating the next round of the TPE audit. TPE audits result in Medicare overpayments appealed through the standard Medicare appeals process. In addition to a Medicare overpayment, providers and suppliers with claims errors following three (3) rounds of TPE review may be referred to CMS for further disciplinary actions.

Comprehensive Error Rate Testing Program (CERTs)

The Comprehensive Error Rate Testing (CERT) program is designed to determine the underlying reasons for claim errors and to develop action plans to improve compliance with payment, claims processing, and provider billing requirements. The CERT contractor reviews approximately 120,000 claims processed by the affiliated contractors each year. The CERT contractor randomly selects a sample of Medicare fee-for-service (FFS) claims and requests medical records and supporting information from the providers who submitted the claims. Even though the main focus of the CERT is to obtain a general error rate rather than to identify underpayments or overpayments of a single provider or entity, the CERT sends information on both overpayments and underpayments to the carrier or MAC. The MAC then recovers overpayments or pays underpayments in accordance with the same manual instructions normally used for processing such overpayments or underpayments.

The Medicare Appeals Process

The Medicare Appeals Process is the same for all audits involving Medicare claims, regardless of the contractor who conducted the audit. The following is a brief description of the Medicare appeals process:


The first level of appeal is redetermination. Providers who are dissatisfied with the contractor’s initial determination, which may be in the form of a demand letter, or an indication on the explanation of benefits (EOB), must file a request for redetermination within 120 calendar days from the date the provider received notice of the initial determination. However, for post-payment claims, there is another deadline of which providers must be aware. The MAC may begin withholding or recouping from current payments that would be payable to the provider unless the request for redetermination is filed within 30 days of the first demand letter. The redetermination is decided by the MAC.


A provider who is dissatisfied with the redetermination decision may file a request for reconsideration. Reconsideration is the second level of appeal in the Medicare appeals process and is conducted by a Qualified Independent Contractor (QIC). The deadline for filing a request for reconsideration is 180 calendar days from the date that the provider received notice of the redetermination decision. As with the redetermination level, providers must be concerned with an additional deadline for post-payment claims. In order to avoid recoupment of the alleged overpayment, the request for reconsideration must be received by the QIC within 60 calendar days of the date of the redetermination decision.

At the reconsideration level, there is an “early presentation of evidence” requirement. This means that no additional evidence or documentation will be considered without “good cause” if it is not submitted at the reconsideration. For this reason, it is important to consider all theories of audit defense at this time and submit all potentially relevant evidence so that it is not precluded at the ALJ level.

Administrative Law Judge (ALJ) Hearing

The third level of appeal is an administrative law judge (ALJ) hearing. In order to preserve the right to an ALJ hearing, a provider must file a written request within 60 days of the date that the provider received notice of the reconsideration decision. ALJ hearings may be conducted in-person, by video-teleconference (VTC) or by telephone. In our experience, most hearings are conducted via the telephone.

Medicare Appeals Council

The fourth level of appeal is the Medicare Appeals Council (MAC) review. In order to request a MAC review, a party must file a written request within 60 days of receiving the ALJ decision or dismissal. A party’s request for MAC review must identify the parts of the ALJ action with which the party disagrees and explain the reasons for the disagreement. The MAC may also choose to review an ALJ decision or dismissal on its own motion. CMS or its contractors may refer a case to the MAC for consideration on its own motion within 60 days of the date of receipt of an ALJ’s decision or dismissal. In order for CMS or its contractors to refer a case for MAC review, the decision or dismissal must, in their view, contain an error of law material to the outcome of the case or must present a broad policy or procedural issue that may affect the public interest. 1

MAC review of the ALJ decision is de novo and is “on the record”, meaning that it does not involve a hearing. Instead, the MAC will give the parties an opportunity to file briefs or written statements, upon request. The MAC’s review is limited to the evidence contained in the record of the ALJ proceeding. If the ALJ decision presents a new issue that the parties were not previously afforded the opportunity to address, the MAC will consider any additional submitted evidence that is related to that issue.

The MAC may direct the ALJ to change its decision consistent with the MACs order. The MAC may also require another hearing. The MAC may also uphold the ALJ’s decision if in agreement.

Judicial Review in Federal District Court

Although not a practical option for most healthcare providers, a party to a MAC decision may proceed to a fifth level of appeal in federal district court. A civil action for judicial review must be filed in the U.S. district court for the judicial district in which the party resides or in which the individual, institution or agency has its principal place of business determination, the district court will consider findings of fact by the Secretary of HHS conclusive if supported by substantial evidence.

Medicaid Appeals

Medicaid Integrity Contractors (MICs) and Medicaid RACs

The Deficit Reduction Act of 2005 mandated the creation of the Medicaid Integrity Program (MIP), including the hiring of Medicaid Integrity Contractors (MICs) to perform review, audit, and education functions. As a result of health care reform, the RAC program has also been expanded to include Medicaid claims.

The Medicaid appeals process varies from state to state.

Other Third Party Payor Appeals

Most commercial payors reserve the right to audit participating providers’ claims and to demand return of any alleged overpayments. The appeals process varies by payor and should be set forth in the participation agreement or provider manuals. Our attorneys have defended audits from various payors throughout the years, and have specifically had a great deal of experience in defending Blue Cross Blue Shield of Michigan (BCBSM) audits.

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