Lessons Learned: Appealing Audits

The 30^th Annual Compliance Institute for the Health Care Compliance Association (HCCA) is scheduled to take place in Orlando next week. If you are there, come by and hear me speak – or just say hey!

For decades, I have complained about the process of appealing audits from Recovery Audit Contractors (RACs), Medicare Administrative Contractors (MACs), or Unified Program Integrity Contractors (UPICs), which is often described as meaningless until the fifth level.

A more accurate description might be that it is structured like a maze where every exit leads to another form. For providers, the Medicare appeals system – overseen by the Centers for Medicare & Medicaid Services (CMS) – is cumbersome, expensive, and time-consuming, with fairness that can feel just out of reach until the very end.

The system consists of five escalating levels, each with its own rules, timelines, and opportunities for frustration.

Level 1: Redetermination (MAC)

The first step is a redetermination by the MAC, typically resolved within about 60 days. This is the administrative equivalent of asking someone to reconsider their own decision. Unsurprisingly, many denials are upheld here, often with minimal explanation. It’s quick, but rarely satisfying.

Level 2: Reconsideration (QIC)

Next comes reconsideration by a Qualified Independent Contractor (QIC). Also slated for about 60 days, this level is stricter: providers must submit all documentation upfront. Miss something, and you may not get another chance. Think of it as a high-stakes open-book test for which you’re penalized for forgetting to bring the book.

Level 3: Administrative Law Judge (ALJ)

Here’s where things historically bog down. Although the statutory timeframe is 90 days, backlogs have stretched into years. While recent improvements have reduced average wait times significantly, delays still occur. Statistically, this is the first level where providers tend to see meaningful success, with partial or full favorable decisions often cited in the 20-30-percent range. In other words, after months (or years), you may finally meet someone willing to actually listen.

Level 4: Medicare Appeals Council

If the ALJ decision doesn’t go your way, the case advances to the Medicare Appeals Council. This stage involves more formal legal arguments and additional waiting. By now, the process has shifted from administrative review to something resembling appellate litigation – minus the satisfying courtroom drama.

Level 5: Federal District Court

Finally, if the amount in controversy is high enough, you can take your case to federal district court. Ironically, this is often the first point at which providers feel they receive a truly independent review outside CMS’s internal structure. The catch? Getting here can take years, and the cost can far exceed the original claim in dispute.

Why it’s So Expensive and Time-Consuming

Each level requires time, staffing, and often, legal expertise. Providers must track deadlines, compile extensive documentation, and respond to evolving regulatory expectations. Because the process is sequential, even modest delays compound. What starts as a denied claim can become a multi-year administrative saga.

And there’s a structural issue: the first four levels all operate within or under the umbrella of CMS. While designed to ensure consistency, this creates a perception, fair or not, that providers are appealing to the same system that denied them in the first place. By the time a case reaches federal court, it has effectively escaped that orbit – but only after significant delay and expense.

Why Lobbyists Matter

This is where lobbyists enter the picture: not as fixers of individual claims, but as architects of systemic change, which needs to come from Congress.

Healthcare lobbyists advocate for reforms such as:

• Reducing audit volume and redundancy;
• Streamlining documentation requirements;
• Increasing funding and staffing for ALJs; and
• Creating faster or more independent review pathways.

They are typically paid either as salaried employees of healthcare organizations or as contracted professionals/firm representatives, often earning fees based on retainer agreements or hourly rates. Larger hospital systems and industry associations frequently invest heavily in lobbying because the financial stakes of Medicare reimbursement – and audit recoupments – are enormous.

Without lobbying pressure, many of the incremental improvements seen in recent years, such as reduced ALJ backlogs, might not have occurred. In essence, while providers fight individual denials, lobbyists fight the rules of the game.

Why the System Needs Reform

A central criticism of the current process is that providers often do not receive what feels like a fully impartial review until they reach federal district court, far outside CMS’s administrative purview. By then, the time, cost, and operational burden can be overwhelming.

This raises a fundamental question: should fairness require endurance?

Reform advocates argue for earlier access to truly independent adjudication, simplified appeals pathways, and clearer standards of medical necessity. Without such changes, the system risks discouraging legitimate appeals – not because providers are wrong, but because the process itself is too burdensome to pursue.

Final Thought

Appealing a RAC, MAC, or UPIC audit is less a procedure and more a prolonged test of patience, resources, and resolve. By the time a provider reaches federal court, they’ve likely invested years and significant expense, all to challenge a decision that may have started as a relatively small claim.

If there’s any humor to be found, it’s this: in Medicare appeals, winning often feels less like victory and more like finally reaching the end of a very long line, only to realize you’ve been standing in the wrong building the whole time.