Imagine a prosecutor who files charges, seizes the defendant’s assets before trial, and then never appears in court. No opening statement, no witnesses, no cross-examination. The defendant hires counsel, assembles the record, and argues to an empty table while the charging document sits in the file as though it proves itself. In any criminal court, that case would be dismissed. Before a Medicare Administrative Law Judge, it is routine: the contractor that alleged the overpayment, and often has already recouped the money, need not show up to defend its own accusation.
The process usually starts with a contractor audit. A Medicare contractor reviews a sample of claims, decides some were not properly supported, and often extrapolates that finding across a much larger universe of claims. A modest disagreement over documentation can become an overpayment demand worth hundreds of thousands of dollars or more. The provider must then work through redetermination and reconsideration, two levels of review run by the same contractor system that made the accusation, before it can reach a quasi-independent ALJ.
By the time the provider gets to the ALJ hearing, it has often spent heavily defending itself. It may already have had money recouped from its ongoing Medicare payments. Interest may be running. And when the hearing finally begins, the party that made the accusation is frequently nowhere to be found.
The rules permit CMS and its contractors to participate in an ALJ hearing, or even to enter the case as a party. In practice, they often choose to do neither. They do not need to send a witness to explain how the audit was performed. They do not need to defend the sampling methodology. They do not need to hire attorneys, prepare a brief, or answer a single question from the judge. The accusation is simply left in the file, and the provider is left to disprove it.
That is the core of the unfairness. In almost any other setting, the party making a serious financial claim must stand behind it. A plaintiff who files suit and does not appear loses. A creditor who cannot prove a debt does not collect it. But in the Medicare overpayment process, the accuser can do nothing at all and still keep the full weight of its allegation in play. The burden, cost, and risk fall entirely on the provider.
The contractor has no skin in the game. If its audit was sloppy, its reviewers misread the medical record, or its extrapolation was statistically unsound, there is no meaningful consequence. It does not reimburse the provider’s legal fees. It does not pay a penalty for a baseless claim. At worst, it loses a case it never bothered to defend. Meanwhile, the provider may have spent years and substantial sums proving that it was right all along.
That imbalance creates a dangerous incentive. When accusations are free, there is little reason to make them carefully. Some providers, especially small practices, rural hospitals, and home health agencies operating on thin margins, simply cannot afford to fight. They settle, accept recoupment, or close their doors, not because the accusation was true, but because defending against it cost more than surrendering.
Fairness should not depend on whether a provider can afford to outlast an absent opponent. If a contractor is confident enough in its findings to demand repayment, it should be required to appear and defend them. If it declines, the hearing should reflect that choice, and providers who prevail should have a realistic path to recover the costs of defending against unsupported claims.
Medicare program integrity matters, and so does due process. A system in which one side must show up, pay up, and prove its innocence while the other side does nothing at all is not a system built on fairness. It is a system that rewards accusation over accuracy. Providers deserve better, and so does the Medicare program they serve.