INTRODUCTION

On November 15, 2002, the Centers for Medicare & Medicaid Services (CMS) published a notice of proposed rule making (NPRM) to implement changes to the Medicare appeals system made by the Beneficiaries Improvement and Protection Act of 2000 (BIPA), (Pub. L. No. 106-554). See, 67 Fed. Reg. 62478 (Oct. 7, 2002). The proposed rules were published a month after CMS issued a ruling that it would not meet the statutory requirement that the new appeals provisions apply to initial determinations made on or after October 1, 2002.

Congress’s intent in enacting the BIPA amendments was to develop a quicker, more user-friendly appeals system. Key features of the statute include a uniform process for Medicare Part A and B appeals; imposing time frames for decisions to be made: 30 days for reconsideration and 90 days for administrative law judge (ALJ) and Medicare Appeals Council (MAC) appeals; escalation of cases to the next level when the time frames are not met; expedited review of termination or discharge from care in certain settings; and de novo review when the MAC reviews an ALJ decision.

Instead of being user-friendly, however, the procedures proposed in the regulations would make it harder for beneficiaries to utilize the process without an advocate and weaken the independence of the ALJ level of review. In part in response to concerns raised by these regulations, the Medicare prescription drug bill passed by the Senate in June, 2003 (S. 1, June 27, 2003) included provisions requiring the continued independence of ALJs who hear Medicare cases. Provisions similar to those in S. 1 have reportedly been agreed upon by Congressional conferees attempting to reconcile the Senate and House Medicare prescription drug bills.

BIPA revised the current Medicare appeals process as follows: A fiscal intermediary or a carrier would continue to make an initial determination of a Part A or Part B claim, respectively. If the decision is unfavorable, the beneficiary and/or the provider may request a redetermination by the appropriate contractor. An unfavorable redetermination could then be appealed to a new entity, the Qualified Independent Contractor (QIC), which would issue a reconsideration. The QIC level of review replaces the Part B carrier hearing, and adds a new review step for Part A claims. An unfavorable reconsideration determination could be appealed to an ALJ, provided that $110 remained in controversy, regardless of whether the claim arose under Part A or Part B or involved a hospital claim. An favorable ALJ decision could be appealed to the MAC and then to federal court; the jurisdictional amount for federal court claims is $1130.

BIPA also established a process whereby a party could request that a QIC reconsideration be escalated to the ALJ level of appeal, an ALJ hearing escalated to the MAC, or a MAC review escalated to federal court if the reviewing entity failed to meet the statutory deadline for making a decision. BIPA also allows a beneficiary to request an expedited determination if a provider plans to terminate services and a physician certifies that termination is likely to place the beneficiary’s health at significant risk; or if a provider plans to discharge the beneficiary.

Introduction: The changes to the ALJ level of review included in the November 2003 proposed rules are the most problematic and may go beyond the mandate of BIPA. In addition, they have implications for SSA administrative hearings, since many of the changes mirror proposals that have been made for disability claims. Of grave concern for Medicare advocates is the statement by CMS in the preface to the NPRM that the agency intends to take over the responsibility of holding ALJ hearings on Medicare claims, they had hoped, by October 1, 2003.

Other areas of concern include allowing CMS to be a party and participate in ALJ hearings; requiring ALJs to give deference to policies that have not been implemented pursuant to the APA; limiting the right to introduce new evidence at the ALJ hearing; limiting MAC review to issues raised in the request for review. These proposals are of particular concern if Medicare ALJ hearings are moved from the Social Security Administration to CMS’s control within the Department of Health and Human Services.

CMS as party to hearing: In a major change from current practice (and not mandated by BIPA), the proposed regulations would allow CMS or its contractors to be a party to an ALJ hearing, unless the request for hearing is filed by an unrepresented beneficiary. Party status is at the sole discretion of CMS; the ALJ may not require CMS to be a party. The only requirement is that CMS notify the ALJ within 10 days after receiving the notice of hearing (hearing notices must be mailed 20 days in advance of the hearing date) that it intends to participate in the hearing as a party. Also, the proposed rules neither require CMS to notify the other parties of its intent to participate as a party nor include the addition of CMS as a party in the list of "good cause" reasons for obtaining a postponement of the hearing. As a party, CMS may file position papers, provide testimony to clarify factual or policy issues; call witnesses or cross-examine the witnesses of other parties; and submit additional evidence, without any limitation on the evidence to be submitted.

CMS also may elect to "participate" in a hearing, in which case it would be allowed to file position papers, provide testimony to clarify factual or policy issues, and submit additional evidence, but not to call witnesses or cross-examine the witnesses of other parties;. The ALJ may request, but not require, CMS to "participate" in a hearing.

Submitting evidence to the ALJ: The proposed regulations would require parties to submit all written evidence they wish to have the ALJ consider with the request for hearing, or at least within 10 days of receiving the hearing notice. The evidence must be accompanied by a statement explaining why it was not submitted at the previous reconsideration level. (Notice of denial of a redetermination is supposed to include a statement of information that must be submitted at the reconsideration level.) Before the hearing the ALJ then will consider whether the appellant (but not other parties, such as CMS) had good cause for submitting the evidence first at the ALJ level. If there was not good cause but the evidence "was of such probative value that it may have a material outcome on the case," the ALJ will remand the case for a revised reconsideration decision. Parties will have to start again with the hearing process by filing a new request for hearing.

Deference to policies not issued pursuant to the Administrative Procedures Act: The proposed rules require the ALJ and the MAC, as well as the QIC reconsideration, to give deference to CMS policies. Under current practice, ALJs are not bound by local medical review policies and CMS policy manuals that are not issued pursuant to the APA. In fact, many beneficiaries win at the ALJ level because ALJs apply the law and regulations, rather than contractor and CMS policies. The proposed rules place the burden on the party to prove why the reviewer should not give deference to the policy, and a review entity that decides not to follow a policy must include in its decision the reason for not applying the policy.

Objections to issues at hearing: The hearing notice would contain a statement of the specific issues to be decided. If a party objects to the issues described in the notice, the ALJ must be notified no later than five days before the hearing. The party must state the reasons for the objections and send a copy to all other parties in the case.

Content of request for review to Medicare Appeals Council (MAC): Under the proposed regulations the MAC would review an ALJ’s decision de novo and must issue a decision within 90 days of receipt of the appellant’s request for review. The request for review must identify the parts of the ALJ decision with which the appellant disagrees and "explain" why he or she believes it is wrong.

However, the proposed regulation describing the content of the request for review, which appears to be discretionary about what is included, does not adequately warn the appellant of the consequences for failing to raise specific issues in the request for review. The MAC "will limit its review of an ALJ’s actions to those exceptions raised by the party in the request for review, unless the appellant is an unrepresented beneficiary." This proposed regulation essentially adopts an exhaustion requirement for individual issues, as was suggested by the U. S. Supreme Court in Sims v. Apfel, 530 U.S. 103 (2000).

For purposes of this section only, the proposed regulation states that a "representative" does not include a member of the beneficiary’s family, a legal guardian, or an individual who routinely acts on behalf of the beneficiary, such as a family member with a power of attorney.

Evidence submitted to the MAC: Although review at the MAC is described as de novo, the proposed regulations limit the MAC’s review of the evidence to "the evidence contained in the record of the proceedings before the ALJ." If the hearing decision decides a new issue that the parties were not afforded the opportunity to address at the ALJ level, the MAC will consider any evidence related to that issue that is submitted with the request for review. If the MAC determines that additional evidence is needed to resolve the issues in the case and the record indicates that the parties or previous decision makers did not attempt to obtain the evidence, the MAC may (but is not required to) remand the case to the ALJ to obtain the evidence and issue a new decision.

Deference to CMS Policies: As described more fully above, the proposed regulations would require the MAC, like ALJs and QICs, to give deference to CMS policies. Again, this is an important diversion from the independence now afforded to the Medicare Appeals Board.

A Congressional Conference Committee is currently meeting to reconcile the Medicare Prescription Drug bills passed by the House of Representatives (HR. 1) and the Senate (S. 1) in June 2003. The conferees have reportedly addressed some of the issues regarding Medicare ALJ appeals which have been of concern to beneficiaries and providers concerned with due process. The Conferees have reportedly accepted related provisions from S. 1. S.1, §511 includes the following provisions:

• The Commissioner of Social Security (SS) is required to issue a plan by April 1, 2004 which would transfer responsibility from SS to the Department of Health and Human Services (HHS) for Medicare ALJ hearings.
  

• The plan shall include certain mandated information, including the following:

• The steps that should be taken to ensure the independence of ALJs. Including ensuring that such judges are in an office that is functionally and operationally separate from the Centers for Medicare & Medicaid Services and the Center for Medicare Choices. §511 (a)(2)(H);
  

• The number of ALJs and support staff needed to hear and decide cases in a timely manner;
  

• A timetable for the transition;
  

• The feasibility of developing a process to give precedential authority to Departmental Appeals Board decisions;
  

• The feasibility of filing ALJ appeals electronically;

• The feasibility of conducting hearings using telephone or video-conference technologies;
  

• The steps that should be taken to hire ALJs and to provide appropriate geographic distribution of ALJs throughout the US in order to assure timely access to such judges;
  

• The establishment of performance standards to re timeliness of ALJ decisions;

• The feasibility of sharing space, staff, resources between HHS and SS;
  

• The training that ALJs should receive re Medicare.

• Recommendations for further Congressional action including possible modifications to the requirements and deadlines established under BIPA.

• A transfer plan for Medicare ALJs can not be implemented until at least six months after the required plan is submitted.

Time frames for decision-making: Although the primary improvement of the BIPA appeals provisions was the establishment of set time frames by which contractors, ALJs, and the MAC must issue decisions, the proposed rules weaken this protection. CMS indicates in the preface to the NPRM that it will monitor fiscal intermediary and carrier compliance with the 30-day statutory time frame for making decisions, but that it will not impose a remedy if the contractor fails to comply. CMS has also determined that a claim escalated from the QIC to the ALJ level, or from the ALJ level to the MAC, does not have to be decided within the 90-day statutory time frame, since those time frames only apply to review of decisions made at the level below.

Notices: The proposed rule includes specific requirements for notices at all level. However, although the rule requires that unfavorable notices explain the laws, regulations, and policy guidance upon which the decision-maker relied in issuing the decision, it does not require that the notice explain how to get copies of those documents.

Expedited Review: CMS proposes to implement the provisions of BIPA that establish a right to expedited review of a decision to terminate or discharge a patient from a hospital, skilled nursing facility, a comprehensive outpatient rehabilitation facility (CORF) or home health care by extending the hospital expedited review process to the other settings. As in the hospital setting, a beneficiary who requests an expedited determination will have that determination reviewed by the Quality Improvement Organization (QIO), which is required to issue a decision within 72 hours of the request for review. The beneficiary may then seek expedited reconsideration by the QIC, which again must issue a decision within 72 hours. The provider may not bill the patient until a decision has been issued.

Attorneys fees: The proposed regulation makes formal the position CMS stated in a letter to the Center for Medicare Advocacy, which indicated that no award of attorneys fees may be made against the Medicare trust fund. The proposed regulation states that a provider or supplier may not charge the beneficiary any fee associated with the representation. CMS states that it does not believe it should establish a process for ALJs to review and approve attorney fee petitions, since the agency lacks authority to award attorney fees, but nevertheless seeks comments on the issue.

Comments on the proposed regulations were due on January 14, 2003. The Center for Medicare Advocacy, Inc. filed comments on behalf of beneficiaries and beneficiary organizations. As of this writing, October 23, 2003, final regulations have not been issued.