CMS recently finalized significant changes affecting Medicare appeals, particularly at the Administrative Law Judge (ALJ) level of review. These changes apply to appeals of payment and coverage determinations for items and services furnished to Medicare beneficiaries, enrollees in Medicare Advantage (MA) and other Medicare competitive health plans, and enrollees in Medicare prescription drug plans, as well as to appeals of enrollment and entitlement determinations, and certain premium appeals. The final rule, which is effective March 20, 2017, can be accessed here.
The new regulations stated goal is to address the “unprecedented and sustained increase in the number of appeals” in recent years, which has “strained OMHA’s available resources and resulted in delays for appellants to obtain hearings and decisions” due to the enormous backlog of claims waiting to be adjudicated. [82 FR 4976]. While the agency’s effort to ease this backlog by streamlining the appeals process is commendable, the Center for Medicare Advocacy (the Center) believes that some of the key revisions do not strike the right balance between efficiency and ensuring beneficiaries’ access to full, fair, and timely hearings and decisions on their claims. The Center has brought thousands of appeals in front of ALJs. Based on our extensive experience with the appeals process we have the following concerns:
- The Departmental Appeals Board (DAB) Chair has Sole Discretion to Confer Binding, Precedential Authority on Select Council Decisions. 42 CFR § 401.109
CMS’ stated goal in authorizing the DAB Chair to give precedential effect to certain Council decisions is to “assist appeal adjudicators at all levels of appeal by providing clear direction on repetitive legal and policy questions, and in limited circumstances, factual questions” and “provide improved predictability and consistency across future cases.” [82 FR 4977, 4980].
Notice of precedential decisions will be published in the Federal Register and the decisions themselves will be posted on an accessible HHS Web site. § 401.109(b). From the date of posting, precedential decisions will be binding on CMS and its contractors in making initial determinations, redeterminations, and reconsiderations; OMHA ALJs and Attorney Adjudicators; the Council in its future decisions; and SSA to the extent that it adjudicates matters under CMS jurisdiction. § 401.109(c).
In response to concerns expressed by the Center and other stakeholders regarding the lack of standards or criteria for selecting precedential decisions, the agency added the following language to the final regulation at § 409.109(a): “In determining which decisions should be designated as precedential, the DAB Chair may take into consideration decisions that address, resolve, or clarify recurring legal issues, rules or policies, or that may have broad application or impact, or involve issues of public interest.” This additional language, however, offers no guidelines for evaluating the quality of decisions and the potential for their misapplication in similar but separate cases. There is no administrative mechanism for independently challenging and overturning a bad precedent, which remains binding as long as the same authority or provision is still in effect, or unless CMS reverses it.
In the past, the Center has received egregious Council decisions in which the law has been misapplied and which have required appeals to Federal Court. Based in part on actual decisions the Center has seen where the Council has misapplied the law, the Center is deeply concerned that precedential decisions may be misapplied to deny coverage for medically necessary care and services to which Medicare enrollees are entitled by law. We are also worried about the chilling effect on beneficiaries, who may decide not to appeal valid claims if they misconstrue their likelihood of success based on the Council’s analysis or legal interpretation in a precedential decision. Since beneficiaries are often unrepresented by counsel in the administrative appeals process, they may not understand the scope of a precedential ruling, how the factual circumstances in their own case may command a different interpretation or outcome, and whether a separate legal provision may affect their claim. The adverse effect on coverage and appeals for beneficiaries thus outweighs whatever positive predictability and consistency may be achieved by affording precedential effect to Council decisions.
- Use of Attorney Adjudicators
The revised rules authorize “Attorney Adjudicators,” rather than Administrative Law Judges (ALJs) to perform a portion of OMHA’s workload that does not require a hearing. An Attorney Adjudicator is defined as “a licensed attorney employed by OMHA with knowledge of Medicare coverage and payment laws and guidance”. 42 CFR § 405.902. CMS indicates that Attorney Adjudicators would receive the same training as OMHA ALJs.
Attorney Adjudicators can issue decisions when a decision can be issued without an ALJ conducting a hearing under the regulations, dismissals when an appellant withdraws his or her request for an ALJ hearing, certain remands, and reviews of QIC and IRE dismissals.
The published regulations serve as notice to appellants that waiving the right to appear at a hearing allows an Attorney Adjudicator to issue a decision, provided that a hearing is not necessary to decide the appeal. Appellants and other parties may withdraw a waiver of the right to appear at the hearing at any time before a notice of decision has been issued. §§ 405.1036(b)(2) and 423.2036(b)(2).
If an Attorney Adjudicator is assigned to adjudicate a request for an ALJ hearing, the request can still be reassigned to an ALJ for an oral hearing if the Attorney Adjudicator determines that a hearing could be necessary to render a decision. Moreover, decisions and dismissals issued by Attorney Adjudicators may be reopened and/or appealed in the same manner as equivalent decisions and dismissals issued by ALJs, and an extension of rights associated with an appeal adjudicated by an ALJ would extend to any appeal adjudicated by an Attorney Adjudicator. § 423.562.
The Center is interested in hearing from beneficiaries and their advocates about the quality of their experiences with and decisions issued by Attorney Adjudicators.
- No Longer “Must” ALJs (and Attorney Adjudicators) Issue a Decision Within 90 Days.
Despite strong objections by the Center and other commenters, CMS removed the word “must” from regulations mandating that ALJs issue a decision no later than 90 days after receiving a hearing request. 42 C.F.R. § 405.1016(a) and (c). According to CMS, removing “must” does not “abrogate the general expectation that a decision, dismissal, or remand will be issued within an applicable adjudication time frame, such as the 90 day time frame provided for at section 1869(d)(1)(A) of the Act…”, but “only has the effect of more appropriately setting expectations with regard to whether there is an absolute and unqualified requirement to issue a decision, dismissal, or remand within the adjudication time frame.” [82 FR 5040].
The Center believes this rule change is contrary to the plain language of the Medicare statute, which the D.C. Circuit Court of Appeals recently held imposes a clear duty to issue decisions within 90 days. The Court firmly rejected the agency’s position that the statutory option allowing appellants to escalate their appeal to the next level of review dilutes the mandatory nature of the deadline, because “providing a consequence for noncompliance does not necessarily undermine the force of a command” to decide appeals in 90 days.
The Center particularly urged the agency not to weaken the 90-day deadline for hearing requests by Medicare beneficiaries and Medicaid state agencies, since it is the final protection these parties have against the tremendous delays affecting the Medicare appeals system and the exceptionally high rate of denials at the two lower levels of review. Additionally, escalating an appeal to the next level of review where there is no right to a hearing and the delays in getting a decision are even longer than at the ALJ level is not an adequate alternative to receiving an ALJ decision within 90 days. The Center is interested in learning about any problems that beneficiaries experience in obtaining timely ALJ or Attorney Adjudicator decisions after this change goes into effect.
- Administrative Hearings by Telephone as Default Mode for All Appellants Except Unrepresented Beneficiaries.
The regulation makes telephone hearings the default hearing method for individuals other than unrepresented beneficiaries. 42 CFR § 405.1020(b)(2). Video-teleconferencing (VTC) will be retained as the default method of conducting hearings for unrepresented beneficiaries, unless good cause for an in-person appearance is shown or the beneficiary requests a phone hearing.
The Center urged the agency to retain VTC as the default method for all appellants or, alternatively, allow appellants to choose a VTC hearing without having to establish good cause. We have found that appearance by VTC affords greater assurance that ALJs fulfill their duty to provide a full and fair hearing. Visual interaction enhances comprehension and allows appellants and ALJs to gauge whether there is understanding, confusion or lingering questions. There is better awareness of when an ALJ is tired, disinterested, or distracted which may not be obvious in a phone hearing. Reliance solely upon listening requires greater mental energy and focus and can prove exhausting. VTC hearings afford a measure of protection against procedural improprieties, particularly in long hearings and those involving multiple parties, large volumes of documentation, or complex arguments. VTC also helps all involved check to see that they are looking at the same document or other visual evidence.
The Center would like to hear from advocates and beneficiaries concerning any problems related to the method by which their hearings were conducted.
- Additional Appeals Rule Revisions of Interest to Beneficiaries and their Advocates
The final rule clarifies that a party to a QIC reconsideration or an enrollee who receives an IRE reconsideration has a right to a hearing before an ALJ if they file a timely request and meet the amount in controversy requirement. If the request is timely filed with an office other than the office specified in the reconsideration or dismissal, it will still be treated as timely. However, the applicable timeframe for deciding the appeal begins on the date the office specified in the reconsideration or dismissal receives the request.
- Content Requirements for Hearing Request
The revised rules require appellants, including unrepresented beneficiaries, to provide a telephone number on the hearing request to help ensure that OMHA can make timely contact with them. The Medicare appeal number or document control number, if any, assigned to the QIC reconsideration or dismissal notice being appealed, must also be indicated. The agency also clarified that appellants must provide the “dates of service for the claims being appealed, if applicable.” Filing parties will also have to inform if they are aware that they or the claim is the subject of an investigation or proceeding by the OIG or other law enforcement agencies.
In addition, appellants will be required to include the “amount in controversy” applicable to the disputed claim in their hearing request, unless the matter involves a disputed termination of Medicare-covered items or services, and the beneficiary did not elect to continue receiving the items or services. This requirement is waived for beneficiaries who are not represented by a provider, supplier, or Medicaid State agency. For such appellants, the agency will require the QIC to specify in the notice of reconsideration, for partially or fully unfavorable reconsideration decisions, whether the amount remaining in controversy is estimated to meet or not meet the amount required for an ALJ hearing.
- Copy Requirements for Hearing Request
The amended rules require an appellant to send a copy of a request for an ALJ hearing or review of a QIC dismissal to the other parties who were sent a copy of the reconsideration or dismissal, along with any additional materials (e.g., a position paper or brief) that are necessary to provide the information required for a complete request. If additional evidence (e.g., medical records) is submitted with the request for hearing, the appellant may send a copy of the evidence or briefly describe the evidence pertinent to the party and offer to provide copies of the evidence at the party’s request (subject to authorities that apply to disclosing evidence). Evidence that the required copies were sent to the applicable parties includes: certification on the standard hearing or review request form; an indication such as a “cc” line; an affidavit or certificate of service; or a mailing or shipping receipt.
If an appellant, other than an unrepresented beneficiary, fails to send the required copies, the appellant will be provided with an additional opportunity to do so, and any adjudication period will not begin until receipt of evidence that the required copies were sent. If an appellant still fails to provide evidence that copies were sent within the extra time allowed, the appellant's request for hearing or review will be dismissed. As noted, unrepresented beneficiaries are exempt from the potential consequences of failing to satisfy the copy requirements.
- Submission of New Evidence
There are three time frames when parties may submit all written or other evidence they wish to have considered: (1) With the request for hearing; (2) by the date specified in the request for hearing; or (3) if a hearing is scheduled, within 10 calendar days of receiving the notice of hearing. This requirement does not apply to oral testimony or evidence submitted by an unrepresented beneficiary.
The revised rules establish that new evidence introduced at the OMHA level will not be considered without a statement explaining why the evidence was not submitted prior to the QIC’s reconsideration, and also sets forth additional circumstances for which an ALJ or Attorney Adjudicator could find good cause to accept new evidence. It is important to note that these limitations do not apply to new evidence submitted by an unrepresented beneficiary, a Medicaid State agency, CMS or its contractors, an applicable plan, or a beneficiary represented by someone other than a provider or supplier.
- Hearing Process
If CMS and one or more contractors file an election to be a party to a hearing, the rules now limit participation to the first party to file its election, unless the ALJ determines that an additional entity’s participation as a party is necessary for a full examination of the matters at issue. Neither CMS nor its contractors may elect to be a party to a hearing requested by an unrepresented beneficiary, nor may an ALJ request their participation as a party to such a hearing.
The rules now expressly permit an ALJ to limit testimony and/or argument at hearing that are not relevant to an issue before the ALJ, repetitive of evidence or testimony already in the record, or that relate to an issue that has been sufficiently developed or already ruled upon by the ALJ. Moreover, an ALJ may excuse a party or party’s representative from a hearing if that individual remains uncooperative, disruptive, or abusive during the course of the hearing after being warned by the ALJ to stop such behavior.
Numerous other changes were finalized by the agency.
February 8, 2017 – W. Kwok
For more information,
Center attorneys will discuss the final Appeal Rules in
 Am. Hosp. Ass’n v. Burwell, 812 F.3d 183 (Feb. 9, 2016).
 Id. at 190.
 42 C.F.R. §§ 405.1002 and 423.2002.
 42 C.F.R. §§ 405.1014(c)(2) and 423.2014(d)(2)(i).
 42 C.F.R. § 405.1014(a)(1)(i) through (iii).
 42 C.F.R. § 405.1014(a)(1)(iv).
 42 C.F.R. § 405.1014(a)(1)(v).
 42 C.F.R. § 405.1014(a)(1)(vii).
 42 C.F.R. § 405.1014(a)(1)(viii).
 Pursuant to the Center’s recent settlement with the agency in Exley v. Burwell, 3:14-CV-1230, CMS just released the revised Form OMHA-100, which is the unified request for hearing and review that can be used for all appeals to OMHA. The new form: allows beneficiaries and enrollees to self-identify; accommodates requests for Part D appeals; and includes an OMHA toll-free phone number in 18-point font to obtain assistance or a large print version of the forms. A link to a fillable PDF version of the form is on the OMHA website at: https://www.hhs.gov/about/agencies/omha/filing-an-appeal/forms/index.html.
 42 C.F.R. § 405.1014(d)(1).
 42 C.F.R. § 405.1014(d)(2).
 42 C.F.R. §§ 405.1014(d)(3) and 405.1052(a)(7) and (b)(4).
 42 C.F.R. § 405.1018(d).
 42 C.F.R. § 405.1012(a)(2).
 42 C.F.R. §§ 405.1030(b)(2) and 423.2030(b)(2).
 42 C.F.R. §§ 405.1030(b)(3) and 423.2030(b)(3).