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CMS has restructured its Quality Improvement Organization (QIO) Program to separate the beneficiary complaint review functions from the quality improvement functions.

The change information described below is response to many years of urging CMS to separate the review of beneficiary complaints function of QIOs from that of the QIO function of assisting providers of services with quality of care improvement activities.  To that end, in March of 2006, the Institute of Medicine (IoM) released a report, “Medicare’s Quality Improvement Organization Program:  Maximizing Potential.  That report recommended removing from QIOs the function of performing quality of care complaint investigations for Medicare beneficiaries. The CMS response below designates two QIOs to work exclusively on beneficiary complaints.

In  response to the IoM report, the Center for Medicare Advocacy held a conference to explore the types of entities that would be most appropriate to handle beneficiary complaints. See (site visited August 15, 2014) and (site visited August 15, 2014).   For this conference, the Center for Medicare Advocacy received support from the Commonwealth Fund, AARP, and other sources,

For Beneficiary Complaints (Beneficiary and Family-Centered (BFCC) QIO contractors)

On May 9, 2014, the Centers for Medicare & Medicaid Services (CMS) announced the first phase of its QIO restructuring of the QIO functions.  In the first phase, CMS has contracted with Livanta LLC (for geographic areas 1 and 5), located in Annapolis Junction, Maryland,, and KePRO (for geographic areas 2, 3, and 4), located in Seven Hills, Ohio,  

These contractors will be responsible for ensuring consistency in the review process with respect to beneficiary complaints. CMS describes these two contractors as its Beneficiary and Family-Centered (BFCC) QIO contractors.  The states in the designated geographic areas are:  Area 1: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Puerto Rico, Rhode Island, Vermont, Virgin Islands;  Area 2: District of Columbia, Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia;  Area 3: Alabama, Arkansas, Colorado, Kentucky, Louisiana, Mississippi, Montana, North Dakota, New Mexico, Oklahoma, South Dakota, Tennessee, Texas, Utah, Wyoming;  Area 4: Iowa, Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, Wisconsin, and  Area 5: Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Washington.  CMS will introduce the program changes with the beginning of its five year, 11th Statement of Work – the QIO contracts cycle – on Aug. 1, 2014.

Presently, Medicare beneficiaries and their advocates are experiencing delays in reaching staff of the Beneficiary and Family-Centered (BFCC) QIO contractors to review claims information and related matters.  It is important to stay vigilant as the new system continues to roll out and take shape.

For Assisting Providers with Quality Improvement (Quality Innovation Network (QIN)-QIOs)

On July 18, 2014, as part of the restructuring of the QIO program – separating the beneficiary quality of care complaint review process from provider quality improvement functions — the Centers for Medicare & Medicaid Services (CMS) awarded additional contracts to assist providers with quality improvement matters. The new contracts represent the second phase of QIO restructuring. These QIOs will be known as Quality Innovation Network (QIN)-QIOs.  See Each QIN-QIO will work on strategic quality improvement initiatives.


As discussed during the last Alliance Call in June 2014, CMS issued policy in March 2014 that greatly restricted access to prescription drugs by hospice patients (see, e.g., see the Center’s Weekly Alert “Hospice and Access to Medications – New CMS Guidance” (April 10, 2014) available at:   

As discussed below, on July 18, 2014, CMS revised – and greatly improved – this guidance. The following is excerpted from the Center’s Weekly Alert “Hospice and Access to Medications Update: CMS Replacement Guidance” (July 24, 2014) available at:  

Brief History

When Medicare beneficiaries elect the hospice benefit, they waive Medicare coverage for all care and services related to the terminal illness that are not on the hospice plan of care and provided through the hospice provider.  This means that when a terminally ill beneficiary elects hospice, all of the medications needed to control the pain and symptoms related to the terminal illness should be paid for by the hospice provider from the hospice Medicare payment.  All medications that are not related to the terminal illness should continue to be paid for by the beneficiary’s Medicare Part D Plan Sponsor (insurance company that administers the beneficiary’s prescription drug benefit).  

On March 10, 2014, CMS issued a memorandum entitled, "Part D Payment for Drugs for Beneficiaries Enrolled in Hospice – Final 2014 Guidance."  The Guidance directed Part D Plan Sponsors to "place beneficiary-level prior authorization (PA) requirements on all drugs for beneficiaries who have elected hospice…"  This direction was based on the mistaken assumption that once a beneficiary elects hospice, all of her medications will be related to the terminal illness and thus the financial responsibility of the hospice provider.  After the original memorandum was issued, the Center for Medicare Advocacy and over 40 other advocate and provider organizations, including the American Medical Association, asked CMS to rescind the policy because it created significant barriers for beneficiary access to necessary Part D medications.

Replacement Guidance

On July 18, 2014, the Centers for Medicare and Medicaid Services (CMS) issued a memorandum to Part D Plan Sponsors and Medicare hospice providers replacing its March 10, 2014 Guidance. Pursuant to the replacement guidance, the only Part D medications requiring a "hospice prior authorization" are:  analgesics (medications used to treat pain); antiemetics (medications used to treat nausea); laxatives; and anxiolytics (medications used to treat anxiety).   This means that when Medicare beneficiaries elect hospice they should not have difficulty accessing medically necessary medications that are not related to their terminal condition through their Part D plans. 

The replacement guidance is effective immediately, however within the text of the replacement guidance, CMS indicates that Part D Plan Sponsors are "encouraged" to fully implement the policy by no later than October 1, 2014.  Pursuant to the replacement guidance, once a Medicare beneficiary elects the hospice benefit, Part D Plan Sponsors should continue to fill medications as they were filled prior to the election except for analgesics, antiemetics, laxatives, and anxiolytics.  For these four categories, the Part D Plan Sponsors should require prior authorization.  This is because these four categories are usually related to palliative treatment for the terminal illness and related conditions, and thus are usually, (but not always) covered as part of the Medicare hospice benefit.


The replacement guidance is significantly better than the original.  Fewer medications will require prior authorization and as long as Part D Plan Sponsors, pharmacists, and hospice providers comply with its requirements, Medicare beneficiaries should not experience difficulty accessing their Part D medications. Unfortunately, the replacement guidance, like the original relies upon the good will and prompt diligence of hospice providers, pharmacies, and Part D Plan Sponsors to ensure Medicare beneficiaries do not lose access to medications necessary to prevent pain, nausea, constipation, and anxiety.  It also gives no time frames, with the exception of a formal coverage request, to ensure that the sponsors, pharmacists, and providers act expeditiously.

Moreover, the replacement guidance, like the original, provides no real appeal process for hospice patients who believe the hospice provider is providing the wrong medication or not enough medication to control the symptoms related to the terminal illness. 


A study assessing the outcomes of patients who were treated in inpatient rehabilitation facilities (IRFs) with clinically and demographically similar patients who received their post-acute rehabilitation in skilled nursing facilities (SNFs) finds that IRFs provide better care to their patients over a number of outcome measures – IRF patients live longer, spend more days at home and fewer days in health care institutions, have fewer emergency room visits and, for patients with some diagnoses, fewer rehospitalizations.  In short, the study by Dobson DaVanzo & Associates (July 2014) shows that clinical outcomes for IRF patients are considerably better than clinical outcomes for SNF patients, but costs are higher for IRF patients than for SNF patients. 

These findings have significant implications for site-neutral payment proposals and bundling demonstrations, both of which are likely to shift patients to SNFs.  Site-neutral payments would likely reduce payments to IRFs, reduce the availability of IRFs for Medicare patients, and increase cost-sharing for Medicare patients.  Post-acute bundling would also likely shift Medicare patients from IRFs to SNFs.  IRFs should be available to Medicare patients who need, and could benefit from, their services.  Site-neutral payments and the bundling demonstrations, though, appear to undermine the availability of IRFs for Medicare patients who need post-acute care.


Note: The following material is excerpted from a July 24, 2014 letter the Center sent to

Daniel R. Levinson, Inspector General, U.S. Department of Health and Human Services.

The Center is aware that many vendors are dissatisfied with the DMEPOS competitive bidding program. We fear this dissatisfaction is translating into actions that create barriers to beneficiaries’ ability to get necessary DMEPOS items and services. For example, beneficiaries have contacted us about suppliers who won bids but now say the payment they receive is too low for them to fulfill their contract obligations to deliver equipment in a timely manner or to provide necessary supplies.

Since early 2014, the Center has noticed a significant increase in supplier non-compliance with delivery and set up obligations, primarily in areas of the United States in which the competitive bidding program became operative in July 2013. 

While some suppliers say that the competitive bidding rates are too low, others seem genuinely uninformed about their delivery and set-up requirements. In our July 10 CMA Alert, the Center set out the delivery and set-up responsibilities of suppliers by product category.  That information is available at:

Advancing Access to Medicare and Health Care

The July 10 CMA Alert also identified the following examples of recurring DMEPOS delivery and set-up issues that have been brought to our attention:

•         DMEPOS Orders Are Taking An Unduly Long Time To Be Delivered

Suppliers are not always delivering DMEPOS in a reasonable time.  Delivery of necessary medical items such as reclining wheelchairs and oxygen has taken as long as a month or more, and only after repeated calls to the supplier and/or re-faxing of orders.  Such delays are stressful, can impede a timely hospital discharge, and can impair a beneficiary's quality of life.

•         Some Suppliers Are Refusing To Provide Certain DMEPOS Items

After receiving a bid contract, some DMEPOS suppliers either stop supplying a certain item, or Medicare beneficiaries are no longer able to use the same DMEPOS supplier they have used in years past.  The beneficiary then has to find a new supplier, one that is covered by Medicare and has their required DMEPOS.  Unfortunately, this often proves difficult, and beneficiaries suffer in the meantime, either using equipment that they are not accustomed to or that is not optimal for their medical situation. This has also been experienced with liquid oxygen and ostomy supplies.

•         Some Suppliers Are Refusing To Deliver Prescribed DMEPOS Items

Some suppliers will refuse to have DMEPOS items delivered directly to a beneficiary after a hospital or skilled nursing facility discharge, which means that the beneficiary may go home without their needed DMEPOS, and must wait until that DMEPOS is delivered by mail.  Sending a beneficiaries home from a hospital or skilled nursing facility without their necessary medical equipment is unsafe and inappropriate.

•         Some Suppliers Do Not Honor Their Repair Obligations

DMEPOS suppliers are obligated to assist beneficiaries with necessary repairs of their DMEPOS equipment, yet some suppliers are avoiding this responsibility. For example, beneficiaries, or their caregivers, are forced to search to find a supplier who will repair their wheelchairs.

The DMEPOS competitive bidding program is law and should be followed.  We encourage the Centers for Medicare & Medicaid Services (CMS) to enhance its monitoring and expand its enforcement of current DMEPOS law, regulations, and vendor contracts.  Similarly, there must be a vigorous and on-going campaign to educate competitive bid winners and consumers about the rules of the competitive bidding program.  Likewise, CMS must use it power to sanction non-compliance. 

We are disappointed that neither the HHS OIG nor the GAO, in recent reports about the DMEPOS program, identified the access, delivery, and set-up concerns identified above.  In addition, the Center takes issue with the recent GAO and OIG reports on the success of the DMEPOS program and beneficiary access to the equipment and supplies they need. (See our comments at:

Thus, we ask the Office of the Inspector General to perform a comprehensive study to assess supplier actions, and beneficiary access to necessary DMEPOS, under the competitive bidding program.


  • Problems with Medicare Appeals – As previously discussed during Alliance calls, the Center’s experience with dismal success rates in beneficiary appeals at the lower levels of review are quite staggering, and have been getting exponentially worse over the past few years.
    • On June 4, 2014, the Center filed a complaint in United States District Court in Connecticut against Kathleen Sebelius, Secretary of Health and Human Services (at that time), on behalf of plaintiffs who have been denied a meaningful review of their Medicare claims at the first two levels of appeal. The case was brought as a class action, and the four named plaintiffs represent thousands of Medicare beneficiaries in Connecticut who cannot get a meaningful review of their case. Instead, Medicare beneficiaries receive almost automatic denials of coverage, which is essentially “rubber stamped” at both the Redetermination and Reconsideration levels. The problem persists throughout the country.
  • ALJ Delay Issues – The “rubber stamp” denials at the lower levels of Medicare appeals have resulted in huge backlogs to receive an ALJ hearing – the only meaningful review of a Medicare appeal and chance for success. The statute and regulations require that an ALJ issue a decision within 90 days of the Request for Hearing. While the Chief ALJ has stated that individual beneficiary cases should not be delayed, still most of the Center’s cases are greatly exceeding statutory timelines for decisions. The Center would like to hear from Advocates with similar ALJ delays. We are considering our options to solve the ALJ delay problem for beneficiaries.
  • Jimmo v. Sebelius (Improvement Standard) No. 11-cv-17 (D.Vt. filed 1/18/11).  As reported during previous Alliance calls, the Settlement in Jimmo was approved on January 24, 2013 during a scheduled fairness hearing.  As previously discussed, CMS has issued revisions to its Medicare Benefit Policy Manual to ensure that Medicare coverage is available for skilled maintenance services in the home health, nursing home and outpatient settings.  CMS also implemented a nationwide education campaign for all who make Medicare determinations to ensure that beneficiaries with chronic conditions are not denied coverage for critical services because their underlying conditions will not improve.
  • Bagnall v. Sebelius (Observation Status) No. 3:11-cv-01703 (D. Conn., filed 11/3/2011). In November 2011, the Center for Medicare Advocacy and the National Senior Citizens Law Center filed a class action lawsuit on behalf of individuals who have been denied Medicare Part A coverage of hospital and nursing home stays because their care in the hospital was considered "outpatient observation" rather than an inpatient admission. When hospital patients are placed on observation status they are labeled "outpatients," even though they are often on a regular hospital floor for many days, receiving the same care as inpatients.  Because patients must be hospitalized as inpatients for three consecutive days to receive Medicare coverage of post-hospital nursing home care, people on observation status do not have nursing home coverage.  They must either privately pay the high cost of nursing care or forgo that skilled care.  The number of people placed on observation status has greatly increased in recent years.  As previously reported, unfortunately, on September 23, 2013, a federal judge in Connecticut granted the government’s motion to dismiss the lawsuit. Plaintiffs appealed, but limited the appeal to the issue of the right to an effective notice and review procedure for beneficiaries placed on observation status.  Their opening brief was filed on February 13, 2014.  Both the AMA and the American Health Care Association filed amicus briefs in support of plaintiffs, and the American Hospital Association filed an amicus brief that was neutral as to the parties.  The Secretary’s brief is due on May 15, 2014.
  • There is bipartisan support in both the House and Senate to fix this problem. Representatives Joseph Courtney (D-CT) and Tom Latham (R-IA) have introduced the Improving Access to Medicare Coverage Act of 2013 (H.R.1179) to help Medicare beneficiaries who are hospitalized in observation status. This bill would require that time spent in observation be counted towards meeting the three-day prior inpatient stay that is necessary to qualify for Medicare coverage of SNF care. Senator Sherrod Brown (D-OH) has introduced a companion bill, S.569, cosponsored by Senator Susan Collins (R-ME).
  • For more information about observation status, including pending legislation   see:

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