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On December 9, 2009, the Centers for Medicare & Medicaid Services (CMS) issued final regulations for the Medicare Claims Appeals Process (Parts A & B combined) and for the application of certain appeals provisions to the Medicare prescription drug appeals process (Medicare Part D). Both sets of rules were effective on January 8, 2010. Appeal rules for Medicare Part C, known as Medicare Advantage (MA) [1], are not changed by the new regulations under discussion in this Alert.

Regulations governing the combined appeals process for Medicare Parts A & B, authorized by 42 U.S.C. §§1395ff, are codified at 42 C.F.R. §§405.900 et seq. (Subpart I – Determinations, Redeterminations, Reconsiderations, and Appeals under Original Medicare process). Those regulations are now modified by final regulations at 74 Fed. Reg. 65296 et seq. See

The final rules for Part D appeals are in the Federal Register at 74 Fed. Reg. 65340 et seq., (December 9, 2009),, and modify Part D appeals regulations governing the coverage determinations and exceptions process for Medicare Part D. The prescription drug benefit is authorized in the Medicare statute at 42 U.S.C. §§1395w-104(f),(g), (h), with implementing interim final regulations, effective March 22, 2005, and codified at 42 C.F.R. §§423.560 et seq.

The final regulations for Part D appeals create a new heading for subpart M. It is now called "Grievances, Coverage Determinations, Redeterminations, and Reconsiderations." See 42 C.F.R. Part 423, Subpart M, (2009). The scope of the renamed Subpart M is set out in new §423.558 (2009) as follows: Requirements of Part D plan sponsors with respect to grievances, coverage determinations, and redeterminations are set forth in §423.558(a)(1)(2009). The requirements of the Part D Independent Review Entities (IREs) with respect to reconsiderations are set forth in §423.558(a)(2)(2009), and the rights of Part D enrollees with respect to grievances, coverage determinations, redeterminations, and reconsiderations are set forth in §423.558(a)(3)(2009). The final rules also provide, in §423.558(b)(2009), that requirements regarding reopenings, ALJ hearings, MAC review, and Judicial review are set forth in Subpart U.

Changes and Clarifications for Part A and B Appeals

Definition of a contractor: CMS has clarified the term contractor for purposes of Subpart I as an entity that has a contract with the Federal government to review and/or adjudicate claims, determinations and/or decisions. This includes, but is not limited to, Fiscal Intermediaries (FIs), Carriers, Medicare Administrative Contractors (MACs), Qualified Independent Contractors (QICs), and Quality Improvement Organizations (QIOs).

State Medicaid Agency as Party: A Medicaid state agency cannot be a party to an initial determination. Rather, it can only be a party to a redetermination, reconsideration, hearing, or Medicare Appeals Council (MAC) review. Only after Medicare has issued its initial determination on a claim for items or services provided to a dually eligible beneficiary can a determination be made about a State agency's potential liability for all or part of the associated charges.

Appointment of Representative: If an appeal request is filed by an individual attempting to represent a party, but the submission contains a defective Appointment of Representative (AOR) form, the adjudicator will give the party notice of the defect and time to correct it. A representative must submit, with each appeal request, a copy of the valid, effective AOR or other conforming written instrument in order to request a redetermination or other appeal on behalf of the party. A valid, executed AOR will be honored for the duration of the initial appeal request for which it is filed, and for any subsequent appeal requests with which it is submitted, provided the initial appeal request is filed within one year of the effective date of the AOR. With respect to Medicare Secondary Payer recovery claims, the AOR is deemed valid for longer than one year because liability, no-fault, and worker's compensation claims often take more than one year to resolve.

Proof of Authority to Represent Where Beneficiary Has Died: In order to prevent unauthorized disclosures, CMS contractors must obtain documentation of the status of any person attempting to appeal on behalf of a deceased beneficiary, i.e., authority to administer the estate by probate or intestate provisions of the relevant state probate law.

Approval of Fees before Charging Beneficiary: In these final regulations, CMS reiterates its position, as in Social Security cases, that persons, including attorneys, wishing to charge a fee for representation services before the Secretary, must obtain approval of fees before charging a beneficiary. The requirement applies to proceeding at the Administrative Law Judge Level (ALJ) and beyond. CMS also clarifies that the requirement does not apply to non-beneficiary appellants.

Medicare Summary Notice: This notice, and a remittance advice (RA), are only sent to parties of an initial determination. They are not sent to appointed representatives. The MSN covers the entire range of health care services and items billed to Medicare within a 90-day period. An RA contains comprehensive claims information for all claims processed for a provider or supplier during a specific period.

Assignment of Appeal Rights: CMS has clarified that appointing a representative and assigning appeal rights are two different and unrelated actions. Beneficiaries have the option of either (1) assigning (transferring), by a signed agreement, their appeal rights to the provider or supplier that provided the item or service at issue, if such person or entity is not a party to the initial determination, or (2) appointing a representative (by a signed writing) to act on their behalf during the appeal.

Clean Claims: Claims for services that cannot be adjudicated timely at the initial determination level because they lack sufficient documentation and/or require special handling do not come within the definition of clean claims.

Notice of Non-coverage: A provider's notice of non-coverage does not constitute an initial determination because it is not a determination made by the Medicare program.

Effect of Claim Suspended for Medical Review by Contractor Staff: A claim suspended for medical staff review is not considered a claim that is invalid or incomplete and would not preclude review. Rather, a claim that is suspended for development is one that appears technically sufficient on its face, but requires additional information in order to make a coverage and payment decision.

Calendar Days: Throughout Subpart I, unless otherwise specified, CMS is now using the term, "calendar day" to define what it means when it uses the word "day."

Final or Binding Decisions: CMS is reserving the term "final" decision of the Secretary to describe those actions or decisions for which judicial review may be immediately sought. The term "binding" describes situations in which the parties are obligated to abide by the adjudicator's action or decision, unless further recourse to challenge the action or decision is available and a party exercises that right. In its comments, CMS notes that a binding decision is not a final decision of the Secretary for the purposes of exhausting administrative remedies prior to judicial review.

ALJ Subpoena Power: An ALJ may not issue a subpoena to CMS or its contractors, on his or her own initiative or at the request of a party, to compel an appearance, testimony, or the production of evidence. Parties to an ALJ hearing who wish to subpoena documents or witnesses must file a written request for the issuance of a subpoena within the time period required (within 10 calendar days of the receipt of the notice of the hearing).

Limits of ALJ and Medicare Administrative Contractors: All laws and regulations pertaining to the Medicare and Medicaid programs, including but not limited to Titles XI, XVIII, and XIX of the Social Security Act and applicable implementing regulations, are binding on ALJs and the Medicare Appeals Council (MAC).

Escalation to MAC from the ALJ: With respect to escalation, new language says "if the ALJ does not issue a decision, dismissal order, or remand order within the later of 5 calendar days of receiving the request for escalation or 5 calendar days from the end of the applicable adjudication period as prescribed in the regulations," the appellant may request MAC review. In addition, the appellant must send a copy of the request for review to the other parties to the ALJ decision or dismissal who received a copy of the hearing decision or a copy of the notice of dismissal.

Highlights of Part D Regulations

The new regulations contain revisions to the previous regulations, found at 42 CFR Part 423, Subpart M. As described above, CMS reorganized and consolidated some of the existing requirements for ALJ and MAC level review into a new Subpart U. For the most part, the new rules align the Part D ALJ and MAC procedures with the ALJ and MAC procedures for claims arising under Medicare Parts A and B. The processes and procedures, including the processes for requesting ALJ or MAC review, are substantially the same. ALJ hearings are conducted by video-teleconferencing, where available, or by telephone, with the opportunity to request an in-person hearing.

The regulations also add timeframes for issuing ALJ and MAC decisions regarding Part D claims, including timeframes in expedited procedures, and clarify the role of the Part D plan, CMS, and the Independent Review Entity (IRE) at the ALJ hearing.

As with the new regulations for Parts A and B, the new Part D regulations clarify that all timeframes refer to calendar days. They also replace the terms "final" or "final and binding" decision with the word "binding" in several sections. The clarification is intended to distinguish between decisions that are binding on the beneficiary and the Part D plan unless they are appealed, and decisions that are considered final decisions of the Secretary of Health and Human Services (HHS) for purposes of exhausting administrative remedies when seeking federal court review of the agency decision. The regulations also clarify that ALJ review is de novo review.

Timeframes for Issuing Part D Decisions

The biggest change to the Part D ALJ and MAC appeals processes is the addition of timeframes within which the adjudicators must issue decisions. Unlike the statutory section setting forth appeals rights under Parts A and B, the Part D statutory section does not include set timeframes for issuing ALJ and MAC decisions. CMS determined, however, that it is appropriate to require ALJs and the MAC to issue decisions within the 90-day time frame that applies to Parts A and B claims. The 90 days run from the date the request for review is received. As with the Parts A & B combined appeals rules, CMS now clarifies that if a request for an in-person ALJ hearing is granted, the request will not be deemed a waiver of the right to a decision within 90 days. The ALJ must still issue a decision within 90 days of receipt of the appeal request unless the beneficiary agrees to a waiver of the time frame in writing.

CMS also determined that it is appropriate to include a process for expedited review of all Part D coverage determinations except for those that solely involve a request for payment of drugs already furnished. To qualify for expedited review, the person writing the prescription must indicate, or the ALJ or MAC must determine, that applying the standard 90-day timeframe may seriously jeopardize the beneficiary's life, health, or ability to regain maximum function. The ALJ or MAC may consider the standard as having been met if a lower-level adjudicator has granted a request for an expedited hearing.

A beneficiary may make an oral request for an expedited ALJ hearing or MAC review, but only after first receiving the written decision from the IRE, in the case of a request for an ALJ hearing, or the written ALJ decision, in the case of MAC review. The ALJ/MAC must inform the beneficiary within 5 days of receipt of the request whether the request for expedited review has been granted. If the request is granted, then the decision must be issued within 10 days of receipt of the request for the appeal.

Role of the Part D Plan and of CMS at ALJ Hearings

In a departure from the Parts A and B regulations, where providers may file appeals and be a party to the ALJ hearing, and from the Part C regulations, where the Medicare Advantage plan may be a party to the hearing, CMS has determined that the Part D plan is not a party to the hearing. CMS bases the decision on the statutory section which says that only the beneficiary can file an appeal to the ALJ. Likewise, CMS and the IRE cannot be parties at the hearing. CMS has determined that CMS, the IRE, and the Part D plan may be participants at the hearing, however, if their request to participate is granted by the ALJ or if the ALJ requests their participation.

Because the Part D plan, CMS, and the IRE cannot be a party to the hearing, they cannot call witnesses or cross-examine the beneficiary or any beneficiary witness if they act as participants. Under the Parts A and B combined regulations, a participant to a hearing may file position papers or provide testimony to clarify factual or policy issues. CMS states in the preamble to the new Part D regulations: "Participation by CMS, the IRE, or the Part D plan sponsor is intended to be non-adversarial and for the purpose of aiding in the clarification of factual or policy issues."

Evidentiary Issues

The Part D regulations do not incorporate the Parts A and B limitation on the submission of new evidence at the ALJ hearing. That rule applies only to providers and suppliers who file appeals concerning Parts A and B claims. Since only beneficiaries may appeal a Part D claim, the limitation on the submission of evidence is not applicable. However, a beneficiary who is represented must submit new evidence within 10 calendar days of receiving the notice of hearing. The 90-day time frame for issuing a decision will be extended by the number of days beyond 10 days in which evidence is submitted. For example, if new evidence is submitted 20 days after the date of request, then the ALJ will have an additional 10 days in which to issue the decision. The 10-day rule does not apply to an unrepresented beneficiary.

If the beneficiary wants to submit evidence at the ALJ or the MAC concerning a change in his or her condition after the issuance of the coverage determination, then the ALJ or the MAC must remand the case to the IRE for consideration of the new evidence. The proposed regulations originally required remanding the case to the Part D plan. CMS changed the final rule in response to comments filed by beneficiary advocates, who stated that a remand to the Part D sponsor would prolong the appeal if the beneficiary was dissatisfied with the plan sponsor's new coverage determination. Under the final procedure, if a case is remanded to the IRE for consideration of new evidence, then the beneficiary would have opportunity to appeal the new decision to the ALJ.

Beneficiary advocates had also asked CMS to authorize the ALJ to request expert testimony and to allow the beneficiary to request the ALJ to issue a subpoena in a Part D appeal. Advocates cited the reluctance of some physicians, who already felt overburdened by Part D, to submit medical records or to participate as a witness in the appeal. CMS responded by stating that the regulations allow the ALJ, on his or her own initiative, to subpoena witnesses and medical records when the ALJ deems the issuance of a subpoena to be reasonable and necessary for full presentation of the case. In rejecting the request for additional subpoena power, CMS also clarified that the ALJ may not issue a subpoena to CMS, the IRE, or to the plan to compel an appearance, testimony, or production of evidence.


The changes in regulations above are a combination of major and minor changes; they all warrant careful attention Advocates should further attend to how CMS's clarification of the use of "final" and "binding" affects one's ability to move through appeals processes. Also of significance is the limitation on ALJ and MAC subpoena power authority. In this regard, advocates will have to think through discovery needs in a more comprehensive fashion at the onset of an administrative appeal.

[1] codified at 42 U.S.C. §§1395w-22(f), (g); 42 C.F.R. §422.560 et seq.

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