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ALJ/MAC Decision Database



Medicare beneficiaries whose claims for Part B Medicare coverage are denied may find that the denial was based on a local coverage rule. What are these local coverage rules, how can a beneficiary obtain payment when such a rule has been applied to her claim, and what should one do if a claim is denied Medicare coverage based on a local rule?

Claims for Medicare coverage of health care are administered by private insurance companies that contract with the Center for Medicare & Medicaid Services (CMS) to perform this function. In order to facilitate claims administration, CMS requires its contractors to adopt local coverage rules. Local Coverage Determinations (LCDs) also known as Local Medical Review Policies (LMRPs) set out the terms under which claims will be paid – or denied as not "reasonable and necessary". There are now more than 9,000 local coverage rules throughout the country.

If a claim for Part B Medicare coverage is denied, chances are good that a local coverage rule was the basis for the denial. Most claims are now submitted electronically by physicians and other providers of services. They are processed by computers that have been programed to apply the local coverage rules adopted by the contractor, and to deny claims if all requirements set out in the local coverage rule have not been shown to have been met.

For example, in 2001 Medicare began denying payment for trigger point injections for beneficiary Christopher E., a Center for Medicare Advocacy client, after Medicare adopted a local coverage rule that limited payment to three injections except in special circumstances. Mr. E is paralyzed, the injections were ordered by his physician as medically necessary for his intractable pain. The Center for Medicare Advocacy was eventually able to win a reversal of the denial by showing that application of the local coverage rule had been unduly restrictive.

How does one obtain a Local Coverage Rule - and, hopefully, Coverage?

  • The first thing that a Medicare beneficiary whose claim has been denied should do is request a copy of the local coverage rule that was applied to the claim. This can be done by contacting the Medicare contractor who issued the denial: an 800 phone number is included on the initial denial notice for this purpose. The local coverage determination should also be posted on the contractor’s website. In addition, all the local coverage rules in the country should be searchable through the CMS website,

  • With the full text of the local coverage rule in hand, you can determine whether the claim can meet the rule’s requirements for coverage. Often all that is needed is to submit a specific piece of additional information, such as a test result or a physician statement, that is required by the local coverage rule. You should appeal to the next stage, usually a paper reconsideration, and send this additional information to the decision-maker.

  • Finding out about local coverage rules is often the key to obtaining Medicare coverage.

What if the claim at issue does not meet the requirements of the Local Coverage Rule?

  • If the claim does not qualify for coverage under the terms of the local coverage rule, consider whether the local rule itself appears to be too restrictive. Although local coverage rules and other CMS policies are binding on the contractor who makes decisions on Medicare claims at the initial, reconsideration, and Part B hearing stages, they are not binding at higher levels of appeal, including the next stage, the Administrative Law Judge (ALJ) hearing. If you can show the ALJ that the services you received were "reasonable and necessary" as required by the Medicare statute, the claim may be paid despite the local rule. A majority of cases appealed to the ALJ stage are granted coverage.

Will the impending change in Administrative Law Judge status affect appeals?

Hearings before Administrative Law Judges have traditionally been the best opportunity for those denied Medicare coverage to argue the merits of the case, as the ALJ’s, who have been part of the Social Security Administration, are neutral arbiters bound by the letter of the law rather than by any CMS policy. The Center for Medicare Advocacy wins benefits in over 80% of the cases it appeals to an ALJ.

Under the Medicare Act of 2003, ALJ’s are being transferred from the Social Security Administration to the Department of Health and Human Services, the parent organization of CMS, the agency ultimately responsible for the Medicare program. This obviously raises concerns about the future autonomy of the ALJs who will hear Medicare cases.

Given this concern, the Center for Medicare Advocacy and other advocates have worked to assure the continued independence of ALJs. Thanks to efforts by these groups, the Medicare Act requires HHS to establish an office of ALJs that is organizationally and functionally separate from CMS. ALJs are to report directly to the Secretary of HHS and cannot be under the supervision of any other officer of the Department. This theoretical separation helps ease some initial concerns. In practice, however, advocates should carefully follow implementing regulations and actual cases at the ALJ level to ensure that CMS policy is not given undue weight, that ALJs remain truly independent, and that ALJ decisions remain based purely on the laws as they are written.


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