REVISIONS TO THE MEDICARE APPEALS PROCESS


On December 8, 2003, President Bush signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Public Law 108-173. In addition to creating a new Medicare Part D prescription drug benefit, the Act also made changes to other parts of the Medicare program. This memorandum describes the changes to the Medicare appeals process.

Transfer of Administrative Law Judges to Department of Health and Human Services

Section 931 of the Act calls for the transfer of responsibility for Medicare administrative law judge (ALJ) appeals from the Social Security Administration (SSA) to the Department of Health and Human Services (HHS) no earlier than July 1, 2005 but not later than October 1, 2005.

SSA and HHS are required to send to Congress and to the Comptroller General, no later than April 1, 2004, a plan for the transfer. The plan is to include the projected number of ALJs and support staff required to handle cases, projected costs for fiscal year 2005, a timetable for the transition, a recommendation concerning the feasibility of giving Departmental Appeals Board (DAB) decisions binding, precedential authority, the feasibility of filing cases electronically and conducting hearings by tele-or video-conference, the regulations needed, a design for a unified case tracking system, steps to ensure independence of ALJs and to ensure adequate geographic distribution, steps concerning hiring, performance standards, training and shared resources. The plan may also include recommendations for legislative modifications to 42 U.S.C. § 1395ff, which governs the appeals process for traditional Medicare. The General Accounting Office must evaluate the plan and submit its evaluation to Congress within six months after receiving the report.

In effectuating the transfer of ALJs to HHS, the Secretary of HHS must ensure the independence of ALJs from the Centers for Medicare & Medicaid Services (CMS) and its contractors and place ALJs in an office that is organizationally and functionally separate from CMS. The office of ALJ will be under the supervision of the Secretary and shall not report to any other officer of HHS. The Secretary must also provide for an appropriate geographic distribution of ALJs to ensure timely access to hearings throughout the United States.

The Section also provides appropriations for hiring and training ALJs and for increased financial support to the DAB. HHS is also required to enter into arrangements with SSA for the sharing of resources, including office space and support staff.

Expedited Access to Judicial Review

Section 932 of the Act modifies 42 U.S.C. § 1395ff(b) to create a new process whereby beneficiaries, providers and suppliers can have expedited access to judicial review in certain appeals of Medicare Part A or Part B claims. The new expedited appeals process also applies to provider contract disputes, primarily nursing home enforcement cases. Expedited review is available when it is determined both that the DAB lacks authority to decide a question of law or regulation relevant to the case and that there is no material issue of fact in dispute.

A beneficiary may file a request for expedited access to judicial review at the same time as, or after, filing a request for an ALJ hearing. A review entity made up of three reviewers who are ALJs or members of the DAB has 60 days after receipt of the request to issue a written decision. The review entity may request appropriate documents and materials from the beneficiary to support her contention that (1) no material issues of fact exist and (2) the DAB lacks authority to decide the relevant question of law or regulations. If the review entity agrees with the beneficiary’s request for expedited review, or if the review entity fails to act within 60 days of receipt of the request, the beneficiary skips ALJ and DAB review and may go directly to district court. If the review entity finds against the beneficiary, she has no further recourse, and may not make another request for expedited review regarding the matter in dispute.

Revisions to the Medicare Parts A and B Appeals Process

Sections 933, 937, 939 and 940 make revisions to 42 U.S.C. § 1395ff, the appeals process for claims under Parts A and B, including revisions to the changes made by BIPA 2000 that have yet to be implemented.

1. Presentation of evidence by providers: Effective October 1, 2004, providers and suppliers who bring appeals of Medicare claims may not introduce new evidence at the ALJ level of review unless they show good cause as to why the evidence was not introduced at an earlier level of review.

2. Written notice requirements: Section 933 adds details to the requirement to provide written notice of initial determinations and redeterminations by fiscal intermediaries and carriers, reconsiderations by qualified independent contractors (QICs), and ALJ decisions. All notices must be provided in printed form and written in a manner calculated to be understood by the beneficiary. The changes became effective upon enactment.

A. The written notice of an initial determination which denies a claim must include the reasons for the determination, including whether a local medical review policy (LMRP) was used, the procedures for obtaining additional information, and notification of the right to seek a redetermination and instructions on how to initiate an appeal. The beneficiary may request information about the specific policy, manual or regulation used to make the determination.

B. The written notice of a redetermination which denies a claim must include the specific reasons for the redetermination, a summary of the clinical or scientific evidence used in making the determination, a description of how to obtain additional information, and notification of the right to appeal and the process for filing an appeal.

C. The written notice of a reconsideration must include, "to the extent appropriate", a detailed explanation of the decision, a discussion of the pertinent facts and applicable regulations, and, in a case involving a medical necessity determination, an explanation of the medical and scientific rationale for the decision. The notice must also explain appeal rights and the process for filing an appeal.

D. The written notice of an ALJ decision must include the specific reasons for the determination including, if appropriate, a summary of the clinical or scientific evidence used to make the determination, the procedures for obtaining addition information concerning the decision, notification of the right to appeal and instructions for filing an appeal.

3. Requirements for QICs. The statute also modifies the BIPA 2000 provisions, which have not yet been implemented, concerning the new reconsideration level of review conducted by QICs. The revisions to the QIC requirements take effect as if they were part of BIPA, which had an effective date of October 1, 2002.

The new Act reduces the number of QICs from twelve to four and modifies the requirements that must be satisfied in order for an entity to contract with CMS as a QIC. The Act strengthens the independence requirements for QICs and for reviewers; among other things, a reviewer’s compensation cannot depend upon the result of the decision in the case.

4. Appeals by providers. Section 939 allows providers or suppliers to appeal a denial on behalf of an individual who subsequently dies if there is no one else available to pursue the appeal. The provision is effective immediately for items and services furnished on or after December 8, 2003.

5. Time frames and jurisdiction amounts. Section 940 extends the time frames for issuing redeterminations and reconsiderations from 30 days to 60 days. Starting in 2005, the jurisdictional amount for ALJ hearing requests and for requests for judicial review will be increased for all beneficiaries each year by the percentage increase in the medical care component of the consumer price index for urban customers, rounded to the nearest multiple of $10.

6. Correction of minor errors. Section 937 authorizes CMS to create a process, including re-submission of correct claims, to allow providers and suppliers to correct minor errors or omissions in claims without having to file an appeal. The process is to take effect not later than December 8, 2004.

New Limited Prior Determination Process

Section 938 amends 42 U.S.C. §1395ff(b) to create a new, limited prior determination process regarding physician services determined by the Secretary to be subject to the process. Under the process, a participating physician who has permission from the patient or an individual who has received an advanced beneficiary notice (ABN) may ask the appropriate Medicare contractor for a determination of whether Medicare will pay for a service before actually receiving the service.

The Secretary may require that the request be accompanied by a description of the physicians’ service, supporting medical necessity documentation, the ABN if the requester is the individual, and other appropriate documents. The contractor must then provide a written notice, within 45 days of receipt of the request, as to whether the service is covered, is not covered, or the contractor lacks sufficient information to make a coverage determination. The contractor must inform the beneficiary of the decision if the request was made by the physician.

A determination that a service is covered is binding on the contractor in the absence of fraud or misrepresentation of the facts. If the determination is not favorable, the individual has no appeal rights. However, the individual may still receive the service and have a claim submitted to the contractor. If the claim for services received is denied, the individual may then pursue an appeal through the regular appeals process. Similarly, an individual who decides not to go through the prior determination process, but who chooses instead to receive the service and seek reimbursement, retains current appeal rights.

The Secretary is to implement the prior determination process no later than June 2005. The process sunsets five-years later. During this time period, the Secretary also must establish a process for collecting information about instances in which beneficiaries who receive an ABN decide not to receive the service, and must establish an outreach and education program for beneficiaries and providers about the appropriate use of ABNs. The GAO must report on the use of ABNs and the response by beneficiaries within 18 months of enactment, and report on the use of the prior determination process with 36 months of enactment.

Revisions to Medicare Administration

Section 911, included in the Act as part of the regulatory reform initiative, creates a new Section 1874A of the Social Security Act that modifies and consolidates the administration of Medicare contracts. The section specifically gives the Secretary the authority to enter into contracts with an eligible entity to serve as a Medicare administrative contractor with respect to the performance of certain functions previously performed by fiscal intermediaries and carriers. These functions include determination of payment amounts and making payments, including the development of local coverage determinations; beneficiary education and assistance; provider consultation, communication, education, and technical assistance; and other necessary functions, including functions concerning the Medicare Integrity Program. New Section 1874A defines the appropriate Medicare administrative contractor as the entity which has a contract to perform the function in relation to an individual entitled to benefits under Part A or enrolled under Part B, or to a provider, supplier, or class of providers or suppliers.

Section 911 of the Act makes conforming modifications to 42 U.S.C. §§ 1395h, 1395u to remove references to fiscal intermediaries and carriers.


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