Changes to The Medicare Appeals System
Are Likely to Delay Access to Impartial Hearings

November 10, 2004

The Centers for Medicare & Medicaid Services (CMS) issued a statement on October 18, 2004, claiming that Medicare beneficiaries would soon be able to resolve their appeals more quickly and efficiently as a result of changes CMS is making to the Medicare claims appeals system.  The reality is, however, that the changes will make it more difficult for beneficiaries to get a fast and fair resolution of their appeals. These changes extend the time for contractors to review appeals, add another layer of review, and increase the amount in controversy required to obtain an administrative law judge hearing. 

Congress included major changes to the Medicare appeals system in both the Medicare Prescription Drug, Improvement and Modernization Act of 2003, (MMA) Pub. L. No. 108-173, 117 Stat. 2066 (Dec. 2003), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), Pub. L. No. 106-554, §521, 114 Stat. 2763A-463, 2763A-534 (Dec. 2000).  As reported in the October 7 and April 2, 2004, Weekly Alerts, plans are underway to implement one of the MMA changes.  The administrative law judges who hear Medicare cases are to be transferred from the Social Security Administration to the Department of Health and Human Services.

Most of the changes made by BIPA have not yet been implemented.  The biggest change is the creation of a new reconsideration level of review to be performed by new entities, the Qualified Independent Contractors, or QICs.  The QIC reconsideration replaces the Part B Fair Hearing and adds a new level of appeal for Part A claims. All Part A and Part B claims must be reconsidered by a QIC before they reach the administrative law judge (ALJ) stage, the level of review where beneficiaries are most likely to prevail on their claim.  BIPA requires the QIC to review the initial determination made by the Medicare contractor and to use “a panel of physicians or other appropriate health care professionals” where the issue involves the medical necessity of the item or service.  The QIC is also supposed to solicit the views of the beneficiary when conducting the reconsideration. 

Advocates are concerned that the QIC reconsideration will be nothing more than a rubber stamp of the initial Medicare contractor and will create another barrier before beneficiaries can get an impartial ALJ hearing.  Despite their name, QICs are not independent, but rather are contractors of CMS.  They do not offer the impartial and fair review that ALJs provide.  The statute does not provide for a face-to-face hearing with an independent reviewer at the QIC nor does it discuss the opportunity to submit new evidence to substantiate an appeal. Although BIPA initially required QICs to complete their review within 30 days after a reconsideration request was filed, MMA extended that time period to 60 days.

MMA also has the potential to make it more difficult to obtain an ALJ hearing.  Commencing in 2005, the necessary amount in controversy, which has been $100, may increase annually.  According to MMA, any increase to the amount in controversy will equal the percentage increase in the medical care component of the consumer price index for urban consumers, for the time period of July 2003 to the July preceding the year involved, rounded to the nearest $10. Based on this calculation, the amount in controversy requirement is not anticipated to increase in 2005.

CMS bases its claim for improved appeals on steps it is taking to put into place the QIC level of review as well as other MMA changes. The October statement announces the eight entities that were selected to serve as QICs.  These eight entities will then bid on the specific types of appeals they want to handle, such as Part A, Part B, or durable medical equipment claims, and the part of the country that want to serve. Most already act as Quality Improvement Organizations (QIOs) that review hospital appeals or as entities that review Medicare Advantage claims.  Many of these organizations have not proved themselves sympathetic to beneficiaries or beneficiary advocates, making it difficult for beneficiaries to file supporting documentation or to get additional information about their claim. 

As part of the move towards establishment of QICs, CMS will implement a change in appeals terminology made by BIPA. Part A reconsiderations, made by the Part A contractor, and Part B reviews, made by the Part B contractor, will now both be referred to as “redeterminations” of the initial contractor determination.  The name change is to eliminate confusion with the new QIC reconsideration level of review.

Finally, CMS announced in a Program Transmittal that it will implement, on October 1, 2004, an MMA change imposing a 60-day decision deadline for claims redeterminations.  Previously, Medicare contractors were required to process 75% of Part A reconsiderations within 60 days and 90% of Part A reconsiderations within 90 days.  They were required to complete 95% of Part B reviews within 45 days.  To expedite the appeals process, BIPA required that contractors issue their determinations within 30 days.  That provision was never implemented, and an MMA amendment extended the deadline to 60 days. Ironically, then, the MMA actually gives contractors more time to decide Part B claims, and does not decrease the time for most Part A claims.  Thus, implementation of the change will not expedite the appeals process at all for many beneficiaries.

In the fall of 2002 CMS issued proposed regulations to implement the BIPA changes and to make other changes to the Medicare appeals process.  CMS says in its October statement that the final regulations will be issued by the end of the year.  The Center for Medicare Advocacy, Inc., will advise advocates as soon as the final regulations are issued and will provide an analysis of the changes.

Copyright © Center for Medicare Advocacy, Inc. 09/10/2013