[Federal Register: March 8, 2005 (Volume 70, Number 44)]
[Rules and Regulations]
[Page 11419-11499]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08mr05-14]
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Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 401 and 405
Medicare Program: Changes to the Medicare Claims Appeal Procedures;
Interim Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 401 and 405
[CMS-4064-IFC]
RIN 0938-AM73
Medicare Program: Changes to the Medicare Claims Appeal
Procedures
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Interim final rule with comment period.
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SUMMARY: Medicare beneficiaries and, under certain circumstances,
providers and suppliers of health care services, can appeal adverse
determinations regarding claims for benefits under Medicare Part A and
Part B under sections 1869 and 1879 of the Social Security Act (the
Act). Section 521 of the Medicare, Medicaid, and SCHIP Benefits Act of
2000 (BIPA) amended section 1869 of the Act to provide for significant
changes to the Medicare claims appeal procedures. This interim final
rule responds to comments on the November 15, 2002 proposed rule
regarding changes to these appeal procedures, establishes the
implementing regulations, and explains how the new procedures will be
implemented. It also sets forth provisions that are needed to implement
the new statutory requirements enacted in Title IX of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).
DATES: Effective date: These regulations are effective on May 1, 2005.
However, in view of the wide span of applicability of these rules and
the complex, intertwined nature of the affected appeal procedures, not
all of these provisions can be implemented simultaneously. Please see
section I.E. of the preamble for a full description of the
implementation approach.
Comment date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on May 9, 2005.
ADDRESSES: In commenting, please refer to file code CMS-4064-IFC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/regulations/ecomments.
(Attachments should be in Microsoft Word, WordPerfect, or
Excel; however, we prefer Microsoft Word.)
2. By mail. You may mail written comments (one original and two
copies) to the following address ONLY: Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Attention: CMS-4064-
IFC, P.O. Box 8011, Baltimore, MD 21244-8011.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-7195 in advance to schedule your arrival
with one of our staff members. Room 445-G, Hubert H. Humphrey Building,
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security
Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section below.
FOR FURTHER INFORMATION CONTACT: Michele Edmondson-Parrott, (410) 786-
6478 (for issues relating to general appeal rights). Janet Miller,
(410) 786-1588 (for issues relating to assignment or authorized
representatives). Jennifer Eichhorn Frantz, (410) 786-9531 (for issues
relating to initial determinations and redeterminations). Arrah Tabe-
Bedward, (410) 786-7129 or Jennifer Eichhorn Frantz, (410) 786-9531
(for issues relating to Qualified Independent Contractor (QIC)
reconsiderations). Arrah Tabe-Bedward, (410) 786-7129 or John Scott
(410) 786-3636 (for issues relating to expedited access to judicial
review, Administrative Law Judge (ALJ) hearings and Medicare Appeals
Council (MAC) reviews). Jennifer Collins, (410) 786-1404 or Rosalind
Little, (410) 786-6972 (for issues relating to reopenings).
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. You can assist us by referencing the file code
CMS-4064-IFC and the specific ``issue identifier'' that precedes the
section on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. After the close of the
comment period, CMS posts all electronic comments received before the
close of the comment period on its public website. Comments received
timely will be available for public inspection as they are received,
generally beginning approximately 3 weeks after publication of a
document, at the headquarters of the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday
through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an
appointment to view public comments, phone (410) 786-7197.
Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date
of the issue requested and enclose a check or money order payable to
the Superintendent of Documents, or enclose your Visa or Master Card
number and expiration date. Credit card orders can also be placed by
calling the order desk at (202) 512-1800 (or toll-free at 1-888-293-
6498) or by faxing to (202) 512-2250. The cost for each copy is $10. As
an alternative, you can view and photocopy the Federal Register
document at most libraries designated as Federal Depository Libraries
and at many other public and academic libraries throughout the country
that receive the Federal Register.
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. The web site address is: http://www.access.gpo.gov/nara/index.html
.
To assist readers in referencing sections contained in this
preamble, we are providing the following table of contents.
[[Page 11421]]
Table of Contents
I. Background
A. Overview of Existing Medicare Program
B. Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act (BIPA) of 2000
C. Related Provisions of the Medicare Prescription Drug,
Improvement, and Modernization Act (MMA) of 2003
D. Codification of Regulations
E. Implementation of the New Appeal Requirements
II. Analysis of and Responses to Public Comments
A. Overview of Comments on November 15, 2002 Proposed Rule
B. Appeal Rights (Sec. 405.900 through Sec. 405.912)
1. Basis and Scope, Definitions, General Rules, and Parties to
Initial Determinations, Redeterminations, Reconsiderations, Hearings
and Reviews (Sec. 405.902 through Sec. 405.906)
2. Medicaid State Agencies (Sec. 405.908)
3. Appointed Representatives (Sec. 405.910)
4. Assignment of Appeal Rights (Sec. 405.912)
5. Initial Determinations (Sec. 405.920 through Sec. 405.928)
6. Redeterminations (Sec. 405.940 through Sec. 405.958)
7. Redetermination, Notification, and Subsequent Limitations on
Evidence (Sec. 405.954, Sec. 405.956, Sec. 405.966)
8. Reconsiderations (Sec. 405.960 through Sec. 405.978)
9. Conduct of a Reconsideration (Sec. 405.968 and Sec.
405.976)
10. Reopenings of Initial Determinations, Redeterminations,
Reconsiderations, Hearings, and Reviews (Sec. 405.980 through Sec.
405.986)
11. Expedited Access to Judicial Review (Sec. 405.990)
12. ALJ Hearings (Sec. 405.1000 through Sec. 405.1066)
13. Remand Authority (Sec. 405.1034)
14. When May an ALJ Consolidate a Hearing? (Sec. 405.1044)
15. When May an ALJ Dismiss a Request for Hearing? (Sec.
405.1052)
16. Content of ALJ's Decision (Sec. 405.1046)
17. Appeals Involving Overpayments (Sec. 405.1064)
18. Review by the MAC and Judicial Review (Sec. 405.1100
through Sec. 405.1140)
III. Response to Comments
IV. Collection of Information Requirements
V. Regulatory Impact Analysis
VI. Waiver of Proposed Rulemaking
I. Background
[If you choose to comment on issues in this section, please include the
caption ``BACKGROUND'' at the beginning of your comments.]
A. Overview of Existing Medicare Program
The original Medicare program consists of two parts (Part A and
Part B). Part A, known as the hospital insurance program, covers
certain care provided to inpatients in hospitals, critical access
hospitals, and skilled nursing facilities, as well as hospice care and
some home health care. Part B, the supplementary medical insurance
program, covers certain physicians' services, outpatient hospital care,
and other medical services that are not covered under Part A.
In addition to the original Medicare program, beneficiaries may
elect to receive health care coverage under Part C of Medicare, the
Medicare Advantage (MA) program. Under the MA program, an individual is
entitled to those items and services (other than hospice care) for
which benefits are available under Part A and Part B. An MA plan can
provide additional health care items and services that are not covered
under the original Medicare program. Beginning in January 2006,
beneficiaries also can elect to receive prescription drug coverage
under Part D of Medicare through the Medicare prescription drug
benefit.
Under the original Medicare program, a beneficiary can generally
obtain health services from any institution, agency, or person
qualified to participate in the Medicare program that undertakes to
provide the service to the individual. After the care is provided, the
provider or supplier (or, in some cases, a beneficiary) can submit a
claim for benefits under the Medicare program to the appropriate
government contractor, either a fiscal intermediary (FI) (for all Part
A claims and certain Part B claims) or a carrier (for most claims under
Part B). If the claim is for an item or service that falls within a
Medicare benefit category, is reasonable and necessary for the
individual, and is not otherwise excluded by statute or rule, then the
contractor pays the claim. However, the Medicare program does not cover
all health care expenses. Therefore, if the Medicare contractor
determines that the medical care is not covered under the Medicare
program, then it denies the claim.
Generally, when a contractor denies a claim, it notifies the
provider, supplier, or beneficiary of the denial and offers the
opportunity to appeal the denial. The existing appeal procedures for
original Medicare are set forth in regulations at 42 CFR part 405,
subparts G and H. Separate procedures for appealing determinations made
under the Part C program are set forth at subpart M of part 422. There
is a similar, separate appeals process for Part D claim determinations
set forth at subpart M of Part 423. After an appellant has exhausted
the administrative appeal procedures offered under the Medicare
program, the Medicare statute provides the opportunity for a
dissatisfied individual to seek review in Federal court.
Consistent with section 1852(g)(5) of the Act, the MA regulations
provide that enrollees in MA plans who are dissatisfied with
determinations regarding their Part C benefits have the right to a
hearing before an Administrative Law Judge (ALJ), review by the
Departmental Appeals Board (DAB), and judicial review at the Federal
district court level in much the same manner as beneficiaries have
under the fee-for-service Medicare program. These regulations are
codified at Sec. Sec. 422.600 through 422.612. Section 1860D-4(h) of
the Act establishes similar rights for enrollees in Medicare
prescription drug plans. To the extent that there are any differences
in the appeal procedures for these enrollees, we will address those
differences in future Part C and Part D rulemaking documents.
The regulations in part 405 subpart G beginning at Sec. 405.701
describe reconsiderations and appeals under Medicare Part A. When a
Medicare contractor makes a determination for a Part A claim, the
beneficiary or, in some circumstances, the provider, can appeal the
determination. (Consistent with sections 1861(u) and 1866(e) of the Act
and Sec. 400.202, the term ``provider'' generally includes hospitals,
skilled nursing facilities (SNFs), home health agencies (HHAs),
comprehensive outpatient rehabilitation facilities (CORFs), and
hospices, as well as certain clinics, rehabilitation agencies, and
public health agencies.) If the determination is appealed, then the
contractor reconsiders the initial determination. If the contractor
upholds the original determination, a party can request a hearing
before an ALJ, provided that the amount in controversy is at least
$100. If a party is dissatisfied with the ALJ's decision, a party can
request review by the DAB. The component within the DAB that is
responsible for Medicare claim appeals is the Medicare Appeals Council
(MAC). (Although the Medicare appeals regulations in part 405 contain
some limited provisions regarding ALJ and MAC proceedings, these
proceedings are generally governed by the Social Security
Administration (SSA) regulations at 20 CFR part 404, subpart J.) MAC
decisions constitute the final decision of the Secretary and can be
appealed to a Federal court. Generally, the lower level of appeal must
be exhausted before the appeal can be elevated to the next level.
Medicare Part B appeal procedures are set forth in part 405 subpart
H (Sec. 405.801 et seq.). Under these
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regulations, beneficiaries and suppliers that accept assignment for
Medicare claims can appeal to a Medicare contractor for a review of the
contractor's initial determination that a claim cannot be paid, either
in full or in part. (The term ``supplier'' is defined under section
1861(d) of the Act, as amended by section 901(b) of the MMA, and means
a physician or other practitioner, a facility, or other entity (other
than a provider of services that furnishes items or services) under
Medicare. This regulation will use the term ``supplier'' to include
physicians.) Suppliers that do not take assignment and providers, in
some circumstances, also have appeal rights.
If the contractor's review results in a continued denial of the
claim, and the amount in controversy is at least $100, the appellant
can request a second level appeal known as a ``fair hearing.'' If the
hearing officer upholds the denial, the appellant can request a hearing
before an ALJ, provided that the appellant meets the amount-in-
controversy requirement. (We published a ruling, CMS Ruling No. 02-1,
which implemented the $100 amount-in-controversy requirement for Part B
ALJ hearings specified in section 521 of BIPA for initial
determinations made on or after October 1, 2002. See 67 FR 62478, 62480
(Oct. 7, 2002). For initial determinations prior to October 1, 2002,
the amount in controversy threshold was $500 for all services other
than home health ($100).) Subsequent aspects of the appeals process for
Part B claims are identical to those described above for a Part A
claim.
B. Medicare, Medicaid, and SCHIP Benefits Improvement and Protection
Act of 2000
Section 521 of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000, (Pub. L. 106-554) (BIPA),
amended section 1869 of the Act to require revisions to the Medicare
fee-for-service appeals process. Among the major changes required by
the BIPA amendments are--
Establishing a uniform process for handling Medicare Part
A and Part B appeals, including the introduction of a new level of
appeal for Part A claims;
Revising the time frames for filing a request for Part A
and Part B appeals;
Imposing a 30-day time frame for certain
``redeterminations'' made by the contractors;
Requiring the establishment of a new appeals entity, the
qualified independent contractor (QIC), to conduct ``reconsiderations''
of contractors' initial determinations (including redeterminations) and
allowing appellants to escalate cases to an ALJ hearing, if
reconsiderations are not completed within 30 days;
Establishing a uniform amount in controversy threshold of
$100 for Part B appeals at the ALJ level;
Imposing 90-day time limits for conducting ALJ and DAB
appeals and allowing appellants to escalate cases to the next level of
appeal if ALJs or the MAC do not meet the 90-day deadline; and
Imposing ``de novo'' review when the MAC reviews an ALJ
decision made after a hearing.
On November 15, 2002, we published in the Federal Register a
comprehensive proposed rule (67 FR 69312) to implement the provisions
of section 521 of the BIPA, as well as other complementary changes
needed to improve the Medicare claim appeal procedures.
Revised section 1869 of the Act also requires that the Secretary
establish a process by which a beneficiary can obtain an expedited
determination if the beneficiary receives a notice from a provider of
services that the provider plans to terminate all services or discharge
the beneficiary from the provider. Previously, this right to an
expedited review existed under statute only for hospital discharges
(under sections 1154 and 1155 of the Act). On November 26, 2004, we
published a separate final rule, Expedited Determination Procedures for
Provider Service Terminations (69 FR 69252), to respond to comments on
that aspect of the November 15, 2002 proposed rule and to set forth the
regulations needed to establish new expedited review procedures for
provider service terminations.
C. Related Provisions of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA)
On December 8, 2003, the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173) was enacted. The
MMA includes a number of provisions that affect the Medicare claim
appeals process, each of which is summarized below. To the extent that
the new statutory language has necessitated revisions or additions to
our proposed regulations to ensure that they conform to the MMA, we
have incorporated the needed changes into this interim final rule. A
brief summary of these provisions follows. To the extent that the MMA
provisions entail regulatory changes, a discussion of those changes is
set forth in the appropriate section of this preamble.
1. Requirement To Transfer the Administrative Law Judge Function to the
Department of Health and Human Services (Section 931 of the MMA)
Section 931 of the MMA requires transfer of the functions of
administrative law judges (ALJs) responsible for hearing appeals under
title XVIII of the Act (and related provisions of title XI of the Act)
from the Commissioner of SSA to the Secretary of the Department of
Health and Human Services (DHHS). These ALJs are required to be
organizationally and functionally independent from CMS and must report
to and fall under the general supervision of the Secretary of DHHS. The
DHHS and SSA were required to jointly develop a plan to facilitate this
transfer not later than April 1, 2004, and the transfer will take place
no earlier than July 1, 2005, but not later than October 1, 2005. On
March 25, 2004, DHHS and SSA submitted a report to the Congress that
describes the process through which DHHS and SSA will accomplish the
transfer of responsibility for the ALJ function. A copy of that report
is available online at http://www.hhs.gov/medicare/appealsrpt.pdf.
2. Process for Expedited Access to Judicial Review (Section 932 of the
MMA)
Section 1869(b) of the Act provides for expedited access to
judicial review in situations involving Medicare claims appeals.
Section 932 of the MMA amends section 1869(b) of the Act by requiring a
review entity to respond to a request for expedited access to judicial
review in writing within 60 days after receiving the request. The term
``review entity'' means up to three reviewers who are ALJs or members
of the Departmental Appeals Board as determined by the Secretary. If
the review entity does not act within the 60-day deadline, then the
party can request judicial review. Expedited access to judicial review
can be granted when the MAC does not have authority to decide questions
of law or regulation relevant to matters in controversy and there is no
material issue of fact in dispute. See Sec. 405.990.
3. Revisions to the Medicare Fee-for-Service Appeals Process (Section
933 of the MMA)
a. Requirement for Full and Early Presentation of Evidence (Section
933(a))
Section 933(a) of the MMA amends section 1869(b) of the Act to
require providers and suppliers to present any evidence for an appeal
no later than the
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QIC reconsideration level, unless there is good cause that prevented
the timely introduction of the evidence. In this interim final rule
with comment, we are adopting regulations to specify that in the
absence of good cause, a provider, supplier, or beneficiary represented
by a provider or supplier must present evidence at the QIC level.
Evidence not presented by the parties at the QIC level cannot be
introduced at a higher level of appeal. See Sec. 405.956(b)(8), Sec.
405.966(a), Sec. 405.1018, and Sec. 405.1122(c).
b. Use of Patients' Medical Records (Section 933(b))
Section 933(b) of the MMA amends section 1869(c)(3)(B)(i) of the
Act to require QICs to review an individual's medical records when
conducting a reconsideration involving medical necessity. See Sec.
405.968(a).
c. Notice Requirements for Medicare Appeals (Section 933(c))
Section 933(c) of the MMA amends sections 1869(a), 1869(c), and
1869(d) of the Act to require appeal notices issued at the initial
determination, redetermination, reconsideration, and ALJ levels to
include certain information. As amended, section 1869(a)(4) of the Act
requires that a notice of an initial determination include the reasons
for the determination, including whether a local medical review policy
(LMRP) or local coverage determination (LCD) was used. The notice of
initial determination must also include procedures for obtaining
additional data concerning the determination and notification of any
applicable appeal rights, including instructions on how to request a
redetermination. See Sec. 405.921(a).
Section 1869(a)(5) of the Act specifies that a notice of
redetermination must include the specific reasons for the
redetermination, a summary of the clinical or scientific evidence used
to make the redetermination, if applicable, information on how to
obtain additional information concerning the redetermination, and
notification of any applicable appeal rights. See Sec. 405.956.
Reconsideration notices, under the amended section 1869(c)(3)(E) of
the Act, are required to include information about applicable appeal
rights. See Sec. 405.976. Section 1869(d) of the Act is also amended
to require that notices of ALJ decisions give the specific reasons for
the decision, including, if applicable, a summary of the clinical or
scientific evidence used in making the decision, the procedures for
obtaining additional information about the decision, and any applicable
appeal rights. See Sec. 405.1046(b). Additionally, section 933 of the
MMA amends sections 1869(a), 1869(c), and 1869(d) of the Act to require
all appeal notices to be written in a manner calculated to be
understood by a beneficiary.
d. Qualified Independent Contractors (QICs) (Section 933(d))
Prior to the MMA, section 1869(c) of the Act, as amended by section
521 of BIPA, required the Secretary to enter into contracts with at
least 12 entities called qualified independent contractors (QICs) to
conduct reconsiderations of contested claim determinations. Section
1869(c) sets forth certain requirements for the QICs and their reviews
and panels. Section 933(d) of the MMA makes a number of revisions to
section 1869(c) of the Act, including providing additional detail
regarding the eligibility requirements for QICs (section 933(d)(1) of
the MMA) and the eligibility requirements for QIC reviewers (section
933(d)(2) of the MMA). We have added Sec. 405.968(c)(3) to reflect the
requirement of section 1869(g)(1)(C) that where a claim pertains to the
furnishing of treatment by a physician, or the provision of items or
services by a physician, a reviewing professional must be a physician.
In addition, section 933(d)(3) of the MMA amended section 1869(c)(4) of
the Act to reduce from 12 to 4 the minimum number of QICs with whom the
Secretary must contract.
4. Process for the Correction of Minor Errors or Omissions Without
Pursuing an Appeal (Section 937 of the MMA)
Section 937 of the MMA requires that the Secretary develop a means
of allowing providers and suppliers to correct minor errors or
omissions to claims submitted under the programs under title XVIII
without initiating an appeal. The statute specifies that this process
be available no later than December 8, 2004. We have revised Sec.
405.980 to allow providers and suppliers to make these corrections
through the reopenings process. See Sec. 405.927 and Sec. 405.980.
This process was developed in consultation with Medicare
contractors and representatives of providers and suppliers, as required
by section 937 of the MMA. We published an article on April 30, 2004
that is available online at http://www.cms.hhs.gov/medlearn/matters/mmarticles/2004/SE0420.pdf
to address the implementation of section 937
and consulted with providers and suppliers about this implementation
during open door forums held between August 3 and August 31, 2004. We
also created an e-mailbox, PBG937@cms.hhs.gov, for providers and
suppliers to comment on our proposed implementation. The comment period
closed September 10, 2004.
5. Appeals by Providers When There Is No Other Party Available (Section
939 of the MMA)
In situations where a beneficiary dies and there is no other party
available to appeal an unfavorable determination, section 939 of the
MMA amends section 1870 of the Act to permit a provider or supplier to
file an appeal. See Sec. 405.906(c).
6. Revisions to the Appeals Time Frames and Amounts in Controversy
(Section 940 of the MMA)
Sections 1869(a)(3)(C)(ii) and 1869(c)(3)(C)(i) of the Act as added
by section 521 of BIPA established 30-day decision making time frames
at both the redetermination and reconsideration levels. Additionally,
section 1869 (b)(1)(E) of the Act established the amount in controversy
(AIC) requirement for ALJ hearing requests and judicial review as $100
and $1000, respectively. Section 940 of the MMA amended these
provisions so that the decision-making time frame for redeterminations
and reconsiderations is 60 days and the AICs for ALJ hearings and
judicial review will now be adjusted annually, beginning on January 1,
2005, by the percentage increase in the medical care component of the
consumer price index (CPI) for all urban consumers and rounded to the
nearest multiple of $10. See Sec. 405.950(a), Sec. 405.970(a), and
Sec. 405.1006. A conforming amendment applies these AICs to the Part C
MA program as well, and we have proposed that they apply to Part D when
the new prescription drug benefit becomes available in January 2006.
See 69 Fed. Reg. 46,866, 46,910, and 46,911, 46,722 for the MA proposed
rule and 69 Fed. Reg. 46,632 for the Part D proposed rule. (The medical
care component of the CPI increased by 4.5 percent in 2004.
Consequently, the AIC in 2005 for ALJ hearings will remain $100, and
the AIC for judicial review will be $1,050.)
7. Determinations of Sustained or High Levels of Payment Errors
(Section 935(a) of the MMA)
Consistent with section 1893(f)(3) of the Act, as amended by
section 935(a) of the MMA, determinations by the Secretary of sustained
or high levels of payment errors are precluded from administrative or
judicial review. See Sec. 405.926(p).
[[Page 11424]]
8. Limitations on Further Review of Prior Determinations (Section
938(a) of the MMA)
Section 1869(h)(6) of the Act, as amended by section 938(a) of the
MMA, requires that there must be no administrative or judicial review
of ``prior determinations'' on coverage of physicians'' services, a new
aspect of the Medicare program that the MMA specifies must begin by
June 2005. See Sec. 405.926(q).
D. Codification of Regulations
The current regulations governing Medicare administrative appeals
are set forth in 42 CFR part 405, subparts G and H. These regulations
will continue to be necessary for an indefinite transition period until
the completion of all appeals that result from initial determinations
made before the implementation of the new procedures set forth in this
interim final rule. However, the new BIPA and MMA provisions make
possible a largely uniform set of appeals procedures that can be
applied for claims under both Parts A and B of Medicare. Therefore,
this interim final rule establishes a new subpart I of part 405 that
sets forth in one location the administrative appeals requirements for
Medicare carriers, fiscal intermediaries (FIs), QICs, ALJs, and the
MAC. The major subjects covered in subpart I of part 405 are as
follows:
General Rules (Sec. 405.900 through Sec. 405.912)--
Definitions and requirements concerning initial determinations, parties
to appeals, appointing a representative, and assigning appeal rights.
Initial Determinations (Sec. 405.920 through Sec.
405.928)--Requirements concerning the processing time frames for
initial claim determinations, descriptions of actions that are initial
determinations, and the effect of an initial determination.
Redeterminations (Sec. 405.940 through Sec. 405.958)--
Requirements concerning requesting a redetermination, the
redetermination process, applicable notice requirements, and the effect
of a redetermination.
QIC Reconsiderations (Sec. 405.960 through Sec.
405.978)--Requirements concerning requesting a reconsideration, the
reconsideration process, applicable notice requirements, and the effect
of a reconsideration.
Reopenings (Sec. 405.980 through Sec. 405.986)--
Requirements concerning reopening of determinations and decisions,
including the good cause standard, content requirements for notices of
revised determinations or decisions, and the effect of a revised
determination or decision.
Expedited Access to Judicial Review (Sec. 405.990)--
Requirements concerning obtaining expedited access to judicial review.
ALJ Hearings (Sec. 405.1000 through Sec. 405.1064)--
Requirements concerning requesting a hearing, the hearing process,
applicable notice requirements, the effect of an ALJ's decision, and
the applicability of national and local coverage determinations.
MAC Review (Sec. 405.1100 through Sec. 405.1140)--
Requirements concerning requesting a review, the review process,
applicable notice requirements, the effect of a review decision, and
the requirements for requesting judicial review.
E. Implementation of the New Appeal Requirements
We believe that the changes set forth in this interim final rule,
in conjunction with the introduction of a new case-specific appeal data
system that we are now developing, will produce substantial
improvements in the efficiency of the Medicare claims appeal process.
We expect that the implementation of these new appeal procedures, along
with the transfer of the ALJ function from SSA to DHHS, will reduce
appellants' concerns over the fairness and timeliness of Medicare
appeal decisions. The introduction of QICs, in particular, will not
only reassure appellants of the independence of the reconsideration
process, but also offer them for the first time routine
reconsideration, by a panel of physicians or other health care
professionals, of all medical necessity issues. As a result, we believe
these new procedures will lead, over time, to significant reductions in
the need to pursue appeals at the later stages of the appeals system,
such as ALJ hearings and MAC reviews.
In the short term, however, we recognize that implementing the
changes set forth in this interim final rule may prove challenging both
for the entities responsible for conducting appeals and for appellants
themselves. For example, there may be an initial increase in requests
for second level appeals (that is, reconsiderations by QICs), given the
availability of these new independent appeal entities and the
introduction of physician review panels, as well as the fact that the
time frame for a QIC decision is only half of the current time frame
for a contractor fair hearing. Similarly, increases in requests for ALJ
hearings or MAC reviews are also possible, in view of the establishment
of relatively short decision-making time frames for these entities.
Another challenge involves the need for appeal entities to process
appeals that were filed before and after the implementation of these
new appeal procedures. For example, the DHHS ALJs and the MAC will need
to continue processing appeals received before the implementation of
QICs at the same time that they begin to receive appeals of QIC
reconsiderations. Thus, until all appeals that were filed under the
rules in effect before full implementation of these regulations are
completed, different administrative deadlines and procedures may apply,
depending on the timing and source of the previous, lower-level appeal
decision. Based on previous experience, the need for parallel
procedures could extend over a year, as all cases currently in the
appeals pipeline are resolved.
In addressing these challenges and implementing the new procedures,
we need to balance the goal of implementing the new procedures as
quickly as possible with our responsibility to facilitate a clear and
well-organized transition to the new procedures for appellants and
appeals entities alike. We also need to ensure that existing appeals
continue to be carried out as expeditiously as possible as we
transition fully to the new appeals procedures. These goals drive the
implementation approach described below.
The appeal procedures set forth in section 521 of BIPA were to take
effect for initial determinations made on or after October 1, 2002. As
discussed in the proposed rule, we were unable to fully implement the
BIPA provisions by that date without disrupting other fundamental
functions of the Medicare program (for example, the processing and
payment of claims). We were also aware of the possibility of additional
statutory changes, as were subsequently enacted in the MMA.
Additionally, we recognize that the MMA has, in some cases, established
specific deadlines for implementation of certain appeals provisions.
For example, section 933(a)(2) of the MMA establishes an effective date
of October 1, 2004 for the prohibition on submission of new evidence,
absent good cause, by providers or suppliers in any ALJ or MAC appeal
if that evidence was not presented at the QIC reconsideration. For
other provisions, the MMA either makes no explicit reference to an
effective date, or specifies (under section 933(d)(4)) that certain MMA
amendments will be effective as if included in the BIPA legislation;
that is, as of October 1, 2002. In the absence of
[[Page 11425]]
a specific effective date, the provisions became effective on the date
of enactment of the MMA.
Given the unavoidable delays in full implementation of the BIPA
changes, it will not be possible to meet all of the MMA deadlines. As a
practical matter, full, effective implementation of both the MMA and
BIPA provisions can be achieved only in concert with the availability
of QICs in the Medicare appeals process. Thus, we believe that full
implementation of these regulations must be premised on, and linked to,
QIC implementation.
As noted above, another important related MMA provision is the
transfer of the ALJ hearing function for Medicare claims appeals from
SSA to DHHS. Section 931(b) of the MMA mandates that this transition
take place not earlier than July 1, 2005, and not later than October 1,
2005. We have also taken this impending change into account in
establishing the implementation schedule for the new appeals provisions
set forth in this interim final rule.
Based on all of these considerations, the table below illustrates
the implementation approach that we are following for the provisions of
this interim final rule:
Implementation Approach
------------------------------------------------------------------------
Section(s) Effective
------------------------------------------------------------------------
Sec. 401.108......................... Effective date of interim final
rule.
Sec. 405.900-Sec. 405.928.......... Effective date of interim final
rule.
Sec. 405.940, Sec. 944(a), and Sec. FI initial determinations
944(b). issued on or after May 1,
2005. Carrier initial
determinations issued on or
after January 1, 2006.
Sec. 942(a).......................... Effective date of interim final
rule.
Sec. 405.942(b), Sec. 405.944(c), All requests for
Sec. 405.946 through Sec. 405.958. redeterminations received by
FIs on and or after May 1,
2005. All requests for
redeterminations received by
Carriers on or after January
1, 2006.
Sec. 405.960-Sec. 405.978.......... May 1, 2005 for
redeterminations issued by FIs
January 1, 2006 for
redeterminations issued by
Carriers.
Sec. 405.980-Sec. 405.990.......... Effective date of interim final
rule.
Sec. 405.1000-Sec. 405.1018........ Effective for all appeal
requests stemming from a QIC
reconsideration.
Sec. 405.1020........................ July 1, 2005 for all ALJ
hearing requests.
Sec. 405.1022-Sec. 405.1140........ Effective for all appeal
requests stemming from a QIC
reconsideration.
------------------------------------------------------------------------
As the table reflects, we have concluded that the best approach to
implement the new appeal procedures is to phase in the new procedures
beginning in FY 2005. QIC reconsiderations will become available in two
stages depending on if an FI or carrier carries out the
redetermination. For all FI redeterminations issued on or after May 1,
2005, appellants will have a right to reconsideration by a QIC within
60 days of their request for reconsideration, as well as escalation to
an ALJ if the reconsideration is not completed timely. Similarly, the
new reconsideration and escalation procedures will take effect for all
carrier redeterminations issued on or after January 1, 2006. Thus, in
2006, all new appeals will be carried out under the regulations set
forth in this interim final rule, including provisions on--
Reconsiderations by QICs;
The new statutory time frames for reconsiderations, ALJ
hearings, and MAC reviews;
The possibility of escalation of cases where the time
frames are not met;
The new notice and evidence rules; and
Medicare-specific ALJ procedures.
The phased-in approach enables at least two QICs to begin carrying
out reconsiderations of appealed FI redeterminations beginning in May
2005, and thus to provide the second level reconsideration envisioned
by the statute for Part A claims as soon as possible. In January 2006,
at least four QICs will begin carrying out reconsiderations of appealed
carrier redeterminations. We believe that this phased-in approach to
QIC implementation constitutes the only viable approach for an
undertaking of this magnitude and is critical to ensuring that we: (1)
Minimize disruption among the current Medicare contractors and current
appellants; and (2) have adequate opportunity to educate providers,
suppliers, and beneficiaries about the new procedures. Phasing in the
transition from the current process serves to eliminate any unnecessary
risk in terms of our ability to manage major appeal transitions at all
of our FIs and carriers simultaneously. In addition, these contractors
are dealing at the same time with numerous statutorily mandated changes
(such as the contracting reform changes required under Title IX of the
MMA).
We have chosen to implement the changes initially for
redeterminations conducted by fiscal intermediaries for several
reasons. Fiscal intermediaries are responsible for all appeals
involving Part A claims, as well a limited number of Part B claims. The
Part A process currently does not include a second level of contractor
appeal prior to an ALJ hearing, unlike the Part B fair hearing
procedure. Thus, introducing the QIC reconsideration step first for
these claims ensures that Part A appellants have access to a second
pre-ALJ appeal process as soon as possible. Implementing the new
procedures for appeals resulting from FI determinations also gives us
an opportunity over several months to identify and address any process
problems or other technical difficulties involved in the first stages
of QIC reconsiderations before transitioning the much larger Part B
appeals workload that is now performed by carriers.
One unavoidable consequence of this change will be that some
employees of current contractors will need to be either reassigned or
discharged since the FIs and carriers will no longer be conducting fair
hearings. However, we believe that the slightly longer transition for
the much larger carrier workforce will help to ameliorate the potential
human costs of this change.
Finally, we note that wherever it was feasible (that is, where the
BIPA and MMA appeals provisions are not fundamentally premised on the
introduction of QIC reconsiderations into the appeals process), we have
already taken a series of steps to implement the new appeal provisions
mandated by the statute, including most notably the transition to a
uniform redetermination process by our FIs and carriers. We issued
instructions (CR 2620) to effect this change beginning on October 1,
2004. The instructions incorporate both the redetermination decision-
making time frames and notice requirements required by the statute
[[Page 11426]]
(under sections 1869(a)(2), 1869(a)(3) and 1869(a)(5) of the Act, as
amended by section 521 of BIPA and sections 933 and 940 of the MMA). We
have also issued instructions to the contractors regarding the
implementation of section 939 of the MMA (which took effect upon
enactment of the MMA) concerning appeals by providers when there is no
other party available because of the death of the beneficiary
appellant. These regulations codify those changes.
II. Analysis of and Responses to Public Comments
A. Overview of Comments on November 15, 2002 Proposed Rule
We received 37 timely comments from organizations representing
providers and suppliers, beneficiary advocacy groups, administrative
law judges, law offices, health plans, and others. The issues most
frequently raised by commenters include: Beneficiary protections,
particularly for unrepresented beneficiaries; deadlines for filing
appeals and time frames for decision-making; notices; differences
between an assignee and an appointed representative of a beneficiary;
authority of representatives of parties; time frames for the escalation
of cases from one level to the next when adjudicators fail to meet
their deadlines; the role of the new entities, qualified independent
contractors (QICs), that will perform reconsiderations; evidentiary
requirements; the perceived formality of administrative law judge (ALJ)
procedures, especially adversarial proceedings whereby we enter the
process in general, and the impact on beneficiaries in particular;
whether an ALJ's role changes and how much deference the ALJ gives to
our policies; dismissals and remands of appeals; and distinctions
between reopenings and appeals.
These comments and our responses are discussed below, in order of
the new regulations text. (For the convenience of the reader, we are
presenting below a chart offering a sequential overview of the
available procedures and related time frames associated with the former
and current appeals process. This chart is for illustrative purposes
only, and certain details (such as when escalation of a case is
permissible) have been omitted for ease of presentation. For a full
description of the applicable requirements, please consult the preamble
material that follows and the regulations text.)
[GRAPHIC] [TIFF OMITTED] TR08MR05.000
[[Page 11427]]
B. Appeal Rights (Sec. 405.900 Through Sec. 405.912)
1. Basis and Scope, Definitions, General Rules, and Parties to Initial
Determinations, Redeterminations, Reconsiderations, Hearings and
Reviews (Sec. 405.900 Through Sec. 405.906)
[If you choose to comment on issues in this section, please include the
caption ``Appeal Rights--Basis and Scope, etc.'' at the beginning of
your comments.]
In the proposed rule, we proposed that providers would be allowed
to file an administrative appeal of Medicare initial determinations to
the same extent as beneficiaries. Currently, providers have limited
rights to appeal Medicare initial determinations: providers can appeal
Medicare determinations only when the determination involves a finding
that: (1) The item or service is not covered because it constitutes
custodial care, is not reasonable and necessary, or for certain other
reasons; and (2) the provider knows, or reasonably could have been
expected to know, that the item or service in question is not covered
under Medicare (that is, there is a finding with respect to the
limitation of liability provision under section 1879 of the Act).
Regarding non-participating providers and suppliers, however, we
proposed maintaining the current appeal policies.
Consistent with section 940 of the MMA, in this interim final rule,
we are making a change to Sec. 405.904(a)(2) concerning the amounts in
controversy for ALJ hearings and judicial review. Section 940 of the
MMA requires the amount in controversy to be adjusted annually based on
the medical care component of the consumer price index for all urban
consumers. Accordingly, we have deleted specific references to the
previous $100 and $1,000 threshold requirements.
We have made two revisions to proposed Sec. 405.906. In the
proposed rule, we inadvertently omitted certain nonparticipating
suppliers as potential parties to an initial determination. The interim
final rule corrects that error by specifying under Sec. 405.906(a)(2)
that a nonparticipating supplier who has accepted assignment can be a
party to an initial determination.
Also, consistent with section 1870(h) of the Act, as amended by
section 939(a) of the MMA, we have added a conforming provision to
Sec. 405.906(c) concerning parties to appeals. Where a provider or
supplier is not already a party, revised Sec. 405.906(c) permits the
provider or supplier to appeal an initial determination relating to
services it rendered to a beneficiary who subsequently dies. This
provision is intended to give appeal rights to nonparticipating
suppliers who are not considered parties to the initial determination
and who may not have secured an assignment of appeal rights from the
beneficiary.
Comment: Several commenters sought clarification on whether the
intent of the proposed rule was to give party status to providers on
the basis of a ``technical denial.'' (A technical denial is a denial
based on an item or service failing to meet all of the requirements of
a Medicare-covered benefit, rather than on a determination that an item
or service is not reasonable and necessary under section 1862(a)(1)(A)
of the Act, or on a determination that an item or service constitutes
custodial care.) Many interpreted the proposed rule as maintaining the
current policy that providers do not have appeal rights for these types
of denials. Other commenters believed that our intent was to allow
providers to appeal to the same extent as beneficiaries and agreed with
the proposal. Still other commenters questioned whether the change in
policy to expand appeal rights for providers would mean that
contractors would no longer deny claims because the claims failed to
meet the requirements of the Medicare benefit.
Response: A provider or supplier can appeal a properly submitted
claim only after the contractor has issued an initial determination on
that claim. Thus, if a contractor rejects a claim because the claim was
improperly submitted (for example, the claim was missing the basic
information needed to process it), that rejection does not constitute
an initial determination.
Currently, Sec. 405.710(b) allows a provider to appeal an initial
determination on Part A coverage only when a contractor determines: (1)
That an item or service is not covered because it constitutes custodial
care; (2) that an item or service is not covered because it did not
qualify as covered home health services because the beneficiary was not
confined to the home or did not need skilled nursing care on an
intermittent basis; (3) that an item or service is not covered because
it was a hospice service provided to a non-terminally ill individual;
(4) that the item or service is not covered because it is not
reasonable and necessary; and (5) either the beneficiary or provider of
services, or both, knew, or could reasonably have been expected to
know, that the item or service is excluded from Medicare coverage.
Historically, only beneficiaries were afforded the right to appeal
claims that were denied because the items or services failed to meet
the requirements of the Medicare covered benefit (for example, a denial
of home health services due to the lack of a physician certification).
Despite this restriction, however, providers routinely accessed the
appeals process by acting as the beneficiary's appointed representative
in situations where they would otherwise not have had appeal rights.
As discussed in the proposed rule, a clear goal of the BIPA
legislation was to establish a uniform appeals process for Part A and
Part B claims, and thus for all beneficiaries, providers, and
participating suppliers. In keeping with this goal, we believe that the
interests of the appeals process would be best served by ensuring that
providers are afforded an equal opportunity to be heard with regard to
all Medicare initial determinations. Therefore, as proposed, we are
specifying that Medicare providers may file administrative appeals of
initial determinations to the same extent as beneficiaries. With this
change, we achieve consistency in our approach to which individuals or
entities can bring an appeal under Part A and Part B.
This interim final rule does not change the available bases for
claim denials. Contractors may continue to deny claims on the basis
that the item or service is not a Medicare benefit, or more precisely,
that the item or service in question does not adhere to all the
requirements set forth in the definition of the Medicare benefit.
Rather, this interim final rule changes the appeals status of providers
and participating suppliers, allowing them to appeal all denials on
their own accord.
Comment: One commenter requested clarification on whether a
beneficiary can appeal even if the beneficiary has appointed a
representative or initiated a valid assignment of appeal rights. The
commenter expressed concern that under proposed Sec. 405.906, any
party to the initial determination can request a redetermination. A
literal reading of this section would permit a beneficiary to pursue an
appeal even if the beneficiary has an appointed representative or has
assigned appeal rights to a provider or supplier. In addition, the
commenter asked if beneficiaries could pursue an appeal at the same
time as the provider.
Response: The commenter raises two sets of issues: (1) The appeal
rights of a beneficiary who has appointed a representative; and (2) the
appeal rights of a beneficiary who has assigned these rights to a
provider or supplier.
Beneficiaries can either exercise their appeal rights themselves or
through an appointed representative, or they can assign their appeal
rights to the provider
[[Page 11428]]
or supplier that delivered the service or item. (We note that
appointment of a representative and assignment of appeal rights are two
different and unrelated actions.) Unlike assignment, appointment of a
representative does not entail transferring one's appeal rights, nor
does it make the appointed representative a separate party to the
appeal. An appointed representative is chosen by a party to assist a
beneficiary in exercising appeal rights with respect to one or more
initial determinations. The beneficiary retains party status during the
appeals process, and therefore, never loses the right to appeal to
subsequent levels of the appeals process. To avoid confusion regarding
representation, either the beneficiary or the appointed representative
(but not both the beneficiary and the appointed representative) should
request the appeal.
On the other hand, when a beneficiary completes a valid assignment
of appeal rights, the beneficiary assigns appeal rights for the
particular claim or claims to a provider or supplier who is not
otherwise a party to the initial determination. If the beneficiary
assigns appeal rights in accordance with Sec. 405.912(f), then the
beneficiary transfers any right to request a redetermination,
reconsideration, hearing, or MAC review with respect to the item or
services at issue, unless the assignment is revoked in accordance with
Sec. 405.912(g). While it is not permissible for a beneficiary to file
an appeal when a valid assignment of appeal rights is in force, it is
possible for more than one party to file a request for an appeal on the
same claim when no assignment of appeal rights has been made (for
example, a beneficiary and a supplier that has accepted assignment of a
claim). We are providing under Sec. Sec. 405.944(c) and 405.964(c)
that if more than one party timely files a request for redetermination
or reconsideration on the same claim before a redetermination or
reconsideration is made on the first timely filed request, the
contractor or the QIC will consolidate the separate requests into one
proceeding and issue one determination. These provisions are consistent
with the longstanding policy that multiple parties have t he right to
appeal the same claim. We note, however, that has been very rare for
more than one party to exercise this right.
Comment: One commenter pointed out that Sec. 405.906(a)(1) lists a
beneficiary who has filed a claim for payment or has had a claim for
payment filed as a party to the initial determination. The commenter
suggested that we revise this provision since beneficiaries in most
instances do not file claims.
Response: As a general rule, we require providers and suppliers to
submit claims to seek reimbursement for items or services that they
have delivered to beneficiaries. Thus, beneficiaries generally do not
need to file claims, but they continue to have the right to do so. (In
some situations, however, beneficiaries are prohibited from filing
claims on their own, such as for glucose test strips.) Accordingly, we
believe that it is necessary to maintain this language in the interim
final rule to accommodate those rare instances where beneficiaries may
submit claims (for example, because a supplier improperly refuses or
fails to submit a timely claim with Medicare for reimbursement). For
clarity, we have added Sec. 405.926(n) and Sec. 405.926(o) to reflect
that a provider or supplier's failure to request an initial
determination or submit a timely claim does not constitute an initial
determination, and that determinations with respect to whether an
entity qualifies for an exception to the electronic claims submission
requirement under 42 CFR, part 424, are not considered initial
determinations.
2. Medicaid State Agencies (Sec. 405.908)
[If you choose to comment on issues in this section, please include the
caption ``Medicaid State Agencies'' at the beginning of your comments.]
In the proposed rule, we drafted a separate provision acknowledging
the right of a Medicaid State Agency to pursue an appeal on behalf of a
beneficiary who is entitled to benefits under both Medicare and
Medicaid. We proposed that a Medicaid State Agency would not be
considered a party, unless the agency actually pursued a
redetermination on behalf of a dually eligible beneficiary. A
contractor would not automatically send a Medicaid State Agency notice
of determinations made during the administrative appeals process, nor
would the agency be permitted to request QIC reconsiderations, ALJ
hearings or MAC reviews, unless the agency actually filed a request for
redetermination for a beneficiary. If a Medicaid State Agency filed a
request for a redetermination, it would retain party status for the
claim throughout the rest of the appeals process.
Comment: With regard to a Medicaid State Agency filing an appeal on
behalf of an individual that is entitled to both Medicare and Medicaid
benefits, one commenter recommended that we clarify the definition of a
dual eligible.
Response: A dual eligible beneficiary is one who is eligible for
and enrolled to receive benefits under both the Medicare and Medicaid
programs. To clarify this concept, we have replaced the proposed text
``dually eligible for Medicare and Medicaid'' in Sec. 405.908.
Instead, the text now states that ``[w]hen a beneficiary is enrolled to
receive benefits under both Medicare and Medicaid, the Medicaid State
Agency may file a request for an appeal with respect to a claim for
items or services furnished to a dual eligible beneficiary.'' We note
that we further clarified in this provision that the Medicaid State
Agency's appeal is only with respect to services for which has made
payment or for which it may be liable.
Comment: A commenter recommended that we clarify what qualifies as
a timely filed redetermination request under Sec. 405.908.
Response: A request for a redetermination by a Medicaid State
Agency will be considered timely if it meets the requirements at Sec.
405.942. Section 405.942(a) specifies that a request for a
redetermination must be filed within 120 calendar days from the date
the party receives the notice of the initial determination. Although
the Medicaid State Agency is not a party to the initial determination,
it is filing a redetermination request with respect to a claim for
items and services furnished to a beneficiary. Therefore, the
timeliness of the request will be determined by the date that the
beneficiary receives the initial determination notice, otherwise known
as the Medicare Summary Notice (MSN). For purposes of calculating the
date of receipt of the MSN under Sec. 405.942(a)(1), it is presumed
that the beneficiary received the MSN 5 days after the date on the MSN,
unless there is evidence to the contrary.
3. Appointed Representatives (Sec. 405.910)
[If you would like to comment on issues in this section, please include
the caption ``Appointed Representatives'' at the beginning of your
comments.]
Under proposed Sec. 405.910, we incorporated and modified several
of the provisions in 20 CFR part 404, subpart R, and 42 CFR part 405,
subparts G and H, as they relate to the representation of parties.
These provisions eliminated the need for incorporation of the existing
SSA regulations regarding appointment of representatives.
Proposed Sec. 405.910(a) sets forth the definition of appointed
representative as an individual authorized by a party, or
[[Page 11429]]
under State law, to act on the party's behalf in dealing with any of
the levels of the appeals process. Appointed representatives do not
have independent party status and take action only on behalf of the
individual or entity they represent.
Under proposed Sec. 405.910(d), we set forth that in order to be
valid, an appointment both needs to be in writing, and signed by the
party making the appointment and the individual agreeing to accept the
appointment (even when the individual being appointed is an attorney).
Proposed section Sec. 405.910(e) establishes the time frame governing
the duration of representation as: (1) The life of an individual
appeal, and (2) for purposes of appeals of other initial
determinations, one year from its original effectuation.
New section 1869(b)(1)(B)(iv) of the Act makes clear that section
206(a)(4) does not apply in the case of Medicare appeals. This section
permits the award of attorney's fees (not to exceed 25 percent) from a
claimant's entitlement to past-due disability benefits. Therefore, in
proposed Sec. 405.910(f), we are explicit that no award of attorney
fees can be made against the Medicare trust funds. However, we
requested comments on petitions to ALJs to review and approve attorney
fees.
In proposed Sec. 405.910(g) through Sec. 405.910(k), we
delineated the responsibilities and rights of an appointed
representative. In proposed Sec. 405.910(l), we established the rules
regarding delegation. (Delegation is the act of empowering another to
act as a representative.) In order for an appointed representative to
designate another person to act as a representative (the designee), the
appointed representative must: (1) Give the designee's name to the
party; (2) secure the designee's acceptance of both the representation
and the requirements of that representation; and (3) secure the
represented party's acceptance of the new arrangement with a signed,
written document. We note that the decision on whether to have an
appointed representative belongs to the party, and we neither encourage
nor discourage representation. Therefore, under proposed Sec.
405.910(m), a party would have the ability to revoke an appointment for
any reason, at any time.
Comment: A commenter suggested amending the regulation to require
that appointed representatives for providers be members of the bar.
However, this commenter also recommended permitting non-attorneys to
act as representatives for beneficiaries, but only if these
representatives waived receipt of a fee for their services.
Response: Section 1869(b)(1)(B)(iv) of the Act establishes that the
requirements set out in sections 205(j) and 206 of the Act govern who
may serve as a representative for a Medicare beneficiary. Section
405.910 of the regulations permits anyone who satisfies the
requirements outlined in section 205(j)(2) to act as a representative.
The provisions of Sec. 405.910(b) discuss persons not qualified to act
as an appointed representative. Nothing in section 205(j)(2) requires
appointed representatives to be members of the bar. Therefore, we do
not agree that it is appropriate or necessary to limit providers'
access to the administrative appeals process by requiring them to
retain attorneys if they wish to appoint a representative.
Similarly, there is nothing in section 205(j)(2) that requires non-
attorneys who represent beneficiaries to waive their fees. However, we
agree with the commenter that certain precautions be taken to prevent a
conflict of interest when the party that provides an item or service is
the same party representing the beneficiary in a claim appeal.
Therefore, in accordance with section 1869(b)(1)(B)(iii) of the Act,
new Sec. 405.910(f)(3) requires that a provider or supplier who both
furnished the service being appealed and represents the beneficiary in
the Medicare claim appeal, must waive the right to collect a fee for
acting as the appointed representative. Additionally, if the appeal
involves a question of liability under section 1879 of the Act, the
provider or supplier may not represent the beneficiary unless the
provider or supplier also waives the right to collect payment for the
item or service at issue.
Comment: We solicited comments on our proposal to require attorneys
to petition ALJs for review and approval of fees. A few commenters
suggested that appointed representatives who are members of the bar of
one of the fifty States, the District of Columbia, or Puerto Rico, not
be required to petition an ALJ in order to collect a fee. Instead, one
commenter suggested that oversight should be left to the bar of which
the attorney is a member.
There were also a number of comments regarding the ability of
appointed representatives to charge fees. The commenters noted that the
proposed rule addressed only fees charged by attorney representatives,
and recommended that we address fees for non-attorneys in this interim
final rule. One commenter recommended that the final rule include
explicit language requiring non-attorney representatives to waive any
right to charge and receive a fee. Finally, other commenters inquired
about the applicability of the Equal Access to Justice Act (EAJA) to
the new appeals process and recommended that the final rule reference
the availability of attorney's fees.
Response: Section 1869(b)(1)(B)(iv) of the Act establishes that the
provisions of sections 205(j) and 206 (other than subsection (a)(4)) of
the Act apply to representation for Medicare claim appeals in the same
manner as they apply to representation for Social Security claims. By
incorporating these sections, the Congress maintained that for appeals
before the Secretary, appointed representatives, including attorneys,
must obtain approval of fees before charging a party.
Consistent with the current practice of fee petitions before ALJs,
and sections 205(j) and 206 (other than subsection (a)(4)) of the Act,
as applied by section 1869(b)(1)(B)(iv) of the Act, we are requiring in
new Sec. 405.910(f)(1) that an attorney or other person who represents
a beneficiary, and who wishes to charge a fee for services rendered in
connection with an appeal before the Secretary, must seek approval of
the fee from the Secretary. Although it would be up to the Secretary to
determine the reasonableness of the fee, we do not believe the
provisions in sections 206(a)(2) and 206(a)(3) of the Act will be
relevant in determining whether a fee is reasonable. In Social Security
appeals, those provisions limit a representative's fee, in certain
instances, to the lesser of 25 percent of past due benefits or $4,000
(with the $4,000 cap subject to an update factor determined by the
Commissioner of Social Security). Unlike Social Security appeals,
Medicare appeals do not involve past-due cash benefits; moreover, the
benefits at issue can vary from as little as $100 (the minimum amount
in controversy for an ALJ appeal) to $100,000 or more, and we do not
believe that applying a 25 percent test to these divergent figures is
reasonable. Therefore, the test in sections 206(a)(2) and 206(a)(3) of
the Act is irrelevant in determining the reasonableness of
representatives' fees. Also, section 206(a)(4) does not apply, because
the Medicare program does not involve past-due cash benefits. The
process for obtaining fee approval will be further described either in
future rulemaking or in ALJ and MAC level procedural manuals or other
issuances, as appropriate.
We do not consider services below the ALJ hearing level in
connection with
[[Page 11430]]
claims in proceedings before Medicare contractors (such as
intermediaries, carriers, QICs, QIOs and other independent review
entities) to be services provided in connection with proceedings before
the Secretary. Section 206(a) authorizes the Commissioner of Social
Security to prescribe rules and regulations to govern the
representation of claimants in proceedings before the Commissioner.
This provision has been interpreted to include proceedings at the ALJ
level and above. Thus, appeals before the Secretary of HHS have long
been interpreted to include only the ALJ level and above. Therefore,
the fee petition provisions do not apply to services rendered below the
ALJ hearing level, nor do they apply to representatives of non-
beneficiary appellants.
We also agree that fee limitations are appropriate for certain non-
attorneys who represent beneficiaries. Accordingly, Sec. 405.910(f)(3)
requires providers and suppliers who furnished the items or services in
question to waive the right to charge and collect any fee for
representing a beneficiary in a claim appeal. This is required by
section 1869(b)(1)(B)(iii) of the Act. To ensure that this policy is
followed consistently, we will revise the Appointment of Representative
form, CMS-1696-U4, to reflect this policy. In Sec. 405.910(f)(4), we
also added that the Secretary does not review fee arrangements made by
a beneficiary for the purposes of making a claim for third party
payment (as defined in 42 CFR Sec. 411.21) even though that
representation may ultimately include representation for a Medicare
Secondary Payer recovery claim.
Guidelines for the application of Equal Access to Justice Act
(EAJA) to claims before the Department may be found at 45 CFR part 13.
(The final rule was published in the Federal Register at 69 FR 2843
(January 21, 2004)). The final rule governs the applicability of EAJA
to the Medicare claim appeals process. The Department intends to review
the EAJA provisions to determine what, if any, amendments may be
necessary to reflect the changes being implemented in this regulation.
Comment: A commenter asked what, if anything, are the consequences
of failing to satisfy all seven of the requirements set out in proposed
Sec. 405.910(d) for making out a valid appointment.
Response: All of the requirements in new Sec. 405.910(c) are
necessary to complete a valid appointment of representation. To clarify
this matter, we are specifying under new Sec. 405.910(d) that if any
of the required elements are missing or defective, adjudicators must
contact the party with a description of the missing documentation or
information. Unless the defect is cured, the prospective appointed
representative lacks the authority to act on behalf of the party, and
is not entitled to obtain or receive any information related to the
appeal, including the appeal decision. An individual may also use a
CMS-1696 form to appoint a representative. That form contains all of
the required elements to complete a valid appointment of
representation.
Comment: We received several responses to our request for comments
regarding alternative time frames for the duration of an appointment of
representative. Some commenters simply wanted clarification of the
policy in the proposed rule. Others understood our proposal to make
appointments valid for one year, but wondered if the one-year period
began on the date-of-service for the appealed claim, or on the date
that the beneficiary, provider or supplier authorized another
individual to appeal on their behalf. One commenter argued that because
we offered no indication that representatives were initiating appeals
without the consent of the appellants, limiting the duration of
appointments would serve only to create unnecessary hardships for
appellants. Providers, and suppliers would be prevented or delayed from
entering the claim appeals process, and beneficiaries with chronic
conditions would be required to renew the appointment every year.
Response: A number of the comments that we received indicate some
confusion between the appointed representative provisions at Sec.
405.910 and the assignment provisions at Sec. 405.912. Appointing a
representative and assigning appeal rights are two different and
unrelated actions under the new appeals process. Beneficiaries have the
option of either assigning their appeal rights to a provider or
supplier, or appointing a representative to exercise their appeal
rights for them.
Under the assignment provision, a beneficiary transfers his or her
right to appeal a specific claim or claims to a provider or supplier
who is not already a party to the initial determination. In doing so,
the beneficiary completely relinquishes any right to appeal the claim
or claims at issue and the provider or supplier becomes a party and may
appeal.
Appointing a representative, however, does not transfer a party's
appeal rights, nor does it make the appointed representative a party to
the appeal. An appointed representative is chosen by a party for the
duration of one year to assist the party in exercising appeal rights
for one or more initial determinations. We believe that once an appeal
of an initial determination has been filed, the appointed
representative retains the right to manage that appeal through the
entire appeals process, regardless of how long it takes to reach a
final decision. In Sec. 405.910(e)(3), we state that unless revoked,
an appointment is valid for the life of the appeal.
In Sec. 405.910(e)(4), we made an exception for appointments
signed in connection with Medicare Secondary Payer recovery claims,
because liability, no-fault, and worker's compensation claims often
take more than one year to resolve. Where an appointment of
representative is related to these recovery claims, the appointment is
valid from the date that it is signed through the duration of any
subsequent appeal.
We do not agree that either an appointment or the representative's
ability to file appeals of future claims continues indefinitely.
Appointed representatives have unlimited access to protected health
care information, and as we stated in the proposed rule, we have an
affirmative duty to ensure that our adjudicators only disclose
protected health information to authorized third parties. Taking this
into consideration, we believe that it is both necessary and
appropriate to limit the duration of an appointment and a
representative's ability to file additional appeals to a period of one
year, beginning on the day that the appointment becomes effective.
In Sec. 405.910(i)(4), we specifiy that for initial determinations
involving MSP recovery issues, the notice of initial determination must
be sent to the beneficiary and appointed representative. This differs
from non-MSP determinations where only the beneficiary receives the
notice of initial determination to prevent more than the minimum amount
of personally identifiable health information from being disclosed.
Unlike other notices of initial determination, which may include
information on claims not at issue, MSP notices of initial
determination are limited to include only the minimum necessary amount
of information related to the claims at issue.
Section 405.910(e)(1) clarifies that the effective date of the
appointment is the day that the Appointment of Representative (AOR)
form or other written instrument contains the signatures of both the
party and appointed representative. Also, we are
[[Page 11431]]
requiring under Sec. 405.910(e)(2) that during this one-year period,
representatives must submit a copy of the signed and dated original
appointment with each additional appeal that they file on behalf of the
party.
Finally, we made one other significant change to Sec. 405.910.
Although we proposed provisions in the context of appeals, we solicited
comments on whether the appointment of representative procedures should
apply for initial determination purposes as well. We did not receive
comments on this issue, but we believe there is no reason to imply that
different procedures or rules apply to initial determinations.
Therefore, we have provided under Sec. 405.910(a) of this interim
final rule that the appointment of representative provisions apply for
initial determinations, as well as for appeals. Also, under Sec.
405.910(e)(3), an appointment signed in connection with the party's
efforts to request payment of a claim is valid from the date that
appointment is signed for the duration of any subsequent appeal, unless
the appointment is specifically revoked. When a contractor issues an
initial determination, it sends a notice of that action only to the
party, and not to the party's appointed representative.
Comment: One commenter was concerned about the inability of an
appointed representative to delegate an appointment to another person
without first obtaining the party's signature. The commenter opined
that requiring a beneficiary's signature in order to delegate an
appointment would greatly impede a beneficiary's ability to receive
timely representation. By way of example, the commenter noted that a
signature requirement would prevent a family member acting as a
representative for an incapacitated beneficiary from retaining an
attorney or paralegal to represent the beneficiary in a Medicare claim
appeal. Additionally, the commenter stated that the signature
requirement would prevent appointed representatives who are members of
a law firm or a legal services organization from designating a new
representative within the firm or organization when program turnover or
workload necessitated a change.
Response: Although we appreciate the administrative benefits to be
gained from allowing an appointed representative to delegate an
appointment to another individual, the privacy concerns that we noted
previously seriously impact our ability to permit delegation in most
instances. We believe that the benefits that are gained by ensuring
that a beneficiary is made aware when an appointment has been delegated
outweigh the burden of obtaining the beneficiary's consent. We also do
not believe that this requirement will greatly impede the beneficiary's
ability to receive timely representation.
In the case where a beneficiary is no longer mentally capable of
giving consent or signing the appointment of representative form, the
family member or friend should refer to State law. As defined in Sec.
405.902, an authorized representative is an individual authorized under
State or other applicable law to act on behalf of a beneficiary or
other party involved in the appeal. Unlike an appointed representative,
an authorized representative ``stands in the shoes'' of the
beneficiary. State requirements differ with respect to what is required
to legally represent an incompetent beneficiary. Individuals appointed
or designated under State statutes may act as authorized
representatives. For example, some States have health care consent
statutes providing for health care decision-making by surrogates on
behalf of patients who lack advance directives and guardians. Other
States have laws that grant authority to individuals with durable
powers of attorney. In an emergency, a disinterested third party, such
as a public guardianship agency, may be an authorized representative,
for example, in a situation where the beneficiary's inability to act
has arisen suddenly (for example, a medical emergency, a traumatic
accident, an emotionally traumatic incident, disabling drug
interaction, or stroke), and there is no one who can be genuinely
considered to be the beneficiary's choice as his or her authorized
representative. Thus, an individual who has legal authority under State
law is able to make decisions on behalf of a beneficiary, including the
ability to delegate the appointment to another person, without first
obtaining the beneficiary's signature.
Attorneys in law firms and legal service organizations present a
unique situation. As a general rule, attorneys within the same law firm
already are obligated to observe strict confidentiality rules with
respect to client information, and therefore, the common practice of
delegating cases to other attorneys within the firm does not warrant
privacy concerns. Thus, we believe it is appropriate to permit
attorneys to delegate another attorney within the same firm or
organization as a substitute representative. Section 405.910(l)(2) is
amended to reflect this policy.
Comment: A commenter asked that we provide information on how to
change an appointed representative during the appeals process.
Response: As indicated in the proposed rule, we believe that the
decision of whether to retain an appointed representative be left
entirely to the party bringing the appeal. Section 405.910(m) permits a
party to revoke an appointment at any time and for any reason by
submitting a signed, written statement to the entity processing the
appeal. The revocation is effective once it is received by the entity
hearing the appeal. The party can then appoint a new representative.
4. Assignment of Appeal Rights (Sec. 405.912)
[If you choose to comment on issues in this section, please include the
caption ``Assignment of Appeal Rights'' at the beginning of your
comments.]
Under proposed Sec. 405.912, we created new regulatory procedures
for the assignment of appeal rights by a beneficiary to a supplier or
provider of services. We proposed that a provider or supplier that
furnished the item or service at issue and that wanted to take
assignment of a beneficiary's appeal rights for a particular claim must
waive any right to payment from the beneficiary in order to fully
protect beneficiaries when their appeal rights are assigned. This does
not prohibit the provider or supplier from recovery of any coinsurance
or deductible or claiming payment in full where the beneficiary has
signed an Advance Beneficiary Notice (ABN) accepting responsibility for
payment. We proposed that the assignment be valid for the duration of
the appeals process, but only for the items or services listed on the
assignment form.
Comment: One commenter requested clarification on whether an
assignment applies to an individual item or service, or to all items or
services within an entire claim. The commenter believed that assigning
different providers or suppliers for multiple items or services within
a claim would be too confusing.
Response: We do not believe that it is appropriate or necessary to
require beneficiaries to relinquish their rights to appeal individual
items or services. Consistent with our longstanding policy where we
allow beneficiaries to appeal individual items or services within a
single claim, Sec. 405.912 permits beneficiaries to assign their
appeal rights for individual items or services to providers and
suppliers. We believe that this will not cause confusion since each
claim originates from a single provider or supplier. The provider or
supplier
[[Page 11432]]
needs to ensure that the assignment form includes the full range of
items or services furnished on the date of service.
Comment: One commenter expressed concern that obtaining assignment
after services were provided would adversely affect providers with
transient populations because their beneficiary contact information is
usually for temporary residences. The commenter suggested that the
assignment form be available to be signed at admission.
Response: We understand the concerns of the commenter, and agree
that the assignment form may be completed at admission. Section
405.912(c) does not prevent a provider and beneficiary from being able
to complete and execute the assignment at the time that the beneficiary
receives services. When a provider needs to appeal an initial
determination that denies payment for the services rendered, the
provider can submit the previously signed assignment form with the
request for redetermination.
Comment: One commenter suggested that the regulation be clarified
to ensure that the waiver of collection from the beneficiary applies
even if the appeal is unsuccessful.
Response: We agree that the regulation should be clarified to
specify that the waiver of the right to collect payment by the assignee
remains valid in the event of an unfavorable determination or decision.
We have amended our proposed Sec. 405.912(d)(1) to specify that the
waiver remains in effect regardless of the outcome of the appeal
decision. We have also taken the opportunity to correct an omission in
Sec. 405.912(d)(1). The waiver of payment also remains in effect if
the assignment is revoked under Sec. 405.912(g)(2) or Sec.
405.912(g)(3). That is, if the assignee fails to file an appeal of an
unfavorable decision or if an act or omission by the assignee is
determined to be contrary to the financial interests of the
beneficiary, the assignee will not be able to collect payment from the
beneficiary.
Comment: One commenter recommended that the waiver of the right to
collect from the beneficiary apply regardless of whether there is an
ABN in effect. The commenter expressed concern that a provider or
supplier might be inclined to require a beneficiary to sign an ABN for
any item or service in order to protect any future collection of
payment.
Response: We prohibit providers and suppliers from routinely
issuing ABNs for all services. ABNs generally are issued only when the
provider or supplier has reason to believe that Medicare is not likely
to cover the furnished services. Thus, we are maintaining the provision
at Sec. 405.912(d)(2) that an assignee that furnished the item or
service is not prohibited from recovering payment when an ABN has been
properly executed. We believe an alternative policy would create
disincentives for providers and suppliers to bring appeals on behalf of
beneficiaries when they believe Medicare is denying coverage
improperly. If providers and suppliers are faced with the choice of
appealing what they believe to be an erroneous denial or collecting
from the beneficiary in the event of an unfavorable decision, they may
simply decide to place the burden of appeal on the beneficiary.
Comment: Some commenters raised concerns about our proposal to
permit beneficiaries to revoke an assignment. One commenter recommended
that assignment be irrevocable until the appeal is filed or the
deadline for filing has expired in order to prevent a provider or
supplier from wasting resources pursuing an appeal. The commenter
suggested that we establish a time frame for a beneficiary to revoke an
assignment. Another commenter requested that we define the specific
circumstances that constitute abandonment.
Response: We believe that it is unnecessary to establish a time
frame to limit a beneficiary's right to revoke an assignment. The
inherent nature of an assignment protects the interests of a
beneficiary since transferring the appeal rights to a provider or
supplier precludes the provider or supplier from collecting payment
from the beneficiary in the event of an unfavorable determination. We
believe that beneficiaries will rarely revoke an assignment; therefore,
the possibility of providers and suppliers unnecessarily pursuing
appeals is remote. A somewhat more likely scenario involves
abandonment, that is, inaction on the part of the assignee to undertake
or proceed in the appeals process. Section 405.912(g)(2) addresses this
situation by specifying that an assignment may be revoked ``[b]y
abandonment if the assignee does not file an appeal of an unfavorable
decision.''
Comment: One commenter supported the use of a standardized form for
assignment. The commenter suggested that the form include an
explanation of assignment and what an assignee does for a beneficiary.
The commenter also suggested that proposed Sec. 405.912(d)(2) should
be revised to reflect that the assignment may be executed by the
beneficiary or his or her representative.
Response: We agree with the commenter and are developing a
standardized form for assignment, as required by section 1869(b)(1)(C)
of the Act. This form, which has been consumer-tested with the
beneficiary population, contains extensive information to assist
beneficiaries in understanding the assignment and execution of their
appeal rights.
As mentioned in an earlier response, we added a definition of an
``authorized representative'' at Sec. 405.902. Authorized
representatives (for example, a legal guardian or someone with a power
of attorney) possess all the rights associated with the appeals process
to the same extent as beneficiaries. Therefore, we do not believe that
it is necessary for new Sec. 405.912(c)(2) to reflect that an
authorized representative may execute an assignment of appeal rights on
behalf of a beneficiary. Appointed representatives under Sec. 405.910,
including attorneys, may assist the beneficiary or another party with
Medicare appeals, but they do not have any other rights or
responsibilities with respect to the beneficiary or another party, and
may not sign documents as the beneficiary or party. Thus, an appointed
representative may not assign appeal rights under Sec. 405.912 without
the beneficiary's or other party's consent.
5. Initial Determinations (Sec. 405.920 Through Sec. 405.928)
[If you choose to comment on issues in this section, please include the
caption ``Initial Determinations'' at the beginning of your comments.]
Section 1869(a)(2)(A) of the Act establishes that for all claims
other than clean claims (a clean claim is a claim that has no defect or
impropriety), an initial determination must be concluded, and a notice
of that determination must be mailed, by no later than 45 days after
the carrier or fiscal intermediary receives the claim. We proposed that
interest would not accrue on non-clean claims that were not adjudicated
within 45 days. By definition, non-clean claims are often claims that
require additional documentation, and therefore take additional time to
process.
With respect to clean claims, section 1869(a)(2)(B) of the Act
requires that interest accrues if clean claims are not processed within
30 days. This standard remains the same as specified in sections
1816(c)(2) and 1842(c)(2) of the Act.
We proposed to continue to notify parties of the initial
determination in writing. The proposed content of the notices included
the basis for the determination and notification to the parties of
their right to a
[[Page 11433]]
redetermination if they were dissatisfied with the outcome of the
initial determination. Consistent with existing policy, the Remittance
Advice (RA) and Medicare Summary Notice (MSN) would be used as a notice
of initial determination.
We also proposed the types of actions that constitute initial
determinations, as well as those that do not constitute initial
determinations. We generally proposed to maintain the existing policies
concerning initial determinations, while at the same time unifying the
Part A and Part B rules. We have also included examples specific to
Medicare Secondary Payer situations in listing the type of actions that
constitute initial determinations. We specified our longstanding policy
that SSA will continue to make Part A and Part B entitlement and
enrollment determinations. As noted previously in section I.C.1 of this
interim final rule, section 931 of the MMA requires the transfer of ALJ
hearing functions from SSA to HHS. Although SSA will continue to make
Part A and Part B entitlement and enrollment determinations and
reconsiderations subject to the requirements set out at 20 CFR Part
404, Subpart J, HHS will be responsible for reviewing entitlement and
enrollment decisions at the ALJ and MAC levels. We note, however, that
this regulation does not provide the specific procedural requirements
that will apply to the adjudication of entitlement appeals. These
instructions will instead be provided separately once this interim
final rule is published. We believe that this approach will ensure that
beneficiaries, providers, suppliers, and other interested parties
receive clear guidance regarding the procedures for appealing an
entitlement determination at each level of the appeals process.
We addressed the circumstances under which an appeal can be filed
when a beneficiary disputes the computation of coinsurance amounts.
Previously, our rules stated that beneficiaries could appeal Medicare
determinations regarding the ``application of the coinsurance
feature.'' We clarified this provision to state that the contractor's
``computation of coinsurance'' was considered an initial determination,
and therefore, could be appealed. In making this proposal, we
considered that for most Part B services, beneficiaries were
responsible for a 20 percent coinsurance payment and, since the
contractor calculated the percentage, a beneficiary should be able to
appeal the contractor's computation. In instances where the coinsurance
amount was not computed by the contractor, but rather, was an amount
prescribed by regulation (for example, outpatient services), the issue
of the appropriateness of the coinsurance amount was not appealable
since it was an automatically calculated amount based directly on a fee
schedule exempt from review.
We also specified that there be no administrative appeal rights
available for certain aspects of initial determinations. For example,
under section 1833(t) of the Social Security Act (the Act),
administrative appeals are prohibited for issues involving the
calculation of coinsurance amounts for outpatient services subject to
prospective payment rules, and under section 1848(i) of the Act, the
values used to calculate allowable amounts under the physician fee
schedule may not be the subject of an administrative appeal.
Additionally, we proposed some further examples of actions that are not
initial determinations, such as waiver of interest determinations and
certain Medicare Secondary Payer actions.
Comment: One commenter suggested that the initial determination
notice contain more details about requesting a redetermination, such as
the documentation needed to pursue an appeal. The commenter recommended
that the notice give exact citations for the rules and policies upon
which the determination is based and explain how to obtain them. The
commenter also suggested that the notice include a toll free number
that appellants can call to receive copies of coverage rules and
policies.
Response: We agree with the commenter that initial determination
notices contain information necessary for beneficiaries to initiate
appeals. However, we believe that existing notice requirements are
fully compatible with this objective, and we do not believe that
additional detail is appropriate.
Currently, beneficiaries receive initial determination notices
through the Medicare Summary Notice (MSN), and providers and suppliers
receive notices on the Remittance Advice (RA). The MSN is a consumer-
tested, customer-friendly monthly statement that lists all of the
services or supplies billed to Medicare during a 30-day period. It
contains information about requesting an appeal on the bottom of the
last page and at the back of each page. The MSN indicates the date that
an appeal must be filed in order for it to be considered timely. The
MSN also allows beneficiaries to appeal by circling an item, explaining
why they disagree, and signing and sending the notice, or a copy of the
notice, to a specified address.
We also agree with the commenter that MSNs indicate when the basis
for a claim denial involves a local or national coverage determination.
Effective during 2003, CMS now requires fiscal intermediaries and
carriers to provide references to coverage policies when they describe
the basis for claim denials. However, based on nationwide testing of
Medicare beneficiary focus groups, CMS does not include regulatory
citations in MSNs because they are confusing to beneficiaries. We
believe that referring to a local or national coverage determination is
more meaningful to beneficiaries in helping them understand the reason
their claim has been denied.
The MSN contains the Medicare toll-free number so that
beneficiaries can obtain information about various aspects of the
Medicare program, including individual claim determinations.
Beneficiaries can also use the toll-free number to request a copy of
the coverage rule or policy used as the basis to deny a claim, or they
may access the policies via the Internet.
Thus, in light of the information already contained in MSNs, we do
not believe that it is necessary to modify the initial determination
notices sent to beneficiaries. However, we believe it is appropriate to
include in the regulations the explicit notice requirements that are
set forth under section 933(c)(1) of the MMA. Therefore, Sec.
405.921(a)(1) specifies that contractors must write the MSNs in a
manner calculated to be understood by the beneficiary. We have also set
forth the statutory content requirements as to the contents of the
notice in Sec. 405.921(a)(2). That is, the notice must contain the
reasons for the determination, including whether a local medical review
policy, local coverage determination, or national coverage
determination was applied, the procedures for obtaining additional
information concerning the determination, such as the specific
provision of the policy, manual, law, or regulation used in making the
determination, and notification to the parties of their right to a
redetermination if they are dissatisfied with the outcome of the
initial determination. The notice also must include instructions on how
to request a redetermination. Again, we believe that the existing MSNs
meet all the new MMA requirements and have codified these beneficiary
notice requirements in Sec. 405.921(a). Furthermore, although the
statutory requirements apply only with respect to beneficiary notices,
we have adopted very similar requirements for notices to providers and
suppliers under
[[Page 11434]]
Sec. 405.921(b). The format and content requirements adopted as the
national standard for remittance advice transactions under HIPAA and
the corresponding CMS requirements for electronic and paper remittance
advice notices already require use of messages or codes to explain
initial determinations, and the reasons for any full or partial denial
decisions that apply to services on a claim, as well as the appeal
rights in relation to the decision. Thus, the MMA requirements for
beneficiary notices are generally already in use in the remittance
advice notices to providers and suppliers.
Finally, we note that contractors will issue MSNs to beneficiaries
only, and not to appointed representatives or assignees. Throughout
Sec. 405.910, we have reinforced the concept that appointed
representatives have the same right as beneficiaries to receive
information on claims only after an appeal has been filed. Consistent
with HIPAA, a contractor may not disclose protected health information
without a valid appointment. MSNs encompass a range of health services
and supplies that were billed to Medicare within a 30-day period.
Because an appointed representative may not have authority to receive
information on all such services or supplies, we believe that it is
appropriate for contractors to disseminate MSNs only to beneficiaries.
Furthermore, we believe that it is unnecessary to incur the substantial
costs to modify the standard systems to generate MSNs to appointed
representatives.
Comment: We received several comments regarding procedures that
should be established when contractors do not meet the statutory
deadlines for making initial determinations. Section 521 of BIPA
maintains the existing 30-day time frame for 95 percent of clean claims
under sections 1816(c)(2) and 1842(c)(2) of the Act, and establishes a
45-day time frame for claims that are defective or require special
treatment or substantiating documentation. Some commenters believe that
we should create an escalation provision for initial determinations
similar to the escalation provisions required by statute for QIC
reconsiderations, ALJ hearings and MAC reviews. This would enable
parties to proceed to the redetermination level of the appeals process
when contractors fail to meet the 45-day statutory time frame. One
commenter recommended that when the contractor fails to make an initial
determination within 45 days, the claim bypasses the redetermination
level and advances to the reconsideration level.
Some commenters argued for contractor penalties such as strict
contractor evaluations, sanctions, or non-renewal of contracts based on
noncompliance beyond a reasonable threshold. These commenters believed
that any exceptions to the 45-day rule should be narrow. Other
commenters urged us to assess interest penalties for non-clean claims
that would mirror the provision for clean claims. Still other
commenters thought that the 45-day time frame for non-clean claims
might be too stringent and that we should set up specific, achievable
time frames with appropriate penalties to ensure compliance.
Response: We understand the commenters' concerns regarding the need
for contractors to process claims timely and pay them promptly. It is
also important that contractors employ appropriate medical review
strategies to ensure the appropriate payment of billed claims. When a
contractor undertakes medical review on a claim, it is not always
possible to pay within 45 days, particularly if a provider or supplier
does not submit the additional documentation requested in a timely
manner. We believe that protecting the Medicare Trust Funds through
medical review of certain questionable claims that are flagged by our
system edits is preferable to making inappropriate payments, absent
proper evidence. We retain reputable independent third-party auditing
firms to ensure that contractors are following all Medicare laws,
rules, and regulations.
In addition, we strongly believe that providers and suppliers play
a vital role in the FIs' and carriers' ability to meet their decision-
making time frames. If providers and suppliers submit clean claims,
they can avoid the delays that are associated with processing non-clean
claims. The more complete the claim is upon initial submission, the
greater the ability of the Medicare contractor to process the claim
quickly. Until a determination can be made, however, we continue to
believe that no interest should accrue on non-clean claims. In
addition, the Congress has authorized interest only in the case of
clean, complete claims.
We also believe that it would be inefficient and result in
unnecessary costs to escalate undeveloped claims to the redetermination
or reconsideration levels. These claims could not be reviewed or
reconsidered because there would be no initial determination to review.
Furthermore, the Congress weighed the merits of escalation and chose to
implement that option only at the QIC level and above.
Comment: A few commenters suggested that we define the terms ``non-
clean'' and ``clean'' in the context of claims.
Response: As defined in sections 1816(c)(2)(B)(i) and
1842(c)(2)(B)(i) of the Act, ``[t]he term ``clean'' claim means a claim
that has no defect or impropriety (including any lack of any required
substantiating documentation) or particular circumstance requiring
special treatment that prevents timely payment from being made on the
claim.'' Claims that do not meet this definition are considered ``non-
clean'' claims. Since the term ``clean claim'' is clearly defined in
statute, we are maintaining this definition as proposed in Sec.
405.902.
We have also included in Sec. 405.902 other statutory and
regulatory definitions, such as, beneficiary, provider, supplier,
carrier and fiscal intermediary. We did not define these terms in the
proposed rule because they are defined in 42 CFR part 400. However, for
the convenience of Medicare appellants, we have decided to provide
definitions in this section as well.
Comment: One commenter believed that we should clearly state
whether a beneficiary who has paid for an item or service up front is
entitled to any interest that would accrue if the contractor does not
pay the clean claim within the statutory time frame, regardless of
whether the claim was submitted by the beneficiary or on the
beneficiary's behalf. The commenter argued that in this situation, the
beneficiary would suffer irreparable harm by the delay in processing
the claim, as opposed to the provider or supplier, and paying interest
to them would result in their unjust enrichment.
Response: In the agreement and attestation statement signed by a
provider, the provider agrees not to charge beneficiaries for services
for which beneficiaries are entitled to have payment made on their
behalf by the Medicare program. In accordance with the provider
participation agreement, the provider may only bill the beneficiary
upfront for any unmet deductible and the applicable coinsurance.
Therefore, institutional providers are always paid directly by the FI,
including any applicable interest.
Likewise, participating suppliers and suppliers who accept
assignment are also precluded from charging the beneficiary more than
the unmet deductible and the applicable coinsurance. If the supplier
collects any additional payment from the beneficiary before submitting
the claim, the supplier must show on the claim form
[[Page 11435]]
the amount collected. The carrier then will refund directly to the
beneficiary the additional payment along with any applicable interest
on the over collected amount. In situations where the supplier does not
accept assignment on a claim, the carrier makes payment directly to the
beneficiary and includes any applicable interest regardless of whether
he or she paid the supplier up-front for the item or service.
Comment: One commenter asserted that the proposed rule's reference
to SSA making initial determinations with regard to entitlement issues
was incorrect.
Response: We disagree with the commenter and maintain our
longstanding policy that SSA makes initial determinations concerning
applications for enrollment, as well as determinations regarding Part A
and Part B entitlement. Consistent with our current regulations at 42
CFR Sec. 405.704(a)(3) and Sec. 405.704(a)(4), we have also added
language to Sec. 405.924(a)(3) to specify that an initial
determination includes a denial of a request for withdrawal of an
application for hospital or supplementary medical insurance or a denial
of a request for cancellation of a request for withdrawal of an
application for hospital or supplementary medical insurance. Section
405.904(a)(1) clarifies the jurisdictional authority of SSA and DHHS
with respect to initial determinations and appeals for applications and
entitlement issues. That is, SSA will continue to perform initial
determinations and reconsiderations, and DHHS'' ALJs and MAC will
conduct hearings and reviews. As noted above, we intend to provide
further guidance on how ALJs and the MAC will process entitlement
appeals in separate instructions.
Comment: We received a comment on whether proposed Sec.
405.924(b)(13), which defines an initial determination as a
determination having a current or potential effect on the amount of
benefits to be paid, includes Resource Utilization Group (RUG)
categories. The commenter asked that we clarify in the final rule that
the appeal rights for RUG reclassifications established in CMS
Transmittal A-00-08 are continued in the final rule. The commenter also
believes that proposed Sec. 405.906(a)(3) and Sec. 405.940 appeared
to grant providers the right to seek redeterminations when a RUG is
down coded to another category. However, the commenter noted that this
conflicted with the reopening provisions at Sec. 405.980, which seemed
to suggest that all adjustments to claims must be handled through the
reopenings process.
Response: As the commenter points out, CMS Transmittal A-00-08,
which is now in the Program Integrity Manual at Chapter 6, allows
skilled nursing facilities (SNFs) to appeal denials based on section
1862(a)(1)(A) of the Act. Nothing in this interim final rule limits the
right of appeal created by CMS Transmittal A-00-08.
Although down coding a RUG category may be considered an initial
determination under new Sec. 405.924(b)(12), if the down coding was
alleged to be the result of a clerical error as defined in Sec.
405.980(a)(3), then the request for appeal likely can be processed as a
request for reopening. This approach is consistent with section 937(a)
of the MMA and the reopening provisions at Sec. 405.980, whereby
errors or omissions may be corrected without pursuing appeal. We note
that, in this interim final rule, we have added a new section at Sec.
405.927 regarding initial determinations that may be subject to the
reopenings.
We also note that we have added specific language to new Sec.
405.924(b)(13) to make it clear that the issue of whether a waiver of
adjustment or recovery under sections 1870(b) and 1870(c) of the Act is
appropriate is an initial determination with respect to a provider,
supplier, or beneficiary in the context of both non-Medicare Secondary
Payer overpayments and Medicare Secondary Payer recovery claims.
Comment: One commenter questioned whether the amount of coinsurance
owed under the outpatient prospective payment system (OPPS) would be
considered an initial determination, given that Sec. 405.924(b)(5)
indicates that the computation of coinsurance amounts constitutes an
initial determination. The commenter pointed out that Sec. 405.926(b)
states that ``coinsurance amounts prescribed by regulation for
outpatient services under the prospective payment system'' are not
initial determinations. The commenter believed that section 1833(t)(12)
of the Act does not preclude administrative and judicial review of the
computation of OPPS coinsurance amounts.
Response: Section 4523(a) of the Balanced Budget Act of 1997 (BBA)
amended section 1833 of the Act by adding subsection (t) which provides
for the implementation of a prospective payment system (PPS) for
outpatient services. Section 1833(t)(12) of the Act precludes
administrative or judicial review of the calculation of the unadjusted
coinsurance amount, as well as administrative or judicial review of
coinsurance amounts directly premised on base amounts calculated
pursuant to section 1833(t)(3) of the Act. Therefore, the unadjusted
coinsurance amount under 1833(t)(3) of the Act is not an initial
determination subject to any type of review. On the other hand, if a
party believes that an item or service was incorrectly coded, leading
to a higher coinsurance amount for that service, the party can
challenge that determination in an appeal.
Comment: One commenter argued that inherent reasonableness is an
initial determination under proposed Sec. 405.924(b)(13) because it is
an issue that has a present or potential effect on the amount of
benefits to be paid under Part A or Part B. Another commenter believed
that a party who is dissatisfied with an initial determination should
be able to appeal a claim where the amount of payment was determined
based on the application of an inherent reasonableness policy.
Response: Sections 1842(b)(8) and 1842(b)(9) of the Act authorize
the Secretary to deviate from the payment methodologies prescribed in
the Act if the application of those methodologies would result in a
payment amount for a particular service or group of services that is
determined to be grossly excessive or deficient, and therefore, is not
inherently reasonable. Section 1842(b)(8)(A)(i) of the Act requires the
Secretary to describe in regulations the factors to be considered in
determining an amount that is realistic and equitable.
Furthermore, pursuant to section 1842(b)(9) of the Act, before
making any adjustment for inherent reasonableness, the Secretary is
required to publish a notice of proposed determination in the Federal
Register and allow no less than 60 days for public comment on the
proposed determination. The public comment period on proposed inherent
reasonableness adjustments gives the public an opportunity to raise
issues and concerns regarding these adjustments. All issues and
concerns that the public raises are given full consideration, and a
final determination is published before the actual adjustments in
payments are made. Any adjustment would be broadly applicable to a
given service or group of services, rather than just to an individual
claim determination. Thus, we do not believe that the Congress intended
for inherent reasonableness adjustments to payment amounts to
constitute initial determinations that are subject to the appeals
process. We have modified Sec. 405.926(c) to clarify this issue.
We agree with the commenter that where the amount of payment on a
[[Page 11436]]
claim was determined based on an inherent reasonableness policy, this
would result in an initial determination that is appealable. It is
important to note the difference between an initial determination made
on a specific claim, and the payment policy or methodology used to make
that initial determination. The latter is not considered an appealable
initial determination under this subpart.
We have added six items that also do not constitute initial
determinations under Sec. 405.926. Under Sec. 405.926(n), we
incorporated CMS'' longstanding policy that a finding that a provider
or supplier failed to submit a claim, or failed to submit a timely
claim, despite being requested to do so by the beneficiary or the
beneficiary's subrogee, does not constitute an initial determination,
and would preclude the claim from being subject to the appeals process.
Second, consistent with section 1893(f)(3)(A) of the Act, as amended by
section 935(a) of the MMA, we have added a conforming provision at
Sec. 405.926(p) that determinations by the Secretary of sustained or
high levels of payment errors are precluded from administrative or
judicial review. Also, consistent with section 938(a) of the MMA, Sec.
405.926(q) provides that a contractor's prior determination related to
coverage of physicians' services is not subject to the administrative
appeals process or judicial review. However, a negative determination
would not prevent an individual from obtaining a service, seeking
reimbursement and, in the event of a denied claim, appealing the denial
under section 1869(b) of the Act. Finally, consistent with established
policies, we have added three items at Sec. 405.926(o), Sec.
405.926(r), and Sec. 405.926(s). Under Sec. 405.926(o),
determinations with respect to whether an entity qualifies for an
exception to the electronic claims submission requirement under part
424 of this chapter are not initial determinations. Section 405.926''
provides that requests for anticipated payment under the home health
prospective payment system under Sec. 409.43(c)(ii)(2) are not initial
determinations. Lastly, claim submissions on forms or formats that are
incomplete, invalid, or do not meet the requirements for a Medicare
claim and are returned or rejected to the provider or supplier also do
not constitute initial determinations. We welcome comments on these
additions.
6. Redeterminations (Sec. 405.940 through Sec. 405.958)
[If you choose to comment on issues in this section, please include
the caption ``Redeterminations'' at the beginning of your comments.]
a. Requesting and Filing a Redetermination Request
In the proposed rule, we proposed to continue the policy of
permitting parties to file their requests for a redetermination not
only with the appropriate CMS contractor, as indicated on the notice of
initial determination, but also at a local SSA or CMS office. In
maintaining this policy for filing requests, we proposed that the date
the redetermination request would be considered to be filed meant the
date the contractor, SSA, or CMS received the request. Additionally, we
specified that for purposes of issuing a redetermination, the date of
timely filing would be considered as the date that the contractor
responsible for the redetermination received the redetermination
request. We proposed to allow extensions to the time frames for
redetermination requests if a party showed good cause for missing the
120-day deadline. In order to determine whether a party had shown good
cause for missing the deadline, the contractor would consider: the
circumstances that kept the party from making the request on time;
whether the contractor's actions misled the party; and whether the
party had any physical, mental, educational, or language limitations
that prevented the party from filing a timely request, or from
understanding or knowing the need to file a timely request for
redetermination.
We also indicated that redetermination requests would need to be
made in writing. Previously, Part B requests for review could be made
by telephone; however, we proposed to eliminate telephone requests in
order to provide a reliable record of the request, and to encourage the
submission of evidence to support the request. We proposed that
requests would need to be made using a standard CMS form.
Alternatively, when not made on a CMS form, the request would need to
contain all the elements listed in Sec. 405.944(b), that is, the
beneficiary's name, Medicare health insurance claim (HIC) number,
specific date of service, and identification of the item or service for
which the party was requesting the redetermination, and the name and
signature of the party or appointed representative.
We solicited comments on alternative approaches that would be
convenient and easy for appellants. We also proposed that a beneficiary
or beneficiary's appointed representative could continue to file a
request for an appeal using the instructions on the MSN, that is, he or
she could satisfy the requirements by circling an item on the MSN,
signing the bottom of the MSN, and returning the MSN to the contractor.
In situations where more than one party requested a redetermination on
the same claim, we proposed that the contractor would consolidate the
requests into one proceeding in order to avoid duplication.
Comment: Several commenters suggested that we clarify the
procedures for how fiscal intermediaries and carriers calculate and
record the receipt date for redetermination requests. One commenter
recommended that we establish that the receipt date is the date the
request first arrives at the appropriate address. Another commenter
objected to presuming that the receipt of the initial determination,
which is used to calculate the time frame for a redetermination
request, will be 5 days after the date of the initial determination
notice. The commenter argued that often appellants receive initial
determinations much later than the date on the notice. In some cases,
the provider does not receive the initial determination until a month
later. The commenter believed that 10 days would be a more realistic
time frame for contractors to assume receipt and begin calculating
whether a party met the 120-day time frame for requesting a
redetermination.
A few commenters requested that we define ``evidence to the
contrary'' of the presumed 5-day receipt date in order to prevent
discrepancies in how different contractors handle requests for
redeterminations. One commenter suggested that ``evidence to the
contrary'' should be a receipt from a mail delivery service containing
the date of delivery to the appropriate address. Another commenter
asked whether a date stamp by the provider would be an acceptable way
to verify the date of receipt of an initial determination.
Response: We appreciate the concerns about calculating and
recording the receipt date for appeal requests based on the delivery
time for the initial determination notice. We agree that a uniform
process needs to be used for calculating and recording the date of
receipt of an appeal request. Thus, we proposed to incorporate into the
regulations CMS's clear, longstanding policy that the date of receipt
is presumed to be 5 days after the date of the initial determination
notice. We will carefully monitor our contractors to ensure that they
calculate the time frames appropriately. If we determine that any
additional instructions are
[[Page 11437]]
needed, we will provide them in manual instructions.
We understand that in some cases the initial determination notice
will be received later than 5 days from the date of the notice, which
is why the regulations allow more than 5 days where there is evidence
to the contrary. An example of evidence to the contrary would include a
postmark date or a receipt from a mail service containing the date of
delivery to the party. We do not believe it would be appropriate to
attempt to include in regulations all the possible ways for a party to
demonstrate when the party received an initial determination notice.
Instead, we will allow adjudicators to exercise their discretion as to
whether a party's evidence demonstrates that the party received the
initial determination beyond 5 days from the date on the notice.
Finally, we note that 120 days is a significant amount of time for a
party to file an appeal and that appellants also have an opportunity to
request an extension of this deadline; thus, we believe that the
calculation of the receipt date for appeal requests based on the
prevailing 5-day standard will not pose an undue hardship for most
appellants.
Comment: One commenter requested clarification on whether
adjudicators could request appellants to provide proof to support good
cause for failing to file an appeal within the allotted time frame.
Response: Adjudicators may request appellants to provide supporting
documentation that demonstrates that they have good cause for filing an
appeal beyond the deadline. We strongly encourage appellants to provide
supporting documentation when requesting a contractor, QIC, ALJ, or the
MAC to consider good cause for filing an appeal late. In fact, an
adjudicator can summarily dismiss a request made on the basis of good
cause when there is no evidence to support the request.
Comment: Some commenters raised objections to beginning the
decision-making time frame on the date that the contractor received the
redetermination request if an appellant filed an appeal at an
alternative location. One commenter agreed with this approach, but
indicated it would be difficult for appellants to know when the time
frame for making a decision started. The commenter suggested that we
add a requirement that the contractor notify the appellant when the
request has been received and the date the time frame began. Another
commenter suggested that we establish a definitive deadline by which an
appeal would be presumed received by the appropriate contractor for
purposes of tracking the adjudication time frame. The commenter thought
that an appellant should be able to presume that a contractor received
a request within 60 days; and therefore, the appellant should expect a
decision within 90 days. Another commenter suggested that CMS develop a
web-based system for local SSA, CMS or contractor staff to enter and
immediately transmit the request to the appropriate adjudicator. A few
commenters believed that the delayed decision-making time frame
penalized beneficiaries for something that was beyond their control.
They argued that the policy would be unfair to beneficiaries because
they would not receive a timely decision when they used an alternative
filing location.
Response: We recognize the commenters' concerns about the confusion
and potential delays involved in transmitting requests filed at
alternative locations to the appropriate contractor. Further, as noted
above, under section 931 of the MMA, SSA's role in the Medicare claims
appeal process will end with the impending transfer of the ALJ function
from SSA to DHHS no later than October 1, 2005. In view of the reduced
role of SSA in the processing of Medicare appeals, we do not believe it
is appropriate to specify in the regulations that appeals may be filed
at SSA offices. We have revised Sec. 405.942(a) to eliminate the
reference to alternative filing locations. We believe that directing
appellants to only one filing location will reduce confusion and
eliminate the potential delay in transmitting the request. We will also
allow an extension to the filing deadline when a party, in good faith,
sends a request to a government agency within the time period to file
and the request does not reach the appropriate contractor until after
the time period to file expires.
The elimination of alternative locations will obviate any routine
need for notices informing appellants of the date of receipt at the
adjudicating contractor. Given the elimination of alternative filing
locations, we think it would be unnecessarily burdensome on contractors
to notify all appellants of the receipt date, given that it could be
easily calculated to within a few days. In addition, we are actively
exploring the development of a web-based system that would permit
appellants to access real-time information about the status of their
appeals.
Comment: We received several comments on whether redetermination
requests should be accepted orally or in writing. One commenter
disagreed with the elimination of accepting requests over the
telephone. The commenter believed that taking requests by telephone is
a convenient and simple method for filing an appeal. Another commenter
pointed out that telephone requests facilitated meeting the decision-
making time frame. The commenter also indicated that telephone appeals
are advantageous because additional documentation can be requested
while the appellant is on the phone. Other commenters agreed that
requests for redeterminations be made in writing only. They stated that
when the request and the response are given on the telephone, it leaves
room for interpretation on what occurred during the telephone call.
Also, it could be difficult for the QIC to construct the case file if
the redetermination was handled over the telephone. The commenter
suggested alternative methods such as the use of a secure system for
fax or electronic mail requests. Another commenter agreed with our
discussion in the preamble to the proposed rule that the changes to the
reopening process could resolve the types of issues addressed in the
current telephone appeals process, and encouraged our efforts to
clarify the reopening rules.
Response: We recognize that initiating a redetermination over the
telephone can under some circumstances provide a faster process for
appellants than a written appeal. In the past, providers and suppliers
generally initiated reviews by phone for routine, uncomplicated
matters. However, section 937(a) of the MMA requires CMS to develop a
process whereby, in the case of minor errors or omissions that are
detected in the submission of claims, a provider or supplier can be
given an opportunity to correct these minor errors or omissions without
the need to initiate an appeal. Contractors would also continue to
handle these types of issues over the telephone through procedures
other than appeals, such as reopenings, including any associated
adjustments. The reopening process is discussed in more detail later in
this preamble under its own heading.
Written requests offer other advantages of efficiency and accuracy.
An appellant submitting a written request can submit evidence at the
same time as the request. The early submission of evidence leads to
resolving appeals at lower levels and promotes more accurate decision-
making. Furthermore, many appeals involve judgment calls that require
thought, research and analysis, much of which cannot be addressed in a
phone call. Also, as noted by a commenter,
[[Page 11438]]
written appeals aid contractors in developing case files for use at
later appeal stages.
Thus, as proposed, we will require that appellants request
redeterminations in writing. We will work on identifying simple and
convenient methods for appellants to request redeterminations in
writing, such as via facsimile or electronic mail request. Finally, we
note that contractors are by no means prevented from communicating with
appellants by phone in situations where contact by telephone can
provide information needed to resolve an appeal.
Comment: Some commenters raised questions about requests for
redetermination made by more than one party. A few commenters objected
to our proposal that where two or more parties requested an appeal on
the same initial determination, the contractor's deadline for
processing the appeal would be based on the latest filed request. One
commenter disagreed with the consolidation of multiple requests into
one proceeding, and argued that this would result in unwarranted
delays. The commenter suggested that we stipulate in this final
regulation that the decision-making time frame starts with the first
request for redetermination. The commenter also thought that
contractors should be required to act on beneficiary appeals when they
are received, rather than waiting to see if another party appeals.
Another commenter was concerned whether the contactor would wait until
the end of the full 120-day filing deadline to see if another party
would request an appeal.
Response: Instances when more than one party files a request for an
appeal of the same claim have always been rare, and we do not expect
any change in this regard under the new appeals procedures. Although we
appreciate the concern that contractors might wait 120 days to see if
another party appeals, contractors could not do so even if they wanted
to, given the requirement that they process a redetermination within 60
days of a timely filed request. A delay will occur only if another
request is received before the contractor issues a decision. Therefore,
we do not believe that consolidating the decision-making time frame for
appeals with multiple parties will create an impediment to the
efficient resolution of appeals. To the contrary, we believe that when
another party subsequently requests an appeal before a decision has
been made on the original request, fairness demands that the two
requests be combined into one case. We have amended Sec. 405.944(c) to
clarify this point.
Comment: Several commenters made recommendations about the place
and method of filing redetermination requests. One commenter suggested
that all review organizations have an address for delivery services
other than the U.S. Postal Service. The commenter stated that
appellants sometimes wish to use private services to deliver their
appeals, particularly to ensure that contractors receive the appeals
timely. A few commenters suggested that CMS provide appellants an
opportunity to submit a redetermination request via facsimile or via e-
mail. The commenter believed that these alternatives would create
better efficiencies for appellants.
Response: We encourage appellants to use delivery services that
will ensure the timely receipt by contractors of appeal requests. We
will explore with contractors ways to achieve efficiencies in the
appeals process, including establishing addresses for private delivery
services. We also will look into the extent to which contractors can
set up a process to accept facsimile and electronic requests in
compliance with applicable security and privacy policies and
procedures. Should these changes prove feasible, we will implement them
through manual instructions.
Comment: Several commenters urged us to make the standard form for
requesting a redetermination widely available to ensure accessibility
by beneficiaries. They suggested including the form for requesting a
redetermination with the initial determination notice. Alternatively,
the initial determination should provide information about where to
obtain the standard form. Commenters recommended that the standard form
be available upon request by telephone, on the Internet, and at all SSA
and CMS contractor offices.
Response: We agree that standardized forms should be readily
accessible to beneficiaries. As mentioned earlier in our discussion
about initial determinations, beneficiaries now routinely receive
Medicare Summary Notices (MSNs). The MSN contains information on the
appeals process and instructions for requesting an appeal.
Beneficiaries can use the MSN to request an appeal by circling the item
or service with which they disagree, explaining why they disagree,
signing the MSN, and returning it or a copy to the specified address.
Consumer testing has shown that the information on the MSN is complete
and easy for beneficiaries to understand. In most cases, we believe
that allowing beneficiaries to use the MSN to request an appeal is a
more effective practice than referring them to a required form.
We will ensure that customer service representatives at our 1-800-
MEDICARE number provide beneficiaries with accurate information on how
they may obtain standardized appeal forms. Updated appeal forms will
continue to be available on the Internet at http://www.cms.hhs.gov/forms and http://www.Medicare.gov/Basics/forms, as well as at CMS
contractor offices.
b. Evidence Submitted With the Redetermination Request
In the proposed rule, we specified that a party should explain why
he or she disagrees with the contractor's initial determination and
include any evidence that the party believes should be considered by
the contractor in making its redetermination. We wanted to encourage
appellants to make their case at the earliest possible level. To
facilitate this goal, we proposed that if appellants could not submit
relevant documentation along with their redetermination requests, then
they could provide later submissions. However, since it would be
difficult to process the redetermination within the appropriate time
frame, we proposed to permit contractors to extend the decision-making
time frame by up to 14 days based on the later submission of evidence.
Comment: One commenter suggested that prior to issuing a
redetermination, the contractor should request the necessary
documentation from the appellant and allow the appellant 14 days to
either submit the documentation requested or to certify that there are
no additional records to submit. The commenter also indicated that if
the appellant failed to provide the documentation, an unfavorable
decision should be rendered based on failure to provide the necessary
documentation. The commenter also questioned whether it was our intent
to preclude the QIC from accepting documentation other than what is
requested in the redetermination letter.
Response: We believe that the efficiency and accuracy of the
appeals process is enhanced when appellants submit all necessary
documentation with their redetermination requests. Although appellants
have the opportunity to submit evidence related to the claim at issue
at any time during the redetermination process, we strongly encourage
appellants to submit, at the time of their request, all evidence that
they want to be considered. If supporting documentation is not
submitted with the request, the contractor may contact the appellant to
try to obtain the missing information.
[[Page 11439]]
The contractor will not necessarily uphold an unfavorable initial
determination based solely on the lack of documentation submission. The
contractor must make a decision based on the information in the case
file.
If the contractor believes that the appellant is missing specific
information or documentation necessary for processing the
redetermination, but cannot obtain the information before its deadline,
the contractor will uphold the claim denial and then list the specific
missing information in the redetermination letter. If the appellant
requests a QIC reconsideration, the appellant should submit the
documentation specified in the redetermination notice with the request
for reconsideration. The QIC may accept any additional documentation,
even if it is not specified in the redetermination notice. If the
appellant fails to submit this evidence before the QIC issues its
reconsideration, the appellant may be precluded from introducing the
evidence at higher levels of the appeals process, absent a showing of
good cause. (See the discussion below regarding the regulatory and
statutory requirements for full and early presentation of evidence.)
c. Conducting a Redetermination and Time Frame for Making a Decision
Section 1869 of the Act provides little or no guidance with respect
to the conduct of redeterminations, with the exception of establishing
the filing and decision-making time frames. Thus, with few exceptions,
we did not propose major changes to the existing procedures for first
level appeals of claim determinations. To assist appellants who might
be unable to submit relevant documentation along with the request for
redetermination, and to promote the resolution of appeals at the
earliest possible level, we proposed to allow later submission of
documentation. If the appellant submitted evidence after the request,
an automatic 14-day extension would be added to the decision-making
time frame. See Sec. 405.946(b).
Comment: One commenter contended that CMS exceeded its statutory
authority by changing the standard with respect to the established time
frame for a decision on a request for redetermination. The commenter
disagreed with the proposal of an automatic 14-day extension to the
time frame when an appellant submits evidence after the request.
Another commenter agreed that additional time might be necessary to
issue a decision when a party submits additional evidence. The
commenter noted that we did not specify whether a party could submit
additional evidence more than once, and if so, what the impact would be
on the decision-making deadline. For example, would a 14-day extension
apply each time a party submitted additional evidence, or would there
by only one extension, regardless of how many times a party submitted
additional evidence? The commenter suggested that we specify that there
are no limits on evidence submission at the redetermination level and
that a party can submit additional evidence as many times as it deems
appropriate until a specific point near the time to issue a decision.
The commenter recommended that evidence should be permitted until 5
days prior to the decision-making deadline (for example, additional
evidence could be submitted until 55 days after the contractor received
the redetermination request).
Response: We believe allowing extensions of decision-making time
frames under some circumstances is consistent with the statute. We
believe that an appeal request should include the pertinent evidence
for an adjudicator to make an appropriate determination, as indicated
in Sec. 405.946(a). If the evidence is not submitted with the request,
the 14-day extension allows time for an adjudicator to carefully review
and consider additional evidence. It is unreasonable first to expect an
adjudicator to prepare a decision based on incomplete information
submitted with the appeal request, and then in as little as a few days,
potentially rewrite a decision based on new evidence.
While a party, by regulation, may submit additional evidence as
many times as it deems appropriate until the contractor issues a
decision, the impact is that the contractor may extend its decision-
making deadline by up to 14 days each time. The only way to avoid the
need for extended decision-making time frames would be to preclude the
submission of additional evidence by appellants after they file their
redetermination requests. Note that although the contractor may extend
the deadline, this does not mean that we expect the contractor to take
the maximum time to issue the decision in all cases. As mentioned in
the comment above, we urge appellants to submit all necessary
documentation with their requests in order to avoid delays. We note
that from the outset, appellants have twice the amount of time to
request an appeal as adjudicators do to conduct the appeal.
Comment: Some commenters argued that we should impose penalties on
fiscal intermediaries and carriers that fail to meet the 60-day
deadline for issuing a redetermination. In addition, the commenters
recommended that we establish specific remedies for appellants, such as
the ability to escalate cases to QICs, when contractors fail to meet
their time frames. One commenter argued that non-enforcement of the
time frame would have a negative impact on beneficiaries, since they
cannot proceed to the QIC until the contractor issues a
redetermination.
Response: We do not believe that it is appropriate to permit
escalation of redeterminations when contractors do not meet their
deadlines. We believe this is consistent with the statute in that the
Congress seems to have weighed the merits of escalation and chose to
implement that option only at the QIC level and above. The statute also
already directs that the Secretary monitor the timeliness of all
contractors' redeterminations. Sections 1816(f) and 1842(b)(2) of the
Act require us to develop criteria, standards and procedures to
evaluate a fiscal intermediary's or carrier's performance of its
functions. Measuring the timeliness of redeterminations is a critical
part of this process, and a contractor's inability to process
redeterminations within the required 60-day time frame will be enforced
through corrective action plans and other tools that CMS has available
to ensure that carriers and fiscal intermediaries fulfill their
statutory and contractual obligations. Under our ongoing Contractor
Performance Evaluation (CPE) process, CMS devotes extensive resources
to onsite surveys of contractors to ensure that they meet these
obligations.
Comment: One commenter recommended that we prohibit Medicare
contractors and QICs from raising new issues during an appeal. Any
issues that are different from those in dispute should be raised
through the reopening process. The commenter stated that bringing up
new issues creates great confusion for appellants.
Response: A redetermination consists of a fresh examination of all
the issues involved in a claim to determine whether it is payable.
Therefore, the redetermination is not limited to validating the
original reason for the denial of the claim at issue in the appeal. All
applicable statutory and regulatory provisions, as well as CMS-issued
policies and procedures, bind contractors making redeterminations (for
example, CMS Rulings, Medicare manual instructions, program memoranda,
national coverage determinations, local coverage
[[Page 11440]]
determinations, and regional medical review determinations). As a
result, all these authorities must be considered as part of the
redetermination.
d. Withdrawals and Dismissals
In the proposed rule, we proposed to allow parties to withdraw
redetermination requests within 14 days of the original request in
order to avoid situations where the request for withdrawal and the
decision crossed in the mail. We also proposed several reasons a
contractor might dismiss a request (for example, where a request for
redetermination did not contain the minimum elements for a
redetermination request set forth in proposed Sec. 405.944). We also
proposed to dismiss a request if the party filing the request died and
there was no information in the record to determine whether another
party might be prejudiced by the redetermination.
We also proposed that when a contractor dismissed a request, a
written notice would be sent to the parties. Also, a dismissal could be
vacated at any time within 6 months from the date of the dismissal
notice for good and sufficient cause. Finally, an appellant could
request a QIC reconsideration of the dismissal within 60 days of the
dismissal notice. See proposed Sec. 405.974(b).
Comment: A commenter recommended that the dismissal notice under
Sec. 405.952(c) should inform the appellant of the right to request
that the contractor vacate the dismissal within 6 months.
Response: We agree that the dismissal notice should include
information about vacating the dismissal. We have revised Sec.
405.952(c) to require that the dismissal notice state that there is a
right to request that the contractor vacate the dismissal action.
Comment: Proposed Sec. 405.952(a) permits a party to withdraw its
appeal request by filing a written and signed request for withdrawal
within 14 calendar days of the filing of the redetermination request. A
commenter questioned whether a contractor would disregard a request for
withdrawal made after the 14th day. The commenter argued that there was
no legitimate reason to issue a redetermination if someone wanted to
withdraw an appeal request. The commenter recommended that as long as
the withdrawal request was received before the contractor issued a
redetermination, then the request for redetermination should be
dismissed.
Response: We agree with the commenter and will not limit requests
for withdrawal to within 14 days of filing the request for
redetermination. Under this interim final rule, a request for
withdrawal must be received before a redetermination has been issued.
We encourage appellants to submit written requests early to avoid
having the notice of a redetermination and a request to withdraw cross
in the mail.
Comment: Proposed Sec. 405.952(b)(2) requires a contractor to
dismiss a request for a redetermination if the contractor determines
that a party has failed to make out a valid request for redetermination
that substantially complies with Sec. 405.944. Proposed Sec.
405.944(b) requires an appellant to either use a standard CMS form or
submit a written request containing four elements: (1) The
beneficiary's name; (2) the beneficiary's health insurance claim
number; (3) the specific services(s) and item(s) for which the
redetermination has been requested, as well as the specific date(s) of
service; and (4) the name and signature of the party or appointed
representative of the party. Two commenters pointed out that these
elements do not mirror the requirements contained on the current
standard CMS form to request a review.
The commenters requested us to clarify if the current review form
would comply with Sec. 405.944. They also inquired as to whether we
would develop a new form. If CMS developed a new form, the commenters
suggested providing space on the form for all of the required elements
listed in the proposed rule. Additionally, one commenter requested that
CMS develop and disseminate a standard form as quickly as possible so
that parties can become familiar with the information required in the
form.
Response: We realize that the current standard forms for requesting
a review and reconsideration, CMS forms 1964 and 2649 respectively, do
not contain all of the elements required under Sec. 405.944. However,
we are in the process of revising all of our current appeal forms. The
standard CMS form will contain all of the elements specified in Sec.
405.944. Once we complete the new forms, they will be released and made
available to appellants at contractor offices, CMS offices, on the
Internet, and by calling 1-800-MEDICARE. We intend to release the new
forms in conjunction with the implementation of these interim final
regulations.
Comment: One commenter contended that allowing contractors to
dismiss redeterminations when appellants fail to make out valid
requests effectively denies appellants the ability to pursue appeals.
Other commenters maintained that requiring specific elements in order
to make a request would penalize unrepresented beneficiaries or those
that have limited English-speaking abilities or mental capacity. One
commenter argued that unrepresented beneficiaries should be given
notice of any deficiencies and an opportunity to correct and file an
amended redetermination request within a reasonable time period (for
example, 10 business days after receipt of the notice). The commenter
also recommended that the notice of an incomplete request should inform
the party of the information necessary to request a redetermination;
otherwise, the party would not know what information was missing.
Response: We do not agree that contractors should be required to
inform appellants of the defects in their redetermination requests
instead of being able to issue dismissals. Section 405.944(b) requires
only four elements for making out a valid redetermination request: (1)
The beneficiary's name; (2) the Medicare health insurance claim number;
(3) the specific services(s) and item(s) for which the redetermination
is requested and the specific date(s) of service; and (4) the name and
signature of the party or representative of the party. This constitutes
the minimum information needed to process an appeal, and we believe
that it is entirely appropriate to require the party appealing to
provide this basic information. Absent this information, it would be
difficult, if not impossible, to ascertain whether the individual
requesting the appeal is in fact a party or representing a party, or to
identify the claim at issue. We believe that accepting appeal requests
with insufficient basic information about the claim and requiring
contractors to inform appellants of the defects in their appeal
requests would make for an inefficient appeals process. Note that
identification of the specific items or services for which a
redetermination is being requested can be accomplished in a variety of
relatively simple ways. For example, a beneficiary may simply circle
the denied service in question on the MSN. Alternatively, for revised
initial determinations (for example, overpayment cases or Medicare
Secondary Payer recovery cases), appellants can meet this criterion by
including a copy of the ``demand letter'' used to initiate these cases.
Thus, meeting these minimum requirements is not onerous.
In arriving at the decision to allow contractors to dismiss invalid
redetermination requests under Sec. 405.952(b)(2), we considered the
fact that a dismissal does not necessarily
[[Page 11441]]
terminate a party's right to file an appeal. If the 120-day time frame
for filing a redetermination has not expired at the time a contractor
issues a dismissal, then a party may correct the defect and resubmit
the appeal. Also, a contractor may vacate a dismissal at any time
within 6 months from the date of the dismissal notice, if good and
sufficient cause is shown. Alternatively, if a party believes that the
contractor inappropriately dismissed a request, the party can request a
reconsideration by the QIC within 60 days of the dismissal.
Therefore, we are adopting our proposed policy in this interim
final rule of dismissing requests that do not meet the requirements of
Sec. 405.944. A contractor may, but is not required to, contact
appellants to give them an opportunity to cure a defect in their
redetermination request before dismissing it. We believe that this
policy is reasonable given that it is clear how a party must make out a
valid redetermination request. As under the former appeals process, we
will continue to allow a beneficiary to file an appeal by following the
requirements detailed on the MSN. We will instruct our contractors to
take into consideration any special needs of unrepresented
beneficiaries, or those with limited capacities or abilities. Also, we
are in the process of creating a redetermination form that will assist
appellants who are unfamiliar with the process (for example,
unrepresented beneficiaries) with their requests.
Comment: One commenter requested clarification on the circumstances
under which a request for redetermination would be dismissed when a
beneficiary dies. The commenter requested clarification about any
potential liability of the deceased beneficiary's estate, including
recovery by a State. The commenter believed that Sec. 405.952(b)(4)
also should clarify the situations an adjudicator must consider to
determine whether dismissing the redetermination request may prejudice
another party. The commenter indicated that in almost every situation,
the beneficiary's estate would be prejudiced by the determination and
argued that a dismissal would preclude the beneficiary's family or
estate from protecting its right to seek reimbursement.
Response: We have revised the proposed language in Sec.
405.952(b)(4) to make the needed clarifications. A contractor will
dismiss a redetermination request when the beneficiary whose claim is
being appealed dies while the request is pending, under the following
circumstances: (1) The beneficiary's surviving spouse or estate has no
remaining financial interest in the case based on whether either
remains liable for the services or subsequent similar services; (2) no
other individual or entity with a financial interest in the case wishes
to pursue the appeal; and (3) no other party filed a valid and timely
redetermination request. For example, the contractor will dismiss the
request if the beneficiary or the beneficiary's representative filed
the request for redetermination but the beneficiary was not held liable
for the services at issue. The contractor will inquire whether another
party wishes to continue the appeal. However, the contractor will not
be required to inquire whether any other party wishes to continue the
appeal unless a valid and timely request for redetermination is filed.
We wish to note that when a beneficiary dies and the request for
redetermination is subsequently dismissed, a party, including the
beneficiary's estate, may request the contractor to vacate the
dismissal under Sec. 405.932(c) for good and sufficient cause.
Examples of good and sufficient cause include when there is the
possibility of Medicaid liability or when there is a possibility the
State (which pays Medicaid funds) will attempt recovery of its payment
from the estate.
As mentioned in our discussion above on parties to initial
determinations and appeals, Sec. 405.906(c) now establishes that in
the event of the death of a beneficiary, a provider or supplier may
appeal if there is no other party available to appeal an initial
determination. Thus, the provider or supplier of the item or service
may request a redetermination in these situations, consistent with the
clear direction of section 939 of the MMA.
Comment: A commenter requested that we clarify the meaning of
``otherwise transmit'' in proposed Sec. 405.952(d) in terms of a
contractor providing a dismissal notice to the parties at their last
known addresses. The commenter pointed out that the type of
transmission is particularly important for beneficiaries who do not
have access to facsimile and electronic mail.
Response: The dismissal notice, like a redetermination notice, will
be delivered through first class U.S. mail. Although contractors do not
currently transmit notices by facsimile or electronic mail, we want to
ensure that the regulations allow them the flexibility to do so in the
future should CMS believe that other notification methods are
appropriate. Nevertheless, even if contractors use alternate means to
provide dismissal notices, we will instruct contractors to allow
parties to elect their preferred method of delivery.
7. Redetermination, Notification, and Subsequent Limitations on
Evidence'' (Sec. 405.954, Sec. 405.956, and Sec. 405.966)
[If you choose to comment on issues in this section, please include the
caption ``Redetermination, Notification, and Subsequent Limitations on
Evidence'' at the beginning of your comments.]
When a contractor's redetermination fully reverses the initial
determination, we proposed to maintain the current policy that proper
notification would be achieved through the MSN or the RA, which
contractors send to beneficiaries, and providers and suppliers,
respectively. If a redetermination affirmed the initial determination,
either in whole or in part, we proposed that a redetermination notice
contain: (1) A clear statement indicating the extent to which the
redetermination is favorable or unfavorable; (2) a summary of the
facts; (3) an explanation of how the pertinent laws, regulations,
coverage rules, and CMS policies apply to the facts of the case; (4) a
summary of the rationale for the redetermination; (5) notification to
the parties of their right to a reconsideration, the procedures that a
party would follow in order to request a reconsideration, and the time
limit for requesting a reconsideration; (6) a statement of the specific
missing documentation that would need to be submitted with a request
for a reconsideration; (7) an explanation that if the specific
supporting documentation specified in the notice is not submitted with
the request for a reconsideration, the evidence will not be considered
at an ALJ hearing, unless the appellant demonstrates good cause as to
why the evidence was not provided previously; and (8) any other
requirements specified by CMS. When a redetermination notice is sent to
a provider or supplier announcing a full or partial reversal of the
initial determination, the Medicare contractor must also issue an
electronic or paper remittance notice to the provider or supplier to
explain the payment.
In general, the proposed requirements for the redetermination
notice were similar to existing instructions concerning the content of
contractor appeal determinations. However, our proposal that
contractors also specify supporting documentation that would need to
accompany a reconsideration request was a new requirement.
Comment: We received many comments on the requirement for the
redetermination notice to include a statement of the specific missing
[[Page 11442]]
documentation that must be submitted with the reconsideration request.
In general, the commenters agreed with the requirement to identify
additional supporting documentation in the redetermination notice. They
also agreed that this change would improve the efficiency of the
appeals process by assisting appellants in knowing the type of
documentation to submit.
Several other commenters objected to this provision. Two commenters
argued that the statute and Medicare regulations require filing certain
documentation with particular types of claims (for example, claims for
power wheel chairs require submission of a power wheelchair Certificate
of Medical Necessity (CMN)). They argued that if the statute and
regulations do not require the submission of a particular piece of
documentation, but a contractor needs that documentation before it will
pay a claim, then the contractor should be required to explain why it
needs the documentation and consider the impact of requiring compliance
with the a request (consistent with the Paperwork Reduction Act of 1995
(PRA)). They proposed that the carrier or fiscal intermediary explain
in detail the rationale for collecting any additional documentation not
required for submitting a particular claim. The commenter argued that
the rationale should include the legal and medical necessity reason for
such collection.
Response: We believe that the appeals time frames and procedures
mandated by section 521 of BIPA and Title IX of the MMA clearly require
greater efficiency in the Medicare appeals process. This belief is
reinforced by section 933(a) of the MMA, which requires that a provider
or supplier may not, in any subsequent level of appeal, introduce
evidence that was not presented at the reconsideration conducted by the
QIC, unless there is good cause that precluded the introduction of that
evidence at or before that reconsideration. However, absent advance
notice of what documents are needed to support a claim, appellants may
have difficulty determining what constitutes relevant evidence for
their claim appeals. Thus, although not required by the statute, we
believe that requiring contractor redetermination notices to identify
necessary missing documentation will provide very valuable information
for appellants to present their cases to QICs. Therefore, we believe
this provision is advantageous to appellants since it should result in
a better understanding of the basis for the unfavorable redetermination
and lead to more accurate reconsiderations.
Comment: One commenter recommended revising the new evidence
provisions to preclude the subsequent submission of information only to
the extent that it involves objective medical information (for example,
a specific blood gas percentage or patient height and weight). Another
commenter suggested that we distinguish between the submission of new
evidence that involves readily available clinical documentation
directly implicated in the claim dispute and other evidence (for
example, expert opinions, clarifying treating physicians' opinions, or
evidence from providers not directly involved in the dispute). The
commenter recommended only precluding clinical documentation.
Other commenters argued that this provision was too burdensome for
providers, suppliers, and beneficiaries, particularly when they do not
have easy access to supporting documentation that may be required. Some
of the commenters suggested that we exempt beneficiaries from these
rules because they do not have ready access to medical records and
other documentation.
One commenter believed that the proposed rule was too lenient and
recommended that we limit the rules on submission of evidence at the
redetermination and reconsideration levels. The commenter suggested
that we require appellants to sign a form certifying that they do not
have any more records to submit.
Response: We do not believe that it is either practical or
consistent with the statute to limit the requirement on full and early
presentation of evidence by attempting to distinguish between evidence
that is readily available to the provider and that which is obtained
from providers not directly involved in the claim dispute. Similarly,
we cannot limit this provision to objective medical information. Given
the vast amount of medical services and items that could be involved in
a claim dispute, it would be extremely difficult to draw clear
distinctions among the numerous types of documentation that might be
needed. Nevertheless, where it is not feasible to obtain this
documentation, as indicated in Sec. 405.1028, an ALJ will make a
determination on whether good cause for failure to submit the evidence
to the QIC exists. This applies to all documentation, including the
items listed in the notice of redetermination.
Finally, we note that, consistent with section 933(a) of the MMA,
we have specified in the interim final rule that the limitation on the
presentation of new evidence, absent good cause, applies only to
providers and suppliers, and not to beneficiary appellants. The
limitation on the presentation of new evidence will also apply to
beneficiaries represented by providers or suppliers to ensure that
providers or suppliers do not attempt to circumvent these rules by
offering to represent beneficiaries. Further, to the extent that
beneficiaries may not be as sophisticated as providers or suppliers
regarding the administrative appeals process this consideration would
not apply in the case of a beneficiary represented by a provider or
supplier. Thus, although contractor redetermination notices will
uniformly identify any necessary missing documentation, beneficiaries,
except those represented by providers or suppliers, will still be
permitted to introduce evidence after the QIC reconsideration level
(although for efficiency reasons, they would be better served by doing
so as soon as possible). We believe it would be unnecessarily
burdensome to require appellants to certify that they have no further
evidence to submit. (See section II.D.3 below for a further discussion
of rules related to evidence at QIC reconsiderations.)
Comment: Several commenters made additional suggestions for
improving the notices that inform parties of the decision on an appeal.
Some commenters suggested including a form to request a reconsideration
on the back of the redetermination notice. Other commenters suggested
that CMS make available upon request the laws, regulations, policy
manuals, national coverage determinations (NCDs), local coverage
determinations (LCDs), and local medical review policies (LMRPs) that
were used to make the decision. They recommended that notices should
include the correct citations to the appropriate provisions. One
commenter recommended that if the MSN is used to inform a beneficiary
of a redetermination that is wholly favorable, the MSN should be sent
within the proper time frame. This commenter also suggested that the
appointed representative receive a copy of the decision.
Response: We agree that including a form to request a
reconsideration with the redetermination notice would assist appellants
and help them to provide the information QICs need to process
reconsiderations. At one time, we had considered including a
reconsideration request form on the reverse side of the redetermination
notice, but consumer-testing results indicated that appellants found
this confusing. We intend to continue exploring how best to make
available a reconsideration request form with the redetermination.
Consistent
[[Page 11443]]
with section 1869(a)(5) of the Act, as amended by section 933(c)(1) of
the MMA, we require in Sec. 405.956(b)(9) that contractors make
available upon request correct information on the laws, regulations,
policy manuals, national coverage determinations (NCDs), local coverage
determinations (LCDs), and local medical review policies (LMRPs) that
were used to make the decision.
We appreciate the commenter's concern about receiving MSNs within a
reasonable amount of time from the date of a fully favorable
redetermination. However, it is more efficient and cost-effective for
beneficiaries to receive MSNs on a monthly basis, as opposed to each
time a claim or appeal is processed. Thus, if an adjustment is made to
a claim as the result of an appeal decision, the beneficiary will not
receive the MSN until the next scheduled monthly release. We believe
that this is an acceptable amount of time, and it continues a
longstanding Medicare practice. CMS will monitor contractor performance
in this regard.
To ensure that appellants are made aware of the outcome of a fully
favorable redetermination in a timely manner, we added Sec. 405.956(a)
and Sec. 405.956(c) to reflect that contractors must send a written
notice to the appellant within 60 calendar days of receipt of the
request for a redetermination. The written notice must contain a clear
statement indicating that the redetermination is wholly favorable to
the appellant.
Additionally, we wish to clarify that all parties to the appeal are
required to receive a copy of an unfavorable or partially favorable
redetermination notice, with the sole exception of overpayment cases
involving multiple beneficiaries. Our experience has been that
beneficiaries often are confused by the copies of notices that they
receive in conjunction with overpayment and recovery letters to
providers and suppliers. To minimize confusion, under Sec.
405.956(a)(2), we specify that in these situations, contractors are
permitted to issue written notices only to appellants.
Although we agree that an appointed representative must receive a
copy of the redetermination, we do not agree, for privacy reasons, that
the appointed representative also should receive a copy of the MSN.
MSNs contain information about other claims filed during the previous
month, with which the appointed representative may have no authorized
involvement.
Comment: A commenter pointed out that we did not impose a deadline
for a contractor to make payment on a claim after a favorable decision.
The commenter recommended that we require payment to be made within 60
days of the date of the favorable decision.
Response: We agree that payment should be made within a reasonable
time from the date of a favorable determination. We will continue to
evaluate contractors' performance in effectuating favorable decisions.
8. Reconsiderations (Sec. 405.960 Through Sec. 405.978)
[If you choose to comment on issues in this section, please include the
caption ``Reconsiderations'' at the beginning of your comments.]
a. Time Frame for Filing a Reconsideration Request
Proposed Sec. 405.962(a) specified that appellants who wished to
file a request for reconsideration would be required to do so within
180 days of receipt of the redetermination notice, or within additional
time as the QIC might allow for good cause. In proposed Sec. 405.964,
we set forth the place and method for filing a request for
reconsideration. We would permit parties to file requests with the QIC,
CMS, or SSA offices. For purposes of establishing whether an appellant
had timely filed a request for reconsideration, a request would be
considered filed on the date it was received by the QIC, SSA, or CMS.
However, for reconsideration requests submitted to CMS or SSA offices,
the QIC's decision-making period would not begin until the QIC received
the request.
We also specified that reconsideration requests could either be
made using a standard CMS form, or some other written document, as long
as it contained the key elements captured by the form; that is, the
beneficiary's name, HIC number, date(s) of service and service(s) at
issue, and the name and signature of the party or representative of the
party. If the reconsideration request did not contain any one of the
essential elements referenced above, we proposed that the QIC would
dismiss the reconsideration on the basis that the party failed to make
out a valid request.
We also proposed in Sec. Sec. 405.964(c) and 405.970(b)(3) that
QICs would consolidate multiple requests for reconsideration into a
single proceeding, and would issue one reconsideration determination to
all parties within 30 days of the latest reconsideration request.
Proposed Sec. 405.970 set forth the general requirement that QICs
would complete their reconsiderations within 30 days of receiving a
timely filed request. By no later than the close of the 30-day
decision-making period, a QIC would either issue its reconsideration,
notify all parties that it would not be able to complete its review by
the decision-making deadline, or dismiss the request for
reconsideration. Pursuant to section 1869(c) of the Act, the notice
that the QIC is unable to complete its reconsideration within the
decision-making period would advise the appellant of the right to
request escalation of the appeal to an ALJ. Under Sec. 405.970(d),
appellants would be able to submit a written request directing the QIC
to escalate the appeal. We proposed that whenever a QIC received an
escalation request, the QIC would take one of two actions within 5
days: (1) Complete its reconsideration and notify the parties of its
decision; or (2) acknowledge the escalation request in writing and
forward the case file to the ALJ.
Comment: A few commenters expressed concern about how appellants
that filed appeals at alternative sites would know whether or when the
proper adjudicator received their reconsideration request. To address
this situation, the commenters recommended requiring adjudicators to
send acknowledgement letters to appellants that file at alternative
locations. Other commenters suggested requiring all adjudicators to use
addresses that are accessible by delivery other than the U.S. postal
service to enable appellants to file directly with the proper
adjudicator.
Response: As discussed above in the context of requests for
redeterminations, we agree with the commenter that appellants who use
alternate filing locations would have difficulty determining if and
when the proper adjudicator received their request. Our experience has
been that very few appellants use alternative filing locations (for
example, SSA field offices). However, when they do so, requests often
do not arrive timely at the proper adjudicating entity. Moreover, as
noted previously, consistent with section 931 of the MMA, SSA will no
longer play a role in Medicare claims appeals. For these reasons, and
consistent with the policy for redetermination requests, we have
revised Sec. 405.964(a) to specify that all requests for a
reconsideration must be filed with the QIC indicated on the notice of
redetermination. Just as we plan to do with intermediaries and
carriers, we also will explore with QICs ways that we can create
efficiencies in the appeals process, including establishing addresses
for private delivery services.
Comment: Many commenters disagreed with the proposal of ``tolling
[[Page 11444]]
the decision-making clock'' for a QIC reconsideration when an appeal is
filed at an alternative location (for example, at an SSA office rather
than with the QIC). Commenters perceived this provision as unfairly
penalizing appellants that used alternative filing locations. Rather
than beginning the decision-making time frame only when a QIC receives
an appeal request, commenters suggested that CMS develop an electronic
filing system. An electronic filing system would allow appellants to
continue filing their appeals at alternative filing locations and
permit adjudicators to receive the appeals almost immediately, thereby
eliminating the need to toll the decision-making clock. (Note that the
issue of tolling the decision-making deadline also applies to other
levels of the appeals process.)
Response: As discussed above, we believe the best way to facilitate
a QIC's ability to adjudicate a reconsideration timely is to require
that all reconsideration requests be filed at the QIC. Thus, the
comments on the ``tolling of the clock'' issue are no longer pertinent.
Note that redetermination notices will clearly specify the proper
entity to whom to direct a reconsideration request. We do recognize
that the development of an electronic filing system would make the
appeals process more efficient; therefore, we intend to pursue this
goal both with QICs and the new Medicare administrative contractors
that are mandated by the MMA.
Comment: Some commenters inquired whether carriers and
intermediaries would be required to create case files, or to forward
redetermination letters and documentation to the QIC for
reconsiderations. One commenter argued that the QIC's success in
meeting its decision-making time frame would depend upon the
contractors' compliance with a time frame to forward cases to the QICs.
If contractors are responsible for forwarding case files to QICs, the
commenters suggested that CMS establish a time frame in the regulation
for performing this activity. One commenter recommended a 15-day time
frame to complete both the preparation and forwarding of the case file.
Response: In order to achieve the statutory time frame for QIC
decisions, efficient processing and forwarding of case files to the
QICs is essential. From an appellant's perspective, however, this will
be a seamless process, and we believe that the proper vehicle to
address the mechanics of case file transmission is through our
contractor evaluation process and manual instructions, rather than
through regulations.
Comment: Some commenters pointed out that currently, some
contractors define the date of receipt as the day that the contractor
logs in the request, while others define it as the day the request is
received in the contractor's mailroom. To eliminate confusion, one
commenter asked that CMS clarify in the final rule that the date of
receipt of a reconsideration request would be the date that the request
arrived in the QIC's mailroom.
Response: We recognize the need for consistency in this regard and
agree that inefficiencies in logging in an appeal request should not
adversely affect an appellant. We intend to address the issue through
the QIC contracts and instructions.
b. Withdrawal or Dismissal of a Request for Reconsideration
Proposed Sec. 405.972 established provisions for withdrawing and
dismissing requests for reconsideration. We proposed that appellants
should be able to withdraw their reconsideration requests by filing a
written request for withdrawal to the QIC within 14 calendar days of
filing the reconsideration request. Under proposed Sec. 405.972(b), we
set forth the reasons why a QIC would dismiss a request for
reconsideration (for example, if the party failed to make out a valid
request consistent with the requirements identified in Sec. 405.964).
We also proposed under Sec. 405.972(e) to allow appellants to request
an ALJ review of a QIC dismissal of a reconsideration request if the
request was filed within 60 days of the QIC's dismissal notice.
Comment: Some commenters asked us to give a rationale for allowing
appeals of dismissals and remanding reversed dismissals. Other
commenters argued that a reconsideration regarding the dismissal of a
redetermination request should be final and not appealable. In
addition, the same commenters asked that we include a provision that a
subsequent reversal of a dismissal have no effect on a party's appeal
rights.
Response: Although we recognize that permitting appeals of
dismissals can be inefficient at times, we believe our approach of
providing for review of dismissals at the next adjudicative level
balances the need for review with the need for finality. Because
dismissals will only be based on the circumstances involving the appeal
request (for example, whether the party included the proper elements in
its appeal request, (or whether it is a proper party to request an
appeal) rather than the merits on whether the claim is payable, we do
not believe further review is necessary. Accordingly we are adding
Sec. 405.1004(c) to specify that an ALJ's decision with respect to a
QIC's dismissal of a reconsideration request is final and not subject
to further review. Finally, we are not adopting the commenter's
suggestion that a subsequent reversal of a dismissal have no effect on
a party's appeal rights. On the contrary, a subsequent reversal by an
ALJ of a dismissal would restore the party's reconsideration rights.
Thus, it is necessary for the case to be remanded for the QIC to render
a decision on the substantive issue of whether a claim must be paid.
Comment: We received many comments and questions on the procedural
aspects of the dismissal provision in the reconsideration section of
the proposed rule. Commenters asked us to specify the circumstances in
which a dismissal would be appropriate and to identify what an
appellant would need to show in order to successfully appeal the
dismissal of a reconsideration request. The commenters also asked us to
clarify the circumstances under which an adjudicator can dismiss a
reconsideration request when a beneficiary dies.
Response: Section 405.972(b) describes the circumstances that
warrant dismissal of a reconsideration request, either entirely or as
to any stated issue. A dismissal is appropriate when the person or
entity requesting a reconsideration is not a proper party under Sec.
405.906 or does not otherwise have a right to a reconsideration under
section 1869(b) of the Act. A dismissal also is warranted where a party
fails to make out a valid request for reconsideration under Sec.
405.964(a) and Sec. 405.964(b) or fails to file a request within the
proper time frame under Sec. 405.962.
On appeal, the party contesting the dismissal must provide evidence
sufficient to refute the basis for the dismissal. For example, if a
reconsideration request were dismissed because the person filing the
appeal is not a proper party, then the appellant would have to show
that they are in fact a proper party.
We have amended Sec. 405.972(b)(4) to identify, in the event of a
beneficiary-appellant's death, the circumstances an adjudicator must
consider to determine whether dismissing the reconsideration request
prejudices another party. The adjudicator will look to determine
whether all three circumstances are present: (1) The beneficiary's
surviving spouse or estate has no remaining
[[Page 11445]]
financial interest in the case, based on whether either remains liable
for the services, or for subsequent similar services under the
limitation of liability provisions, based on the denial of the services
at issue; (2) no other individual or entity with a financial interest
in the case wishes to pursue the appeal; and (3) no other party to the
redetermination filed a valid and timely reconsideration request. For
example, the QIC will dismiss the request if the beneficiary or the
beneficiary's appointed representative filed the request for
reconsideration, but the beneficiary was not held liable for the
services at issue. The QIC will inquire whether the provider or
supplier of the item or service wishes to continue the appeal. However,
the QIC will not be required to inquire whether any other party wishes
to continue the appeal unless a valid and timely request for
reconsideration is filed by another party. We wish to note that when a
beneficiary dies and the request is subsequently dismissed, a party,
including the beneficiary's estate, may request the contractor to
vacate the dismissal under Sec. 405.972(d) for good and sufficient
cause. Examples of good and sufficient cause include the possibility of
Medicaid liability or the possibility that the State (which pays
Medicaid funds) will attempt recovery of its payment from the estate.
As mentioned in our discussion above on parties to initial
determinations and appeals, Sec. 405.906(c) reflects that in the event
of the death of a beneficiary, a provider or supplier will be able to
appeal if no other party is available to appeal the redetermination.
Thus, the provider or supplier of the item or service is able to
request reconsideration in these circumstances.
Comment: Some commenters criticized the policy regarding dismissals
of incomplete reconsideration requests. Rather than dismissing
incomplete reconsideration requests, commenters thought that a better
policy would be to inform appellants of the defect and afford them an
opportunity to cure the defect. At a minimum, the commenters suggested
an exception for beneficiaries.
Response: Consistent with the previous discussion of dismissals of
redetermination requests, we do not agree with the commenters that QICs
must be required to inform appellants of the defects in their
reconsideration requests instead of being able to issue dismissals. We
believe that this policy is reasonable given the new redetermination
notice requirements and the simplicity of the elements of a valid
reconsideration request.
Section 405.964(b) requires only five elements for making out a
valid reconsideration request: (1) The beneficiary's name; (2) the
beneficiary's Medicare health insurance claim number; (3) the specific
service(s) and item(s) for which the reconsideration is requested and
the specific date(s) of service; (4) the name and signature of the
party or representative of the party; and (5) the name of the
contractor that made the redetermination. We added the requirement that
the party specify the contractor that made the redetermination to
facilitate the QIC obtaining the case file from the appropriate
contractor. Since QICs need this basic information in order to process
an appeal, we believe that it is appropriate to require the party
appealing to provide adequate information to identify the specific
claim at issue. Further, the name and signature of the appellant is
necessary to ascertain whether the individual requesting the appeal is
in fact a party. This basic information is all that is required under
Sec. 405.964(b), and it essentially mirrors the information that would
have already been provided by an appellant at the redetermination
level. Thus, we believe that requiring QICs to accept appeal requests
with insufficient information about the claim and to inform appellants
of the defects in their appeal requests makes for an inefficient
appeals process.
As under the former appeals process, CMS will create a standardized
reconsideration form that will assist appellants, particularly
unrepresented beneficiaries, with their requests. Furthermore, a
dismissal of a request for reconsideration does not necessarily
terminate a party's right to file an appeal. If the 180-day time frame
for filing a request for reconsideration has not expired at the time a
QIC issues a dismissal, then a party may correct the defect and
resubmit the appeal. Additionally, if a party believes its
reconsideration was inappropriately dismissed, it can either ask the
QIC to vacate its dismissal, or appeal the dismissal to an ALJ.
Comment: A few commenters asked how the dismissal of a consolidated
appeal or a remand resulting from a reversed dismissal affects a
party's appeal rights.
Response: Under Sec. 405.964(c), QICs are required to consolidate
multiple requests for reconsideration of the same claim into one
proceeding. The dismissal of a party's individual appeal request within
a consolidated appeal does not affect any remaining party's appeal.
When a dismissal is appealed to the next level, the adjudicator will
determine if the dismissal is correct. If the adjudicator reverses the
dismissal, the dismissal is vacated and remanded to the previous level
of appeal. The remand of a vacated dismissal is meant to ensure that
appeals are resolved at the lowest level possible. If one party's
appeal is remanded on a consolidated appeal, all other parties' appeals
on the same claim are remanded. The previous adjudicator will reopen
the dismissal and issue a new determination. This new determination
will provide appeal rights.
Comment: A few commenters opined that appellants should be able to
withdraw a reconsideration request any time after filing the appeal
request, but before a decision is rendered.
Response: Consistent with our policy for redetermination requests,
we agree with the commenters that an appellant should be allowed to
withdraw an appeal request any time after a request is filed, but
before the QIC issues a decision. Thus, we have removed the proposed
provision that a withdrawal request must be filed with the QIC within
14 calendar days of the filing of the reconsideration request. Section
405.972(a) now reads ``an appellant that files a request for
reconsideration may withdraw its request by filing a written and signed
request for withdrawal * * *. The request for withdrawal must be
received in the QIC's mailroom before the reconsideration is issued.''
c. Evidence Submitted With the Reconsideration Request
Proposed Sec. 405.966(a) describes the type of evidence that
accompanies reconsideration requests and specifies that the failure to
submit documentation listed in the redetermination notice at the
reconsideration level generally prevents the introduction of that
evidence at subsequent appeal levels. Under proposed Sec. 405.966(b),
if appellants submit additional documentation after their request for
reconsideration has been filed, including documentation listed in the
redetermination notice, the late submission results in an automatic 14-
day extension of the QIC's decision-making time frame. Section 933(a)
of the MMA subsequently added a similar, new statutory requirement with
respect to the full and early presentation of evidence.
Comment: When filing a request for reconsideration, proposed Sec.
405.966(a) requires a party to present evidence and allegations of fact
or law related to the issue in dispute and explain why it disagrees
with the redetermination. In addition, the evidence would need to
include any missing documentation
[[Page 11446]]
identified in the redetermination notice. Absent good cause, the
failure to submit evidence generally prevents its introduction at
subsequent levels of the appeals process. Many commenters perceived
this ``penalty'' for failing to comply with the requirement for early
presentation of evidence as too harsh.
Some argued that requiring beneficiaries to submit evidence and
make allegations of fact and law at the reconsideration level changes
the nature of the appeal from an informal review to an adversarial
proceeding. These commenters believe that beneficiaries generally lack
the resources and sophistication to make a showing at the time a
reconsideration request is filed and are better able to present
evidence and explain their case in a hearing. Other commenters
indicated that requiring early presentation of evidence is unfair to
all appellants, not just beneficiaries, especially since the proposed
rule would allow CMS to enter an appeal as a party at the ALJ level and
to submit evidence and position papers. To address this issue,
commenters recommended either eliminating this provision entirely, or
creating an exception to this requirement for unrepresented
beneficiaries.
Response: Section 1869(b)(3) of the Act, as amended by section
933(a)(1) of the MMA, now specifies that providers and suppliers may
not introduce evidence in any appeal that was not presented at the
reconsideration conducted by the QIC, unless there is good cause that
prevented the introduction of that evidence at or before that
reconsideration. This statutory change is largely consistent with the
policy identified in the proposed rule; therefore, we are adopting this
provision as proposed for provider and supplier appellants.
However, we are establishing an exception to the ``full and early
presentation of evidence'' requirement for beneficiaries. Specifically,
we have added Sec. 405.966(c) to allow beneficiary-appellants to
submit documentation that was specified as missing in the notice of
redetermination at any time during a pending appeal without the need
for good cause. Note that Sec. 405.966(c)(2) clarifies that this
exception does not apply to beneficiaries who are represented by
providers or suppliers. See the discussion above at Section II, B&,
``Redetermination, Notification, and Subsequent Limitations on
Evidence'', for a complete discussion of this issue.
We will develop manual instructions requiring QICs to help
beneficiary-appellants to obtain documentation requested in the notice
of redetermination.
Any case involving the late submission of evidence, including
appeals by beneficiaries, will continue to result in a 14-day extension
of the decision-making time frame. We believe this policy is necessary
to encourage all appellants to submit evidence with their appeal
requests and to ensure that adjudicators have adequate time to
thoroughly review all evidence prior to issuing a decision. A 14-day
extension does not apply when the submission of evidence is in response
to a request by a QIC, unless the QIC's request pertains to
documentation specified in the redetermination notice.
Any evidence submitted after the reconsideration level by
providers, suppliers, or beneficiaries who are represented by a
provider or supplier, will be evaluated against a good cause standard
for late filing described at Sec. 405.1028. Note that the full and
early presentation of evidence requirement established under section
933 of the MMA and Sec. 405.966 does not apply to CMS, and therefore,
it does not limit CMS' ability to introduce evidence at the ALJ level.
CMS still must submit any evidence within the time frame designated by
the ALJ. An extension of this deadline is permissible for good cause at
the discretion of the ALJ.
Comment: Proposed Sec. 405.966(b) allows the QIC to automatically
extend its time frame by 14 additional days when a party submits
additional evidence after filing its reconsideration request. One
commenter recommended that the automatic 14-day extension apply only
once, even if an appellant makes more than one late submission.
Response: Consistent with our policy for redeterminations, a party
may submit additional evidence as many times as it deems appropriate
until the QIC issues a decision, but the QIC may extend its decision-
making deadline by up to 14 days each time. Thus, we have clarified in
Sec. 405.966(b) that the 14-day extension applies each time a party
submits additional evidence. We note that this provision also applies
to late submissions of evidence by other parties to the appeal. The 14-
day extension allows time for the QIC to carefully review and consider
the additional evidence. Again, although the QIC may extend the
deadline, by no means do we anticipate that QICs will use the maximum
time to issue decisions in all cases. The only time that the submission
of evidence will not trigger the automatic 14-day extension is when the
QIC requests documentation not previously requested in the
redetermination notice.
9. Conduct of a Reconsideration (Sec. 405.968 and Sec. 405.976)
[If you choose to comment on issues in this section, please include the
caption ``Conduct of a Reconsideration'' at the beginning of your
comments.]
In proposed Sec. 405.968, we defined a QIC reconsideration as ``an
independent, on-the-record review of an initial determination,
including the redetermination.'' If an initial determination involved a
finding on whether an item or service was reasonable and necessary for
the diagnosis or treatment of illness or injury (under section
1862(a)(1)(A)) of the Act, a QIC's reconsideration must be based on
clinical experience and medical, technical, and scientific evidence, to
the extent applicable. Under proposed Sec. 405.968(b), QICs would be
bound by NCDs. QICs would be required to follow LCDs, LMRPs and CMS
program guidance unless the appellant questioned the policy and
provided a persuasive reason why the policy should not be followed.
Under proposed Sec. 405.976, we specify that reconsiderations be
in writing and contain several substantive elements, including: (1) A
clear statement as to whether the reconsideration is favorable or
unfavorable; (2) a summary of the facts; (3) an explanation of how the
pertinent laws, regulations, coverage rules, and CMS policies apply to
the facts; (4) an explanation of the medical and scientific rationale
for the reconsideration when the case involved determining whether an
item or service was reasonable or necessary for the diagnosis or
treatment of an illness or injury; and (5) a clear statement of the
QIC's rationale for its decision. Consistent with proposed Sec.
405.968(b)(3), if the QIC's decision conflicts with an LCD, LMRP, or
with program guidance (for example, a CMS manual instruction), the
notice needs to include the QIC's rationale for not following the
policy in question. Similarly, consistent with proposed Sec.
405.976(b)(5), the reconsideration notice needs to address how any
missing documentation affects the reconsideration and the limitations
on the presentation of evidence at the ALJ hearing level.
Comment: We received many comments on the provision requiring QICs
to give deference to a local coverage determination (LCD) or local
medical review policy (LMRP) unless an appellant questions the policy
and provides a reason why the policy should not be followed that the
QIC finds persuasive. Some commenters thought that CMS had exceeded its
statutory
[[Page 11447]]
authority by binding QICs to LCDs and LMRPs and questioned the
propriety of requiring QICs to give deference to policies that they
allege sometimes contradict statutes and regulations, and that are not
promulgated through notice-and-comment rulemaking. They also expressed
concern over whether unrepresented beneficiaries would be able to
effectively challenge CMS policies and noted that requiring QICs to
give deference to LCDs and LMRPs would prevent QICs from reviewing
these policies.
Response: We continue to believe that it is both appropriate and
consistent with the statutory intent of BIPA to require QICs to
consider LCDs and LMRPs and other CMS program guidance and to apply
these policies appropriately in a particular case. A QIC is not
required to follow a given policy in an individual case if it believes
that the policy is not legally persuasive under specific circumstances.
However, this does not mean a QIC may ignore or invalidate an LCD for
all subsequent appeals. The Congress created a new and entirely
separate process for reviewing the validity of LCDs in section 1869(f)
of the Act, as added by section 522 of BIPA. Section 1869(f) of the Act
permits beneficiaries who are seeking coverage from an item or service
to challenge the reasonableness of an LCD. A challenge to an LCD under
section 522 of BIPA is reviewed by an ALJ.
As the commenter suggests, however, we have reevaluated the
proposed requirement that a QIC could choose not to follow LCDs, LMRPs,
and CMS program guidance only if the appellant questioned the policy
and provided a persuasive reason why the policy should not be followed.
As a result, we have revised Sec. 405.968 to provide that a QIC may
decline to follow a policy in a particular case either at the request
of a party or at its own discretion.
Thus, as revised, Sec. 405.968 states that a QIC is not bound by
LCDs, LMRPs, or CMS program guidance, but will give substantial
deference to these policies if they are applicable to a particular
case. Moreover, a QIC may decline to follow a policy if the QIC
determines, either at a party's request or at its own discretion, that
the policy does not apply to the facts of the particular case. Thus,
QICs will not review LCDs, LMRPs, or other CMS guidance. Rather, they
will evaluate the applicability of the LCD, LMRP, or CMS guidance to a
particular claim denial. Their decisions will not affect subsequent
cases and are not precedential. A QIC does not have the authority to
require CMS or a contractor to withdraw or revise its LCDs, LMRPs, or
other guidance. This amended provision eliminates the burden imposed on
appellants, including beneficiaries, to challenge CMS policies in the
claim appeals process. (See section II.G.5 of this preamble for a
related discussion of ALJ and MAC consideration of local coverage
policies.)
We also note that section 522 of BIPA created a new review process
that enables certain beneficiaries to challenge LCDs at the ALJ hearing
and MAC review levels and NCDs at the MAC review level. Thus, we
believe that it is important to note how the coverage appeals process
could affect QICs in processing claim appeals.
If a party appeals a denial that is based on an LCD or NCD by
filing only a claim appeal, then adjudicators will apply the coverage
policy that was in place on the date the item or service was received,
regardless of whether some other beneficiary has filed a coverage
appeal based on the same LCD or NCD. This policy is consistent with
original Medicare policy that requires LCD or NCD changes to only be
applied prospectively to requests for payment.
If an appellant files both a claim and a coverage appeal based on
the same initial determination, both appeals will go forward. The claim
appeal adjudication time frames will not be impacted because the
appeals will be conducted simultaneously. In adjudicating the claim
appeal, adjudicators will apply the coverage policy that was in place
on the date the item or service was provided, unless the appellant
receives a favorable coverage appeal decision. If the appellant
receives the favorable coverage decision prior to a decision being
issued for the claim appeal, then pursuant to 42 CFR Sec. 426.488 and
Sec. 426.560, the claim appeal will be adjudicated without
consideration of the invalidated LCD or NCD provision(s). If an
appellant receives a favorable decision in the coverage appeal after
receiving an unfavorable claim appeal decision, then the appellant is
entitled to have the claim appeal reopened and revised for good cause,
subject to the provisions in Sec. 405.980 and Sec. 405.986, without
consideration of the invalid LCD or NCD provision(s). As a result of
these clarifications, we have added Sec. 405.1034(c) to permit ALJs to
remand an appeal to a QIC in this situation.
Comment: Although a few commenters agreed with the proposal that
all QIC proceedings would be ``on-the-record,'' most commenters opposed
this proposed policy and recommended that QICs be required to offer
appellants an opportunity for a hearing, as has been the case under the
existing Part B fair hearing process. Commenters stated that requiring
all QIC proceedings to be held on-the-record was contrary to
congressional intent and would limit an appellant's ability to interact
with the adjudicator. The commenters believed that appellants would be
deprived of an important opportunity to provide adjudicators with
clarifications and additional information not contained in the record,
and that adjudicators would not have an opportunity to personally
assess a beneficiary's physical/mental condition. Commenters suggested
that beneficiary appellants in particular would be adversely affected
by this policy. Other commenters agreed that QICs should not be
required to conduct in-person or telephone reconsiderations within the
statutory decision-making time frame, but expressed concern over the
accuracy of the QICs' on-the-record decisions.
Response: As the commenters point out, under the existing appeals
process, appellants have had an opportunity to request a ``fair
hearing'' with respect to Part B determinations. This process, which
has involved on-the-record, telephone, or in-person proceedings, has
served as the second level of appeals for Part B claims, consistent
with section 1842(b)(3)(C) of the Act, which specifies that an
individual will be granted an opportunity for a fair hearing by the
carrier in any case where the amount in controversy is at least $100.
Section 1842(b)(2)(B)(ii) of the Act establishes a 120-day deadline for
the fair hearing decision. The existing regulations governing appeals
under Medicare Part B, in Subpart H of Part 405, describe the available
hearing procedures.
However, the right to a fair hearing has never been part of the
appeals process for Part A claims. For these claims, Sec. 405.710
establishes a right to a ``reconsideration.'' Neither the statute nor
the implementing regulations under Subpart G of Part 405 provide for
any type of hearing before the ALJ level for Part A claims. Neither the
statute nor the regulations establish a minimum amount in controversy
for Part A reconsiderations.
In contrast to the pre-BIPA statute, revised section 1869 of the
Act establishes a uniform set of appeals requirements for all Part A
and Part B claim determinations. The required procedures now available
under the statute consist of a ``redetermination'' by an intermediary
or carrier, a ``reconsideration'' by a QIC, a ``hearing'' before an
ALJ, and then a ``review'' by the DAB. As under the existing Part A
process, the statute does not establish any minimum amount in
controversy
[[Page 11448]]
for reconsiderations and sets this amount at only $100 for ALJ
hearings.
Section 1869 of the Act, as amended by BIPA and the MMA, does not
require, or even mention, a hearing at the QIC level. Instead, section
1869(c)(3)(B)(i) of the Act specifies that in conducting a
reconsideration, the QIC ``* * * shall review initial determinations''
and that when the determination involves whether an item or service is
reasonable and necessary under section 1862(a)(1)(A) of the Act, ``* *
* such review shall include consideration of the facts and
circumstances of the initial determination by a panel of physicians or
other appropriate health care professionals and [decisions] shall be
based on applicable information, including clinical experience
(including the medical records of the individual involved) and medical,
technical, and scientific evidence.'' The statute then specifically
provides for ``hearings'' at the ALJ level under section 1869(d)(1).
Finally, the Congress established rigorous decision-making time frames
at all levels of the appeals process that will significantly reduce the
amount of time in which an appellant who chooses to use the ALJ process
will obtain a decision.
Taking into consideration all of the above information, we believe
our proposal is consistent with the substantially revised appeals
methodology, including faster decision-making time frames, physician
reviewers, and lower amount in controversy thresholds. We believe that
the Congress was fully aware of the historical meaning of the terms
``reconsideration'' and ``hearing'' and did not use them lightly in the
new statute. Appellants retain the right to a hearing at the ALJ level,
and this hearing will take place generally within the same time frame
as a ``fair hearing'' under the previous Part B appeals process. Thus,
we continue to believe that the statute does not intend or require that
the QIC reconsideration process include an opportunity for a hearing.
Finally, we note that QICs are not precluded from contacting appellants
and obtaining necessary information from them by phone or other means.
Comment: A few commenters inquired about the QICs' ability to hear
or raise new issues. One commenter recommended that QICs be prohibited
from raising new issues. Most commenters, however, agreed that QICs
should be able to hear or raise new issues not raised at the initial
determination or redetermination levels. In a related question, another
commenter asked whether a QIC panel would adjudicate an appeal if a
section 1862(a)(1)(A) issue (that is, a medical necessity issue) was
raised for the first time at the reconsideration level.
Response: A reconsideration is a new and independent review of an
initial determination and we believe adjudicators at the
reconsideration level should be permitted to raise and develop any
issues that they believe are relevant to the claims in the case at
hand. Accordingly, we have added Sec. 405.968(b)(5) to clarify this
policy. Section 1869(c)(3)(B)(i) of the Act requires that a
reconsidered determination involve consideration by a panel of
physicians or other health care professionals when the initial
determination is based on section 1862(a)(1)(A) of the Act. Thus, if a
medical necessity issue was raised for the first time at the
reconsideration level, we believe that review by a panel of health
professionals would be required. Although the panel may consider new
issues involving the claims in dispute, it must not adjudicate new
claims for which the contractor has not issued a redetermination.
Comment: One commenter thought that the redetermination and
reconsideration levels were redundant and suggested eliminating one in
order to make the appeals process more efficient.
Response: Section 1869(a)(3)(A) of the Act gives appellants who are
dissatisfied with their initial determination the right to request a
redetermination. If an appellant is dissatisfied with the
redetermination, then section 1869(b)(1)(A) of the Act grants the
appellant the right to request a reconsideration. Thus, both the
redetermination and reconsideration levels are unambiguously required
by statute. It is not within CMS' discretion to eliminate either the
redetermination or reconsideration levels of appeal.
a. Time Frame for Making a Reconsideration
Comment: Proposed section 405.970(c) specified that, by no later
than the close of the 30-day decision-making time frame, a QIC must
issue to the parties either a reconsideration, a dismissal, or a notice
stating that the QIC will not be able to complete its review by the
deadline. The notice would also advise the appellant of the right to
request escalation of the appeal to an ALJ. CMS further specified that,
whenever a QIC receives an escalation request, the QIC, within 5 days,
would either complete its reconsideration and notify the parties of the
decision, or acknowledge the escalation request and forward the case
file to an ALJ.
A number of commenters felt that BIPA unequivocally requires QICs
to issue reconsiderations within 30 days of their receipt of a request
for reconsideration. Thus, they were critical of the proposed policy to
allow a QIC to issue a notice to an appellant indicating that it is
unable to complete a reconsideration within the prescribed decision-
making time frame. The commenters complained that allowing QICs to
issue these notices, rather than an actual reconsideration, contradicts
the statutory intent and creates a loophole for QICs to avoid
compliance with the decision-making time frames established by BIPA.
Response: We realize that the Congress intends for QICs to issue
reconsiderations in response to timely filed reconsideration requests
within 60 days as stated in section 1869(c)(3)(C)(i) of the Act (as
amended by section 940(a)(2) of the MMA). We disagree, however, with
the assertion that the drafters envisioned that QICs would be able to
issue timely decisions for every reconsideration request no matter what
the circumstances involved. To the contrary, the Congress clearly
expected that there would be situations in which QICs would not be able
to comply with the statutory decision-making time frames, as evidenced
by the inclusion of the escalation provisions of section
1869(c)(3)(C)(ii) of the Act, ``Consequences of Failure to Meet
Deadline.'' Here, the Congress created a new right for appellants to
escalate appeals to the ALJ level in the event that the QIC failed to
mail the notice of reconsideration within the decision-making time
frame. In order to accommodate appellants' ability to exercise this
right, it is essential that QICs provide appellants with a notice when
a reconsideration cannot be issued timely.
Sections 405.970(a)(2) and 405.970(c)(2), therefore, do not
conflict with the statutory intent or create a loophole for avoiding
compliance with the statutory decision-making time frames. Rather,
these provisions help guarantee that appellants will be able to
exercise their right to escalate an appeal by ensuring that appellants
receive timely notice of the QIC's inability to issue a reconsideration
within the statutory time frame. We believe this process is highly
preferable to not informing an appellant of this fact. We also wish to
point out that if an escalation request is received prior to the end of
the 60-day adjudication period, the QIC will proceed with its review of
the reconsideration request
[[Page 11449]]
and either (1) issue its reconsideration by the end of 65 days (the 60-
day period plus 5 days from receipt of the request to escalate) or (2)
send notification to the party on the 60-day deadline that the QIC
cannot complete its review by the 60-day deadline and escalate the
request at that time.
Comment: Two commenters expressed concern over applying the 30-day
decision-making time frame to reconsiderations of post-pay audit cases
involving statistical sampling. The commenters stated that the large
volume of claims to be reviewed for these types of cases would prevent
QICs from ever meeting the 30-day time frame or would force the QICs to
simply rubberstamp the redetermination in order to meet the 30-day
deadline. The commenters further surmised that ALJs would regularly
overturn QIC reconsiderations on these ``big box'' cases for lack of
development. The commenters recommended that CMS either provide a
longer decision-making time frame for these types of cases, or bypass
the reconsideration level for these cases and allow appellants to go to
the ALJ hearing level if they are dissatisfied with the audit
determination.
Response: We appreciate the commenters' observation that it will be
difficult for the QICs to process ``big box'' cases resulting from
complex post-payment audits that involve individual consideration of
multiple claims in a timely manner, even under the new 60-day time
frame established by section 940(a)(2) of the MMA. At this point, we do
not have a basis for direct evaluation of this issue since the QICs are
not yet conducting reconsiderations. However, we know that in the
former appeals process when a fair hearing officer receives a ``big-
box'' case, it generally has taken 60 days to review the extensive
medical records and other documentation associated with these cases. As
mentioned in the previous response, we believe that the Congress
expected that there would be situations in which QICs would not be able
to comply with the decision-making time frame, as evidenced by the
inclusion of the escalation provision of section 1869(c)(3)(C)(ii) of
the Act. Thus, if an adjudicator fails to complete a reconsideration of
a ``big-box'' case within 60 days, an appellant has the option of
either waiting for the QIC's reconsideration, or requesting escalation
of the case to the ALJ hearing level. We intend to work very closely
with carriers, FIs, and QICs to identify ways to streamline the
redetermination case file transmission and reconsideration procedures
in order to facilitate the achievement of this deadline.
b. Notice of a Reconsideration
Comment: Because the proposed rule gives providers and
participating suppliers the same appeal rights as beneficiaries, some
commenters wondered who would receive the reconsideration notice if
both the beneficiary and the provider or supplier filed timely appeals.
Response: Section 405.964(c) establishes that ``[i]f more than one
party timely files a request for reconsideration on the same claim
before a reconsideration is made on the first timely filed request, the
QIC must consolidate the separate requests into one proceeding and
issue one reconsideration.'' Thus, pursuant to Sec. Sec. 405.970(c)(1)
and 405.976(a)(1), all of the parties will receive a copy of the
reconsideration. This applies to all reconsiderations, including
consolidated cases. To minimize confusion for beneficiaries who have no
financial liability in overpayment cases involving multiple
beneficiaries, we added an exception at Sec. 405.976(a)(2) that QICs
need to issue written notices only to the appellants in these cases.
Therefore, the beneficiary will only receive a written notice of the
reconsideration in such an overpayment case when he or she files an
appeal request or it is a consolidated case.
We also note that we have added a requirement at Sec.
405.976(b)(7) that the QIC must also indicate whether the amount in
controversy meets the threshold requirement for an ALJ hearing if the
reconsideration is partially or fully unfavorable. We believe this
addition will be beneficial to appellants as well as to adjudicators at
those levels where AICs apply.
c. Publication of Reconsiderations
Comment: Citing the statutory requirement to make reconsiderations
available, two commenters suggested that the final rule include
information about publication of QIC reconsiderations. Specifically,
the commenters thought that CMS should establish a time frame for
publication of QIC decisions and identify how the public would be able
to view and obtain copies of reconsiderations, in order to ensure that
appellants have access to prior reconsiderations as they make their own
reconsideration requests.
Response: Section 1869(c)(3)(G) of the Act requires QICs to make
reconsiderations available, but does not require CMS or the QICs to
``publish'' all reconsiderations. However, we do not believe that this
interim final regulation is the appropriate vehicle to provide
information regarding the availability of reconsiderations. CMS is
working with the QICs to determine how best to provide the public with
specific information regarding prior QIC reconsiderations.
Although we expect QICs to issue consistent reconsiderations, and
appellants will have access to those prior reconsiderations, it is
worth noting that reconsiderations, like all other Medicare
administrative appeal decisions, have no precedential value. Moreover,
based on current workload, there may be as many as one million QIC
reconsiderations a year; given the large volume of anticipated
reconsiderations, we do not intend to ``publish'' them, but we will
ensure they are made available.
d. QIC Qualifications
Comment: Many commenters asked that the final rule include more
explicit information about the QICs. In particular, commenters wanted
the final rule to identify the minimum qualifications for the QIC panel
members and reviewers, clearly define the role of the QIC panel in the
reconsideration process, and describe the on-going training that would
be made available to the panel members and reviewers. Most of these
commenters strongly believe that QIC panelists should be licensed,
practicing health care professionals with sufficient expertise in the
relevant area of medicine involved in the appeal, and also possess some
legal experience. One commenter suggested that the requirements
currently used for Quality Improvement Organization (QIO) reviewers
might be a good model for developing the QIC reviewers' qualifications.
Commenters also asked that the final rule spell out the provisions that
would be put in place to ensure the QICs' independence.
Response: We agree with commenters that details regarding the
qualifications of the QICs' panel members and reviewers, the structure
of the QICs, and their operational policies need to be established
before implementation of the new appeals process. Both BIPA and the MMA
have provided extensive direction in regard to QIC independence
requirements and the eligibility requirements for QIC reviewers, and we
intend to ensure through the QIC contracting process that QICs are
fully compliant with these requirements. We have also established QIC
training requirements through the procurement process. However, we do
not believe it is necessary or appropriate to address these types of
issues in regulations, and instead will follow the normal business
[[Page 11450]]
practice of including this information in the contracts with the QICs.
Comment: Although commenters overwhelmingly agreed that using
panels of health care professionals at the QIC level would be an
improvement over the current appeals process, at least one commenter
questioned the cost-effectiveness of using these panels for appeals
involving low dollar claims and recommended that we develop alternative
ways of reviewing these kinds of appeals.
Response: We appreciate the commenter's concern and recognize that
using panels of physicians and other health care professionals to
review appeals of section 1862(a)(1)(A) denials will not always be
cost-effective. However, based on the unambiguous language in section
1869(c)(3)(B)(i) of the Act, the Congress clearly intended that panels
of physicians or other health care professionals review all appeals
involving determinations on whether an item or service is reasonable or
necessary, regardless of the dollar value of the claim(s) involved. We
intend to work with QIC's to determine the most cost-effective means of
fulfilling this statutory requirement.
10. Reopenings of Initial Determinations, Redeterminations,
Reconsiderations, Hearings and Reviews (Sec. 405.980 through Sec.
405.986)
[If you choose to comment on issues in this section, please include the
caption ``Reopenings of Initial Determinations, Reconsiderations,
Hearings, and Reviews'' at the beginning of your comments.]
Section 1869(b)(1)(G) of the Act, as added by BIPA, provides for
the reopening and revision of any initial determination or reconsidered
determination according to guidelines prescribed by the Secretary. As
we pointed out in the proposed rule, clear reopening provisions are
needed not only to comply with BIPA, but also to address longstanding
confusion over the reopening rules for Medicare claim determinations.
Thus, we proposed to establish a unified set of reopening regulations
that consolidate and clarify the existing reopening provisions of
subparts G and H of part 405. (See 67 FR 69327.)
First, proposed Sec. 405.980(a) establishes the general rule that
a reopening is a remedial action taken by a carrier, intermediary, QIC,
ALJ, the MAC, or any other entity designated by CMS to change a final
determination or decision made with respect to an initial
determination, redetermination, reconsideration, hearing, or review,
even though the determination or decision may have been correct based
upon the evidence of record. (For purposes of reopenings, the term
``contractors'' includes carriers, intermediaries, and program
safeguard contractors.) Under proposed Sec. 405.980(a)(4), we define a
clerical error as human and mechanical mistakes (for example,
mathematical or computational mistakes, or inaccurate data entry).
Proposed Sec. 405.980(b) through Sec. 405.980(e) specify the time
frames and requirements for reopening initial determinations,
redeterminations, reconsiderations, hearing decisions, and reviews,
both for reopenings initiated by contractors, QICs, ALJs, or the MAC,
as well as those requested by parties. Either a party can request a
reopening, or a contractor can reopen on its own motion, for any
reason, within one year from the date of the notice of the initial
determination or redetermination. A party or a contractor has a 4-year
time frame for requesting or initiating reopenings for good cause.
However, although a party can request a reopening, the contractor can
nevertheless determine that there is not good cause to reopen the case.
(An example of good cause to reopen based on a clerical error is when
payment for a claim is denied because an erroneous code, which is not
covered by Medicare, was used and it is later determined that the
procedure was miscoded.) We also proposed that a contractor can reopen
within 5 years from the date of the initial determination or
redetermination if the contractor discovers a pattern of billing errors
or identifies an overpayment extrapolated from a statistical sample.
Finally, we proposed to maintain the longstanding policy that
reopenings are permitted at any time on claim determinations that have
been procured through fraud or similar fault. Proposed Sec.
405.980(b)(4)(ii) defines similar fault as ``to obtain, retain,
convert, seek, or receive Medicare funds to which a person knows or
should reasonably be expected to know that he or she or another for
whose benefit Medicare funds are obtained, retained, converted, sought,
or received is not legally entitled. This includes, but is not limited
to, a failure to demonstrate that it filed a proper claim as defined in
part 411 of this chapter.'' Similar fault is intended to cover
instances where Medicare payment is obtained by those with no legal
rights to the funds, but where law enforcement is not proceeding with a
recovery based on fraud. This includes instances where a provider has
been paid twice for the same claim where the contractor erroneously
pays for codes that should not have been paid, but there is no evidence
that the provider intentionally failed to refund the money; or where
there is the manipulation of legitimate codes to obtain a higher
reimbursement. While this last example might appear to be an example of
fraud, it is also an example of an instance when the similar fault
provision might be used. The similar fault provision is appropriately
used where fraudulent behavior is suspected but law enforcement is not
proceeding with recovery on the basis of fraud.
Proposed Sec. 405.980(d)(1) and Sec. 405.980(e)(3) provide 180
days from the date of a reconsideration for either a party to request,
or a QIC to initiate, a reopening. Similarly, both the parties and the
adjudicators at the ALJ and MAC levels also have 180 days from the date
of a hearing or review decision to request or initiate a reopening. The
party, QIC, ALJ, or the MAC have to establish good cause for a
reopening.
Proposed Sec. 405.982 through Sec. 405.984 require contractors,
QICs, ALJs, or the MAC to mail notices of revised determinations or
decisions based on reopened determinations, reconsiderations, or
decisions to the appropriate parties at their last known addresses. In
the case of a reopening that results in a favorable decision and
issuance of additional payment to a provider or supplier, a revised
remittance advice (RA) must be issued to the provider or supplier that
explains the payment and reports the appeal rights; this RA will serve
as the notice of the reopening determination. In the case of a
reconsideration that results in additional payment to a provider or
supplier, both a reconsideration determination notice and an electronic
or paper remittance advice notice must be issued. Proposed Sec.
405.986 specifies how a party, contractor, QIC, ALJ, or the MAC would
establish good cause for a reopening. In this interim final rule, we
have revised proposed Sec. 405.986(b), to clarify that although a
change in substantive law or interpretative policy is not good cause
for reopening, the provision does not preclude contractors from
reopening claims to effectuate a decision issued under section 1869(f)
of the Act, as amended by section 522 of BIPA. The final regulation
implementing the coverage appeals process was published after the
notice of proposed rulemaking for this regulation was issued. Thus, we
have now added language at Sec. 405.980(b)(5) to enable contractors to
reopen claim determinations at any time in order to effectuate
favorable coverage appeals decisions issued to a beneficiary. We
[[Page 11451]]
wish to make clear that this provision does not allow retroactive
application of coverage decisions to payment denials.
a. Reasons and Conditions for Reopenings
Comment: Several commenters mentioned that the proposed definition
for a reopening does not acknowledge that the purpose of a reopening is
to ensure correct payment amounts; and therefore, a reopening may
result from either an overpayment or an underpayment. They believed
that CMS should clarify in the regulations that a reopening can be
initiated for either an overpayment or an underpayment.
Response: We agree with the commenter that the underlying goal of
the reopening process is to pay claims appropriately, subject to
considerations of administrative finality. In the proposed rule (67 FR
69327), we state that, ``the purpose for conducting a reopening should
be to change the determinations or decisions that result in either
overpayments or underpayments.'' To accommodate this concept in the
regulations, we have added text at Sec. 405.980(a)(1) that makes clear
that a reopening is an action to change a final determination or
decision that results in either an overpayment or an underpayment.
Comment: One commenter requests clarification on the conditions for
reopening. The commenter seeks further clarification on whether good
cause is required for reopenings that occur within 1 year from the date
of the initial determination or redetermination, or whether a
contractor would grant a request for reopening for any reason within
the one-year time frame.
Response: The authority for a contractor to reopen a claim or
appeal within one year from the date of the initial determination or
redetermination for any reason exists under Sec. 405.750(b)(1) and
Sec. 405.841(a). Therefore, we have removed proposed text formerly in
Sec. 405.980(a)(2)(i) in order to avoid the implication that
contractor reopenings within one year are premised on good cause. This
is consistent with Sec. 405.980(b)(1) and Sec. 405.980(c)(1), which
maintain the authority for contractors to reopen claims or appeals
within 1 year for any reason. Thus, contractors do not need to
establish good cause under Sec. 405.986(a) to reopen within 1 year.
We also note that under Sec. 405.980(b)(3), contractors may reopen
at any time if there exists reliable evidence that an initial
determination was procured by fraud or similar fault. In addition, we
have added Sec. 405.986(c) to provide that if a third party payer
changes its assessment of whether it has primary payment responsibility
more than 1 year after the date of Medicare's initial determination,
the contractor is without authority to find good cause to reopen a
claim.
b. Distinguishing Between Reopenings and Appeals
Comment: Two commenters express uncertainty over whether CMS
intends for contractors to process corrections of clerical errors as
reopenings or appeals. One commenter contends that CMS provides
conflicting information by suggesting in one section of the preamble
that adjustments resulting from clerical errors are handled through the
reopenings process, while stating in another section of the preamble,
that either a party would need to exhaust all appeal rights, or the
time limit to file an appeal would need to expire, in order for the
contractor to conduct a reopening to correct these errors. Another
commenter maintains that the proposed rule requires human or mechanical
errors to go through the appeals process instead.
Response: As we stated in the proposed rule, ``requests for
adjustments to claims resulting from clerical errors must be handled
through the reopenings process. Therefore, when a contractor makes an
adjustment to a claim, the contractor is not processing an appeal, but
instead, conducting a reopening'' (67 FR 69327). Moreover, section 937
of the MMA subsequently amended the Act to specify that in the case of
minor errors or omissions that are detected in the submission of
claims, CMS must give a provider or supplier an opportunity to correct
that error or omission without the need to initiate an appeal. We
equate the MMA's minor errors or omissions to fall under our definition
of clerical errors, located in Sec. 405.980(a)(3). We believe that it
is neither cost efficient nor necessary for contractors to correct
clerical errors through the appeals process. Thus, Sec. 405.927 and
Sec. 405.980(a)(3) require that clerical errors be processed as
reopenings rather than appeals. Consistent with the process that we
developed in consultation with Medicare contractors, and
representations of providers and suppliers as required under section
937 of the MMA, we have made a conforming change at Sec. 405.980(a)(3)
to specify that contractors must grant reopenings for clerical errors
or omissions. Section 405.980(a)(4) of this interim final rule states
that a contractor may reopen and revise its initial determination or
redetermination on its own motion at any time if the initial
determination is unfavorable, in whole or in part, to the party
thereto, but only for the purpose of correcting a clerical error on
which that determination was based. In the event that a contractor does
not believe that a clerical error exists, the contractor must dismiss
the reopening request and advise the party of its ability to pursue to
the appeals process on the claim denial, provided the timeframe to
request an appeal has not expired. It should be noted that the party
would be requesting an appeal of the original denial, not the dismissal
of the reopening request. Reopenings continue to be discretionary
actions on the part of the contractors; therefore, their decision not
to reopen is not subject to appeal.
Similarly, we believe that improper denials based on duplicate
claims essentially involve clerical errors that can be best resolved
through the reopenings process. When a provider or supplier receives a
denial based on the contractor's determination that the claim is a
duplicate and the provider or supplier believes the denial is
incorrect, and the contractor agrees that the denial was incorrect, the
contractor should reopen the denial. Thus, we added text at Sec.
405.980(a)(3)(iii) to specify that if a provider or supplier wishes to
resolve a denial based on a claim being erroneously identified as a
duplicate, the contractor should process the request as a reopening
rather than as an appeal. In the event the contractor does not believe
the denial was improper, the contractor must dismiss the reopening
request and advise the party of any appeal rights, provided the
timeframe to request an appeal on the original denial has not expired.
Comment: One commenter was concerned that the proposed rule would
limit opportunities for reopenings, because proposed Sec.
405.980(a)(5) would preclude a reopening when a party has filed an
appeal request. The commenter asked whether one can assume that a
reopening will not be granted when a provider requests an appeal of a
denial or partial payment such as that resulting from a provider
submitting an incorrect CPT code, diagnosis code, or modifier.
Response: Under normal circumstances, a valid request for an appeal
must be processed as an appeal, and once an adjudicator receives a
valid appeal request, the entity that made the previous determination
generally no longer has jurisdictional authority to reopen that
determination. We have revised Sec. 405.980(a)(4) to clarify this
point.
Section 405.980(a)(4) ensures that the reopening and appeal
processes are not engaged at the same time. We recognize,
[[Page 11452]]
however, that in certain situations, it will be apparent that the
provider that is requesting an appeal is actually bringing a clerical
error to the attention of the contractor. Under this interim final
rule, irrespective of the provider's or supplier's request for an
appeal, a contractor will treat the request for appeal of a clerical
error as a request for a reopening. Therefore, as a practical matter,
under Sec. 405.980(a)(4), the contractor must transfer the provider's
or supplier's appeal request to the reopenings unit for processing. On
the other hand, if a contractor receives a request for a reopening, but
disagrees that the issue is a clerical error, then the contractor must
dismiss the reopening request and advise the party of any appeal
rights, provided that the timeframe to request an appeal on the
original denial has not expired.
CMS understands that educational efforts must be undertaken in
conjunction with this regulation to make the provider and supplier
communities aware of their ability, and the contractor's obligation to
resolve clerical errors through the reopenings process. Until that
education occurs, many providers and suppliers may continue to believe
that their only, or best, recourse is to request an appeal.
c. Similar Fault and Reopenings Within 5 Years
Comment: As noted above, proposed Sec. 405.980(b)(4)(ii) defines
similar fault as ``to obtain, retain, convert, seek, or receive
Medicare funds to which a person knows or should reasonably be expected
to know that he or she or another for whose benefit Medicare funds are
obtained, retained, converted, sought, or received is not legally
entitled. This includes, but is not limited to, a failure to
demonstrate that it filed a proper claim as defined in part 411 of this
chapter.'' Several commenters believe that this definition is too broad
and allows contractors to reopen almost any claim, for any reason.
Response: The definition of similar fault covers situations where a
contractor identifies an inappropriate billing that does not rise to
the level of fraud. It is necessary to define similar fault as those
situations when a contractor has identified inappropriate billing by a
provider or supplier that knows or could have been reasonably expected
to know that the claim should not have been paid for items or services,
but the situation is not one where a law enforcement agency has made a
determination that the billing is fraudulent. The similar fault
provision is appropriately used where fraudulent behavior is suspected
but law enforcement is not proceeding with recovery on the basis of
fraud. We do not believe this definition is overly broad, given the
implicit requirement that the fault be ``similar'' to fraud.
Comment: Several commenters express concern over the provision in
the proposed rule at Sec. 405.980(b)(3), which allows a contractor to
reopen initial determinations and redeterminations within 5 years of
discovering a pattern of billing errors, or identifying an overpayment
extrapolated from a statistical sample. The commenters point out the
difficulty and burden in locating documentation on older claims. The
commenters also argue that CMS does not provide a rationale for the
proposed 5-year time frame.
Response: CMS proposed this provision in an effort to accommodate
overpayments identified by external auditors and law enforcement
agencies. There were instances where auditors utilized a 5-year
sampling methodology, identified an overpayment, and instructed the
Medicare contractor to recoup the overpayment. Since the audit results
were usually amounts extrapolated from a statistical sample based on 5
years of records, carriers and intermediaries experienced difficulty
collecting the overpayments because Sec. 405.750(b)(2) and Sec.
405.841(b) bound carriers and intermediaries to a 4-year limit for the
identification and collection of overpayments where a law enforcement
agency did not make a fraud determination.
However, we recognize providers' concerns with this proposal and
consequently have decided to remove it from the final regulation. To
the extent that law enforcement findings suggest a need for reopenings
in situations that involve inappropriate billing patterns, but fall
short of outright fraud, contractors may rely on the similar fault
provision at Sec. 405.980(b)(3) to reopen claims.
Comment: One commenter asks whether proposed Sec. 405.980(b)(4),
which allows contractors to reopen initial determinations procured by
fraud or similar fault, is limited to initial determinations that have
not been appealed or reopened.
Response: Section Sec. 405.980(a)(4) of this interim final rule
requires that when a party files a valid request for an appeal, the
adjudicator no longer has jurisdiction to reopen the pending claim or
appeal at issue. However, in cases of fraud or similar fault, the
government may be pursuing legal action for claims it suspects are
fraudulent, an activity which falls outside of the administrative
appeals process. In the event legal action results in a favorable
decision for CMS, CMS has the ability to reopen the claims in question
and recoup any overpayment. Additionally, if a claim has gone through
the appeals process on a completely separate issue, CMS may reopen the
claim, but only to address an issue not previously decided on appeal.
For example, if a claim is denied as not medically necessary and that
denial on medical necessity is the issue being brought before the
adjudicator on appeal, yet an issue of fraud is discovered on the same
claim, the claim may be reopened to address the issue of fraud not
previously considered on appeal. The reopening action on the fraud
issue would occur only after the claim had proceeded through the
appeals process on the medical necessity issue. Any unfavorable
decision that was issued based on the subsequent reopening would
generate appeal rights and any party to that determination would be
able to contest any new denial through the appeals process. A
previously appealed claim could also be reopened by the adjudicator to
correct a later discovered clerical error.
Comment: One commenter asks if it is CMS' intent to revise Sec.
405.355(b), which allows a reopening for the collection of an
overpayment within 3 years from the date of the initial determination.
Response: Section 405.355(b) pertains to the waiver of an
adjustment or recovery from a provider or other individual who is
deemed to be without fault. The provision does not address a
contractor's ability to reopen an initial determination or
redetermination, and is not affected by this interim final rule.
d. Authority To Reopen
Comment: One commenter recommends that CMS require in the
regulation text that a determination or decision can be reopened only
by the entity that rendered the decision. For example, only a QIC can
reopen a QIC's decision.
Response: As originally proposed, Sec. Sec. 405.980(a)(1)(i)
through 405.980(a)(1)(iv) specify that only the entity that issues a
determination, reconsideration or other decision can initiate a
reopening of that decision. Although this remains true in most
instances, we note that this interim final rule contains an exception
to this general principle at Sec. 405.980(a)(1)(iv), whereby the MAC
can reopen an ALJ's hearing decision. It should be noted that this is a
continuation of CMS' current practice and does not constitute a change
in policy. We also note that Sec. 405.986(b) specifies that a change
in
[[Page 11453]]
legal interpretation, regulations, or program instructions (or a
declaration of what the law means or meant), whether by the judiciary
or otherwise, does not form a basis for reopening.
e. Time Frames and Notice Requirements
Comment: One commenter recommends that CMS establish a time frame
for processing and completing reopenings.
Response: We agree that, wherever possible, a party must have a
reasonable expectation as to the administrative finality of a decision
on a claim or claims in question. However, since an adjudicator can
reopen at any time for fraud or similar fault, we do not believe that
CMS can establish meaningful time frames for processing and completing
reopenings. Instead, CMS will monitor the processing of reopenings by
contractors during performance reviews and desk audits.
Comment: One commenter states that an adjudicator must be required
to send both a reopening notice and a decision notice resulting from
the reopening. The commenter contends that a reopening notice helps the
party determine the adjudicator's time frame for issuing a decision.
Also, the decision notice must provide the basis and evidence
supporting the reopening.
Response: We are not requiring adjudicators to provide a notice to
a party when they reopen claims and appeals, since any action that
might result from the reopening will result in a party receiving a
notice of the revision. Section 405.982 provides that adjudicators must
issue notices of revised determinations or decisions which, in the
event of an adverse revised determination or decision, must state the
rationale and basis for the revision, and information about appeal
rights. In the case of an adverse determination, a party would need
this information should the party decide to appeal. In addition, if a
contractor's reopening of an initial determination results in an
overpayment determination, then the contractor must issue a demand
letter to the affected party. If the reopening results in a favorable
determination, then a revised MSN and RA will be generated.
f. Establishing an Evidentiary Burden of Proof To Reopen
Comment: One commenter recommends that CMS add to the regulation
text that a contractor has an evidentiary burden of proof, particularly
with respect to those reopening actions that occur after the 1-year
limit on reopenings for any reason.
Response: Our policy that, within 1 year, for any reason,
contractors may reopen claims and parties may request reopenings, is
fair and equitable; moreover, no evidentiary standard is needed in the
those situations. For reopenings after that time, the rules we proposed
are sufficient; that is, contractors must have good cause for reopening
claims within 4 years and must have obtained reliable evidence for
reopening at any time for fraud or similar fault. No matter what the
outcome of a reopened and revised determination, parties retain the
right to challenge the new determination at the appropriate appeal
level.
g. Inability To Appeal a Decision on Whether To Reopen
Comment: One commenter expresses concern that a party cannot seek
review of a determination not to grant a request for reopening. The
commenter argues that not allowing an appeal violates a party's due
process rights.
Response: It is our longstanding rule that failure to grant a
request for reopening is not reviewable. The Supreme Court has upheld
this concept. See Your Home Visiting Nurses Services, Inc. v. Shalala,
525 U.S. 449 (1999); Califano v. Sanders, 430 U.S. 99 (1977). This does
not violate the party's due process rights, because the administrative
appeals process for Medicare claims already affords ample due process
to the party. The reopenings process simply offers, but does not
guarantee, an additional process if a party misses the time frame for
filing an appeal or if the party has exhausted his or her appeal
rights. For purposes of administrative finality and efficiency, CMS
cannot sanction an endless cycle of reopening requests and appeals.
h. Enforcement of the Good Cause Standard
Comment: One commenter recommends that CMS create enforcement
provisions for the good cause standard when contractors reopen claims.
The commenter says that contractors often ignore the guidelines set out
in regulations and manuals and cite a request for medical records as
good cause for a reopening, even though the medical records existed at
the time the contractor initially reviewed the claim.
Response: The regulations require that contractors abide by the
good cause standard for reopening actions after one year from the date
of the initial or revised determination. CMS assesses a contractor's
compliance with Federal laws, regulations and manual instructions
during audits and evaluations of the contractors' performance. Thus,
the necessary monitoring and enforcement mechanisms are already in
place.
i. Applying Similar Reopening Standards to Adjudicators and Parties
Comment: One commenter recommends that CMS apply the same reopening
standards to adjudicators and parties and that a party be able to
challenge an adjudicator's reopening action.
Response: As discussed above, an adjudicator's decision on whether
to reopen a claim or an appeal is discretionary and not subject to an
appeal. However, the reopening standards that apply to parties and
adjudicators are very similar in this interim final rule. The only
provisions that necessitate a difference are those provisions, which
allow adjudicators to reopen at any time if reliable evidence exists
that a determination or decision was procured by fraud or similar
fault, and Sec. 405.980(b)(5), which allows contractors to reopen at
any time to effectuate a decision issued under the coverage appeals
process. Clearly, a party that obtains payment through fraudulent or
other similar means has no use for this provision. Again, if a
contractor issues a revised determination or decision that is
unfavorable, the affected party has the right to appeal.
11. Expedited Access to Judicial Review (EAJR) (Sec. 405.990)
[If you choose to comment on issues in this section, please include the
caption ``Expedited Access to Judicial Review'' at the beginning of
your comments.]
In proposed Sec. 405.990, we incorporate the current regulations
governing the expedited appeals process (EAP) at Sec. 405.718 and
Sec. 405.853 with only two changes. First, since under BIPA the
appeals process is the same for both Part A and B claims, we
consolidated the Part A and B regulations governing expedited review of
cases involving those claims. Second, under BIPA, ALJs are bound by all
NCDs rather than only by NCDs based on section 1862(a)(1)(A) of the
Act. Therefore, the regulations no longer limit expedited review to
cases involving NCDs based on section 1862(a)(1)(A) of the Act.
In addition, we establish under proposed Sec. 405.992 the
standards that apply to ALJs and the MAC for policies that are not
subject to the expedited appeals process. These standards have been
moved to Sec. 405.1060 in this interim final rule and are discussed in
detail in the ALJ section. (See section II.G.5 of this preamble).
[[Page 11454]]
Comment: One commenter questions the requirement in Sec. 405.990
for a $1,000 amount in controversy and the requirement for unanimous,
written concurrence from all parties in order to request use of the
EAP. The same commenter also requests that we make a number of
clarifications in Sec. 405.990, including stating explicitly that use
of the EAP is not automatic, the decision by the review entity is not
reviewable, and certification from the review entity does not trigger
an action in Federal district court; the appellant must file a suit.
Response: As noted above, proposed Sec. 405.990 includes no
significant changes to the existing EAP process. The policies cited by
the commenter (decisions to certify a case are not reviewable, a
certification does not automatically trigger a Federal suit and written
concurrence from all parties) are longstanding elements of the EAP
process. Since publication of the proposed rule, however, the MMA has
revised the applicable statutory requirements. In this interim final
rule, we intend to maintain the proposed policies, as well as the
changes necessitated by section 932 of the MMA. Therefore, we are
revising Sec. 405.990 so that it is consistent with the MMA
requirements.
Section 932 of the MMA states that the Secretary must establish a
process under which a provider or supplier or a beneficiary may obtain
access to judicial review when a review entity determines that the
Departmental Appeals Board (DAB) does not have the authority to decide
the question or law or regulation relevant to the matters in
controversy and that there is no material issue of fact in dispute. As
a result, we are modifying proposed Sec. 405.990(f)(1) and Sec.
405.990(f)(2) to require that requests for expedited access to judicial
review (EAJR) be evaluated by a review entity. (Note that in this
interim final rule we have replaced references to the EAP with EAJR in
order to avoid confusion with the expedited appeals process under Sec.
405.1200 through Sec. 405.1206, which permits beneficiaries to request
an expedited appeal of provider service terminations.) Also, in Sec.
405.990(a), we define a review entity as a decision-making body
composed of up to three reviewers who are ALJs or members of the DAB,
as determined by the Secretary. The MMA also establishes a 60-day
decision-making time frame for EAJR requests. Therefore, we have
amended Sec. 405.990(f)(2) to implement this change.
Section 932 of the MMA provides that a review entity's
determination ``shall be considered a final decision and not subject to
review by the Secretary.'' This language plainly has two effects--(1) a
review entity's determination that is favorable to the party requesting
EAJR is the final agency decision for purposes of judicial review, and
(2) an ALJ or the MAC may not alter an unfavorable determination in the
regular appeals process. Therefore, in Sec. 405.990(f)(3), we are
prohibiting an ALJ or the MAC from reviewing a decision by the review
entity that either certifies that the requirements for EAJR are met, or
denies the request. In Sec. 405.990(h)(3), we cross reference to Sec.
405.1136 since requests for EAJR certified by the review entity must
also meet the requirements under that section for filing a civil action
in a Federal district court.
Finally, as required under the MMA, if a provider, supplier, or
beneficiary is granted judicial review, Sec. 405.990(j) requires the
application of interest to the AIC.
12. ALJ Hearings (Sec. 405.1000 Through Sec. 405.1064
[If you choose to comment on issues in this section, please include the
caption ``ALJ Hearings'' at the beginning of your comments.]
a. Introduction
In the proposed rule, we included new procedures to both implement
section 1869 of the Act, as amended by BIPA, and codify in the Medicare
regulations at 42 CFR, part 405, subpart I, all of the requirements
that apply to ALJ and MAC proceedings. Most of the previous regulations
used by the ALJs and the MAC were set forth in 20 CFR, part 404 of
SSA's regulations, which focuses on SSA's disability appeals
procedures. We note that we are generally carrying over relevant
provisions of these rules applicable to Medicare proceedings, but will
discuss in the preamble any new regulations that make substantive
changes to the ALJ and MAC processes.
In addition to receiving comments on the proposed new provisions,
we received some comments on the carry over of regulations that are
already in effect for Medicare ALJ hearings and MAC review. Since most
of these comments were associated with general concerns about changes
to the ALJ process, we note them, where applicable, in the sections
below.
Finally, as noted above, this interim final rule includes some
straightforward changes to the ALJ and MAC process required by the MMA.
b. Escalation
(1) General Application
One of the most significant changes required under section 521 of
BIPA is the introduction of an appellant's right to escalate a case to
an ALJ if a QIC fails to make a timely reconsideration, or to the MAC
if an ALJ hearing does not produce a timely decision on an appeal of a
QIC reconsideration. As we noted in the proposed rule, the statute does
not allow an appellant to proceed beyond the initial contractor level
until he or she has received a redetermination from that contractor,
even if the contractor does not issue the initial determination or
redetermination within the statutory time frames. This is consistent
with the pre-BIPA regulations, which require an appellant to complete
all steps of the appeals process in sequence, except when an appellant
invokes the expedited appeals process described in Sec. Sec. 405.718
[Part A appeals] and 405.853 [Part B appeals].
BIPA, however, adds the option to advance a case to the next level
of appeal when, in certain circumstances, an adjudicator does not act
on the appeal within the statutory deadline. In the proposed rule, we
use the term ``escalation'' to describe this movement of a case to the
next level of appeal.
Section 1869(c)(3)(C)(i) of the Act, as amended by section
940(a)(2) of the MMA, requires the QICs to decide appeals within 60
days. Sections 1869(c) and 1869(d) of the Act, as amended by the MMA,
now provide that an appellant may escalate an appeal as follows: (1) By
requesting an ALJ hearing if the QIC does not decide the appeal within
60 days; (2) by requesting a review by the MAC if the ALJ does not
decide the appeal of a QIC reconsideration within 90 days; and (3) by
requesting judicial review if the MAC does not complete its review of
an ALJ decision within 90 days. (At the ALJ and MAC levels, the
statutory time period for completing the action begins on the date the
appeal is timely filed.) When an appellant does not request escalation
to the next level, the case remains with the current adjudicator until
a final action is issued. We have revised proposed Sec. Sec. 405.990
and 405.1136(c) to conform to these requirements.
We emphasized in the proposed rule that appellants must consider
carefully the type of review that is best to resolve their case before
deciding to escalate an appeal, because the type of proceedings and
adjudicator varies with each step. For example, appellants who escalate
a case from the ALJ level to the MAC will ordinarily not have the
opportunity to
[[Page 11455]]
present their case during an oral hearing, unless they received an oral
hearing at the ALJ level before escalating their case to the MAC. We
also indicated that the statutory decision making deadlines apply only
where there is a decision issued at the prior level. We did not propose
any alternate deadlines for escalated cases, but encouraged comments on
whether the final rule must include time frames and, if so, what time
frames are be appropriate.
Comment: Most commenters on this point argue that allowing
unlimited time for escalated cases is contrary to statutory intent;
they recommended that cases that are escalated to the ALJ and MAC
levels be subject to a time limit. Commenters varied, however, on how
to establish appropriate time frames. Recommendations included: (1)
Requiring escalated cases to be decided within the ``normal'' 90 days;
(2) adding an additional 30 days to the ``normal'' 90-day time frame;
and (3) adding the adjudication time frame from the previous level to
the current level. Under the third recommendation, which preceded the
enactment of the MMA, a case escalated from the QIC level to the ALJ
would have a 120-day time frame (the pre-MMA 30-day QIC time frame plus
the 90-day ALJ time frame) and a case escalated from the ALJ level to
the MAC would have a 180-day time frame (90-day ALJ time frame plus the
90-day MAC time frame.) Adjusting this suggestion to reflect the new
MMA adjudication period for the QICs, the time frame for the ALJ level
would be 150 days.
Response: We hold that our original proposal is consistent with the
language of the statute. Moreover, as we noted in the proposed rule,
when ALJs and the MAC receive cases that have not completed the process
below, they will require more time to determine what issues are
properly before them and how to resolve those issues. As indicated in
the proposed rule, however, we see value in establishing time limits
for escalated cases to ensure that appellants do not wait indefinitely
for a decision. After considering the commenters' suggestions, we have
decided to establish a 180-day decision deadline for cases escalated to
the ALJ and MAC levels. (For purposes of this discussion, we call these
requirements the ``escalated time frames.'') These new time frames are,
in essence, a modification of the third recommendation described above.
Given the nature of ALJ proceedings, which includes scheduling and
conducting a hearing, we do not believe that adding the QIC's
adjudication time is sufficient.
As a corollary to the above decision, we are revising the
regulations to provide that, in certain circumstances, an appellant has
a right to escalate a case to the next level when the ALJ or MAC does
not decide that case within its escalated time frame. Thus, Sec.
405.1016(c) now specifies that for a case escalated to an ALJ, the ALJ
must issue a decision no later than 180 days after the date that the
request for escalation is received by the ALJ hearing office. We also
revised sections 405.1100 and 405.1106(b) to establish a parallel
deadline for a case that is escalated from the ALJ to the MAC.
(2) Specific Provisions Affected by Escalation
In the proposed rule, we note that the statute does not provide a
specific mechanism for appellants to request escalation, nor does it
indicate the effect of an escalation request on case development or
other adjudication efforts the QIC, ALJ or MAC may be conducting when
the escalation request is received. We are particularly concerned about
the adverse impact on appellants and adjudicators if cases that are
close to completion are deemed automatically escalated at the end of
the statutory adjudication period. To alleviate this problem, we
proposed that, when a QIC, ALJ, or the MAC receives a request for
escalation after the adjudication period has expired, it will defer
sending the case to the next level for 5 days after the request is
received. If possible, the QIC or ALJ will issue its action within the
5-day period. If fully favorable to all parties, the determination or
decision will be sent to the appropriate CMS contractor for
effectuation. If the action is not fully favorable, any party to the
appeal can file a request for an ALJ hearing or MAC review, as
applicable, within the 60-day appeals period. If the QIC or ALJ is not
able to decide the case within the 5-day period, the appellant will be
notified and the case will be forwarded to the next level of appeal. We
provide in proposed Sec. 405.1104(b) the procedures an ALJ must follow
when the ALJ is not able to issue a final action or remand within 5
days of receipt of the request for escalation.
We also proposed similar rules for cases in which an appellant
requests escalation from the MAC level to Federal district court when
the amount in controversy is $1,000 or more. We proposed that the MAC
can, if feasible, issue a final action within 5 days of the request for
escalation. We also provided in proposed Sec. 405.1132(b), that when
the MAC is not able to issue a final action within 5 days of receipt of
the request for escalation, it will send a notice to the appellant
acknowledging receipt of the request for escalation. A party can then
file an action in Federal district court within 60 days after it
receives notice of the MAC's decision.
Comment: One commenter expresses concern that the procedures
outlined in Sec. 405.1132(b) are not parallel to the procedures
governing escalation from the QIC and ALJ levels, and are too
burdensome. The commenter suggests that if the MAC does not issue an
action within 5 days of the receipt of the request for escalation, the
appellant must be able to proceed directly to court without issuance of
a MAC ``decision.''
Response: Our use of the word ``decision'' in proposed Sec.
405.1132(b) was an error and did not convey clearly the intention of
the provision. We are revising the regulation to clarify that when the
MAC issues its ``notice'' acknowledging that the MAC has not been able
to complete its action within the statutory period, the appellant can
file a civil action with the district court within 60 days of receipt
of the MAC's acknowledgment notice. We recognize that the commenter may
view the notice as an unnecessary step, since an appellant escalating
to the ALJ or MAC level need only file the request for escalation and
wait for a response (either an action from the QIC or ALJ or a notice
that the case has been forwarded to the next level). However, we
believe that the notice described in Sec. 405.1132(a)(2) of this final
rule will benefit appellants in several ways. We anticipate that some
appellants may file a request for escalation before the MAC's 90-day
period has expired; prompt notification of when the time period will
expire and an indication, if possible, of when the MAC anticipates
issuing its decision, will save appellants unnecessary court costs. We
also note that BIPA has not changed the mechanism whereby appellants
who are dissatisfied with the final decision of the Secretary may bring
a civil action in Federal district court. Section 1869(b)(1)(A) of the
Act provides that judicial review of the Secretary's final decision
continues to be governed by section 205(g) of the Act. Under that
provision, appellants seeking judicial review of the Secretary's action
must file a civil action within 60 days of the Secretary's decision, or
within any additional time allowed by the Secretary. We believe that
the notice we intend to provide under Sec. 405.1132(b) is within our
authority under section 205(g), and will provide a useful benchmark for
both appellants and the
[[Page 11456]]
courts to determine when a civil action in an escalated case is timely
filed. We have revised the regulation text of Sec. 405.1132(b) to make
the effect of the notice clearer.
Similarly, we have retained, at Sec. 405.1134, the provision
carried over from SSA's appeals regulations that allows the MAC to
extend the time to file a civil action for good cause. This regulation
is also consistent with the language in section 205(g) quoted above,
and provides protection for beneficiaries and other appellants who may
need additional time to file a civil action or who wish to protect
their right to commence a civil action while a request to the MAC to
reopen its action is pending. In our experience, the above provisions
are particularly helpful to beneficiaries proceeding pro se and in no
way diminish their access to the Federal courts.
c. Conduct of ALJ Hearing--General Rules
In our November 15, 2002 proposed rule, we discussed how ALJ
hearings in Medicare cases are currently conducted and how we proposed
to conduct those hearings in the future. Section 1869(b)(1)(A) of the
Act, as amended by BIPA, provides that any individual who is
dissatisfied with an initial determination can request a
reconsideration, as well as a hearing, provided that the request for
the hearing is timely filed and that the amount in controversy
requirements are met, as provided by section 205(b) of the Act.
Traditionally, the Secretary has granted individuals entitled to a
205(b) hearing an in-person hearing. Regulations at 20 CFR Sec.
404.948, which are incorporated into the current regulations governing
Part A and Part B appeals, allow an appellant to waive an in-person
hearing and request a decision based on the written record. We stated
in the proposed rule that we would continue that policy and we did not
receive any comments on this proposal.
We also indicated in the proposed rule that we intend to offer
appellants an opportunity for hearings by telephone or
videoteleconferencing (VTC), as available. We note at the time the
proposed rule was published, VTC was available only at selected hearing
sites throughout the country. We also explained the advantages of
offering telephone and VTC hearings as alternatives to in-person
hearings. These advantages include: (1) Providing a hearing in a
convenient setting for beneficiaries who have trouble traveling even
short distances; and (2) providing a more convenient site for providers
and suppliers who may not wish to travel to a more distant hearing
site. Finally, we stated that we were proposing the above alternatives
to an in-person hearing because we believed they would enable ALJs to
complete more cases within the 90-day adjudication period and give some
appellants, who currently waive their right to a hearing and request an
on-the-record decision because of traveling or scheduling difficulties,
an opportunity to present their case orally.
On January 5, 2001, SSA issued a proposed rule in which it proposed
to authorize use of VTC in conducting hearings before ALJs. See 66 FR
1059. SSA's final rule with comment (68 FR 5211), published February 3,
2003, addressed the public comments on the proposed rule and invited
comment on the one significant change in the final rule, which provides
that appellants may object to VTC only with respect to their own
appearance. Because SSA's ALJs have been conducting Medicare hearings,
the reasons articulated in the final rule with comment for adopting VTC
as a alternative to an in-person hearing reflect SSA's experience with
conducting Medicare hearings, as well as retirement and disability
hearings. In responding to public comments, the final rule with comment
identifies the factors that supported including VTC as a means of
providing a 205(b) hearing. In summary, SSA found that:
Use of VTC, where available, has decreased the necessity
of sending ALJs to remote sites to hold in-person hearings. This, in
turn, has decreased processing times, since to make travel to remote
hearing sites as effective as possible, ALJ hearing offices ordinarily
wait until they have a sufficient number of hearing requests to
schedule a full day of hearings.
Use of VTC decreases the difficulty of obtaining expert
witnesses for a hearing, since it can be difficult to find medical
experts who are available to travel to remote sites.
The time ALJs have spent traveling to remote sites can be
used to perform their adjudicatory responsibilities.
Surveys of appellants, including beneficiaries, rated VTC
procedures positively. A large percentage has rated the procedures as
``convenient'' or ``very convenient.'' Test data showed that processing
time for these hearings was substantially less than for hearings
conducted at remote sites, and that the ratio of hearings held to
hearings scheduled was significantly higher for hearings using VTC
procedures than for hearings scheduled in person.
Because SSA's regulations at 20 CFR, part 404 subpart J governing
procedures for ALJ hearings are incorporated by reference in the former
regulations governing Part A and Part B appeals, SSA's VTC rules,
codified at 20 CFR Sec. Sec. 404.929, 404.936, 404.938 and 404.950,
have been effective for Part A and Part B ALJ hearings since March 5,
2003. Like other relevant SSA rules, we have incorporated certain
policies regarding the use of VTC into this interim final rule. (On
December 11, 2003, SSA issued a final rule on VTC, which responded to
comments on the February 3, 2003, rulemaking, but did not change any of
the regulation text. See 68 FR 69003). Thus, where available, ALJs have
been conducting hearings via VTC in Medicare cases for over a year. Our
knowledge of this new process, as well as our experience with telephone
and in-person hearings and on-the-record decisions, forms the basis of
our responses to the comments described below.
Comment: One commenter states that the proposed rule does not
indicate whether a party may object to the type of hearing (in-person,
by VTC, or by telephone) scheduled by the ALJ. The commenter also notes
that a proposal for Medicare ALJ hearings conducted by telephone was
rejected after criticism from claimant organizations, legal groups and
other organizations was received. One of the main concerns at that time
was a fact finder's potential difficulty in assessing witness
credibility and demeanor in a telephone hearing.
Response: This interim final rule makes clear that an appellant can
object to the type of hearing scheduled by the ALJ, including
proceedings by telephone or VTC. As noted in our discussion in the
proposed rule, some appellants waive any type of oral hearing on the
grounds that they believe that written submissions to the ALJ will
adequately present their case. In the past, others have waived the
right to an oral hearing, stating that they are unable to leave their
homes or cannot travel as far as the ALJ hearing office or other
designated site. In our experience, telephone and VTC hearings offer an
opportunity for individuals to present their case orally without the
burden of extensive travel and, thus, provide an alternative to
presenting their case solely in writing. Given these advantages and
benefits, we are convinced of the advantages of incorporating VTC
procedures into the Medicare hearings process, particularly in view of
the BIPA time frames. Therefore, we have revised Sec. 405.1020 to
require ALJ hearings to be conducted by VTC if the VTC technology is
available, but allow the appellant to request an in-person hearing,
which will be granted upon a finding of good cause,
[[Page 11457]]
with the understanding that the request constitutes a waiver of the 90-
day time frame for holding a hearing and rendering an opinion.
ALJs may determine that an in-person hearing should be conducted if
VTC technology is not available or special or extraordinary
circumstances exist. For example, an ALJ could find special and
extraordinary circumstances for holding an in-person hearing when the
case presents complex, challenging or novel presentation issues that
necessitate an in-person hearing. Similarly, an appellant's proximity
to and ability to go to the local hearing office for the hearing may
constitute special and extraordinary circumstances that warrant the
scheduling of an in-person hearing.
Additionally, Sec. 405.1020(e)(4) of this interim final rule
specifies that a party who objects to either a VTC or telephone hearing
has a right to request an in-person hearing, which will be granted upon
a finding of good cause. An ALJ could find good cause to grant a
request for an in-person hearing when a party demonstrates that the
case presents complex, challenging or novel presentation issues that
necessitate an in-person hearing. Similarly, an ALJ may find good cause
to schedule a hearing based on a party's proximity to and ability to go
to the local hearing office. Consistent with SSA's current policy,
Sec. 405.1020(i)(5) provides that a party may object to the use of a
VTC or telephone hearing only with respect to his or her own testimony,
but not with respect to the entire hearing.
We anticipate that providers and suppliers will be particularly
interested in VTC hearings, because they reduce the amount of
nonproductive travel time previously associated with in-person
hearings.
We believe that VTC and telephone hearings are convenient not only
for providers and suppliers, but also for beneficiaries and their
representatives. In particular, we note that many beneficiaries are
represented by an adult child whose ability to take time off from work
to attend an in-person hearing is often limited. Use of telephone
hearings and VTC enables these individuals to pursue their parents'
appeals without undue disruption of their daily routine. Moreover,
because the interim final rule makes clear that an in-person hearing
may be requested by all appellants, appellants who believe that their
appeal can be presented effectively only in person, will have the right
to request an in-person hearing, which will be granted upon a finding
of good cause. In light of the new policy on the use of VTC and
telephones for ALJ hearings, Sec. 405.1020, Sec. 405.1022, and Sec.
405.1036 require ALJs to conduct VTC hearings whenever the technology
is available and allow ALJs to offer to conduct telephone hearings if
the hearing request or administrative record suggests that a telephone
hearing may be more convenient for one or more of the parties.
d. Actions That Are Reviewable by an ALJ
Current regulations governing the Part A and Part B appeals process
do not provide ALJs jurisdiction to overturn dismissals issued by a
contractor or a carrier hearing officer. In the proposed rule, we
proposed giving ALJs the authority to decide or review all final
actions issued by a QIC, including dismissals for untimely filing,
failure to exhaust administrative remedies, or res judicata. The
proposed rule also specifies that if an ALJ decides that the QIC's
dismissal is improper, the ALJ will remand the case to the QIC for a
substantive decision.
Comment: One commenter questions the propriety of allowing an ALJ
to review a contractor's dismissal order and whether that review
constitutes a reopening of the contractor's action.
Response: Under the pre-BIPA appeals process, ALJs have sometimes
identified contractor dismissals that were inappropriate. Because the
regulations did not provide appellants a direct right of appeal of
dismissals, referring those cases to CMS or the contractor was
cumbersome and delayed the resolution of the appellant's appeal. We
believe that providing a direct right of appeal will provide both a
simpler and more cost-effective method to challenge a dismissal the
party believes is inappropriate. Because we are providing a direct
appeal right, the ALJ's remand to the contractor is not a reopening of
the contractor's dismissal order. To clarify the effect of the remand
order, we have revised Sec. 405.1004(b) to provide that when the ALJ
determines that the QIC's dismissal was in error, the ALJ will vacate
the QIC's dismissal and remand the case to the QIC for a
reconsideration. Consistent with the discussion above regarding appeals
to QICs of contractor dismissals, appeals of dismissals will be
permitted only at the next adjudicative level, and we have added Sec.
405.1004(c) to clarify that an ALJ's decision regarding a QIC's
dismissal of a reconsideration request is final and there is no
subsequent appeal right.
e. Authorities That Are Binding on an ALJ
In the proposed rule, we explain that the Medicare statute, CMS
regulations, and CMS Rulings bind ALJs. Prior to BIPA, ALJs and the MAC
were also bound by NCDs, based on section 1862(a)(1) of the Act, but
not NCDs, based on other statutory provisions. Under BIPA, all NCDs,
whether based on section 1862(a)(1) of the Act or on other grounds, are
binding on ALJs and the MAC. This change is reflected in Sec. Sec.
405.732 and 405.860, as amended at 68 FR 63692, 63715, 63716 (November
7, 2003), and is also reflected in Sec. 405.1060 of this interim final
rule.
We also note a change in this interim final rule to Sec. 401.108,
which pertains to the binding nature of CMS Rulings on CMS components,
and SSA to the extent that it adjudicates matters under the
jurisdiction of CMS. In light of the transfer of responsibility for the
ALJ hearing function from SSA to HHS, we are amending Sec. 401.108(c)
and creating a new Sec. 405.1063 to specify that CMS Rulings bind HHS
components that adjudicate matters under CMS' jurisdiction. We
recognize that this is an expansion of the current policy, but believe
this new requirement will help ensure consistency among appeals
decisions.
In the proposed rule, we also address the degree to which ALJs and
the MAC must defer to non-binding CMS and contractor policies such as
LCDs, LMRPs, manual instructions and program memoranda. As reflected in
proposed Sec. 405.992, ALJs and the MAC are expected to give deference
to these policies. The proposed regulations also provide, however, that
a party can request that an ALJ or MAC disregard a policy, but the
request must provide a rationale for why the policy should not be
followed in the particular case.
Comment: Several commenters disagreed with the proposed regulation,
because they believed that it placed an undue burden on appellants,
particularly unrepresented beneficiaries, to identify policies
applicable to their case and to explain why the policy should not be
followed.
Response: New Sec. 405.1060 through Sec. 405.1062 alter the
regulation text proposed under Sec. 405.992 to clarify the
applicability of NCDs, LCDs, LMRPS, and CMS program guidance to ALJs
and the MAC. Section 405.1062 gives ALJs and the MAC the authority to
consider whether guidance documents (for example, LCDs, LMRPs, and
manuals) should apply to a specific claim for benefits on their own
motion, rather than doing so only at the appellant's
[[Page 11458]]
request. This eliminates barriers for those beneficiaries who are not
able to raise these issues on their own. We note, however, that
particularly with the advent of the Internet, an increasing number of
beneficiary appeals contain challenges to medical policies citing
medical research and other grounds. These appeals will be easier to
pursue because notices of redetermination under Sec. 405.956 will now
include more detailed explanations concerning the basis for a claim
denial, including the application of a LMRP or LCD.
Comment: Requiring ALJs to defer to CMS and contractor policy
alters the ALJ's role as an independent fact finder and, thus, changes
the character of a 205(b) hearing.
Response: We disagree with the commenter's characterization of the
proposed hearing process. Under this regulation, ALJs will continue
their traditional role as independent evaluators of the facts presented
in an individual case. Requiring an ALJ to consider CMS policy and give
substantial deference to it, if applicable to a particular case, does
not alter the ALJ's role as fact finder. Indeed, ALJs have always been
bound by Medicare policies included in CMS regulations, CMS rulings,
and NCDs based on section 1862(a)(1) of the Act.
The Federal courts have considered and applied deference standards
in considering the validity of various Medicare policies, and have also
recognized that ALJs and the MAC properly consider issues relating to
deference as well. For example, in Abiona v. Thompson, 237 F. Supp. 2d
258 (E.D.N.Y. 2002), the court upheld a decision in which the MAC
denied anesthesiologists' requests for payment of post-surgical
administration of patient-controlled analgesia (PCA). In its decision,
the MAC relied, inter alia, on the preamble to the Medicare physician
fee schedule and a CMS program memorandum, both of which provided that
payment for physician services related to PCA was included in the
global fee paid to the surgeon and, therefore, was not routinely
payable to anesthesiologists.
In response to the above comments and to provide a clearer standard
of review, we have revised the regulation to provide that: (1) ALJs and
the MAC must give substantial deference to LCDs, LMRPs, CMS manuals or
other program guidance; (2) the applicability of a CMS manual
instruction or other non-binding issuance may be raised by either the
appellant or the MAC or ALJ on their own motion; and (3) the ALJ or MAC
may decline to follow a policy in a particular case, but must explain
the reason why the policy was not followed. These decisions apply only
for purposes of the appeal in question, and do not have precedential
effect.
The ALJ or MAC will review the facts of the particular case to
determine whether and how the policy in question applies to the
specific claim for benefits. If an ALJ or MAC decision concludes that a
policy should not be followed, the decision will explain why the policy
was not followed in light of the facts of the particular case. We
believe this will provide a useful framework for deciding cases in
which a particular, non-binding policy is the focus of the appeal.
Section 522 of BIPA created a new coverage appeals process that
enables certain beneficiaries to challenge LCDs and NCDs. Because a
beneficiary can conceivably bring an appeal under both the section 522
coverage appeals process and the section 521 claims appeal process, we
are clarifying in this interim final rule how adjudicators will handle
simultaneous appeals. These clarifications are consistent with CMS'
final rule that created the new process to allow LCD and NCD
challenges. See 68 FR 63692 (November 7, 2003). If a party appeals a
denial that is based on an LCD or NCD by filing only a claim appeal,
then adjudicators will apply the coverage policy that was in place on
the date the item or service was received, regardless of whether some
other beneficiary has filed a coverage appeal based on the same LCD or
NCD. This policy is consistent with original Medicare policy that
requires changes to LCD or NCDs to be applied prospectively to requests
for payment.
If an appellant files both a claim and a coverage appeal based on
the same initial determination, both appeals will go forward. The claim
appeal adjudication time frames will not be impacted because the
appeals will be conducted simultaneously. In adjudicating the claim
appeal, adjudicators will apply the coverage policy that was in place
on the date the item or service was provided, unless the appellant
receives a favorable coverage appeal decision. If the appellant
receives the favorable coverage decision prior to a decision being
issued for the claim appeal, then pursuant to 42 CFR Sec. 426.488 and
Sec. 426.560, the claim appeal will be adjudicated without
consideration of the invalidated LCD or NCD provision(s). If an
appellant receives a favorable decision in the coverage appeal after
receiving an unfavorable claim appeal decision, then the appellant is
entitled to have the claim appeal reopened and revised for good cause,
subject to the provisions in Sec. 405.980 and Sec. 405.986, without
consideration of the invalid LCD or NCD provision(s). As a result of
these clarifications, we have added Sec. 405.1034(c) to permit ALJs to
remand an appeal to a QIC in this situation.
f. Aggregating Claims To Meet the Amount in Controversy
Prior to the enactment of section 521 of BIPA, the statute and
regulations provided different amounts in controversy for Part A and
Part B appeals. Under Part A, an appellant received a reconsideration
of the initial determination regardless of the monetary value of the
claim, but had to meet a $100 threshold to receive a hearing before an
ALJ. Similarly, an appellant contesting an initial determination issued
on a Part B claim received a review determination regardless of the
amount in controversy. However, there was a $100 amount in controversy
requirement for a Part B carrier hearing and a $500 threshold for an
ALJ hearing with respect to a Part B claim determination (except for
home health where the threshold for ALJ appeals was $100).
The pre-BIPA aggregation provisions found at former section
1869(b)(2) of the Act directed the Secretary to devise a system for
allowing appellants to combine claims to meet the amount in controversy
as follows:
In determining the amount in controversy, the Secretary, under
regulations, shall allow two or more claims to be aggregated if the
claims involve the delivery of similar or related services to the
same individual or involve common issues of law and fact arising
from services furnished to two or more individuals.
The Secretary implemented the above provisions in a final
regulation published March 16, 1994 (the existing regulations can be
found in Sec. 405.740 and Sec. 405.817). The regulation established
two methods of aggregation: one for individual appellants and one for
multiple appellants. Individual appellants appealing either Part A or
Part B claims were allowed to aggregate two or more claims within a
specified period, regardless of issue, to meet the jurisdictional
minimums for a carrier hearing and ALJ hearing. Multiple appellants,
however, were allowed to aggregate their claims only under the
statutory requirements; that is, if the claims involved the delivery of
similar or related services to the same individual or common issues of
law and fact arising from services furnished to two or more
individuals.
BIPA 521 changed the amount in controversy requirements. Section
1869(b)(1)(E) of the Act provides that the amount in controversy for an
ALJ
[[Page 11459]]
hearing will be $100 for appeals of both Part A and Part B claims. In
addition, the aggregation provisions were revised: Two or more appeals
are allowed to be aggregated when the appeals either involve the
delivery of similar or related services to the same individual by one
or more providers and suppliers, or there are common issues of law and
fact arising from services furnished to two or more individuals by one
or more providers or suppliers.
In the proposed rule, we proposed to limit aggregation of claims
under BIPA to those that meet the statutory requirements for
aggregation, that is, those that involve the delivery of similar or
related services to the same individual, or common issues of law and
fact arising from services furnished to two or more individuals.
Individual appellants will no longer be allowed to aggregate all timely
filed claims, regardless of issue. We explained that this change was
appropriate because under BIPA, unlike the previous appeals system,
appellants will have a right to appeal to an independent contractor (a
QIC) regardless of a claim's monetary value. We also proposed the
following related policies:
To continue our pre-BIPA policy of restricting claims that
may be aggregated to those that are appealed within 60 days after
receipt of all reconsiderations being appealed, because to do otherwise
would in essence extend the time to file a request for hearing beyond
the 60-day limit;
To provide separate rules for claims that are escalated
from the QIC to the ALJ level to ensure that only appeals that meet the
amount in controversy requirements are escalated to the ALJ level; and
To require appellants to explain in their request for
aggregation why they believe the claims involve common issues of law
and fact or the delivery of similar or related services.
Comment: Two commenters believe that the proposed limits on
aggregation are too restrictive, because some claims with low dollar
amounts, but involving important issues, will not reach the ALJ level.
One commenter added that there are some claims, such as therapy
evaluations, that usually fall below the $100 limit. Another commenter
recommended that the 60-day deadline to file a request for ALJ hearing
be tolled to enable an appellant to aggregate the appeal with another
claim still pending with the QIC.
Response: The statute requires ALJs and the MAC to apply the
applicable amount in controversy standard under Sec. 405.1006 for an
ALJ hearing. Moreover, as we noted in the preamble to the proposed
rule, with the creation of the QICs, appellants will have access to a
review by an independent contractor regardless of a claim's monetary
value. Our experience suggests that the large majority of Part A and
Part B appeals decided by the QICs will equal or exceed the threshold
amount in controversy. We also believe that the QIC review will provide
sufficient due process for claims below the threshold amount in
controversy. (In addition, as noted below, the Congress has recently
provided that the amount in controversy be increased annually beginning
in 2005.) Moreover, as explained in the proposed rule, extending or
tolling the time for an appellant to aggregate a claim with another
would in essence extend the statutory deadline to file a request for
hearing beyond the 60-day deadline and would also prevent ALJs and the
MAC from completing appeals within the statutory deadlines.
Comment: Several commenters asked for specific guidance in
calculating the amount in controversy for services where reimbursement
is governed by a specific formula or fee schedule.
Response: The interim final rule does not alter the pre-BIPA
regulation's instructions for calculating the amount remaining in
controversy. Regardless of the type of service or payment methodology,
the amount remaining in controversy for an ALJ hearing is computed as
the actual amount charged the individual for the items and services in
question, less any amount for which payment has been made by the
initial contractor or ordered by the QIC, and less any deductible and
applicable coinsurance amounts. (Section 405.1006(d)(1)).
Finally, section 940(b)(1) of the MMA provides that, for requests
for an ALJ hearing or judicial review made after 2004, the amount in
controversy thresholds will be increased by the percentage increase in
the medical care component of the consumer price index for all urban
consumers (U.S. city average) for July 2003 to the July preceding the
year involved. Amounts determined under this formula that are not a
multiple of $10 will be rounded to the nearest multiple of $10. We have
proposed to revise Sec. 405.1002, Sec. 405.1006, and Sec.
405.1136(a) to reflect this statutory change. When this formula results
in revisions to the amount in controversy, CMS will alert the public
through a Federal Register notice, or other appropriate vehicle.
g. The ALJ Hearing
(1) When CMS or Its Contractors May Participate in an ALJ Hearing
As we explained in the proposed rule, previous regulations have not
addressed whether CMS or its contractors can participate in ALJ
hearings. Occasions have arisen, however, in which an ALJ has
determined that input from CMS or a contractor will help resolve an
issue in a case. In some instances, ALJs have requested position
papers, testimony, or other evidence from CMS or a contractor, but
these proceedings have been cumbersome, because the regulations did not
provide specific procedures for input. After reviewing the outcome of
other cases, CMS, as well as the Department's Office of Inspector
General (in its report issued in September 1999 (OEI-04-97-00160)),
concluded that the cases might have been resolved more appropriately if
CMS or the contractor had been party to the appeal.
In response to the above concerns, we included several provisions
in the proposed rule that define the extent to which CMS and its
contractors may participate in the hearing process. We were also
mindful that section 1869(c)(3)(J) of the Act specifically provides
that the new independent contractors, the QICs, will participate in
hearings to the extent required by the Secretary. Consistent with this
provision, we proposed to revise our regulations to allow a
representative of CMS, or a CMS contractor, to participate in an ALJ
hearing at the request of an ALJ, the QIC or CMS. Participation may
include filing position papers (within the time frame specified by the
ALJ) or providing testimony to clarify factual or policy issues in a
case, but will not include those aspects of full party status (for
example, the right to call witnesses or to cross-examine the witnesses
of the appellant or another party to the hearing). Because the role of
a participant will be non-adversarial, we proposed to allow
participation of the QIC, CMS, or CMS' contractors in cases brought by
all appellants, including beneficiaries. We also explained in the
proposed rule that an ALJ will not have the authority to require CMS or
a contractor to participate in a case, nor may the ALJ draw any
inferences if CMS or a contractor decides not to participate.
Consistent with the practice before an ALJ, we amended Sec. 405.1120
and Sec. 405.1124 by adding language to clarify that the MAC is
prohibited from drawing any adverse inferences if CMS or a contractor
decides not to participate in a MAC review.
[[Page 11460]]
In addition, we proposed allowing CMS or its contractor to enter an
appeal at the ALJ level as a party, unless an unrepresented beneficiary
brings the appeal. In this circumstance, CMS or its contractor will
have all the rights of a party, including the right to call witnesses
or cross-examine other witnesses, to submit additional evidence within
the time frame specified by the ALJ, and to seek MAC review of a
decision adverse to CMS. Similar to the participation rules, an ALJ
will not have the authority to require CMS or a contractor to enter a
case as a party or to draw any inferences if it does not participate in
the case.
One reason for these proposals is to allow ALJs and the MAC to
resolve issues of fact and law more quickly and reduce the need for
remands for additional development. Another aim is to reduce the number
of cases referred to the MAC for own motion review because factual
issues have not been addressed during the ALJ proceedings. In that
regard, we note that these new regulations link CMS' ability to refer
certain types of cases to the MAC for own motion review to the extent
to which CMS has been a party or has participated in the appeal below.
For example, under Sec. 405.1110(b), if CMS or its contractor does not
participate as a party or otherwise in a case at the ALJ level, any
subsequent referral to the MAC for own motion review is limited to ALJ
decisions or dismissals containing errors of law or a broad policy or
procedural issue that may affect the public interest. This provision
affords appellants a measure of administrative finality when CMS
chooses not to participate as a party or otherwise in a case at the ALJ
level and the resolution of the case hinges on the weight of the
evidence rather than the controlling law and policy.
Comment: Although we received some positive comments concerning
expanding CMS' role in the appeals process, most of the commenters who
addressed this aspect of the proposed regulations are opposed or
suggested modifications to the process. Those opposed are concerned
that allowing CMS or its contractors to be parties or participate will
change the nature of the hearing from an informal process to an
adversarial hearing process not contemplated by the Congress. Some of
these commenters stated that the change will particularly disadvantage
beneficiaries.
Response: We disagree to some extent with the commenters'
characterization of the nature of the ALJ hearing process under the
pre-BIPA statutory and regulatory scheme. While CMS or its contractors
are not explicitly recognized as parties in fee-for service appeals
under the pre-BIPA statute (former section 1869(b)(2) of the Act),
appeals brought by enrollees of managed care organizations (MCOs) are,
by statute and regulation, adversarial at the ALJ, MAC, and Federal
district court levels. Notably, sections 1852(g)(5) and 1876(c)(5)(B)
of the Act, which reference the right to a ``205(b) hearing,'' provide
that the MCO, as well as the enrollee, is a party to the hearing. MCOs
that receive adverse decisions at the ALJ and MAC levels may appeal
those decisions to the MAC and Federal district court, as applicable.
Our experience with these managed care hearings and appeals
suggests that most beneficiaries, including those who are not
represented, are able to participate fully in the hearing process even
when the MCO appears at the hearing. This is due, in part, to the
control exercised by the ALJ, one of whose roles is to ensure that all
parties receive a full and fair hearing. We expect that ALJs will
continue to fulfill this role under these new rules for fee-for-service
appeals. Neither the existing nor the proposed regulations contemplate
that the ALJ will conduct a trial-like proceeding with formal rules of
evidence. (Moreover, as noted above, CMS or its contractors may not
invoke full party status when the appellant is an unrepresented
beneficiary.)
In addition, fee-for-service appeals conducted under 42 CFR part
405, subparts G and H, are currently adversarial when liability under
sections 1879 or 1842(l)(1)(C) of the Act is an issue. When a provider
or supplier has concluded that the service it provided to a beneficiary
is not covered and asserts that it has informed the beneficiary of
potential non-coverage before providing the service, the interests of
the provider or supplier and the beneficiary concerning liability are
adverse and can be contested during the ALJ hearing.
We also disagree with the commenters' conclusion that the Congress
did not envision that CMS or its contractors might, in some instances,
be represented at a hearing and before the MAC. As noted in the
proposed rule, section 1869(c)(3)(J) of the Act provides that the new
independent contractors, the QICs, will participate in hearings to the
extent required by the Secretary. This is a clear indication that the
Congress recognized the benefit of agency participation in the appeals
process. Thus, we continue to believe that limited expansion of CMS
role in the ALJ hearing process is appropriate, necessary, and
consistent with the statute.
Comment: As noted above, several commenters favored the provision
allowing CMS' and its contractors to invoke party status or otherwise
participate at the hearing level, stating that participation will
create a full and fair record. These commenters suggested various
changes to the regulations to clarify who may participate and how the
various parties to the hearing would be notified.
Response: Consistent with the above comments, we expect that
allowing CMS or a contractor party status or participation, combined
with the new rules concerning the submission of evidence, will create a
record that is more complete at an earlier stage in the appeals
process. These commenters noted the benefit to the Medicare program of
a fully developed record that clearly conveys the program's coverage
and payment policies. We believe a fully developed record will benefit
all participants to the hearing. For example, after the statute was
amended in 1986 to provide for ALJ hearings for Part B claims, some
beneficiaries appealed the amount of payment awarded to their
physicians under the reasonable cost system because they did not
understand how the amounts had been calculated. In those circumstances,
the hearing and resulting decision essentially served an informational
purpose. Similarly, CMS participation at a hearing may assist
beneficiaries, as well as adjudicators, in understanding concepts (for
example, the distinction between hospital inpatient and observation
admissions) that may affect coverage for certain benefits. We also hope
to alleviate the difficult position that many ALJs currently face in
adjudicating a case completely and impartially when the appellant
introduces expert evidence, in the form of testimony, for the first
time during the ALJ proceedings, and the ALJ does not have a routine
avenue of obtaining information on the same topic from the agency.
We also expect that a fully developed record at the ALJ level or
below will lead to a reduction in MAC remands to the ALJ level, as well
as CMS referrals to the MAC for own motion review. In order to
encourage this development, Sec. 405.1110(c)(2) provides that if CMS
or its contractor does not participate at the ALJ level, the MAC will
exercise own motion review only if the ALJ's action contains an error
of law or abuse of discretion material to the outcome of the case, or
if the case presents a broad policy or procedural issue that may affect
the general public interest. In other words, cases in which CMS or its
[[Page 11461]]
contractor decide not to participate at the ALJ level as a party or
otherwise will not be reviewed by the MAC on its own motion if the
perceived error concerns the ALJ's evaluation of the facts of the case
rather than an error of law or procedure.
Proposed section 405.1000 listed the types of contractors that may
participate as parties in hearings before an ALJ, to include Quality
Improvement Organizations (QIOs). Therefore, we have amended Sec.
405.1000 to include this technical change.
Comment: Several commenters noted that the proposed regulations do
not address sufficiently how the participation of CMS or its
contractors will affect ALJ hearing procedures such as the issuance of
the notice of hearing and the potential for discovery.
Response: We have modified several of the regulations to clarify
how a hearing will be handled when CMS or its contractor invokes party
status or decides to participate in a hearing. For example, in Sec.
405.1020(c) we require the ALJ to send a copy of the notice of hearing
to both the QIC and the contractor that issued the initial
determination. (The QIC or the contractor will be responsible for
advising CMS of any significant cases in which the agency may decide to
participate.)
Comment: Several commenters raised concerns that the proposed
regulations contain more formal procedures than the previous
regulations and will, therefore, inhibit the ability of an
unrepresented beneficiary to pursue an appeal.
Response: Many of the provisions cited by the commenters are
identical to those that have been part of the current regulations since
1980 and, in our experience, have not been difficult for unrepresented
beneficiaries to follow. For example, a few commenters suggested that
the requirement that a beneficiary object to the issues in the notice
of hearing will require the beneficiary to file formal objections or
pleadings. This is not the intent of the regulation, nor in our
experience has it inhibited beneficiaries from pursuing their requests
for hearings. Section 405.1024 of the regulation is a carryover from 20
CFR Sec. 404.939, which has applied to Social Security retirement,
disability, and Medicare hearings since August 1980. See 45 FR 52078,
52081 (August 5, 1980). We decided to maintain this regulation not to
formalize the proceedings, but rather to give beneficiaries and other
parties the opportunity to make corrections in those instances, albeit
rare, in which the ALJ hearing office does not correctly identify the
issue to be decided or the parties to the hearing. It is in the
interest of the parties and the adjudicator to correct these mistakes
at the earliest opportunity so that hearings do not have to be
postponed or supplemented because necessary parties were not sent the
notice of hearing or appropriate expert witnesses were not obtained
because the issues before the ALJ were not properly identified before
the hearing. Parties may respond to the notice, as they do now, in an
informal manner. The regulation does not require or anticipate formal
written submissions.
Comment: Several commenters indicated that while the proposed rules
include a provision for issuing subpoenas, they do not require CMS to
respond to discovery requests or orders.
Response: BIPA does not explicitly provide for discovery during ALJ
proceedings, and given the time frames for adjudications under BIPA, we
do not envision that most hearings will include discovery. However, in
light of these and other comments relating to discovery, we believe it
is appropriate to permit discovery when an ALJ hearing is adversarial
(that is, whenever CMS or its contractor is a party to an ALJ hearing).
Therefore, we have added Sec. 405.1037 to permit limited discovery
when CMS participates in an ALJ hearing as a party. Our experience
indicates that most information that is relevant to issues before an
ALJ can be obtained by direct request by the ALJ or subpoena.
Therefore, we anticipate that extensive discovery will not be
necessary.
In general, we allow discovery for matters relevant to the specific
subject matter of the ALJ hearing, but only if they are not privileged
or otherwise protected from disclosure, and the ALJ determines that the
discovery request is not unreasonable, unduly burdensome or expensive,
or otherwise inappropriate. We also limit discovery by permitting a
party only to (1) request of another party the reasonable production of
documents for inspection and copying, and (2) take the deposition of
another party if the proposed deponent agrees to the deposition or the
ALJ finds that the proposed deposition is necessary and appropriate in
order to secure the deponent's testimony for an ALJ hearing. An ALJ
will decide on a case-by-case basis the time frame within which a party
that seeks discovery must submit its request and when all discovery
must be concluded.
Section 405.1037(d) sets forth rules for motions to compel and
protective orders. A party that files a motion to compel or a
protective order must also include a self-sworn declaration describing
the movant's efforts to resolve or narrow the discovery dispute.
As a general rule, the MAC may review an ALJ discovery or
disclosure ruling only during the course of its review as specified in
Sec. 405.1100, Sec. 405.1102, Sec. 405.1104, or Sec. 405.1110.
However, there may be immediate MAC review where an ALJ's ruling
authorizes discovery or disclosure of a matter for which an objection
based on privilege or other protection from disclosure (such as case
preparation, confidentiality, or undue burden) was made to the ALJ. An
ALJ must stay all proceedings affected by a ruling for a minimum of 15
days when the ALJ receives notice that a party intends to seek MAC
review of the ruling. If the MAC grants a request for review or takes
own motion review of a ruling, the ALJ ruling will be stayed until the
MAC issues a written decision that affirms, reverses, or modifies, the
ALJ's ruling. When CMS requests review of an ALJ ruling, the MAC must
grant the request, and the ruling is automatically stayed pending the
MAC's order. With respect to requests from a party other than CMS for
review of a discovery ruling, if the MAC does not grant review or take
own motion review within the time allotted for the stay, then the stay
will be lifted and the ruling will stand.
If a party requests discovery against another party to the ALJ
hearing, the ALJ adjudication time frame specified in Sec. 405.1016
will be tolled. Tolling the ALJ's decision-making time frame pending
resolution of the discovery dispute will ensure that ALJs have an
appropriate opportunity to consider the merits of an appeal, while also
maintaining an appellant's ability to escalate to the MAC if the ALJ is
unable to issue a decision within the statutory time frame.
In developing the discovery procedures, we considered their
potential effects on appellants and other parties to an appeal. We
believe that reasonable discovery can enhance the fairness of
proceedings and the accuracy of decisions. We also believe that
discovery should be limited to hearings where CMS has joined as a party
because it has not been previously available for ALJ hearings and these
hearings will be adversarial because of CMS party status. Additionally,
ALJs will not be able to schedule and hold hearings in an efficient
manner if broad discovery is permitted. As previously mentioned, we
expect the number of appeals in which CMS elects to participate as a
party to be quite low. When CMS does participate as a party, we expect
the need for discovery to be
[[Page 11462]]
minimal. Also, because we anticipate that the majority of appeals in
which CMS elects to participate as a party will involve overpayments,
CMS will not arbitrarily invoke party status, subject itself to
possible discovery requests, and risk additional interest liability in
an attempt to delay the proceedings. Therefore, we believe that it is
unlikely that these procedures regarding discovery will negatively
impact the appellant and other parties to an appeal.
When all other discovery efforts have failed, parties may also
obtain evidence by requesting subpoenas. The Social Security Act
provides for the use of subpoenas, and the proposed regulations, like
the current SSA regulations applicable to ALJ hearings, allow an ALJ,
through independent initiative or at the request of a party, to issue
subpoenas concerning the attendance and testimony of witnesses and
production of evidence. The ALJ will rule on whether and to what extent
a party's requests for subpoenas will be granted, taking into account
any objections that may be raised. We note that if a party fails to
comply with a subpoena, neither the ALJ nor a party may seek judicial
enforcement; instead, the ALJ must make application to the Secretary
for such enforcement. Similarly, the Administrative Procedure Act and
the current regulations applicable to Part A and Part B appeals allow
the MAC to issue subpoenas. Therefore, we have amended Sec. 405.1122
by adding paragraph (d), which largely mirrors Sec. 405.1036(f) and
describes the MAC's ability to issue subpoenas and the requirements for
submitting a subpoena request.
We recognize that this interim final rule does not fully discuss
how the discovery and subpoena provisions apply to CMS when it enters
an ALJ hearing as a party. Therefore, following publication of this
interim final rule containing the regulatory provisions on subpoena and
discovery procedures, we will issue a CMS Ruling clarifying the
application of these provisions to CMS.
(2) Issues Before an ALJ
In the proposed rule, we generally adopted the provisions from 20
CFR Sec. 404.946 regarding issues before an ALJ. Section 405.1032(a)
generally discusses the types of issues that an ALJ may consider at a
hearing. ALJs may consider all of the issues brought out in the
previous determinations that were not decided entirely in a party's
favor. Under certain circumstances, ALJs may also consider issues
decided favorably.
Comment: Some commenters objected to Sec. 405.1032(a) allowing an
ALJ to consider issues decided favorably to a party by a QIC or other
contractor even if those issues are not raised on appeal. One commenter
suggested that this regulation places the ALJ ``in an appellate
position.''
Response: This regulation is a direct carryover from a currently
applicable regulation at 20 CFR Sec. 404.946(a). In our experience, it
is rarely used in the Medicare context. We decided to retain it,
however, to give the ALJ the authority to remedy clearly inconsistent
outcomes that sometimes present themselves in a case before an ALJ. For
example, an ALJ who has been asked to reverse a determination that the
second week of skilled nursing facility services was not medically
necessary may discover that the beneficiary did not have a 3-day
qualifying inpatient hospital stay. Section 405.1032(a) allows the ALJ
to take jurisdiction of an earlier, fully favorable determination with
respect to the first week of care, which is also subject to the 3-day
qualifying stay requirement, but only if: (1) That determination may be
properly reopened under the reopening regulations; and (2) the ALJ
gives proper notice to the parties that this issue will be addressed.
Although we anticipate that this provision will be rarely invoked, we
have included it in the regulation to address the type of situation
described above.
Section 405.1032(c) discusses whether an ALJ can consider a claim
that is not the subject of a hearing request. This paragraph was added
to address CMS'' concerns that ALJs not consider claims that have not
been previously adjudicated. Section 405.1032(c) prohibits an ALJ from
taking jurisdiction of a claim that has not been adjudicated at the
lower appeals levels through the QIC level. It is important to note the
distinction between new claims versus new issues for purposes of
applying Sec. 405.1032. A new issue is one that is raised for the
first time at the ALJ level, that is relevant to the dates of service
that are before the ALJ, but was not previously considered in the
appeal. For example, if a claim was previously denied for a reason
other than medical necessity and the appellant raises a medical
necessity issue at the ALJ hearing level, the medical necessity issue
is new, since it is relevant to the claim but not the original dispute
in the appeal. A new claim, however, is a claim that has not completed
the appeals process at the through the QIC level. A claim can only be
combined with an appeal at the ALJ level if it has already been
reconsidered by a QIC.
(3) Parties to an ALJ Hearing
In proposed Sec. 405.1020(a), we stated that the ALJ must send the
notice of hearing to ``all parties and the QIC that issued the
reconsideration determination.'' We received several comments
concerning whether ALJs are always required to send notices of hearing
to ``all parties.''
Comment: ALJs currently encounter significant difficulties in
determining who receives the notice of hearing when the appeal concerns
either a large number of initial claims filed by a single provider or
supplier, or a postpayment audit involving statistical sampling and a
resulting overpayment assessed against a provider or supplier. Although
the beneficiaries who received the items or services technically may be
parties to these appeals, in many instances they have not been involved
in the proceedings below and, due to the application of the limitation
of liability and overpayment provisions, may have no financial
liability for the services at issue. Attempting to locate and send
notices of hearing to these beneficiaries is extremely time-consuming
and will hinder the ALJ's efforts to hold a hearing and issue a
decision within the 90-day adjudication period.
Response: We have modified the notice of hearings requirements in
Sec. 405.1020(c) to clarify that an ALJ is not required to send a
notice of hearing to a party who has not participated in the
determinations below and whose liability status for the items or
services in dispute has not been altered since the initial
determination. We believe that this will ensure that all parties who
have an interest in the appeal are given an opportunity to participate,
while at the same time alleviating the ALJ hearing office's obligation
to contact those individuals who have not pursued their appeals rights
at the earlier levels, or have no financial interest in the outcome.
However, the regulation does not prohibit the ALJ from notifying a
party who has not previously participated in the appeal, if the ALJ's
pre-hearing development suggests that the party's interests may be
adversely affected by the outcome of the case.
h. Filing Requests for ALJ Hearing and MAC Review--Time and Place
Section 1869(b)(1)(D)(ii) of the Act provides that ``[t]he
Secretary shall establish in regulations time limits for the filing of
a request for a hearing by the Secretary in accordance with provisions
in sections 205 and 206.'' In addition, section 1869(d)(1)(A) of the
Act provides that ``[e]xcept as provided in subparagraph (B), an
administrative
[[Page 11463]]
law judge shall conduct and conclude a hearing on a decision of a
qualified independent contractor under subsection (c) and render a
decision on such hearing by not later than the end of the 90-day period
beginning on the date a request for hearing has been timely filed.''
Similarly, section 1869(d)(2)(A) of the Act provides that the MAC
``shall conduct and conclude a review of [an ALJ decision] and make a
decision or remand the case to the administrative law judge for
reconsideration by not later than the end of the 90-day period
beginning on the date a request for review has been timely filed.''
Section 205(b) of the Act gives an appellant 60 days to request a
hearing. The current regulations governing appeals of Medicare claims
provide for appealing from the contractor's determination or decision
to an ALJ and, thereafter, from the ALJ level to the MAC. In the
proposed rule, we stated that we will continue to require parties to
file their appeals to the ALJ level and the MAC within 60 days. We also
stated that ALJs and the MAC will continue to follow most of the
general principles currently found in 20 CFR Sec. 404.933 and 42 CFR
Sec. 405.722 when they decide whether an appeal has been timely filed
for purposes of establishing the appellant's right to appeal. These
regulations provide that an appeal is considered filed on the day it is
received by a Social Security office, CMS, including its contractors,
an ALJ, or, in the case of a request for MAC review, the MAC. We stated
in the proposed rule that we will continue to calculate the 60-day
filing period based on the date the appeal is actually received by one
of the above offices, as reflected in proposed Sec. 405.1014(b).
However, for purposes of calculating the 90-day adjudication period
that governs ALJ and MAC actions, we stated that if a request for ALJ
hearing was not filed directly with the ALJ hearing office or a request
for MAC review was not filed directly with the MAC, the 90-day
adjudication period would not begin until the appeal is received by the
ALJ or MAC, as applicable. Finally, we indicated that in those requests
for hearing or MAC review in which an appellant does not file an appeal
within the 60-day filing period but contends that there is good cause
for filing late, the 90-day adjudication period will begin with the
date the good-cause explanation is received by the ALJ or MAC, as
applicable, assuming that the ALJ or MAC determines that the
explanation provides good cause for filing the appeal late.
Comment: We did not receive any adverse comments concerning
starting the calculation of the 90-day adjudication period from the
date when an adjudicator receives an appellant's good cause explanation
for filing an appeal late. However, we received several comments
objecting to tolling the 90-day adjudication period for appeals not
filed directly with the ALJ hearing office or MAC until the appeal
reaches the appropriate adjudicator. Commenters objected for
essentially two reasons: (1) They felt that tolling the adjudication
period was contrary to the Congress' direction that the appeals be
completed within 90 days and (2) that beneficiaries and other
appellants must not be penalized for delays caused by the government
and its contractors. Suggested solutions included increased
coordination between SSA and CMS local offices with the appeals
entities and establishing deemed or presumed dates of receipt for
appeals whose actual receipt is delayed because the component that
initially received the appeal does not forward it timely to the
adjudicator.
Response: As noted in the proposed rule, and discussed in detail
above in both the contractor and QIC context, directing appellants to
only one filing location will reduce confusion and eliminate potential
delays in transmitting the appeal request. Similarly, in the case of
ALJ hearings or MAC reviews, requiring appellants to file their appeals
with a single appeals entity will be the simplest and most efficient
way of eliminating the delays that concern the commenters. In two
sections of the proposed rule, SSA was listed as a filing location. As
mentioned previously, given the reduced role of SSA in the processing
of Medicare appeals, we believe that an explicit regulatory reference
to SSA field offices is no longer appropriate. Therefore, we have
revised Sec. 405.1014(b) and Sec. 405.1106(a) to eliminate the
references to SSA as an alternative filing location. We intend to
instruct the QICs to include in their reconsideration notices the
appropriate entity to whom a subsequent appeal must be directed. We
will also continue our efforts to make forms for requesting an ALJ
hearing and MAC review accessible and easy to use. In that regard, we
note that a specific form for requesting MAC review with directions for
filing under the current regulations is available on the Departmental
Appeals Board's Web site at http://www.hhs.gov/dab.
Consistent with our managed care regulations, Sec. Sec.
405.1106(a) and 405.1106(b) require that an appellant send a copy of
the request for review (or escalation) to the other parties involved in
the appeal. Although the MAC will not dismiss an appeal on the grounds
that the appellant failed to satisfy this requirement, the adjudication
deadline will be tolled if the appellant fails to copy the other
parties. This is one of several provisions we will monitor for
effectiveness, and we will assess the need for changes as we gain
experience with the new process.
Comment: One commenter suggested that the ALJ be required to notify
the appellant when the request for review is received, so that the
appellant will know when the 90-day adjudication period begins.
Response: We agree with the commenter. ALJ hearing offices and the
MAC routinely send acknowledgment notices to the appellant when they
receive a request for hearing or MAC review. However, this interim
final rule requires ALJ hearing requests to be filed with the entity
specified in the notice of reconsideration. Therefore, the decision-
making time frame begins on the date an appeal is timely filed with
this entity. Accordingly, Sec. 405.1014(b) has been modified to
require ALJ hearing offices to send appellants a notice of the date of
receipt of an appeal request only when a hearing office receives a
request that was initially filed with an entity other than the one
specified in the notice of reconsideration. Similarly, Sec.
405.1016(a) now requires notice of the date of receipt to be sent only
when a request for MAC review is filed with an entity other than the
MAC or ALJ hearing office.
i. Adjudication Deadlines
Section 1869(d)(1)(A) of the Act provides that, unless the
appellant waives the statutory adjudication deadline, the ALJ ``shall
conduct and conclude a hearing on a decision of a [QIC]'' and issue a
decision within 90 days from the date a request for hearing is timely
filed. As we discussed in the proposed rule, we interpret this
provision as requiring an ALJ to decide a case within 90 days only when
the QIC has issued a final action in a case. Therefore, we proposed
that when an appellant escalates an appeal from the QIC to the ALJ
level, the proceedings before the ALJ will not be subject to the 90-day
limit.
Comment: As noted in our discussion of escalation, we received
several comments objecting to the above proposal. Some commenters
stated that cases escalated from the QIC level to the ALJ level be
subject to the 90-day limit, and others suggested an extended, but
still limited, time frame.
[[Page 11464]]
Response: As indicated in our discussion above, this interim final
rule requires that ALJs complete their action in cases escalated from
the QIC level to the ALJ level within 180 days of the date of receipt
of the escalation request.
We also proposed that the 90-day adjudication period be tolled when
delays in submitting evidence or requests for postponement of a hearing
by an appellant, rather than the ALJ's actions, extend the length of
the proceedings. We received no specific objections to this proposal.
Because we have now limited cases escalated from the QIC level to the
ALJ level to a 180-day adjudication period, we have included in the
final regulation text that an appellant's actions that delay the
proceedings will similarly toll the 180-day adjudication deadline.
Comment: One commenter asked us to clarify the effect of the
statutory provision that allows an appellant to waive the 90-day
adjudication period. The commenter asked if this provision allows an
appellant to, in essence, agree to an extension of the adjudication
period for a limited period.
Response: We agree with the commenter that in some instances the
appellant may benefit by agreeing to a limited extension of the
adjudication period in order to give the ALJ sufficient time to obtain
additional testimony or evidence, or otherwise consider the appeal and
issue a decision. Section 405.1036(d), consistent with section
1869(d)(1)(B) of the Act, allows an appellant to waive the adjudication
period. We have modified that section to provide that the waiver may be
for a specific period of time agreed upon by the ALJ and the appellant.
13. Remand Authority (Sec. 405.1034)
In the proposed rule, we noted that the current regulations
governing Medicare appeals do not contain clear guidance concerning if
and when an ALJ can remand a case to a contractor for further
proceedings. We proposed giving ALJs remand authority for three
specific reasons: (1) When the ALJ decides that the QIC's dismissal of
a request for reconsideration was improper; (2) when the record
provided to an ALJ lacks the technical information needed to resolve
the case, which only the contractor can provide; and (3) when an
appellant submits new evidence to the ALJ without providing a good
reason for not providing it at the QIC level.
Comment: We did not receive any comments concerning the ALJ's
authority to remand when the ALJ decides that the QIC's dismissal of a
request for reconsideration was improper. However, several commenters
expressed concern that the mandatory remand provisions altered the
ALJ's role as the trier of fact, as well as the de novo aspect of an
ALJ hearing. Others contend that it will be unfair to restrict a
party's right to submit new evidence not considered by the QIC, and at
the same time allow CMS to submit evidence and position papers if it
participates in a case. Many others reference specific situations in
which they said the prohibition concerning the introduction of new
evidence should not be applied, or, alternatively, in which good cause
to introduce the evidence should be found.
Response: As noted earlier in this rule, the MMA amended several of
BIPA's appeal provisions. Effective October 1, 2004, section 1869(b)(3)
of the Act, as amended by section 933(a) of the MMA, requires that a
provider of services or supplier not introduce evidence in any appeal
that was not presented at the reconsideration conducted by the QIC,
unless there is good cause that prevented the introduction of that
evidence at or before the reconsideration.
This new statutory provision is more restrictive than the proposed
rule, in which we proposed only to require that evidence specifically
identified in the notice of redetermination be produced no later than
the reconsideration level. In accordance with section 933(a) of the
MMA, we have amended Sec. 405.1028 and Sec. 405.1122(c) to require
providers and suppliers to submit all evidence at the reconsideration
level unless there is good cause for not submitting it at, or before,
that level. Similarly, in Sec. 405.1028, we require beneficiaries who
are represented by a provider or supplier to submit all evidence at the
reconsideration level unless there is good cause for not submitting it
at, or before, that level. Although the statute does not require
application of this standard to beneficiaries who are represented by
providers or suppliers, we think it is appropriate to extend the
requirements of section 933(a) to these beneficiaries. Doing so will
likely prevent a provider or supplier from subverting the requirement
for full and early presentation of evidence simply by offering to
represent a beneficiary, rather than appealing on its own behalf. In
light of these changes, we have eliminated the portions of proposed
Sec. 405.1030 and Sec. 405.1034 that would have required an ALJ to
remand a case to the QIC when an appellant introduced new evidence at
the ALJ level without good cause. Although an ALJ or the MAC may not
rely on evidence submitted untimely in deciding the substantive
issue(s) in an appeal, unless good cause is found for the late
submission of evidence, Sec. 405.1042(a)(2) ensures that the excluded
evidence will become a part of the record, and that the ALJ or MAC will
explain in its action why the evidence has been excluded.
Comment: Several commenters noted that, while the appellant's right
to submit new evidence beyond the QIC level is restrained by the good
cause standard, the regulations do not appear to place similar
restrictions on CMS or its contractors if they decide to submit
evidence at the hearing.
Response: We disagree with the commenters' position that it is
unfair to prevent providers and suppliers from submitting new evidence
at the ALJ level, while allowing CMS or its contractors to submit
evidence at the ALJ level if the agency elects to join the appeal as a
party. We have also considered these comments in light of the statutory
change described above that impose a good cause standard on providers
and suppliers for purposes of submitting evidence beyond the QIC level.
CMS and its contractors are not permitted to participate in the appeals
process prior to the ALJ level. Consequently, they are also prohibited
from submitting evidence in either the redetermination or the
reconsideration. Therefore, if CMS elects to join an appeal as a party,
the agency should be afforded an opportunity to present evidence and
the ALJ level is the earliest opportunity for this to take place. We
anticipate that there are several scenarios in which an ALJ will need
to consider whether a provider or supplier appellant's request to
introduce new evidence at the ALJ level must be granted for good cause.
While it is not possible to delineate in a regulation all of the
situations that can constitute good cause, we note that the type of new
evidence that may be introduced at various levels of appeal will also
be affected by the number of issues that are considered during the
course of an appeal. For example, if a QIC disagrees with a
contractor's denial of a claim on technical grounds, it may still
determine that the claim is not payable because the service was not
medically reasonable and necessary. Since the issue of medical
necessity may not have been addressed until the QIC's determination,
the ALJ will need to take that into account when determining whether
the appellant has good cause to produce additional evidence on the
medical necessity issue at the ALJ level. Similarly, in instances in
which CMS introduces evidence at the ALJ level that was not part of the
[[Page 11465]]
record below, the ALJ should consider whether the introduction of this
evidence constitutes good cause for granting an appellant's request to
introduce new evidence.
Comment: One commenter objects to the provision that allows an ALJ
to remand to the QIC when the record provided to the ALJ lacks
technical information that is material to resolving the case, and only
the contractor can provide the information. The commenter suggests that
the ALJ retain the appeal and ask the contractor to forward the
information to the ALJ.
Response: We anticipate that most appeal files forwarded to the ALJ
will have all of the documents necessary to decide the case. In the
rare instance in which the file lacks necessary technical information,
we believe that the most effective way of completing the record is to
return the case, via remand, to the contractor. However, Sec. 405.1034
will give an ALJ the option of either remanding the case to the
contractor, or asking the contractor to forward the missing information
to the ALJ hearing office. In the event that we move to an electronic
file system, we will consider revising this provision further.
14. When an ALJ Can Consolidate a Hearing (Sec. 405.1044)
[If you choose to comment on issues in this section, please include the
caption ``ALJ--Consolidation of Hearing'' at the beginning of your
comments.]
We have continued the longstanding practice of allowing ALJs to
consolidate requests for hearing where appropriate. We added in the
proposed rule, however, a provision requiring an ALJ to notify CMS of
the intent to consolidate hearings because we believe that the
consolidation of hearings may affect CMS' decision on whether to
participate or invoke party status.
Comment: We received one comment on this provision. The commenter
recommends that a beneficiary have the right to object to a request for
consolidation of the beneficiary's appeal with those of another party
(for example, a provider or supplier appealing numerous appeals on the
same issue). The commenter's concern is that consolidation of the
appeal will eliminate the 90-day deadline for resolution of the case.
The commenter also states that consolidation will complicate the
hearing and make it more difficult for the beneficiary to assert rights
in the appeal.
Response: We expect the situation described by the commenter to
occur only rarely. In our experience, providers and suppliers make
requests for consolidation of hearings in cases involving identical
coverage and payment issues for the same item or service provided to
multiple beneficiaries. In the majority of these cases, the liability
of individual beneficiaries has been waived or, if not, the beneficiary
has not filed an appeal or otherwise participated in the determinations
below, and has not filed a separate request for ALJ hearing. However,
if the beneficiary and the provider or supplier, as applicable, both
file a request for hearing in response to the same QIC reconsideration,
the provider or supplier may not, in essence, waive the beneficiary's
right to an ALJ action within 90 days because it wants to consolidate
that determination with other similar appeals. Beneficiaries who do not
waive the 90-day adjudication period in order to participate in the
consolidated proceedings must be mindful, however, that their case will
be decided without the benefit of any of the testimony that can be
given at the consolidated hearing, and that their decision may be
revised if the evidence considered and resulting outcome of the
consolidated hearing provides a basis for reopening the beneficiary's
case.
15. When an ALJ Can Dismiss a Request for a Hearing (Sec. 405.1052)
[If you choose to comment on issues in this section, please include the
caption ``When an ALJ Can Dismiss a Request for a Hearing'' at the
beginning of your comments.]
We note that CMS' pre-BIPA regulations did not address this issue;
rather, ALJs followed the regulations at 20 CFR Sec. 404.957. Those
regulations were designed to resolve appeals filed by applicants for
Social Security retirement and disability benefits. Therefore we
proposed new regulations that address the specific procedural issues
that arise in Medicare claims appeals. We described an ALJ's authority
to dismiss a request for hearing on several grounds, including: The
death of the beneficiary when there is no substitute party with a
remaining financial interest; dismissals in response to a request for
withdrawal; dismissals based on a previous determination or decision
about the appellant's rights on the same facts and on the same issue or
issues, and dismissals based on abandonment. We received one comment
concerning dismissals related to the survival of an appeal following
the death of the beneficiary, and one concerning when, if ever, an ALJ
may vacate a dismissal.
Comment: We received a general comment concerning whether ALJs can
be given the authority to vacate their own dismissal orders.
Response: SSA's regulations include a provision allowing ALJs to
vacate their own dismissals. However, in practice, this provision has
not been an effective remedy in Medicare appeals because the claims
folder is no longer in the ALJ hearing office and is unavailable to the
ALJ by the time the request to vacate the order is received in the ALJ
hearing office. Moreover, resolutions of these requests have been
delayed or complicated when appellants have simultaneously asked the
ALJ to vacate the dismissal order and asked the MAC to review the
dismissal. In light of these problems, we believe that the better
practice is to provide only for an appeal of the dismissal order to the
MAC.
Comment: We proposed that either the ALJ or the MAC could dismiss a
request for hearing or review, as applicable, when a beneficiary dies
before an appeal is filed, or during the pendency of the appeal. We did
not receive any comments concerning the ALJ's right to dismiss the
request for hearing, but did receive a comment concerning a MAC's
dismissal on the same grounds. The commenter states that the MAC must
hold a hearing at the request of the beneficiary's estate on the issue
of whether there is any remaining financial liability of the estate
that establishes the estate as a substitute party that can continue the
appeal.
Response: In our experience, it is not necessary to hold a hearing
at either the ALJ or MAC level to resolve whether the beneficiary's
estate has a right to a hearing or MAC review. The issue in these
circumstances is whether there remains an interested, substitute party
who has a remaining financial interest in the outcome of the appeal. As
indicated in the proposed rule, this remaining financial interest can
be established if the beneficiary either paid for the service (and,
thus, the beneficiary's surviving spouse or estate is seeking
reimbursement on behalf of the beneficiary) or the beneficiary's spouse
or estate continues to be potentially financially liable to pay for the
service. Conversely, if the beneficiary's liability for the service was
waived and that determination was not used as a basis to establish the
beneficiary's liability for subsequent services, the beneficiary's
spouse or estate has no remaining financial interest in the appeal.
Neither the statute nor existing regulations require a hearing before
an appeal may be dismissed on the above issue, and, in our experience,
a determination of the estate's remaining financial liability, if any,
can be established without a
[[Page 11466]]
hearing. We wish to note that when a beneficiary dies and the appeal is
subsequently dismissed, a party, including the beneficiary's estate,
may ask the MAC to vacate the dismissal under Sec. 405.1108(b).
Examples of situations in which a dismissal should be vacated include
when there is the possibility of Medicaid liability or when there is a
possibility the State (which pays Medicaid funds) will attempt recovery
of its payment from the estate.
We note, however, that section 939 of the MMA now provides that, if
a beneficiary dies and there is no substitute party available to appeal
a determination, the provider or supplier who furnished the item or
service can pursue the appeal. We have amended Sec. 405.1052(a)(5) to
reflect this change. However, because a beneficiary's estate may have
an interest in having Medicare cover a service so that a State (which
pays Medicaid funds) will not attempt to recover its Medicaid payment
from the estate, adjudicators may only dismiss requests involving
dually eligible beneficiaries pursuant to the requirements set out in
Sec. 405.1052.
16. Content of ALJ's Decision (Sec. 405.1046)
[If you choose to comment on issues in this section, please include the
caption ``Content of ALJ's Decision'' at the beginning of your
comments.]
Section 405.1046 of the proposed rule sets forth general rules
regarding the ALJ's decision notice. We received no comments on these
provisions. Subsequently, section 933(c)(3) of the MMA amended section
1869(d) of the Act to provide that an ALJ decision must be written in a
manner calculated to be understood by the beneficiary and must include:
The specific reasons for the decision (including, to the
extent appropriate, a summary of the clinical or scientific evidence
used in making the decision);
The procedures for obtaining additional information
concerning the decision; and
Notification of the right to appeal the decision and
instructions on how to initiate such an appeal.
1. These provisions have now been incorporated in Sec. 405.1046(b)
of this interim final rule. The new provisions are basically verbatim
restatements of the statute and are completely compatible with,
although more detailed than, the proposed provisions.
2. In addition to changes needed to implement section 933(c)(3) of
the MMA, we have added paragraph (c) to Sec. 405.1046 to clarify CMS'
long-standing position that ALJ decisions are not final for purposes of
determining the actual amount of payment due. ALJ decisions involving
underpayments often indicate that Medicare must make payment for a
service, but do not calculate a specific underpayment amount to be
made. These determinations are not final, because the contractor must
still calculate the underpayment amount by determining the principal
amount to be paid. In addition, if the ALJ makes a finding concerning
payment when the amount of payment was not an issue before the ALJ, the
contractor may independently determine the payment amount. Therefore,
the date of the final determination for purposes of determining when
interest charges on underpayments begin accruing is the date that the
contractor completes the calculation and makes the written
determination of the principal amount that Medicare owes.
17. Appeals Involving Overpayments (Sec. 405.1064)
[If you choose to comment on issues in this section, please include the
caption ``Appeals Involving Overpayments'' at the beginning of your
comments.]
A decision that is based on only a portion of a statistical sample
does not accurately reflect the entire record. Therefore, we have added
Sec. 405.1064 to set forth a general rule regarding ALJ decisions that
are based on statistical samples. The effect of this technical change
is that when an appeal from the QIC involves an overpayment issue and
the QIC relies on a statistical sample in reaching a decision, the ALJ
must base his or her decision on a review of all claims in the same
statistical sample.
18. Review by the MAC and Judicial Review (Sec. 405.1100 Through Sec.
405.1140)
[If you choose to comment on issues in this section, please include the
caption ``Review by the MAC and Judicial Review'' at the beginning of
your comments.]
a. Introduction
The component of the Departmental Appeals Board (DAB) that decides
cases brought under section 521 of BIPA is called the Medicare Appeals
Council (MAC). Prior to this interim final rule, the MAC considered
requests for review of Medicare cases under the procedures used by
SSA's Appeals Council. See 20 CFR Sec. Sec. 404.966 through 404.985.
In the proposed rule, we proposed that some of the regulations
governing the SSA's Appeals Council be modified to meet the particular
needs of the Medicare process and proposed adding other regulations to
effectuate the BIPA provisions governing MAC review.
b. MAC Review of an ALJ's Action/De Novo Review
Under the regulations governing the pre-BIPA process, the MAC could
deny or dismiss a request for review, or it could grant the request for
review and either issue a decision or remand the case to an ALJ. The
MAC could also review an ALJ's action in order to dismiss a request for
hearing for any reason for which it could have been dismissed by the
ALJ. The MAC also had the authority under the pre-BIPA process to
review an ALJ's action on its own motion, provided that it took review
of the case within 60 days after the date of the hearing decision or
dismissal. In the proposed rule, we described the factors the MAC
considered under the pre-BIPA regulations in deciding whether to grant
review. We also noted that if the MAC denied review of an ALJ's
decision under those regulations, the ALJ's action, not the denial of
review, was the final decision of the Secretary and was reviewable in
Federal district court on a substantial evidence standard.
BIPA establishes a new standard for MAC review of an ALJ's action.
Section 1869(d)(2)(A) of the Act directs the MAC to conduct its review
of an ALJ decision and make a decision or remand the case to the ALJ
within 90 days of a request for review. Section 1869(d)(2)(B) of the
Act specifies that the MAC reviews the case de novo. In addition,
section 1869(d)(3)(A) of the Act allows parties to request a review by
the MAC if within 90 days of timely filing a request for an ALJ
hearing, the ALJ has not issued a decision, ``notwithstanding any
requirements for a hearing for purposes of the party's right to such a
review.''
We proposed under Sec. 405.1100 that when a party requests a MAC
review, the MAC reviews the ALJ's decision de novo. The party does not
have the right to a hearing before the MAC, and the MAC considers all
evidence in the administrative record. If a case requires additional
evidence or proceedings at the ALJ level, the MAC remands the case to
the ALJ for further action. Otherwise, the MAC communicates its final
action on the case by issuing a final decision or order that adopts,
modifies, or reverses the ALJ's action, as appropriate. We also
proposed other changes to the MAC's current procedures to accommodate
the statute's changes to the MAC's standard of review, as well as the
adjudication deadlines. (Some of the changes concerning time and place
of filing a review and other changes that affect both the ALJ and MAC
process are
[[Page 11467]]
discussed earlier in this preamble.) Because an ALJ's decision is not
final and binding on all parties if the MAC reverses the ALJ's
decision, we have amended Sec. 405.1048 to make that point clear.
Consistent with our managed care regulations, Sec. Sec.
405.1106(a) and 405.1106(b) require that an appellant must send a copy
of the request for MAC review or escalation to the MAC and to the other
parties involved in the appeal. Although the MAC will not dismiss an
appeal on the grounds that the appellant failed to satisfy this
requirement, the deadline will be tolled if the appellant fails to copy
the other parties.
Comment: Most of the comments we received concerning MAC review
pertained to the MAC's procedures when a case is escalated from the ALJ
level to the MAC. However, one commenter expressed the concern that the
MAC's de novo review standard would diminish an ALJ's authority to make
findings of fact.
Response: Section 1869(d)(2)(B) of the Act requires the MAC to
conduct any review of an ALJ's decision under a de novo review
standard. Therefore, when the MAC reviews an ALJ's decision, the MAC
will not apply a substantial evidence standard when it considers an
ALJ's findings of fact. However, an ALJ's findings and conclusions on
factual issues will still carry weight, particularly with respect to
the credibility of witnesses, and by no means do the BIPA changes
diminish an ALJ's authority to make findings of fact.
As we indicated in the proposed rule, the MAC must carefully
consider all evidence in the record in conducting its review. It must
then adopt, modify, or reverse the ALJ's decision, or remand the case
to an ALJ for further proceedings (the MAC can also dismiss a request
for review). Note that under Sec. 405.1112, an appellant's request for
a review must identify the parts of the ALJ decision with which the
appellant disagrees and explain why the ALJ's findings and conclusions
are wrong. The MAC will limit its review to those exceptions, unless
the appellant is an unrepresented beneficiary. Thus, the MAC will
review an ALJ's findings of fact or conclusion only when specifically
challenged by an appellant. Under those circumstances, or in the case
of an unrepresented beneficiary appellant, the de novo review standard
will apply. Note that the MAC can remand the case to an ALJ if the MAC
determines that additional evidence is needed or additional action by
the ALJ is required.
c. Escalation of an Appeal From the ALJ Level to the MAC
Section 1869(d)(3)(A) of the Act, as amended by section 521 of
BIPA, provides that if an ALJ does not issue a decision within the 90-
day adjudication period, ``the party requesting the hearing may request
a review by [the MAC], notwithstanding any requirements for a hearing
for purposes of the [appellant's] right to such a review.'' We
originally proposed that cases escalated to the MAC from the ALJ level
under this provision would not be subject to the 90-day adjudication
deadline. As discussed earlier in this preamble, we have decided to
require that the MAC complete its action in an escalated case within
180 days of the receipt of the request for escalation.
We also indicated in the proposed rule that we interpret section
1869(d)(3)(A) of the Act to mean that only the person or entity that
requests the ALJ hearing can escalate the appeal to the MAC if the ALJ
does not meet the 90-day adjudication deadline. For example, where CMS
has entered a case as a party, it may not seek escalation. We did not
receive any comments concerning this proposal. We also stated that we
believed that the statute does not require the MAC to hold a hearing
when a case is escalated from the ALJ to MAC level.
Comment: We received several comments that the MAC be required to
hold a hearing when a case is escalated from the ALJ level. Some
commenters note that proposed Sec. 405.1108(d)(2) allows the MAC to
hold a hearing.
Response: As we noted in the proposed rule, the statute describes
different procedures and standards for adjudication or review for the
various steps of appeal. Just as some appellants in the pre-BIPA
process chose different processes at the carrier hearing level (in-
person hearing, telephone hearing, or on-the-record decision) and made
similar choices at the ALJ level, appellants who consider escalating
their cases will have to determine how important it is in their case to
receive the type of process provided at a particular level. As we
explained in the proposed rule, the statute does not require that the
MAC hold a hearing if a case is escalated to it; rather, the statute
allows escalation ``notwithstanding any requirements for a hearing.''
Moreover, Sec. 405.1108(d)(2) does not establish an appellant's right
to a hearing before the MAC; rather, it gives the MAC the option to
hold a hearing when the MAC concludes that it is necessary. Therefore,
although an appellant who escalates a case to the MAC can request that
the MAC hold a hearing, the MAC has the authority to deny the request
and decide the case on the written record.
We also explained that when the MAC receives a case escalated from
the ALJ level, the MAC might issue a decision, dismiss either the
request for hearing or request for review on procedural grounds, or, if
the administrative record is insufficient to take any of the above
actions, remand the case to the ALJ for specific development and a
decision.
Comment: Some commenters state that it is inappropriate for the MAC
to remand a case to an ALJ that has been escalated to the MAC because
the ALJ has not decided the case within the 90-day period. Instead, the
MAC must correct any deficiencies in the record itself.
Response: We do not anticipate that the MAC will routinely remand
an escalated case to the ALJ. However, we need to retain this option
for those rare occasions in which the MAC cannot resolve the case at
its level, or when the request for escalation and the other remedies
requested by the appellant in the request for review are mutually
exclusive. For example, where an ALJ fails to issue a decision after a
hearing that the appellant does not believe was a fair hearing, the
appellant might escalate at the end of the 90-day adjudication period
for the purpose of requesting a hearing and decision by a different
ALJ. Here, if the MAC concludes that the appellant did not receive a
fair hearing before the first ALJ and determines that the appropriate
remedy is a hearing before a different ALJ, then the MAC can remand
that case accordingly.
C. Miscellaneous Comments
Comment: We received a number of questions about the prioritization
of appeals once the new BIPA appeals process is implemented. In
particular, commenters are concerned that at the post-redetermination
levels of appeal, requests filed on or after the effective date of the
BIPA changes will receive priority because of the new adjudication
deadlines and the possibility of escalation. Commenters request that we
clarify how adjudicators will be expected to prioritize appeal
requests. They recommended that CMS require that appeal requests be
adjudicated in the order in which they are received. In a related
comment, we were asked to clarify what impact, if any, implementation
of the new appeals process will have on appeals that are already in
progress.
[[Page 11468]]
Response: As discussed in section I-E of this preamble, we are
fully cognizant of these important issues and have taken them into
consideration in developing an implementation approach for these new
requirements. In general, we agree with commenters that adjudicators
can be expected to continue to carry out appeals in the order in which
appeal requests are received. Thus, CMS intends to work closely with
the FIs and carriers to ensure that all appeal requests are completed
on a timely basis. Similarly, CMS, SSA, and HHS are working together to
reduce the backlog of cases at the ALJ and MAC levels, and thus,
minimize this problem.
Comment: In the current appeals process, contractors are required
to effectuate appeal decisions within 30 days. A commenter asked what
effectuation time frame(s) FIs and carriers will be required to adhere
to in the new appeals process.
Response: The current appeal regulations do not require carriers or
fiscal intermediaries to effectuate ALJ or MAC decisions within a
specific time frame. The effectuation time frames that our contractors
follow in the current appeals process are based on manual requirements.
Neither BIPA nor MMA impose any statutory requirements for effectuation
of appeals decisions. Nonetheless, it is our intention to maintain the
current manual requirements for effectuation of ALJ and MAC decisions
in the new appeals process. The relevant manual provisions can be found
in the Internet-only Manual (IOM)(Medicare Claims Processing Manual
(Pub. 100-4) at Chapter 29 Sections 60.20.2, 60.22, and 60.24. In
conjunction with implementation of the new appeals process, an
additional section will be added to the IOM detailing the effectuation
time frames for QIC decisions.
Comment: One commenter asks whether the changes implemented by BIPA
also apply to the Medicare Cost Program.
Response: The changes to appeal procedures that are required under
section 521 of BIPA, and Title IX, Subtitle D, of the MMA, apply only
to claim determinations with respect to Part A and Part B of Medicare.
However, section 1876(c)(5) of the Act and Sec. 417.600 of the
Medicare cost plan regulations establish that cost plan enrollees have
a right to an ALJ hearing and a subsequent right to MAC and judicial
review. Thus, the new ALJ and MAC regulations will generally apply to
cost plans. We intend to address this issue in further detail in either
a CMS Ruling or future rulemaking.
Comment: Under the proposed rule, CMS has the option of joining
certain appeals at the ALJ level. A commenter recommends that if CMS
elects to join an appeal, the agency must be required to hire an
attorney to represent it.
Response: In the current claim appeals process, appellants and
other parties retain almost complete discretion to elect or not to
elect an appointed representative. With few exceptions, parties can
choose any person to act as their appointed representative. In the new
appeals process, as in the old, we believe that all decisions with
respect to the selection of an appointed representative should be left
up to the party, regardless of whether the party is a beneficiary or
CMS. Accordingly, the Appointed Representative provisions found in
section 405.910 of the interim final rule maintain our current policy
of giving parties almost complete control over the selection of an
appointed representative. As a party to an appeal, CMS enjoys the same
rights and privileges as any other party, including control over its
selection of an appointed representative.
Comment: One commenter asks us to clarify what, if any, continuing
education will be available to QICs and ALJs.
Response: The new Administrative QIC (AdQIC) will have primary
responsibility for fulfilling the educational and training needs of the
QICs.
III. Response to Comments
Because of the large number of items of correspondence we normally
receive on Federal Register documents published for comments, we are
not able to acknowledge or respond to them individually. We will
consider all comments concerning the provisions of the interim final
rule that we receive by the date and time specified in the DATES
section of this preamble, and respond to those comments in the preamble
to the final rule.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act (PRA) of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment when a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA of 1995 requires that
we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Therefore, we are soliciting public comments on each of these
issues for the information collection requirements discussed below.
The PRA exempts most of the information collection activities
referenced in this Interim Final Rule with Comment. In particular, 5
CFR 1320.4 excludes collection activities during the conduct of
administrative actions such as redeterminations, reconsiderations, and/
or appeals. Specifically, these actions are taken after the initial
determination or a denial of payment. There is, however, one
requirement contained in this rule that is subject to the PRA because
the burden is imposed prior to an administrative action or denial of
payment. This requirement is discussed below.
Section 405.910 Appointed Representatives
In summary, section 405.910 states an individual or entity may
appoint a representative to act on their behalf in exercising their
rights to an initial determination or appeal. This appointment of
representation must be in writing and must include all of the required
elements specified in this section.
The burden associated with this requirement is the time and effort
of the individual or entity to prepare an appointment of representation
containing all of the required information of this section. In an
effort to reduce some of the burden associated with this requirement,
we have developed a standardized format that the individual/entity may
opt to use.
We estimate that approximately 27,277 individuals and entities will
elect to appoint a representative to act on their behalf each year.
Because we have developed the optional standardized form, we estimate
that it should only take approximately 15 minutes to supply the
required information to comply with the requirements of this section.
Therefore, we estimate the total burden to be 6,819 hours on an annual
basis.
[[Page 11469]]
If you wish to view the proposed standardized notices and the
supporting documentation, you can download a copy from the CMS Web site
at http://www.cms.hhs.gov/regulations/pra/.
We have submitted a copy of this final rule to OMB for its review
of the information collection requirements described above. These
requirements are not effective until they have been approved by OMB.
If you comment on any of these information collection and record
keeping requirements, please mail copies directly to the following:
Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Regulations Development and
Issuances Group, Attn: Dawn Willinghan, CMS-4064-IFC Room C5-14-03,
7500 Security Boulevard, Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Christopher Martin, CMS Desk Officer Comments submitted to
OMB may also be e-mailed to the following address: e-mail:
Christopher_Martin@omb.eop.gov or faxed to OMB at (202) 395-6974.
V. Regulatory Impact Analysis
[If you choose to comment on issues in this section, please include the
caption ``Regulatory Impact Analysis'' at the beginning of your
comments.]
A. Introduction
We have examined the impact of this interim final rule with comment
under the criteria of Executive Order 12866 (September 1993, Regulatory
Planning and Review), section 1102(b) of the Social Security Act, the
Regulatory Flexibility Act (RFA) (Pub. L. 96-354), the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, if regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health and safety effects,
distributive impacts, and equity). A regulatory impact analysis (RIA)
must be prepared for major rules with economically significant effects
($100 million or more annually). Although we do not expect this interim
final rule to have a substantial financial impact on beneficiaries,
providers, or suppliers, we anticipate that Federal costs to implement
this rule may exceed the $100 million threshold. Therefore, this is a
major rule and in compliance with Executive Order 12866, we have
prepared the RIA below. In accordance with the provisions of Executive
Order 12866, this regulation was reviewed by the Office of Management
and Budget.
The RFA requires agencies, in issuing certain rules, to analyze
options for regulatory relief of small businesses. For purposes of the
RFA, small entities include small businesses, nonprofit organizations,
and government agencies. Most hospitals and most other providers and
suppliers are small entities, either by nonprofit status or by having
revenues of $25 million or less annually. For purposes of the RFA, all
providers and suppliers affected by this regulation are considered to
be small entities. Individuals and States are not included in the
definition of a small entity.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis for a rule that may have a significant
impact on the operations of a substantial number of small rural
hospitals. This analysis must conform to the provisions of section 603
of the RFA. For purposes of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is located outside of a
Metropolitan Statistical Area and has fewer than 100 beds.
We are not preparing analyses for either the RFA or section 1102(b)
of the Act. As discussed in further detail below, we are uncertain how
many small entities will be affected by this rule. The purpose of this
interim final rule is to improve the efficiency of the claims review
and appeals process, and to the extent that these changes shorten the
appeals process, these regulations should reduce the associated burden
on small entities. Similarly, the impact on small rural hospitals is
likely to be negligible or slightly positive. Therefore, we are
certifying that the interim final rule will not have a significant
impact on a substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that would include any Federal mandate that may result
in expenditure in any one year by State, local, or tribal governments,
in the aggregate, or by the private sector, of $100 million. This rule
will not have this effect on State, local, or tribal governments, or on
the private sector.
B. Scope of the Changes
We did not receive any comments regarding the impact analysis
provided in the proposed rule. Therefore, this analysis largely repeats
the proposed rule impact analysis and estimates. This interim final
rule adopts most of the proposed provisions and adds changes required
under the MMA. The impact of any changes is discussed below.
As discussed in detail above in section II of this preamble, this
interim final rule establishes new regulations concerning appeals
procedures for Medicare claims determinations, consistent with section
1869 of the Act as amended by section 521 of BIPA 2000 and sections
931, 932, 933, 935, 937, 939, and 940 of the MMA.
Among the significant changes required by the BIPA and MMA
amendments are:
Establishing a uniform process for handling Medicare Part
A and Part B appeals, including the introduction of a new level of
appeal for Part A claims.
Revising the time frames for filing a request for a Part A
and Part B appeal.
Requiring appeals notices issued at the redetermination,
reconsideration, and ALJ levels to include specific information.
Imposing a 60-day time frame for redeterminations made by
fiscal intermediaries and carriers.
Requiring the establishment of a new appeals entity, the
qualified independent contractor (QIC), to conduct ``reconsiderations''
of contractors' initial determinations including redeterminations, and
allowing appellants to escalate the case to an ALJ hearing, if
reconsiderations are not completed within 60 days.
Requiring providers and suppliers to present all evidence
for an appeal no later than the QIC reconsideration level, unless the
appellant demonstrates good cause as to why that evidence was not
provided previously.
Establishing uniform amount in controversy thresholds for
ALJ hearings and judicial review that will be adjusted annually by the
medical care component of the Consumer Price Index for all urban
consumers.
Establishing a 90-day time limit for conducting ALJ and
DAB appeals and allowing appellants to escalate a case to the next
level of appeal if ALJs or the MAC do not meet their deadlines.
Establishing a requirement for ``de novo'' review when the
MAC reviews an ALJ decision made after a hearing.
This interim final rule does not establish new rules, or alter
existing rules, with respect to the substantive standards for
determining whether a Medicare claim is payable. Claims that enter the
administrative appeals process represent an extremely small portion of
the total number of claims that Medicare processes each year. In FY
2003, for
[[Page 11470]]
example, Medicare contractors processed 1.05 billion claims; of these
only about 5.7 million were appealed. Thus, the number of Medicare
claims that enter the administrative appeals system represents only
about 0.5 percent of the total number of claims filed with Medicare.
Moreover, the 5.7 million figure represents the total number of claims
appealed, not the number of appellants. From our experience, the vast
majority of appeal requests are filed by a relatively limited group of
appellants. Therefore, the number of providers, physicians and other
suppliers, as well as beneficiaries who enter the appeals process is
far fewer than the 5.7 million claims that are appealed. Given the
small percentage of claims and appellants involved in the
administrative appeals process, we believe that this interim final rule
will have little or no effect on most Medicare providers and suppliers.
The changes set forth are even less likely to affect beneficiaries,
whose appeals are estimated to constitute no more than 3 to 5 percent
of total appeals. As discussed in detail below, however, for those
providers, suppliers, and beneficiaries who do file appeals of Medicare
claim determinations, the effects of this interim final rule should be
positive.
C. Anticipated Effects on Providers, Physicians and Other Suppliers,
and Beneficiaries
We expect that the changes set forth in this interim final rule
will produce substantial improvements in the consistency and efficiency
of the claims appeal process. For the most part, the anticipated
positive impact of the interim final rule on providers, physicians and
other suppliers will be similar to the anticipated effects on
beneficiary appellants, although again the impact on the provider and
supplier communities would be more pronounced due to the much greater
volume of provider and supplier appeals. We include a brief discussion
of the anticipated impact of major changes below.
In general, we do not anticipate that the introduction of these new
appeals procedures will have a substantive impact on the final results
of claims appeals; that is, there is no reason to believe that the use
of QICs, or other changes required by BIPA and the MMA, will result in
any change in the extent to which appeals eventually result in
favorable decisions for providers, suppliers, or beneficiaries. Thus,
we do not anticipate that these changes will have a quantifiable impact
on Medicare claims payments. From an administrative perspective,
however, the introduction of better notice requirements, new
independent review entities, and mandatory physician review of medical
necessity issues should increase appellants' confidence in the Medicare
appeals process. Thus, we believe that the implementation of
requirements that ensure appellants of both the fairness of the
decision-making process and the accuracy and consistency of the
decisions reached can eventually lead to measurable reductions in the
need for the elevation of appeals to the slower, more costly levels of
the appeals system (for example, ALJ hearings and MAC or Federal court
review).
In the short term, it will not be surprising if there is an initial
spike in requests for reconsiderations by QICs given the reduced time
frame for these second level appeals, the availability of new appeal
entities, and the introduction of physician review panels. Similarly,
it is foreseeable that the number of requests for ALJ hearings or MAC
reviews may increase given the establishment of relatively short
decision-making time frames for these entities.
Most of the major changes set forth in this interim final rule (for
example, as the new time frames for appeals decisions) are mandated by
the statutes and thus, are not subject to the Secretary's discretion.
To the extent that we have exercised discretion (for example, in
establishing procedures for conducting appeals), we have attempted to
balance the need for accurate, expeditious appeals decisions with our
responsibilities to implement these changes in a cost-effective manner.
A discussion of the anticipated impacts of key provisions follows.
1. Decision Making Time Frames and Escalation
Perhaps the most significant changes set forth are the reductions
in mandatory time frames for issuing decisions on appeals. In general,
this means faster receipt of decisions and, for favorable decisions,
faster payment. For example, under the interim final rule, the time
frame for a reconsideration (formally called a carrier hearing) has
been reduced from 120 days to 60 days. If the decision is favorable
(that is, the appeal results in a reversal of an initial determination
that a claim could not be paid), effectuation of the favorable decision
will be initiated as soon as a decision is reached. Given the reduced
decision-making time frames, payments will be received substantially
sooner than under the current system. These benefits to appellants will
extend to all levels of the Medicare administrative appeals process.
In addition to the new time frames for making decisions, the
interim final rule will allow appellants the option of escalating an
appeal to an ALJ if the QIC fails to make a decision timely. Escalation
is also available at the appellants' option from the ALJ level to the
MAC if an ALJ fails to issue a hearing decision on a QIC decision
within 90 days of a request for an appeal of a QIC reconsideration (or
similarly from the MAC to Federal court). Clearly, these options will
be a positive change for appellants, who have greater control of their
appeals and a viable recourse during the appeals process if, during one
stage of the appeals process, their appeal is not decided timely.
Overall, these changes will reduce the amount of time that it takes
for a claim to make its way through the administrative appeals process.
In the past, it generally took 3 to 5 years for appealed claims to
reach resolution at the MAC level. We anticipate that a claim will now
take about 18 months to make its way through the entire administrative
appeals process.
2. Transfer of ALJ Function
After the proposed rule was published in the Federal Register, a
significant development occurred involving the transfer of the ALJ
function. Section 931 of the MMA requires the responsibility for the
functions of ALJs for hearing appeals under title XVIII of the Act (and
related provisions on title XI of the Act) to be transferred from the
Commissioner of SSA to the Secretary of the DHHS. For the most part,
organizational responsibility for this function should not have a
material impact on appellants. To the extent that there is an impact,
it should be positive since ALJs will now be able to focus solely on
Medicare issues instead of both SSA and Medicare issues. Note that
although this rule reflects the transfer of the ALJ function from SSA
to DHHS, the rule does not implement this change.
3. Review of Claims by a Panel of Health Care Professionals
Another important change implemented through this interim final
rule is the requirement that a panel of physicians or other qualified
health care professionals conduct QIC reconsiderations when the initial
determination being appealed involves a medical necessity issue. BIPA
mandates that when an initial determination involves a finding on
whether an item or service is reasonable and necessary for the
diagnosis or treatment of an
[[Page 11471]]
illness or injury, a QIC's reconsideration must be based on clinical
experience and medical, technical, and scientific evidence to the
extent applicable. MMA further provides that if a claim is for
treatment, items, or services furnished by a physician, the reviewing
professional must also be a physician. We believe that this change will
give appellants more confidence that a fair decision has been reached,
potentially reducing their need to pursue subsequent appeals. Thus, the
introduction of routine involvement of physicians and other health care
professionals into the appeals process should produce administrative
finality at an earlier level of the process and benefit both appellants
and the Medicare program.
4. Decision Letters and Documentation Requirements
An important aspect of the proposed rule concerns the content of
the notices sent to parties when a contractor upholds its initial
determination. These requirements include a written summary of the
rationale for the redetermination decision and the identification of
any specific missing documentation that contributed to the decision to
deny the claim in question. Since publication of the proposed rule,
section 933(c) of the MMA amended sections 1869(a), 1869(c), and
1869(d) of the Act and established statutory notice requirements that
are very similar to those we proposed. Those statutory requirements
have been incorporated into this interim final rule. We believe that
these policies will provide appellants with the information they need
to build their case early in the appeals process. We believe the impact
of these requirements will be to produce more accurate decisions at the
QIC reconsideration level, based on all the appropriate medical
information, rather than appeals often needing to be raised to an ALJ
before needed documentation is produced. This will give beneficiaries,
providers, and suppliers more detail about why their claim was denied
and allow them to fashion their appeal accordingly.
In addition, section 1869(b)(3) of the Act, as amended by section
933(a)(1) of the MMA, now specifies that providers and suppliers may
not introduce evidence in any appeal that was not presented at the
reconsideration conducted by the QIC. As a matter of policy, we also
have extended this requirement to beneficiaries represented by
providers and suppliers. This will ensure that providers and suppliers
do not attempt to circumvent this evidence requirement by offering to
represent beneficiaries. If the information is not submitted to the
QIC, but instead is presented later in the appeals process, the
evidence will not be considered unless the appellant demonstrates good
cause why the information was not submitted to the QIC. We believe the
end result of these provisions will be that appeals are resolved at the
earliest possible administrative level, which is a positive result for
all appellants.
5. Appeal Rights
In the past, providers could appeal in their own right only when
the item or service was not covered because it constituted custodial
care, was not reasonable and necessary, or in certain other limited
situations when the determinations involved a finding with respect to
the limitation of liability provision under section 1879 of the Act. In
order to appeal in other circumstances, providers must have acted as
representatives of beneficiaries.
In the interim final rule, we permit participating providers to
appeal to the same extent as beneficiaries, or suppliers who take
assignment. Also, consistent with section 1870(h) of the Act, as
amended by section 939(a) of the MMA, we permit a provider or supplier
to appeal a claim denial where that provider or supplier has rendered
items or services to a beneficiary who subsequently dies and there is
no other party available to appeal the denial. We believe these changes
will have several positive impacts on appellants. For example, they
should eliminate any confusion providers may have in determining
whether they have standing to appeal an initial determination, and they
remove the burden for the provider of obtaining an appointment of
representative from a beneficiary. Thus, this interim final rule
expands both provider and supplier appeal rights.
D. Effects on the Medicare Program
In the final analysis, the primary financial impact of implementing
these changes falls upon the government agencies responsible for
conducting appeals; that is, CMS and DHHS. Deciding appeals within
shorter timeframes and establishing new independent review entities to
conduct these appeals entail significant new costs, as does the
development of an appeals-specific data system to track the results of
these appeals. By establishing shorter decisionmaking timeframes and
improved procedures in the Medicare appeals system, BIPA and the MMA
created additional opportunities and incentives for providers,
suppliers, and beneficiaries to request appeals. Also, the statute no
longer provides for any minimum amount in controversy (AIC) for appeals
below the ALJ level, and lowers the AIC from $500 to $100 (plus an
annual increase based on the CPI) for Part B claim determinations that
are appealed to an ALJ. The AIC for Part A claims remains at $100 (plus
an annual increase based on the CPI).
Thus, although we anticipate that the impact of these changes will
be positive for the provider, physician, supplier, and beneficiary
communities, implementing these procedures has generated substantial
costs to the Medicare program. CMS' FY 2004 operating plan included $10
million for QIC implementation start-up costs and $6 million for the
Medicare Appeals System (MAS), which will be used to track appeals
electronically. In addition, CMS plans to spend $6 million from the FY
2004-2005 Medicare Modernization Act appropriation for MAS. Higher
spending is likely in FY 2006, as more of the appeals workload is
transferred over to the QICs, not to mention the additional costs to
implement necessary changes at the ALJ and MAC appeals levels.
E. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
interim final and final rules) that imposes substantial direct
requirement costs on State and local governments, preempts State law,
or otherwise has Federalism implications. This rule does not have a
substantial effect on State or local governments.
VI. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
Federal Register to provide a period for public comment before the
provisions of a document take effect. However, section 553(b) of the
Administrative Procedure Act provides for waiver of this procedure, if
an agency for good cause finds that the notice and comment procedure is
impracticable, unnecessary, or contrary to the public interest and
incorporates a statement of the finding and the reasons for it into the
notice issued.
Subsequent to the publication of the proposed rule on November 15,
2002, the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (P.L. 108-173) was enacted on December 8, 2003. Title IX of
the MMA includes a number of essentially nondiscretionary provisions
that directly affect the Medicare claims appeals process. As discussed
below, we find good cause to incorporate these
[[Page 11472]]
requirements into this interim final rule, rather than to issue a
notice of proposed rulemaking to address statutory changes. Due to the
close relationship between the provisions of the rule that address new
MMA requirements and the policies that were included in the November
15, 2002 proposed rule, we are soliciting comments on all provisions
contained in this interim final rule and, as required under section 902
of the MMA, will publish a subsequent final rule addressing any
comments received in response to this interim final rule not later than
3 years after the publication date of this rule. The BIPA section 521
provisions have previously been subject to comment in the proposed rule
of November 15, 2002. The comments received in response to that
proposed rule are described in this interim final rule, and the
policies included in this interim final rule reflect those comments.
As a rule, the MMA appeals provisions are straightforward and self-
explanatory and do not involve significant agency discretion in how
they should be implemented. For example, section 940 of the MMA
establishes new decisionmaking timeframes for both redeterminations and
reconsiderations, and it would be unnecessary and contrary to the
public interest not to implement these deadlines as soon as possible.
Similarly, section 939 of the MMA establishes new appeal rights for
providers when a beneficiary dies and there is no other party available
to appeal a determination; not implementing this provision as soon as
practicable would again be contrary to the public interest.
Not only would proposed rulemaking be unnecessary and contrary to
the public interest, it would also be impracticable. The BIPA
provisions that were set forth in our proposed rule are in many cases
inextricably linked with the subsequent MMA provisions, and it would be
virtually impossible to finalize the proposed rule without
incorporating the MMA provisions. Moreover, the MMA legislation
mandated provisions that were nearly identical to those set forth in
the proposed rule, such as the requirements concerning the full and
early presentation of evidence under section 933(a) of the MMA and the
new notice requirements for Medicare appeals under 933(c) of the MMA.
Even absent the MMA provisions, the requirements set forth in this
interim final rule would have constituted logical outgrowths of the
proposed rule, and it would be both impracticable and illogical not to
incorporate these requirements into this regulation.
Thus, we believe there is good cause to include the appeals
provisions of the MMA along with the appeals provisions of BIPA (which
were previously addressed in the proposed rule) in this interim final
rule. Publishing these provisions in an interim final rule will give
the public ample opportunity to submit comments. Note that given the
close linkage between many of the proposed requirements and those set
forth under the MMA, we believe it is appropriate to consider comments
on all aspects of this rule, including those that have previously been
subject to notice and comment. Publication of this interim final rule
will serve the public interest by ensuring that Medicare beneficiaries,
providers, and suppliers have access to the improved Medicare appeals
system as expeditiously as possible, consistent with congressional
intent.
List of Subjects
42 CFR Part 401
Claims, Freedom of information, Health facilities, Medicare,
Privacy.
42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 401--GENERAL ADMINISTRATIVE REQUIREMENTS
Subpart B--Confidentiality and Disclosure
0
1. The authority citation for part 401 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh). Subpart F is also issued under the
authority of the Federal Claims Collection Act (31 U.S.C. 3711).
0
2. Amend Sec. 401.108 by revising paragraph (c) to read as follows:
Sec. 401.108 CMS rulings.
* * * * *
(c) CMS Rulings are published under the authority of the
Administrator, CMS. They are binding on all CMS components, on all HHS
components that adjudicate matters under the jurisdiction of CMS, and
on the Social Security Administration to the extent that components of
the Social Security Administration adjudicate matters pertaining to
Medicare Part A and Medicare Part B under the jurisdiction of CMS.
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
0
3. The authority citation for part 405 continues to read as follows:
Authority: Secs. 205(a) 1102, 1861, 1862(a), 1869, 1871, 1874,
1881, and 1886(k) of the Social Security Act (42 U.S.C. 405(a) 1302,
1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 1395ww(k)), and
Sec. 353 of the Public Health Service Act (42 U.S.C. 263a).
0
4. Add a new subpart I, Sec. 405.900 through Sec. 405.1140 to read as
follows:
Subpart I--Determinations, Redeterminations, Reconsiderations, and
Appeals Under Original Medicare (Parts A and B)
Sec.
405.900 Basis and scope.
405.902 Definitions.
405.904 Medicare initial determinations, redeterminations and
appeals: General description.
405.906. Parties to the initial determinations, redeterminations,
reconsiderations, hearings and reviews.
405.908 Medicaid State agencies.
405.910 Appointed representatives.
405.912 Assignment of appeal rights.
Initial Determinations
405.920 Initial determinations.
405.921 Notice of initial determination.
405.922 Time frame for processing initial determinations.
405.924 Actions that are initial determinations.
405.926 Actions that are not initial determinations.
405.927 Initial determinations subject to the reopenings process.
405.928 Effect of the initial determination.
Redeterminations
405.940 Right to a redetermination.
405.942 Time frame for filing a request for a redetermination.
405.944 Place and method of filing a request for a redetermination.
405.946 Evidence to be submitted with the redetermination request.
405.948 Conduct of a redetermination.
405.950 Time frame for making a redetermination.
405.952 Withdrawal or dismissal of a request for a redetermination.
405.954 Redetermination.
405.956 Notice of a redetermination.
405.958 Effect of a redetermination.
Reconsideration
405.960 Right to a reconsideration.
405.962 Time frame for filing a request for a reconsideration.
405.964 Place and method of filing a request for a reconsideration.
405.966 Evidence to be submitted with the reconsideration request.
[[Page 11473]]
405.968 Conduct of a reconsideration.
405.970 Time frame for making a reconsideration.
405.972 Withdrawal or dismissal of a request for a reconsideration.
405.974 Reconsideration.
405.976 Notice of a reconsideration.
405.978 Effect of a reconsideration.
Reopenings
405.980 Reopenings of initial determinations, redeterminations, and
reconsiderations, hearings and reviews.
405.982 Notice of a revised determination or decision.
405.984 Effect of a revised determination or decision.
405.986 Good cause for reopening.
Expedited Access to Judicial Review
405.990 Expedited access to judicial review.
ALJ Hearings
405.1000 Hearing before an ALJ: General rule.
405.1002 Right to an ALJ hearing.
405.1004 Right to ALJ review of QIC notice of dismissal.
405.1006 Amount in controversy required to request an ALJ hearing
and judicial review.
405.1008 Parties to an ALJ hearing.
405.1010 When CMS or its contractors may participate in an ALJ
hearing.
405.1012 When CMS or its contractors may be a party to a hearing.
405.1014 Request for an ALJ hearing.
405.1016 Time frames for deciding an appeal before an ALJ.
405.1018 Submitting evidence before the ALJ hearing.
405.1020 Time and place for a hearing before an ALJ.
405.1022 Notice of a hearing before an ALJ.
405.1024 Objections to the issues.
405.1026 Disqualification of the ALJ.
405.1028 Prehearing case review of evidence submitted to the ALJ by
the appellant.
405.1030 ALJ hearing procedures.
405.1032 Issues before an ALJ.
405.1034 When an ALJ may remand a case to the QIC.
405.1036 Description of an ALJ hearing process.
405.1037 Discovery.
405.1038 Deciding a case without a hearing before an ALJ.
405.1040 Prehearing and posthearing conferences.
405.1042 The administrative record.
405.1044 Consolidated hearing before an ALJ.
405.1046 Notice of an ALJ decision.
405.1048 The effect of an ALJ's decision.
405.1050 Removal of a hearing request from an ALJ to the MAC.
405.1052 Dismissal of a request for a hearing before an ALJ.
405.1054 Effect of dismissal of a request for a hearing before an
ALJ.
Applicability of Medicare Coverage Policies
405.1060 Applicability of nation coverage determinations (NCDs).
405.1062 Applicability of local coverage determinations and other
policies not binding on the ALJ and MAC.
405.1063 Applicability of CMS rulings.
405.1064 ALJ decisions involving statistical samples.
Medicare Appeals Council Review
405.1100 Medicare Appeals Council review: General.
405.1102 Request for MAC review when an ALJ issues decision or
dismissal.
405.1104 Request for MAC review when an ALJ does not issue a
decision timely.
405.1106 Where a request for review or escalation may be filed.
405.1108 MAC actions when request for review or escalation is filed.
405.1110 MAC reviews on its own motion.
405.1112 Content of request for review.
405.1114 Dismissal of request for review.
405.1116 Effect of dismissal of request for MAC review or request
for hearing.
405.1118 Obtaining evidence from the MAC.
405.1120 Filling briefs with the MAC.
405.1122 What evidence may be submitted to the MAC.
405.1124 Oral argument.
405.1126 Case remanded by the MAC.
405.1128 Action of the MAC.
405.1130 Effect of the MAC's decision.
405.1132 Request for escalation to Federal district court.
405.1134 Extension of time to file action in Federal district court.
405.1136 Judicial review.
405.1138 Case remanded by a Federal district court.
405.1140 MAC review of ALJ decision in a case remanded by a Federal
district court.
Subpart I--Determinations, Redeterminations, Reconsiderations, and
Appeals Under Original Medicare (Part A and Part B)
Sec. 405.900 Basis and scope.
(a) Statutory basis. This subpart is based on the provisions of
sections 1869 (a) through (e) and (g) of the Act.
(b) Scope. This subpart establishes the requirements for appeals of
initial determinations for benefits under Part A or Part B of Medicare,
including the following:
(1) The initial determination of whether an individual is entitled
to benefits under Part A or Part B. (Regulations governing
reconsiderations of these initial determinations are at 20 CFR, part
404, subpart J).
(2) The initial determination of the amount of benefits available
to an individual under Part A or Part B.
(3) Any other initial determination relating to a claim for
benefits under Part A or Part B, including an initial determination
made by a quality improvement organization under section 1154(a)(2) of
the Act or by an entity under contract with the Secretary (other than a
contract under section 1852 of the Act) to administer provisions of
titles XVIII or XI of the Act.
Sec. 405.902 Definitions.
For the purposes of this subpart, the term--
ALJ means an Administrative Law Judge of the Department of Health
and Human Services.
Appellant means the beneficiary, assignee or other person or entity
that has filed and pursued an appeal concerning a particular initial
determination. Designation as an appellant does not in itself convey
standing to appeal the determination in question.
Appointed representative means an individual appointed by a party
to represent the party in a Medicare claim or claim appeal.
Assignee means:
(1) A supplier that furnishes items or services to a beneficiary
and has accepted a valid assignment of a claim or
(2) A provider or supplier that furnishes items or services to a
beneficiary, who is not already a party, and has accepted a valid
assignment of the right to appeal a claim executed by the beneficiary.
Assignment of a claim means the transfer by a beneficiary of his or
her claim for payment to the supplier in return for the latter's
promise not to charge more for his or her services than what the
carrier finds to be the Medicare-approved amount, as provided in Sec.
424.55 and Sec. 424.56 of this chapter.
Assignment of appeal rights means the transfer by a beneficiary of
his or her right to appeal under this subpart to a provider or supplier
who is not already a party, as provided in section 1869(b)(1)(C) of the
Act.
Assignor means a beneficiary whose provider of services or supplier
has taken assignment of a claim or an appeal of a claim.
Authorized representative means an individual authorized under
State or other applicable law to act on behalf of a beneficiary or
other party involved in the appeal. The authorized representative will
have all of the rights and responsibilities of a beneficiary or party,
as applicable, throughout the appeals process.
Beneficiary means an individual who is enrolled to receive benefits
under Medicare Part A or Part B.
Carrier means an organization that has entered into a contract with
the Secretary in accordance to section 1842 of the Act and is
authorized to make determinations for Part B of title XVIII of the Act.
[[Page 11474]]
Clean claim means a claim that has no defect or impropriety
(including any lack of required substantiating documentation) or
particular circumstance requiring special treatment that prevents
timely payment from being made on the claim under title XVIII within
the time periods specified in sections 1816(c) and 1842(c) of the Act.
Family member means for purposes of the QIC reconsideration panel
under Sec. 405.968 the following persons as they relate to the
physician or healthcare provider.
(1) The spouse (other than a spouse who is legally separated from
the physician or health care professional under a decree of divorce or
separate maintenance);
(2) Children (including stepchildren and legally adopted children);
(3) Grandchildren;
(4) Parents; and
(5) Grandparents.
Fiscal Intermediary means an organization that has entered into a
contract with CMS in accordance with section 1816 of the Act and is
authorized to make determinations and payments for Part A of title
XVIII of the Act, and Part B provider services as specified in Sec.
421.5(c) of this chapter.
MAC stands for the Medicare Appeals Council within the Departmental
Appeals Board of the U.S. Department of Health and Human Services.
Party means an individual or entity listed in Sec. 405.906 that
has standing to appeal an initial determination and/or a subsequent
administrative appeal determination.
Provider means a hospital, critical access hospital, skilled
nursing facility, comprehensive outpatient rehabilitation facility,
home health agency, or hospice that has in effect an agreement to
participate in Medicare, or clinic, rehabilitation agency, or public
health agency that has in effect a similar agreement, but only to
furnish outpatient physical therapy or speech pathology services, or a
community mental health center that has in effect a similar agreement
but only to furnish partial hospitalization services.
Qualified Independent Contractor (QIC) means an entity which
contracts with the Secretary in accordance with section 1869 of the Act
to perform reconsiderations under Sec. 405.960 through Sec. 405.978.
Quality Improvement Organization (QIO) means an entity that
contracts with the Secretary in accordance with sections 1152 and 1153
of the Act and 42 CFR subchapter F, to perform the functions described
in section 1154 of the Act and 42 CFR subchapter F, including expedited
determinations as described in Sec. 405.1200 through Sec. 405.1208.
Reliable evidence means evidence that is relevant, credible, and
material.
Remand means to vacate a lower level appeal decision, or a portion
of the decision, and return the case, or a portion of the case, to that
level for a new decision.
Similar fault means to obtain, retain, convert, seek, or receive
Medicare funds to which a person knows or should reasonably be expected
to know that he or she or another for whose benefit Medicare funds are
obtained, retained, converted, sought, or received is not legally
entitled. This includes, but is not limited to, a failure to
demonstrate that he or she filed a proper claim as defined in part 411
of this chapter.
Supplier means, unless the context otherwise requires, a physician
or other practitioner, a facility, or other entity (other than a
provider of services) that furnishes items or services under Medicare.
Vacate means to set aside a previous action.
Sec. 405.904 Medicare initial determinations, redeterminations and
appeals: General description.
(a) General overview. (1) Entitlement appeals. The SSA makes an
initial determination on an application for Medicare benefits and/or
entitlement of an individual to receive Medicare benefits. A
beneficiary who is dissatisfied with the initial determination may
request, and SSA will perform, a reconsideration in accordance with 20
CFR part 404, subpart J if the requirements for obtaining a
reconsideration are met. Following the reconsideration, the beneficiary
may request a hearing before an Administrative Law Judge (ALJ) under
this subpart (42 CFR part 405, subpart I). If the beneficiary obtains a
hearing before an ALJ and is dissatisfied with the decision of the ALJ,
he or she may request the Medicare Appeals Council (MAC) to review the
case. Following the action of the MAC, the beneficiary may be entitled
to file suit in Federal district court.
(2) Claim appeals. The Medicare contractor makes an initial
determination when a claim for Medicare benefits under Part A or Part B
is submitted. A beneficiary who is dissatisfied with the initial
determination may request that the contractor perform a redetermination
of the claim if the requirements for obtaining a redetermination are
met. Following the contractor's redetermination, the beneficiary may
request, and the Qualified Independent Contractor (QIC) will perform, a
reconsideration of the claim if the requirements for obtaining a
reconsideration are met. Following the reconsideration, the beneficiary
may request, and the ALJ will conduct a hearing if the amount remaining
in controversy and other requirements for an ALJ hearing are met. If
the beneficiary is dissatisfied with the decision of the ALJ, he or she
may request the MAC to review the case. If the MAC reviews the case and
issues a decision, and the beneficiary is dissatisfied with the
decision, the beneficiary may file suit in Federal district court if
the amount remaining in controversy and the other requirements for
judicial review are met.
(b) Non-beneficiary appellants. In general, the procedures
described in paragraph (a) of this section are also available to
parties other than beneficiaries either directly or through a
representative acting on a party's behalf, consistent with the
requirements of this subpart I. A provider generally has the right to
judicial review only as provided under section 1879(d) of the Act; that
is, when a determination involves a finding that services are not
covered because--
(1) They were custodial care (see Sec. 411.15(g) of this chapter);
they were not reasonable and necessary (see Sec. 411.15(k) of this
chapter); they did not qualify as covered home health services because
the beneficiary was not confined to the home or did not need skilled
nursing care on an intermittent basis (see Sec. 409.42(a) and (c)(1)
of this chapter); or they were hospice services provided to a non-
terminally ill individual (see Sec. 418.22 of this chapter); and
(2) Either the provider or the beneficiary, or both, knew or could
reasonably be expected to know that those services were not covered
under Medicare.
Sec. 405.906 Parties to the initial determinations, redeterminations,
reconsiderations, hearings and reviews.
(a) Parties to the initial determination. The parties to the
initial determination are the following individuals and entities:
(1) A beneficiary who files a claim for payment under Medicare Part
A or Part B or has had a claim for payment filed on his or her behalf,
or in the case of a deceased beneficiary, when there is no estate, any
person obligated to make or entitled to receive payment in accordance
with part 424, subpart E of this chapter. Payment by a third party
payer does not entitle that entity to party status.
[[Page 11475]]
(2) A supplier who has accepted assignment for items or services
furnished to a beneficiary that are at issue in the claim.
(3) A provider of services who files a claim for items or services
furnished to a beneficiary.
(b) Parties to the redetermination, reconsideration, hearing and
MAC. The parties to the redetermination, reconsideration, hearing, and
MAC review are--
(1) The parties to the initial determination in accordance with
paragraph (a) of this section, except under paragraph (a)(1) of this
section where a beneficiary has assigned appeal rights under Sec.
405.912;
(2) A State agency in accordance with Sec. 405.908;
(3) A provider or supplier that has accepted an assignment of
appeal rights from the beneficiary according to Sec. 405.912;
(4) A non-participating physician not billing on an assigned basis
who, in accordance with section 1842(l) of the Act, may be liable to
refund monies collected for services furnished to the beneficiary
because those services were denied on the basis of section 1862(a)(1)
of the Act; and
(5) A non-participating supplier not billing on an assigned basis
who, in accordance with sections 1834(a)(18) and 1834(j)(4) of the Act,
may be liable to refund monies collected for items furnished to the
beneficiary.
(c) Appeals by providers and suppliers when there is no other party
available. If a provider or supplier is not already a party to the
proceeding in accordance with paragraphs (a) and (b) of this section, a
provider of services or supplier may appeal an initial determination
relating to services it rendered to a beneficiary who subsequently dies
if there is no other party available to appeal the determination.
Sec. 405.908 Medicaid State agencies.
When a beneficiary is enrolled to receive benefits under both
Medicare and Medicaid, the Medicaid State agency may file a request for
an appeal with respect to a claim for items or services furnished to a
dually eligible beneficiary only for services for which the Medicaid
State agency has made payment, or for which it may be liable. A
Medicaid State agency is considered a party only when it files a timely
redetermination request with respect to a claim for items or services
furnished to a beneficiary in accordance with 42 CFR parts 940 through
958. If a State agency files a request for redetermination, it may
retain party status at the QIC, ALJ, MAC, and judicial review levels.
Sec. 405.910 Appointed representatives.
(a) Scope of representation. An appointed representative may act on
behalf of an individual or entity in exercising his or her right to an
initial determination or appeal. Appointed representatives do not have
party status and may take action only on behalf of the individual or
entity that they represent.
(b) Persons not qualified. A party may not name as an appointed
representative, an individual who is disqualified, suspended, or
otherwise prohibited by law from acting as a representative in any
proceedings before DHHS, or in entitlement appeals, before SSA.
(c) Completing a valid appointment. For purposes of this subpart,
an appointment of representation must:
(1) Be in writing and signed and dated by both the party and
individual agreeing to be the representative;
(2) Provide a statement appointing the representative to act on
behalf of the party, and in the case of a beneficiary, authorizing the
adjudicator to release identifiable health information to the appointed
representative.
(3) Include a written explanation of the purpose and scope of the
representation;
(4) Contain both the party's and appointed representative's name,
phone number, and address;
(5) Identify the beneficiary's Medicare health insurance claim
number;
(6) Include the appointed representative's professional status or
relationship to the party;
(7) Be filed with the entity processing the party's initial
determination or appeal.
(d) Curing a defective appointment of representative.
(1) If any one of the seven elements named in paragraph (c) of this
section is missing from the appointment, the adjudicator should contact
the party and provide a description of the missing documentation or
information.
(2) Unless the defect is cured, the prospective appointed
representative lacks the authority to act on behalf of the party, and
is not entitled to obtain or receive any information related to the
appeal, including the appeal decision.
(e) Duration of appointment. (1) Unless revoked, an appointment is
considered valid for 1 year from the date that the Appointment of
Representative (AOR) form or other conforming written instrument
contains the signatures of both the party and the appointed
representative.
(2) To initiate an appeal within the 1-year time frame, the
representative must file a copy of the AOR form, or other conforming
written instrument, with the appeal request. Unless revoked, the
representation is valid for the duration of an individual's appeal of
an initial determination.
(3) For an initial determination of a Medicare Secondary Payer
recovery claim, an appointment signed in connection with the party's
efforts to make a claim for third party payment is valid from the date
that appointment is signed for the duration of any subsequent appeal,
unless the appointment is specifically revoked.
(f) Appointed representative fees. (1) General rule. An appointed
representative for a beneficiary who wishes to charge a fee for
services rendered in connection with an appeal before the Secretary
must obtain approval of the fee from the Secretary. Services rendered
below the ALJ level are not considered proceedings before the
Secretary.
(2) No fees or costs against trust funds. No award of attorney or
any other representative's fees or any costs in connection with an
appeal may be made against the Medicare trust funds.
(3) Special rules for providers and suppliers. A provider or
supplier that furnished the items or services to a beneficiary that are
the subject of the appeal may represent that beneficiary in an appeal
under this subpart, but the provider or supplier may not charge the
beneficiary any fee associated with the representation. If a provider
or supplier furnishes services or items to a beneficiary, the provider
or supplier may not represent the beneficiary on the issues described
in section 1879(a)(2) of the Act, unless the provider or supplier
waives the right to payment from the beneficiary for the services or
items involved in the appeal.
(4) Special rules for purposes of third party payment. The
Secretary does not review fee arrangements made by a beneficiary for
purposes of making a claim for third party payment (as defined in 42
CFR 411.21) even though the representation may ultimately include
representation for a Medicare Secondary Payer recovery claim.
(5) Reasonableness of representative fees. In determining the
reasonableness of a representative's fee, the Secretary will not apply
the test specified in sections 206(a)(2) and (a)(3) of the Act.
(g) Responsibilities of an appointed representative. (1) An
appointed representative has an affirmative duty to--
(i) Inform the party of the scope and responsibilities of the
representation;
[[Page 11476]]
(ii) Inform the party of the status of the appeal and the results
of actions taken on behalf of the party, including, but not limited to,
notification of appeal determinations, decisions, and further appeal
rights;
(iii) Disclose to a beneficiary any financial risk and liability of
a non-assigned claim that the beneficiary may have;
(iv) Not act contrary to the interest of the party; and
(v) Comply with all laws and CMS regulations, CMS Rulings, and
instructions.
(2) An appeal request filed by a provider or supplier described in
paragraph (f)(3) of this section must also include a statement signed
by the provider or supplier stating that no financial liability is
imposed on the beneficiary in connection with that representation. If
applicable, the appeal request must also include a signed statement
that the provider or supplier waives the right to payment from the
beneficiary for services or items regarding issues described in section
1879(a)(2) of the Act.
(h) Authority of an appointed representative. An appointed
representative may, on behalf of the party--
(1) Obtain appeals information about the claim to the same extent
as the party;
(2) Submit evidence;
(3) Make statements about facts and law; and
(4) Make any request, or give, or receive, any notice about the
appeal proceedings.
(i) Notice or request to an appointed representative.
(1) Initial determinations. When a contractor takes an action or
issues an initial determination, it sends the action or notice to the
party.
(2) Appeals. When a contractor, QIC, ALJ, or the MAC takes an
action or issues a redetermination, reconsideration, or appeal
decision, in connection with an initial determination, it sends notice
of the action to the appointed representative.
(3) The contractor, QIC, ALJ or MAC sends any requests for
information or evidence regarding a claim that is appealed to the
appointed representative. The contractor sends any requests for
information or evidence regarding an initial determination to the
party.
(4) For initial determinations and appeals involving Medicare
Secondary Payer recovery claims, the adjudicator sends notices and
requests to both the beneficiary and the appointed representative.
(j) Effect of notice or request to an appointed representative. A
notice or request sent to the appointed representative has the same
force and effect as if was sent to the party.
(k) Information available to the appointed representative. An
appointed representative may obtain any and all appeals information
applicable to the claim at issue that is available to the party.
(l) Delegation of appointment by appointed representative. An
appointed representative may not designate another individual to act as
the appointed representative of the party unless--
(1) The appointed representative provides written notice to the
party of the appointed representative's intent to delegate to another
individual. The notice must include:
(i) The name of the designee; and
(ii) The designee's acceptance to be obligated and comply with the
requirements of representation under this subpart.
(2) The party accepts the designation as evidenced by a written
statement signed by the party. This signed statement is not required
when the appointed representative and designee are attorneys in the
same law firm or organization.
(m) Revoking the appointment of representative. (1) A party may
revoke an appointment of representative without cause at any time.
(2) Revocation. Revocation is not effective until the adjudicator
receives a signed, written statement from the party.
(3) Death of the party. (i) The death of a party terminates the
authority of the appointed representative, except as specified in
paragraph (m)(3)(ii) of this section.
(ii) A party's death does not terminate an appeal that is in
progress if another individual or entity may be entitled to receive or
obligated to make payment for the items or services that are the
subject of the appeal. The appointment of representative remains in
effect for the duration of the appeal except for MSP recovery claims.
Sec. 405.912 Assignment of appeal rights.
(a) Who may be an assignee. Only a provider, or supplier that--
(1) Is not a party to the initial determination as defined in Sec.
405.906; and
(2) Furnished an item or service to the beneficiary may seek
assignment of appeal rights from the beneficiary for that item or
service.
(b) Who may not be an assignee. An individual or entity who is not
a provider or supplier may not be an assignee. A provider or supplier
that furnishes an item or service to a beneficiary may not seek
assignment for that item or service when considered a party to the
initial determination as defined in Sec. 405.906.
(c) Requirements for a valid assignment of appeal right. The
assignment of appeal rights must--
(1) Be executed using a CMS standard form;
(2) Be in writing and signed by both the beneficiary assigning his
or her appeal rights and by the assignee;
(3) Indicate the item or service for which the assignment of appeal
rights is authorized;
(4) Contain a waiver of the assignee's right to collect payment
from the assignor for the specific item or service that are the subject
of the appeal except as set forth in paragraph (d)(2) of this section;
and
(5) Be submitted at the same time the request for redetermination
or other appeal is filed.
(d) Waiver of right to collect payment. (1) Except as specified in
paragraph (d)(2) of this section, the assignee must waive the right to
collect payment for the item or service for which the assignment of
appeal rights is made. If the assignment is revoked under paragraph
(g)(2) or (g)(3) of this section, the waiver of the right to collect
payment nevertheless remains valid. A waiver of the right to collect
payment remains in effect regardless of the outcome of the appeal
decision.
(2) The assignee is not prohibited from recovering payment
associated with coinsurance or deductibles or when an advance
beneficiary notice is properly executed.
(e) Duration of a valid assignment of appeal rights. Unless
revoked, the assignment of appeal rights is valid for all
administrative and judicial review associated with the item or service
as indicated on the standard CMS form, even in the event of the death
of the assignor.
(f) Rights of the assignee. When a valid assignment of appeal
rights is executed, the assignor transfers all appeal rights involving
the particular item or service to the assignee. These include, but are
not limited to--
(1) Obtaining information about the claim to the same extent as the
assignor;
(2) Submitting evidence;
(3) Making statements about facts or law; and
(4) Making any request, or giving, or receiving any notice about
appeal proceedings.
(g) Revocation of assignment. When an assignment of appeal rights
is
[[Page 11477]]
revoked, the rights to appeal revert to the assignee. An assignment of
appeal rights may be revoked in any of the following ways:
(1) In writing by the assignor. The revocation of assignment must
be delivered to the adjudicator and the assignor, and is effective on
the date of receipt by the adjudicator.
(2) By abandonment if the assignee does not file an appeal of an
unfavorable decision.
(3) By act or omission by the assignee that is determined by an
adjudicator to be contrary to the financial interests of the assignor.
(h) Responsibilities of the assignee. Once the assignee files an
appeal, the assignee becomes a party to the appeal. The assignee must
meet all requirements for appeals that apply to any other party.
Initial Determinations
Sec. 405.920 Initial determinations.
After a claim is filed with the appropriate contractor in the
manner and form described in subpart C of part 424 of this chapter, the
contractor must--
(a) Determine if the items and services furnished are covered or
otherwise reimbursable under title XVIII of the Act;
(b) Determine any amounts payable and make payment accordingly; and
(c) Notify the parties to the initial determination of the
determination in accordance with Sec. 405.921.
Sec. 405.921 Notice of initial determination.
(a) Notice of initial determination sent to the beneficiary. (1)
The notice must be written in a manner calculated to be understood by
the beneficiary, and sent to the last known address of the beneficiary;
(2) Content of the notice. The notice of initial determination must
contain--
(i) The reasons for the determination, including whether a local
medical review policy, a local coverage determination, or national
coverage determination was applied;
(ii) The procedures for obtaining additional information concerning
the contractor's determination, such as a specific provision of the
policy, manual, law or regulation used in making the determination;
(iii) Information on the right to a redetermination if the
beneficiary is dissatisfied with the outcome of the initial
determination and instructions on how to request a redetermination; and
(iv) Any other requirements specified by CMS.
(b) Notice of initial determination sent to providers and
suppliers.
(1) An electronic or paper remittance advice (RA) notice is the
notice of initial determination sent to providers and suppliers that
accept assignment. The electronic RA must comply with the format and
content requirements of the standard adopted for national use by
covered entities under the Health Insurance Portability and
Accountability Act (HIPAA) and related CMS manual instructions. When a
paper RA is mailed, it must comply with CMS manual instructions that
parallel the HIPAA data content and coding requirements.
(2) The notice of initial determination must contain:
(i) The basis for any full or partial denial determination of
services or items on the claim;
(ii) Information on the right to a redetermination if the provider
or supplier is dissatisfied with the outcome of the initial
determination;
(iii) All applicable claim adjustment reason and remark codes to
explain the determination;
(iv) The source of the RA and who may be contacted if the provider
or supplier requires further information;
(v) All content requirements of the standard adopted for national
use by covered entities under HIPAA; and
(vi) Any other requirements specified by CMS.
Sec. 405.922 Time frame for processing initial determinations.
The contractor issues initial determinations on clean claims within
30 days of receipt if they are submitted by or on behalf of the
beneficiary who received the items and/or services; otherwise, interest
must be paid at the rate specified at 31 U.S.C. 3902(a) for the period
beginning on the day after the required payment date and ending on the
date payment is made.
Sec. 405.924 Actions that are initial determinations.
(a) Applications and entitlement of individuals. SSA makes initial
determinations and processes reconsiderations with respect to an
individual on the following:
(1) A determination with respect to entitlement to hospital
insurance or supplementary medical insurance under Medicare.
(2) A disallowance of an individual's application for entitlement
to hospital or supplementary medical insurance, if the individual fails
to submit evidence requested by SSA to support the application. (SSA
specifies in the initial determination the conditions of entitlement
that the applicant failed to establish by not submitting the requested
evidence).
(3) A denial of a request for withdrawal of an application for
hospital or supplementary medical insurance, or a denial of a request
for cancellation of a request for withdrawal.
(4) A determination as to whether an individual, previously
determined as entitled to hospital or supplementary medical insurance,
is no longer entitled to those benefits, including a determination
based on nonpayment of premiums.
(b) Claims made by or on behalf of beneficiaries. The Medicare
contractor makes initial determinations regarding claims for benefits
under Medicare Part A and Part B. A finding that a request for payment
or other submission does not meet the requirements for a Medicare claim
as defined in Sec. 424.32 of this chapter, is not considered an
initial determination. An initial determination for purposes of this
subpart includes, but is not limited to, determinations with respect
to:
(1) If the items and/or services furnished are covered under title
XVIII;
(2) In the case of determinations on the basis of section 1879(b)
or (c) of the Act, if the beneficiary, or supplier who accepts
assignment under Sec. 424.55 of this chapter knew, or could reasonably
have expected to know at the time the items or services were furnished,
that the items or services were not covered;
(3) In the case of determinations on the basis of section
1842(l)(1) of the Act, if the beneficiary or physician knew, or could
reasonably have expected to know at the time the services were
furnished, that the services were not covered;
(4) Whether the deductible is met;
(5) The computation of the coinsurance amount;
(6) The number of days used for inpatient hospital, psychiatric
hospital, or post-hospital extended care;
(7) The number of home health visits used;
(8) Periods of hospice care used;
(9) Requirements for certification and plan of treatment for
physician services, durable medical equipment, therapies, inpatient
hospitalization, skilled nursing care, home health, hospice, and
partial hospitalization services;
(10) The beginning and ending of a spell of illness, including a
determination made under the presumptions established under Sec.
409.60(c)(2) of this chapter, and as specified in Sec. 409.60(c)(4) of
this chapter;
(11) The medical necessity of services, or the reasonableness or
appropriateness of placement of an individual at an
[[Page 11478]]
acute level of patient care made by the Quality Improvement
Organization (QIO) on behalf of the contractor in accordance with Sec.
476.86(c)(1) of this chapter;
(12) Any other issues having a present or potential effect on the
amount of benefits to be paid under Part A or Part B of Medicare,
including a determination as to whether there was an underpayment of
benefits paid under Part A or Part B, and if so, the amount thereof;
(13) If a waiver of adjustment or recovery under sections 1870(b)
and (c) of the Act is appropriate:
(i) When an overpayment of hospital insurance benefits or
supplementary medical insurance benefits (including a payment under
section 1814(e) of the Act) was made for an individual; or
(ii) For a Medicare Secondary Payer recovery claim against a
beneficiary or against a provider or supplier.
(14) If a particular claim is not payable by Medicare based upon
the application of the Medicare Secondary Payer provisions of section
1862(b) of the Act.
(15) Under the Medicare Secondary Payer provisions of sections
1862(b) of the Act that Medicare has a recovery claim against a
provider, supplier, or beneficiary for services or items that were
already paid by the Medicare program, except when the Medicare
Secondary Payer recovery claim against the provider or supplier is
based upon failure to file a proper claim as defined in part 411 of
this chapter because this action is a reopening.
(c) Determinations by QIOs. An initial determination for purposes
of this subpart also includes a determination made by a QIO that:
(1) A provider can terminate services provided to an individual
when a physician certified that failure to continue the provision of
those services is likely to place the individual's health at
significant risk; or
(2) A provider can discharge an individual from the provider of
services.
Sec. 405.926 Actions that are not initial determinations.
Actions that are not initial determinations and are not appealable
under this subpart include, but are not limited to--
(a) Any determination for which CMS has sole responsibility, for
example--
(1) If an entity meets the conditions for participation in the
program;
(2) If an independent laboratory meets the conditions for coverage
of services;
(b) The coinsurance amounts prescribed by regulation for outpatient
services under the prospective payment system;
(c) Any issue regarding the computation of the payment amount of
program reimbursement of general applicability for which CMS or a
carrier has sole responsibility under Part B such as the establishment
of a fee schedule set forth in part 414 of this chapter, or an inherent
reasonableness adjustment pursuant to Sec. 405.502(g), and any issue
regarding the cost report settlement process under Part A;
(d) Whether an individual's appeal meets the qualifications for
expedited access to judicial review provided in Sec. 405.990;
(e) Any determination regarding whether a Medicare overpayment
claim must be compromised, or collection action terminated or suspended
under the Federal Claims Collection Act of 1966, as amended;
(f) Determinations regarding the transfer or discharge of residents
of skilled nursing facilities in accordance with Sec. 483.12 of this
chapter;
(g) Determinations regarding the readmission screening and annual
resident review processes required by subparts C and E of part 483 of
this chapter;
(h) Determinations for a waiver of Medicare Secondary Payer
recovery under section 1862(b) of the Act;
(i) Determinations for a waiver of interest;
(j) Determinations for a finding regarding the general
applicability of the Medicare Secondary Payer provisions (as opposed to
the application in a particular case);
(k) Determinations under the Medicare Secondary Payer provisions of
section 1862(b) of the Act that Medicare has a recovery against an
entity that was or is required or responsible (directly, as an insurer
or self-insurer, as a third party administrator, as an employer that
sponsors or contributes to a group health plan or a large group health
plan, or otherwise,) to make payment for services or items that were
already reimbursed by the Medicare program;
(l) A contractor's, QIC's, ALJ's, or MAC's determination or
decision to reopen or not to reopen an initial determination,
redetermination, reconsideration, hearing decision, or review decision;
(m) Determinations that CMS or its contractors may participate in
or act as parties in an ALJ hearing or MAC review;
(n) Determinations that a provider or supplier failed to submit a
claim or failed to submit a timely claim despite being requested to do
so by the beneficiary or the beneficiary's subrogee;
(o) Determinations with respect to whether an entity qualifies for
an exception to the electronic claims submission requirement under part
424 of this chapter;
(p) Determinations by the Secretary of sustained or high levels of
payment errors in accordance with section 1893(f)(3)(A) of the Act;
(q) A contractor's prior determination related to coverage of
physicians' services;
(r) Requests for anticipated payment under the home health
prospective payment system under Sec. 409.43(c)(ii)(2) of this
chapter; and
(s) Claim submissions on forms or formats that are incomplete,
invalid, or do not meet the requirements for a Medicare claim and
returned or rejected to the provider or supplier.
Sec. 405.927 Initial determinations subject to the reopenings
process.
Minor errors or omissions in an initial determination must be
corrected only through the contractor's reopenings process under Sec.
405.980(a)(3).
Sec. 405.928 Effect of the initial determination.
(a) An initial determination described in Sec. 405.924(a) is
binding unless it is revised or reconsidered in accordance with 20 CFR
404.907, or revised as a result of a reopening in accordance with 20
CFR 404.988.
(b) An initial determination described in Sec. 405.924(b) is
binding upon all parties to the initial determination unless--
(1) A redetermination is completed in accordance with Sec. 405.940
through Sec. 405.958; or
(2) The initial determination is revised as a result of a reopening
in accordance with Sec. 405.980.
(c) An initial determination listed in Sec. 405.924(b) where a
party submits a timely, valid request for redetermination under Sec.
405.942 through Sec. 405.944 must be processed as a redetermination
under Sec. 405.948 through Sec. 405.958 unless the initial
determination involves a clerical error or other minor error or
omission.
Redeterminations
Sec. 405.940 Right to a redetermination.
A person or entity that may be a party to a redetermination in
accordance with Sec. 405.906(b) and that is dissatisfied with an
initial determination may request a redetermination by a contractor in
accordance with Sec. 405.940 through Sec. 405.958, regardless of the
amount in controversy.
[[Page 11479]]
Sec. 405.942 Time frame for filing a request for a redetermination.
(a) Time frame for filing a request. Except as provided in
paragraph (b) of this section, any request for redetermination must be
filed within 120 calendar days from the date a party receives the
notice of the initial determination.
(1) For purposes of this section, the date of receipt of the
initial determination will be presumed to be 5 days after the date of
the notice of initial determination, unless there is evidence to the
contrary.
(2) The request is considered as filed on the date it is received
by the contractor.
(b) Extending the time frame for filing a request. General rule. If
the 120-day period in which to file a request for a redetermination has
expired and a party shows good cause, the contractor may extend the
time frame for filing a request for redetermination.
(1) How to request an extension. A party may file a request for an
extension of time for filing a request for a redetermination with the
contractor. The party should include any evidence supporting the
request for extension. The request for redetermination extension must--
(i) Be in writing;
(ii) State why the request for redetermination was not filed within
the required time frame; and
(iii) Meet the requirements of Sec. 405.944.
(2) How the contractor determines if good cause exists. In
determining if a party has good cause for missing a deadline to request
a redetermination, the contractor considers--
(i) The circumstances that kept the party from making the request
on time;
(ii) If the contractor's action(s) misled the party; and
(iii) If the party had or has any physical, mental, educational, or
linguistic limitations, including any lack of facility with the English
language, that prevented the party from filing a timely request or from
understanding or knowing about the need to file a timely request.
(3) Examples of good cause. Examples of circumstances when good
cause may be found to exist include, but are not limited to, the
following situations:
(i) The party was prevented by serious illness from contacting the
contractor in person, in writing, or through a friend, relative, or
other person; or
(ii) The party had a death or serious illness in his or her
immediate family; or
(iii) Important records of the party were destroyed or damaged by
fire or other accidental cause; or
(iv) The contractor gave the party incorrect or incomplete
information about when and how to request a redetermination; or
(v) The party did not receive notice of the determination or
decision; or
(vi) The party sent the request to a Government agency in good
faith within the time limit, and the request did not reach the
appropriate contractor until after the time period to file a request
expired.
Sec. 405.944 Place and method of filing a request for a
redetermination.
(a) Filing location. The request for redetermination must be filed
with the contractor indicated on the notice of initial determination.
(b) Content of redetermination request. The request for
redetermination must be in writing and should be made on a standard CMS
form. A written request that is not made on a standard CMS form is
accepted if it contains the same required elements as follows:
(1) The beneficiary's name;
(2) The Medicare health insurance claim number;
(3) Specific service(s) and/or item(s) for which the
redetermination is being requested and the specific date(s) of the
service;
(4) The name and signature of the party or the representative of
the party.
(c) Requests for redetermination by more than one party. If more
than one party timely files a request for redetermination on the same
claim before a redetermination is made on the first timely filed
request, the contractor must consolidate the separate requests into one
proceeding and issue one redetermination.
Sec. 405.946 Evidence to be submitted with the redetermination
request.
(a) Evidence submitted with the request. When filing the request
for redetermination, a party must explain why it disagrees with the
contractor's determination and should include any evidence that the
party believes should be considered by the contractor in making its
redetermination.
(b) Evidence submitted after the request. When a party submits
additional evidence after filing the request for redetermination, the
contractor's 60-day decision-making time frame is automatically
extended for 14 calendar days for each submission.
Sec. 405.948 Conduct of a redetermination.
A redetermination consists of an independent review of an initial
determination. In conducting a redetermination, the contractor reviews
the evidence and findings upon which the initial determination was
based, and any additional evidence the parties submit or the contractor
obtains on its own. An individual who was not involved in making the
initial determination must make a redetermination. The contractor may
raise and develop new issues that are relevant to the claims in the
particular case.
Sec. 405.950 Time frame for making a redetermination.
(a) General rule. The contractor mails, or otherwise transmits,
written notice of the redetermination or dismissal to the parties to
the redetermination at their last known addresses within 60 calendar
days of the date the contractor receives a timely filed request for
redetermination.
(b) Exceptions. (1) If a contractor grants an appellant's request
for an extension of the 120-day filing deadline made in accordance with
Sec. 405.942(b), the 60-day decision-making time frame begins on the
date the contractor receives the late-filed request for
redetermination, or when the request for an extension is granted,
whichever is later.
(2) If a contractor receives from multiple parties timely requests
for redetermination of a claim determination, consistent with Sec.
405.944(c), the contractor must issue a redetermination or dismissal
within 60 days of the latest filed request.
(3) If a party submits additional evidence after the request for
redetermination is filed, the contractor's 60-day decision-making time
frame is extended for 14 calendar days for each submission, consistent
with Sec. 405.946(b).
Sec. 405.952 Withdrawal or dismissal of a request for a
redetermination.
(a) Withdrawing a request. A party that files a request for
redetermination may withdraw its request by filing a written and signed
request for withdrawal. The request for withdrawal must contain a clear
statement that the appellant is withdrawing the request for a
redetermination and does not intend to proceed further with the appeal.
The request must be received in the contractor's mailroom before a
redetermination is issued. The appeal will proceed with respect to any
other parties that have filed a timely request for redetermination.
(b) Dismissing a request. A contractor dismisses a redetermination
request, either entirely or as to any stated issue, under any of the
following circumstances:
[[Page 11480]]
(1) When the person or entity requesting a redetermination is not a
proper party under Sec. 405.906(b) or does not otherwise have a right
to a redetermination under section 1869(a) of the Act;
(2) When the contractor determines the party failed to make out a
valid request for redetermination that substantially complies with
Sec. 405.944;
(3) When the party fails to file the redetermination request within
the proper filing time frame in accordance with Sec. 405.942;
(4) When a beneficiary or the beneficiary's representative files a
request for redetermination, but the beneficiary dies while the request
is pending, and all of the following criteria apply:
(i) The beneficiary's surviving spouse or estate has no remaining
financial interest in the case. In deciding this issue, the contractor
considers if the surviving spouse or estate remains liable for the
services for which payment was denied or a Medicare contractor held the
beneficiary liable for subsequent similar services under the limitation
of liability provisions based on the denial of payment for services at
issue;
(ii) No other individual or entity with a financial interest in the
case wishes to pursue the appeal; and
(iii) No other party filed a valid and timely redetermination
request under Sec. 405.942 and Sec. 405.944;
(5) When a party filing the redetermination request submits a
timely written request for withdrawal with the contractor; or
(6) When the contractor has not issued an initial determination on
the claim or the matter for which a redetermination is sought.
(c) Notice of dismissal. A contractor mails or otherwise transmits
a written notice of the dismissal of the redetermination request to the
parties at their last known addresses. The notice states that there is
a right to request that the contractor vacate the dismissal action.
(d) Vacating a dismissal. If good and sufficient cause is
established, a contractor may vacate its dismissal of a request for
redetermination within 6 months from the date of the notice of
dismissal.
(e) Effect of dismissal. The dismissal of a request for
redetermination is final and binding, unless it is modified or reversed
by a QIC under Sec. 405.974(b) or vacated under paragraph (d) of this
section.
Sec. 405.954 Redetermination.
Upon the basis of the evidence of record, the contractor
adjudicates the claim(s), and renders a redetermination affirming or
reversing, in whole or in part, the initial determination in question.
Sec. 405.956 Notice of a redetermination.
(a) Notification to parties. (1) General rule. Written notice of a
redetermination affirming, in whole or in part, the initial
determination must be mailed or otherwise transmitted to all parties at
their last known addresses in accordance with the time frames
established in Sec. 405.950. Written notice of a redetermination fully
reversing the initial determination must be mailed or otherwise
transmitted to the appellant in accordance with the time frames
established in Sec. 405.950. If the redetermination results in
issuance of supplemental payment to a provider or supplier, the
Medicare contractor must also issue an electronic or paper RA notice to
the provider or supplier.
(2) Overpayment cases involving multiple beneficiaries who have no
liability. In an overpayment case involving multiple beneficiaries who
have no liability, the contractor may issue a written notice only to
the appellant.
(b) Content of the notice for affirmations, in whole or in part.
For decisions that are affirmations, in whole or in part, of the
initial determination, the redetermination must be written in a manner
calculated to be understood by a beneficiary, and contain--
(1) A clear statement indicating the extent to which the
redetermination is favorable or unfavorable;
(2) A summary of the facts, including, as appropriate, a summary of
the clinical or scientific evidence used in making the redetermination;
(3) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies apply to the facts of the case;
(4) A summary of the rationale for the redetermination in clear,
understandable language;
(5) Notification to the parties of their right to a reconsideration
and a description of the procedures that a party must follow in order
to request a reconsideration, including the time frame within which a
reconsideration must be requested;
(6) A statement of any specific missing documentation that must be
submitted with a request for a reconsideration, if applicable;
(7) A statement that all evidence the appellant wishes to introduce
during the claim appeals process should be submitted with the request
for a reconsideration;
(8) Notification that evidence not submitted to the QIC as
indicated in paragraph (b)(6) of this section, is not considered at an
ALJ hearing or further appeal, unless the appellant demonstrates good
cause as to why that evidence was not provided previously; and
(9) The procedures for obtaining additional information concerning
the redetermination, such as specific provisions of the policy, manual,
or regulation used in making the redetermination.
(10) Any other requirements specified by CMS.
(c) Content of the notice for a full reversal. For decisions that
are full reversals of the initial determination, the redetermination
must be in writing and contain--
(1) A clear statement indicating that the redetermination is wholly
favorable;
(2) Any other requirements specified by CMS.
(d) Exception for beneficiary appeal requests. (1) The notice must
inform beneficiary appellants that the requirements of paragraph (b)(8)
of this section are not applicable for purposes of beneficiary appeals.
(2) This exception does not apply for appeal requests from
beneficiaries who are represented by providers or suppliers.
Sec. 405.958 Effect of a redetermination.
In accordance with section 1869 (a)(3)(D) of the Act, once a
redetermination is issued, it becomes part of the initial
determination. The redetermination is final and binding upon all
parties unless--
(a) A reconsideration is completed in accordance with Sec. 405.960
through Sec. 405.978; or
(b) The redetermination is revised as a result of a reopening in
accordance with Sec. 405.980.
Reconsideration
Sec. 405.960 Right to a reconsideration.
A person or entity that is a party to a redetermination made by a
contractor as described under Sec. 405.940 through Sec. 405.958, and
is dissatisfied with that determination, may request a reconsideration
by a QIC in accordance with Sec. 405.962 through Sec. 405.966,
regardless of the amount in controversy.
Sec. 405.962 Timeframe for filing a request for a reconsideration.
(a) Timeframe for filing a request. Except as provided in paragraph
(b) of this section, any request for a reconsideration must be filed
within 180 calendar days from the date the
[[Page 11481]]
party receives the notice of the redetermination.
(1) For purposes of this section, the date of receipt of the
redetermination will be presumed to be 5 days after the date of the
notice of redetermination, unless there is evidence to the contrary.
(2) For purposes of meeting the 180-day filing deadline, the
request is considered as filed on the date it is received by the QIC.
(b) Extending the time for filing a request. (1) General rule. A
QIC may extend the 180-day timeframe for filing a request for
reconsideration for good cause.
(2) How to request an extension. A party to the redetermination
must file its request for an extension of the time for filing the
reconsideration request with its request for reconsideration. A party
should include evidence to support the request for extension. The
request for reconsideration and request for extension must--
(i) Be in writing;
(ii) State why the request for reconsideration was not filed within
the required timeframe; and
(iii) Meet the requirements of Sec. 405.964.
(3) How the QIC determines whether good cause exists. In
determining whether a party has good cause for missing a deadline to
request reconsideration, the QIC applies the good cause provisions
contained in Sec. 405.942(b)(2) and (b)(3).
Sec. 405.964 Place and method of filing a request for a
reconsideration.
(a) Filing location. The request for reconsideration must be filed
with the QIC indicated on the notice of redetermination.
(b) Content of reconsideration request. The request for
reconsideration must be in writing and should be made on a standard CMS
form. A written request that is not made on a standard CMS form is
accepted if it contains the same required elements, as follows:
(1) The beneficiary's name;
(2) Medicare health insurance claim number;
(3) Specific service(s) and item(s) for which the reconsideration
is requested and the specific date(s) of service;
(4) The name and signature of the party or the representative of
the party; and
(5) The name of the contractor that made the redetermination.
(c) Requests for reconsideration by more than one party. If more
than one party timely files a request for reconsideration on the same
claim before a reconsideration is made on the first timely filed
request, the QIC must consolidate the separate requests into one
proceeding and issue one reconsideration.
Sec. 405.966 Evidence to be submitted with the reconsideration
request.
(a) Evidence submitted with the request. When filing a request for
reconsideration, a party should present evidence and allegations of
fact or law related to the issue in dispute and explain why it
disagrees with the initial determination, including the
redetermination.
(1) This evidence must include any missing documentation identified
in the notice of redetermination, consistent with Sec. 405.956(b)(6).
(2) Absent good cause, failure to submit all evidence, including
documentation requested in the notice of redetermination prior to the
issuance of the notice of reconsideration precludes subsequent
consideration of that evidence.
(b) Evidence submitted after the request. Each time a party submits
additional evidence after filing the request for reconsideration, the
QIC's 60-day decisionmaking timeframe is automatically extended by up
to 14 calendar days for each submission. This extension does not apply
to timely submissions of documentation specifically requested by a QIC,
unless the documentation was originally requested in the notice of
redetermination.
(c) Exception for beneficiaries and State Medicaid Agencies that
file reconsideration requests. (1) Beneficiaries and State Medicaid
Agencies that file requests for reconsideration are not required to
comply with the requirements of paragraph (a) of this section. However,
the automatic 14-day extension described in paragraph (b) of this
section applies to each evidence submission made after the request for
reconsideration is filed.
(2) Beneficiaries who are represented by providers or suppliers
must comply with the requirements of paragraph (a) of this section.
Sec. 405.968 Conduct of a reconsideration.
(a) General rules. (1) A reconsideration consists of an
independent, on-the-record review of an initial determination,
including the redetermination and all issues related to payment of the
claim. In conducting a reconsideration, the QIC reviews the evidence
and findings upon which the initial determination, including the
redetermination, was based, and any additional evidence the parties
submit or that the QIC obtains on its own. If the initial determination
involves a finding on whether an item or service is reasonable and
necessary for the diagnosis or treatment of illness or injury (under
section 1862(a)(1)(A) of the Act), a QIC's reconsideration must involve
consideration by a panel of physicians or other appropriate health care
professionals, and be based on clinical experience, the patient's
medical records, and medical, technical, and scientific evidence of
record to the extent applicable.
(b) Authority of the QIC. (1) National coverage determinations
(NCDs), CMS Rulings, and applicable laws and regulations are binding on
the QIC.
(2) QICs are not bound by LCDs, LMRPs, or CMS program guidance,
such as program memoranda and manual instructions, but give substantial
deference to these policies if they are applicable to a particular
case. A QIC may decline to follow a policy, if the QIC determines,
either at a party's request or at its own discretion, that the policy
does not apply to the facts of the particular case.
(3) If a QIC declines to follow a policy in a particular case, the
QIC's reconsideration explains the reasons why the policy was not
followed.
(4) A QIC's decision to decline to follow a policy under this
section applies only to the specific claim being reconsidered and does
not have precedential effect.
(5) A QIC may raise and develop new issues that are relevant to the
claims in a particular case provided that the contractor rendered a
redetermination with respect to the claims.
(c) Qualifications of the QIC's panel members. (1) Members of a
QIC's panel who conduct reconsiderations must have sufficient medical,
legal, and other expertise, including knowledge of the Medicare
program.
(2) When a redetermination is made with respect to whether an item
or service is reasonable and necessary (section 1862(a)(1)(A) of the
Act), the QIC designates a panel of physicians or other appropriate
health care professionals to consider the facts and circumstances of
the redetermination.
(3) Where a claim pertains to the furnishing of treatment by a
physician, or the provision of items or services by a physician, a
reviewing professional must be a physician.
(d) Disqualification of a QIC panel member. No physician or health
care professional employed by or otherwise working for a QIC may review
determinations regarding--
(1) Health care services furnished to a patient if that physician
or health care
[[Page 11482]]
professional was directly responsible for furnishing those services; or
(2) Health care services provided in or by an institution,
organization, or agency, if that physician or health care professional
or any member of the physician's family or health care professional's
family has, directly or indirectly, a significant financial interest in
that institution, organization, or agency (see the term family member
as defined in Sec. 405.902).
Sec. 405.970 Timeframe for making a reconsideration.
(a) General rule. Within 60 calendar days of the date the QIC
receives a timely filed request for reconsideration or any additional
time provided by paragraph (b) of this section, the QIC mails, or
otherwise transmits to the parties at their last known addresses,
written notice of--
(1) The reconsideration;
(2) Its inability to complete its review within 60 days in
accordance with paragraphs (c) through (e) of this section; or
(3) Dismissal.
(b) Exceptions. (1) If a QIC grants an appellant's request for an
extension of the 180-day filing deadline made in accordance with Sec.
405.962(b), the QIC's 60-day decision-making timeframe begins on the
date the QIC receives the late filed request for reconsideration, or
when the request for an extension that meets the requirements of Sec.
405.962(b) is granted, whichever is later.
(2) If a QIC receives timely requests for reconsideration from
multiple parties, consistent with Sec. 405.964(c), the QIC must issue
a reconsideration, notice that it cannot complete its review, or
dismissal within 60 days for each submission of the latest filed
request.
(3) Each time a party submits additional evidence after the request
for reconsideration is filed, the QIC's 60-day decisionmaking timeframe
is extended by up to 14 days for each submission, consistent with Sec.
405.966(b).
(c) Responsibilities of the QIC. Within 60 days of receiving a
request for a reconsideration, or any additional time provided for
under paragraph (b) of this section, a QIC must take one of the
following actions:
(1) Notify all parties of its reconsideration, consistent with
Sec. 405.976.
(2) Notify the appellant that it cannot complete the
reconsideration by the deadline specified in paragraph (b) of this
section and offer the appellant the opportunity to escalate the appeal
to an ALJ. The QIC continues to process the reconsideration unless it
receives a written request from the appellant to escalate the case to
an ALJ after the adjudication period has expired.
(3) Notify all parties that it has dismissed the request for
reconsideration consistent with Sec. 405.972.
(d) Responsibilities of the appellant. If an appellant wishes to
exercise the option of escalating the case to an ALJ, the appellant
must notify the QIC in writing.
(e) Actions following appellant's notice. (1) If the appellant
fails to notify the QIC, or notifies the QIC that the appellant does
not choose to escalate the case, the QIC completes its reconsideration
and notifies the appellant of its action consistent with Sec. 405.972
or Sec. 405.976.
(2) If the appellant notifies the QIC that the appellant wishes to
escalate the case, the QIC must take one of the following actions
within 5 days of receipt of the notice or 5 days from the end of the
applicable adjudication period under paragraph (a) or (b) of this
section:
(i) Complete its reconsideration and notify all parties of its
decision consistent with Sec. 405.972 or Sec. 405.976.
(ii) Acknowledge the escalation notice in writing and forward the
case file to the ALJ hearing office.
Sec. 405.972 Withdrawal or dismissal of a request for a
reconsideration.
(a) Withdrawing a request. An appellant that files a request for
reconsideration may withdraw its request by filing a written and signed
request for withdrawal. The request for withdrawal must--
(1) Contain a clear statement that the appellant is withdrawing the
request for reconsideration and does not intend to proceed further with
the appeal.
(2) Be received in the QIC's mailroom before the reconsideration is
issued.
(b) Dismissing a request. A QIC dismisses a reconsideration
request, either entirely or as to any stated issue, under any of the
following circumstances:
(1) When the person or entity requesting reconsideration is not a
proper party under Sec. 405.906(b) or does not otherwise have a right
to a reconsideration under section 1869(b) of the Act;
(2) When the QIC determines that the party failed to make out a
valid request for reconsideration that substantially complies with
Sec. 405.964(a) and (b);
(3) When the party fails to file the reconsideration request in
accordance with the timeframes established in Sec. 405.962;
(4) When a beneficiary or the beneficiary's representative files a
request for reconsideration, but the beneficiary dies while the request
is pending, and all of the following criteria apply:
(i) The beneficiary's surviving spouse or estate has no remaining
financial interest in the case. In deciding this issue, the QIC
considers if the surviving spouse or estate remains liable for the
services for which payment was denied or a Medicare contractor held the
beneficiary liable for subsequent similar services under the limitation
of liability provisions based on the denial of payment for services at
issue;
(ii) No other individual or entity with a financial interest in the
case wishes to pursue the appeal; and
(iii) No other party to the redetermination filed a valid and
timely request for reconsideration under Sec. 405.962 and Sec.
405.964.
(5) When a party filing for the reconsideration submits a written
request of withdrawal to the QIC and satisfies the criteria set forth
in paragraph (a) of this section before the reconsideration has been
issued; or
(6) When the contractor has not issued a redetermination on the
initial determination for which a reconsideration is sought.
(c) Notice of dismissal. A QIC mails or otherwise transmits written
notice of the dismissal of the reconsideration request to the parties
at their last known addresses. The notice states that there is a right
to request that the contractor vacate the dismissal action. The appeal
will proceed with respect to any other parties that have filed a timely
request for reconsideration.
(d) Vacating a dismissal. If good and sufficient cause is
established, a QIC may vacate its dismissal of a request for
reconsideration within 6 months of the date of the notice of dismissal.
(e) Effect of dismissal. The dismissal of a request for
reconsideration is final and binding, unless it is modified or reversed
by an ALJ under Sec. 405.1004 or vacated under paragraph (d) of this
section.
Sec. 405.974 Reconsideration.
(a) Reconsideration of a contractor determination. Except as
provided in Sec. 405.972, upon the basis of the evidence of record,
the QIC must issue a reconsideration affirming or reversing, in whole
or in part, the initial determination, including the redetermination,
in question.
(b) Reconsideration of contractor's dismissal of a redetermination
request. (1) A party to a contractor's dismissal of a request for
redetermination has a right to have the dismissal reviewed by a QIC, if
the party files a written request for
[[Page 11483]]
review of the dismissal with the QIC within 60 days after receipt of
the contractor's notice of dismissal.
(2) If the QIC determines that the contractor's dismissal was in
error, it vacates the dismissal and remands the case to the contractor
for a redetermination.
(3) A QIC's reconsideration of a contractor's dismissal of a
redetermination request is final and not subject to any further review.
Sec. 405.976 Notice of a reconsideration.
(a) Notification to parties. (1) General rules. (i) Written notice
of the reconsideration must be mailed or otherwise transmitted to all
parties at their last known addresses, in accordance with the
timeframes established in Sec. 405.970(a) or (b).
(ii) The notice must be written in a manner reasonably calculated
to be understood by a beneficiary.
(iii) The QIC must promptly notify the entity responsible for
payment of claims under Part A or Part B of its reconsideration. If the
reconsideration results in issuance of supplemental payment to a
provider or supplier, the Medicare contractor must also issue an
electronic or paper RA notice to the provider or supplier.
(2) Overpayment cases involving multiple beneficiaries who have no
liability. In an overpayment case involving multiple beneficiaries who
have no liability, the QIC may issue a written notice only to the
appellant.
(b) Content of the notice. The reconsideration must be in writing
and contain--
(1) A clear statement indicating whether the reconsideration is
favorable or unfavorable;
(2) A summary of the facts, including as appropriate, a summary of
the clinical or scientific evidence used in making the reconsideration;
(3) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies, apply to the facts of the case, including,
where applicable, the rationale for declining to follow an LCD, LMRP,
or CMS program guidance;
(4) In the case of a determination on whether an item or service is
reasonable or necessary under section 1862(a)(1)(A) of the Act, an
explanation of the medical and scientific rationale for the decision;
(5) A summary of the rationale for the reconsideration.
(i) If the notice of redetermination indicated that specific
documentation should be submitted with the reconsideration request, and
the documentation was not submitted with the request for
reconsideration, the summary must indicate how the missing
documentation affected the reconsideration; and
(ii) The summary must also specify that, consistent with Sec.
405.956(b)(8) and Sec. 405.966(b), all evidence, including evidence
requested in the notice of redetermination, that is not submitted prior
to the issuance of the reconsideration will not be considered at an ALJ
level, or made part of the administrative record, unless the appellant
demonstrates good cause as to why the evidence was not provided prior
to the issuance of the QIC's reconsideration. This requirement does not
apply to beneficiaries, unless the beneficiary is represented by a
provider or supplier or to State Medicaid Agencies;
(6) Information concerning to the parties' right to an ALJ hearing,
including the applicable amount in controversy requirement and
aggregation provisions;
(7) A statement of whether the amount in controversy needed for an
ALJ hearing is met when the reconsideration is partially or fully
unfavorable;
(8) A description of the procedures that a party must follow in
order to obtain an ALJ hearing of an expedited reconsideration,
including the time frame under which a request for an ALJ hearing must
be filed;
(9) If appropriate, advice as to the requirements for use of the
expedited access to judicial review process set forth in Sec. 405.990;
(10) The procedures for obtaining additional information concerning
the reconsideration, such as specific provisions of the policy, manual,
or regulation used in making the reconsideration; and
(11) Any other requirements specified by CMS.
Sec. 405.978 Effect of a reconsideration.
A reconsideration is final and binding on all parties, unless--
(a) An ALJ decision is issued in accordance to a request for an ALJ
hearing made in accordance with Sec. 405.1014;
(b) A review entity issues a decision in accordance to a request
for expedited access to judicial review under Sec. 405.990; or
(c) The reconsideration is revised as a result of a reopening in
accordance with Sec. 405.980.
Reopenings
Sec. 405.980 Reopenings of initial determinations, redeterminations,
and reconsiderations, hearings and reviews.
(a) General rules. (1) A reopening is a remedial action taken to
change a final determination or decision that resulted in either an
overpayment or underpayment, even though the determination or decision
was correct based on the evidence of record. That action may be taken
by--
(i) A contractor to revise the initial determination or
redetermination;
(ii) A QIC to revise the reconsideration;
(iii) An ALJ to revise the hearing decision; or
(iv) The MAC to revise the hearing or review decision.
(2) If a contractor issues a denial of a claim because it did not
receive requested documentation during medical review and the party
subsequently requests a redetermination, the contractor must process
the request as a reopening.
(3) Notwithstanding paragraph (a)(4) of this section, a contractor
must process clerical errors (which includes mirror errors and
omissions) as reopenings, instead of redeterminations as specified in
Sec. 405.940. If the contractor receives a request for reopening and
disagrees that the issue is a clerical error, the contractor must
dismiss the reopening request and advise the party of any appeal
rights, provided the timeframe to request an appeal on the original
denial has not expired. For purposes of this section, clerical error
includes human and mechanical errors on the part of the party or the
contractor such as--
(i) Mathematical or computational mistakes;
(ii) Inaccurate data entry; or
(iii) Denials of claims as duplicates.
(4) When a party has filed a valid request for an appeal of an
initial determination, redetermination, reconsideration, hearing, or
MAC review, no adjudicator has jurisdiction to reopen a claim at issue
until all appeal rights are exhausted. Once the appeal rights have been
exhausted, the contractor, QIC, ALJ, or MAC may reopen as set forth in
this section.
(5) The contractor's, QIC's, ALJ's, or MAC's decision on whether to
reopen is final and not subject to appeal.
(6) A Medicare secondary payer demand to recover a conditional
payment, based upon a provider's or supplier's failure to demonstrate
that it filed a proper claim with a plan, program, or insurer, as
defined in Sec. 411.21 of this chapter, because this action is a
reopening.
[[Page 11484]]
(b) Time frames and requirements for reopening initial
determinations and redeterminations initiated by a contractor. A
contractor may reopen and revise its initial determination or
redetermination on its own motion--
(1) Within 1 year from the date of the initial determination or
redetermination for any reason.
(2) Within 4 years from the date of the initial determination or
redetermination for good cause as defined in Sec. 405.986.
(3) At any time if there exists reliable evidence as defined in
Sec. 405.902 that the initial determination was procured by fraud or
similar fault as defined in Sec. 405.902.
(4) At anytime if the initial determination is unfavorable, in
whole or in part, to the party thereto, but only for the purpose of
correcting a clerical error on which that determination was based.
(5) At any time to effectuate a decision issued under the coverage
appeals process.
(c) Time frame and requirements for reopening initial
determinations and redeterminations requested by a party. (1) A party
may request that a contractor reopen its initial determination or
redetermination within 1 year from the date of the initial
determination or redetermination for any reason.
(2) A party may request that a contractor reopen its initial
determination or redetermination within 4 years from the date of the
initial determination or redetermination for good cause in accordance
with Sec. 405.986.
(3) A party may request that a contractor reopen its initial
determination at any time if the initial determination is unfavorable,
in whole or in part, to the party thereto, but only for the purpose of
correcting a clerical error on which that determination was based.
Third party payer error does not constitute clerical error. See Sec.
405.986(c).
(d) Time frame and requirements for reopening reconsiderations,
hearing decisions and reviews initiated by a QIC, ALJ, or the MAC. (1)
A QIC may reopen its reconsideration on its own motion within 180 days
from the date of the reconsideration for good cause in accordance with
Sec. 405.986. If the QIC's reconsideration was procured by fraud or
similar fault, then the QIC may reopen at any time.
(2) An ALJ may reopen its hearing decision on its own motion within
180 days from the date of the decision for good cause in accordance
with Sec. 405.986. If the ALJ's decision was procured by fraud or
similar fault, then the ALJ may reopen at any time.
(3) The MAC may reopen its review decision on its own motion within
180 days from the date of the review decision for good cause in
accordance with Sec. 405.986. If the MAC's decision was procured by
fraud or similar fault, then the MAC may reopen at any time.
(e) Time frames and requirements for reopening reconsiderations,
hearing decisions, and reviews requested by a party. (1) A party to a
reconsideration may request that a QIC reopen its reconsideration
within 180 days from the date of the reconsideration for good cause in
accordance with Sec. 405.986.
(2) A party to a hearing may request that an ALJ reopen his or her
decision within 180 days from the date of the hearing decision for good
cause in accordance with Sec. 405.986.
(3) A party to a review may request that the MAC reopen its
decision within 180 days from the date of the review decision for good
cause in accordance with Sec. 405.986.
Sec. 405.982 Notice of a revised determination or decision.
(a) When adjudicators initiate reopenings. When any determination
or decision is reopened and revised as provided in Sec. 405.980, the
contractor, QIC, ALJ, or the MAC must mail its revised determination or
decision to the parties to that determination or decision at their last
known address. In the case of a full or partial reversal resulting in
issuance of a payment to a provider or supplier, a revised electronic
or paper remittance advice notice must be issued by the Medicare
contractor. An adverse revised determination or decision must state the
rationale and basis for the reopening and revision and any right to
appeal.
(b) Reopenings initiated at the request of a party. The contractor,
QIC, ALJ, or the MAC must mail its revised determination or decision to
the parties to that determination or decision at their last known
address. In the case of a full or partial reversal resulting in
issuance of a payment to a provider or supplier, a revised electronic
or paper remittance advice notice must be issued by the Medicare
contractor. An adverse revised determination or decision must state the
rationale and basis for the reopening and revision and any right to
appeal.
Sec. 405.984 Effect of a revised determination or decision.
(a) Initial determinations. The revision of an initial
determination is binding upon all parties unless a party files a
written request for a redetermination that is accepted and processed in
accordance with Sec. 405.940 through Sec. 405.958.
(b) Redeterminations. The revision of a redetermination is binding
upon all parties unless a party files a written request for a QIC
reconsideration that is accepted and processed in accordance with Sec.
405.960 through Sec. 405.978.
(c) Reconsiderations. The revision of a reconsideration is binding
upon all parties unless a party files a written request for an ALJ
hearing that is accepted and processed in accordance with Sec.
405.1000 through Sec. 405.1064.
(d) ALJ Hearing decisions. The revision of a hearing decision is
binding upon all parties unless a party files a written request for a
MAC review that is accepted and processed in accordance with Sec.
405.1100 through Sec. 405.1130.
(e) MAC review. The revision of a MAC review is binding upon all
parties unless a party files a civil action in which a Federal district
court accepts jurisdiction and issues a decision.
(f) Appeal of only the portion of the determination or decision
revised by the reopening. Only the portion of the initial
determination, redetermination, reconsideration, or hearing decision
revised by the reopening may be subsequently appealed.
(g) Effect of a revised determination or decision. A revised
determination or decision is binding unless it is appealed or otherwise
reopened.
Sec. 405.986 Good cause for reopening.
(a) Establishing good cause. Good cause may be established when--
(1) There is new and material evidence that--
(i) Was not available or known at the time of the determination or
decision; and
(ii) May result in a different conclusion; or
(2) The evidence that was considered in making the determination or
decision clearly shows on its face that an obvious error was made at
the time of the determination or decision.
(b) Change in substantive law or interpretative policy. A change of
legal interpretation or policy by CMS in a regulation, CMS ruling, or
CMS general instruction, or a change in legal interpretation or policy
by SSA in a regulation, SSA ruling, or SSA general instruction in
entitlement appeals, whether made in response to judicial precedent or
otherwise, is not a basis for reopening a determination or hearing
decision under this section. This provision does not preclude
contractors from conducting reopenings to effectuate coverage decisions
issued under the authority granted by section 1869(f) of the Act.
(c) Third party payer error. A request to reopen a claim based upon
a third
[[Page 11485]]
party payer's error in making a primary payment determination when
Medicare processed the claim in accordance with the information in its
system of records or on the claim form does not constitute good cause
for reopening.
(d) MSP recovery claim. A determination under the Medicare
Secondary Payer provisions of Section 1862(b) of the Act that Medicare
has an MSP recovery claim for services or items that were already
reimbursed by the Medicare program is not a reopening.
Expedited Access to Judicial Review
Sec. 405.990 Expedited access to judicial review.
(a) Process for expedited access to judicial review. (1) For
purposes of this section, a ``review entity'' means an entity of up to
three reviewers who are ALJs or members of the Departmental Appeals
Board (DAB), as determined by the Secretary.
(2) In order to obtain expedited access to judicial review (EAJR),
a review entity must certify that the Medicare Appeals Council (MAC)
does not have the authority to decide the question of law or regulation
relevant to the matters in dispute and that there is no material issue
of fact in dispute.
(3) A party may make a request for EAJR only once with respect to a
question of law or regulation for a specific matter in dispute in an
appeal.
(b) Conditions for making the expedited appeals request. (1) A
party may request EAJR in place of an ALJ hearing or MAC review if the
following conditions are met:
(i) A QIC has made a reconsideration determination and the party
has filed a request for--
(A) an ALJ hearing in accordance with Sec. 405.1002 and a final
decision of the ALJ has been issued;
(B) MAC review in accordance with Sec. 405.1102 and a final
decision of the MAC has not been issued; or
(ii) The appeal has been escalated from the QIC to the ALJ level
after the period described in Sec. 405.970(a) and Sec. 405.970(b) has
expired, and the QIC does not issue a final action within the time
frame described in Sec. 405.970(e).
(2) The requestor is a party, as defined in paragraph (e) of this
section.
(3) The amount remaining in controversy meets the requirements of
Sec. 405.1006(b) or (c).
(4) If there is more than one party to the reconsideration,
hearing, or MAC review, each party concurs, in writing, with the
request for the EAJR.
(5) There are no material issues of fact in dispute.
(c) Content of the request for EAJR. The request for EAJR must--
(1) Allege that there are no material issues of fact in dispute and
identify the facts that the requestor considers material and that are
not disputed; and
(2) Assert that the only factor precluding a decision favorable to
the requestor is--
(i) A statutory provision that is unconstitutional, or a provision
of a regulation or national coverage determination and specify the
statutory provision that the requestor considers unconstitutional or
the provision of a regulation or a national coverage determination that
the requestor considers invalid, or
(ii) A CMS Ruling that the requester considers invalid;
(3) Include a copy of any QIC reconsideration and of any ALJ
hearing decision that the requester has received;
(4) If any QIC reconsideration or ALJ hearing decision was based on
facts that the requestor is disputing, state why the requestor
considers those facts to be immaterial; and
(5) If any QIC reconsideration or ALJ hearing decision was based on
a provision of a law, regulation, national coverage determination or
CMS Ruling in addition to the one the requestor considers
unconstitutional or invalid, a statement as to why further
administrative review of how that provision applies to the facts is not
necessary.
(d) Place and time for an EAJR request. (1) Method and place for
filing request. The requestor may include an EAJR request in his or her
request for an ALJ hearing or MAC review, or, if an appeal is already
pending with an ALJ or the MAC, file a written EAJR request with the
ALJ hearing office or MAC where the appeal is being considered. The ALJ
hearing office or MAC forwards the request to the review entity within
5 calendar days of receipt.
(2) Time of filing request. The party may file a request for the
EAJR--
(i) If the party has requested a hearing, at any time before
receipt of the notice of the ALJ's decision; or
(ii) If the party has requested MAC review, at any time before
receipt of notice of the MAC's decision.
(e) Parties to the EAJR. The parties to the EAJR are the persons or
entities who were parties to the QIC's reconsideration determination
and, if applicable, to the ALJ hearing.
(f) Determination on EAJR request. (1) The review entity described
in paragraph (a) of this section will determine whether the request for
EAJR meets all of the requirements of paragraphs (b), (c), and (d) of
this section.
(2) Within 60 days after the date the review entity receives a
request and accompanying documents and materials meeting the conditions
in paragraphs (b), (c), and (d) of this section, the review entity will
issue either a certification in accordance to paragraph (g) of this
section or a denial of the request.
(3) A determination by the review entity either certifying that the
requirements for EAJR are met pursuant to paragraph (g) of this section
or denying the request is final and not subject to review by the
Secretary.
(4) If the review entity fails to make a determination within the
time frame specified in paragraph (f)(2) of this section, then the
requestor may bring a civil action in Federal district court within 60
days of the end of the time frame.
(g) Certification by the review entity. If a party meets the
requirements for the EAJR, the review entity certifies in writing
that--
(1) The material facts involved in the claim are not in dispute;
(2) Except as indicated in paragraph (g)(3) of this section, the
Secretary's interpretation of the law is not in dispute;
(3) The sole issue(s) in dispute is the constitutionality of a
statutory provision, or the validity of a provision of a regulation,
CMS Ruling, or national coverage determination;
(4) But for the provision challenged, the requestor would receive a
favorable decision on the ultimate issue (such as whether a claim
should be paid); and
(5) The certification by the review entity is the Secretary's final
action for purposes of seeking expedited judicial review.
(h) Effect of certification by the review entity. If an EAJR
request results in a certification described in paragraph (g) of this
section--
(1) The party that requested the EAJR is considered to have waived
any right to completion of the remaining steps of the administrative
appeals process regarding the matter certified.
(2) The requestor has 60 days, beginning on the date of the review
entity's certification within which to bring a civil action in Federal
district court.
(3) The requestor must satisfy the requirements for venue under
section 1869(b)(2)(C)(iii) of the Act, as well as the requirements for
filing a civil action in a Federal district court under Sec.
405.1136(a) and Sec. 405.1136(c) through Sec. 405.1136(f).
[[Page 11486]]
(i) Rejection of EAJR. (1) If a request for EAJR request does not
meet all the conditions set out in paragraphs (b), (c) and (d) of this
section, or if the review entity does not certify a request for EAJR,
the review entity advises in writing all parties that the request has
been denied, and returns the request to the ALJ hearing office or the
MAC, which will treat it as a request for hearing or for MAC review, as
appropriate.
(2) Whenever a review entity forwards a rejected EAJR request to an
ALJ hearing office or the MAC, the appeal is considered timely filed
and the 90-day decision making time frame begins on the day the request
is received by the hearing office or the MAC.
(j) Interest on any amounts in controversy. (1) If a provider or
supplier is granted judicial review in accordance with this section,
the amount in controversy, if any, is subject to annual interest
beginning on the first day of the first month beginning after the 60-
day period as determined in accordance with paragraphs (f)(4) or (h)(2)
of this section, as applicable.
(2) The interest is awarded by the reviewing court and payable to a
prevailing party.
(3) The rate of interest is equal to the rate of interest
applicable to obligations issued for purchase by the Federal
Supplementary Medical Insurance Trust Fund for the month in which the
civil action authorized under this subpart is commenced.
(4) No interest awarded in accordance with this paragraph shall be
income or cost for purposes of determining reimbursement due to
providers or suppliers under Medicare.
ALJ Hearings
Sec. 405.1000 Hearing before an ALJ: General rule.
(a) If a party is dissatisfied with a QIC's reconsideration or if
the adjudication period specified in Sec. 405.970 for the QIC to
complete its reconsideration has elapsed, the party may request a
hearing.
(b) A hearing may be conducted in-person, by video-teleconference
(VTC), or by telephone. At the hearing, the parties may submit evidence
(subject to the restrictions in Sec. 405.1018 and Sec. 405.1028),
examine the evidence used in making the determination under review, and
present and/or question witnesses.
(c) In some circumstances, a representative of CMS or its
contractor, including the QIC, QIO, fiscal intermediary or carrier, may
participate in or join the hearing as a party. (see Sec. 405.1010 and
Sec. 405.1012).
(d) The ALJ issues a decision based on the hearing record.
(e) If all parties to the hearing waive their right to appear at
the hearing in person or by telephone or video-teleconference, the ALJ
may make a decision based on the evidence that is in the file and any
new evidence that is submitted for consideration.
(f) The ALJ may require the parties to participate in a hearing if
it is necessary to decide the case. If the ALJ determines that it is
necessary to obtain testimony from a non-party, he or she may hold a
hearing to obtain that testimony, even if all of the parties have
waived the right to appear. In that event, however, the ALJ will give
the parties the opportunity to appear when the testimony is given, but
may hold the hearing even if none of the parties decide to appear.
(g) An ALJ may also issue a decision on the record on his or her
own initiative if the evidence in the hearing record supports a fully
favorable finding.
Sec. 405.1002 Right to an ALJ hearing.
(a) A party to a QIC reconsideration may request a hearing before
an ALJ if--
(1) The party files a written request for an ALJ hearing within 60
days after receipt of the notice of the QIC's reconsideration; and
(2) The party meets the amount in controversy requirements of Sec.
405.1006.
(b) A party who files a timely appeal before a QIC and whose appeal
continues to be pending before a QIC at the end of the period described
in Sec. 405.970 has a right to a hearing before an ALJ if--
(1) The party files a written request with the QIC to escalate the
appeal to the ALJ level after the period described in Sec. 405.970(a)
and (b) has expired and the party files the request in accordance with
Sec. 405.970(d);
(2) The QIC does not issue a final action within 5 days of
receiving the request for escalation in accordance with Sec.
405.970(e)(2); and
(3) The party has an amount remaining in controversy specified in
Sec. 405.1006.
Sec. 405.1004 Right to ALJ review of QIC notice of dismissal.
(a) A party to a QIC's dismissal of a request for reconsideration
has a right to have the dismissal reviewed by an ALJ if--
(1) The party files a written request for an ALJ review within 60
days after receipt of the notice of the QIC's dismissal; and
(2) The party meets the amount in controversy requirements of Sec.
405.1006.
(b) If the ALJ determines that the QIC's dismissal was in error, he
or she vacates the dismissal and remands the case to the QIC for a
reconsideration.
(c) An ALJ's decision regarding a QIC's dismissal of a
reconsideration request is final and not subject to further review.
Sec. 405.1006 Amount in controversy required to request an ALJ
hearing and judicial review.
(a) Definitions. For the purposes of aggregating claims to meet the
amount in controversy requirement for an ALJ hearing or judicial
review:
(1) ``Common issues of law and fact'' means the claims sought to be
aggregated are denied, or payment is reduced, for similar reasons and
arise from a similar fact pattern material to the reason the claims are
denied or payment is reduced.
(2) ``Delivery of similar or related services'' means like or
coordinated services or items provided to one or more beneficiaries.
(b) ALJ review. To be entitled to a hearing before an ALJ, the
party must meet the amount in controversy requirements of this section.
(1) For ALJ hearing requests, the required amount remaining in
controversy must be $100 increased by the percentage increase in the
medical care component of the consumer price index for all urban
consumers (U.S. city average) as measured from July 2003 to the July
preceding the current year involved.
(2) If the figure in paragraph (b)(1) of this section is not a
multiple of $10, then it is rounded to the nearest multiple of $10. The
Secretary will publish changes to the amount in controversy requirement
in the Federal Register when necessary.
(c) Judicial review. To be entitled to judicial review, a party
must meet the amount in controversy requirements of this subpart at the
time it requests judicial review.
(1) For review requests, the required amount remaining in
controversy must be $1,000 or more, adjusted as specified in paragraphs
(b)(1) and (b)(2) of this section.
(2) [Reserved]
(d) Calculating the amount remaining in controversy. (1) The amount
remaining in controversy is computed as the actual amount charged the
individual for the items and services in question, reduced by--
(i) Any Medicare payments already made or awarded for the items or
services; and
(ii) Any deductible and coinsurance amounts applicable in the
particular case.
(2) Notwithstanding paragraph (d)(1) of this section, when payment
is made
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for items or services under section 1879 of the Act or Sec. 411.400 of
this chapter, or the liability of the beneficiary for those services is
limited under Sec. 411.402 of this chapter, the amount in controversy
is computed as the amount that the beneficiary would have been charged
for the items or services in question if those expenses were not paid
under Sec. 411.400 of this chapter or if that liability was not
limited under Sec. 411.402 of this chapter, reduced by any deductible
and coinsurance amounts applicable in the particular case.
(e) Aggregating claims to meet the amount in controversy--
(1) Appealing QIC reconsiderations to the ALJ level. Either an
individual appellant or multiple appellants may aggregate two or more
claims to meet the amount in controversy for an ALJ hearing if--
(i) The claims were previously reconsidered by a QIC;
(ii) The request for ALJ hearing lists all of the claims to be
aggregated and is filed within 60 days after receipt of all of the
reconsiderations being appealed; and
(iii) The ALJ determines that the claims that a single appellant
seeks to aggregate involve the delivery of similar or related services,
or the claims that multiple appellants seek to aggregate involve common
issues of law and fact. Part A and Part B claims may be combined to
meet the amount in controversy requirements.
(2) Aggregating claims that are escalated from the QIC level to the
ALJ level. Either an individual appellant or multiple appellants may
aggregate two or more claims to meet the amount in controversy for an
ALJ hearing if--
(i) The claims were pending before the QIC in conjunction with the
same request for reconsideration;
(ii) The appellant(s) requests aggregation of the claims to the ALJ
level in the same request for escalation; and
(iii) The ALJ determines that the claims that a single appellant
seeks to aggregate involve the delivery of similar or related services,
or the claims that multiple appellants seek to aggregate involve common
issues of law and fact. Part A and Part B claims may be combined to
meet the amount in controversy requirements.
(f) Content of request for aggregation. When an appellant(s) seeks
to aggregate claims in a request for an ALJ hearing, the appellant(s)
must--
(1) Specify all of the claims the appellant(s) seeks to aggregate;
and
(2) State why the appellant(s) believes that the claims involve
common issues of law and fact or delivery of similar or related
services.
Sec. 405.1008 Parties to an ALJ hearing.
(a) Who may request a hearing. Any party to the QIC's
reconsideration may request a hearing before an ALJ. However, only the
appellant (that is, the party that filed and maintained the request for
reconsideration by a QIC) may request that the appeal be escalated to
the ALJ level if the QIC does not complete its action within the time
frame described in Sec. 405.970.
(b) Who are parties to the ALJ hearing. The party who filed the
request for hearing and all other parties to the reconsideration are
parties to the ALJ hearing. In addition, a representative of CMS or its
contractor may be a party under the circumstances described in Sec.
405.1012.
Sec. 405.1010 When CMS or its contractors may participate in an ALJ
hearing.
(a) An ALJ may request, but may not require, CMS and/or one or more
of its contractors, to participate in any proceedings before the ALJ,
including the oral hearing, if any. CMS and/or one or more of its
contractors, including a QIC, may also elect to participate in the
hearing process.
(b) If CMS or one or more of its contractors elects to participate,
it advises the ALJ, the appellant, and all other parties identified in
the notice of hearing of its intent to participate no later than 10
days after receiving the notice of hearing.
(c) Participation may include filing position papers or providing
testimony to clarify factual or policy issues in a case, but it does
not include calling witnesses or cross-examining the witnesses of a
party to the hearing.
(d) When CMS or its contractor participates in an ALJ hearing, the
agency or its contractor may not be called as a witness during the
hearing.
(e) CMS or its contractor must submit any position papers within
the time frame designated by the ALJ.
(f) The ALJ cannot draw any adverse inferences if CMS or a
contractor decides not to participate in any proceedings before an ALJ,
including the hearing.
Sec. 405.1012 When CMS or its contractors may be a party to a
hearing.
(a) CMS and/or one or more of its contractors, including a QIC, may
be a party to an ALJ hearing unless the request for hearing is filed by
an unrepresented beneficiary.
(b) CMS and/or the contractor(s) advises the ALJ, appellant, and
all other parties identified in the notice of hearing that it intends
to participate as a party no later than 10 days after receiving the
notice of hearing.
(c) When CMS or one or more of its contractors participate in a
hearing as a party, it may file position papers, provide testimony to
clarify factual or policy issues, call witnesses or cross-examine the
witnesses of other parties. CMS or its contractor(s) will submit any
position papers within the time frame specified by the ALJ. CMS or its
contractor(s), when acting as parties, may also submit additional
evidence to the ALJ within the time frame designated by the ALJ.
(d) The ALJ may not require CMS or a contractor to enter a case as
a party or draw any adverse inferences if CMS or a contractor decides
not to enter as a party.
Sec. 405.1014 Request for an ALJ hearing.
(a) Content of the request. The request for an ALJ hearing must be
made in writing. The request must include all of the following--
(1) The name, address, and Medicare health insurance claim number
of the beneficiary whose claim is being appealed.
(2) The name and address of the appellant, when the appellant is
not the beneficiary.
(3) The name and address of the designated representatives if any.
(4) The document control number assigned to the appeal by the QIC,
if any.
(5) The dates of service.
(6) The reasons the appellant disagrees with the QIC's
reconsideration or other determination being appealed.
(7) A statement of any additional evidence to be submitted and the
date it will be submitted.
(b) When and where to file. The request for an ALJ hearing after a
QIC reconsideration must be filed--
(1) Within 60 days from the date the party receives notice of the
QIC's reconsideration;
(2) With the entity specified in the QIC's reconsideration. The
appellant must also send a copy of the request for hearing to the other
parties. Failure to do so will toll the ALJ's 90-day adjudication
deadline until all parties to the QIC reconsideration receive notice of
the requested ALJ hearing. If the request for hearing is timely filed
with an entity other than the entity specified in the QIC's
reconsideration, the deadline specified in Sec. 405.1016 for deciding
the appeal begins on the date the entity specified in the QIC's
reconsideration receives the request for hearing. If the request for
hearing is filed with an entity, other than the
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entity specified in the QIC's reconsideration, the ALJ hearing office
must notify the appellant of the date of receipt of the request and the
commencement of the 90-day adjudication time frame.
(c) Extension of time to request a hearing. (1) If the request for
hearing is not filed within 60 calendar days of receipt of the QIC's
reconsideration, an appellant may request an extension for good cause
(See Sec. Sec. 405.942(b)(2) and 405.942(b)(3)).
(2) Any request for an extension of time must be in writing, give
the reasons why the request for a hearing was not filed within the
stated time period, and must be filed with the entity specified in the
notice of reconsideration.
(3) If the ALJ finds there is good cause for missing the deadline,
the time period for filing the hearing request will be extended. To
determine whether good cause for late filing exists, the ALJ uses the
standards set forth in Sec. 405.942(b)(2) and Sec. 405.942(b)(3).
(4) If a request for hearing is not timely filed, the adjudication
period in Sec. 405.1016 begins the date the ALJ hearing office grants
the request to extend the filing deadline.
Sec. 405.1016 Time frames for deciding an appeal before an ALJ.
(a) When a request for an ALJ hearing is filed after a QIC has
issued a reconsideration, the ALJ must issue a decision, dismissal
order, or remand to the QIC, as appropriate, no later than the end of
the 90-day period beginning on the date the request for hearing is
received by the entity specified in the QIC's notice of
reconsideration, unless the 90-day period has been extended as provided
in this subpart.
(b) The adjudication period specified in paragraph (a) of this
section begins on the date that a timely filed request for hearing is
received by the entity specified in the QIC's reconsideration, or, if
it is not timely filed, the date that the ALJ hearing office grants any
extension to the filing deadline.
(c) When an appeal is escalated to the ALJ level because the QIC
has not issued a reconsideration determination within the period
specified in Sec. 405.970, the ALJ must issue a decision, dismissal
order, or remand to the QIC, as appropriate, no later than the end of
the 180-day period beginning on the date that the request for
escalation is received by the ALJ hearing office, unless the 180-day
period is extended as provided in this subpart.
(d) When CMS is a party to an ALJ hearing and a party requests
discovery under Sec. 405.1037 against another party to the hearing,
the adjudication periods discussed in paragraph (a) and (c) of this
section is tolled.
Sec. 405.1018 Submitting evidence before the ALJ hearing.
(a) Except as provided in this section, parties must submit all
written evidence they wish to have considered at the hearing with the
request for hearing (or within 10 days of receiving the notice of
hearing).
(b) If a party submits written evidence later than 10 days after
receiving the notice of hearing, the period between the time the
evidence was required to have been submitted and the time it is
received is not counted toward the adjudication deadline specified in
Sec. 405.1016.
(c) Any evidence submitted by a provider, supplier, or beneficiary
represented by a provider or supplier that is not submitted prior to
the issuance of the QIC's reconsideration determination must be
accompanied by a statement explaining why the evidence is not
previously submitted to the QIC, or a prior decision-maker (see Sec.
405.1028).
(d) The requirements of this section do not apply to oral testimony
given at a hearing, or to evidence submitted by an unrepresented
beneficiary.
Sec. 405.1020 Time and place for a hearing before an ALJ.
(a) General. The ALJ sets the time and place for the hearing, and
may change the time and place, if necessary.
(b) Determining how appearances are made. The ALJ will direct that
the appearance of an individual be conducted by videoteleconferencing
(VTC) if the ALJ finds that VTC technology is available to conduct the
appearance. The ALJ may also offer to conduct a hearing by telephone if
the request for hearing or administrative record suggests that a
telephone hearing may be more convenient for one or more of the
parties. The ALJ, with the concurrence of the Managing Field Office
ALJ, may determine that an in-person hearing should be conducted if--
(1) VTC technology is not available; or
(2) Special or extraordinary circumstances exist.
(c) Notice of hearing. (1) The ALJ will send a notice of hearing to
all parties that filed an appeal or otherwise participated in any of
the determinations in paragraphs (c) through (i) of this section, any
party who was found liable for the services at issue subsequent to the
initial determination, the contractor that issued the initial
determination, and the QIC that issued the reconsideration, advising
them of the proposed time and place of the hearing.
(2) The notice of hearing will require all parties to the ALJ
hearing (and any potential participant from CMS or its contractor who
wishes to attend the hearing) to reply to the notice by:
(i) Acknowledging whether they plan to attend the hearing at the
time and place proposed in the notice of hearing; or
(ii) Objecting to the proposed time and/or place of the hearing.
(d) A party's right to waive a hearing. A party may also waive the
right to a hearing and request that the ALJ issue a decision based on
the written evidence in the record. As provided in Sec. 405.1000, the
ALJ may require the parties to attend a hearing if it is necessary to
decide the case. If the ALJ determines that it is necessary to obtain
testimony from a non-party, he or she may still hold a hearing to
obtain that testimony, even if all of the parties have waived the right
to appear. In those cases, the ALJ will give the parties the
opportunity to appear when the testimony is given but may hold the
hearing even if none of the parties decide to appear.
(e) A party's objection to time and place of hearing. (1) If a
party objects to the time and place of the hearing, the party must
notify the ALJ at the earliest possible opportunity before the time set
for the hearing.
(2) The party must state the reason for the objection and state the
time and place he or she wants the hearing to be held.
(3) The request must be in writing.
(4) The ALJ may change the time or place of the hearing if the
party has good cause. (Section 405.1052(a)(2) provides the procedures
the ALJ follows when a party does not respond to a notice of hearing
and fails to appear at the time and place of the hearing.)
(f) Good cause for changing the time or place. The ALJ can find
good cause for changing the time or place of the scheduled hearing and
reschedule the hearing if the information available to the ALJ supports
the party's contention that--
(1) The party or his or her representative is unable to attend or
to travel to the scheduled hearing because of a serious physical or
mental condition, incapacitating injury, or death in the family; or
(2) Severe weather conditions make it impossible to travel to the
hearing; or
(3) Good cause exists as set forth in paragraph (g) of this
section.
(g) Good cause in other circumstances. (1) In determining whether
good cause exists in circumstances other than those set forth in
paragraph (f) of this section, the ALJ
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considers the party's reason for requesting the change, the facts
supporting the request, and the impact of the proposed change on the
efficient administration of the hearing process.
(2) Factors evaluated to determine the impact of the change
include, but are not limited to, the effect on processing other
scheduled hearings, potential delays in rescheduling the hearing, and
whether any prior changes were granted the party.
(3) Examples of other circumstances a party might give for
requesting a change in the time or place of the hearing include, but
are not limited to, the following:
(i) The party has attempted to obtain a representative but needs
additional time.
(ii) The party's representative was appointed within 10 days of the
scheduled hearing and needs additional time to prepare for the hearing.
(iii) The party's representative has a prior commitment to be in
court or at another administrative hearing on the date scheduled for
the hearing.
(iv) A witness who will testify to facts material to a party's case
is unavailable to attend the scheduled hearing and the evidence cannot
be otherwise obtained.
(v) Transportation is not readily available for a party to travel
to the hearing.
(vi) The party is unrepresented, and is unable to respond to the
notice of hearing because of any physical, mental, educational, or
linguistic limitations (including any lack of facility with the English
language) that he or she has.
(h) Effect of rescheduling hearing. If a hearing is postponed at
the request of the appellant for any of the above reasons, the time
between the originally scheduled hearing date and the new hearing date
is not counted toward the adjudication deadline specified in Sec.
405.1016.
(i) A party request for an in-person hearing. (1) If a party
objects to a VTC hearing or to the ALJ's offer to conduct a hearing by
telephone, the party must notify the ALJ at the earliest possible
opportunity before the time set for the hearing and request an in-
person hearing.
(2) The party must state the reason for the objection and state the
time or place he or she wants the hearing to be held.
(3) The request must be in writing.
(4) A request for an in-person hearing shall constitute a waiver of
the 90-day time frame specified in Sec. 405.1016.
(5) The ALJ may grant the request, with the concurrence of the
Managing Field Office ALJ, upon a finding of good cause and will
reschedule the hearing for a time and place when the party may appear
in person before the ALJ.
Sec. 405.1022 Notice of a hearing before an ALJ.
(a) Issuing the notice. After the ALJ sets the time and place of
the hearing, notice of the hearing will be mailed to the parties and
other potential participants, as provided in Sec. 405.1020(c) at their
last known addresses, or given by personal service, unless the parties
have indicated in writing that they do not wish to receive this notice.
The notice is mailed or served at least 20 days before the hearing.
(b) Notice information. (1) The notice of hearing contains a
statement of the specific issues to be decided and will inform the
parties that they may designate a person to represent them during the
proceedings.
(2) The notice must include an explanation of the procedures for
requesting a change in the time or place of the hearing, a reminder
that, if the appellant fails to appear at the scheduled hearing without
good cause, the ALJ may dismiss the hearing request, and other
information about the scheduling and conduct of the hearing.
(3) The appellant will also be told if his or her appearance or
that of any other party or witness is scheduled by VTC, telephone, or
in person. If the ALJ has scheduled the appellant or other party to
appear at the hearing by VTC, the notice of hearing will advise that
the scheduled place for the hearing is a VTC site and explain what it
means to appear at the hearing by VTC.
(4) The notice advises the appellant or other parties that if they
object to appearing by VTC or telephone, and wish instead to have their
hearing at a time and place where they may appear in person before the
ALJ, they must follow the procedures set forth at Sec. 405.1020(i) for
notifying the ALJ of their objections and for requesting an in-person
hearing.
(c) Acknowledging the notice of hearing. (1) If the appellant, any
other party to the reconsideration, or their representative does not
acknowledge receipt of the notice of hearing, the ALJ hearing office
attempts to contact the party for an explanation.
(2) If the party states that he or she did not receive the notice
of hearing, an amended notice is sent to him or her by certified mail
or e-mail, if available. (See Sec. 405.1052 for the procedures the ALJ
follows in deciding if the time or place of a scheduled hearing will be
changed if a party does not respond to the notice of hearing).
Sec. 405.1024 Objections to the issues.
(a) If a party objects to the issues described in the notice of
hearing, he or she must notify the ALJ in writing at the earliest
possible opportunity before the time set for the hearing, and no later
than 5 days before the hearing.
(b) The party must state the reasons for his or her objections and
send a copy of the objections to all other parties to the appeal.
(c) The ALJ makes a decision on the objections either in writing or
at the hearing.
Sec. 405.1026 Disqualification of the ALJ.
(a) An ALJ cannot conduct a hearing if he or she is prejudiced or
partial to any party or has any interest in the matter pending for
decision.
(b) If a party objects to the ALJ who will conduct the hearing, the
party must notify the ALJ within 10 calendar days of the date of the
notice of hearing. The ALJ considers the party's objections and decides
whether to proceed with the hearing or withdraw.
(c) If the ALJ withdraws, another ALJ will be appointed to conduct
the hearing. If the ALJ does not withdraw, the party may, after the ALJ
has issued an action in the case, present his or her objections to the
MAC in accordance with Sec. 405.1100 et seq. The MAC will then
consider whether the hearing decision should be revised or a new
hearing held before another ALJ. If the case is escalated to the MAC
after a hearing is held but before the ALJ issues a decision, the MAC
considers the reasons the party objected to the ALJ during its review
of the case and, if the MAC deems it necessary, may remand the case to
another ALJ for a hearing and decision.
Sec. 405.1028 Prehearing case review of evidence submitted to the ALJ
by the appellant.
(a) Examination of any new evidence. After a hearing is requested
but before it is held, the A