The Centers for Medicare & Medicaid Services (CMS), part of the U.S. Department of Health and Human Services (HHS), and Contractors administer the Medicare program. Medicare Administrative Contractors (fiscal intermediaries and carriers), Administrative Law Judges (ALJ), the Medicare Appeals Council (MAC), and U.S. District Courts, constitute the administrative appeal process.
In 2000 and 2003, Congress made changes to the appeal process, and created a unified system for challenging Part A and B denied claims. Changes were enacted by §521 of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), Public Law 106-554; and by §§931 to 940 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), Public Law 108-173. Many of the changes were to §1869 and §1879 of the Social Security Act (SSA). These statutes explain the appeal process.
Originally, the Medicare program had two parts. Part A, known as the hospital insurance program, covers care provided to inpatients of hospitals, critical access hospitals, skilled nursing facilities, hospice, and home health agencies. Part B, known as the supplemental medical insurance program, covers physicians’ services, outpatient hospital care, some home health and other services. The services provided must meet Medicare coverage requirements, and must be provided to Medicare eligible patients. The appeals process for Medicare Part C, Medicare Advantage or managed care plans, and Part D, the Prescription Drug Benefit are not addressed in this article. Current regulations found at 42 C.F.R. Subpart G, § 405.700 et seq. describe the appeals process under Part A. The current appeals process has five levels.
BIPA and MMA Changes To Part A and B Appeals Process
The Initial Determination step one now has an added level of review. First, the Medicare Administrator Contractor (“Contractor”) makes an initial determination. If the claim is denied, the notice to the parties must state the basis for the denial and how to apply for a redetermination. The Contractor has 30 days to issue an initial determination on a clean claim, and 45 days on a non-clean claim. A clean claim has no defect or impropriety requiring special treatment that prevents payment by Medicare. If a Contractor does not process a clean claim within the 30 days, interest begins to run. There is no interest provision for failure to process a non-clean claim. See regulations at §§405.902, 405.920–405.928.
The beneficiary or provider has 120 days from the date of receipt of the initial determination to request a redetermination. CMS presumes receipt 5 days after the date of the decision, unless there is evidence to the contrary. This will be referred to as the 5 day rule. The 5 day rule applies to every level of appeal. There is no amount in controversy (AIC) for a redetermination.
An initial determination cannot be further appealed unless there is a redetermination. The redetermination cannot be performed by an individual that was involved in the initial determination. The Contractor must issue its redetermination within 30 days of receipt of the request. The request must be made in writing on a CMS form, or if not on a form, the request must contain the beneficiary’s name, health insurance claim number, the services or items, and the name and signature of the party or the appointed representative of the party. The request can be dismissed if it does not include this information.
Although the regulations do not require the presentation of evidence to support the request for a redetermination, the appellant is encouraged to present any additional evidence as soon as possible in the appeal process, and new evidence after the reconsideration level will not be reviewed by the ALJ, unless good cause is shown.
The ALJ may remand the appeal to the reconsideration level to consider the new evidence. The regulations describe the criteria for good cause with examples. The request must explain why the party disagrees with the Contractor’s determination, and include any evidence the party believes the Contractor should consider in its redetermination. The request must be made to the Contractor, or a local SSA or CMS office. The redetermination must include a summary of the facts, an explanation of how laws, regulations, coverage rules and CMS policies apply to the facts, the rationale for the decision, how to apply for a reconsideration, and a statement that any evidence not presented at the reconsideration level will not be considered by the ALJ. See regulations at §§405.940–405.958.
The Reconsideration Step Two
Reconsideration is “an independent, on the record review of an initial determination, including the redetermination, performed by a Qualified Independent Contractor (QIC).” QICs are not to be confused with Qualified Improvement Organizations (QIO), which were formerly known as Peer Review Organizations. QIOs contract with HHS to perform expedited determinations when a service is being stopped, and peer review functions, whereas QICs perform reconsiderations.
QICs will routinely participate in ALJ hearings. Don’t confuse redeterminations with reconsiderations. They are two different levels of appeal. The redetermination comes after the initial denial performed by the Contractor, and is followed by a reconsideration performed by a QIC. There is no AIC to request reconsideration.
The request must be made within 180 days from the receipt of the redetermination. This is an improvement from the 60-day time period to request reconsideration under the pre-BIPA appeals process. However, the additional time is because CMS believes 180 days is sufficient time to gather all evidence and present the evidence with the request for reconsideration. Any evidence not presented at this level will not be considered at the ALJ hearing, unless good cause is shown for the delay. This prohibition does not apply to oral testimony, including experts, given at the ALJ hearing.
Prior to BIPA, providers could introduce new evidence at any level of the administrative appeal process because all levels were considered de novo. This change creates a burden on the party requesting the reconsideration (the “appellant”) to identify all evidence, including medical records from other providers, affidavits from physicians, nurses and other witnesses, and supporting medical treatises and literature, early in the appeal process. CMS believes introduction of all evidence at the reconsideration level will eliminate the backlog of ALJ hearings. CMS has developed a standard form for requesting reconsideration. A written request must contain the same information as a request for a redetermination. QICs are bound by law, regulations, CMS Rulings and National Coverage Decisions (NCD).
QICs must follow local medical coverage determinations (LCD), local medical review polices (LMRP), or CMS program memoranda or manuals, unless the appellant questions the policy, provides a reason why the policy should not be followed and the QIC agrees. A QIC’s decision must explain why it agrees or disagrees with the appellant’s reasons for not following the policy.
In addition, the QIC decision must explain the rationale for its decision. This change eliminates the use of form letters, which do not really explain the reason for the denial. In my experience, a review of the administrative record sent to the Office of Hearings and Appeals before the ALJ hearing always uncovers a wealth of information explaining the reason for the denial and the government’s thought process. QICs must issue a decision within 30 days of the request.
There is an automatic 14-day extension to the 60-day rule, if the appellant submits additional evidence after the request for reconsideration has been filed. If the QIC fails to issue a decision within 30 days, the appeal can escalate to the ALJ hearing. This occurs if the QIC receives a written request from the appellant, and the QIC fails to issue a reconsideration within 5 days of the escalation request. If there is no escalation request from the appellant and the QIC has sent a notice of inability to meet the 30-day deadline, the QIC continues to process the appeal. QICs must be independent reviewers, who were not involved in the initial denial or redetermination, are not a related party to anyone involved in the appeal, do not have a conflict of interest, and do not have a familial, financial or professional relationship with any party to the appeal.
The QIC reviewer must be either a physician with “medical expertise in the field of practice that is appropriate for the items or services at issue,” or a health care professional “who is legally authorized to…furnish the health care items or services at issue and has medical expertise in the field of practice that is appropriate for such items or services.” This change addresses the practice by some Contractors of using experts with the wrong expertise in an appeal; for example, a pediatrician who reviews denied claims for cardiac services. The QIC must have a panel of medical professionals review an item or service when the issue is whether the item or service was reasonable and necessary. The QIC’s decision in this regard must be based on clinical experience and medical, technical and scientific evidence. The regulations also address the content of a reconsideration decision, withdrawal or dismissal of reconsideration requests, and appeal rights. See regulations at §§405.960–405.978.
The Administrative Law Judge Hearing Step Three
This is a request for an ALJ hearing made within 60 days from receipt of the QIC’s reconsideration. The AIC amount is adjusted each year, and claims can be aggregated under certain circumstances. A hearing can be in person, via telephone, or by video conferencing. An appellant may waive a hearing and request a decision based on the written record. The ALJ must issue a decision within 90 days from the receipt of the hearing request by the hearing office, unless the time is tolled for extensions.
A hearing request may also be filed with the QIC, CMS, or a local SSA office. In its request, the appellant must state why it disagrees with the QIC’s reconsideration, and include a statement of any additional evidence to be submitted and when it will be submitted. The ALJs may review all final actions issued by a QIC, including dismissals for untimely filing, failure to exhaust administrative remedies, or res judicata. ALJs are bound by Medicare statutes, CMS regulations, rulings, and NCDs.
The appellant must submit all written evidence with the request for the hearing, or within 10 days after receiving the notice of hearing. If evidence is submitted late, the period between the 10th day and the date the evidence is received is excluded from the 90-day deadline for an ALJ decision. New evidence that was not considered by the QIC must be submitted with a statement explaining why the evidence was not submitted to the QIC. If the ALJ determines that good cause does not exist for submitting the new evidence at the ALJ level, or the appellant so admits, the ALJ will remand the appeal to the QIC to consider the new evidence. If the new evidence relates to an issue that was the basis of the QIC’s unfavorable decision, and the ALJ finds good cause, the ALJ will consider the new evidence in reaching its decision. CMS or its Contractor, including the QICs, may be a party to the hearing or participate in the hearing by submitting a position paper or providing testimony to clarify factual or policy issues. A party to the hearing has the right to cross-examine witnesses. CMS and its Contractors cannot participate if the beneficiary is unrepresented.
An ALJ may consolidate different hearings if one or more of the issues are the same. However, before consolidating, the AL J must give notice to CMS, which has the right to participate in the consolidated hearing as a party. If a beneficiary dies while an appeal is pending, it will not be dismissed if the beneficiary paid for the services or has a spouse or estate that is financially liable, or the appeal is filed by a provider that has a financial interest in the outcome, or if the appeal involves a service where payment was made under waiver of liability, but the outcome impacts on coverage of other services. 42 C.F.R. Part 405, Subpart I describes the conduct of ALJ hearings, including pre-hearing conferences, objections, subpoenas, witnesses and cross examination.
Review by the Medicare Appeals Council (MAC) Step Four
This is an appeal to the MAC made within 60 days of the receipt of the ALJ decision. There is no AIC threshold. Except for unrepresented beneficiaries, a request for a MAC review must include the specific reasons why the appellant (providers, suppliers, CMS, State Medicaid agencies, and Representatives) disagrees with the ALJ decision or dismissal.
The MAC must issue its decision within 90 days of receipt of the request. Similar to current rules governing ALJ hearings, MAC rules are those used by the SSA’s Appeal Council to review disability cases found at 20 C.F.R. Part 404. BIPA incorporates these procedures into Medicare regulations. The MAC reviews an ALJ decision or dismissal de novo, which means the MAC will examine all of the issues before the ALJ, not just those issues appealed. CMS warns that because the review is de novo, the MAC’s decision may differ from the ALJ’s decision.
The MAC can adopt, modify or reverse the ALJ’s decision. The MAC can remand the case to the ALJ for further development. The MAC can also review an ALJ decision or dismissal on its own motion. If CMS or its Contractors participated as a party to the hearing, and refer the ALJ decision or dismissal to the MAC for own motion review, the MAC can accept the case if there is an error of law, abuse of discretion, the decision is not consistent with the evidence, or there is a broad policy or procedural issue that may affect the public.
If CMS or its Contractor are not a party to the hearing, the MAC may accept the CMS referral if there is error of law or a broad policy issue exists. Under these circumstances, the MAC’s review of the ALJ decision is limited to the issues raised by CMS or its Contractor in making the referral, and not all issues presented at the hearing. When CMS or its Contractors make a referral to the MAC, all parties at the ALJ hearing are entitled to notice and an opportunity to comment.
The MAC will consider all documents, evidence and transcript of oral testimony before the ALJ. If a party wants a copy, they must pay a fee. The MAC will not consider new evidence, unless the ALJ decision raises a new issue and the parties did not have an opportunity to present evidence on that issue. The MAC may remand the case to the ALJ to consider such evidence. Any party to the appeal and CMS and its Contractors may submit a brief to the MAC. The MAC will grant oral argument only if there is an important question of law, policy or fact that cannot be resolved on the written record.
Judicial Review Step Five
This is an appeal to Federal District Court where the beneficiary resides or the provider has its principal place of business. The complaint must be filed within 60 days of receipt of the MAC decision. There must be at least $1,260 in denied claims. This amount is indexed and changes each year. There is no time limit on the issuance of a decision. The standard of review is substantial evidence. The Court reviews the administrative record below. The findings of the Secretary of HHS are conclusive if supported by substantial evidence. No new evidence can be presented at this level.
Escalation allows an appellant to advance to the next level of appeal if an adjudicator fails to issue its decision within the time limits, i.e., to an ALJ if the QIC fails to issue a reconsideration within 30 to 44 days; to the MAC if an ALJ fails to issue a decision within 90 days; and to Federal District Court if the MAC fails to issue a decision within 90 days. The appellant must request the escalation in writing, or the appeal remains at the current level until a decision is reached irrespective of how long it takes.
If a QIC, ALJ or a MAC receives an escalation request, it will have 5 days to issue a decision before sending the appeal to the next level. There are some disadvantages to requesting an escalation. An appeal escalated from the QIC to ALJ level is not reviewed by QIC health care professionals, and the ALJ does not have that QIC analysis when conducting its review. In an appeal escalated from ALJ to MAC, the appellant loses the right to a hearing because MAC’s reviews are based on the written record below.
When an appellant requests an escalation, the appellant waives the right to obtain a decision within 90 days from the ALJ’s and MAC’s receipt of the request. CMS states that the additional time is needed by the adjudicator because there is no decision from the appeal level below.
Expedited Determination Procedures For Provider Service Terminations
On November 26, 2004, final regulations, with comment period ending January 25, 2005, were issued addressing one section of BIPA §521. These final regulations focus on expedited appeal procedures available to beneficiaries when they are informed by a provider that their Medicare coverage is about to end.
The regulations were effective July 1, 2005. These procedures apply if a home health agency, hospice, skilled nursing facility, comprehensive outpatient rehabilitation facility or hospital notifies a beneficiary that Medicare will no longer cover the services provided. A termination of Medicare covered service is a discharge by a residential provider, or a complete cessation of coverage after a course of treatment. A reduction in services, or a termination of one type of service while the beneficiary receives another type of service from the provider, is not a termination. The provider must use a CMS form and deliver written notice to the beneficiary of its decision to terminate services no later than 2 days before the end of the services.
If services to be provided are for less than 2 days, notice must be given at admission. For non-residential providers, such as a hospice, if the time between visits is more than 2 days, the notice must be given at the visit prior to the last visit. The final notice must contain the date coverage ends; the date the beneficiary is financially liable; how to request an expedited determination and present evidence; and the beneficiary’s right to receive information from the provider explaining why the services are no longer covered and identifying what Medicare rule or policy the provider is relying on.
A beneficiary is asked to sign the notice, to establish date of receipt. If the beneficiary refuses to sign the notice, the provider must so indicate on the notice, and that becomes the date of receipt. A beneficiary can request an expedited determination by the Quality Improvement Organization (QIO) in writing or by telephone by noon of the next day after receipt from the provider of the notice of termination. For termination of non-residential services, a physician must certify that failure to continue the service may place the beneficiary’s health at significant risk. The QIO must examine the medical record, solicit the views of the beneficiary and give the provider an opportunity to explain why it decided to terminate services. The burden of proof is on the provider to support its decision based on medical necessity or Medicare coverage policies. The provider must give the QIO all information it needs by close of business on the day the QIO notifies the provider of the beneficiary’s request for an expedited determination. The information can be provided by telephone. Within 72 hours of receipt of the beneficiary’s request, the QIO must notify the beneficiary, his doctor and provider as to whether the termination is correct. The initial notification may be by telephone followed by a written notice.
During this period the provider may not bill the beneficiary until the expedited determination and reconsideration process is complete. If the provider fails to give proper notice, coverage of service continues until 2 days after valid notice is given. If the QIO’s decision is delayed because the provider failed to supply necessary information or records, the provider may be liable for the additional coverage. The beneficiary is entitled to an expedited reconsideration conducted by the Quality Improvement Contractor (QIC). The same rules apply to this level of appeal. The beneficiary can appeal the QIC’s decision to an ALJ, or escalate the appeal process to ALJ hearing if the QIC fails to issue its decision within 72 hours.
Note that if the beneficiary files a late request for the QIC reconsideration, the provider may bill the beneficiary during the appeal. The regulations also describe expedited determinations of inpatient hospital discharges. A beneficiary can ignore the expedited procedures and pursue an appeal through the normal process. See final regulations §§405.1200–405.1208.
Providers Rights To Appeal Medicare Initial Determinations
Currently, providers have limited rights to appeal Medicare initial determinations. Pursuant to § 1879(d) of the SSA, providers have appeal rights only if there is a determination that 1) an item or service is not covered because it is custodial care, was not reasonable and necessary, or for certain other reasons; and 2) the provider knew or could reasonably be expected to know that the service in question was not covered under Medicare. This is a finding with respect to limitation of liability under § 1879. Providers have been able to pursue appeals on behalf of beneficiaries, where they do not have a right to appeal on their own, when the beneficiary executes an Appointment of Representative Form designating the provider as their representative.
BIPA changes these rules by giving providers, physicians and other suppliers that participate in Medicare, the right to file for an administrative appeal to the same extent as beneficiaries. To accomplish this, the regulations at §405.906(a) define parties in the first step of the appeal process, the initial determination, to include 1) a beneficiary who filed a claim or had the claim filed on his behalf, 2) the estate or person obligated to make or entitled to receive payment for a deceased beneficiary, and 3) a participating provider, physician or supplier who has filed a claim for items or services furnished to a beneficiary.
These parties do not need an “assignment of appeal rights” executed by the beneficiary to pursue an appeal. 42 C.F.R. § 405.906(b) defines the parties to the additional levels of appeal (redetermination, reconsideration, hearing and MAC) as 1) the same as above; 2) a Medicaid State Agency which files a timely redetermination request for a dually eligible patient, i.e., Medicare beneficiary and Medicaid recipient; 3) non-participating physicians and suppliers who have accepted “assignment” of appeal rights from the beneficiary; and 4) “an assignee who has accepted an assignment of appeal rights from the beneficiary according to § 405.912.” An “assignor” is a beneficiary whose provider, physician or supplier has taken assignment of the right to appeal a claim. An “assignee” is a provider, physician or supplier who furnishes items or services to a beneficiary, and who has accepted a valid assignment of appeal rights executed by the beneficiary. “Assignment of appeal rights” means the transfer by the assignor of his or her right to appeal an initial determination to the assignee.
The question raised is, if BIPA gives providers, physicians and suppliers the right to file an appeal of a denied claim, when must they obtain an “assignment of appeal rights” executed by the beneficiary? The answer is in §405.912. The regulation states that a provider, physician or supplier that furnished the item or service to the beneficiary, and is not considered a party as defined in §405.906(a) to the initial determination must obtain an assignment of appeal rights from the beneficiary to pursue the appeal.
Thus, it appears that non-participating providers, physicians, and suppliers must obtain an executed assignment of appeal rights. An assignment of appeal rights is valid if it is executed using the CMS form, and is in writing and signed by the assignor and the assignee; indicates the item or service for which the assignment of appeal rights is authorized; contains a waiver by the provider, physician or supplier to collect payment from the beneficiary, except for coinsurance or deductibles or when an advance beneficiary notice has been properly executed; and is submitted at the same time the request for redetermination or appeal is filed. The duration of the assignment of appeal rights covers all the administrative and judicial reviews for the items and services listed on the CMS form, unless revoked.
Therefore, it is important that the CMS form list all the periods and types of services covered by the appeal. Revocation occurs in writing by the beneficiary; by abandonment if the provider, physician or supplier does not file an appeal of an unfavorable decision, or by act or omission that is determined by an adjudicator to be contrary to the financial interests of the beneficiary. If revocation occurs, the beneficiary can pursue the appeal. See §§405.906–405.912.
Appointment of Representative
An assignment of appeal rights should not be confused with an appointed representative. Section 405.910 defines a “representative” as any individual or individual associated with an entity authorized by a party, or under Sate law, to act on the party’s behalf in dealing with any level of the appeal process. Representatives are not parties.
An individual or entity that has been disqualified, suspended, or prohibited by law from participating in the Medicare program cannot be a representative. An appointment of representative document must be executed in writing; signed by the party and the representative, including attorney; provide a statement authorizing the representative to act on behalf of the party; explain the purpose and scope of the representation; contain the name, phone number and address of the party and representative and the beneficiary’s health insurance claim number; describe the representative’s professional relationship or status to the party; and be filed with the entity processing the appeal.
The appointment is valid for the duration of the appeal of the initial determination described in the appointment document, and for 1 year from its original date for purposes of commencing appeals of other initial determinations, unless revoked. See §405.910.
So, Which of These Changes Are In Effect Now?
Changes made by §521 of BIPA were to be implemented by October 1, 2002, and only if they apply only if the changes are clear and self explanatory; can be implemented with existing CMS resources; can be implemented without the introduction of QICs; and if implementing the change on a “stand alone basis” supports Congress’ intent to create a more timely and accurate appeals process.
Applying these criteria, CMS implemented three changes effective October 1, 2002. First, for initial determinations made on or after October 1, 2002, the request for a redetermination must be made within 120 days of receipt of the initial determination. Second, the $100 amount in controversy threshold for requesting an ALJ hearing applies. Prior to BIPA, a request for an ALJ hearing for Part B claims had a $500 threshold. The new $100 threshold applies to both Part A and B claims. However, the pre BIPA rules for aggregation of claims still apply. Finally, CMS determined that the redetermination under BIPA “mirror current policy” of the current Part A reconsiderations and the Part B reviews. Both redeterminations and the current reconsiderations and carrier reviews require that the review be conducted by the same Contractor that made the initial determination, but not the same individual; and require that a review of an initial determination must occur before the appeal can proceed to the next level. Therefore, for initial determinations made on or after October 1, 2002, existing rules governing reconsiderations for Part A claims and Part B reviews apply. See CMS Ruling 02-1, October 2, 2002. In addition, with the promulgation of the final rule, the procedures for expedited determinations and reconsiderations when services are terminated became effective July 1, 2005.
The BIPA and MMA changes impact many other areas too numerous to discuss in the context of this article. For example, there are rules governing reopening of decisions at each level of appeal; expedited appeals if there is no material issue of fact, and the only factor precluding a favorable decision to the appellant is a statutory provision that is unconstitutional, or a regulation, national coverage determination, or a CMS ruling that is invalid; the transfer of ALJs performing Medicare appeals from the Social Security Administration to HHS; and the filing of complaints to challenge national coverage determinations. These vast changes and the introduction of QICs to conduct the reconsideration have caused CMS to implement BIPA in stages.
These changes alter how providers pursue appeals. The bottom line is that documentation of services provided will be under even more scrutiny at each level of appeal.