CMS recently issued Transmittal 543, Change Request 8501 in which it instructs Medicare Administrative Contractors (MACs) to, among other things, defend their medical review decisions through the Administrative Law Judge (ALJ) level of appeal.  CMS suggests it is providing for greater MAC involvement in the ALJ process in furtherance of CMS’s efforts to ensure the agency and its contractors “are making quality decisions.”  The Transmittal will modify Chapter 3 of the Medicare Program Integrity Manual (“Verifying Potential Errors and Taking Corrective Action”).  The changes set out in the Transmittal will become effective on October 27, 2014. 

According to the Transmittal, a MAC “shall assign a physician to participate or take party status at [ALJ] hearings” involving its own claim determinations or claim determinations over which it has responsibility.  For claims reviewed by other entities, CMS instructs a MAC to “participate only in a supporting role.”

In accordance with existing regulations, the Transmittal draws a distinction between a MAC’s “participation” and “party” status in the ALJ hearing process.  CMS states that participation includes the filing of position papers, providing testimony, and responding to questions by the ALJ or appellant, as appropriate.  A MAC with participation status cannot call its own witnesses or cross-examine other parties’ witnesses, however.  A MAC must make its election to participate consistent with 42 C.F.R. § 405.1010 and must provide written notice of its election within ten calendar days of the hearing notice.

A MAC must receive CMS’s prior approval before electing party status.  (If a MAC does not receive such approval, it may elect to proceed as a participant.)  According to the Transmittal, CMS will assign high priority to cases involving program integrity issues and/or a significant dollar amount of disputed overpayments.  Party status permits a MAC to call witnesses, cross-examine other witnesses and serve certain discovery in accordance with 42 C.F.R. § 405.1037(b).  A MAC with party status may also file position papers and must be prepared for questioning by the ALJ or other parties.  The MAC shall make its party status election consistent with 42 C.F.R. § 405.1012 and provide written notice of its election within ten calendar days of the hearing notice.

The Transmittal provides that a MAC must also establish a process to determine which cases should be selected for participation at the ALJ level of appeal.  The factors a MAC should consider in making such a determination include:

  • Policy implications;
  • The amount of money at issue;
  • The source of the denial;
  • Program integrity matters; and
  • Whether the issue in dispute is or has been a recurring issue at the ALJ level of appeal.

In addition, the Transmittal instructs MACs to coordinate with Quality Improvement Contractors (QICs) to ensure timely hearing notifications and to manage other representation matters.