On January 17, 2017, the Centers for Medicare & Medicaid Services (“CMS”) finalized certain changes to the Medicare appeals process, with the intent to provide increased transparency and efficiency to cure the current backlog in pending appeals. According to CMS, the number of requests for an Administrative Law Judge (“ALJ”) hearing or review pending at the Office of Medicare Hearings and Appeals (“OMHA”) level increased by 1,222 percent from FY 2009 through FY 2014. As of September 30, 2016, OMHA had over 650,000 pending appeals and an adjudication capacity of 92,000 appeals per year.
The U.S. Department of Health & Human Services, with CMS, intends to adopt a three-prong approach to combat the appeals backlog: (i) request new resources, (ii) take administrative action to reduce the number of pending appeals and implement new tools to alleviate the backlog, and (iii) propose legislative reforms that provide for additional funding to further reduce the backlog.
Most notable in the final rule, CMS establishes a new authority (i.e., the “attorney adjudicator”) charged with responsibility for (i) issuing decisions when a decision can be issued without an ALJ hearing; (ii) dismissing appeals when an appellant withdraws his or her request for an ALJ hearing; and (iii) remanding appeals for information that can only be provided by CMS or one of its contractors, at the Medicare Appeals Council’s (the “Council”) discretion. CMS intends for the attorney adjudicator to be an additional resource for reducing the current appeals backlog. Conforming technical changes have been made throughout the regulations to acknowledge existence of this new authority.
Additional highlights from the final rule include:
- Adopting a flexible time frame for ALJs deciding appeals of QIC reconsideration decisions. The regulations currently require that, when a request for ALJ hearing is filed after a QIC has issued a reconsideration decision, an ALJ “must” issue a decision, dismissal order, or remand to the QIC no later than 90 calendar days after receiving the QIC’s notice of reconsideration. CMS first proposed, and now finalizes, removing the requirement that decisions “must” be issued in 90 days because CMS does not believe that the 90 calendar-day time frame should be an absolute requirement. An appellant retains the right to escalate an appeal if the adjudication time frame is not met.
- Establishing an inventory of Council precedent. The final rule allows for the Departmental Appeals Board Chair to designate certain Council cases as precedent, which cases will be made publicly available and will hopefully allow for consistent future interpretation and analysis of CMS regulations and policies. The Council precedent will be binding on all lower levels of review, unless CMS adopts contrary regulations or policies or higher courts invalidate such precedent. In considering whether a case should serve as precedent, the DAB Chair will consider whether the case at issue involves a recurring legal issue or matter of public interest or has general application to a broad number of cases.
- Limiting participation in hearings. CMS revises its regulations to limit the number of entities that may participate in an ALJ hearing unless the ALJ determines that an entity’s participation is necessary for complete examination of the issues on appeal. If CMS and one or more of its contractors file an election to be a “party” after the notice of hearing is issued, the first entity to file its election will be made a “party” and the others will be designated as “participants” in the appeal. While participants may not object to the time, place and manner of a hearing, participants do reserve the right to file position papers and provide written testimony to clarify factual or policy issues.
- Modifying requirements for submitting evidence and identifying attendance at hearings. CMS finalizes its proposal requiring that the parties submit all written or other evidence to be considered at the hearing either with the request for hearing, by the date specified in the request for hearing, or if a hearing is scheduled, within ten calendar days of receiving notice of the hearing. Additionally, CMS finalizes its proposal requiring that individuals from the entity or organization who plan to attend the hearing be included in the response to the notice of hearing, which response should also include the list of witnesses who will provide testimony at the hearing.
- Establishing “good cause” standards for examining new evidence at the hearing stage. CMS has finalized the additional circumstances under which good cause may be found to submit new evidence at the OMHA and ALJ level, as follows: (i) where the new evidence is material to an issue addressed in the QIC’s reconsideration; (ii) where the new evidence is material to a “new” issue identified after the QIC’s reconsideration (with the authority to make such a good cause determination limited to ALJs because only ALJs may raise a new issue on appeal); (iii) where the party made reasonable attempts to obtain the evidence prior to the QIC’s reconsideration (e.g., obtaining medical records); and (iv) where a party asserts and demonstrates that the new evidence was in fact submitted to the QIC.
- Establishing new standards for conducting consolidated proceedings. CMS clarifies by final rule that the ALJ has two mutually exclusive options for handling consolidated proceedings – i.e., making a consolidated decision and record or maintaining separate records and issuing separate decisions. CMS will only permit consolidated proceedings where appeals are filed by the same appellant, or where multiple appellants have agreed to aggregate their claims to meet the amount in controversy requirement.
- Changing the default method for conducting a hearing. CMS finalizes its proposal to establish telephone conference as the default method for conducting a hearing, replacing video teleconference as the default method.
- Preserving the “actual amount charged” as the standard for determining the amount in controversy. CMS initially proposed using the Medicare allowable amount (i.e., the Medicare fee schedule or published contractor-priced amount) as the new standard for determining the amount in controversy. In declining to finalize its proposal, CMS explains that there are certain claims not subject to a fee schedule where the Medicare fee schedule standard would not be appropriate. Accordingly, CMS rejects its proposal to modify the standard for calculating the amount in controversy.
The final rule was published in the Federal Register on January 17, 2017, and will become effective 60 days thereafter.