Section Review

Implementation of New Medicare Appeals Procedures Delayed

Michael CostaMichael R. Costa is a senior associate in the Health Business Practice Group of the law firm Greenberg, Traurig, LLP in Boston and chairman of the MBA Health Law Section Council.

I. Introduction

A little-noticed provision in the Benefits Improvement and Protection Act ("BIPA") will eventually overhaul the procedures for appealing Medicare payment decisions, and should bring some additional protections for physicians who are subject to claim denials and overpayment determinations. Under the new procedure, independent external contractors no longer bound by the carriers' policies, will hear reconsideration of claims. Providers, who appealed Medicare payment decisions through the current system, are frustrated by local carrier policies that vary from place to place, and will welcome these changes. Local policies are frequently counterintuitive, at best, and of questionable merit, at worst. The only problem is that implementation of the most significant portions of the new appeals procedures have been indefinitely delayed by the Centers for Medicare and Medicaid Services ("CMS").


II. The existing appeals process

Section 1869 of the Social Security Act (the "Act") establishes a Medicare beneficiary's right to dispute initial determinations made by contractors that result in the denial of claims, in whole or in part, for services received under the Medicare Part A and Part B Programs. Section 1879(d) extends these appeal rights, under certain circumstances, to providers and suppliers who accept assignment.

For initial determinations made before Oct. 1, 2002, an appeal of an initial claim decision generally follows one of two distinct processes depending upon whether it is a Part A or Part V claim. Part A claims, known as reconsiderations, are carried out by Medicare's fiscal intermediaries who issue the initial determination. If an initial determination is upheld at the reconsideration level, the appellant may request a hearing before an administrative law judge ("ALJ") if the amount in controversy is $100 or more. If the ALJ upholds the fiscal intermediary's reconsideration decision, the appellant may request a review by the Departmental Appeals Board ("DAB"). If still unsatisfied with the decision, the appellant's next level of appeal is to a Federal District Court.

Medicare Part B claim reviews are carried out by Medicare carriers. If the amount in controversy is at least $100, carrier reviews are subject to "fair hearings" under 1841(b)(2)(B)(ii) of the Act. The same Medicare contractor that conducted the review carries out these reviews. Subsequently, these appeals may proceed to the ALJ hearing level, provided that the amount in controversy is $500 or more. Thereafter, the appeals process mirrors the Part A appeals process.


III. The new appeals process under BIPA

BIPA makes a major improvement over the current system. Under BIPA, initial determinations by the secretary must be concluded no later than 45 days from the date the secretary receives a claim for benefits. The current system allows the carrier 60 days to reach an initial payment decision on a non-clean claim. Under BIPA, a provider dissatisfied with the initial determination would have 120 days to request a "Redetermination" by the carrier, which must be completed by the carrier within 30 days of the request. Under the current system, such a request must be filed within 180 days of the Initial Determination, is referred to as a "Carrier Review," and must be completed by the carrier within 45 days.

If dissatisfied with the results of the Redetermination, under BIPA, an appeal may be had by requesting a "Reconsideration" within 180 days of the adverse Redetermination. Under the current system, a provider can appeal the Carrier Review within 180 days by requesting a "Carrier Fair Hearing" before a fair hearing officer. Such officers are generally employees of the carrier and their decisions are governed by the carrier's applicable local medical review policies. Moreover, as indicated above, an appeal to a fair hearing officer is only available if the denials total $100 or more. Under BIPA, the Carrier Fair Hearing will be replaced with a Reconsideration by a new legally created position known as a "Qualified Independent Contractor" (QIC).

BIPA requires that CMS maintain contracts with a minimum of 12 QICs. The QICs conducting the hearings will be physicians or other health care professionals, not affiliated with the carriers, and will not be bound by local medical review policies. Therefore, providers will be able to challenge the application of local medical review policies that the providers deem unfair. Under the current system, such challenge is unavailable until the next level of appeal before an administrative law judge (ALJ). Under the current system, fair hearing officers have 120 days to conduct their appeal. However, under BIPA, the QICs will have only 30 days and are not required to hold a hearing. As such, providers appealing carrier Redeterminations hope that these appeal hearings will be more akin to a peer review process, with the QICs having a more empathetic approach based upon their practical experiences. Importantly, a provider can appeal denied claims to a QIC regardless of the dollar amount in question.

The next level of appeal under both systems is an ALJ Hearing, which must be requested within 60 days. ALJs are bound only by laws and regulations, not by CMS's administrative directives to carriers or local medical review policies. Under the current system, this level of appeal is only available if the denials total $500 or more. Under BIPA, this level of appeal is available if the denials total $100 or more. Under the current system, the ALJ is not bound by any time limitations. As present, it takes 441 days, on average, to adjudicate a Medicare Part B case. Under BIPA, ALJs would have 90 days within which to render a decision.

The final administrative level of appeal under both systems is to the Medicare Appeals Council (MAC), which must be requested within 60 days of the ALJ decision. Under the current system, the MAC is similar to an appeals court, reviewing ALJ decisions for legal sufficiency and whether the ALJs exceeded their legal authority. At present, the MAC has no time limitation as to when a decision must be rendered. Under BIPA, the MAC must render a decision within 90 days and appears to have a de novo approach to its review. Under both systems, if the dispute is not satisfactorily resolved through the administrative process, and if contested amounts are greater than $1,000, a provider will be able to request judicial review by filing with the U.S. District Court.

Overall, BIPA mandates new and shorter time limits at nearly every level of appeal. Noncompliance with these time limitations could lead to the matter moving up to the next levels of appeal. Critics say that, due to these shorter time limits, cases may reach the District Courts without decisions and case development from prior administrative levels of appeal.


IV. BIPA's proposed changes delayed

On Jan. 1, 2002, the Office of Inspector General recommended that CMS delay the implementation of Section 521 of BIPA until the agency can resolve problems that make the current system backlogged, overwhelmed and untimely. Considering this recommendation and the fact that the new appeal provisions require additional policy development, CMS provided notice in the Oct. 7, 2002, Federal Register of its intent to both implement and delay certain components of the new Medicare appeals process.

Recognizing the need to accomplish BIPA's goal of achieving a more efficient and accurate appeals system, CMS made the decision to implement two specific components of the new Medicare appeals system. First, the 120-day deadline for filing requests for redeterminations as proposed under the new appeals process will be implemented effective Oct. 1, 2002. This change effectively increases the existing 60-day deadline for requesting reconsiderations of Part A claims and decreases the 180-day deadline for requesting Part B reviews. Second, CMS has chosen to implement the newly proposed amount in controversy requirements for both Part A and Part B appeals. Accordingly, effective Oct. 1, 2002, the amount in controversy requirement for requesting a Part B ALJ hearing and all ALJ hearings for QIC initial determinations will be $100.

Believing that the remaining Medicare appeal provisions of BIPA will ultimately require further public comment, CMS has indefinitely delayed their implementation. In so doing, CMS made it clear that until the new procedures are made effective, fiscal intermediaries and carriers should continue to follow current practices in making initial determinations and carrying out Medicare claim appeals and reviews of hospital discharges.


V. Conclusion

Although BIPA provides for a series of structural and procedural changes to improve the existing Medicare appeals process, the complexity of the changes has unfortunately resulted in the indefinite delay in their implementation. While it is encouraging to know that the new procedures are on CMS' radar screen and that efforts have been taken to implement certain provisions, much more work needs to be done. It is only with the continued cooperation of CMS officials and the public that the far-reaching benefits of the new appeals process will ultimately be recognized.

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