Updates On the Medicare Appeals Backlog and New Opportunities in Medicare’s Appeals Process – Endnotes


1 There are five levels of appeal within the Medicare appeals process: (1) at level one an appellant files a request for redetermination with the Medicare Administrative Contractor (“MAC”) (Part A & B appellants), Medicare Advantage Plan (Part C appellants) or Medicare Prescription Drug Plan (Part D appellants); (2) at level two an appellant files a request for reconsideration with the Qualified Independent Contractor (“QIC”) (Part A & B appellants) or Independent Review Entity (Part C or D appellants); (3) at level three an appellant files a request for ALJ hearing with OMHA (Part A, B, C or D appellants); (4) at level four an appellant files a request for Medicare Appeals Council review (Part A, B, C or D appellants) (the Medicare Appeals Council is within the Departmental Appeals Board and for purposes of this article, the fourth level of appeal is referred to as the Council level of appeal); and (5) at level five an appellant files a civil action in Federal District Court (Part A, B, C or D appellants). See OMHA’s website at: http://hhs.gov/omha/process/index.html (last accessed April 30, 2018).

2 It is not until the third level of appeal that an independent fact finder reviews the claims and makes an independent determination of coverage. Therefore, to obtain relief, most appellants appealed unfavorable determinations to the third level of the appeals process, which led to a backlog of appeals at the third level of appeal.

3 42 C.F.R. § 405.1016(a).

4 At a recent speech regarding the appeals process and new initiatives to combat the backlog and improve the appeals process, Chief Administrative Law Judge Nancy Griswold of OMHA provided the following average processing times: FY 2008: 88.5 days, FY 2009: 94.9 days, FY 2010: 109.6 days, FY 2011: 121.3 days, FY 2012: 134.5 days, FY 2013: 220.6 days, FY 2014: 414.9 days, FY 2015: 661.8 days, FY 2016: 877.2 days and FY 2017: 1,108.7 days. “Latest Policy & Regulatory Changes to the Medicare Appeals Process,” American Health Lawyer’s Association Conference, March 21-23, 2018, presentation by Nancy J. Griswold, Chief Administrative Law Judge, OMHA and Erin Diesel Roumayah, Esq.

5 Id.

6 American Hospital Association, et. al. v. Burwell, 209 F. Supp. 3d 221, (D.D.C. Sept. 19, 2016) has served as a significant catalyst for the recent efforts to combat the backlog of appeals and improve efficiencies in the Medicare appeals process. In this case, the American Hospital Association (“AHA”) sought a mandamus order against the United States Secretary of Health and Human Services (“Secretary”) to clear the backlog of appeals at the ALJ level and comply with the 90-day statutory timeframe for ALJ hearing. Previously, the AHA proposed an aggressive four-year timetable to eliminate the backlog of appeals by 2021. The Secretary argued that lawful compliance with the AHA’s four-year timetable would be impossible and on appeal, the Court of Appeals for the District of Columbia Circuit vacated and remanded the case to the District Court to evaluate the Secretary’s claim that lawful compliance was impossible. The case is currently stayed on remand before the District Court for the AHA to submit new proposals for a mandamus order for the Secretary’s and District Court’s consideration.

7 For a Part B claim to be eligible, an ALJ hearing request had to have been filed in 2013 and the appeal could not already be assigned to an ALJ for hearing. See OMHA’s website regarding SCF of Part B claims, located at: https:// hhs.gov/about/agencies/omha/about/specialinitiatives/settlement-conference-facilitation/ medicare-part-b-alj-appeals/index.html (last accessed April 30, 2018).

8 Phase II expanded claim eligibility criteria to ALJ hearing requests filed on or before September 30, 2015 and not yet scheduled for ALJ hearing. Under Phase II, at least 20 claims had to be at issue or at least $10,000 in controversy if fewer than 20 claims were involved. See OMHA’s website regarding SCF Phase II for a full list of Phase II eligibility criteria, located at: http://www.hhs.gov/omha/ OMHA%20Settlement%20Conference%20 Facilitation/SCF%20Part%20B%20Docs/ settlement_conference_facilitation_b.html (last accessed April 30, 2018).

9 For a Part A claim to be eligible the ALJ hearing request must have been filed on or before December 31, 2015 and not yet scheduled for ALJ hearing. Additionally, each individual claim must be $100,000 or less and there must be at least 50 claims and $20,000 collectively in controversy. Additional eligibility criteria for the Phase III SCF process are located on CMS’ website, located at: https:// www.hhs.gov/about/agencies/omha/about/ special-initiatives/settlement-conferencefacilitation/medicare-part-a-alj-appeals/index. html (last accessed April 30, 2018).

10 OMHA estimated that in FY 2017 OMHA decided 84,729 appeals. See note 1, supra.

11 A QIC is a review entity that contracts with Medicare to review and process appeals at the second level of the Medicare appeals process, known as reconsideration, for Medicare Part A or Part B appeals. However, if an appeal involves a Medicare Part C or a Part D claim for services, the second level appeal is not processed by a QIC, but rather is processed by an Independent Review Entity. Although decisions by an Independent Review Entity can be appealed to an ALJ for hearing at the third level of the Medicare appeals process, a decision by an Independent Review Entity on a Part C and Part D claim for Medicare benefits is not eligible for resolution through the expanded SCF program. To be eligible for the expanded SCF program the appeal must arise from a Medicare Part A or Part B claim for benefits.

12 See CMS’ website regarding the expanded Settlement Conference Facilitation program for a full list of eligibility criteria at: https:// www.hhs.gov/about/agencies/omha/about/specialinitiatives/settlement-conference-facilitation/ index.html (last accessed June 15, 2018).

13 Id. See also CMS’ Frequently Asked Questions regarding the SCF Program at page 2 of 6, located on CMS’ website regarding the expanded SCF program.

14 Additional eligibility limitations are explained on CMS’ website at: https://www.hhs.gov/ about/agencies/omha/about/special-initiatives/ settlement-conference-facilitation/index.html (last accessed June 15, 2018).

15 For additional details regarding the SCF Express process, see CMS’ website regarding the Settlement Conference Facilitation program.

16 See CMS’ website regarding the LVA Initiative, located at: https://cms.gov/Medicare/ Appeals-and-Grievances/OrgMedFFSAppeals/ Appeals-Settlement-Initiatives/Low-VolumeAppeals-Initiative.html (last accessed April 30, 2018).

17 CMS defined patient status claims as claims denied on grounds that inpatient reimbursement for hospital services was not medically reasonable and necessary, but outpatient reimbursement would be appropriate. Further information regarding the Hospital Appeals Settlements is located on CMS’ website at: https://www.cms.gov/Medicare/Appeals-andGrievances/OrgMedFFSAppeals/HospitalAppeals-Settlement-Process-2016.html (last accessed April 30, 2018).

18 The first Hospital Appeals Settlement (colloquially named the “68% Settlement”) contained seven eligibility criteria: (1) the claim was denied by an entity which conducted review on behalf of CMS; (2) the claim was not for services or items furnished to a Medicare Part C enrollee; (3) the claim was denied based upon an inappropriate setting determination (i.e. a “patient status” denial); (4) the first day of admission was before October 1, 2013; (5) the hospital timely appealed the denial; (6) as of the date the administrative agreement is executed by the hospital and submitted to CMS the claim was either still pending at the Medicare Administrative Contractor (“MAC”), QIC, ALJ or DAB level or the hospital hadn’t yet exhausted its appeal rights; and (7) the hospital did not receive payment and/or bill for the service as a Part B claim. See CMS Hospital Appeals Settlement for Fee-For-Service Denials Based on Patient Status Reviews for Admissions Prior to October 1, 2013 Frequently Asked Questions, located at: https://cms.gov/Research-StatisticsData-and-Systems/Monitoring-Programs/ Medicare-FFS-Compliance-Programs/MedicalReview/Downloads/Hospital_Appeals_Settlement FAQs_10312014_508.pdf (last accessed April 30, 2018). See also CMS’ Hospital Appeals Settlement website, located at: https://www. cms.gov/research-statistics-data-and-systems/ monitoring-programs/medicare-ffs-complianceprograms/medical-review/inpatienthospital reviews.html (last accessed April 30, 2018).

19 As an alternative to individual claim review and adjudication, CMS may utilize statistical sampling and extrapolation to estimate overpayments in instances involving large numbers of beneficiaries and claims. See Chaves County Home Health Service, Inc. v. Sullivan, 931 F.2d 914 (D.C. Cir. April 26, 1991) discussing HHS’ longstanding practice of statistical sampling and extrapolation for estimating and adjudicating Medicare overpayments. See also CMS’ statistical sampling guidelines found in the Medicare Program Integrity Manual at Chapter 8, located at: https://cms. gov/Regulations-and-Guidance/Guidance/ Manuals/downloads/pim83c08.pdf (last accessed April 30, 2018).

20 See CMS’ Appeals Settlement Initiatives website regarding the LVA Initiative, located at: https://www.cms.gov/Medicare/Appeals-andGrievances/OrgMedFFSAppeals/AppealsSettlement-Initiatives/Low-Volume-AppealsInitiative.html (last accessed April 30, 2018).

21 See CMS’ Frequently Asked Questions regarding the LVA Initiative, located on CMS’ website at: https://cms.gov/Medicare/Appeals-andGrievances/OrgMedFFSAppeals/AppealsSettlement-Initiatives/LVA-FAQs.pdf (last accessed April 30, 2018).

22 Id. CMS’ Common Working File is a benefits coordination and pre-payment claims validation system for Medicare Part A and Part B claims. CMS and its contractors utilize this database to determine patient eligibility and monitor appropriate use of Medicare benefits. For further information see CMS’ Medicare Claims Processing Manual at Chapter 27, Section 10, located at: https://www.cms.gov/ Regulations-and-Guidance/Guidance/Manuals/ downloads/clm104c27.pdf (last accessed April 30, 2018).

23 For example, if a patient has both Medicare and private insurer health coverage, coordination of benefit rules will determine which payor is obligated to pay first. If Medicare is obligated to pay first and the secondary payor pays only after Medicare has made a determination of coverage and payment, and if a claim is denied by Medicare on post payment audit and subsequently remains denied through the LVA Initiative, the private payor may demand that the appellant refund any moneys that the private payor initially paid on the claim. Whether and to what extent an appellant may incur refund obligations to other payors will depend on the appellant’s contractual agreements with the payors and applicable law. See also note 20, supra.

24 See note 20, supra.

25 Id.

26 Details about the process are available at CMS’ website, identified in note 19, supra.

27 The pilot was fairly limited in scope, applying to claims that were assigned to one or more ALJs or filed between April 1, 2013, and June 30, 2013.

28 See Improvements are Needed at the Administrative Law Judge Level of Medicare Appeals, HHSOIG, OEI-02-10-00340 (November 2012); see also Nudelman, Jodi, Statement to the House Committee on Ways and Means, Subcommittee on Health, Current Hospital Issues in the Medicare Program, Hearing May 20, 2014.

29 The SSI was designed to resolve large volumes of claims pending in the Medicare appeals process that were filed by Medicare Part A and Part B providers and suppliers. If a beneficiary is found to be financially responsible for a Medicare overpayment, then the appeal would not be eligible for the SSI. Beneficiaries rarely participate in the Medicare hearing process. If a Medicare beneficiary does participate in the appeals process, CMS has an obligation to protect the beneficiary’s exercise of his/her appeal rights and the appeal would therefore not be eligible for resolution in the SSI.

30 RACs are entities contracted by CMS to identify and return improper Medicare payments. RACs are compensated on a contingency-fee basis and thus tend to audit Medicare providers zealously.

31 See CMS’ website regarding the SSI, located at: https://www.hhs.gov/about/agencies/omha/ about/special-initiatives/statistical-sampling/ index.html (last accessed April 30, 2018).

32 Id.

33 For example, one potential challenge could be that the sampling process employed by the statistician resulted in a non-random or nonrepresentative sample, such that the sample itself is invalid. If the sample itself is not statistically valid, the statistical extrapolation cannot be considered statistically valid. For more information see CMS’ Medicare Program Integrity Manual at Chapter 8, note 18 supra.

34 See CMS’ Fact Sheet regarding the QIC DME Formal Telephone Discussion Demonstration, located at: https://www.cms.gov/Medicare/ Appeals-and-Grievances/OrgMedFFS Appeals/Downloads/QIC-Formal-TelephoneDemonstration-Revised-Fact-Sheet-%E2% 80%93-November-18-2016v508.pdf (last accessed April 30, 2018). See also C2C Innovative Solutions, Inc.’s website regarding the QIC DME Formal Telephone Discussion Demonstration, located at: https://www. c2cinc.com/Telephone-Demonstration (last accessed April 30, 2018). C2C Innovative Solutions, Inc. is the Qualified Independent Contractor for DME suppliers that submit Medicare claims.

35 See note 1, supra.

36 82 Fed. Reg. 4974 (January 17, 2017).

37 Id.

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