HHS Proposes Significant Changes to ALJ Hearing Procedures

King & Spalding

HHS announced a Proposed Rule on July 5, 2016 aimed at reducing the backlog of appeals at the Office of Medicare Hearings and Appeals (OMHA) and Departmental Appeals Board (DAB) for Medicare payment and coverage determinations.  As of April 30, 2016, OMHA had more than 750,000 pending appeals, with an adjudication capacity of just 77,000 per year (expected to increase by 15,000 by the end of fiscal year 2016).  The changes suggested in the Proposed Rule include expanding the pool of OMHA adjudicators and “improv[ing] the efficiency of the appeals process by streamlining the processes” so less time is spent on procedural matters.

Precedential Final Decisions

HHS proposes that certain Medicare Appeals Council (Council) decisions may be designated as precedential by the DAB Chair.  Provided that the underlying authority does not change (e.g., that there are no changes to the relevant CMS manual provision), the decisions’ legal analyses and authority interpretations would bind lower-level decision makers, including Medicare Administrative Contractors, Qualified Independent Contractors (QICs), and Administrative Law Judges (ALJs) at OMHA.  To ensure that appellants and others are aware of such precedential decisions, the Proposed Rule requires that the precedential decisions be published in the Federal Register and otherwise made available to the public on the HHS website.

Attorney Adjudicators

In an effort to reduce the backlog of appeals and the workload of ALJs, HHS proposes to allow non-ALJ attorneys to perform certain functions at OMHA.  Proposed abilities include drafting orders for dismissals based on appellant withdrawal requests and remanding appeals for information to Medicare contractors.  Attorney adjudicators may also issue decisions without an oral ALJ hearing when (1) the record supports a finding in favor of the appellant on every issue; (2) all parties waive the right to an oral hearing and request a decision based on the written record; or (3) an appellant lives outside of the United States and does not wish to appear.  The effect of such decisions is equivalent to the effect of an ALJ’s decision.  Attorney adjudicators must be licensed, employed by OMHA, and be knowledgeable of Medicare coverage and payment laws and guidance.  HHS estimates that it could redirect approximately 23,650 cases per year to the attorney adjudicators and away from ALJs.

Amount in Controversy

The amount in controversy required for a hearing will remain the same – for calendar year 2016, $150 for ALJ hearing and $1,500 for judicial review.  However, HHS proposes to generally calculate the amount in controversy based on the Medicare allowable amount, rather than billed charges, for appeals of claims submitted by providers and suppliers.  If a claim is not priced according to a fee schedule or does not have a published contractor-priced amount (e.g., hospital outpatient, hospice, home health, or skilled nursing services), HHS will continue to use billed charges. In the case of an overpayment, the amount in controversy is proposed to be the amount specified in the demand letter.  If the overpayment is based on sampling and extrapolation, the estimated overpayment as extrapolated to the sampling universe is the amount in controversy.  For challenges to the Medicare fee schedule, the amount in controversy is proposed to be the difference between the amount the appellant argues should have been the allowable amount and the published amount.

New Evidence and New Issues at OMHA Level

HHS proposes to allow that a party may submit evidence for the first time at the “OMHA level” for good cause as decided by the ALJ or attorney adjudicator in four circumstances:  (1) when the new evidence is material to an issue addressed in a QIC reconsideration but the issue was not identified as material prior to the reconsideration (consistent with current regulation); (2) when the new evidence is material to a new issue identified after the QIC’s reconsideration; (3) when the party was unable to obtain the evidence before the QIC reconsideration, despite reasonable attempts before the decision; and (4)  when the evidence was submitted by the party to the QIC or another contractor, but it was not included in the record.  HHS also proposes a catch-all exception, where the party demonstrates that it could not have obtained the evidence before the QIC reconsideration.

Furthermore, HHS proposes additional regulations about when an ALJ may consider a new issue at hearing that was not part of the underlying record.  Currently, an ALJ may do so if the ALJ notifies the parties prior to hearing, the issue is material, and resolution is permissible under rules of reopenings.  HHS proposes to “consolidate” the current provisions, such that an ALJ may consider the new issue only  if its resolution has a material impact on the claim and (1) if there is new or material evidence not available or known at the time of the underlying determination or (2) if the evidence considered in making that determination was obvious error.

“Simplified” Expedited Access to Judicial Review (EAJR)

Under current regulations, a party requesting EAJR files its request with the ALJ or Council, who then forwards the request to the EAJR review entity within five days of receipt.  To avoid delays, HHS proposes instead that a party requesting EAJR may file a request with the DAB at the same time as a request for an ALJ hearing or Council review if the hearing or review is not pending, or file an EAJR request with the DAB if an appeal is already pending before an ALJ or otherwise before OMHA or the Council.  As is currently the case, DAB must act upon the EAJR request within 60 days of receipt.

CMS as a Participant and Party In ALJ Hearings

HHS also proposes significant revisions regarding how CMS and its contractors may engage in ALJ hearings.  Consistent with current rules, as a participant, CMS and its contractors may submit written position papers and testimony, may also provide oral testimony at hearing, but may not call witnesses or cross examine a party’s witness.  Also consistent with current rules, as a party, CMS and its contractors may do all of the above, and also call witnesses and cross-examine other parties’ witnesses.  The proposed changes revise the timeframes of how CMS and its contractors become participants or parties, based on whether a notice of hearing has been issued and whether one is required.  As proposed, if more than one entity (i.e., CMS and a contractor or multiple contractors) elects to become a party to an ALJ hearing, the first to file a response is made a party, and the rest are relegated to participants, unless the ALJ grants leave for additional parties as necessary.  To promote administrative efficiency, the proposal also allows only one non-party entity to participate in the oral hearing (i.e., by providing oral testimony), again unless the ALJ grants leave.

General Appeal Requirements

  • HHS proposes to require that providers or suppliers appealing a Medicare coverage or payment determination must include the Medicare NPI of the provider or supplier furnishing the service.  If a Medicare beneficiary appoints a representative, HHS continues to require that the beneficiary’s Medicare health insurance claim number be used.
  • HHS proposes to require that when one or more parties file a timely request for an ALJ hearing on the same claim before a decision is made on the first timely request, the requests are to be consolidated into one proceeding and record, with one decision, dismissal or remand issued.  If a decision has already been issued or good cause is found to extend the period to file the additional request, the adjudicator may reopen the decision.
  • The current rule requires that a request for ALJ hearing be filed with the “entity” specified on the notice of reconsideration, which has led appellants to file their requests with the incorrect OMHA office.  To avoid confusion, HHS clarifies that a request for hearing must be filed with the office indicated in the notice of reconsideration received, which may be the OMHA docketing office, not the QIC or OMHA office unless otherwise specified.
  • HHS proposes that ALJ hearing requests include a statement of “whether the filing party is aware that it or the claim is subject to an OIG or other law enforcement investigation,” one purpose of which is to assist OMHA staff in checking whether the provider or supplier is excluded from Medicare and determine whether the ALJ should request the participation of CMS or any program integrity contractors previously involved in the claim.
  • As proposed, appellants are required to include the amount in controversy with their request, unless the appellant is a beneficiary not represented by a provider, supplier, or Medicaid State agency.
  • Appellants will have an opportunity to cure deficient appeal filings or deficient filing of copies as proposed, but failure to do so within the provided timeframe will result in a dismissal.  HHS proposes that an ALJ (but not an attorney adjudicator) may find good cause to grant filing extension requests.

The Federal Register publication is available here.  Comments to the Proposed Rule are due by 5:00 p.m. on August 29, 2016.  HHS published a blog post on June 28, 2016 regarding its proposed regulations, available here.

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