CODE OF
FEDERAL REGULATIONS
TITLE 1--GENERAL
PROVISIONS
CHAPTER
III--ADMINISTRATIVE CONFERENCE OF THE UNITED
STATES
PART
305--RECOMMENDATIONS OF THE ADMINISTRATIVE
CONFERENCE OF THE UNITED STATES
1 C.F.R. s 305.86-5
s 305.86-5 Medicare
Appeals (Recommendation No. 86-5).
The Medicare program,
since 1965, provides health insurance for nearly
all elderly and most disabled Americans. The
program relies on hospitals, nursing homes and
other health care institutions (under "Part A" of
the program) and physicians and suppliers (under
"Part B") to provide benefits to its
beneficiaries.
This program, serving 30
million persons, has been administered since 1977
by the Health Care Financing Administration (HCFA),
within the Department of Health and Human Services
(HHS). Congress purposefully created a
decentralized system, with implementation by
localized carriers and intermediaries, primarily
insurance companies. HCFA contracts with these
organizations to administer the millions of claims
made by beneficiaries each year and the resulting
payments to providers. For Part A these
organizations are known as "fiscal intermediaries"
and for Part B they are referred to as "carriers."
Additionally, statutorily-mandated peer review
organizations (PROs), made up of physician
controlled organizations under contract with HCFA,
have been given new responsibility to decide many
disputes raised by beneficiaries and hospitals
under Part A. To guide its contractors, HCFA issues
health insurance manuals containing detailed
instructions, though they normally are not
published through notice-and-comment
rulemaking.
HCFA also issues "national
coverage decisions" on whether new medical
technologies and procedures are covered by
Medicare. These decisions are sometimes made after
a recommendation is sought from the HHS Office of
Health Technology Assessment (OHTA). Only when OHTA
advice is sought does HCFA publish notice in the
Federal Register. In most cases, affected
manufacturers, providers, and beneficiaries have no
notice or opportunity to file comments on proposed
action, and neither HCFA nor OHTA has published its
decisionmaking procedures or its criteria for
making these decisions.
Rapidly rising program
expenditures, especially inflation in hospital care
costs, led Congress to take a number of steps to
control costs. In 1982, the PRO system was created
and was delegated important responsibility to deny
Medicare payment for inappropriate or unnecessary
services and to sanction providers for improper
practices. In the following two years Congress
froze physician charges for fifteen months and
completely revamped the reimbursement system for
hospitals by creating the "prospective payment
system" under which Medicare pays hospitals a
predetermined fixed price for each patient case
(according to a classification system of some 470
Diagnosis Related Groupings or DRGs), regardless of
the actual costs incurred in treating the patient.
The prices are subject to annual updating and the
classification system is to be reviewed annually.
Congress created the advisory Prospective Payment
Assessment Commission to participate in this
process. Additionally, to mitigate fears that the
prospective payment system might lead to
unnecessary brief admissions or premature release
of patients, Congress charged the PROs with the
responsibility for monitoring hospital admissions
and discharge practices. In the first years of this
program, hospital admissions for the elderly
declined for the first time since 1965, the average
length of stay also declined and there was a
greater utilization of outpatient services.
Moreover, many hospitals have made record profits
under the new system while reducing the rate of
inflation in hospitals costs. There has also been a
marked increase in physician (Part B) services, as
patients have moved out of hospital and into
outpatient care, and to greater reliance on home
health services.
The Medicare appeals
system is a patchwork with differing administrative
and judicial review requirements for beneficiaries
and providers and differing rules for Part A and
Part B appeals.
Under Part A, most cases
are beneficiary appeals primarily involving
coverage determinations. Initial determinations are
by PROs if hospital services are involved and by
fiscal intermediaries for other Part A services. A
reconsideration step is built in. After this "paper
review," administrative review is then available by
an administrative law judge in the Social Security
Office of Hearings and Appeals if the amount in
controversy exceeds $100 ($200 in hospital cases).
The SSA Appeals Council may review and reverse the
ALJ's decision on its own motion. Judicial review
in the district court is available for the
beneficiary if the amount in controversy is $1000
($2000 in hospital cases).
Providers who have
disputes concerning reimbursement under Part A
(over $10,000) may bring appeals to the Provider
Reimbursement Review Board (PRRB), a five-member
board within HHS. (Appeals involving amounts
between $1,000 and $10,000 are heard by fiscal
intermediaries.) The Secretary may review PRRB
decisions on his own motion and providers have a
right to judicial review. The PRRB's effectiveness
as an independent adjudicator of provider payments
disputes has been called into question by provider
groups who have raised concerns about its
independence, jurisdiction, slowness and its
procedures for handling group appeals. Moreover,
the PRRB's role under the prospective payment
system has been changing. The Board does retain
jurisdiction over appeals remaining under the old
system and over some key issues concerning
allowable costs, and availability of payments under
the new system. But, HCFA rulings and regulations
have constrained the PRRB's jurisdiction in
prospective payment rate cases and provided that it
may not order retrospective correction of errors in
those rates. Moreover, some key provider appeals
such as those involving errors in DRG assignment
have been transferred to PROs. No further review is
available in such cases.
Until passage of the
Omnibus Budget Reconciliation Act of 1986, Pub. L.
99- 509, there was no administrative and judicial
review of Part B claims. However, under the new
law, beneficiaries with disputed claims of over
$500 (and physicians who have accepted assignment
of such claims) have a right to a hearing before an
administrative law judge, and to subsequent
judicial review if the claim exceeds $1,000.
Previously there was no judicial review and
beneficiaries with Part B claims exceeding $100
were limited to a "fair hearing" before an officer
selected by the carrier. (This procedure will
continue for claims between $100 and $500 under the
new legislation.)
The new legislation also
made several other important changes in the laws
affecting Medicare. The legislation:
--authorized persons
affiliated with providers to represent
beneficiaries in Part A appeals as long as no
financial liability is imposed in connection with
the representation;
--requires that HCFA
regulations regarding the Medicare program provide
for a 60-day comment period;
--requires expanded notice
procedures for medicare patients concerning their
hospital discharge rights;
--mandates various new
requirements on PROs to review beneficiary
complaints and to review the quality of care
provided; and
--expands appeal rights in
home health care cases involving so-called
"technical denials" of benefits.
The Conference welcomes
these changes. Indeed, at the time of their
enactment, the Conference was actively considering
recommendations concerning some of them. Other
aspects of the process, however, also deserve
modification or, at least, further study. We
therefore call upon HCFA to continue its efforts to
improve the implementation of this important
program by heeding the following specific
suggestions.
Recommendation
I. Publication of
Policies
A. The Health Care
Financing Administration (HCFA) should keep up to
date and provide reasonable access to all
standards, guidelines and procedures used in making
coverage and payment determinations under Part A
and Part B of the Medicare program.
B. In promulgating
interpretations of Medicare benefits likely to have
substantial impact on the public, HCFA should adopt
procedures that allow for public comment (either
pre-promulgation or post-adoption). See ACUS
Recommendation 76-5.
C. HCFA by regulation (or
Congress by legislation if necessary) should
require fiscal intermediaries and carriers to
publish and provide reasonable access to all
insurance industry rules or other screening devices
used in making coverage and payment determinations
under Part A and Part B.
D. HHS should introduce
more openness and regularity into the procedure for
issuing "national coverage decisions" pertaining to
new medical technologies and procedures, through:
(1) Development of published decisional criteria;
(2) providing for notice and inviting comments in
such cases, both in HCFA's decisionmaking process
and in the process by which the HHS Office of
Health Technology Assessment supplies
recommendations to HCFA; and (3) providing for
internal administrative review or reconsideration
of such decisions.
II. Administrative
Appeal Procedures
A. HCFA should continue to
develop and assess the adequacy and timing of
notice to beneficiaries about coverage and payment
decisions on medical benefits and appeal rights
regarding these decisions.
B. Because of the
increased caseload in Medicare appeals adjudication
anticipated after the recent enactment of new
appeal rights in Part B cases, HHS should consider
whether modification of the existing adjudicatory
system is necessary, including whether to establish
a Medicare appeals division with its own
administrative law judges and review procedure.
C. When resolving hospital
rate appeals under the prospective payment system,
the Provider Reimbursement Review Board should be
authorized, by regulation (or, if necessary, by
legislation) to assume jurisdiction of an
individual hospital's appeal in a manner that
affords timely relief to successful appellants.
III. Suggestions for
Further Study
HCFA should undertake or
support additional research in the following
areas:
A. An empirical study of
the role, performance and procedures of:
(1) Fiscal intermediaries
and carriers in making coverage and payment
determination under Part A and Part B;
(2) Peer review
organizations in adjudicating Part A appeals by
beneficiaries and by hospitals under the
prospective payment system.
B. A comprehensive
analysis of the current administrative arrangement
by which hospital payment rates are updated under
the prospective payment system (taking into account
the need for fair ratemaking, timely resolution of
disputes and budgetary controls), including an
assessment of the Prospective Payment Assessment
Commission in this process.
C. An examination of the
future role and responsibilities of the Provider
Reimbursement Review Board under the prospective
payment system, including its jurisdiction, need
for expedited review procedures for group appeals,
qualifications for membership, adequacy of budget
and administrative support, and the need for
independence from the rest of the Department.
D. An examination of
whether or not the implementation of the
statutorily- mandated peer review program should be
done to a greater extent through notice-
and-comment rulemaking, rather than through
reliance upon program instructions and contract
provisions.
E. A study of HCFA's use
of statistical sampling techniques to determine
project overpayments to a provider for a given
year, and whether the use of these techniques may
effectively deny beneficiaries or providers the
opportunity to challenge payment determinations
based on actual claims experience.
F. A study of whether, in
hospital rate appeals, HCFA should allow
retroactive correction of erroneous calculations of
a hospital's payment rate for affected prior years
under the prospective payment system, and payment
to hospital accordingly.
G. A study of the process
by which ALJ reversals of claim denials are
implemented by intermediaries and providers,
including the need for tighter accounting of
payments to beneficiaries and reimbursements to
providers.
H. An examination of the
feasibility and utility of setting internal time
guidelines for each stage of the Medicare appeals
process, including reconsiderations; ALJ hearings
and Appeals Council review.
[51 FR 46987, Dec. 30,
1986]
Authority: 5 U.S.C.
591-596.
SOURCE: 38 FR 19782, July
23, 1973; 57 FR 61760, 61768, Dec. 29, 1992, unless
otherwise noted.
[Previous
Part] [Next
Part]
|