On November 14, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a report that assessed the impact of changes made to the Medicare appeals system in 2005, in which, among other changes, Administrative Law Judges (ALJs) within the Office of Medicare Hearings and Appeals (OMHA) were required to follow new regulations addressing how to apply Medicare policy, when to accept new evidence, and how the Centers for Medicare & Medicaid Services (CMS) participates in appeals. The OIG report concluded improvements in the process are needed and made recommendations accordingly.
As explained in the report, Medicare ALJ appeals are the third level in a four-level process. At the first two levels, decisions are made after Medicare contractors review the evidence in the case files. The third level of appeal is conducted by ALJs and differs substantially from the first two levels. One of the major differences is that the appellant has the right to a hearing before an ALJ. The fourth appeal level is administered by the Medicare Appeals Council.
The study was based on an analysis of all ALJ appeals decided in fiscal year (FY) 2010; structured interviews with ALJs and other staff; structured interviews with Qualified Independent Contractors (QIC), which administer the second level of appeal, and CMS staff; policies, procedures, and other documents; and data on CMS participation in ALJ appeals.
The OIG found that providers filed 85 percent of ALJ appeals in FY 2010, with a small number of providers filing nearly one-third of all appeals. For 56 percent of appeals, ALJs reversed QIC decisions and decided in favor of appellants; this rate varied substantially across Medicare program areas. Differences between ALJ and QIC decisions were due to different interpretations of Medicare policies and other factors. In addition, the favorable rate varied widely by ALJ. When CMS participated in appeals, ALJ decisions were less likely to be favorable to appellants. Staff raised concerns about the acceptance of new evidence and the organization of case files. Finally, ALJ staff handled suspicions of fraud inconsistently.
In response to these findings, the OIG made the following recommendations to OMHA and CMS, with which OMHA and CMS concurred fully or in part.
- Develop and provide coordinated training on Medicare policies to ALJs and QICs.
- Identify and clarify Medicare policies that are unclear and interpreted differently.
- Standardize case files and make them electronic.
- Revise regulations to provide more guidance to ALJs regarding the acceptance of new evidence.
- Improve the handling of appeals from appellants who are also under fraud investigation and seek statutory authority to postpone these appeals when necessary.
- Specific to OMHA, OIG recommended that OMHA seek statutory authority to establish a filing fee, implement a quality assurance process to review ALJ decisions, determine whether specialization among ALJs would improve consistency and efficiency, and develop policies to handle suspicions of fraud appropriately and consistently and train staff accordingly.
- Specific to CMS, OIG recommendedthat CMS continues to increase CMS participation in ALJ appeals.
