CMS Opens Up on Improving Medicare Appeals Process, Launching Statistical Sampling Initiative

The Centers for Medicare & Medicaid Services (CMS) held an MLN Connects national provider call on June 29 to educate providers and interested parties on the U.S. Department of Health and Human Services (HHS) final rule to improve the Medicare appeals process. CMS and the Office of Medicare Hearings and Appeals (OMHA) additionally recently released details on a new statistical sampling initiative.

The call provided a high-level overview of the final rule, which was published and made effective Jan. 17, 2017, as well as certain general provisions aimed at improving the Medicare appeals process. More specifically, CMS discussed new regulations governing the designation of precedential decisions; the use and scope of authority of attorney adjudicators; and new uniform references to the Medicare Appeals Council and other changes.

CMS officials explained new regulations governing the notice and content of requests for administrative law judge (ALJ) hearings; authorizing ALJs or attorney adjudicators to vacate dismissals; requiring OMHA to request missing information essential to resolving issues on appeal (with tolling of adjudication time frames); and providing remand authority due to missing appeal information or other reasons.

Other high-level regulatory changes discussed by CMS included new rules governing party and non-party participation at ALJ hearings; what entities would be recipients of notices of hearings; limitations on how many CMS entities may attend an ALJ hearing as a party; and the prohibition of fully favorable on-the-record decisions wherein CMS or a CMS contractor has elected to be a party. CMS also discussed new regulations permitting stipulated on-the-record decisions, requiring the identification of hearing attendees and witnesses, and expanding the definition of “good cause” to modify a hearing time or place.

CMS also explained provisions of the final rule governing the admission of new evidence at the ALJ level of appeal. Specifically, new regulations require that any new evidence submitted at the ALJ level be accompanied by a statement explaining why the evidence was not previously submitted. Without an explanatory statement, the new evidence will not be considered. The new regulations also provide four new examples of when good cause may be found for the admission of new evidence.

The final rule also strengthens ALJ discretion in managing the conduct of a hearing by permitting ALJs to limit testimony or arguments that are irrelevant, repetitive, or sufficiently developed. ALJs also would be permitted to excuse a party or representative that the ALJ deems uncooperative, disruptive, or abusive.

CMS discussed other miscellaneous issues regarding the final rule, such as new regulations governing adjudication time frames and the simplification of escalation provisions. Additionally, CMS clarified regulations regarding statistical sampling cases, such as the required amount in controversy and what sample claim information is required for appeal. This includes statistically extrapolated cases, untimely asserted challenges to the statistical sampling, and/or extrapolation, and the final rule clarified the scope of the ALJ’s or attorney adjudicator’s required review of the sampled claims when issuing a decision.

The New Statistical Sampling Initiative

CMS also discussed the Statistical Sampling Initiative, a new alternative adjudication program intended to provide appellants with an expedited and efficient resolution to pending eligible ALJ appeals. OMHA indicated during the call that it is currently assigning claims to ALJs that were filed in January-March 2014. Given the current backlog, by participating in the Statistical Sampling Initiative, an appellant likely will receive a more expeditious resolution to its appeals than would be achieved by awaiting ALJ hearings on a claim-by-claim basis. To participate in this new initiative, an appellant can request statistical sampling, an ALJ may refer an interested appellant, or an OMHA statistical sampling coordinator may identify potentially eligible claims and recommend an appellant’s participation in the program.

In the Statistical Sampling Initiative, a statistical expert will draw a random sample of claims from the universe of an appellant’s pending eligible claims, and following ALJ hearing(s) and determination(s) on the sampled claims, the determination(s) will be extrapolated to the universe of pending eligible claims. Eligible claims and appeals are defined as those in which all jurisdictional requirements for an ALJ hearing have been met; the beneficiary was not found liable after the initial determination nor participated in the qualified independent contractor (QIC) reconsideration; the request for hearing constitutes an appeal of a QIC reconsideration decision; there is no outstanding request for settlement conference facilitation regarding the claim; and at least 250 claims are at issue, per eligible claim category.

CMS explained that there are three eligible claim categories for the Statistical Sampling Initiative: prepayment claim denials; post-payment, non-Recovery Audit Contractor (RAC) claim denials; and post-payment RAC claim denials from one RAC. An appellant can meet the 250-claim minimum threshold for multiple claim categories, but each claim category must have at least 250 claims at issue. In the event that an appellant has multiple categories of at least 250 claims, a separate statistical sampling will be conducted on each category.

Additionally, CMS explained that for purposes of the Statistical Sampling Initiative, an appellant must be a single Medicare provider or supplier. If multiple providers or suppliers with multiple National Provider Identifiers (NPIs) are owned by a single entity, the owing entity may serve as the appellant as long as the owning entity agrees to receive/make any payment from/to Medicare as a result of the extrapolated findings.

As indicated in the call, the sample of claims will be selected by a trained and experienced statistical expert, according to Medicare statistical sampling methodologies that are set forth in Medicare’s Program Integrity Manual.

CMS also described the process of the Statistical Sampling Initiative. Once an appellant expresses interest in the program, OMHA then will generate a list of potential claims that make up the universe of eligible claims. The appellant then will receive the potential list to review it for completeness. An ALJ then will conduct a pre-hearing conference to discuss and finalize the universe of claims, review the proposed statistical sampling process, and answer any questions. Following the pre-hearing conference, the ALJ will issue a post-conference order, which will become binding should no objections be filed. Then, the sampled claims will be combined and assigned to a lead ALJ for a hearing.

CMS explained that additional ALJs will be assigned depending on the size of the universe of claims. If a universe is 250-750 claims, two additional ALJs will be assigned and each ALJ will separately hear and decide on one-third of the statistically sampled claims. If the universe is larger than 750 claims, three to four additional ALJs will be assigned, with each ALJ hearing and deciding on one-quarter to one-fifth of the statistically sampled claims.

During the question-and-answer session following the call, CMS clarified that although each ALJ will conduct its own hearing on its portion of the statistically sampled claims, the lead ALJ will combine the decisions from each hearing on the sampled claims and issue one decision, which OMHA’s statistical expert will extrapolate to the universe of claims. At hearing, appellants should not only discuss the merits of the sampled claims, but the sample methodology as well. Appellants also should cross-examine the OMHA statistician and elicit the testimony of the appellant’s own statistical expert. In the event of an unfavorable determination, an appellant can appeal the decision on the statistical sample, but the appeal must include all claims from the statistical universe. Additionally, if the appellant challenges the statistical methodology, the methodology must be challenged as it pertains to the entire universe.

Although OMHA and CMS responded to a number of inquiries regarding the Initiative during the question-and-answer session, important questions remain unanswered regarding the statistical methodology by which an overpayment or return of funds will be calculated. For example, will the Statistical Sampling Initiative use the mid-point estimate or the lower confidence boundary to estimate the overpayment or return of funds?  If OMHA finds that funds are owed to a provider, utilizing a lower confidence boundary as opposed to a mid-point estimate could yield a lower payout to a provider.

This Statistical Sampling Initiative is another addition to the myriad of alternative adjudication programs recently advanced by CMS and OMHA to clear the backlog of pending ALJ appeals. Under the pilot, to be eligible, claims must have been assigned to one or more ALJs or have been filed between April 1 and June 30, 2013. The current Initiative contains no filing date restriction. Therefore, providers can efficiently resolve numerous cases at a time. Additionally, the Statistical Sampling Initiative, unlike the Statistical Sampling Pilot, minimizes the risk of pulling an unfavorable ALJ by employing a panel of multiple adjudicators.

With broader eligibility criteria and the use of an adjudication panel, OMHA is hopeful that the Statistical Sampling Initiative will be a more attractive alternative of an adjudication program that the previously released Statistical Sampling Pilot.

Appellants that are currently awaiting ALJ hearing on at least 250 similarly categorized eligible claims should carefully review this opportunity to determine if it would be advantageous to engage in it.  

Program Note:

For more information on the latest changes in the appeal process at OMHA, listen to Monitor Mondays, July 10, 10-10:30 a.m. ET when Chief Administrative Law Judge Nancy Griswold will be the broadcast’s special guest.