Medicare
Incomplete Plan to Transfer Appeals Workload from SSA to HHS Threatens Service to Appellants Gao ID: GAO-05-45 October 4, 2004The Medicare appeals process has been the subject of widespread concern in recent years because of the time it takes to resolve appeals of denied claims. Two federal agencies play a role in deciding appeals--the Department of Health and Human Services (HHS) and the Social Security Administration (SSA). Currently, neither agency manages and oversees the entire multilevel process. In the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Congress mandated that SSA transfer its responsibility for adjudicating Medicare appeals to HHS between July 1, 2005, and October 1, 2005. In addition, it directed the two agencies to develop a transfer plan addressing 13 specific elements related to the transfer. GAO's objective was to determine whether the plan is sufficient to ensure a smooth and timely transition.
Transferring the Medicare appeals workload from SSA to HHS requires careful preparation and the precise implementation of many interrelated items. The transfer is mandated to take place no later than October 1, 2005. SSA and HHS have stressed their commitment to ensuring a successful transfer of the administrative law judge (ALJ) level of the Medicare appeals process, and both agencies have emphasized that they are continuing to further develop details of the plan. Although the plan generally addresses each of the 13 elements mandated by MMA, it omits important details on how each element will be implemented. Furthermore, the plan overlooks the need for contingency provisions, which could prove to be essential, should critical tasks not be completed in a timely manner. GAO believes that this essential information is needed to facilitate a smooth and timely transfer. Its absence makes it unclear how the transfer plan will be implemented and threatens to compromise service to appellants.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-45, Medicare: Incomplete Plan to Transfer Appeals Workload from SSA to HHS Threatens Service to Appellants
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
October 2004:
Medicare:
Incomplete Plan to Transfer Appeals Workload from SSA to HHS Threatens
Service to Appellants:
GAO-05-45:
GAO Highlights:
Highlights of GAO-05-45, a report to the Senate Committee on Finance,
the House Committee on Energy and Commerce, and the House Committee on
Ways and Means
Why GAO Did This Study:
The Medicare appeals process has been the subject of widespread concern
in recent years because of the time it takes to resolve appeals of
denied claims. Two federal agencies play a role in deciding appeals”
the Department of Health and Human Services (HHS) and the Social
Security Administration (SSA). Currently, neither agency manages and
oversees the entire multilevel process. In the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (MMA), Congress
mandated that SSA transfer its responsibility for adjudicating
Medicare appeals to HHS between July 1, 2005, and October 1, 2005. In
addition, it directed the two agencies to develop a transfer plan
addressing 13 specific elements related to the transfer. GAO‘s
objective was to determine whether the plan is sufficient to ensure a
smooth and timely transition.
What GAO Found:
Transferring the Medicare appeals workload from SSA to HHS requires
careful preparation and the precise implementation of many
interrelated items. The transfer is mandated to take place no later
than October 1, 2005. SSA and HHS have stressed their commitment to
ensuring a successful transfer of the administrative law judge (ALJ)
level of the Medicare appeals process, and both agencies have
emphasized that they are continuing to further develop details of the
plan. Although the plan generally addresses each of the 13 elements
mandated by MMA, it omits important details on how each element will
be implemented. Furthermore, the plan overlooks the need for
contingency provisions, which could prove to be essential, should
critical tasks not be completed in a timely manner. GAO believes that
this essential information is needed to facilitate a smooth and timely
transfer. Its absence makes it unclear how the transfer plan will be
implemented and threatens to compromise service to appellants.
Completeness of Medicare Appeals Transfer Plan:
[See PDF for image]
[End of figure]
What GAO Recommends:
GAO recommends that the Secretary of HHS and the Commissioner of SSA
take steps to complete a substantive and detailed transfer plan that
includes contingency provisions. HHS, with one exception, and SSA
generally agreed with the recommendations. HHS stated the
recommendation to develop contingency plans for four elements was
unnecessary. GAO believes a contingency plan for each congressionally
mandated element would best ensure a smooth and timely transition.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Incomplete Transfer Plan Lacks Sufficient Detail to Ensure a Smooth and
Timely Transition:
Conclusion:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Analysis of the Medicare Appeals Transfer Plan:
Appendix II: Comments from the Social Security Administration:
Appendix III: Comments from the Department of Health and Human
Services:
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Acknowledgments:
Table:
Table 1: MMA Requirements for the Transfer Plan by Category:
Figures:
Figure 1: Current and Future Medicare Administrative Appeals Process:
Figure 2: Completeness of Medicare Appeals Transfer Plan:
Abbreviations:
ALJ: administrative law judge:
BIPA: The Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000:
CMS: Centers for Medicare & Medicaid Services:
DAB: Departmental Appeals Board:
HHS: Department of Health and Human Services:
MAC: Medicare Appeals Council:
MAS: Medicare Appeals System:
MMA: Medicare Prescription Drug, Improvement, and Modernization Act of
2003:
OHA: Office of Hearings and Appeals:
OPM: Office of Personnel Management:
QIC: qualified independent contractor:
SSA: Social Security Administration:
United States Government Accountability Office:
Washington, DC 20548:
October 4, 2004:
The Honorable Charles E. Grassley:
Chairman:
The Honorable Max Baucus:
Ranking Minority Member:
Committee on Finance:
United States Senate:
The Honorable Joe Barton:
Chairman:
The Honorable John D. Dingell:
Ranking Minority Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable William M. Thomas:
Chairman:
The Honorable Charles B. Rangel:
Ranking Minority Member:
Committee on Ways and Means:
House of Representatives:
In fiscal year 2003, Medicare--the federal health insurance program
that serves the nation's elderly and disabled--processed over 1 billion
claims submitted by providers on behalf of the beneficiaries they
serve. The Centers for Medicare & Medicaid Services (CMS), an agency
within the Department of Health and Human Services (HHS), is
responsible for administering the Medicare program. With assistance
from 46 claims administration contractors, CMS is charged with
identifying and denying health care claims that are invalid,
incomplete, or otherwise improper. Medicare beneficiaries and providers
have the right to appeal denied claims. In fiscal year 2003, the
Medicare program denied about 136 million claims, or about 13 percent
of all claims submitted. Of these denied claims, more than 5 million
were appealed.
Medicare appeals are resolved through an administrative process
consisting of multiple levels of review through several entities. The
process allows appellants who are dissatisfied with decisions at one
level to appeal to the next level. The entities tasked with resolving
appeals are referred to as "appeals bodies." HHS is responsible for
implementing and overseeing the Medicare appeals process. It includes
using CMS's claims administration contractors that consider appeals of
denied claims, administrative law judges (ALJ) from another federal
agency--the Social Security Administration (SSA)--who adjudicate
appeals, and the Medicare Appeals Council (MAC) within HHS's
Departmental Appeals Board (DAB), which reviews decisions made by the
ALJs.
SSA was an agency within HHS until 1994, when it was separated from HHS
and became an independent agency. Despite its removal from HHS, SSA's
Office of Hearings and Appeals (OHA) continued to hear, or
"adjudicate," Medicare appeals. Although still a participant in this
process, OHA's primary mission is to resolve Social Security appeals.
Its Medicare workload is relatively small, representing about 11
percent of the appeals it heard in fiscal year 2003. As a consequence,
most of OHA's ALJs have greater expertise in Social Security matters
than in Medicare. Because of their separate and distinct missions, and
for the sake of administrative simplicity, HHS and SSA have
contemplated transferring OHA's Medicare appeals workload from SSA to
HHS for years, but an agreement between the two agencies on specific
details of the transfer was never reached.
The Medicare appeals process has been the subject of widespread
concern. Last year we reported that there has been poor coordination
among the appeals bodies, which has affected their abilities to
effectively manage the process.[Footnote 1] We also found that
management by two federal agencies--HHS and SSA--with neither agency
managing and overseeing the entire process, has complicated the appeals
bodies' attempts to streamline the process. The appeals bodies have
also been criticized for the length of time it takes them to render
decisions, particularly SSA's OHA and HHS's MAC.
In the recently enacted Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), Congress mandated that SSA transfer
its responsibility for adjudicating Medicare appeals to HHS, with the
result that all levels of the process would reside within a single
federal agency.[Footnote 2] MMA specified that the transfer be
completed not earlier than July 1, 2005, and not later than October 1,
2005. The law also required that SSA and HHS develop a plan for
transferring the work and specified 13 elements that were to be
addressed in that plan.[Footnote 3] MMA directed SSA and HHS to submit
the transfer plan to GAO for evaluation no later than April 1, 2004.
Our objective was to evaluate this plan[Footnote 4] to determine
whether it is sufficient to facilitate a smooth and timely transition.
To do our work, we assessed how well the plan addressed the specific
requirements set out in MMA and interviewed officials at HHS and SSA
responsible for developing the plan. We also reviewed laws and
regulations relevant to the transfer. To learn more about the plan's
implications, we interviewed ALJs who currently adjudicate Medicare
appeals at OHA and judges at the MAC who review appealed OHA decisions.
We also met with other officials at OHA, DAB, and CMS and
representatives from two beneficiary advocacy groups to discuss the
implications of the transfer plan. To learn more about HHS's ability to
hire new ALJs, we spoke with officials from the Office of Personnel
Management (OPM). We interviewed officials from the Office of
Management and Budget to learn about the costs associated with the
transfer and related budgetary matters. Representatives from the
Association of Administrative Law Judges--the union representing ALJs-
-and the American Bar Association submitted written comments regarding
the transfer plan, which we considered. Finally, we analyzed available
information and other materials supporting the assumptions on which the
plan is based, to determine their validity and to evaluate the
appropriateness of the plan's strategies. We performed our work from
March 2004 through September 2004 in accordance with generally accepted
government auditing standards.
Results in Brief:
Transferring the Medicare appeals workload from SSA to HHS poses a
complex challenge that requires careful preparation and the precise
implementation of many interrelated tasks. Although the plan generally
addresses each of the 13 elements mandated by MMA, it does not fully
address 5 of them. For example, while MMA mandated that the plan
address cost projections and financing by including funding levels
required for fiscal year 2005 and subsequent fiscal years, the plan
only contains information for fiscal year 2005. In addition, we found
that the plan lacks detailed information for 11 of the 13 elements,
making it difficult to understand how the transfer will be
accomplished. For example, the plan contains insufficient information
concerning the timing of the transfer, such as a detailed schedule or
project plan to ensure that critical tasks are accomplished. Other
elements of the plan required by MMA--including the development of new
regulations to guide the appeals process and critical operational
matters--have not been thoroughly addressed. Moreover, issues that
establish the foundation for many other transfer activities--such as
the geographic distribution of ALJs--have not been resolved. Finally,
ambiguous details concerning plans for hiring and training ALJs,
developing appropriate performance standards, and safeguarding their
decisional independence leave it unclear exactly how these important
components of the transfer will ultimately be accomplished. The
scarcity of detailed information regarding specific dates, duties, and
decisions prevents a full assessment of the plan's elements and the
absence of contingency plans, should elements not be completed in a
timely manner, threatens to compromise service to appellants.
We are recommending that the Secretary of HHS and the Commissioner of
SSA take steps to help ensure a smooth and timely transition of the
Medicare appeals workload from SSA to HHS, including the completion of
a substantive and detailed transfer plan that includes contingency
plans. HHS, with one exception, and SSA generally agreed with the
recommendations. HHS stated the recommendation to develop contingency
plans for four elements was unnecessary. We believe a contingency plan
for each congressionally mandated element would best ensure a smooth
and timely transition. The agencies also noted new efforts to
facilitate the transfer of Medicare appeals to HHS. Although these
efforts might have merit, we had no opportunity to evaluate them.
Background:
Medicare's fee-for-service health care program consists of two parts--
A and B. Part A covers inpatient hospital, skilled nursing facility,
hospice, and certain home health services. Part B covers physician
services, diagnostic tests, and related services and supplies. Medicare
providers, on behalf of their beneficiaries, can appeal denied claims
for services. Currently, there are four levels of administrative appeal
(see fig. 1). Appeals for denied Part A and Part B Medicare claims
currently follow similar, but not identical, paths. At the first level
of appeal, the process is the same for both Part A and Part B denials.
The Medicare claims administration contractor[Footnote 5] reexamines
the claim along with any additional documentation provided by the
appellant. At this level, in general, only written materials are
reviewed; however, Part B appellants may request telephone hearings. If
the appellant of a Part B claim is dissatisfied with a decision at the
first level, he may proceed to the second level of review, conducted by
the Medicare contractor. At this stage, the file is once again
reviewed, including any additional documentation submitted by the
appellant, and a hearing may be conducted. However, there is no
comparable second level of review by Medicare contractors of Part A
appeals.[Footnote 6]
Appellants of both Part A and Part B denied claims who remain
dissatisfied with the decisions rendered by Medicare contractors may
appeal to the third level--SSA's OHA--where appeals are adjudicated by
ALJs.[Footnote 7] At this level, appellants have the option of
attending a hearing conducted by telephone, by videoconference, or in
person. OHA's ALJs adjudicated the appeal of about 122,000 Medicare
claims in fiscal year 2003. Should appellants also be dissatisfied with
the ALJ's decision, they can appeal to the MAC. The MAC's adjudication
is the fourth and final level of the administrative appeals process. It
is based on a review of OHA's decision; the MAC does not conduct
hearings. Appellants who have had their appeals denied at all levels of
the administrative appeals process have the option of appealing to a
federal district court.
In addition to preparing for the transition of SSA's appeals workload,
HHS continues to plan numerous administrative and structural changes
required by the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA).[Footnote 8] Most of these changes have
not yet been implemented, including the finalization of new
regulations. Among other things, BIPA mandated shorter time frames;
expedited procedures for processing Medicare appeals at all levels; and
the establishment of new contractors, known as qualified independent
contractors (QIC). Contracts for QICs have not yet been awarded, but
once QICs become operational, they will provide a new second level of
adjudication for Part A appeals and replace the existing second level
of the appeals process for Part B claims.
As noted earlier, figure 1 shows the appeals bodies that are currently
involved in Medicare appeals. It also shows those that will be
responsible for resolving Medicare appeals once BIPA has been fully
implemented and OHA's workload has been transferred to HHS.
Figure 1: Current and Future Medicare Administrative Appeals Process:
[See PDF for image]
[A] The second level of the current appeals process is relevant for
Part B appeals only. At present, there is no comparable second level of
appeals for denied Part A claims. Appellants whose Part A claims have
been denied by the claims administration contractor may continue to
appeal their claims by submitting them to OHA.
[End of figure]
The transfer of the appeals workload from SSA to HHS is not a new
proposal. As early as 1988, while SSA was still a part of HHS,
discussion regarding the transfer of this function was already under
way and, throughout the years, the development of potential transfer
plans and strategies has continued. Discussions were active as late as
2003, culminating in SSA's decision not to seek funding for Medicare
appeals in its fiscal year 2004 budget request. Instead, HHS requested
and received funding to cover the cost in its fiscal year 2004 budget.
Under a reimbursable agreement with CMS, SSA will continue to hear
Medicare appeals until September 30, 2005.
In response to MMA's mandate to transfer the workload, SSA and HHS
created an interagency team that drafted the required transfer plan.
The team has continued to meet to deliberate various aspects of the
plan and discuss its implementation. Representatives from both agencies
have stressed their commitment to ensuring a successful transfer of the
Medicare appeals process from SSA to HHS. The plan indicates that HHS
will begin to exercise adjudicative authority for Part A and Part B ALJ
appeals that are received on or after July 1, 2005. The plan notes that
this schedule is being adopted so SSA may concentrate on reducing its
pending workload between July 1, 2005 and September 30, 2005 and to
permit HHS to prepare for and begin conducting ALJ hearings.
According to MMA, the plan is required to provide information regarding
13 key elements. For purposes of this report, we have grouped these
elements into six broader categories--timetable, scope of work,
adjudication guidance, operational matters, staffing, and oversight.
Table 1 lists these six categories and related elements and identifies
the act's requirements for each element.
Table 1: MMA Requirements for the Transfer Plan by Category:
Category and related elements: (A) Timetable: (1) Transition timetable;
MMA requirement: A timetable for the transition.
Category and related elements: (B) Scope of work: (2) Workload;
MMA requirement: The number of ALJs and support staff required now and
in the future to hear and decide Medicare appeals in a timely manner,
taking into account current and anticipated claims volume, appeals,
the number of beneficiaries, and statutory changes.
Category and related elements: (B) Scope of work: (3) Cost projections
and financing;
MMA requirement: Funding levels required for fiscal year 2005 and
subsequent years to carry out the functions transferred under the plan.
Category and related elements: (C) Adjudication guidance: (4)
Regulations;
MMA requirement: The establishment of specific regulations to govern
the appeals process.
Category and related elements: (C) Adjudication guidance: (5)
Feasibility of precedential authority;
MMA requirement: The feasibility of developing a process to give MAC
decisions, addressing broad legal issues, binding precedential
authority.
Category and related elements: (D) Operational matters: (6) Geographic
distribution;
MMA requirement: The steps that should be taken to provide for an
appropriate geographic distribution of ALJs throughout the United
States to ensure timely access.
Category and related elements: (D) Operational matters: (7) Access to
ALJs;
MMA requirement: The feasibility of (a) electronically filing appeals
to the ALJ level and (b) conducting hearings using video-or
teleconferencing technologies.
Category and related elements: (D) Operational matters: (8) Shared
resources;
MMA requirement: The steps that should be taken to enter into
arrangements between HHS and SSA to share office space, support staff,
and other resources, with appropriate reimbursement.
Category and related elements: (D) Operational matters: (9) Case
tracking;
MMA requirement: The development of a unified case tracking system
that will facilitate the maintenance and transfer of case-specific
data across both the fee-for- service and managed care components of
the Medicare program.
Category and related elements: (E) Staffing: (10) Hiring;
MMA requirement: The steps that should be taken to hire ALJs, taking
into account their Medicare expertise and appropriate geographic
distribution, and to hire support staff for ALJs.
Category and related elements: (E) Staffing: (11) Training;
MMA requirement: Training for ALJs regarding Medicare laws and
regulations.
Category and related elements: (F) Oversight: (12) Independence of
ALJs;
MMA requirement: The steps that should be taken to ensure the
independence of ALJs through placement of ALJs in an administrative
office organizationally and functionally separate from CMS and its
contractors, and providing that ALJs report to, and be under the
general supervision of, the Secretary of HHS, but not report to, or be
subject to supervision by, another officer of HHS.
Category and related elements: (F) Oversight: (13) Performance
standards;
MMA requirement: The appropriateness of establishing performance
standards for ALJs with respect to timeliness of decisions, taking
into account applicable requirements.
Source: GAO analysis of Section 931 of MMA.
[End of table]
Incomplete Transfer Plan Lacks Sufficient Detail to Ensure a Smooth and
Timely Transition:
We found that HHS's and SSA's plan is too vague to serve as a blueprint
for the transfer's implementation. We evaluated the plan's 13 elements,
mandated by MMA, and grouped them into six categories to evaluate
whether the plan was sufficient to ensure a smooth and timely
transition. We found that in virtually every category, the information
contained in the plan, as well as documentation provided to us in the
course of our work, lacked sufficient detail to ensure that HHS will
achieve a smooth and timely transfer. Further, the lack of detail and
the fact that some aspects of the plan have not yet been finalized
raise serious questions as to whether HHS and SSA have considered the
breadth of challenges inherent in the transfer. Our review suggests
that the plan's deficiencies, if not corrected, may compromise service
to appellants. (App. I contains a summary evaluation of our analysis of
the plan.)
Category A: Essential Milestones and Contingency Strategies Not
Included in Transition Timetables:
Element 1: Timetable:
Transferring SSA's annual workload of appeals--about 122,000 claims in
fiscal year 2003--to HHS requires the development of many interrelated
components. For example, deciding where ALJs should be geographically
located affects hiring and training plans and the need for office
space. Because the transfer date is approaching, many of these
activities must be completed simultaneously so that HHS can ensure that
service to appellants will not be disrupted. With the exception of the
development of a case tracking system, the plan contains few milestones
for completing tasks. Some of the few dates that are mentioned merely
reflect the MMA-imposed deadlines between July 1, 2005, and October 1,
2005, without noting interim milestones. For example, there are no
milestone dates associated with the vital tasks of producing training
materials for newly hired ALJs or locating office space for ALJs to
conduct hearings. Other elements of the plan are addressed without ever
mentioning dates, such as the ensuring of independence for ALJs and the
establishment of performance standards for them. Moreover, the plan
does not assign responsibility to any group, office, or individual to
perform the necessary tasks to execute key elements of the plan. In our
view, the level of complexity associated with the transfer would
warrant the development of a detailed schematic outlining all of the
steps that need to be taken, as well as the corresponding dates for
completing these steps, to ensure that the plan could be successfully
executed. In response to our inquiries, the transfer team reported that
it did not prepare a project plan nor could it supply information about
ambiguous or absent milestones. Without specific milestones, HHS does
not have a management tool for determining whether the general dates
contained in the plan can be met as scheduled.
The transfer plan also lacks a contingency component, to be used in the
event that something prevents the transfer from occurring as scheduled.
Given the importance of having a system in place for adjudicating
appeals, we view this as a considerable oversight. Failure to
successfully implement even one element of the plan, such as the
development of a geographic distribution plan to ensure appellants
appropriate access to ALJs throughout the country, could derail the
transfer. Although this is a critical element of the plan, there is no
contingency provision. HHS officials maintained that they are confident
the transfer will be executed in a timely manner, eliminating the need
for a contingency plan. However, they indicated that if necessary, they
could renew their reimbursable agreement with SSA to adjudicate
Medicare appeals for another year. In contrast, SSA officials
emphasized to us that responsibility for all Medicare appeals will
pass, under MMA, to HHS on October 1, 2005. According to them, it is
not a given that SSA will have the capability, or even the legal
authority as of that date, to adjudicate Medicare appeals under any
arrangement with HHS. In our view, this is the type of issue a
contingency plan could address. In agency comments, both SSA and HHS
reported that they have identified a mechanism for HHS to continue to
use SSA ALJs to adjudicate Medicare appeals after the date of the
transfer, if necessary. However, neither agency provided details
concerning this mechanism in their comments. As a result, we are unable
to evaluate it.
Category B: The Plan's Assumptions to Predict the Scope of Work Are Not
Credible:
Understanding the size of the appeals workload is a critical first step
in planning for the transfer because other decisions, such as the
number of ALJs needed to complete the adjudications, are predicated on
it. We found that the transfer plan does not present a thorough
analysis of the expected workload and the costs to transfer the
function and adjudicate appeals. Further, the plan is based on
unreliable staff and cost data, which undermine the validity of the
plan's projections. MMA mandated that certain external factors be
incorporated into the plan's analyses, such as changes in the number of
appeals and the effect of statutory changes. However, the plan did not
contain a detailed discussion of the implications of these factors on
workload and costs.
Element 2: Workload:
HHS's plan to initially hire 50 ALJs is based on information from OHA
that it uses an average of 46 ALJs to adjudicate Medicare appeals each
month. However, SSA does not have a dedicated corps of ALJs who are
exclusively devoted to hearing Medicare appeals, and based its estimate
on the average amount of time ALJs spend doing Medicare work. OHA has
no formal timekeeping system for its ALJs, and instead, the chief of
each local hearing office estimates the amount of time ALJs spend each
month adjudicating Medicare appeals. Individual ALJs do not provide
their own time estimates, and the information supplied by each local
office is not otherwise verified. The transfer team did not
independently determine the accuracy of this information, despite the
plan's heavy reliance on it.
Despite the fact that MMA requires the plan to address the number of
ALJs and support staff required to hear Medicare appeals now and in the
future, the plan limits itself to the present. It does not specifically
address how the implementation of recent statutory changes to Medicare
may affect the appeals workload and increase the need for personnel.
For example, the plan does not address the potential impact of
additional appeals resulting from MMA's new prescription drug
benefit.[Footnote 9] Further, the largest impact may result from the
implementation of BIPA's changes, which will not become effective until
the QICs are fully established--now slated for October 2005. BIPA's
changes to the appeals process were to apply to appeals of claims
denied on or after October 1, 2002. However, CMS issued a ruling on
October 7, 2002,[Footnote 10] that held that the majority of BIPA's
provisions apply only to appeals adjudicated by QICs. Because QICs are
not yet operational, the appeals process is currently operating in
accordance with regulations established prior to BIPA's
passage.[Footnote 11] The establishment of the QICs and new regulations
implementing BIPA's provisions are now expected to occur simultaneously
with the plan to transfer the OHA workload. As a result, it will be
HHS's ALJs who will be expected to comply with BIPA's shorter time
frames for processing appeals. While their OHA colleagues, who faced no
deadlines, took an average of 327 days to complete a Medicare appeal in
fiscal year 2003, HHS ALJs will be expected to render decisions much
more quickly--within 90 days. The plan is silent as to how HHS's new
corps of ALJs will meet BIPA's time frames by completing the same
workload in less than one-third the time taken by OHA.
In addition, the plan states that efficiencies will be gained from
hiring ALJs and staff who are specialized in Medicare, increasing
reliance on teleconferences and videoconferences to minimize travel,
and improving the management of appeals cases. While efficiencies may
be gained in the long term, we found that the plan did not provide a
sound quantitative basis to support HHS's claim that efficiencies would
mitigate demand for more resources in the first year of operation.
Further, the plan does not contain a contingency provision to address
the possibility that greater efficiencies may not be achieved. In our
view, this is significant as, in the short term, HHS may experience a
period of diminished efficiency while new staff--both ALJs and support
personnel--take time to attend training, develop expertise with
Medicare issues, and gain familiarity with their new organization and
infrastructure.
Element 3: Cost Projections and Financing:
The plan notes that $129 million was requested for fiscal year 2005 for
Medicare appeals reforms, which includes start-up funds for HHS's ALJ
unit; funds to reimburse SSA for continuing to process Medicare
appeals; and funds to implement other BIPA reforms, as amended by MMA.
In fiscal year 2004, $50 million was intended for processing appeals
submitted to ALJs. HHS officials told us that they anticipate requiring
the same amount for fiscal year 2005. The $50 million for processing
appeals is based upon SSA's agreement to adjudicate approximately
50,000 cases,[Footnote 12] at a cost of $1,000 each, in fiscal year
2004. We learned that HHS expects to use $8 million in fiscal year 2005
to meet start-up costs for the transfer of ALJ functions. Although the
plan notes that start-up funds will allow HHS to begin hiring attorneys
and other staff, it makes no mention of office space, equipment, and
other infrastructure development costs. Most of the remaining balance
is expected to be used for establishing QICs. We also noted that the
plan does not provide cost projections for years subsequent to 2005, as
required by MMA.
Office of Management and Budget officials, who are responsible for
approving HHS's requests, and HHS officials could not provide specific
budgetary details related to the plan. Moreover, HHS's estimate of the
costs of adjudicating Medicare appeals in fiscal year 2005 is based on
its assumption that those costs will mirror what it is paying SSA to
resolve appeals this fiscal year under its reimbursable agreement.
However, OHA reported that the actual costs of adjudicating these
appeals exceeded the amount it was being paid. After adjusting for
inflation and overhead, OHA officials estimated that their actual cost
in fiscal year 2003--the most current data available--was closer to
$1,300 per case. MMA allows for increased financial support to ensure
that the HHS ALJ unit meets its workload demands. However, should
additional funds be needed, the plan does not include a contingency
provision that defines criteria and other relevant measures to justify
future requests for increased financial support.
Category C: Completion of Adjudication Guidance for ALJs Not Fully
Addressed:
The timely issuance of regulations governing the appeals process will
have a significant effect on the implementation of the transfer plan.
Without regulations implementing the provisions of BIPA, and more
recently MMA, the appeals process will lack guidance critical for its
operation. Nonetheless, the plan does not address time frames for
establishing these regulations nor does it discuss what actions will be
taken should the regulations not be finalized by the time of the
transfer. It appears, however, that no regulations will be needed
regarding the use of MAC decisions as binding precedents on lower
levels of the appeals process, including ALJs, at least in the near
future. The plan has addressed this matter by retaining current policy,
which allows ALJs and the other appeals bodies to consider these
decisions as guidance, but does not require them to be viewed as
binding precedents. However, the plan suggests that this decision may
only be for the short term.
Element 4: Regulations:
To implement MMA's provisions to transfer SSA's workload to HHS,
regulations will need to be drafted and finalized by October 1, 2005--
the date that the transfer is required to be complete. As required by
MMA, the plan acknowledges the need for specific regulations and
mentions that regulations will be developed in several areas, such as
providing appellants the opportunity to file appeals electronically and
a reliance on videoconferences in lieu of in-person hearings. However,
the plan is silent on the anticipated time frames for issuing these
regulations and does not include interim dates to ensure they are
finalized on time. In the absence of regulations, it is not clear how
appellants will be assured of having sufficient access to ALJs. For
example, without regulations it is uncertain what forum will be used to
provide information to beneficiaries and providers, how access to this
information will be provided, and what will be used as the basis for
this information. The plan also does not address whether there will be
a need to issue additional regulations on other aspects of the
transfer, such as procedures for hiring ALJs, initiating a training
program, developing ALJ performance standards, and identifying
opportunities for HHS and SSA to share resources. Given the ambiguity
in the plan, it is unclear how the required transfer of the appeals
function to HHS could proceed on a timely basis.
Moreover, although the plan recognizes that regulations implementing
most of BIPA's provisions have not been finalized, it does not address
the impact of this situation. This is particularly troubling because,
according to CMS, the implementation of QICs will be delayed if final
regulations are not issued by November 2004. As a result, HHS may be
compelled to develop and operate two separate processing systems--one
that follows current rules, and another that complies with BIPA's
mandated deadlines and other requirements.
Element 5: Feasibility of Precedential Authority:
In response to an MMA requirement to address precedential authority,
the plan makes clear that MAC decisions will not be binding on lower
levels of the appeals process, including ALJs. The plan acknowledges
that precedential authority may contribute to more consistent decisions
by ALJs. However, it concludes that the risk of an inaccurate or
incomplete interpretation of an agency ruling could result in greater
problems when the same issue is raised more clearly or in different
circumstances. The plan therefore concludes that the risks inherent in
giving the MAC precedential authority outweigh the benefits. The plan
also suggests that high-level decisions could serve as guidance to the
lower levels in the process, without having the full force of
precedent. Although the plan indicates that HHS will reevaluate its
stand on the merits of granting binding precedential authority to MAC
decisions, it does not specify what might contribute to a change in its
current position on the issue.
Category D: Operational Matters Need Greater Specificity:
Absent or insufficient details and vague descriptions regarding
critical operational aspects of the transfer prevented us from fully
evaluating these components and, in our view, put the successful
implementation of the transfer at risk. The lack of a geographic
distribution plan for HHS ALJs alone threatens to undermine efforts to
accomplish the transfer in a timely manner. Beyond this, the lack of
specific plans to ensure access to ALJs nationwide and to share
resources with SSA to enhance appellant access may well compromise
service to appellants. Finally, although the plan outlines important
details concerning the establishment of a new case tracking system, its
implementation is linked to the establishment of the QICs in July 2005,
making a current evaluation impractical.
Element 6: Geographic Distribution:
While the plan addresses the topic of the future geographic
distribution of ALJs, it does not include the steps to be taken to
ensure that appellants across the country will have timely access to
such judges, as MMA requires. Rather than detailing a specific
geographic distribution strategy, the transfer plan indicates that a
central hearing support office will be located in the Baltimore,
Maryland and Washington, D.C., metropolitan area and that a field
structure will be established. Because many issues relating to the
successful implementation of the transfer, such as hiring staff, hinge
on the strategy for distributing ALJs throughout the country, its
absence from the plan is a serious shortcoming.
The plan notes that HHS will develop a process for determining the size
and location of the field structure and will reach a final decision
about the geographic distribution of ALJs by the end of calendar year
2004. However, the plan does not include key information that would
enable us to analyze this critical component of the plan, such as the
anticipated number of field office locations or the size and resources
required for each office. The plan also does not supply information
about the number of judges to be housed in each location or details
concerning whether certain case processing activities--such as case
receipt, research, and preparation for hearings--will be centralized or
regionally based.
Element 7: Access to ALJs:
MMA required the plan to address the feasibility of electronically
filing appeals to the ALJ level. CMS is developing a beneficiary Web
site, which, in its pilot at one contractor, allows beneficiaries
Internet access to claims information. The plan anticipates that HHS
will use this Web site to allow electronic appeals submissions.
Although the plan does not discuss when this feature will be available,
a CMS official estimated it would not be ready for testing for at least
2 years. HHS is also exploring the possible development of another
Internet-based filing system that does not depend on CMS's beneficiary
Web site.
MMA also required that the plan address the feasibility of using video-
and teleconferencing to provide access to ALJs. Although the plan
identifies a variety of sources for providing ALJs and appellants with
videoconference access--including SSA, private contractors, and other
government agencies--no analysis has been conducted to determine where
videoconference sites are needed, where such sites are actually
available, and the costs of such services. Moreover, SSA does not
expect appellants to travel more than 75 miles to attend hearings, but
the plan does not address HHS's expectations in this regard. Appellants
in remote areas of the country may be unlikely to find access to
videoconference facilities within such a radius. In regard to
teleconferences, the plan notes that a small number of appeals are
currently conducted in this manner, but more commonly, teleconferences
are used to obtain the testimony of expert witnesses. The plan refers
to HHS's willingness to expand its use of teleconferences, where
appropriate, but does not define the conditions that would constitute
"appropriate" use.
Moreover, no analysis has been done to determine what proportion of
appellants would actually be interested in having their appeals heard
using videoconferences or teleconferences. Several ALJs told us that
beneficiaries are often uncomfortable using videoconference facilities
and prefer to have their cases heard face-to-face. While appellants
have the right to request in-person hearings, the plan does not include
an assessment of HHS's capacity to conduct such hearings. There is no
contingency provision to facilitate in-person hearings, should this be
appellants' preference. Further, as a result of changes to the appeals
process due to BIPA, hearings by ALJs will provide an appellant's sole
opportunity to be heard in person, making access to them all the more
important. Although OHA has been able to accommodate appellants through
its network of 10 regional offices and an additional 143 field offices
with hearing rooms throughout the United States and Puerto Rico, HHS
currently has no available capacity to hear Medicare claims
appeals.[Footnote 13]
Element 8: Shared Resources:
The plan does not address MMA's mandate that it include steps for SSA
and HHS to share office space, support staff, and other resources.
Moreover, it does not include a contingency element should HHS be
unable to use SSA resources to complete the Medicare workload. Instead,
the plan focuses exclusively on sharing videoconference facilities, but
the arrangements for sharing this resource are ambiguous. For example,
while the plan notes that SSA is willing to share its videoconference
sites, it also makes clear that SSA will have priority over the use of
the equipment and does not include a protocol for ensuring that HHS
will have sufficient and timely access. One SSA official told us the
agency anticipates that it will have excess videoconference capacity
once it expands its videoconference system. Currently, SSA has 148
videoconference units available but plans to increase this number to
351 units at 302 different sites by 2006. However, the agency has not
yet performed an analysis to establish where and when excess capacity
is anticipated. Because SSA ALJs schedule their hearings well in
advance, HHS ALJs may have difficulty scheduling videoconferences in
their localities to meet their 90-day BIPA-mandated deadline. Moreover,
even with access to 302 facilities, depending on the location of
available equipment, HHS ALJs may have to travel to videoconferences,
which could be as time-consuming as traveling to in-person hearings.
Element 9: Case Tracking:
The plan addresses the mandate's directive to develop a unified case
tracking system for all appeals levels, and outlines a new tool
designed to fulfill the mandate's requirements--the Medicare Appeals
System (MAS). We found that the design and approach to implementing MAS
appear reasonable. However, the plan was drafted with the expectation
that MAS would be first used by QICs in the summer of 2004. The delay
in implementing QICs, which are now not expected to become fully
operational until October 2005, has reduced the time available for live
testing of the system to determine if it will perform as expected.
Currently, HHS is unable to conduct such testing. This delay may leave
insufficient time to fully test MAS and make necessary adjustments to
the system, but the plan leaves no margin for such an occurrence.
However, should MAS be unavailable at the time of the transfer, CMS has
an alternate case tracking system that could be temporarily deployed
until the new system becomes operational.
Category E: Strategy for Staffing HHS's ALJ Unit Is Undeveloped:
The plan lacks a detailed staffing strategy to ensure that HHS can
attract both ALJs and support staff by the time of the transfer. MMA
required the plan to include steps to hire ALJs, taking into account
their expertise in Medicare, and to address training in Medicare laws
and regulations.
Element 10: Hiring:
As required by MMA, the plan addresses steps that should be taken to
hire ALJs and support staff. It outlines HHS's intention to hire ALJs
from various sources, including OPM's register of qualified ALJs, the
list of retired ALJs who have expressed interest in returning to work
and are available for temporary reappointment, and ALJs currently
employed and adjudicating administrative appeals at other
agencies.[Footnote 14] However, it does not discuss how HHS will be
able to ensure that it can attract the 50 ALJs it plans to hire.
Moreover, we expect that it may be difficult for HHS to identify and
hire 50 ALJs with Medicare knowledge. For example, OPM's register, the
largest source of new ALJs with 1,300 potential candidates, does not
include information indicating whether candidates have Medicare
expertise. Similarly, HHS cannot tell which of the 110 retired ALJs on
the register of those interested in returning to work have Medicare
expertise. And, although ALJs already employed at other agencies may be
interested in seeking employment at HHS, few of them are likely to have
knowledge of Medicare rules. Given that the majority of ALJs currently
employed by SSA focus primarily on disability appeals, few of them are
likely to have significant Medicare expertise.
HHS's plan to hire ALJs and other professional and administrative staff
in a manner that ensures an appropriate geographic distribution is a
major staffing consideration. However, the plan does not address how
HHS will incorporate this feature into its hiring plans. Given the lack
of such a geographic distribution plan, there is no way for ALJ
candidates to know where new positions will be located--which may have
a great bearing on their interest. As a result, even the OHA ALJs with
Medicare expertise may not be interested in transferring to HHS, if
this would require them to relocate.
The plan lacks other details concerning HHS's hiring plans. For
example, it is not explicit about whether HHS will hire the 50 ALJs and
200 support staff all at once, or if it intends to conduct several
rounds of hiring and training. The plan does not outline who is to be
involved in the hiring process and, as of July 2004, HHS had not
decided whether a chief judge might be hired first to participate in
the hiring of the ALJs and support staff. Finally, the plan does not
acknowledge the possibility that HHS may be unable to hire all needed
staff by the time of the transfer. By not recognizing this possibility,
the plan misses the opportunity to develop critical contingency
arrangements.
Element 11: Training:
As required by the mandate, the plan describes HHS's plans to develop a
training strategy but, nonetheless, leaves key questions unanswered.
Although the plan establishes four broad categories for short-term
training, it does not include substantive information on the training's
content. It also lacks other critical information, such as a detailed
description of its plans to provide initial training for HHS's ALJs.
While OHA's ALJ training of new hires lasts 5 weeks, the plan does not
describe the duration of HHS's planned training or the depth of
material to be covered. It also does not specify who will be
responsible for developing the training curriculum and course materials
or presenting the training to new ALJs. The plan mentions that HHS is
also developing a long-term training strategy, but there are no details
for providing ongoing training and refresher classes to ALJs in future
years. Even OHA ALJs with Medicare knowledge may need additional
training, as some indicated to us that their understanding of the
program's rules is not current.
In addition to our concerns regarding the content of this plan element,
the lack of a detailed schedule for developing and presenting the new
training program raises concerns about HHS's ability to have an
adequately prepared staff to adhere to its plans to begin processing
appeals by July 1, 2005. The only date included in HHS's training
schedule indicates that both hiring and training will begin in the
second quarter of calendar year 2005--at most, 3 months before the plan
anticipates HHS ALJs will begin hearing appeals. This poses a
challenging time frame for HHS, especially if its training will mirror
OHA's 5-week program. Given the plan's timeline, there is little
opportunity to pursue alternate training arrangements, should delays
occur.
Category F: Issues of Oversight Remain Unresolved:
Although the plan recognizes the importance of ALJ decisional
independence--an element critical to the integrity of the appeals
process--it does not specify, organizationally, where ALJs will be
housed within HHS nor does it discuss the safeguards that will be put
in place to ensure ALJs are insulated from undue influence from HHS.
The plan outlines the circumstances under which performance standards
can be applied to ALJs without threatening their independence. However,
other than meeting time frames prescribed by law, the plan proposes no
standards nor does it describe the process that might be used to
develop such standards.
Element 12: Independence of ALJs:
Despite the fact that the independence of ALJs is critical to ensuring
due process to appellants, the plan is silent on what steps will be
taken to shield ALJs from real or perceived external pressures,
including pressure from elsewhere in HHS, which is tasked with
overseeing the Medicare program. ALJs throughout the federal government
may have to issue rulings against the agencies that employ
them.[Footnote 15] However, since SSA became an independent agency in
1994, OHA ALJs hearing Medicare appeals, as SSA employees, have not
been in this position.
The plan notes that SSA has a long history of maintaining independence
of ALJs. MMA required that the plan provide information on steps to be
taken to ensure the independence of ALJs hearing Medicare appeals once
this function has been transferred to HHS. However, the plan merely
repeats MMA's requirement--that the HHS ALJ unit will report solely to
the Secretary of HHS and that it will be separate from CMS. The plan
provides no information about the proposed, new organizational
structure, nor does it specify who, in terms of title and duties, will
direct and manage the HHS ALJ unit. Furthermore, the plan does not
define the relationship of ALJs to other HHS offices, such as CMS and
the MAC--with which the ALJ unit will have to communicate and
coordinate--or where, organizationally, the ALJ unit will be housed.
The plan also does not include standards that either HHS, or the new
ALJ unit, could use to evaluate whether the independence of the ALJ
unit is being achieved. Similarly, the plan makes no reference to the
steps that will be taken to ensure the objectivity of ALJ training.
Finally, the plan does not recognize the possibility that the
independence of the ALJ unit could be questioned nor does it specify a
contingency plan to ensure--and if necessary, restore--the continued
independence of ALJs.
Element 13: Performance Standards:
The plan addresses the appropriateness of establishing performance
standards for ALJs, as required by MMA. Although the plan acknowledges
that it is important that ALJs adhere to the new time frames for
processing appeals as established by BIPA, it is unclear whether any
other performance standards for ALJs will be established. The plan
notes that the law allows the imposition of "administrative practices
and programming policies that ALJs must follow," including timeliness
of decisions, so long as the agency does not use the guidelines to
influence the ALJs' decisions. In addition, the plan holds that it is
not unreasonable to expect a minimum level of efficiency and that ALJs
can be disciplined for "good cause," which may be based on performance
or unacceptably low productivity. However, the plan does not discuss
whether such guidelines will be imposed, by what means the agency would
evaluate a minimum level of efficiency, who would evaluate the judges,
and what actions might be taken based on unsatisfactory findings.
Similarly, the plan does not include specific steps the agency would
take to ensure that any guidelines and performance standards that are
imposed would not interfere with ALJ independence. Finally, the plan
does not address how ALJs would be evaluated should any new standards
be challenged.
Conclusion:
SSA and HHS have stressed their commitment to ensuring a successful
transfer of the ALJ level of the Medicare appeals process from SSA to
HHS. Addressing the 13 elements specified in MMA and developing and
implementing contingency provisions are key to ensuring that the
transition is smooth and that services to appellants are not disrupted.
Although both agencies have stressed that they are continuing to
further develop details of the plan, based on the information they have
developed thus far, we believe that the plan does not comprehensively
address the 13 elements and, thus, seriously jeopardizes a successful
and timely transition. For example, the absence of specific milestones,
the use of unreliable data, and the lack of an acknowledgement that HHS
may ultimately need to develop two separate processing systems to
adhere to current practices and those required by BIPA are serious
shortcomings. Moreover, the absence of details related to providing
appellants access to ALJs, hiring and training staff with expertise in
Medicare, and preserving ALJ independence further undermine the plan's
credibility. The plan's lack of specific details jeopardizes HHS's
ability to begin adjudicating appeals as scheduled. Unless SSA and HHS
act quickly to effectively address the 13 elements required by MMA and
finalize the transition plan for transferring responsibility for
adjudicating Medicare appeals from SSA to HHS, the appeals process
could be compromised.
Recommendations for Executive Action:
To help ensure a smooth and timely transition of the Medicare appeals
workload from SSA to HHS, we recommend that the Secretary of HHS and
the Commissioner of SSA take steps to complete a substantive and
detailed transfer plan. Specifically, we recommend that the Secretary
and Commissioner take the following six actions:
* Prepare a detailed project plan to include interim and final
milestones, individuals or groups responsible for completing key
elements essential to the transfer, and contingency plans.
* Validate data and perform analyses to support decisions regarding key
elements, such as workload, staffing needs, and costs.
* Outline a strategy that addresses the possible need for two separate
processing systems at HHS--one for appeals that follows the current
processing practices and one that complies with BIPA's time frames and
other requirements--in the event that the BIPA provisions establishing
the QICs are not implemented as scheduled.
* Identify where staff and hearing facilities--including
videoconference equipment--are needed as well as opportunities to share
staff and office space.
* Develop an approach to ensure that ALJs and support staff with
Medicare expertise can be hired, and that all staff are adequately
trained to process and adjudicate Medicare appeals.
* Define the relationship of HHS's ALJ unit to the other organizations
within the department, and identify safeguards that will be established
to ensure decisional independence.
Agency Comments and Our Evaluation:
We provided a draft of this report to both SSA and HHS for their
review. In its written comments, HHS agreed with all but one of our
recommendations. HHS said that contingency plans for several plan
elements--regulations, feasibility of precedential authority,
independence of ALJs, and performance standards--were unnecessary.
Because of the critical nature of these provisions and the inter-
dependence of the plan's components, we continue to believe that the
establishment of such plans for each congressionally mandated element
would best ensure a smooth and timely transition.
Further, HHS emphasized that it attempted to ensure that it provided us
with the most current information available regarding decisions
associated with the transition. However, we do not believe that HHS has
kept us fully apprised of all of its efforts. For example, in its
comments, HHS described the establishment of the Office of Medicare
Hearings and Appeals Transition and the activities of this new office
related to the transfer. Although HHS indicated that this office was
established in July 2004, before our work was complete, this
information was not shared with us. In addition, although HHS noted
several other efforts to enhance the transition process--such as its
analysis of internal data to make caseload projections for fiscal years
2005 and 2006--this information also was not provided to us during the
course of our work. Although this, and other efforts HHS cited to
facilitate the transfer of Medicare appeals might have promise, we had
no opportunity to evaluate them.
We are also concerned with HHS's characterization of our findings and
its own progress in implementing the transfer. For example, HHS
interprets figure 2 in our report as indicating that we believe that
the plan meets substantially all MMA requirements. However, figure 2
clearly shows that 5 of the 13 plan elements do not completely address
these requirements. Moreover, figure 2 shows that the plan lacks
detailed information and contingency plans for the vast majority of the
elements. Such significant deficiencies suggest that a smooth and
timely transfer may be in jeopardy. HHS also stated that the public
comments it received concerning the plan were positive. Our information
does not support this assertion. Our evaluation of these comments
showed that they mirrored the concerns addressed in our report and
raised serious questions about the ability of SSA and HHS to effect the
transfer in a manner that would preserve the independence of ALJs and
ensure the quality of service to appellants.
In its written comments, SSA agreed with our recommendations by either
expressing its concurrence or by citing steps it has taken to aid with
their implementation. SSA also noted that it shared our concern that
adequate planning needs to take place and agreed that detailed
contingency planning is important. Although SSA's comments focused on
its continuing contribution to enhance HHS's understanding of the
current Medicare appeals process, it also emphasized that some elements
of the plan are the sole responsibility of HHS. While we agree that HHS
must ultimately assume full and complete responsibility for the appeals
process, until the transition is complete, we believe that both
agencies are accountable for ensuring that appeals are adjudicated
promptly and competently, and for coordinating their efforts so that
the transfer occurs on a smooth and timely basis.
Finally, both SSA and HHS expressed concern with the title of our
report. HHS said that the title might raise unnecessary fears among the
advocate and beneficiary communities. Further HHS stated that it is on
track for an efficient and effective transfer of the ALJ function at
the earliest possible time allowed by the MMA. Although HHS indicated
that much progress has been made in key areas, such as development of
regulations and the assurance of ALJ independence, it provided no new
information in support of these efforts. In addition, many other
significant questions raised in our report, such as the geographic
distribution of ALJs, were not addressed in its comments. Therefore, we
continue to have significant concerns about the agencies' abilities to
effectuate the transfer on a timely basis. Both agencies also reported
that they had identified a mechanism for HHS to continue to use SSA
ALJs to adjudicate Medicare appeals after the statutory date of the
transfer, if necessary. However, neither SSA nor HHS described this
mechanism and we therefore were unable to evaluate it. Consequently, we
continue to believe that our evaluation of the evidence supports the
report title. SSA's and HHS's comments are reprinted in appendixes II
and III, respectively.
We are sending copies of this report to the Secretary of HHS, the
Commissioner of SSA, and other interested parties. In addition, this
report will be available at no charge on GAO's Web site at http://
www.gao.gov. We will also make copies available to others upon request.
If you or your staffs have any questions about this report, please call
me at (312) 220-7600. An additional GAO contact and other staff members
who prepared this report are listed in appendix IV.
Signed by:
Leslie G. Aronovitz:
Director, Health Care--Program Administration and Integrity Issues:
[End of section]
Appendix I: Analysis of the Medicare Appeals Transfer Plan:
Based on our review of the plan and additional materials provided by
the transfer team, we found that the plan to transfer the Medicare
appeals function from the Social Security Administration to the
Department of Health and Human Services is insufficient to ensure a
smooth and timely transition. Although the plan generally addresses
each of the 13 elements mandated by the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA), as indicated in
figure 2, it omits important details on how each element will be
implemented. Furthermore, the plan overlooks the need for contingency
provisions, which could prove to be essential, should critical tasks
not be completed in a timely manner.
Figure 2: Completeness of Medicare Appeals Transfer Plan:
[See PDF for image]
[End of figure]
[End of section]
Appendix II: Comments from the Social Security Administration:
SOCIAL SECURITY:
The Commissioner:
September 24, 2004:
Ms. Leslie G. Aronovitz:
Director, Health Care - Program Administration and Integrity Issues:
U.S. Government Accountability Office:
Room 5-A-14:
441 G Street NW:
Washington, D.C. 20548:
Dear Ms. Aronovitz:
Thank you for the opportunity to review and comment on the draft
Government Accountability Office (GAO) report "Medicare: Incomplete
Plan to Transfer Appeals Workload from SSA to HHS Threatens Service to
Appellants (GAO-04-1055).
First and foremost, I wish to reiterate my commitment to making the
Social Security Administration's (SSA) transfer successful and to
maintaining service to appellants throughout the process. The draft
report correctly notes that the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) transfers authority
from SSA to HHS for the Medicare appeals hearings function, effective
October 1, 2005. However, in the event that it is necessary, SSA and
the Department of Health and Human Services (HHS) have identified a
mechanism for HHS to continue to use SSA ALJs to adjudicate Medicare
appeals after the statutory date of transfer.
We wish to assure GAO, Congress, and the public that we are confident
that the two agencies, working together, can ensure that case
processing is not interrupted. For this reason, we recommend that GAO
revise the title of the report. We believe that the title "Incomplete
Plan to Transfer Appeals Workload from SSA to HHS Threatens Service to
Appellants" may raise unnecessary fears among the advocate and
beneficiary communities. We suggest "Prompt Action Needed to Complete
Planning for Transfer of the Appeals Workload from SSA to HHS.":
In the draft report, GAO expressed concern about a successful transfer
of the Administrative Law Judge (ALJ) level of the Medicare appeals
process from SSA to HHS. Generally, GAO's concerns relate to the level
of detail in the Report to Congress.
We share GAO's concern that adequate planning takes place to address
the full range of issues and contingencies. We also agree that detailed
contingency planning is important in order to ensure that appeals
continue to be processed, even if the transfer is not completed by the
statutory deadline.
Enclosed are detailed comments and suggestions we have on the draft
report. In addition, I have enclosed a summary of SSA's role in each of
the 13 required elements from the MMA addressed in the draft report. If
you have any questions, please have your staff contact Candace Skurnik
at (410) 965-4636.
Sincerely,
Jo Anne B. Barnhart:
Enclosures:
COMMENTS OF THE SOCIAL SECURITY ADMINISTRATION (SSA) ON THE GOVERNMENT
ACCOUNTABLITY OFFICE (GAO) DRAFT "MEDICARE: INCOMPLETE PLAN TO TRANSFER
APPEALS WORKLOAD FROM SSA TO HHS THREATENS SERVICE TO APPELLANTS" (GAO-
04-1055):
We appreciate the opportunity to review the subject report. We are
taking this opportunity to provide comments and supplemental
information to clarify and more fully describe major actions SSA has
taken in preparation for the transfer of the Medicare appeals function.
Decisions on the structure and procedures for the Department of Health
and Human Services (HHS) appeals process are within the purview of HHS,
and SSA defers to that agency on these points. Thus, as the draft
report makes clear, SSA's role in the transfer has two major elements:
Assisting HHS in developing its system for handling these appeals, and
Ensuring a smooth handoff of the Medicare appeals workload from SSA to
HHS.
SSA takes these responsibilities seriously and has worked with HHS to
ensure that our sister agency is provided with the tools it needs to
develop their new process. In order to facilitate the exchange of
information and ideas, SSA established a work group led by the
Executive Counselor to the Commissioner to coordinate the agency's
participation in the joint SSA-HHS Medicare Workgroup.
SSA assumed its joint responsibility with HHS for the development and
implementation of the transfer plan by providing open access and
complete information about the Medicare hearing process. In addition to
providing a vast array of information to HHS to assist in making
decisions and developing plans for how it will carry out the hearing
function, SSA has given particular attention to coordination and
development of those aspects of the transfer which directly affect
SSA's ability to provide service. These areas include the
implementation of initiatives to process SSA's pending Medicare
workload, effective interface of databases and sharing of information
necessary to let appellants know the status and location of their
cases, and coordinated planning to meet each agency's needs for
Administrative Law Judges (ALJ) and other staff.
Information Sharing:
SSA has shared with HHS information on areas such as:
* The current and historic Medicare Appeals workload as well as its
geographical distribution;
* Startup costs of hearing offices, including the space and equipment
requirements per staff position and the timeline for acquiring space
through the General Services Administration; and:
The timeline and process for hiring ALJs, staff learning curves, and
the timeline for staff to achieve full productivity, along with basic
training materials.
SSA Preparation for Medicare Appeals Transfer to HHS:
To expedite handling of its current Medicare appeals workload, the
Office of Hearings and Appeals (OHA) has developed and implemented,
with the contribution of HHS resources, a centralized Medicare
Screening Unit. The Screening Unit is designed to identify appeals that
can be resolved at the earliest stage possible in the appeal process.
The Screening Unit was staffed beginning in June 2004, and immediately
began the screening process for all Parts B and C appeals. Beginning in
July 2004, all Part A appeals were forwarded directly to the Screening
Unit from the Centers for Medicare and Medicaid Services (CMS)
contractors. We have an established cadre of ALJs to handle Medicare
cases, and have streamlined assignment of cases to these ALJs. We also
are identifying ways to direct cases not handled by the Medicare cadre
ALJs to ALJs with experience handling Medicare cases. To further
facilitate the processing of Medicare appeals, we have developed plans
to hold video hearings scheduled from the Screening Unit beginning in
October 2004.
Database Continuity:
During the transition period when both SSA and HHS will be processing
Medicare hearings, it is critical that both agencies have the ability
to advise appellants and their representatives as to whether their
cases are located at SSA or HHS. SSA and HHS are exploring the most
efficient way to provide current Medicare hearings data to both
agencies. SSA will continue to monitor and track the status and
location of cases within its jurisdiction in the Hearing Office
Tracking System (HOTS). Systems experts from HHS and SSA have met to
discuss the technical issues, including the possible exchange of
Medicare hearings data between SSA and HHS, as well as resources needed
to provide the necessary information. We expect to resolve these issues
well before implementation.
Our responses to the specific recommendations are provided below:
Recommendation 1:
Prepare a detailed project plan to include interim and final
milestones, individuals or groups responsible for completing key
elements essential to the transfer, and contingency plans.
SSA Response:
We agree. SSA will expand upon our plans, described above, to process
the Medicare appeals workload prior to transfer. As noted above, we are
working with HHS to develop a contingency plan to ensure uninterrupted
handling of appeals if a complete transfer does not take place before
the statutory deadline.
Recommendation 2:
Validate data and perform analyses to support decisions regarding key
elements, such as workload, staffing needs, and costs.
SSA Response:
As indicated in our response to recommendation l, SSA has provided HHS
with extensive information and analysis regarding the Medicare appeals
workload, staffing, and costs. As we operate under our expedited
procedures for handling Medicare appeals, we will provide additional
information and analysis to HHS.
Recommendation 3:
Outline a strategy that addresses the possible need for two separate
processing systems at HHS-one for appeals that follows the current
processing practices and one that complies with the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protect Act of 2000 (BIPA)'s
timeframes and other requirements, in the event that the BIPA
provisions establishing the qualified independent contractors (QICs)
are not implemented as scheduled.
SSA Response:
Because SSA has not been involved with the QICs, our contribution in
this area of planning is limited.
Recommendation 4:
Identify where staff and hearing facilities-including videoconference
equipment-are needed as well as opportunities to share staff and office
space.
SSA Response:
SSA/HHS jointly studied opportunities for sharing resources, and
determined that, generally, it is feasible to do so only for
videoconference equipment and space. SSA is in the process of a major
expansion of its videoconference facilities. In planning the need for
and location of these new facilities, we have taken into account
projected use for Medicare video hearings.
Recommendation 5:
Develop an approach to ensure that ALJs and support staff with Medicare
expertise can be hired, and that all staff are adequately trained to
process and adjudicate Medicare appeals.
SSA Response:
As noted above, SSA has provided HHS with information about hiring and
training ALJs and support staffing needs, as well as with basic
training materials.
Recommendation 6:
Define the relationship of HHS's ALJ unit to the other organizations
within the department, and identify safeguards that will be established
to ensure decisional independence.
SSA Response:
This task is one that uniquely lies with HHS. We will, of course,
continue to provide any information that would assist HHS in making
these determinations but will defer to HHS on how its ALJ unit should
be structured.
Social Security Administration Role MMA Transfer Plan Elements from
Draft GAO Report (Terminology Taken from Tables in the Draft Report):
1. Transition Timetable: Provide HHS with information on processes and
startup times and with a suggested timetable.
2. Workload: Provide current and historical information on Medicare
appeals case load and anticipated case volume.
3. Cost Projections/Financing: Provide salary information and startup
costs for hearing offices.
4. Regulations: Task specific to HHS.
5. Precedential Authority: Task specific to HHS.
6. Geographic Distribution: Provide HHS with a breakdown on the
Medicare caseload by geographic area.
7. Access to ALJs: Consider Medicare appeals load in selecting sites
for new SSA video hearing facilities Share electronic disability
appeals processing technology if requested.
8. Shared Resources: Provide HHS access to video hearing facilities.
9. Case Tracking: Maintain the Hearing Office Tracking System through
the transition Share development work on the Case Processing Management
System if requested.
10. Hiring: Share full information on workloads, AU productivity and
support staff needs.
11. Training: Provide HHS with basic ALJ training materials Share
experience on helping new ALJs reach full productivity.
12. Independence of ALJs: Task specific to HHS.
13. Performance standards: Share information on SSA/OPM standards.
[End of section]
Appendix III: Comments from the Department of Health and Human
Services:
DEPARTMENT OF HEALTH AND HUMAN SERVICES:
Office of Inspector General:
SEP 24
Ms. Lelsie G. Aronovitz, Director:
Health Care-Program Administration and Integrity Issues:
United States Government Accountability Office:
Washington, D.C. 20548:
Dear Ms. Aronovitz:
Enclosed are the Department's comments on your draft report entitled,
"Medicare: Incomplete Plan to Transfer Appeals Workload from SSA to HHS
Threatens Service to Appellants" (GAO-04-1055). The comments represent
the tentative position of the Department and are subject to
reevaluation when the final version of this report is received.
The Department appreciates the opportunity to comment on this draft
report before its publication.
Sincerely,
Signed by:
Daniel R. Levinson:
Acting Inspector General:
Enclosure:
The Office of Inspector General (OIG) is transmitting the Department's
response to this draft report in our capacity as the Department's
designated focal point and coordinator for Government Accountability
Office reports. OIG has not conducted an independent assessment of
these comments and therefore expresses no opinion on them.
COMMENTS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS) ON THE
GOVERNMENT ACCOUNTABILITY OFFICE'S (GAO) DRAFT REPORT "MEDICARE-
INCOMPLETE PLAN TO TRANSFER APPEALS WORKLOAD FROM SSA TO HHS THREATENS
SERVICE TO APPELLANTS" (GAO-04-1055):
The Department of Health and Human Services (HHS) appreciates the
opportunity to review and comment on the Government Accountability
Office's (GAO) Draft Report No. GAO-04-1055, which was prepared in
accordance with section 931 of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (MMA) Pub. L. No. 108-173.
Consistent with section 931, HHS and the Social Security Administration
(SSA) reported to the Congress in March 2004 on their plan to
accomplish the transfer of responsibility for the functions of
administrative law judges (ALJs) responsible for hearing Medicare
appeals under title XVIII of the Social Security Act (the Act) to HHS
from SSA. GAO's report will fulfill its obligation under section
931(a)(4) to report to the Congress on its evaluation of that plan. In
the interim, the Secretary of HHS and the Commissioner of SSA have
continued working together to ensure a successful transition and the
availability of an efficient and effective appeals process both during
the transition and after the transfer of responsibility for the appeals
function to HHS is complete.
Since the enactment of the MMA on December 8, 2003, HHS has taken a
series of steps toward the statutory goal of assuming responsibility
for the appeals workload no later than October 1, 2005. HHS has
completed the essential groundwork needed for successful effectuation
of the transfer of the AU function. HHS notes that GAO, in Table 2 of
the draft report "Evaluation of Medicare Appeals Transfer Plan's
Implementation Readiness," concludes that HHS meets substantially all
MMA requirements.
As GAO recognized on page 4 of the draft report, "Transferring the
Medicare appeals workload from SSA to HHS poses a complex challenge
that requires careful preparation and the precise implementation of
many inter-related tasks." Given the complexity of the transfer of the
AU function, HAS is using the time remaining to complete the transition
(approximately 1 year) to take a prudent and responsible course by
evaluating input from all stakeholders and implementing the transition
plan in a deliberative manner while aggressively seeking to take
responsibility for the appeals function at the earliest time the
statute will allow. Moreover, it should be noted that although the GAO
report calls for more specificity in certain areas, the plan did
address all of the elements required by the statute.
It is important to note that the March 2004 report to the Congress was
completed in just over 3 months after enactment of the MMA. Thus, the
report inevitably could not supply the degree of detail that the GAO's
evaluation suggests would have been desirable. HHS has taken a
deliberative approach to establishing the new ALJ appeals entity that
is aimed at ensuring both a timely transition and the long-range
success of the appeals process.
Throughout this ongoing process, HHS has attempted to ensure that GAO
and the Congress have the most current information available regarding
decisions associated with the transition and the development of the new
AU appeals entity. On May 12, 2004, HHS briefed GAO about the
President's fiscal year (FY) 2004 budget, the Centers for Medicare &
Medicaid Services (CMS) FY 2004 operating plan, and the President's FY
2005 budget request for needs associated with the new appeals workload.
Moreover, HHS staff has had ongoing communication, including a meeting
and conference calls with Senate and House staff of the committees of
jurisdiction, to receive input and address issues and concerns. As HHS
moves forward with this transition, conference calls will continue as
necessary to ensure that the Congress is kept up-to-date on transition
progress.
GAO Recommendations:
HHS generally agrees with the recommendations in the draft report.
However, we believe that the title "Incomplete Plan to Transfer Appeals
Workload from SSA to HHS Threatens Service to Appellants" may raise
unnecessary fears among the advocate and beneficiary communities. We
suggest "Prompt Action Needed to Complete Transfer of Appeals Workload
from SSA to HHS." Below are GAO's recommendations, and HHS' responses,
as well as additional information regarding steps HHS has taken since
the transfer plan was submitted to the Congress on March 25, 2004.
GAO Recommendation:
Prepare a detailed project plan to include interim and final
milestones, individuals or groups responsible for completing key
elements essential to the transfer, and contingency plans.
HHS Response:
HHS agrees that project planning is an important and integral element
of a successful transition. To that end, HHS created the Hearing and
Appeals Restructuring Team (HAR), which includes senior leadership from
across the Department, to provide overall direction and guidance. In
addition, on July 25, 2004, HHS established the Office of Medicare
Hearings and Appeals Transition (OMHAT) within the Office of the
Secretary/Assistant Secretary for Administration and Management.
Since it was established, OMHAT has reviewed and evaluated materials
provided by SSA concerning, among other things, workload, training, and
processes. Building on this information, OMHAT has completed several
actions that further the timely and efficient transfer of the hearings
function from SSA. First, OMHAT issued three task orders: one to assess
how best to employ videoconferencing and audio-conferencing
technologies in the hearings process; one to assess HHS staffing needs
for the ALJ hearings function and to develop a weighted workload
system; and another to create a simulation of the anticipated case
workflow for the Medicare hearings function. Second, OMHAT contracted
with "HHS University" (an intra-Department educational network that
offers HHS employees training opportunities) for a project manager to
oversee the development of all training materials and the scheduling
and coordination of training for all new staff associated with the
hearings function, and for a complete analysis of HHS' future training
needs for staff in the new ALJ appeals entity.
In addition, HHS staff are actively working with a contractor to
develop the documentation and workflow analysis for the ALJ portion of
the data system.
The basics of project management involve taking actions to effect a
positive outcome, as well as thinking through possible roadblocks, how
to prevent them, and what arrangements would be needed if they arise.
The Department is assuring that the project management process
considers contingencies as one of the many inherent steps in
approaching each area of this initiative.
The HHS/SSA transition plan anticipates addressing necessary
contingencies. For example, the plan states that HHS will adjust the
hiring of ALJs and other staff depending on actual workload volume, and
will consider any possible expansion or re-alignment of the initial
location of appeals offices depending on experience. Although the GAO
report recommends contingencies for all of the MMA transfer plan
requirements, several items in the plan, however, do not require
specific contingency planning, e.g., regulations, feasibility of
precedential authority, independence of ALJs, and performance
standards.
GAO Recommendation:
Validate data and perform analyses to support decisions regarding key
elements, such workload, staffing needs, and costs.
HHS Response:
HHS agrees with the recommendation to perform further data analysis and
is taking steps to accomplish this independent of reliance on any prior
data. Given the short time period in which the transition plan had to
be developed, HHS, of necessity, relied on SSA staff and cost data.
Presently, HHS is analyzing its internal data to make FY 2005 and FY
2006 caseload projections for all Part A, B, and C appeals, as well as
the new Part D appeals. In addition, HHS is reviewing the SSA Medicare
ALJ caseload by conducting a real-time activity-based review of the
appeals function, including examining actual appeal case files. The
knowledge garnered through this review will be used to develop
workload, staffing, and budget forecasts. The actual caseload
projections have not been finalized and the review is ongoing.
In the short term, efforts have focused on coordinating with SSA to
finalize caseload data to assist in the transition. HHS will closely
evaluate the data using the Medicare Case Tracking System (MCATS) to
develop information regarding caseload projections and future funding
requirements. As the new ALJ appeals entity begins hearing cases, MCATS
data will be supplemented and eventually superceded by data collected
in the new Medicare Appeals System (MAS), the long-range data system
currently being developed by HHS. As the GAO report notes, the MAS
will, for the first time, provide appeals-specific information on each
claim that reaches the Qualified Independent Contractors (QIC)
reconsideration, ALJ, or Departmental Appeals Board (DAB) level. HHS is
working closely with all involved parties to produce a shared data
system that will provide the data needed by each component for claim
and case tracking purposes.
GAO Recommendation:
Outline a strategy that addresses the possible need for two separate
processing systems at HHS-one for appeals that follows the current
processing practices and one that complies with BIPA's timeframes and
other requirements, in the event that the BIPA provisions establishing
the QICs are not implemented as scheduled.
HHS Response:
HHS anticipated the need for two processes. Work is on track to
finalize the relevant regulations and implement the QICs in order to
facilitate and complement the transfer of the appeals function. Because
the two processes will be quite similar and will parallel one another
in most respects, the system will accommodate both types of appeals.
GAO Recommendation:
Identify where staff and hearing facilities-including videoconference
equipment-are needed as well as opportunities to share staff and office
space.
HHS Response:
HHS agrees with this recommendation and has evaluated issues associated
with the geographic distribution and organizational structure of the AU
appeals entity. Final decisions are expected soon and will be shared
with the Congress.
HHS has made decisions regarding the internal organization of the ALJ
appeals entity. The director's office for the new ALJ appeals entity
will be located in the Office of the Secretary and report directly to
the Secretary-a structure that is nearly identical to the
organizational structure of the DAB. The structure meets statutory MMA
requirements that the new ALJ appeals entity be independent of and
physically separate from CMS.
GAO Recommendation:
Develop an approach to ensure that ALJs and support staff with Medicare
expertise can be hired, and that all staff is adequately trained to
process and adjudicate Medicare appeals.
HHS Response:
HHS agrees with this recommendation and is working with OPM to address
hiring and staffing needs, including consideration of Medicare
expertise, classification of the AU position, and the need for an
expedited hiring process. HHS is also evaluating training needs and is
developing a comprehensive training strategy.
GAO Recommendation:
Define the relationship of HHS's ALJ unit to the other organizations
within the Department, and identify safeguards that will be established
to ensure decisional independence.
HHS Response:
HHS agrees that decisional independence is of paramount importance and
will take steps to ensure that this occurs. The organizational
structure of the new ALJ appeals entity will also reflect this
independence.
Other Matters:
In addition to the areas highlighted by the draft report, HHS has taken
significant steps in other areas since the transition plan was
submitted to the Congress to ensure the successful and timely
transition of the appeals function. These steps include the following:
Public Input:
To ensure that stakeholder expectations are taken into consideration in
establishing the new ALJ appeals entity, HHS published a Federal
Register notice on June 28, 2004 soliciting input from stakeholders on
the issues related to the process of transferring the responsibility
for the Medicare appeals from SSA to HHS, with comments due July 28,
2004. Overall, the comments received were positive and provided
significant input into aspects HHS should consider in designing the new
ALJ appeals entity. Many of the comments centered around issues
regarding the organizational structure, the geographic distribution of
hearing offices, and ALJ decisional independence from CMS. Responders
raised many of the same questions HHS has been meticulously addressing
over the last nine months, such as the manner in which the backlog of
cases will be handled and the process for hiring and training ALJs.
Again, HHS has spent considerable time and energy over the last 5
months collecting information pertinent to the questions raised by
responders, and is evaluating and considering the information as part
of the decision-making process.
Budget Formulation:
Much effort has focused on the numerous budget issues associated with
the transfer of the appeals responsibility and the establishment of the
new ALJ appeals entity. This includes evaluating both FY 2004 budget
issues for SSA and HHS, as well as the HHS funding issues for
subsequent years. For example, HHS is working with SSA to develop the
Memorandum of Understanding (MOU) for FY 2005, which ensures that,
consistent with the Medicare appeals transition plan submitted to the
Congress in March 2004, SSA completes the processing of all Medicare
appeals received by it prior to July 1, 2005. In addition, HHS and SSA
have identified a mechanism for HHS to continue to use SSA ALJs to
adjudicate Medicare appeals after the date of the transfer, if
necessary.
Policy Development:
HHS has been working on the development and clearance of the final
regulations needed to implement the BIPA and MMA changes to the
Medicare claims appeals process, including the BIPA section 521 changes
to the appeals procedures. Work is on track to finalize the regulations
and implement the QICs in order to facilitate and complement the
transfer of the appeals function.
A significant amount of work also has been conducted to identify the
numerous procedures that must be in place to ensure that operations run
smoothly once the new AU appeals entity assumes responsibility. For
example, HHS has identified and begun evaluating policies associated
with the manner in which cases will be identified that involve multiple
claimants with common issues, and the practicality of the electronic
filing of appeals.
Operational Policy Coordination:
HHS also is working to make sure that a coordinated operational
approach is in place among all the key components in the appeals
process that need to play a role in bringing about a successful AU
hearing function. HHS is continuing to examine methods to address AU
performance standards. HHS has also worked to ensure smooth
communication at the pre-ALJ and post-ALJ levels of the appeals
process, including seeking input from the DAB to assure that appeals
data and case files will be transferred timely between the new ALJ
appeals entity and the DAB once HHS assumes responsibility for the
hearings function.
Conclusion:
HHS appreciates GAO's thoughtful consideration of the Medicare appeals
transition plan delivered to the Congress in March 2004 and welcomes
the opportunity to review and comment on the GAO draft report
evaluating the plan. As the report noted, this is a complex undertaking
that requires careful preparation and the precise implementation of
many interrelated items. The careful, deliberative work necessary to
successfully manage the transfer of responsibility is ongoing and
steady progress is being made in every area. By its responsible actions
now, HHS is on track for an efficient and effective transfer of the AU
function at the earliest possible time al lowed by the MMA.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Geraldine Redican-Bigott, (312) 220-7678:
Acknowledgments:
Margaret Weber, Craig Winslow, Shirin Hormozi, and Barbara Mulliken
made key contributions to this report.
FOOTNOTES
[1] See GAO, Medicare Appeals: Disparity between Requirements and
Responsible Agencies' Capabilities, GAO-03-841 (Washington, D.C.:
Sept. 29, 2003).
[2] Pub. L. No. 108-173, § 931, 117 Stat. 2066, 2396.
[3] The 13 elements were transition timetable, workload, cost
projections and financing, regulations, feasibility of precedential
authority, geographic distribution, access to ALJs, shared resources,
case tracking, hiring, training, independence of ALJs, and performance
standards.
[4] The Secretary of Health and Human Services and the Commissioner of
Social Security, Report to Congress: Plan for the Transfer of
Responsibility for Medicare Appeals (March 2004).
[5] In addition to processing and paying claims, the claims
administration contractors currently administer the first level of the
Part A appeals process and the first two levels of the Part B appeals
process.
[6] Currently, appellants whose Part A appeals are denied by Medicare
contractors at the first level, and who wish to continue to appeal
their denied claims, proceed directly to the third level of the
administrative appeals process--SSA's OHA.
[7] OHA employs most--about 1,000--of the 1,300 ALJs who are employed
by the federal government. Because OHA's primary mission is to
adjudicate Social Security disability appeals, its resources are
largely devoted to these matters. Although it does not have a dedicated
corps of ALJs for Medicare appeals, it has a cadre of 34 ALJs with
significant Medicare hearings experience. However, few of these ALJs
adjudicate Medicare appeals exclusively. Other ALJs may also have
Medicare experience, to varying degrees. As a result, some Medicare
appeals are randomly assigned to ALJs who may not be familiar with
Medicare statutes and program rules.
[8] Pub. L. No. 106-554, app. F, § 521, 114 Stat. 2763A-463, 2763A-534.
[9] MMA created a new, voluntary prescription drug benefit for Medicare
beneficiaries, to start in 2006.
[10] 67 Fed. Reg. 62,478.
[11] There are two exceptions that resulted from the October 7, 2002
ruling, implementing BIPA's changes--revising the deadline for filing
an appeal for the first level of review and reducing the dollar
threshold for filing an appeal at the OHA level.
[12] An appellant may aggregate multiple denied claims into a single
appeal or "case" to meet OHA's minimum dollar threshold for filing an
appeal. In addition, the appeals bodies may reconfigure a "case" to
group denied claims related to similar issues.
[13] Although HHS employs nine ALJs, they focus on other departmental
matters. One of these ALJs adjudicates appeals at the Food and Drug
Administration. The remaining eight work at DAB and hear enforcement
appeals, including those related to Medicare fraud and provider
penalties. The latter have a backlog of almost 500 pending cases.
However, these ALJs have no hearing rooms and, instead, use the hearing
rooms of local courts or other agencies.
[14] OPM administers the ALJ examination and maintains a hiring
register. Federal agencies that intend to hire ALJs must specify the
number and locations of the judgeships they would like to fill and
submit their requests for candidates to OPM. OPM supplies three to five
of the highest ranked candidates for each slot. Those not hired are
returned to the register. Agencies may also hire temporary ALJs from a
roster of retired judges who have made themselves available for
reemployment. This roster is also maintained by OPM. In addition,
federal agencies may hire ALJs who are already employed in that
capacity at other agencies by posting vacancy announcements and
evaluating applicants.
[15] To ensure that ALJs feel free to exercise their independent
judgment, federal law provides them with several protections. For
example, ALJs are excluded from the definition of "employee," for the
purposes of performance appraisal systems applicable to other federal
employees. 5 U.S.C. § 4301(2)(D) (2000).
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