Medicare Appeals
Disparity between Requirements and Responsible Agencies' Capabilities Gao ID: GAO-03-841 September 29, 2003Appellants and others have been concerned about the length of time it takes for a decision on the appeal of a denied Medicare claim. In December 2000, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), required, among other things, shorter decision time frames. BIPA's provisions related to Medicare appeals were to be applied to claims denied after October 1, 2002, but many of the changes have not yet been implemented. GAO was asked to evaluate whether the current Medicare appeals process is operating consistent with BIPA's requirements and to identify any barriers to meeting the law's requirements.
BIPA demands a level of performance, especially regarding timeliness, that the appeals bodies--the contract insurance carriers responsible for the first two levels of appeals, the Social Security Administration's (SSA) Office of Hearings and Appeals (OHA), and the Department of Health and Human Services (HHS) Medicare Appeals Council (MAC)--have not demonstrated they can meet. While the carriers have generally met their pre-BIPA time requirements, in fiscal year 2001, they completed only 43 percent of first level appeals within BIPA's 30-day time frame. In addition to average processing times more than four times longer than that required by BIPA, OHA and the MAC--the two highest levels of appeal--have accumulated sizable backlogs of unresolved cases. Delays in administrative processing due to inefficiencies and incompatibility of their data systems constitute 70 percent of the time spent processing appeals at the OHA and MAC levels. The appeals bodies are housed in two different agencies--HHS and SSA. The lack of a single entity to set priorities and address operational problems--such as incompatible data and administrative systems--at all four levels of the process has precluded successful management of the appeals system as a whole. Uncertainty about funding and a possible transfer of OHA's Medicare appeals workload from OHA to HHS has also complicated the appeals bodies' ability to adequately plan for the future.
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-03-841, Medicare Appeals: Disparity between Requirements and Responsible Agencies' Capabilities
This is the accessible text file for GAO report number GAO-03-841
entitled 'Medicare Appeals: Disparity between Requirements and
Responsible Agencies' Capabilities' which was released on October 29,
2003.
This text file was formatted by the U.S. General Accounting Office
(GAO) to be accessible to users with visual impairments, as part of a
longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to the Committee on Energy and Commerce, House of
Representatives:
United States General Accounting Office:
GAO:
September 2003:
Medicare Appeals:
Disparity between Requirements and Responsible Agencies' Capabilities:
GAO-03-841:
GAO Highlights:
Highlights of GAO-03-841, a report to the Committee on Energy and
Commerce, House of Representatives
Why GAO Did This Study:
Appellants and others have been concerned about the length of time it
takes for a decision on the appeal of a denied Medicare claim. In
December 2000, the Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000 (BIPA), required, among other things,
shorter decision time frames. BIPA‘s provisions related to Medicare
appeals were to be applied to claims denied after October 1, 2002, but
many of the changes have not yet been implemented. GAO was asked to
evaluate whether the current Medicare appeals process is operating
consistent with BIPA‘s requirements and to identify any barriers to
meeting the law‘s requirements.
What GAO Found:
BIPA demands a level of performance, especially regarding timeliness,
that the appeals bodies”the contract insurance carriers responsible
for the first two levels of appeals, the Social Security
Administration‘s (SSA) Office of Hearings and Appeals (OHA), and the
Department of Health and Human Services (HHS) Medicare Appeals Council
(MAC)”have not demonstrated they can meet. While the carriers have
generally met their pre-BIPA time requirements, in fiscal year 2001,
they completed only 43 percent of first level appeals within BIPA‘s 30-
day time frame. In addition to average processing times more than four
times longer than that required by BIPA, OHA and the MAC”the two
highest levels of appeal”have accumulated sizable backlogs of
unresolved cases. Delays in administrative processing due to
inefficiencies and incompatibility of their data systems constitute 70
percent of the time spent processing appeals at the OHA and MAC
levels.
The appeals bodies are housed in two different agencies”HHS and SSA.
The lack of a single entity to set priorities and address operational
problems”such as incompatible data and administrative systems”at all
four levels of the process has precluded successful management of the
appeals system as a whole. Uncertainty about funding and a possible
transfer of OHA‘s Medicare appeals workload from OHA to HHS has also
complicated the appeals bodies‘ ability to adequately plan for the
future.
What GAO Recommends:
GAO recommends that the Secretary of HHS and the Commissioner of SSA
more closely coordinate their efforts to improve administrative
processing, develop strategies for reducing the backlog of pending
cases, and establish data requirements to facilitate the successful
implementation of BIPA‘s mandated changes. HHS and SSA agreed that
inefficiencies in the appeals process require attention and that the
process would benefit from better coordination.
www.gao.gov/cgi-bin/getrpt?GAO-03-841.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Leslie G. Aronovitz
at (312) 220-7600.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Appeals Process Operations Inconsistent with BIPA's Requirements:
Appeals Bodies' Lack of Coordination and Resources Is a Barrier to BIPA
Implementation:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: The Scope of Part B Claims Rejections, Denials, and
Appeals:
Appendix III: Changes Mandated by Section 521 of BIPA:
Appendix IV: Comments from the Department of Health and Human Services:
Appendix V: Comments from the Social Security Administration:
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Acknowledgments:
Tables:
Table 1: Reason for Denials of Initial Medicare Part B Claims in Fiscal
Year 2001:
Table 2: Growth in Part B Appeals Cases Submitted by Appeal Level from
Fiscal Year 1996 through Fiscal Year 2001:
Figures:
Figure 1: Levels and Time Frames for the Pre-BIPA and BIPA-Mandated
Appeals Process:
Figure 2: Average Time Spent in Each Stage of Processing for Cases
Adjudicated by OHA and the MAC in Fiscal Year 2001:
Abbreviations:
ALJ: administrative law judge
BIPA: The Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000:
CMS: Centers for Medicare & Medicaid Services:
CROWD: Contractor Reporting of Operational and Workload Data:
DAB: Departmental Appeals Board:
HCFA: Health Care Financing Administration:
HHS: Department of Health and Human Services:
LCD: local coverage determination:
LMRP: local medical review policy:
MAC: Medicare Appeals Council:
MOU: memorandum of understanding:
NCD: national coverage determination:
OHA: Office of Hearings and Appeals:
QIC: qualified independent contractor:
SOW: statement of work:
SSA: Social Security Administration:
United States General Accounting Office:
Washington, DC 20548:
September 29, 2003:
The Honorable W.J. "Billy" Tauzin
Chairman
The Honorable John D. Dingell
Ranking Minority Member
Committee on Energy and Commerce
House of Representatives:
In fiscal year 2002, Medicare--the nation's largest health insurer--
paid over $200 billion to provide medical care to 40 million elderly
and disabled beneficiaries. The Centers for Medicare & Medicaid
Services (CMS),[Footnote 1] an agency within the Department of Health
and Human Services (HHS), administers the Medicare program with the
help of about 50 claims administration contractors. Among other things,
CMS is charged with protecting the program by identifying and denying
health care claims that are invalid, incomplete, or otherwise appear to
be improper. Beneficiaries and providers[Footnote 2] may pursue the
payment of denied claims through a multilevel administrative appeals
process. The entities--or appeals bodies--that constitute the process
include the Social Security Administration (SSA) and HHS's Departmental
Appeals Board (DAB), in addition to CMS. In fiscal year 2001, 3.7
million Part B[Footnote 3] appeals were submitted to the first level in
the process.
In recent years, there has been widespread concern about the length of
time it takes the appeals bodies to render decisions. In December 2000,
the Congress enacted the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act of 2000 (BIPA). Section 521 of BIPA
amended section 1869 of the Social Security Act by mandating shorter
time frames and expedited procedures for processing Medicare
appeals.[Footnote 4] It also added the requirement that the Secretary
of HHS report on the number of appealed claims and consistency of
appeals decisions. The provisions were to be applied to claims denied
on or after October 1, 2002.
Concerned about the appeals bodies' ability to implement BIPA's
provisions, you asked that we conduct an assessment of the Medicare
appeals process. Specifically, we examined whether (1) the current
appeals process is operating consistent with BIPA's requirements and
(2) there are any barriers in meeting the law's requirements.
Because the majority of appeals are related to the denial of Part B
claims, we limited our work to assessing the appeals process for these
claims. We reviewed statutes, regulations, policies, and other
documentation related to the four levels of the administrative appeals
process, including Part B carriers,[Footnote 5] which conduct the first
two levels of appeal; the Office of Hearings and Appeals (OHA) within
SSA, which hears the third level of appeals; and the Medicare Appeals
Council (MAC) within HHS's DAB, which reviews OHA's decisions. To
assess the conditions present at the time BIPA was passed, we analyzed
fiscal year 2001 appeals processing data. We subsequently reviewed more
current data and confirmed that the conditions were relatively
unchanged. We interviewed officials from CMS, OHA, and the MAC to
discuss the management of the appeals process and the implementation of
BIPA requirements. We conducted our work from November 2001 through
September 2003, in accordance with generally accepted government
auditing standards. (See app. I for more information on our scope and
methodology.):
Results in Brief:
The appeals bodies are not currently performing at the level that would
enable them to meet BIPA's more rigorous timeliness requirements. Their
performance is far from meeting BIPA requirements with the two higher
levels of appeal taking, on average, more than four times the amount of
time BIPA requires to complete an appeal. In addition, both OHA and the
MAC face large backlogs of pending appeals because they have been
unable to routinely resolve all of the appeals that they receive. Long-
standing administrative problems among the appeals bodies, such as
time-consuming transfers of paper appeals files and delays caused by
outdated technology, which account for about 70 percent of the time
spent in processing appeals at OHA and the MAC, have not been
corrected. BIPA's provision allowing appellants the right to bypass
appeals bodies that do not resolve their appeals within prescribed time
frames by elevating them to the next level may only shift processing
delays to the higher appeals bodies. The combined effect of these
factors has prevented the appeals bodies from attaining the level of
performance BIPA demands.
The appeals bodies face several barriers to the successful
implementation of BIPA. Because appeals bodies are housed in different
agencies, the coordination among them is inherently difficult. Each
agency has its own priorities and, although officials from the appeals
bodies worked together to develop a proposed rule for the
implementation of BIPA, they have not coordinated their BIPA
implementation strategy. The lack of adequate data to pinpoint
weaknesses in the appeals process and enable informed decision-making
has further hindered BIPA's implementation. And, although some of the
appeals bodies are planning to obtain or have implemented new data
management systems, they have not coordinated with their counterparts
to ensure compatibility of the systems across agencies. Uncertainty
about funding and a possible transfer of the OHA's Medicare appeals
workload from OHA to HHS has also complicated the appeals bodies'
ability to adequately plan for the future.
We are recommending that the Secretary of HHS and the Commissioner of
SSA more closely coordinate their efforts to improve administrative
processing, develop strategies for reducing the backlog of pending
cases, and establish data requirements to facilitate the successful
implementation of BIPA's mandated changes. HHS and SSA agreed that
inefficiencies in the appeals process require attention and that the
process would benefit from better coordination.
Background:
Providers and beneficiaries may appeal any denied claim. Claims are
denied for a variety of reasons. In fiscal year 2001, the most common
reason for denying claims was that the services provided were
determined not to have been medically necessary for the beneficiaries.
Other reasons for denials include that Medicare did not cover the
services, or that the beneficiary was not eligible for services. Claims
that do not meet the requirements outlined in Medicare statutes and
federal regulations may be denied.[Footnote 6] In addition, denials may
be issued for claims that are inconsistent with CMS's national coverage
determinations (NCD) and carrier-based policies, including local
medical review policies (LMRP), local coverage determinations (LCD),
and other carrier instructions.[Footnote 7] Relatively few denied
claims are ever appealed, and only a small fraction is appealed to the
highest level. (App. II contains more information regarding the denial
of claims, including common reasons for denials.):
The Medicare Part B appeals process consists of four levels of
administrative appeals performed by three appeals bodies. Medicare
carriers are responsible for the first two levels of appeal--the
carrier review[Footnote 8] and the carrier hearing. Through a
memorandum of understanding (MOU) implemented in March 1995--when SSA
was separated from HHS and became an independent agency--OHA's
administrative law judges (ALJ) within SSA continue to hear the third
level of appeal. OHA's continued role in Medicare appeals is uncertain,
as SSA officials have indicated that they plan to discontinue
adjudicating Medicare appeals and expect to transfer the workload to
HHS. However, until an agreement between SSA and HHS is reached, OHA
will continue to adjudicate Medicare appeals. The MAC adjudicates
appeals at the fourth level of the administrative appeals process. In
addition, appellants who have had their appeals denied at all four
levels of the administrative appeals process have the option of filing
their appeals in federal court.
Section 521 of BIPA requires numerous administrative and structural
changes to the appeals process, including moving the second level of
appeals--the carrier hearing--from the Medicare carriers to a group of
yet-to-be-established contractors, known as qualified independent
contractors (QIC). Figure 1 outlines the steps of the existing appeals
process and the process BIPA requires. BIPA's changes to the appeals
process were to apply with respect to initial determinations--that is,
claims denials--made on or after October 1, 2002. Although CMS
published a rule[Footnote 9] on October 7, 2002, the ruling implemented
only two of BIPA's provisions--revising the deadline for filing an
appeal to the carrier review level and reducing the dollar threshold
for filing an appeal at the OHA level. The October 7TH rule outlines
the criteria used to select the changes that would be immediately
implemented; among the criteria is that the provision can be
implemented using existing CMS resources. CMS published a proposed rule
for complete implementation of BIPA-mandated changes on November 15,
2002,[Footnote 10] but the final rule has not been issued. As of June
2003, the appeals process is generally operating in accordance with
regulations established prior to BIPA's passage. (See app. III for a
comprehensive list of BIPA's changes.):
Figure 1: Levels and Time Frames for the Pre-BIPA and BIPA-Mandated
Appeals Process:
[See PDF for image]
[End of figure]
Beneficiaries and providers have the right to appeal denied claims if
appeals are filed within the deadline. CMS's October 2002 ruling
implemented the BIPA-mandated deadline for filing an appeal at the
carrier review level, shortening it from 180 to 120 days--one of two
BIPA provisions implemented thus far. Appeals at the carrier hearing
level must be submitted within 180 days of the denial or unfavorable
determination. Appellants who are dissatisfied with decisions reached
at the carrier hearing level may appeal to OHA and then to the MAC, and
their appeals must be filed within 60 days of receiving an unfavorable
determination at the previous level.
There is no dollar minimum required to file an appeal at the carrier
review level. However, an appeal at the carrier hearing and OHA levels
must meet specific dollar thresholds of $100 and $500, respectively. To
meet the thresholds, multiple denied claims may be aggregated into a
single appeals "case." The MAC does not have a dollar threshold for
considering appeals. Finally, appellants who receive unfavorable
determinations from the MAC may appeal the decisions in federal court
if the amount in dispute is at least $1,000. BIPA provisions change the
threshold amounts at the second level of appeal and OHA. When QICs
replace carrier hearings as the second level of appeal, the dollar
threshold for submitting an appeal at that level will be eliminated.
Further, CMS's October 2002 ruling implemented BIPA's reduced dollar
threshold for filing an appeal at OHA--the second of two BIPA
provisions to be implemented thus far--by dropping the threshold from
$500 to $100.
BIPA also shortened the time frames the appeals bodies have for
adjudicating appeals at the first two levels and established time
frames for the first time at the higher levels. BIPA's provisions that
revise the timelines for processing appeals have not been implemented,
and the appeals bodies are following previously issued performance
standards specifying that 95 percent of carrier reviews be completed
within 45 days and 90 percent of carrier hearings be completed within
120 days. BIPA required that carrier reviews be completed in 30 days
and that the QICs issue their decisions in 30 days. While OHA and the
MAC have not previously been bound by time limits, BIPA required that
they issue decisions within 90 days of the date an appeal was
filed.[Footnote 11] BIPA also gave appellants the right to escalate
their appeals to the next level in the process for adjudication when a
decision is not issued within the specified time frame. Escalation is
available from any level of appeal except the first--carrier review.
However, CMS's November 2002 proposed rule regarding BIPA's
implementation provides that appellants who escalate their appeals to
the next level will, in essence, be waiving their right to a decision
within the statutory time frame governing that level. For example, an
appeal that is escalated from the OHA to the MAC would not be subject
to the 90-day limit that applies to appeals received by the MAC that
have not been escalated.
The first three levels of appeal share a protocol for adjudication,
called de novo review, which permits adjudicators to consider results
from earlier decisions but requires them to independently evaluate
evidence and issue original decisions. The appeals bodies reexamine the
initial claim to determine if it should be paid and consider any new
documentation or information supporting the claim that the appellant
submitted. The fourth level of review, the MAC, does not share this
protocol. Rather than performing de novo review of evidence, it
evaluates the appropriateness of OHA decisions and considers whether
new evidence submitted will alter the decision. BIPA changes require
that the MAC performs de novo review in all cases.
The appeals bodies reach decisions through either a review of the file
for the initial claim or through hearings. At the first level of
appeal, a carrier review officer who was not involved in the initial
denial reexamines the initial claim and any new supporting
documentation provided by the appellant but does not conduct a hearing.
The second level of appeal--the carrier hearing--provides the appellant
with an opportunity to participate in a hearing at the carrier's
facility or by telephone. OHA conducts hearings at the third level of
review. OHA's hearings are held at its central office in Falls Church,
Virginia, or at one of its 140 local hearing offices nationwide. The
MAC's adjudication is based on a review of OHA's decisions, and it does
not conduct hearings.
Appeals bodies have several options when deciding a case. The case may
be decided fully or partially in favor of the appellant and payment
awarded for all or part of the claim or claims in dispute.
Alternatively, the decision may be unfavorable to the appellant and the
initial denial of payment upheld. The MAC has an additional option of
remanding the appeal--returning it to the OHA judge who issued the
original decision--for a variety of reasons. For example, the MAC may
determine that more evidence is needed, additional action by OHA is
warranted, or that OHA should issue a modified decision based on the
MAC's instructions. Finally, the MAC may deny an appellant's request
for review if it finds that OHA's decision is factually and legally
adequate.
In making a determination regarding whether the claim is payable or
will continue to be denied, the first two levels of appeal are bound by
the same guidance used in the initial denial determination--Medicare
statutes, federal regulations, CMS's NCDs, the carrier's own LMRPs and
LCDs, and, pursuant to carrier's contracts with CMS, CMS's general
instructions, such as manuals and program memoranda. The statutes,
regulations, and NCDs also bind OHA and the MAC--and the QICs, when
they are established. But QICs, OHA, and the MAC only need to consider-
-rather than definitively follow--the carrier-based LMRPs and LCDs in
rendering their decisions.
Management of the Medicare appeals process is currently divided among
CMS, SSA, and the MAC. CMS is charged with establishing procedures for
carriers to follow in considering appeals--including developing
guidelines for timeliness and quality of communications with the
appellant--and is also responsible for ensuring that the carrier review
and carrier hearing processes comply with statutory and regulatory
requirements. SSA establishes its own requirements and procedures, with
input from CMS, for OHA's review of third-level appeals. CMS reimburses
OHA for its appeals work. The MAC independently establishes its own
procedures and guidelines for completing Medicare appeals.
Appeals Process Operations Inconsistent with BIPA's Requirements:
Carriers generally meet CMS's existing time frames for processing
appeals, but all appeals bodies--the carriers, OHA, and the MAC--fall
far short of meeting BIPA's time frames. The large backlog of pending
cases at OHA and the MAC, combined with BIPA's escalation provision and
the requirement for de novo review at the MAC, will demand a level of
performance that the appeals bodies have not demonstrated they can
meet. Administrative delays, caused by inefficiencies such as
difficulties in transferring and locating files and outdated
technology, constitute a large portion of time spent in the appeals
process--especially at OHA and the MAC. QICs have not yet been
implemented and there is insufficient information to predict their
ability to meet BIPA's performance measures.
Appeals Bodies' Current Performance Is Far from Meeting BIPA's
Timeliness Standards:
There is a substantial gap between carriers' current performance and
that required by BIPA's standards. For example, at the first level of
appeals--the carrier review--while carriers completed about 91 percent
of their reviews within CMS's current 45-day time frame, this is
insufficient by BIPA's standards. Only about 43 percent of the carrier
reviews completed in fiscal year 2001 met BIPA's mandated 30-day
deadline. At the carrier hearing level--eventually to be replaced by
the appeals to the QICs--the ability to meet BIPA's time frames remains
largely unanswered because the QICs have not yet been established.
Although the carriers exceeded CMS's performance standards in fiscal
year 2001 by completing more than 90 percent of the carrier hearings
within 120 days, this standard is much less stringent than the one
imposed by BIPA, which requires the QICs to complete all appeals within
30 days.
Similarly, OHA and the MAC fall far short of BIPA's required 90-day
time frame for completing 100 percent of their cases. For example, in
fiscal year 2001, OHA took an average of 14 months from the date an
appeal was filed to complete adjudication. The MAC took even longer to
process appeals during the same year, with cases taking an average of
21 months to adjudicate. As of September 2003, OHA and the MAC had not
implemented BIPA-mandated time frames and continued to operate without
time frames for rendering decisions. Although officials at both appeals
bodies told us that they are concerned with meeting BIPA time frames,
neither body has developed strategies for doing so. Instead, the
officials stated that they would take action once regulations
implementing BIPA are finalized and they are more certain how the new
regulations will affect them.
Existing backlogs of unprocessed cases may also interfere with the
appeals bodies' compliance with BIPA's mandated time frames for appeals
of claims denied after October 2002. While backlogs at the carrier
review and carrier hearing levels are relatively small,[Footnote 12]
OHA and the MAC have been unable to meet workload demands. For example,
OHA's backlog at the end of fiscal year 2001 included nearly 35,000
Part B cases--equal to about the average number of cases processed in 7
months. At the end of that same year, the MAC had a backlog of 15,000
cases--twice the number of cases it adjudicated in 2001. The MAC has
been making strides to improve its efficiency and, near the end of
fiscal year 2003, reported reducing its backlog to 10,100 cases.
According to OHA and MAC representatives, BIPA-governed cases--appeals
of claims denied after October 1, 2002--will have higher priority than
cases filed earlier, virtually ensuring that pre-BIPA cases experience
even longer delays. However, as of July 2003, none of the appeals
bodies had determined how they would prioritize the processing of BIPA
appeals while completing their pre-BIPA workloads.
At OHA, protocols for assigning appeals to ALJs may contribute to
delays. Although OHA plays a critical role in resolving Medicare
appeals, its primary focus is disability appeals for SSA, which
constitute 85 percent of its total caseload. While they are a smaller
workload, Medicare appeals are often more complex than disability
appeals. Some local OHA hearing offices take advantage of their ALJs'
Medicare expertise by assigning all Medicare cases to a single judge.
However, other offices assign cases randomly, requiring judges to
refamiliarize themselves with basic Medicare statutes each time they
hear a Medicare case--potentially prolonging the process.
While all of the appeals bodies are subject to BIPA's processing time
frames, the MAC is uniquely challenged in meeting these deadlines
because the requirement for de novo review expands the scope of the
MAC's work. MAC officials pointed out that shifting from ensuring that
OHA interprets policy correctly to becoming a fact-finding body
requires a substantial amount of additional resources and more time to
gather and evaluate evidence. MAC officials report that they do not
have a strategy to address the expansion in the scope of their work and
the contraction in time to render decisions.
Delays in Administrative Processing at OHA and the MAC Further Suggest
BIPA's Time Frames Will Not Be Met:
The bulk of time at OHA and the MAC is spent on assembling files and
completing other administrative tasks rather than in performing legal
analyses of appeals and adjudicating cases. Each agency takes more than
a year, on average, to complete an appeal. For example, OHA spent 14
months, on average, to complete a case in fiscal year 2001[Footnote 13]
and an average of 10 months of that was consumed obtaining case files
from the lower level appeals bodies and performing related processing
tasks. In that same year, the MAC adjudicated nearly 7,100 Part B cases
and spent about 17 months, on average, performing administrative tasks.
As shown in figure 2, on average, over 70 percent of the time to
resolve OHA and MAC cases was spent on administrative activities,
rather than on substantive legal analysis of the appeals.
Figure 2: Average Time Spent in Each Stage of Processing for Cases
Adjudicated by OHA and the MAC in Fiscal Year 2001:
[See PDF for image]
[End of figure]
Officials from both OHA and the MAC report that it may take months to
receive appellants' case files from the previous level of review or the
appropriate storage facility. Case files--which are all paper
documents--are a critical component of the adjudication process as they
contain all evidence submitted by the appellant in previous appeals.
The MAC, in particular, requires OHA's case files to assess the
evidence, the hearing tapes, and the letter of decision so that it may
determine whether OHA's decision was appropriate.
OHA and the MAC are dependent on the Medicare carriers to forward the
appropriate files to their hearing offices for review. CMS allows
carriers 21 to 45 days to forward case files to OHA, depending on the
number of appellants and dollar value of the case. However, locating
files is further complicated by the fact that appellants are required
to include little information in their appeal requests. Therefore, OHA
and the MAC may receive appeals that do not identify the carrier that
originally denied the claim. Locating files can also be hindered if the
appeal has been in process for several years and the carrier that
initially denied the claim is no longer a Medicare contractor. Although
the defunct carrier should have transferred all of its files, including
its appeals records, to the replacement carrier, such transitions are
not always smooth. Instead, files are often difficult to locate,
causing delays in forwarding specific requested cases.
The MAC faces an additional challenge in locating case files. OHA-
completed cases are routed to a special clearinghouse contractor for
temporary storage. If OHA determines that the appellant is due a full
or partial payment, the clearinghouse returns the files to the carrier
that initially denied the claim so that payment may be processed. If
OHA continues to deny payment, the clearinghouse holds the accompanying
file for 120 days to expedite the MAC's retrieval should the appellant
continue to appeal. However, the MAC may not know whether to approach
the clearinghouse contractor or the relevant carrier to request needed
files. And, like the carriers, the clearinghouse does not always
provide files in a timely manner. In fiscal year 2001, the MAC waited
an average of nearly 3 months--the entire time allowed for the MAC to
adjudicate appeals under the BIPA amendments--to receive case files.
The MAC, which is empowered to remand, or return, cases to OHA when
there is insufficient information in the existing record to issue a
decision, in fiscal year 2001 remanded 1,708 cases--nearly a quarter of
the cases it adjudicated that year--to OHA because needed files were
either missing or incomplete. Although CMS has not performed a
comprehensive evaluation of the clearinghouse's accuracy in routing
appeals files, it recently determined that the clearinghouse had a 10
percent error rate in routing case files to particular carriers for
payment.
Inadequate technology and the need for manual processing also indicate
that the appeals bodies are not prepared to address BIPA's
requirements. For example, providers often aggregate groups of claims
for different beneficiaries to meet the dollar threshold for filing an
OHA appeal. To maintain beneficiary confidentiality, a separate
electronic file--containing the same provider information--is created
for each beneficiary. While widely available technology allows the
creation of multiple data files by entering the information one time
and then quickly duplicating it, OHA's system requires administrative
staff to separately enter repetitive information pertaining to each
denied claim that constitutes the appeal. For example, if a provider is
appealing a similar group of claims in a single appeal, OHA must
nonetheless create a separate case file and data record for each
beneficiary.
BIPA provides that appellants may escalate their appeals from the QIC
or OHA to the next level in the administrative appeals process when it
is not resolved within the time frames mandated. MAC cases not meeting
the time frame may be escalated to the federal district court. More
than 95 percent of OHA appeals and about 85 percent of MAC appeals did
not meet BIPA time frames in fiscal year 2001, suggesting that a number
of cases would be eligible for escalation.[Footnote 14] However,
escalation may not ensure that appellants secure timely adjudication.
Escalated cases will lack comprehensive records because the prior level
of appeal did not complete the cases and may not have the full
collection of case documentation. OHA and MAC officials report that
cases without complete records from earlier levels of appeal will
require the next level to perform time-consuming research. The MAC may
remand cases with incomplete files, causing additional time to be spent
locating and transferring files between the appeals bodies.
Appeals Bodies' Lack of Coordination and Resources Is a Barrier to BIPA
Implementation:
While appellants may view the consideration and resolution of their
appeals as a single process, several separate and uncoordinated bodies
are responsible for administering the various appeals levels. The
appeals bodies have traditionally worked independently; however, close
coordination is critical to successful planning for BIPA changes.
Further, appeals bodies lack the management data to track cases and
analyze case characteristics, preventing them from identifying barriers
to efficiency--a first step in streamlining the process. Planning for
BIPA implementation has also been hampered by (1) proposed regulations
that have not been finalized, (2) the uncertainty of funding amounts
for implementation, and (3) unresolved details regarding the possible
transfer of OHA's appeals workload to HHS.
Appeals Bodies Need Stronger Coordination to Successfully Implement
BIPA's Requirements:
CMS, OHA, and the MAC--located within two federal agencies--are each
responsible for administering a portion of the appeals process.
However, neither the agencies nor the appeals bodies have the authority
to manage the entire process. The appeals bodies focus primarily on
their individual priorities, which may differ and complicate planning
for making improvements to the process as a whole. Attempts to
modernize the appeals process have been undermined when individual
appeals bodies have identified opportunities for improvement, but have
failed to sufficiently take into account the impact of their plans on
the other bodies. For example, CMS issued a draft statement of work
(SOW) outlining the expectations for QICs--the BIPA-mandated
replacement for the workload of Medicare carriers at the second level
of review, the carrier hearing. The draft SOW asks potential QIC
applicants whether they have the capacity to convert paper case files
into an electronic format, with the expectation that this would ease
the transfer of needed files to the higher levels of appeals. However,
CMS officials told us that they did not consult with OHA to ensure that
it would have the capacity to use and store electronic files. OHA
officials agree that electronic files offer an important opportunity to
reduce lost files, speed transfers, and permit case tracking. However,
OHA has focused its own plans to implement a system of electronic
folders--scheduled for January 2004--exclusively on its SSA disability
cases.
Recent planning for BIPA implementation intensified the need for
appeals bodies to work together because the demanding time requirements
alone call for a more efficient appeals process. While officials from
CMS, OHA, and the MAC worked together to develop the proposed rule for
implementing the majority of BIPA's requirements, the agencies have not
taken the opportunity to coordinate strategies to meet the time frames
mandated by the act.
Lack of Management Data Inhibits Appeals Bodies' Ability to Understand
Barriers to Efficiency:
We found that the appeals bodies are not sufficiently coordinated to
track an appealed claim, or group of claims, through all four levels of
the process. This is attributable, in part, to the use of different
numbering systems for case identification at each appeals body and the
fact that the individual claims making up a "case" can change at every
level. For example, appeals bodies often reconfigure cases to group
claims with similar issues. Appellants also change the configuration of
their cases by aggregating their claims to meet minimum dollar
thresholds necessary to file an appeal at a given level. Case numbering
is further complicated when a partially favorable decision is made. In
these situations, some of the claims within the appeal are paid, while
the remaining denied claims are eligible for further appeal by
beneficiaries and providers and subject to further reconfiguration with
new case numbers. Accordingly, assigning a variety of numbers to any
particular claim or group of claims at each level of the process makes
it virtually impossible to track an individual claim from one level to
the next.
Some problems with data quality are also a product of a lack of
coordination between appeals bodies. CMS, OHA, and the MAC are making
individual efforts to improve their data systems to better manage their
caseloads, but their systems remain incompatible. For example, although
CMS is gradually shifting its carriers to one common claims processing
data system--also used to track appeals at the carrier level--it is not
compatible with OHA's or the MAC's data systems. OHA has also initiated
data system improvements, but did not consult with CMS in setting the
parameters for new system requirements or provide CMS's appeals group
with a copy of its planning document. The MAC does not know if the
improvements it is instituting--such as its transition to more powerful
data management software used to organize its caseload--will be
compatible with OHA's, CMS's, or the carriers' systems. Compatible data
systems would facilitate the transfer of case information between
appeals levels and analyses of the process as a whole.
Not only do appeals bodies have incompatible data systems, but data
gathered individually by CMS from carriers and by OHA from local
hearing offices are aggregated and not used to pinpoint problems and
develop solutions to improve the appeals process. For example, CMS only
collects workload data from its carriers in the form of monthly
productivity totals. OHA collects aggregate data from each of its 140
hearing offices, despite the fact that the local offices are tracking
individual cases. The aggregate numbers allow OHA and CMS to develop
basic workload statistics, such as the number of cases they resolve and
the average time frames for adjudication. However, the data do not
allow CMS and OHA to perform more detailed analyses, such as isolating
process steps that create a bottleneck or identifying specific cases
that linger at an appeals level for unusually lengthy periods.
The lack of specific data on case characteristics also limits the
appeals bodies' understanding of the nature and types of appeals that
they must resolve. For example, only the MAC collects data on the
reason for the appeal, the type of denial being appealed, and the
amount in controversy; however, the MAC is not consistent in ensuring
that the information is routinely entered in the database. Furthermore,
carriers do not collect data that allow CMS to distinguish if the
appellant is a beneficiary or a provider, and none of the appeals
bodies collects information on the rates of appeal among provider
specialty groups. Analyses of case characteristic data could be
valuable in identifying confusing or complex policies or requirements
that lead to denied claims and the submission of appeals. The data
would also be useful to the agencies in understanding the nature of
denied claims that are appealed at each level and guiding more
appropriate initial reviews of claims and educating providers about
proper claim submission.
BIPA mandated the use of QICs to replace the second appeals level and
required them to develop management information through a data system
that would identify (1) the types of claims that give rise to appeals,
(2) issues that could benefit from provider education, and (3)
situations that suggest the need for changes in national or local
coverage policy. QICs must report their information to the Secretary of
HHS and, among other things, must monitor appeals decisions to ensure
consistency between similar appeals. However, the requirements do not
affect data collection at the other appeals bodies. As a result,
without corresponding changes at the other appeals bodies, it will
remain difficult to evaluate the performance of the appeals process as
a whole and make informed decisions affecting more than one appeals
level. CMS stated that it plans to expand the QICs' data system to the
third level of appeal--the ALJ-adjudicated level--and, eventually, to
all levels of appeal. Until the compatible data systems are in place at
all appeals bodies--which CMS plans for 2005--the appeals bodies will
not be able to perform the most fundamental types of analyses to
improve the management of the process.
Uncertainties in Regulations, Funding, and the Role of OHA Hinder BIPA
Implementation Planning:
While BIPA mandated several changes to the current appeals process,
CMS, OHA and the MAC are charged with developing regulations for
implementing BIPA's mandates in accordance with the Administrative
Procedures Act.[Footnote 15] As of September 2003, guidance regarding
two provisions--adjusted deadlines for appellants filing first-level
appeals and reduced dollar thresholds required for filing appeals at
OHA--have been issued. CMS officials stated that they expect that the
proposed regulations[Footnote 16] implementing the remaining
provisions of BIPA section 521 will be finalized by early 2004. The
regulations, once finalized, will provide directions specifying how
each body will operate. Without final regulations, officials from
carriers, OHA, and the MAC said that they have had difficulty
estimating what the actual effect on their workloads will be and,
accordingly, have not made specific plans to comply with BIPA's
mandates.
Even after the regulations are finalized, several important issues will
not have been resolved. For example, when it published its ruling on
October 7, 2002, CMS acknowledged that transition issues from the
current appeals process to the new process would require additional
policy guidance prior to implementation. Specifically, questions will
remain regarding the necessity of operating two separate appeals
processes concurrently, dependent on the date of the initial claim
determination. Appeals of claims denied before the effective date of
the BIPA amendments are not governed by them, barring specific guidance
to the contrary, and are subject to pre-BIPA guidelines and processes.
No additional funding was provided to the appeals bodies in fiscal year
2003 to implement BIPA's changes. Moreover, uncertainties exist about
the funds available in fiscal year 2004. The first uncertainty concerns
funding for HHS. The President's proposed budget for fiscal year 2004
includes $126 million in funding for CMS to complete BIPA's changes--
including establishing the QICs, developing the QIC data systems, and
implementing the shortened time frames at the first and second appeals
levels--as well as assuming the workload currently performed by OHA.
However, this funding level was premised on the assumption that BIPA
would be amended to reduce the number of QICs, increase the time frames
for completing appeals at all levels, and require that providers pay a
$50 user fee for filing appeals at QICs. However, as of September 2003,
BIPA had not been amended. Moreover, the proposed budget contained no
additional funding for the MAC to implement BIPA. The second budgetary
uncertainty concerns funding for the third level of the appeals
process, currently performed by OHA. While SSA's fiscal year 2003
budget included a $90 million "direct draw" from the Medicare Trust
Fund for Medicare appeals, the proposed 2004 budget eliminates the
direct draw and does not include a new source for Medicare appeals
funding, reflecting SSA's plan to transfer OHA's Medicare appeals
workload to HHS.
Although BIPA required CMS to establish QICs in time for them to begin
adjudicating appeals of claims denied as of October 1, 2002, CMS
estimated, in its fiscal year 2004 budget request, that QICs would
become operational, at the earliest, February 2005. Agency officials
detailed that the implementation of QICs would require approximately 10
months of drafting and finalizing the related regulations and
conducting the bidding process, and 6 months for hiring staff, renting
space, and performing other tasks associated with making QICs
operational, including developing the QICs' data systems. In commenting
on a draft of this report, HHS stated that CMS now plans for QICs to
begin operation in fiscal year 2004. However, we were not provided with
CMS's implementation plan or sufficient details to evaluate its
feasibility.
Finally, one of the critical issues related to BIPA's implementation
involves the possible transfer of the Medicare caseload currently
adjudicated by SSA's OHA to HHS. Several issues remain unresolved. In
1995, when SSA separated from HHS and became an independent agency, SSA
entered into an MOU with the Health Care Financing Administration to
continue to perform the Medicare appeals work it had been conducting.
Recently, SSA has taken the position, which is reflected in its budget
request for fiscal year 2004, that it intends for OHA to discontinue
adjudicating Medicare appeals and has proposed a revised MOU outlining
the transfer of OHA work to HHS. However, as of September 2003, HHS had
not signed the revised MOU and the transfer of the workload to HHS had
not been finalized. In addition, legislation has been introduced that
would expressly provide for the transfer of Medicare appeals to
HHS.[Footnote 17] However, provider and beneficiary groups have
protested because they believe shifting responsibility to HHS will
compromise the ALJs' independence.
OHA's departure from the appeals process would create a new challenge
for HHS. OHA's process for adjudicating administrative appeals includes
140 local hearing offices and over 1,000 ALJs. Because SSA disability
appeals constitute about 85 percent of OHA's work, OHA would continue
to require the use of its hearing offices and judges regardless of
whether it continues to hear Medicare appeals. BIPA language specifies
that the third level of appeal be adjudicated by ALJs, but because HHS
has far less capacity than OHA to hear ALJ cases,[Footnote 18] HHS
would have to compensate for OHA's departure by developing plans that
would enable it to adjudicate the current workload demands within
BIPA's time frames and to address the backlog of cases accumulated
before the transfer to HHS. As of June 2003, CMS was evaluating OHA's
Medicare operations, workload, and facilities and developing and
assessing the feasibility of various options. A CMS official stated
that assuming OHA's workload would be a notable challenge for the
agency.
Conclusions:
BIPA demands a level of performance--especially regarding timeliness--
that the appeals bodies have not demonstrated they can meet. In
addition to lengthy processing times, OHA and the MAC have developed
sizable backlogs of unprocessed cases. The backlogs raise a question
about how BIPA-governed cases, with their mandated time frames, will be
prioritized relative to unresolved cases filed before BIPA's mandated
implementation date. Administrative and systemic inefficiencies, which
span all levels of appeals, strongly indicate the need for improvement.
Without significant improvements, the appeals bodies will be unable to
meet BIPA's more rigorous performance requirements. Uncertainties
regarding BIPA regulations and funding further complicate the challenge
the appeals bodies face in implementing BIPA and meeting its
requirements. Moreover, the transfer of OHA's Medicare appeals work
from SSA to HHS involves major challenges, and until all of the
stakeholders resolve workload and timeliness issues, the full impact of
such a transfer will not be known.
CMS, its carriers, OHA, and the MAC have traditionally not coordinated
their management of the appeals process. Instead, each has operated as
though the process consisted of discrete and independent segments.
Greater coordination could enable them to resolve the barriers that
currently preclude successful management of the appeals process as a
whole. Inefficiencies in file transfer and case file tracking,
developing comprehensive and meaningful data, and planning for BIPA
implementation require a joint effort including each appeals body and
its agency. The lack of a single entity that sets priorities and
addresses operational problems at all four levels of the process makes
it imperative that all bodies work closely together. If OHA's Medicare
appeals workload is to be transferred to HHS, it is critical that all
of the current appeals bodies work together to develop a carefully
planned transition and build efficiencies to help HHS assume the
workload. We believe that the creation of a Medicare appeals process
that can consistently address BIPA's requirements will require a
commitment for close coordination from all appeals bodies.
Recommendation for Executive Action:
We recommend that the Secretary of HHS and the Commissioner of SSA
create an interagency steering committee with representatives from CMS,
the carriers, OHA, and the MAC to serve as an advisory body to the
Secretary of HHS and the Commissioner of SSA with the following
responsibilities:
* make administrative processes, such as file tracking and transfer,
compatible across all appeals bodies;
* negotiate responsibilities and strategies for reducing the backlog of
pending cases, especially at OHA and the MAC, and establish the
priority for adjudicating pre-BIPA cases relative to BIPA-governed
cases; and:
* establish requirements for reporting specific and comparable program
and performance data to CMS, SSA, and HHS so that management can
identify opportunities for improvement, and determine the resource
requirements necessary to ensure that all appeals bodies will be able
to meet BIPA's requirements.
Agency Comments and Our Evaluation:
We provided a draft of this report to HHS and SSA and received written
comments from both agencies. In its comments, HHS emphasized its
commitment to implementing the appeals provisions in BIPA and
highlighted the steps it has taken to do so. Similarly, SSA emphasized
its efforts to provide quality service to Medicare appellants. We have
reprinted HHS's and SSA's letters in appendixes IV and V, respectively.
HHS agreed with our conclusion that a more coordinated approach to the
appeals process is needed. HHS said, however, that we understated its
progress in this area and described a variety of efforts it has engaged
in to facilitate improved coordination between the appeals bodies. As
we noted in the draft report, HHS has made strides in enhancing
coordination, but we believe that greater progress can be made by
creating an interagency steering committee to develop a consolidated
and strategic approach to implementing BIPA.
SSA's comments also emphasized the benefits of enhanced coordination
between the appeals bodies. It largely attributed the inefficiencies
that exist in the current appeals process to the lack of a single
entity with ownership of, and accountability for, Medicare appeals. SSA
indicated that it believes that HHS is the sole entity with the
authority to unify the policies and procedures for the Medicare appeals
process.
HHS stated that it would consider the appropriateness of an interagency
steering committee but did not specifically agree or disagree with our
recommendation to create such a body. However, it stated that the
transfer of the work performed by SSA's OHA to HHS is critical to
achieving the level of coordination needed to address the
inefficiencies outlined in our report. SSA indicated that it generally
agreed with the specific responsibilities of the steering committee. It
also stated that it believes that HHS has ultimate responsibility for
Medicare appeals and that HHS should carry out the functions of the
steering committee through CMS. SSA stated that its budget anticipates
the transfer of OHA's appeals workload to HHS, and SSA has submitted a
new MOU to HHS to facilitate a smooth transition. While SSA emphasized
its commitment to serving Medicare appellants during the expected
transition, it also pointed out that Medicare appeals make up a small
portion of its work. Therefore, SSA cautioned that while it will
participate in efforts to improve the Medicare appeals process, it must
consider the demands of its total workload in allocating its resources.
While HHS did not specifically comment on our recommendation to make
administrative processes, such as file tracking and transfer,
compatible across all levels of appeal, SSA agreed that an interagency
steering committee could be beneficial in ensuring such compatibility
among appeals bodies. SSA also noted that the steering committee would
be helpful in defining the roles of the appeals bodies both in their
current operating status and during the anticipated transfer of the OHA
workload to HHS.
Regarding our recommendation to negotiate responsibilities for reducing
the backlog of pending cases, HHS agreed that a strategy for setting
clear requirements to prioritize pre-BIPA and BIPA cases and reduce the
backlog of cases at all levels is needed. HHS also reported that the
MAC has already reduced its backlog and we revised the report to
reflect the reduction. HHS also said that prioritizing cases and other
transition matters would be addressed in the forthcoming final
regulations. SSA agreed that strategies for reducing both the backlog
of pending cases and the lengthy processing times for Medicare appeals
are needed and expressed a willingness to help resolve the backlogs and
delays.
HHS agreed with our recommendation to establish comparable program and
performance data across appeals levels and indicated that improved
appeals data capabilities are needed. To that end, HHS noted that it
has issued a request for proposals to develop the data system required
by BIPA. SSA acknowledged that fragmentation of the appeals process has
precluded the development of comparable data. However, SSA pointed out
that preparations to transfer OHA's work to HHS have created a need for
greater data sharing. SSA also pledged to work to capture comparable
data to facilitate the transfer of the OHA's work.
In addition, in response to HHS's specific comments, we have:
* revised the use of the word "rule" to "ruling;":
* clarified that the scope of our work excluded managed care, Medicare
entitlement, and overpayment cases, as well as Part B claims processed
by durable medical equipment contractors and fiscal intermediaries;
* defined the term "provider," as used in this report, to include any
nonbeneficiary appellant, including physicians and other suppliers;
* distinguished between claims that are rejected because they are
duplicate or missing information and those that are denied for
substantive reasons, in appendix II;
* revised the legend of figure 1;
* modified our description of BIPA's escalation provision to recognize
that CMS has developed specific requirements for escalation in its
notice of proposed rulemaking;
* revised our explanation of the MAC's procedures regarding the
parameters for accepting evidence in its current decision-making
process and the MAC's criteria for denying an appellant's request for
review; and:
* added that CMS policy is a binding element in carrier review.
However, we did not revise the draft report in response to HHS's
specific comment regarding our use of the word "review." While BIPA
refers to the first level of appeal as "redetermination," we have used
the term "carrier review" because the adjudication process at the
review level is unchanged by BIPA. Nor did we make revisions in
response to HHS's specific comment that both OHA and the MAC use their
own systems for processing appeals and conduct their own hiring. As we
noted in the draft report OHA and the MAC independently establish their
own procedures and guidelines. Finally, we did not revise the draft in
response to HHS's specific comment that we imply that the MAC has done
no planning related to BIPA requirements. As we noted in the draft
report, the MAC has made some improvements, but as MAC officials told
us, and as HHS indicated in its comments, a detailed action plan to
meet BIPA requirements has not been developed. In its comments, HHS
noted that a detailed plan is premature because the MAC will not
receive BIPA cases for some time--until after they have passed through
the other levels of appeal--however, BIPA requirements apply to claims
denied on or after October 1, 2002, and such cases have already been
submitted.
HHS also provided us with technical comments, which we incorporated as
appropriate.
As agreed with your offices, unless you announce its contents earlier,
we plan no further distribution of this report until 30 days after its
issuance date. At that time, we will send copies to the Secretary of
HHS, the Commissioner of SSA, interested congressional committees, and
other interested parties. We will then make copies available to others
upon request. In addition, the report will be available at no charge on
GAO's Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please call
me at (312) 220-7600. An additional GAO contact and other staff who
made contributions to this report are listed in appendix VI.
Leslie G. Aronovitz
Director, Health Care--Program Administration and Integrity Issues:
[End of section]
Appendix I: Scope and Methodology:
Our analyses were limited to the appeals process for denied Part B
claims--rather than managed care, Medicare entitlement, and overpayment
cases--because Part B cases constitute the majority of appeals. We also
excluded Part B claims processed by durable medical equipment
contractors and fiscal intermediaries to focus on the work performed by
carriers. We reviewed the four levels of the administrative appeals
process; our scope did not extend to the federal district court level.
To gain a better understanding of the process for Part B appeals at the
time the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA) was passed and the changes it mandated,
we reviewed agency procedures for completing Part B appeals regulations
and agreements guiding Medicare appeals and other laws. We also
analyzed appeals workload data and interviewed officials at the Centers
for Medicare & Medicaid Services (CMS) and at all levels of the
administrative appeals process--the carriers, the Office of Hearing and
Appeals (OHA), and the Medicare Appeals Council (MAC).
We reviewed regulations and procedures pertaining to the initial
denials of claims and the submission of appeals by providers and
beneficiaries. We also examined the processes for data management and
guidelines and regulations for adjudicating cases at all levels. We
reviewed the memorandum of understanding between the Health Care
Financing Administration and the Social Security Administration, which
outlines the responsibilities of both agencies in the adjudication of
Medicare appeals. In addition, we reviewed the October 2002 ruling
implementing selected BIPA amendments and the proposed rule for the
implementation of the balance of the BIPA amendments to the appeals
process.
We also analyzed appeals data from CMS, four selected carriers, OHA,
and the MAC to understand the scope and efficiency of the Medicare
appeals process and the characteristics of appeals. All data examined
were for cases adjudicated from fiscal years 1996 through 2001, with a
primary focus on fiscal year 2001, which represents the conditions that
existed at the time BIPA was passed. In reviewing later data and in
conversations with the appeals bodies, we confirmed that the conditions
reflected in the data are relatively unchanged. Limitations in
collected and reported data at each level precluded comprehensive and
consistent analyses in some cases. CMS and the MAC alerted us to some
limitations in their data, including inconsistency in data entry,
changes in data systems that caused the loss of data, and poorly
defined variables. At some levels, only aggregated data were available,
which did not permit detailed analysis.
We studied carrier performance by selecting four carriers located in
different regions of the country and obtaining processing data on
appeals submitted to those carriers at the first two levels of appeals.
We also reviewed the results of CMS's contractor performance
evaluations of carriers' appeals activities in fiscal years 1999, 2000,
and 2001.
We visited three OHA local hearing offices located in proximity to
three of the four selected carriers' appeals operation centers to learn
more about their role in the appeals process and to assess the impact
of carrier performance on their operations. We also examined the
processes and procedures used at the OHA local hearing offices. To
understand the efficiency of the appeals process, we examined the
average total time to process appeals at each level, and the average
time spent in each step of the adjudication process at OHA and the MAC.
We also examined MAC data to determine the number of cases remanded to
OHA because of lost files in fiscal year 2001.
Appeals bodies performed analyses of their appeals data at our request.
CMS performed analyses of the Contractor Reporting of Operational and
Workload Data (CROWD), including the reason for initial claims denials,
the time each carrier took to process carrier reviews and carrier
hearings, and the number of cases at the first three levels of appeal.
CMS analyses of CROWD, OHA analyses of its data, and our analyses of
the MAC's data also provided information on the average time spent in
adjudicating appeals and the number of pending cases. OHA's central
facility analyzed its Part B data based on our request, and we analyzed
data provided by the MAC to determine the time elapsed between
processing milestones at OHA and the MAC. In the analysis of the time
spent in the various phases of case processing at the MAC, cases with
missing date information or cases with negative dates were omitted. All
results of, and methodologies for, our analyses of MAC data were
examined and confirmed by the MAC.
To gain a better understanding of the concerns of appellants regarding
the current appeals process and the potential effects of BIPA, we
interviewed representatives from three Medicare beneficiary advocacy
organizations that assist beneficiaries with Medicare appeals--the
Center for Medicare Advocacy, the Center for Medicare Rights, and the
Medicare Advocacy Project of Massachusetts. We conducted a focus group
with representatives from billing companies through an association for
billers and coders--the Health Care Billing and Management Association.
In addition, we interviewed representatives from nine medical
professional associations:
* American Academy of Ophthalmology:
* American College of Physicians-American Society of Internal Medicine:
* American Hospital Association:
* American Orthopedic Association:
* American Medical Association:
* American Podiatric Medical Association:
* American Urological Association:
* California Medical Association:
* Medical Group Management Association:
[End of section]
Appendix II: The Scope of Part B Claims Rejections, Denials, and
Appeals:
In fiscal year 2001, carriers processed about 773 million Medicare Part
B claims and rejected or denied, in full or in part, about 161 million-
-or 21 percent--of the claims processed. Many claims are rejected
because they are missing information or are duplicates of claims
previously processed and paid or denied.[Footnote 19] In fiscal year
2001, carriers rejected over 19.5 million claims that were missing
information and more than 40 million claims that they considered
duplicate. Duplicate claims may be submitted for several reasons. For
example, inconsistent regulations may confuse providers causing them to
resubmit denied Part B claims--even though Medicare rules do not allow
this--because Medicare allows denied Part A claims to be resubmitted
for payment. Also, turnover in administrative and billing personnel at
providers' offices may result in confusion about whether a claim was
previously submitted, and under what circumstances a claim can be
resubmitted for payment. According to officials from the Centers for
Medicare & Medicaid Services' (CMS), carrier error also contributes to
the rate of duplicate submissions because some carriers have system
limitations that do not always recognize appropriate claims. For
example, if a claim is submitted that appropriately includes the
performance of the same service to two separate limbs, the two distinct
services may be construed as duplicate claims by some carrier systems.
Claims are denied if they do not meet the requirements in Medicare
statutes, federal regulations, or CMS's national coverage
determinations. Carriers may also deny claims based on their own local
medical review policies and local coverage determinations, which may
enhance or clarify national Medicare policy.
CMS compiles data submitted by carriers categorizing the reason for
denying claims. Table 1 shows the reasons for denials of Part B claims
in fiscal year 2001, excluding rejections. Although CMS has established
the categories for data submission shown in table 1, it has not
provided strict definitions of these categories for carriers to follow.
Instead, each carrier has developed its own unique set of definitions
for each category. As a result, these data do not provide a precise or
reliable explanation of the reasons for denial. For example, the
category "other," which comprised more than 17 percent of reported Part
B denials in fiscal year 2001, may include denials at one carrier that
another carrier would have included in another category.
Table 1: Reason for Denials of Initial Medicare Part B Claims in Fiscal
Year 2001:
Reason for denial: Medically unnecessary[A]; Number of denials:
32,480,000; Percentage of total: 29.4.
Reason for denial: Services not covered; Number of denials: 26,536,000;
Percentage of total: 24.1.
Reason for denial: Other; Number of denials: 19,795,000; Percentage of
total: 17.9.
Reason for denial: Claim part of a global fee for a procedure[B];
Number of denials: 14,351,000; Percentage of total: 13.0.
Reason for denial: Medicare is secondary payer for claim[C]; Number of
denials: 7,697,000; Percentage of total: 7.0.
Reason for denial: Claimant ineligible; Number of denials: 7,324,000;
Percentage of total: 6.6.
Reason for denial: Filing limitation exceeded[D]; Number of denials:
2,150,000; Percentage of total: 1.9.
Reason for denial: Total denials; Number of denials: 110,333,000;
Percentage of total: 100[E].
Source: CMS.
[A] Medicare law requires that for services to be covered, they must be
"reasonable and necessary for the diagnosis or treatment of illness or
injury or to improve the functioning of a malformed body member." 42
U.S.C. § 1395y (a) (A) (1) (2000).
[B] Global fee is a total charge for a bundled set of services, such as
a single surgery that encompasses presurgical and postsurgical care or
a diagnostic service that represents physician and equipment charges.
Individual services included in the global fee cannot be paid
separately.
[C] Medicare is the secondary payer when a beneficiary has an insurance
policy or health plan, other than Medicare, that has primary
responsibility for covering the cost of the beneficiary's care. 42
U.S.C. § 1395ff (2000).
[D] To be eligible for payment, claims must be filed no later than the
end of the calendar year following the year the service was provided.
[E] Percentage does not total to 100 due to rounding.
[End of table]
Relatively few cases are appealed when compared to the number of
denials, and only a small fraction is appealed to the highest level.
CMS, the Office of Hearings and Appeals (OHA), and the Medicare Appeals
Council (MAC) do not track the number of denied claims that are
appealed, although CMS collects the number of claims that are
adjudicated in the appeals process for the carrier review, carrier
hearing, and OHA levels. In fiscal year 2001, about 7.1 million claims-
-less than 7 percent of denied Part B claims--were adjudicated at the
carrier review level.[Footnote 20] In that year about 554,000 Part B
appeals were adjudicated at the carrier hearing level and over 201,000
at OHA. The MAC received about 8,800 Part B appeals cases in fiscal
year 2001; however, the MAC does not track the number of claims
comprising cases.
Appeals requests at the higher levels have grown rapidly in recent
years, as shown in table 2. For example, requests for Medicare appeals
at OHA--the third level of appeals--increased a total of 200 percent
from fiscal year 1996 to fiscal year 2001, and the MAC's workload grew
by nearly 500 percent from fiscal year 1997 to fiscal year 2001.
Table 2: Growth in Part B Appeals Cases Submitted by Appeal Level from
Fiscal Year 1996 through Fiscal Year 2001:
Fiscal year: 1996; Carrier review: 4,100,000; Carrier hearing: 69,000;
OHA hearing: 21,000; MAC adjudication: a.
Fiscal year: 1997; Carrier review: 3,900,000; Carrier hearing: 87,000;
OHA hearing: 35,000; MAC adjudication: 1,500.
Fiscal year: 1998; Carrier review: 3,500,000; Carrier hearing: 95,000;
OHA hearing: 35,000; MAC adjudication: 2,700.
Fiscal year: 1999; Carrier review: 3,500,000; Carrier hearing: 93,000;
OHA hearing: 61,000; MAC adjudication: 6,300.
Fiscal year: 2000; Carrier review: 3,300,000; Carrier hearing: 101,000;
OHA hearing: 62,000; MAC adjudication: 7,600.
Fiscal year: 2001; Carrier review: 3,700,000; Carrier hearing: 102,000;
OHA hearing: 63,000; MAC adjudication: 8,800.
Fiscal year: Total growth over the period (percent); Carrier review: -
400,000 (-10); Carrier hearing: 32,000 (47); OHA hearing: 42,000 (200);
MAC adjudication: 7,300 (487).
Sources: CMS, OHA, and the MAC.
Note: Appeals cases may contain several claims.
[A] MAC data for fiscal year 1996 were not available.
[End of table]
[End of section]
Appendix III: Changes Mandated by Section 521 of BIPA:
Section 521 of the Medicare, Medicaid, and SCHIP Benefits Improvement
and Protection Act of 2000 (BIPA) mandates administrative, structural,
and management changes in the appeals process. It includes the
following:
* Revises the filing deadline for appellants at the first level of
appeal: reduced from 180 days to 120 days:
* Reduces the minimum thresholds for filing appeals:
* To second level, from $100 to no minimum:
* To third level, from $500 to $100:
* Changes adjudication time frames at all levels of appeal:
* At first level, from completing 95 percent in 45 days to completing
100 percent in 30 days:
* At second level, from completing 90 percent in 120 days to completing
100 percent in 30 days:
* At third level, time frames of 90 days where none previously existed:
* At fourth level, time frames of 90 days where none previously
existed:
* Allows appellants to escalate the appeal to the next level, including
federal district court, when adjudication time frames have not been met
at the second, third, or fourth levels of appeal:
* Replaces the second level of appeal, currently known as a carrier
hearing, with a redetermination by qualified independent contractors
(QIC):
* The Department of Health and Human Services (HHS) must establish 3-
year contracts with at least 12 QICs:
* QICs, like the Office of Hearings and Appeals (OHA) and the Medicare
Appeals Council (MAC), are not bound by, but shall consider, local
coverage determinations:
* Establishes that the MAC adjudicate cases de novo[Footnote 21]
instead of evaluating OHA's decisions, as had been done:
* Requires that QICs have a comprehensive data system to collect and
share information:
* QICs must maintain accurate records of each decision that enable it
to identify specific types of claims that give rise to appeals,
situations suggesting the need for provider education, situations
suggesting changes in national or local coverage policy, and situations
suggesting changes in local medical review policy:
* QICs must monitor their decisions to ensure consistency in outcomes
between similar appeals:
* QICs must make all decisions available to carriers:
* QICs must report annually to the Secretary of HHS:
* Requires that, at least every 5 years, the Secretary of HHS survey a
sample of appellants regarding their satisfaction with education on the
appeals process and with the process itself; and that the Secretary
must report the results and any recommendations to the Congress:
* Requires that the Secretary of HHS annually report the following to
the Congress:
* The number of appeals:
* Issues that require administrative or legislative action and
recommendations with respect to actions:
* Analysis of consistency of decisions at QICs, including any reasons
for inconsistency:
[End of section]
Appendix IV: Comments from the Department of Health and Human Services:
DEPARTMENT OF HEALTH & HUMAN SERVICES
Office of Inspector General:
SEP 2 2003:
Ms. Leslie G. Aronovitz
Director, Health Care - Program Administration and Integrity Issues
United States General Accounting Office Washington, D.C. 20548:
Dear Ms. Aronovitz:
Enclosed are the Department's comments on your draft report entitled,
"Medicare Appeals: Disparity Between Requirements and Responsible
Agencies' Capabilities." 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 also provided several technical comments directly to
your staff.
The Department appreciates the opportunity to comment on this draft
report before its publication.
Sincerely,
Signed by:
Dara Corrigan:
Acting Principal Deputy 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 General Accounting 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 on the General
Accounting Office's Draft Report, "Medicare Appeals: Disparitv Between
Requirements and Responsible Agencies' Capabilities" (GAO-03-841):
The Department of Health and Human Services (Department / HHS)
appreciates the opportunity to review and comment on the above-
referenced draft report. The General Accounting Office (GAO) draft
report focuses on improvements that are needed in the Medicare claims
appeal procedures in order to meet the Medicare, Medicaid, and the
State Children's Health Insurance Program (SCHIP) Benefits Improvement
and Protection Act of 2000 (BIPA), and the barriers to implementing
these changes.
The Centers for Medicare & Medicaid Services (CMS) and the HHS
Departmental Appeals Board's Medicare Appeals Council (MAC) and its
supporting division, the Medicare Operations Division (MOD), continue
to take aggressive steps to implement the BIPA requirements and improve
the structural problems that are identified in the GAO's report. These
efforts include:
* Redesigning MAC's adjudication process and increasing productivity
dramatically from around 1000 dispositions per-year in the mid-1990s to
a current rate of more than 10,000 per year.
* Reducing the MAC/MOD's total pending caseload for all claim types to
10,100 - far below the 2001 pending caseload reported by GAO for Part
B. MAC/MOD uses strategic planning to prioritize cases by setting
quarterly disposition goals, screening cases for those that can be
disposed of quickly, and systematically focusing on the older, more
complex cases.
* Issuing a CMS ruling in October 2002, outlining procedures for
Medicare contractors, Administrative Law Judges (ALJs), and the HHS
Departmental Appeals Board to use for handling initial determinations
and appeals as of October 1, 2002. This interim guidance addressed
short-term implementation issues and implemented several BIPA 521
provisions, including establishing a new 120-day deadline for filing
requests for redeterminations of claims denials and setting $100 as the
threshold for the amount in controversy for ALJ hearings.
* Publishing a Request for Information (RFI) to solicit industry
comments in connection with a BIPA 521 requirement that CMS contract
with at least 12 Qualified Independent Contractors (QICs) to conduct
reconsiderations, the second level of appeals. We also obtained
comments on a draft statement of work for prospective bidders and other
interested members of the industry. CMS intends to issue the formal
Request for Proposal (RFP) to solicit bids for the QIC work in
September 2003. In keeping with the President's fiscal year (FY) 2004
budget request, this solicitation will permit QIC implementation
beginning in FY 2004.
* Publishing a comprehensive proposed rule on November 15, 2002,
covering all necessary regulatory changes related to BIPA 521, as well
as other long-needed changes aimed at volume control, fairness and
efficiency, and the creation of Medicare-specific ALJ and MAC
regulations. We are now considering the comments on the proposed rule
and are in the process of developing the final rule for publication in
early 2004, consistent with our QIC implementation strategy.
* Issuing a request for proposals (RFP) in June 2003, to develop the
data system needed to implement the BIPA 521 changes. The RFP specifies
that the new Medicare Appeals System (MAS) database will be available
by April 2004 to accept case-specific data at both the QIC and ALJ
level. The implementation of the MAS will represent a critical step
toward providing the management data needed both to track an appeal
across different levels of the system and to identify, and resolve,
systematic problems.
* Working with the Social Security Administration (SSA) to bring about
the transfer of the ALJ hearing function from SSA to a new organization
with a dedicated focus on Medicare ALJ hearings. Although the precise
timing of this transfer may be influenced by legislation, we believe
that this change is critical to achieving the needed coordination among
appeals levels that your report identifies as the single most important
factor in improving the Medicare administrative appeals system.
We believe that these actions illustrate our commitment to full
implementation of the BIPA statute and the progress we continue to make
toward this goal.
General Comments:
1) We agree with the report's primary conclusions concerning the need
for close coordination among all appeals bodies and for improved
appeals data capabilities. However, we believe the report significantly
understates the extent to which CMS has already taken strides to
address these issues. As noted above, CMS is committed to contracting
to build a data system that will, for the first time, make available
uniform program and performance data at all levels of the appeals
process. In addition, MAC/MOD has already migrated its case-tracking
database to the HHS standard (Oracle); the new database contains some
of the data noted by GAO, but because it is primarily an internal
workflow and assignment system, it is not intended to analyze and track
the type of information discussed by GAO. In the process of designing
the required specifications for the Medicare Appeals System (MAS), it
is important to note that HHS is continuing to work with
representatives of the Social Security Administration's (SSA) Office of
Hearings and Appeals to ensure that the data needs of all levels of the
appeals system will be met by the new system.
2) Although the Secretary has delegated authority to CMS to develop the
new regulations that are needed to implement the BIPA appeals
provisions and other changes to the appeals procedures, CMS consulted
with MAC and with Administrative Law Judges (ALJs) from SSA in drafting
the proposed rule. Most recently, in an effort to continue to
improve this coordination CMS has established the Office of Medicare
Adjudication (OMA). This new office will strengthen CMS's ability to
provide executive leadership and direction for all Medicare hearings-
related matters, including the critical role of ensuring systematic
coordination among the different organizations responsible for the
various levels of appeal. CMS is currently seeking additional
information from SSA to achieve a better understanding of the
characteristics of the OHA hearing workload. Thus, we will certainly
consider the appropriateness of a formal interagency steering
committee, particularly in view of the likely transfer of the Medicare
AU function from SSA to HHS. CMS and MAC will also be coordinating on
intra-agency operational issues related to the appeals processes.
3) We agree with the need for a clear strategy for reducing the backlog
of pending cases at all levels of the process, and for establishing
clear requirements with respect to the adjudication of pre-BIPA cases,
some of which have been addressed by MAC/MOD's efforts to prioritize
cases. We intend to address this issue as well as other transition
issues in the forthcoming final regulation on the BIPA changes and
other appeals process improvements. Appeals backlogs are primarily a
concern at the AU and MAC level, however, as the reports explains, CMS
annually issues instructions to its contractors addressing how the
appeals workload should be prioritized, including the elimination of
any backlogs. In addition, CMS is establishing a financial incentive
(in FY 2004) for reducing appeals backlogs for several contractors that
are participating in an ongoing pilot program.
4) The BIPA provisions include measures that are likely to increase
numbers of appeals to the ALJs and MAC (such as lowering amount in
controversy), as well as others that may decrease appeals (such as QIC
provisions), so predicting post-BIPA numbers is extremely difficult.
Additionally, the final version of the implementing regulations will
affect the MAC workload.
Specific Comments:
1) Throughout the draft report, the term "rule" is used to refer to the
October 7, 2002, CMS Ruling, and the term "draft ruling" is incorrectly
used to refer to CMS's:
November 15, 2002, notice of proposed rule making.
2) The report indicates that its scope includes Part B claim appeals,
although our understanding is that GAO did not review appeals
procedures for Part B claims processed by fiscal intermediaries or by
durable medical equipment carriers. We believe that the scope of the
study should be clarified. On a related note, the report routinely uses
the term "providers" to describe all non-beneficiary appellants. For
Medicare purposes, the tenn "provider" technically refers only to
institutional entities such as hospitals, skilled nursing facilities,
and home health agencies, and their claims generally fall under Part A
of Medicare. Further, provider appeals rights are more constrained than
those of beneficiaries, in contrast to the statement on page 3, 3rd
paragraph. We recommend that the report clarify that the term
"providers" is used to refer to any non-beneficiary appellants and thus
includes physicians and other suppliers, and that the statements in the
3rd paragraph of page 3 and the 1st paragraph of page 5 be modified,
for example, by adding "generally" or "in certain circumstances.":
3) Further, the report should acknowledge that caseloads that were not
analyzed included Part A, Part C and other managed care cases, Medicare
entitlement, and overpayments. These caseloads present other procedural
and process problems and add to the administrative challenges of
running an appeals process.
4) Pages 3 and 25 of the GAO draft report provide that in fiscal year
2001, the most common reason for denying claims was the resubmission of
duplicate claims previously processed. The report also provides that
"other common reasons for denials include ... that information critical
to the claims was missing." Technically, when a claim is not paid
because it is a duplicate or because information critical to processing
the claim is missing, CMS does not consider the non-payment a "denial."
Rather, because the party may submit the claim a second time, the
nonpayment is considered a rejection. Denials are subject to appeal
rights, while rejections are not. Thus, it is somewhat misleading for
the GAO to include claims denied on the basis of missing information or
duplication in its report on appeals, since such claims could not be
appealed. We would recommend that the GAO include a footnote in the
third paragraph on page 3 of the report that explains CMS's distinction
between rejections and denials. We suggest that the footnote read as
follows:
Note: CMS distinguishes between claims that are rejected because they
are unprocessable and claims that are denied for substantive reasons.
Submissions that are unprocessable because they are missing information
may not even be considered claims if there is not, for example, enough
information to identify the enrollee. Because these claims are not
being denied for substantive reasons, the rejections are not subject to
appeal under §§ 3 000 and 3005 of the Medicare Carriers Manual. In
addition, claims rejected because they are duplicates are not
considered appealable unless the party is appealing whether the claim
submitted is in fact a duplicate.
5) In the chart on page 5 of the draft report, the key is reversed. The
information provided in the rectangles of the chart represent the time
allowed for Medicare or the appeals bodies to issue a decision and the
information presented in the ovals represents the time allowed for the
appellant to request an appeal, as well as the dollar threshold
required to file appeal.
6) In several places, the report reflects GAO's apparently broader
interpretation of the "escalation" requirement of BIPA than that
adopted by CMS. For example, on page 6, in the 2"d paragraph, the GAO
states: "BIPA also gave appellants the right to escalate their appeals
to the next level in the process for adjudication when a decision is
not issued within the specified timeframe. Escalation is available from
any level of appeal except the first - carrier review." We believe that
the statute imposes a deadline and subsequent escalation only in cases
where there has already been a decision issued at the lower level of
appeal. Thus, as explained in the November 2002 proposed rule (67 FR
69329):
Appellants who escalate their appeals will, in essence, be waiving
their right to obtain a decision within the statutory deadline at the
next level. For example, section 1869(d)(1)(A) provides that unless the
appellant waives the statutory adjudication deadline, the ALJ "shall
conduct and conclude a hearing on a decision of a [QIC] and issue a
decision by the 90th day from the date a request for hearing is timely
filed ...... We interpret this as requiring an ALJ to decide a case
within 90 days when the QIC has issued a final action in a case, but
not when the appellant has escalated the case to the ALJ level before
the QIC issues a decision. A similar distinction is found in the
provisions governing MAC review, which provide that the MAC must
complete its "review of a decision" within 90 days. Therefore, when an
appellant escalates an appeal from the QIC to the ALJ level or from the
ALJ level to the MAC, the proceedings before the ALJ or MAC are not
subject to the 90-day limit.
Although CMS may administratively decide to allow escalation more than
once, this would be an administrative decision, and would not be
required by statute.
7) Page 6, 2nd paragraph: The Part B decision-making timeframes are
statutory, rather than regulatory. Also, in the last paragraph, the
term carrier "review" should be "redetermination.":
8) Also on page 6, the report describes the standards of review
employed at the various steps of the Part B appeals process as follows:
The first three levels of appeal share a protocol for adjudication
called de novo review, which permits adjudicators to review results
from earlier decisions, but requires them to independently evaluate
evidence and issue original decisions. The appeals bodies reexamine the
initial claim to determine if it should be paid and consider any new
documentation or information supporting the claim submitted by the
appellant. The fourth level of review, the MAC, does not share this
protocol. Rather than performing de novo review, it evaluates the
appropriateness of OHA decisions and does not consider the submission
of new evidence or documentation. BIPA changes will require that the
MAC also perform de novo review in all cases.
We agree that BIPA will alter the MAC's review procedures in several
significant ways. However, the report does not accurately describe the
MAC's current standard of review, which is governed by 20 C.F.R. § 404.
970, and is a de novo review in certain respects. Under 20 C.F.R. §
404. 970(b), the MAC may consider new and material evidence, "where it
relates to the period on or before the date of the administrative law
judge hearing decision." Therefore, we would recommend replacing the
last two sentences in this paragraph with the following language:
Rather than performing de novo review of evidence, it evaluates the
appropriateness of OHA decisions and considers whether new 5
evidence will alter the decision. BIPA changes will require that the
MAC perform de novo review in all cases.
9) On page 7, the report states:
Finally MAC may deny an appellant's request if it find no error of law
in the OHA decision.
Since the applicable regulations at 20 CFR provide for a number of
reasons for MAC review other than error of law, the above-cited
language is too narrow. We suggest instead:
Finally MAC may deny an appellant's request for review if it finds that
the OHA decision is factually and legally adequate.
10) Pages 7 and 16: The report states that SSA establishes its own
procedures for appeals and that CMS, OHA, and MAC are all charged with
developing procedural regulations to implement BIPA. We note that the
Secretary of HHS has delegated authority to CMS to develop these
procedural regulations. Such procedural regulations bind not just CMS
contractors, but also OHA, SSA ALJs, and the MAC. However, you may wish
to note that both OHA and MAC use their own systems for processing
appeals and conduct their own hiring.
11) Page 7, P paragraph: The report describes the types of law that
bind the first two levels of appeal. We believe that the list should
also include CMS's policy guidance, such as manuals and program
memoranda, since Medicare contractors are bound by such guidance.
Therefore, we recommend rewriting the first sentence as follows: "In
making a determination ... the first two levels of appeal are bound by
the same substantive legal standards used in the initial denial
determination - Medicare statutes, Federal regulations, CMS's NCDs, the
carrier's own LMRPs and LCDs, and, pursuant to carriers' contracts with
CMS, CMS's general instructions (such as manuals and program
memoranda).":
12) The draft erroneously suggests that MAC has done no planning
related to BIPA requirements. The MAC/MOD redesign and its continuing
strategic planning for adjudicating the pending caseload are part of
our overall efforts to improve quality and to process cases on a
current basis.
13) Although some BIPA requirements are subject to interpretation and
cannot be planned for or implemented until final regulations are
issued, the report fails to recognize that MAC will not start receiving
cases subject to BIPA until they work their way up through the other
levels or are escalated up. Accordingly, a detailed action plan could
not be developed without more concrete information about what factors
would need to be addressed, such as the rate of cases expected, the
experience of the other review levels under BIPA and MAC's caseload and
resources at the time when BIPA cases are actually expected to be
filed.
[End of section]
Appendix V: Comments from the Social Security Administration:
SOCIAL SECURITY The Commissioner August 22, 2003:
Ms. Leslie G. Aronovitz Director,
Health Care-Program Administration and Integrity Issues
U.S. General Accounting Office Washington, D.C.
20548:
Dear Ms. Aronovitz:
Thank you for the opportunity to review and comment on the draft report
"Medicare Appeals: Process Disparity Between Requirements and
Responsible Agencies' Capabilities" (GAO-03-841). Our comments on the
report are enclosed.
If you have any questions, please have your staff contact Laura Bell at
(410) 965-2636.
Sincerely,
Signed by:
Jo Anne B. Barnhart:
Enclosure:
SOCIAL SECURITY ADMINISTRATION
BALTIMORE MD 21235-0001:
COMMENTS ON THE GENERAL ACCOUNTING OFFICE (GAO) DRAFT REPORT "MEDICARE
APPEALS PROCESS: DISPARITY BETWEEN REOUIREMENTS AND RESPONSIBLE
AGENCIES' CAPABILITIES" (GAO-03-841):
Thank you for the opportunity to review and comment on the draft
report. We acknowledge that efficiency and compatibility issues exist
within the Medicare appeals process and we, like GAO, believe that many
of the issues are the result of the lack of a single entity's ownership
of and/or accountability for the process. While the President's Fiscal
Year (FY) 2004 Budget Request anticipates the transfer of the Medicare
hearings function from the Social Security Administration (SSA) to the
Department of Health and Human Services (DHHS), SSA is committed to
providing high quality service to all SSA claimants and appellants.
Therefore, On July 2, 2003 we sent to HHS a proposed memorandum of
understanding (MOU) to address all matters related to the transfer of
the Medicare hearings function from SSA to HHS. We have agreed to
assist HHS by retaining responsibility for all Medicare Part B hearings
cases received on or before May 31, 2004. However, as the President's
FY 2004 budget did not request funds for SSA to process these hearings,
part VI of the MOU addresses reimbursement to SSA from HHS at a
prescribed cost per hearing disposition. We will continue our efforts
to provide the best service possible to Medicare appellants until HHS
assumes responsibility for handling Medicare appeals.
The Medicare appeals process is unique as it weaves in and out of
private contractors, SSA and HHS. Despite the inherent difficulties of
managing such a fragmented process, the following are some measures SSA
has taken to improve the service it provides to Medicare appellants.
The Office of Hearings and Appeals (OHA) established a cadre of
Medicare specialist administrative law judges (ALJ) who hear the most
complex and voluminous cases. Attorneys and staff from Office of the
Chief Administrative Law Judge's (OCALJ) Division of Medicare assist
the ALJs. The Division provides legal analysis, hearing support, and
decision-writing assistance to the hearing offices in Medicare "big
box" cases ($40,000 or more in controversy and multiple beneficiaries),
and pre-screens Part C cases for hearing offices.
OHA developed an intranet Medicare Online website to assist the field
in processing Medicare cases.
The Hearing Office Tracking System (HOTS) has been enhanced recently
to collect separate data about Medicare cases and to generate
management information essential to improving the efficiency of the
process.
These measures and other workload management improvements have resulted
in increased productivity in Medicare cases at SSA.
In an effort to further improve our management of the Medicare appeals
workload and to mitigate the problems resulting from fragmentation, in
January 2002, we created the Executive Counselor for Interagency
Adjudication (ECIA). The ECIA is an executive level position that
serves as our liaison to the Center for Medicare and Medicaid Services
(CMS) within HHS. The primary role of the ECIA is to enhance the
coordination and cooperation between SSA and HHS on Medicare issues,
improve service delivery for both Medicare and disability appeals, plan
and coordinate the administrative transfer of the Medicare appeals
function to HHS, and to work with CMS on other service delivery issues,
including implementation of the Benefits Improvement and Protection Act
(BIPA).
Highlights of our efforts to date include providing comments on the
CMS's Notices of Proposed Rulemaking to implement Sections 521 and 522
of BIPA, interagency discussion by key SSA and CMS staff resulting in
increased understanding of the entire appeals process and the problems
each agency faces, joint development of detailed process maps,
exchanges of caseload reports and systems information, and development
of a proposed Memorandum of Understanding for the transfer of the
Medicare hearing function to HHS on October 1, 2004. As demonstrated
above, the level of communication and coordination for improved service
to Medicare appellants has increased and continues to be a priority for
us.
While we recognize that decisions regarding the transfer of the
Medicare hearings function are pending, our comments on the
recommendations encompass both the current and anticipated structure of
the Medicare appeals process.
Recommendation 1:
GAO recommends that the Secretary of HHS and the Commissioner of SSA
create an interagency steering committee with representatives from CMS,
the carriers, OHA and MAC, to serve as an advisory body to the
Secretary of HHS and the Commissioner of SSA.
Response:
The Social Security Act places ultimate responsibility for
administration of the Medicare program, including its due process
appeals, with HHS, and it is the single entity with the authority to
"unify" the Medicare appeals process in terms of both policies and
procedures. We continue to support the transfer of full operational
responsibility for the Medicare appeals process to HHS and have been
working with HHS to accomplish that goal. On July 2, 2003 we sent to
HHS a proposed memorandum of understanding (MOU) to address all matters
related to the transfer of the Medicare bearings function from SSA to
HHS. We would agree, in the proposed MOU, to assist HHS by retaining
responsibility for all Medicare Part B hearings cases received on or
before May 31, 2004. However, as the President's FY 2004 budget did not
request funds for SSA to process
these hearings, part VI of the MOU addresses reimbursement to SSA from
HHS at a prescribed cost per hearing disposition.
We understand that HHS recently established an Office of Medicare
Adjudication within CMS, which we believe should carry out the
functions of the proposed interagency steering committee, since, as
noted, HHS has ultimate responsibility for all Medicare appeals. Since
Medicare appeals are only a small part of SSA's appeals workload, it
should be noted that SSA can only take such actions with respect to
Medicare that are consistent with meeting the demands of our total
service obligations. SSA will participate and assist HHS/CMS in their
effort to carry out their appeals process responsibilities.
Regarding the specific responsibilities of an interagency steering
committee, we offer the following:
Make administrative processes, such as file tracking and transfer,
compatible across all appeal bodies.
The proposed steering committee may be helpful in further supporting
the recommendation for compatible administrative processes by helping
define roles across CMS, SSA and HHS during its current operation and
during the transfer of the hearing function to HHS. Pending development
of a comprehensive integrated data system by CMS, we will continue to
use our HOTS to track Medicare cases on a reimbursable basis since
there is no funding for Medicare appeals in our FY 2004 President's
Budget Request.
Negotiate responsibilities and strategies for reducing the backlog of
pending cases, especially at OHA and the Medicare Appeals Council, and
establish
the priority for adjudicating pre-BIPA cases relative to BIPA-governed
cases.
We agree with the need for consistent and comprehensive strategies for
reducing the backlog of pending cases and reducing the overall
processing time for Medicare appeals. To the extent that BIPA cases are
adjudicated under the current interagency appeals process, coordination
for handling BIPA cases will be required, and SSA will participate in
this effort to address these activities.
Establish requirements for reporting specific and comparable program
and performance data to CMS, SSA and HHS so that management can
identify opportunities for improvement, and determine the resource
requirements necessary to ensure that all appeals bodies will be able
to meet BIPA's requirements.
As stated above, we believe that the current process fragmentation
prevented the development of a comprehensive data collection and
analysis process to identify efficiency issues and the development of
design improvements. However, in anticipation of the transfer of
Medicare hearings, we have worked to increase the:
understanding of the entire appeals process by bringing together key
SSA and CMS staff. In addition to previously mentioned activities, SSA
has provided CMS specifications for HOTS, which could be used as an
interim system by CMS until a more comprehensive data system is
developed. We have also demonstrated and shared information about the
new Case Processing and Management System (CPMS) that SSA is developing
so CMS can evaluate it for its own future needs. As stated, SSA has
already made enhancements to HOTS to permit improved case tracking and
workload management and to collect separate data on Medicare case
processing. During the period that SSA continues to handle Medicare
hearings, we will work with CMS and HHS to capture comparable data
through HOTS.
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Geraldine Redican-Bigott, (312) 220-7678:
Acknowledgments:
Ankit Mahadevia, Margaret J. Weber, Anne Welch, and Craig Winslow made
major contributions to this report.
FOOTNOTES
[1] On June 14, 2001, the Secretary of Health and Human Services
announced that the name of the Health Care Financing Administration
(HCFA) had been changed to the Centers for Medicare & Medicaid
Services. In this report, we will refer to HCFA where our findings
apply to operations that took place under that organizational structure
and name.
[2] For the purposes of this report, the term "provider" refers to any
nonbeneficiary appellant, including physicians and other suppliers.
[3] Medicare fee-for-service consists of two parts--A and B. Part A
claims cover inpatient hospital, skilled nursing facility, hospice, and
certain home health services. Part B claims cover physician services,
diagnostic tests, and related services and supplies.
[4] Pub. L. No. 106-554, app. F, 114 Stat. 2763, 2763A-534 (codified at
42 U.S.C. § 1395ff (2000)).
[5] Medicare contractors that process Part A claims are called fiscal
intermediaries, while those that process Part B claims are called
carriers.
[6] The Medicare program is governed by title XVIII of the Social
Security Act, 42 U.S.C. §§ 1395 et seq. (2000), and related
regulations, 42 C.F.R. pts. 400-425 (2002).
[7] NCDs are developed by CMS to describe the circumstances for
Medicare coverage for a specific medical service, procedure, or device.
All Medicare carriers must observe NCDs in determining if a claim is
payable; appeals bodies at all levels must apply NCDs when adjudicating
appeals. LMRPs and LCDs, developed by contractors, specify the clinical
circumstances under which a service is covered to enhance or clarify
national Medicare guidance. Due to carrier-based policies, services
covered by Medicare in one area may not be covered in another area
served by a different carrier. For more information on Medicare
coverage policy, see U.S. General Accounting Office, Medicare: Divided
Authority for Policies on Coverage of Procedures and Devices Results in
Inequities, GAO-03-175 (Washington, D.C.: Apr. 11, 2003).
[8] BIPA refers to the carrier review level as the "redetermination."
[9] 67 Fed. Reg. 62,478.
[10] 67 Fed. Reg. 69,312.
[11] OHA and MAC time limits may be waived at the appellant's request.
[12] At the end of fiscal year 2001, the backlog of cases past their
pre-BIPA deadline at both the carrier review and carrier hearing levels
was about the average number carriers process in a single month.
[13] OHA completed more than 56,300 Part B cases in fiscal year 2001.
[14] Since QICs have not yet been implemented, there are no data to
assess whether any of their cases will be eligible for escalation.
[15] With limited exceptions, the Administrative Procedures Act
requires agencies to publish proposed rules and provide an opportunity
for the public to comment on them before they become effective. 5
U.S.C. § 553(b) (2000).
[16] 67 Fed. Reg. 69,182 (Nov. 15, 2002).
[17] H.R. 810, 108th Cong. (2003); S. 1127, 108th Cong. (2003); H.R. 1,
108th Cong. (2003); and H.R. 2473, 108th Cong. tit. IV (2003).
[18] HHS has nine additional ALJs--one at the Food and Drug
Administration and eight who hear enforcement cases including those on
Medicare fraud and provider penalties. The latter have a backlog of 700
unresolved cases. HHS's DAB, which houses both the MAC and the Medicare
fraud ALJs, is located in Washington, D.C. It has five satellite
locations but no hearing rooms--its ALJs use the hearing rooms of local
courts or other agencies.
[19] In its comments on a draft of this report, HHS pointed out that
unprocessable claims--duplicate claims and claims missing information-
-are rejected, rather than denied. According to HHS, such claims can be
resubmitted but not appealed.
[20] Postpayment denials--denials of claims that have been paid but
selected for medical review at a later date--are not included in the
denial rates shown. Postpayment denials generate some appeals; however,
CMS does not collect data on the proportion of appeals resulting from
post-payment denials.
[21] De novo review allows for new evidence and an in-depth and
independent review.
GAO's Mission:
The General Accounting Office, the investigative arm of Congress,
exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order
GAO Products" heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. General Accounting Office
441 G Street NW,
Room LM Washington,
D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 U.S.
General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.
20548:
