HEALTH &. HUMA SERVICES Office of Inspector General
~~:'
(.....; DEPARTMENT OF  Washington, D.C. 20201
JAN 2 6 2009
TO: Perr Rhew
Chief Administrative Law Judge
Office of Medicare Hearngs and Appeals
FROM: Danel R. Levinson
Inspector General
SUBJECT: Memorandum Report: "Medicare Administrative Law Judge Hearngs:
Update, 2007-2008," OEI-02-06-001 11
This memorandum report compares the performance of the Offce of Medicare Hearngs and
Appeals (OMHA) durng its first year of operation to its performance durng its thrd year of.
operation. OMRA is responsible for admstering Medicare administrative law judge (ALJ)
hearngs, which is the thrd level of the Medicare admnistrative appeals process. In September
Inspector General (OIG)
2008, the Senate Committee onFinance requested that the Offce of 
conduct a follow-up study to its previous report on OMR's first year of operation. i The
Committee specifically asked OIG to provide updated information regarding the timeliness of
ALJ decisions and the quality of the data in the appeals system.
From the first to third year of operation, OMR's caseload increased 37 percent and the
proportion of cases subject to the 90-day decision requirement also increased. At the same time,
there was little change in the hearng formats used and the types of primary appellants. In
addition, OMHA improved the timeliness of its decisions from its first to thrd year of operation.
For the cases that had a 90-day decision requirement, OMRA decided 94 percent on time in its
thrd year, compared to 85 percent inits first year of operation. For the cases Without the 90-day
these cases withn
decision requirement, OMRA decided a slightly greater percentage of 
6 months; however, there was also a slight increase in the average number of days to decide
these cases. Lastly, OMRA improved the quality ofthe data in the appeals system from its first
to its third year of operation.
BACKGROUN
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) changed
the maner in which Medicare beneficiares and providers exercise their right to appeal coverage
the responsibilty for conducting ALJ
decisions.2 In paricular, the MMA required a transfer of 
1 OIG, "Medicare Administrative Law Judge Heargs: Early Implementation, 2005-2006," OEI-02-06-00l 10,
July 2008.
2 MM, P.L. No. 108-173,  931-940A.
OEI-02-06-00111 Medicare Adminstrative Law Judge Hearngs: Update, 2007-2008 Page 2  Perry Rhew 
hearings from the Social Security Administration (SSA) to the Department of Health and Human 
Services (HHS).3  As a result, in July 2005, HHS opened OMHA, which assumed responsibility 
for certain Medicare administrative appeals previously handled by SSA.4  Under SSA, hearings 
were held primarily in person at the 141 Social Security offices throughout the country, and there 
was no timeliness requirement for appeal decisions.  In contrast, OMHA, with four field offices, 
planned to use primarily telephones and video teleconferences to conduct ALJ hearings.  Further, 
OMHA faced a new statutory requirement that certain cases be decided within 90 days.     
 
Given these changes, in December 2005, the Senate Committee on Finance requested that OIG 
assess the use of the telephone, video teleconference, and in-person hearings to decide Medicare 
ALJ cases and determine the extent to which OMHA was meeting the new statutory requirement 
to decide certain cases within 90 days.  In response, OIG released a report entitled Medicare 
Administrative Law Judge Hearings:  Early Implementation, 20052006 (OEI-02-06-00110).  
OIG found that in OMHAs first 13 months of operation, it conducted an estimated 
three-quarters of its hearings by telephone.  It also found that most sample appellants were 
satisfied with their hearing format but that incomplete and inaccurate data limited OMHAs 
ability to manage its caseload.  Lastly, OIG found that available data indicated that in its first  
13 months of operation, OMHA did not decide a number of its cases in a timely manner.  
 
Four-Level Medicare Administrative Appeals Process 
There are four levels of the Medicare administrative appeals process within HHS.  For Medicare 
Parts A and B claims appeals, the four levels are:  
 
  Level One:  Affiliated Contractor redeterminations 
  Level Two:  Qualified Independent Contractor reconsiderations 
  Level Three:  ALJ hearings 
  Level Four:  Medicare Appeals Council hearings 
 
If appellants disagree with the outcome of the prior level of appeal, they may take their cases to 
the next level.  For example, if an appellant is not satisfied with the reconsideration by the 
Qualified Independent Contractor, the appellant may request a hearing before an ALJ.  The ALJ 
independently reviews the case and makes a decision in accordance with applicable laws and 
regulations.  After exhausting the four levels of the administrative appeals process, an appellant 
may file an action in a Federal District Court.  Appendix A provides an overview of each of the 
four levels of the administrative appeals process for Medicare Parts A and B.  
 
Different procedures exist for appealing determinations regarding Medicare Parts A and B 
entitlement and enrollment,5 Medicare Part C (the Medicare Advantage program), and Medicare 
Part D (the Medicare prescription drug benefit).  For Level One and Level Two, the entities that 
decide the appeals for Medicare Parts A and B entitlement and enrollment appeals and Medicare 
Parts C and D appeals are different from the entities that decide the appeals for Medicare  
                                                 
3 MMA, P.L. No. 108-173,  931. 
4 70 Fed. Reg. 36386 (June 23, 2005).  OMHA began operations on July 1, 2005. 
5 Parts A and B entitlement and enrollment appeals involve making decisions regarding Medicare benefits and 
beneficiaries that are unrelated to Medicare coverage and payment for specific items and services.  SSA continues to 
handle the determinations and reconsiderations for these cases. 
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 3  Perry Rhew 
Parts A and B claims appeals.6  However, for Level Three, the ALJ is responsible for deciding 
all Medicare appeals.7 
 
Federal Requirements  
Section 521 of the Medicare, Medicaid, and State Childrens Health Insurance Program Benefits 
Improvement and Protection Act of 2000 (BIPA) amended section 1869 of the Social Security 
Act (the Act) to establish a uniform process for handling Medicare Parts A and B claims appeals 
and to impose shorter timeframes for the processing of these appeals.8  The Centers for Medicare 
& Medicaid Services promulgated regulations to address the changes to the claims appeals 
process required by the BIPA and the MMA.9    
 
Section 1869(d)(1)(A) of the Act, as amended by the BIPA, generally requires that an ALJ issue 
a decision about a case within 90 days of the date when the appeal request was filed.10  The  
90-day requirement generally applies to all Medicare Parts A and B claims appeals received after 
the implementation of the BIPA, unless the appellant waives the right to have the case decided 
within 90 days11 or OMHA approves a request for an in-person hearing.12 13  The 90-day 
requirement does not apply to Medicare Parts A and B entitlement and enrollment appeals or to 
Medicare Parts C or D appeals.  An appellant may request an ALJ hearing by filing a written 
request within 60 days of receiving a Level Two decision.14  The ALJ must mail or serve a 
notice of hearing at least 20 days before the hearing.15    
 
Federal regulations state that the ALJ will direct that the appearance of an individual be 
conducted by video teleconference if the ALJ finds that video teleconferencing technology is 
available to conduct the appearance.16  The regulations go on to state that the ALJ may also offer 
to conduct a hearing by telephone if the hearing request or administrative record suggests that a 
telephone hearing may be more convenient for one or more of the parties.  If video 
teleconference technology is not available or if special or extraordinary circumstances exist, the 
                                                 
6 For requirements for the appeal process prior to Level 3 for Medicare Parts A and B entitlement and enrollment, 
see 20 CFR pt. 404, subpart J; for Medicare Part C, see 42 CFR pt. 422, subpart M; and for Medicare Part D,  
see 42 CFR pt. 423, subpart M. 
7 Regarding the right to an ALJ hearing for Medicare Parts A and B entitlement and enrollment appeals, see  
20 CFR  404.929; for Medicare Parts A and B claims appeals, see 42 CFR  405.1002; for Medicare Part C, see  
42 CFR  422.600; and for Medicare Part D, see 42 CFR  423.610.   
8 BIPA, P.L. No. 106-554  521. 
9 70 Fed. Reg. 11420 (Mar. 8, 2005), as amended at 70 Fed. Reg. 37700 (June 30, 2005). 
10 42 U.S.C.  1395ff(d)(1)(A); 42 CFR  405.1016(a). 
11 42 U.S.C.  1395ff(d)(1)(B); 42 CFR  405.1036(d). 
12 42 CFR  405.1020(i).  OMHAs approval of an appellants request for an in-person hearing is different from an 
OMHA determination that an in-person hearing should be conducted because video teleconference technology is not 
available or because special or extraordinary circumstances exist.  In the latter situation, the 90-day requirement 
applies.    
13 In addition, cases that are escalated to OMHA because the prior level did not complete the reconsideration within 
the federally required timeframe are not subject to the 90-day decision requirement.  See 42 CFR  405.1016(c). 
14 42 CFR  405.1014(b)(1) (pertaining to Medicare Parts A and B).  Similar requirements exist for Medicare Part C 
at 42 CFR  422.602(b) and for Medicare Part D at 42 CFR  423.612(b). 
15 42 CFR  405.1022(a). 
16 42 CFR  405.1020(b) (pertaining to Medicare Parts A and B).  Federal regulations state that the time and place 
for ALJ hearings for Medicare Parts C and D must be set in accordance with 42 CFR  405.1020.   
42 CFR  422.602(b) (regarding Medicare Part C); 42 CFR  423.612(b) (regarding Medicare Part D).   
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 4  Perry Rhew 
ALJ may determine that an in-person hearing should be conducted.  Moreover, if a party objects 
to a hearing via telephone or video teleconference, the party may file a written request for an  
in-person hearing, which the ALJ may grant if there is good cause.17  To determine whether 
good cause exists, the ALJ considers the partys reason for requesting the change, the facts 
supporting the request, and the impact on the efficient administration of the hearing process.18  
For example, an ALJ may find that there is good cause for an in-person hearing if the party is 
close to and able to go to an OMHA field office or if the case presents complex, challenging, or 
novel presentation issues.19  In certain circumstances, the ALJ may make an on-the-record 
decision that is based only on the case file and does not require a hearing.20   
 
Medicare Appeals System 
The Medicare Appeals System (hereinafter referred to as the appeals system) was designed to 
create a unified case-tracking system across the four levels of administrative appeal once the ALJ 
function was transferred from SSA to HHS.  The appeals system stores and facilitates the 
transfer of case-specific data.  Currently, Levels Two and Three of the appeals process use the 
appeals system.   
 
The appeals system includes a variety of case-specific information that OMHA uses to manage 
its caseload.  It includes information such as the type of service being contested, the hearing 
format, the date when OMHA received the appeal request, and the date when the decision letter 
was sent to the appellant.  It also lists the parties involved with each case; indicates which party 
is the primary appellant; and specifies whether each party is a Medicare provider or supplier, a 
beneficiary, or a State Medicaid organization.21  OMHA staff can input new data into the appeals 
system regarding Level Three of the appeals process.   
 
METHODOLOGY 
 
The information provided in this report is based on an analysis of data from the appeals system 
for OMHAs third year of operation.  These data include all cases received by OMHA between 
June 1, 2007, and May 31, 2008.  Our previous report is based on data from the appeals system 
for OMHAs first 13 months of operation (hereinafter referred to as the first year of operation).  
That report included data for all cases received by OMHA between July 1, 2005, and  
July 31, 2006.22  The data from the appeals system were organized by case.  Each case may have 
multiple claims.  Each case may also have multiple parties, one of whom may be identified as the 
primary appellant.   
 
                                                 
17 42 CFR  405.1020(i).   
18 42 CFR  405.1020(g).   
19 See 70 Fed. Reg. 11420, 11457 (Mar. 8, 2005) (preamble discussion regarding good cause for in-person hearings).   
20 42 CFR  405.1038.  The ALJ may issue an on-the-record decision if the decision is fully favorable, if all parties 
wish to forgo a hearing, or if an appellant who lives outside the United States does not inform the ALJ that the 
appellant wants to appear and no other parties wish to appear. 
21 These organizations serve as appointed representatives for State Medicaid agencies.  A State Medicaid agency 
may appeal services provided to beneficiaries who are dually eligible for Medicaid and Medicare to determine 
whether Medicare is liable for the payment rather than Medicaid. 
22 For the third year of operation, the data included all information about these cases through September 1, 2008; for 
the first year, the data included all information about these cases through September 12, 2006.    
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 5  Perry Rhew 
We first assessed the composition of OMHAs caseload to identify any changes from its first 
year to its third year of operation.23  Specifically, we compared the total number of cases and the 
percentage of cases by Medicare appeal type, by hearing format type, and by type of primary 
appellant.   
 
We also analyzed the data to assess the timeliness of ALJ decisions.  To accomplish this, we 
analyzed the cases that were subject to the 90-day requirement separately from the cases that 
were not subject to this requirement.  As previously mentioned, the 90-day decision requirement 
generally applies to all Medicare Parts A or B claims appeals received after the implementation 
of the BIPA unless the appellant signs a waiver or OMHA approves an appellant request for an  
in-person hearing.24  The 90-day requirement does not apply to Medicare entitlement and 
enrollment appeals or to Medicare Parts C or D appeals.   
 
To conduct this analysis, we compared the date when OMHA received the appeal request to the 
date when OMHA sent a decision letter to the appellant, including any allotted extension days 
plus a 3-day grace period to cover any holiday weekends.25  We did not include the cases that did 
not have decision letter dates.  A case may not have this date because it was not decided or 
because the date had not been recorded in the appeals system.  For cases with the 90-day 
requirement, we determined the percentage of cases that had been decided on time.  For cases 
without the 90-day decision requirement, we determined the percentage of cases that had been 
decided within 6 months.  For cases with and without the 90-day requirement, we calculated the 
average number of days between the dates when OMHA received the appeal requests and the 
dates when OMHA sent decision letters to the appellants. 
 
Limitations 
The information about OMHAs third year of operation was based on an analysis of data from 
the appeals system.  In contrast, the information about OMHAs first year of operation was based 
on an analysis of data from the appeals system and on structured interviews with a sample of 
appellants.  In the first year, because some of the data in the appeals system were inaccurate or 
missing, the results for several estimates were based on projections from our sample rather than 
on the population of cases in the appeals system.  These estimates included the percentage of 
hearings conducted by telephone, by video teleconference, and in person and the percentage of 
hearings by appellant type.  For these estimates, we compared the results for OMHAs third year 
to the confidence interval for the estimate for OMHAs first year of operation.  Lastly, the 
calculation of the total number of cases subject to the 90-day requirement in the first year in this 
report differs slightly from our previous report.  For this report, we recategorized six cases that 
                                                 
23 We excluded three cases from the analysis of the third year because the decision dates in the appeals system were 
recorded erroneously as being earlier than the dates when the appeals requests were received.  We excluded 16 cases 
from the analysis of the first year for this reason.      
24 Note that in some cases, OMHA staff may make determinations that in-person hearings should be conducted 
without receiving official requests from appellants.  In these cases, the hearings would need to be decided within  
90 days.  In our analysis, all cases with in-person hearings were treated as not being subject to the 90-day 
requirement as OMHAs appeals system does not distinguish between cases in which appellants made the requests 
for in-person hearings from cases in which OMHA staff made such determinations.   
25 The regulations provide for extension days in cases in which hearings are postponed at the request of the 
appellants or in certain other circumstances, such as a party requesting discovery from another party.   
See 42 CFR  405.1020(h) and 405.1037(f). 
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 6  Perry Rhew 
were Medicare Parts A and B entitlement and enrollment appeals.  These cases were not, in fact, 
subject to the 90-day requirement.  This change, however, does not alter the percentage of cases 
meeting the 90-day requirement in the previous report.   
 
Standards 
This review was conducted in accordance with the Quality Standards for Inspections issued by 
the Presidents Council on Integrity and Efficiency and the Executive Council on Integrity and 
Efficiency. 
 
RESULTS 
 
From Its First to Third Year of Operation, OMHAs Caseload Increased 37 Percent and 
the Proportion of Cases Subject to the 90-day Decision Requirement Also Increased  
From its first to third year of operation, OMHAs overall caseload increased 37 percent from 
20,767 to 28,361 cases.  The number of Medicare Parts A and B cases that OMHA received 
increased by 37 percent from 19,432 to 26,529.  The number of Part C cases increased by  
29 percent from 1,196 to 1,539 cases, and the number of Part D cases increased by 111 percent 
from 139 to 293 cases.  Approximately one quarter of the increase in OMHAs caseload was 
attributable to appeals associated with the Recovery Audit Contractor program, a new Medicare 
program designed to detect and collect overpayments.26   
 
In addition, there was a substantial shift from cases without the 90-day decision requirement to 
cases with the requirement from the first to third year of operation.  As shown in Figure 1 on the 
next page, the number of cases with the 90-day decision requirement more than tripled, from 
6,079 to 20,720 cases.  In contrast, the number of cases without the 90-day requirement was 
reduced by almost half, from 14,688 to 7,641 cases.  The shift to more cases with the 90-day 
requirement occurred because, in the third year, all Parts A and B claims appeals were submitted 
after the implementation of the BIPA and were therefore generally subject to the 90-day 
requirement.  Conversely, in the first year, almost all of the Parts A and B claims appeals were 
submitted before the implementation of the BIPA and were therefore not subject to the 
requirement.  
                                                 
26 The Recovery Audit Contractor program, initially authorized as a demonstration project in section 306 of the MMA, 
is designed to reduce Medicare improper payments through detection and collection of overpayments and to identify 
underpayments.  It was made permanent in 2006, and authority for the program is now found at section 1893(h) of the 
Act.  As of March 2008, the Recovery Audit Contractors identified $992.7 million in overpayments, $46.0 million  
(4.6 percent) of which was overturned on appeal.  The Medicare Recovery Audit Contractor (RAC) Program:  An 
Evaluation of the 3-Year Demonstration, June 2008.  Available online at 
http://racaudits.com/uploads/RAC_Demonstration_Evaluation_Report.pdf.  Accessed on November 25, 2008. 
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 7  Perry Rhew 
Figure 1:  Number of Cases With and Without the 90-Day Decision  
Requirement for the First and Third Years of OMHA Operation 
30,000 (28,361)
s 7,641 27%
e
s (20,767)
a
20,000
C
 
f
o
r  14,688 71%
e
mb 10,000 20,720 73%
u
N
6,079 29%
0
First Year Third Year
Cases without the 90-day decision requirement
Cases with the 90-day decision requirement
 
 
   
Source:  OIG analysis of the Medicare Appeals System, 2008.
 
There Was Little Change in the Hearing Formats Used and the Types of Primary 
Appellants From OMHAs First to Third Year of Operation   
In its third year of operation, OMHA conducted 85 percent of its hearings by telephone.  This 
was a slight increase from the first year of operation, when OMHA conducted an estimated  
78 percent of its hearings by telephone.  This estimate had a 95-percent confidence interval of  
73 percent to 83 percent.  In addition, OMHA conducted 8 percent of its hearings by video 
teleconference and 7 percent in person in its third year of operation.  These percentages were not 
statistically different from those in OMHAs first year of operation.27 
 
There were no significant changes in the types of primary appellants from OMHAs first to third 
year of operation.  In the third year of operation, for 78 percent of the cases that had hearings, the 
primary appellants were Medicare providers or suppliers.  Another 13 percent of these cases had 
primary appellants who were Medicare beneficiaries, and 9 percent were pursued by State 
Medicaid organizations.  None of these percentages were statistically different from those in the 
first year of operation.28 
 
In addition, in the third year of operation, 28 percent of the cases had on-the-record decisions.29  
An on-the-record decision is based only on the case file and does not require a hearing.  In 
                                                 
27 The 95-percent confidence intervals for the first year were 8.0 percent to 15.1 percent for video teleconference 
hearings and 6.1 percent to 13.9 percent for in-person hearings.   
28 The 95-percent confidence intervals for the first year were 71.3 percent to 84.4 percent for Medicare providers or 
suppliers, 8.5 percent to 20.5 percent for beneficiaries, and 4.3 percent to 10.9 percent for State Medicaid 
organizations. 
29 Less than 1 percent of decided cases in the third year of operation had no information about whether there were 
hearings or on-the-record decisions. 
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 8  Perry Rhew 
OMHAs first year of operation, there was no information for almost one-third of the decided 
cases.  For the cases that had information, 13 percent were on-the-record decisions.   
 
OMHA Improved the Timeliness of Its Decisions From Its First to Third Year of Operation 
Although its caseload increased by 37 percent, OMHA improved the timeliness of its decisions 
from its first to third year of operation.  Improvements in timeliness were found primarily in 
cases with the 90-day decision requirement, rather than in cases without the 90-day decision 
requirement.  The cases with the 90-day decision requirement represented 73 percent of 
OMHAs caseload in its third year of operation, compared to 29 percent in its first year.  In 
addition, OMHA scheduled hearings more quickly in its third year of operation compared to its 
first year.   
 
For cases with the 90-day decision requirement, OMHA decided a greater percentage of cases 
on time from its first to third year of operation.  During its third year of operation, OMHA had 
20,616 cases that had a 90-day decision requirement and decision dates recorded in the appeals 
system.30  (See Table 1.)  OMHA decided 94 percent of these cases (19,377 of 20,616) on time.  
In contrast, during its first year of operation, OMHA had 3,275 cases that had a 90-day decision 
requirement and decision dates recorded in the appeals system.  OMHA decided 85 percent of 
these cases (2,776 of 3,275) on time.  See Appendix B for the percentages of cases decided 
within 90 days by quarter.   
 
Further, the percentage of cases with the 90-day decision requirement that had been in the 
appeals system for longer than 90 days with no decision dates decreased from OMHAs first to 
third year of operation.  Because the data for the first year of operation were incomplete, this 
change may reflect improvements in data quality as well as timeliness.  
 
Table 1:  Timeliness of Cases With the 90-Day Decision Requirement During the First and Third 
Years of OMHAs Operation 
Number of Cases  Number of Cases 
 
in First Year  in Third Year 
Cases With Decision Dates in Appeals System   3,275  20,616 
     Decided within 90 days  2,776  19,377 
     Not decided within 90 days  499  1,239 
Cases Without Decision Dates in Appeals System   2,804  104 
     In appeals system for longer than 90 days  1,178  54 
     In the appeals system for 90 days or fewer  1,626  50 
Total Number of Cases With the 90-Day Decision 
6,079  20,720 
Requirement 
Source:  OIG analysis of the Medicare Appeals System, 2008.     
 
In addition, OMHA decreased the average number of days to decide cases with the 90-day 
requirement from its first to third year of operation.  On average, OMHA decided these cases in 
69 days in its third year, compared to 82 days in its first year of operation.  OMHA also achieved 
more consistency among its four field offices in the number of days to decision.  During its third 
                                                 
30 Another 104 cases had a 90-day decision requirement but did not have decision dates in the appeals system.   
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 9  Perry Rhew 
year, the average number of days varied from 65 to 76 days among its four field offices, whereas, 
during its first year of operation, the average number of days to decide these cases varied from 
59 to 88 days.   
 
For cases without the 90-day decision requirement, OMHA decided a slightly greater percentage 
of cases within 6 months; however, there was also a slight increase in the average number of 
days to decide these cases.  For cases that were not subject to the 90-day decision requirement, 
OMHA decided a greater percentage of cases within 6 months in its third year, compared to its 
first year of operation.  In its third year, OMHA decided 90 percent of these cases that had 
decision dates (6,582 of 7,305) within 6 months.  In contrast, OMHA decided 88 percent of these 
cases (7,503 of 8,503) within 6 months in its first year.  (See Table 2.) 
   
Table 2:  Timeliness of Cases Without a 90-Day Requirement During the First and Third Years of 
OMHAs Operation 
Number of Cases  Number of Cases 
 
in First Year  in Third Year 
Cases With Decision Dates in Appeals System   8,503  7,305 
     Decided within 6 months  7,503  6,582 
     Not decided within 6 months  1,000  723 
Cases Without Decision Dates in Appeals System   6,185  336 
     In appeals system for longer than 6 months  2,142  63 
     In the appeals system for 6 months or fewer  4,043  273 
Total Number of Cases Without a 90-Day 
14,688  7,641 
Requirement 
Source:  OIG analysis of the Medicare Appeals System, 2008.   
 
At the same time, there was a slight increase in the average number of days to decision for the 
cases without the 90-day decision requirement.  In its third year, OMHA decided Parts C and D 
cases in an average of 89 days, compared to 82 days in its first year.  Further, in its third year, 
OMHA decided Parts A and B cases that were not subject to the 90-day decision requirement in 
an average of 119 days, compared to 110 days in its first year.  The increase in the average 
number of days for the Parts A and B cases may be because of changes in the composition of 
these cases.  In the third year, these cases were not subject to the 90-day decision requirement 
because, for example, the appellants waived the requirement or requested and were granted 
in-person hearings.  In contrast, in the first year, these cases were not subject to the 90-day 
requirement primarily because they had been received before the implementation of the BIPA.  
 
OMHA scheduled hearings more quickly in its third year of operation, compared to its first year.  
For cases with and without the 90-day decision requirement, improvements in timeliness from 
the first to third year of operation were found early in the appeals process.  As shown in  
Figure 2 on the next page, for the cases that had hearings during its third year of operation, 
OMHA took an average of 40 days to schedule hearings from the time when it received the 
appeals requests, compared to 66 days in its first year.31  At the same time, the subsequent 
                                                 
31 The analyses in this section include only the cases that have information on the relevant dates in the appeals 
system.   
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 10  Perry Rhew 
stagesfrom scheduling the hearings to the completion of the hearings and from the completion 
of the hearing to mailing the decision letter to the appellanteach increased by 3 days from the 
first to third year of operation. 
 
Figure 2:  Average Number of Days To Complete Key Steps in the Appeals Process 
for the First and Third Years of OMHA Operation 
66 days  29 days  20 days 
First 
Year 
Request  Scheduling  Hearing  Decision 
Received  Completed  Completed  Letter 
40 days  32 days  23 days 
Third 
Year 
Request  Scheduling  Hearing  Decision 
Received  Completed  Completed  Letter 
 
 
 
             Source:  OIG analysis of the Medicare Appeals System, 2008.
 
OMHA Improved the Quality of the Data in the Appeals System From Its First to Third 
Year of Operation 
OMHA relies on the appeals system as the primary mechanism to collect data about the program 
and to manage its caseload.  In the first year of OMHAs operation, we found that information in 
the appeals system was frequently inaccurate or missing.  Our subsequent review of OMHAs 
third year of operation indicates that OMHA has improved the quality of the data in the appeals 
system.   
  
Information about the primary appellant was more complete.  From its first to third year of 
operation, the percentage of decided cases with no indication about which party was the primary 
appellant dropped from 71 percent to less than 1 percent.   
 
Information about the hearing type and format was also more complete.  The percentage of 
decided cases with no information about whether there were hearings or on-the-record decisions 
dropped from 31 percent to less than 1 percent.  In addition, the percentage of cases that had 
hearings with no information about whether the hearings were conducted by telephone, by video 
teleconference, or in person dropped from 35 percent in the first year of operation to less than  
1 percent in the third year.   
 
Information about key dates was more complete and accurate.  The percentage of decided cases 
with no dates indicating when OMHA requested and received the case files from the previous 
level dropped from more than 75 percent to less than 5 percent.  In addition, the percentage of 
decided cases in which at least one date was out of chronological order dropped from 22 percent 
to 6 percent.  
 
 
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 11  Perry Rhew 
CONCLUSION 
 
From the first to third year of operation, OMHAs caseload increased 37 percent and the 
proportion of cases subject to the 90-day decision requirement also increased.  At the same time, 
there was little change in the hearing formats used and the types of primary appellants.  In 
addition, OMHA improved the timeliness of its decisions from its first to third year of operation.  
For the cases that had a 90-day decision requirement, OMHA decided 94 percent on time in its 
third year, compared to 85 percent in its first year of operation.  For the cases without the 90-day 
requirement, OMHA decided a slightly greater percentage of these cases within 6 months; 
however, there was also a slight increase in the average number of days to decide these cases.  
Lastly, OMHA improved the quality of the data in the appeals system from its first to third year 
of operation. 
 
This report is being issued directly in final form because it has no recommendations.  If you have 
comments or questions about this report, please provide them within 60 days.  Please refer to 
report number OEI-02-06-00111 in all correspondence.   
 
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 12  Perry Rhew 
APPENDIX A 
 
MEDICARE PARTS A AND B ADMINISTRATIVE APPEALS PROCESS  
Below is an overview of the four levels of the Medicare administrative appeals process for 
Medicare Parts A and B claims appeals. 
 
Level One:  Affiliated Contractor Redetermination 
At the first level, an appellant may request a redetermination with an Affiliated Contractor  
(i.e., Medicare carrier or fiscal intermediary) within 120 days of receipt of the notice of the initial 
determination.32  The redetermination must be made by an individual who was not involved in 
the initial determination.  This individual reviews evidence, including previously submitted 
evidence and any additional evidence that the parties submit or the individual obtains, to uphold 
or reject the initial determination.  At both this level and the second level, the appellant may 
contest a denied claim of any dollar amount.  Generally, the Affiliated Contractor must make a 
redetermination decision within 60 days of receipt of the request for redetermination. 
 
Level Two:  Qualified Independent Contractor Reconsideration 
If the appellant does not agree with the Level One decision, the appellant may request a 
reconsideration with a Qualified Independent Contractor (QIC) within 180 days of receipt of the 
Level One decision.33  In a manner similar to the Level One review, the QIC reviews historical 
evidence and prior findings, as well as any new evidence submitted by the appellant.  QICs are 
bound by national coverage determinations (NCD), the Centers for Medicare & Medicaid 
Services (CMS) rulings, and applicable laws and regulations.34  QICs are not bound by local 
coverage determinations (LCD); local medical review policies (LMRP); or CMS program 
guidance, such as program memoranda and manual instructions.  QICs, however, do give 
substantial deference to those policies, if applicable.35  Generally, a QIC has 60 days to make a 
decision from the date when the appellant filed an appeal.36 
 
Level Three:  Administrative Law Judge Hearing 
If an appellant wants to contest a Level Two reconsideration, the appellant may request a hearing 
before an administrative law judge (ALJ).37 38  This request must be filed within 60 days from 
the receipt of notice of the Level Two reconsideration decision.  At this level, the minimum 
                                                 
32 See generally 42 U.S.C.  1395ff(a)(3) and (5) and 42 CFR  405.940405.958 (specifying Federal 
requirements for redeterminations). 
33 42 U.S.C.  1395ff(b)(1)(D)(i).  QICs are a new type of Medicare contractor created to conduct reconsiderations.  
See generally 42 U.S.C.  1395ff(c) and 42 CFR  405.960405.978 (specifying Federal requirements for 
reconsiderations).  
34 42 CFR  405.968(b)(1). 
35 42 CFR  405.968(b)(2). 
36 Starting at Level Two, an appellant may escalate an appeal if it is not dealt with in a timely manner by the appeals 
body.  For example, a request for an ALJ hearing may be submitted if the QIC does not decide the appeal within  
60 days.  42 U.S.C.  1395ff(c)(3)(C)(ii). 
37 ALJs also handle Level Three Medicare Parts A and B entitlement and enrollment appeals and Medicare Parts C 
and D appeals.  For Parts A and B entitlement and enrollment, see 20 CFR  404.900(a)(3), 404.929, and 404.933; 
for Part C, see 42 CFR  422.600 and 422.602; and for Part D, see 42 CFR  423.610 and 423.612. 
38 See generally 42 U.S.C.  1395ff(d) and 42 CFR  405.1000405.1054 (specifying Federal requirements for ALJ 
hearings). 
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 13  Perry Rhew 
amount in controversy is $120.39  ALJs are bound by NCDs, but an ALJ may review the facts of 
a particular case to determine whether an NCD applies to a specific claim for benefits and, if so, 
whether the NCD was applied correctly to the claim.40  ALJs are not bound by LCDs; LMRPs; 
or CMS program guidance, such as program memoranda and manual instructions.  ALJs, 
however, do give substantial deference to those policies, if applicable.41  Generally, the ALJ 
must decide  
Part A and Part B claims appeals within 90 days of the dates when appeal requests were filed. 
 
Level Four:  Medicare Appeals Council Review  
If the appellant disagrees with the Level Three decision, the appellant may request a review with 
the Medicare Appeals Council (MAC)42 within 60 days of receipt of the ALJ hearing decision.43  
This is the last level of administrative review available to appellants.  MAC may deny a request, 
undertake a review, or remand the case to an ALJ for further action.  MAC is bound by NCDs, 
but MAC may review the facts of a particular case to determine whether an NCD applies to a 
specific claim for benefits and, if so, whether the NCD was applied correctly to the claim.44  
MAC is not bound by LCDs, LMRPs, or CMS program guidance, but MAC does give 
substantial deference to those policies, if applicable.45  Generally, MAC must make a decision 
with respect to Medicare Part A and Part B claims appeals within 90 days of the filing dates.  If 
the appellant disagrees with the MAC decision and the amount in controversy is at least 
$1,180,46 the appellant may file a civil action in Federal District Court within 60 days of 
receiving the MAC decision. 
 
 
 
 
 
 
 
                                                 
39 42 U.S.C.  1395ff(b)(1)(E); 42 CFR  405.1006(b)(1).  See 72 Fed. Reg. 73348 (Dec. 27, 2007) for adjustment to 
Medicare appeals amounts in controversy for 2008.   
40 42 CFR  405.1060(b). 
41 42 CFR  405.1062(a). 
42 Level Four review before MAC is also available for Medicare Parts A and B entitlement and enrollment appeals 
and Medicare Parts C and D appeals.  For Parts A and B entitlement and enrollment appeals, see  
20 CFR  404.967; for Part C, see 42 CFR  422.608; and for Part D, see 42 CFR  423.620.   
43 42 CFR  405.1102(a)(1).  MAC is a division of the Department of Health and Human Services Departmental 
Appeals Board and consists of Administrative Appeals Judges.  An appellant may also request a review by MAC if 
the ALJ does not complete its review within 90 days. 42 U.S.C. ' 1395ff(d)(3)(A); 42 CFR  405.1106(b).  See 
generally 42 U.S.C.  1395ff(d) and 42 CFR  405.1100405.1140 (specifying Federal requirements for  MAC 
reviews). 
44 42 CFR  405.1060(c). 
45 42 CFR  405.1062(a). 
46 42 CFR  405.1136, 42 U.S.C.  1395ff(b)(1)(E); 42 CFR  405.1006(c)(1).  See 72 Fed. Reg. 73348  
(Dec. 27, 2007) for adjustment to Medicare appeals amounts in controversy for 2008.   
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008  Page 14  Perry Rhew 
 
APPENDIX B 
 
 
 
Percentage of Cases That Met the 90-Day Requirement,  
by Quarter, During the First and Third Years of OMHAs Operation   
 
Percentage of Cases That Met  Percentage of Cases That  Met  
 
Quarter  the 90-Day Requirement  the 90-Day Requirement  
in First Year  in Third Year   
1st  63%  91%   
 
2nd  79%  95%   
 
3rd  82%  95% 
 
4th  90%  95%   
 
    Total  85%  94% 
 
Note:  Ninety-six cases were excluded from this analysis in the first year because they were received after the    
4th quarter.   
   
Source:  Office of Inspector General analysis of the Medicare Appeals System, 2008. 
 
OEI-02-06-00111       Medicare Administrative Law Judge Hearings:  Update, 20072008