Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
I A N
MP ROVEMENTS  RE  EEDED 
 
A L
AT T  HE  DMINISTRATIVE  AW 
 
J L M
UD  GE  EVEL OF  EDICARE 
 
A  
PPEALS
 
Daniel R. Levinson  
Inspector General 
 
November 2012 
OEI-02-10-00340   
   
EXECUTIVE SUMMARY:  IMPROVEMENTS ARE NEEDED AT THE 
ADMINISTRATIVE LAW JUDGE LEVEL OF MEDICARE APPEALS 
OEI-02-10-00340 
 
 
WHY WE DID THIS STUDY  
 
Administrative law judges (ALJ) within the Office of Medicare Hearings and Appeals (OMHA) 
decide appeals at the third level of the Medicare appeals system.  In 2005, among other changes, 
ALJs were required to follow new regulations addressing how to apply Medicare policy, when to 
accept new evidence, and how the Centers for Medicare & Medicaid Services (CMS) participates 
in appeals.  Medicare providers and beneficiaries may appeal certain decisions related to claims 
for health care services and items.   
 
HOW WE DID THIS STUDY 
 
We based this study on an analysis of all ALJ appeals decided in fiscal year (FY) 2010; 
structured interviews with ALJs and other staff; structured interviews with Qualified 
Independent Contractors (QIC), which administer the second level of appeal, and CMS staff; 
policies, procedures, and other documents; and data on CMS participation in ALJ appeals.   
 
WHAT WE FOUND 
 
Providers filed the vast majority of ALJ appeals in FY 2010, with a small number accounting for 
nearly one-third of all appeals.  For 56 percent of appeals, ALJs reversed QIC decisions and 
decided in favor of appellants; this rate varied substantially across Medicare program areas.  
Differences between ALJ and QIC decisions were due to different interpretations of Medicare 
policies and other factors.  In addition, the favorable rate varied widely by ALJ.  When CMS 
participated in appeals, ALJ decisions were less likely to be favorable to appellants.  Staff raised 
concerns about the acceptance of new evidence and the organization of case files.  Finally, ALJ 
staff handled suspicions of fraud inconsistently. 
 
WHAT WE RECOMMEND 
 
We recommend that OMHA and CMS:  (1) develop and provide coordinated training on 
Medicare policies to ALJs and QICs, (2) identify and clarify Medicare policies that are unclear 
and interpreted differently, (3) standardize case files and make them electronic, (4) revise 
regulations to provide more guidance to ALJs regarding the acceptance of new evidence, and 
(5) improve the handling of appeals from appellants who are also under fraud investigation and 
seek statutory authority to postpone these appeals when necessary.  Further, we recommend that 
OMHA:  (6) seek statutory authority to establish a filing fee, (7) implement a quality assurance 
process to review ALJ decisions, (8) determine whether specialization among ALJs would 
improve consistency and efficiency, and (9) develop policies to handle suspicions of fraud 
appropriately and consistently and train staff accordingly.  Finally, we recommend that CMS:  
(10) continue to increase CMS participation in ALJ appeals.  OMHA and CMS concurred fully 
or in part with all 10 of our recommendations. 
   
   
 
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................4 
Findings........................................................................................................8 
Providers filed 85 percent of the appeals decided by ALJs in  
FY 2010 ............................................................................................8 
For 56 percent of appeals, ALJs reversed prior-level  
decisions and decided fully in favor of appellants ...........................9 
Differences between ALJ and QIC decisions were due to  
different interpretations of Medicare policies and other factors ....10 
The favorable rate varied widely by ALJ ....................................... 11 
CMS participated in 10 percent of ALJ appeals; these appeals 
were less likely to be decided fully in favor of appellants .............13 
Staff raised concerns about the acceptance of new evidence and 
the organization of case files ..........................................................14 
ALJ staff handled suspicions of fraud inconsistently ....................15 
Conclusion and Recommendations ............................................................17 
Agencies Comments and Office of Inspector General Response .21 
Appendixes ................................................................................................23 
A:  Administrative Law Judge Appeals Filed by Each Type of 
Appellant, Fiscal Year 2010 ...........................................................23 
B:  Percentage of Administrative Law Judge Appeals That  
Were Fully Favorable to Appellants, Fiscal Year 2010 ..................24 
C:  Actual Fully Favorable Rates Compared to Expected Fully 
Favorable Rates by Administrative Law Judge, Fiscal  
Year 2010 .......................................................................................25 
D:  Office of Medicare Hearings and Appeals Comments ............26 
E:  Centers for Medicare & Medicaid Services Comments ...........31 
Acknowledgments......................................................................................35 
 
   
   
 
OBJECTIVES 
1.  To describe the characteristics of appeals decided by Medicare administrative 
law judges (ALJ) in fiscal year (FY) 2010.  
2.  To describe differences between ALJ and prior-level decisions and differences 
among ALJs.  
3.  To determine the extent to which the Centers for Medicare & Medicaid 
Services (CMS) participated in ALJ appeals in FY 2010. 
BACKGROUND  
Medicare providers and beneficiaries may appeal certain decisions related to 
claims for health care services and items.1  The administrative appeals process 
includes four levels; ALJs decide appeals at the third level.  In 2005, the 
responsibility for conducting ALJ appeals was transferred from the Social 
Security Administration (SSA) to the Department of Health and Human Services 
(HHS).2   
Among other changes, ALJs were required to follow new regulations that 
addressed how Medicare policy must be applied, when new evidence may be 
accepted, and how CMS can participate in appeals.3  Before these changes were 
introduced, two Office of Inspector General (OIG) reports found a number of 
problems with Medicare appeals.4  In particular, OIG found that the different 
levels of appeal did not consistently apply the same standards and that CMSs 
ability to defend its decisions was limited.  The 2005 regulatory changes were 
intended to address many of these concerns.   
This report is the first to assess the impact of these changes on ALJ appeals.  In 
particular, it describes the characteristics of appeals decided by ALJs, differences 
between ALJ and prior-level decisions, differences among ALJs, and CMSs 
participation in ALJ appeals. 
The Medicare Administrative Appeals Process 
There are four levels of appeal:  
  Level One, administered by CMS Medicare Administrative Contractors; 
 
1 For the purposes of this report, we use provider to refer to both providers and suppliers that provide 
items and services under Medicare Parts A and B.   
2 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173  931. 
3 42 CFR  405.1010, 405.1012, 405.1028, and 405.1062(a). 
4 OIG, Medicare Administrative Appeals:  ALJ Hearing Process, OEI-04-97-00160, September 1999;  
OIG, Medicare Administrative Appeals:  The Potential Impact of BIPA, OEI-04-01-00290,  
January 2002. 
   
   
  Level Two, administered by CMS Qualified Independent Contractors 
(QIC); 
  Level Three, administered by ALJs; and 
  Level Four, administered by the Medicare Appeals Council.5 
 
When a party is dissatisfied with CMSs payment decision on a claim, that party 
may appeal.  The party that files an appeal is called the appellant.  If appellants 
receive unfavorable decisions at one level, they may appeal to the next level.6  
Appellants include Medicare beneficiaries; Medicare providers, such as 
physicians, suppliers, and hospitals; and State Medicaid agencies.  State Medicaid 
agencies may appeal when there is a question of whether Medicare, rather than 
Medicaid, should pay for the services or items received by beneficiaries who are 
eligible for both Medicare and Medicaid coverage (known as dually eligible 
beneficiaries). 
The first level of appeal is administered by the CMS contractors that make the 
initial decisions to pay or deny claims.7  At the second level, two QICs conduct 
Part A appeals; two conduct Part B appeals; and one conducts appeals for durable 
medical equipment, prosthetics, orthotics, and supplies (DMEPOS).  At the first 
two levels, decisions are made after the contractors review the evidence in the 
case files.8 
The third level of appeal is conducted by ALJs and differs substantially from the 
first two levels.  One of the major differences is that the appellant has the right to 
a hearing before an ALJ.  Under certain circumstances, however, the ALJ may not 
conduct a hearing and instead may make a decision after reviewing the evidence 
in the case file (known as an on-the-record review).9 
An ALJ may make a decision that is fully favorable, partially favorable, or 
unfavorable to the appellant.10  These decisions must be based on evidence in the 
 
5 The third and fourth levels apply to most types of appeals, but the first two levels apply only to 
appeals related to Medicare Parts A and B claims.   
6 The first two levels of appeal do not require a minimum dollar amount to be at issue, but the ALJ 
level does.  In FY 2010, this threshold was $130.  See 42 CFR  405.1006.  None of the levels of 
appeal require appellants to pay a filing fee. 
7
 Of the 1.1 billion Parts A and B claims that CMS contractors processed in 2010, 117 million were 
denied and 2.7 million were appealed to the first level.  See CMS, Fact Sheet:  Original Medicare (Fee-
For-Service) Appeals Data  2010.  Accessed at https://www.cms.gov/Medicare/Appeals-and-
Grievances/OrgMedFFSAppeals/Downloads/Factsheet2010.pdf on August 8, 2012. 
8 The case file refers to the administrative record and includes claims, medical records, and other 
evidence.  See 42 CFR  405.1044(b). 
9 An ALJ may make a decision after an on-the-record review if the parties waive their right to a hearing 
or if the evidence supports a fully favorable decision for the appellant.   
See 42 CFR  405.1000(e)(g).  See also 42 CFR  405.1038. 
10 Under certain circumstances, an ALJ may also dismiss an appeal or remand it to the prior level.  
See 42 CFR  405.1034 and 405.1052. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  2 
   
   
case files and on hearing testimony.11  The law protects ALJs independence to 
ensure that their decisions are impartial and free from HHS influence.12  Any 
party who is dissatisfied with the ALJs decision may appeal to the Medicare 
Appeals Council.  When deciding appeals, adjudicators at all four levels conduct a 
new, independent review of the evidence and are not bound by the prior levels 
findings and decisions.13  After exhausting the four levels of the administrative 
appeals process, parties may seek judicial review in Federal District Court. 
Changes to Medicare ALJ Appeals 
In 2005, HHS established the Office of Medicare Hearings and Appeals (OMHA), 
which created a group of ALJs dedicated to deciding Medicare appeals.  These 
ALJs were required to follow new regulations that addressed how Medicare 
policy must be applied, when new evidence may be accepted, and how CMS may 
participate in appeals. 
Prior to 2005, ALJs were bound by Medicare laws, regulations, and National 
Coverage Determinations when making decisions, but were not bound by Local 
Coverage Determinations or CMS program guidance.  In 2005, new regulations 
were introduced that required ALJs to give substantial deference to these latter 
policies and to provide an explanation if they decline to follow one of these 
policies in an appeal.14 
Prior to 2005, appellants were allowed to submit new evidence at the ALJ level 
without restrictions.  Beginning in 2005, an appellant must explain in writing the 
reason for submitting new evidence and ALJs may accept the new evidence only 
if they determine that the appellant had good cause for waiting until the ALJ 
level to submit it.15 
Before 2005, CMS was not allowed to participate in ALJ appeals, which were 
established as a nonadversarial system for appellants to present their cases before 
neutral judges.16  Under the new regulations, however, CMS may choose to 
participate in ALJ appeals as either a participant or a party.  As a participant, CMS 
 
11 42 CFR  405.1046(a). 
12 5 U.S.C.  554(d). 
13 This type of review is referred to as de novo.  See CMS, Medicare Claims Processing Manual, Pub. 
No. 100-04, ch. 29,  110; 42 CFR  405.948, 405.968(a)(1), 405.1000(d), and 405.1100(c).     
14
 42 CFR  405.1062(a)(b).  Prior to these regulations, Federal case law established that adjudicators 
should give deference to agency guidance, such as Local Coverage Determinations.  See Shalala v. 
Guernsey Memorial Hospital, 514 US 87 (1995).  QICs are also bound by Medicare laws, regulations, 
and National Coverage Determinations and must give substantial deference to Local Coverage 
Determinations and CMS program guidance.  See 42 CFR  405.968(b).      
15 42 U.S.C.  1395ff(b)(3).  This restriction applies to providers and represented beneficiaries, but not 
to unrepresented beneficiaries.  It also does not apply to oral testimony presented during the hearing.  
See 42 CFR  405.1018(c) and 405.1028.   
16 Before 2005, CMS participated occasionally when an ALJ requested its participation.  
See 70 Fed. Reg. 11459 (Mar. 8, 2005). 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  3 
   
   
may submit position papers and provide testimony during the hearing.17  As a 
party, CMS may also submit evidence to the ALJ, call or cross-examine witnesses 
during the hearing, and appeal to the next level.18  CMS contractors, rather than 
the agency, typically participate in ALJ appeals.   
Related Work 
This report is part of OIGs continuing work on Medicare ALJ appeals.  Two OIG 
reports evaluated ALJ appeals when they were administered by SSA.19  These 
reports found that the different levels of appeal did not consistently apply the 
same standards and that CMSs ability to defend its decisions was limited.  OIG 
recommended requiring the different levels of appeal to apply the same standards, 
creating a dedicated ALJ corps for Medicare, and allowing increased participation 
from CMS at the ALJ level.   
In addition, two OIG reports evaluated ALJ appeals after the transition from SSA 
to OMHA.20  These reports were focused on the timeliness of ALJ appeals and on 
the format of ALJ hearings, which included, for the first time, telephone and video 
teleconference hearings in addition to the in-person hearings used by SSA.  The 
reports found that OMHA did not decide a number of its cases in a timely manner 
during its first 13 months of operation, but that timeliness improved by its third 
year of operation.  In addition, OIG found that most appellants who were 
interviewed were satisfied with their hearing formats. 
METHODOLOGY 
We based this study on an analysis of:  (1) data on appeals decided in FY 2010; 
(2) structured interviews with ALJs and other OMHA staff; (3) structured 
interviews with QIC and CMS staff; (4) policies, procedures, and other 
documents; and (5) data on CMS participation in ALJ appeals. 
Appeals Data 
We obtained data on ALJ appeals from the Medicare Appeals System (MAS), a 
database that tracks appeals at the second and third levels.  Using these data, we 
examined several characteristics of the appeals decided by ALJs in FY 2010. 
We calculated the percentage of ALJ appeals for each appellant type
beneficiaries, providers, and State Medicaid agencies.  We determined whether 
 
17
 42 CFR  405.1010(c). 
18 42 CFR  405.1012. 
19 OIG, Medicare Administrative Appeals:  ALJ Hearing Process, OEI-04-97-00160, September 1999; 
OIG, Medicare Administrative Appeals:  The Potential Impact of BIPA, OEI-04-01-00290,  
January 2002. 
20 OIG, Medicare Administrative Law Judge Hearings:  Early Implementation, 20052006,  
OEI-02-06-00110, July 2008; OIG, Medicare Administrative Law Judge Hearings:  Update,  
20072008, OEI-02-06-00111, January 2009. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  4 
   
   
the different types of appellants were more likely to file appeals related to certain 
Medicare program areas (e.g., Part A hospital appeals).21  We also calculated the 
number of appeals associated with each unique appellant and identified the 
appellants who filed frequently.22  We considered appellants to be frequent filers 
if they had 50 or more appeals decided in FY 2010. 
Next, we calculated the percentage of appeals associated with each type of ALJ 
decision:  fully favorable to the appellant, partially favorable to the appellant, 
unfavorable to the appellant, or other.23  In addition, we determined the extent to 
which the fully favorable rate varied by Medicare program area and by appellant 
type. 
We then analyzed how the fully favorable rate varied by ALJ.24  We determined 
whether the variation in fully favorable rates was associated with some ALJs 
deciding more appeals in certain Medicare program areas than other ALJs.  To 
conduct this analysis, we compared each ALJs actual fully favorable rate to that 
ALJs expected fully favorable rate.25  In addition, we determined the extent to 
which frequent filers received different favorable rates from different ALJs.  
Finally, we determined whether certain ALJs were more likely than others to 
decide appeals after an on-the-record review of the case file. 
We also obtained data from MAS on appeals that QICs decided in FY 2010.  We 
used these data to calculate the percentage of QIC appeals that were fully 
favorable to appellants. 
Structured Interviews With ALJs and Other OMHA Staff 
We conducted structured interviews with the Chief ALJ, the Executive Director of 
OMHA, the Managing ALJ from each field office, and a sample of ALJ teams.26  
 
21 We analyzed DMEPOS appeals separately from other Part B appeals throughout the report. 
22 To identify unique appellants, we took into account appellant information, such as name and 
Medicare identifier.  In MAS, the Medicare identifiers include National Provider Identifiers and Health 
Insurance Claim Numbers, among others.  Additionally, for appellants who were providers, we linked 
Medicare identifiers to information in CMSs Provider Enrollment, Chain, and Ownership System to 
determine which providers were part of a chain.  We considered all providers that had the same 
Medicare identifier or that were part of the same chain to be unique appellants. 
23
 Under certain circumstances, ALJs may dismiss appeals or remand them to the prior level; appellants 
may also escalate appeals to the next level if ALJs do not make timely decisions.   
See 42 CFR  405.1034, 405.1052, and 405.1104. 
24 For this analysis, of the 72 ALJs, we included the 66 who decided at least 50 appeals as fully 
favorable, partially favorable, or unfavorable during FY 2010.  These ALJs accounted for 99 percent of 
all appeals.  
25 To determine each ALJs expected rate, we first calculated the fully favorable rate among all ALJs 
for each Medicare program area; next, we multiplied these rates by the percentage of appeals that the 
ALJ had in that program area and summed the results. 
26 OMHAs central office and one of its field offices are located in Arlington, Virginia.  The other three 
field offices are in Miami, Florida; Cleveland, Ohio; and Irvine, California.  At the time of the 
interviews, the Virginia field office had 4 ALJ teams and the other three had 13, 21, and 18 ALJ teams, 
respectively.  For the purposes of this report, we refer to all respondents as ALJ staff. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  5 
   
   
We randomly selected 20 percent of the ALJ teams from each field office, for a 
total of 12 ALJ teams.  The teams were each made up of an ALJ, an attorney, and 
other staff.  We interviewed the ALJ and the attorney from each team.  Our 
questions focused on ALJs approaches to decisionmaking, including their 
application of Medicare policies and their acceptance of new evidence, and on 
their experience with CMS participation in appeals.  We conducted these 
interviews in December 2010 and January 2011. 
Structured Interviews With QIC and CMS Staff 
We conducted structured interviews with key staff from the three CMS divisions 
that oversee the contractors that administer the first two levels of appeal, as well 
as other contractors that participate in ALJ appeals.27  We also conducted 
structured interviews with key staff from each of the five QICs and the 
Administrative QIC, which provides support to the QICs.28  Our questions 
focused on the QICs and other contractors experience participating in ALJ 
appeals and on the QICs approaches to decisionmaking.  We conducted these 
interviews in August and September 2011. 
Review of Documentation 
In the fall of 2010, we requested and reviewed written policies, procedures, and 
training materials from OMHA and CMS.  We used these documents primarily to 
validate the information from our interviews. 
CMS Participation Data 
We obtained data from CMS regarding its contractors participation in ALJ 
appeals that were decided in FY 2010.29  For each appeal, CMS indicated which 
contractor participated, whether the contractor was a participant or a party, and 
whether it submitted a position paper or testified at the ALJ hearing.  We merged 
these data with the MAS data. 
We then calculated the percentage of all ALJ appeals in which CMS participated 
and assessed how the rate of participation varied by Medicare program area and 
by type of contractor.  We also determined the extent to which CMS was a 
participant versus a party and the extent to which it submitted position papers 
versus testified at ALJ hearings.  Lastly, we compared the ALJ favorable rates 
when CMS participated to when it did not participate. 
 
27 These other contractors include the Zone Program Integrity Contractors, Program Safeguard 
Contractors, and Recovery Audit Contractors, all of which take steps to recoup inappropriate Medicare 
payments.   
28 For the purposes of this report, we refer to CMS and contractor respondents as CMS staff. 
29 These data were limited to Medicare Part A, Part B, and DMEPOS appeals.  CMS does not 
participate in Parts C and D appeals, which typically involve disputes between appellants and their 
private plans.   
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  6 
   
   
Standards 
This study was conducted in accordance with the Quality Standards for Inspection 
and Evaluation issued by the Council of the Inspectors General on Integrity and 
Efficiency.   
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  7 
   
   
FINDINGS 
Providers filed 85 percent of the appeals decided by ALJs in 
FY 2010 
Providers filed 85 percent of the 40,682 appeals that ALJs decided in FY 2010.  
These providers included physicians, suppliers, and hospitals, among others.  As 
shown in Table 1, beneficiaries filed 11 percent of the appeals, while State 
Medicaid agencies filed 3 percent.  State Medicaid agencies may appeal when 
there is a question of whether Medicare, rather than Medicaid, should pay for the 
services or items received by a dually eligible beneficiary. 
 
Table 1:  Percentage of ALJ Appeals by Appellant Type, FY 2010 
Number of  Number of  Percentage  
Type of Appellant 
Appellants  Appeals  of Appeals  
Provider  6,102  34,542  85% 
Beneficiary   4,429  4,631  11% 
State Medicaid Agency  5  1,361  3% 
Unknown  120  148  <1% 
     Total  10,656  40,682  100% 
 Source:  OIG analysis of MAS data, 2012. 
 
Providers, beneficiaries, and State Medicaid agencies tended to file different types 
of appeals.  Providers were more likely than other appellant types to file Part B 
and DMEPOS appeals, while beneficiaries were more likely to file  
Parts C and D appeals.  State Medicaid agencies were more likely than other 
appellant types to file Part A appeals, especially home health, hospice, and skilled 
nursing facility appeals.  For example, 90 percent of State Medicaid agency 
appeals were Part A appeals, while only 40 percent of provider appeals and 
16 percent of beneficiary appeals were Part A appeals.  See Appendix A for more 
information on appeals by appellant type. 
A small number of providers accounted for nearly one-third of all 
appeals 
Certain providers filed appeals much more frequently than others.  On average, 
providers filed six appeals each.  However, 96 providers were frequent filers that 
filed at least 50 appeals each, with 1 provider filing 1,046 appeals.  While these 
providers represented 2 percent of all providers, they accounted for nearly one-
third of all ALJ appeals in FY 2010.  These providers were twice as likely as other 
providers to file DMEPOS appeals.  No beneficiaries were frequent filers.  
However, 4 State Medicaid agencies filed at least 50 appeals each; 2 of these filed 
more than 500 appeals each. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  8 
   
   
Many ALJ staff raised concerns about the frequent filers.  Several staff noted that 
some of these appellants appeal every payment denial.  A few staff said that these 
appellants have an incentive to appeal because the cost is minimal and a favorable 
decision is likely. 
For 56 percent of appeals, ALJs reversed prior-level 
decisions and decided fully in favor of appellants 
ALJs may decide appeals in several ways:  fully favorable to appellants, partially 
favorable to appellants, or unfavorable to appellants.30  As shown in Table 2, ALJs 
reversed prior-level decisions by QICs and decided fully in favor of appellants in 
56 percent of appeals in FY 2010.  In contrast, QICs decided fully in favor of 
appellants in 20 percent of appeals in FY 2010. 
 
Table 2:  Percentage of ALJ Appeals by Decision, FY 2010 
Appeal Decision  Percentage of Appeals 
Fully favorable to the appellant  56% 
Partially favorable to the appellant  6% 
Unfavorable to the appellant  24% 
Dismissed, remanded, or escalated   14% 
     Total  100% 
 Source:  OIG analysis of MAS data, 2012. 
 
 
The ALJ fully favorable rate varied substantially across Medicare program areas.  
As shown in Table 3, the fully favorable rate was the highest for Part A hospital 
appeals at 72 percent, while the rates were the lowest for Parts C and D appeals at 
18 and 19 percent, respectively.  Several ALJ staff noted that an ALJ typically has 
less discretion when deciding Parts C and D appeals because the beneficiary has 
agreed to a contract with a private plan that covers or does not cover the specific 
service or drug. 
   
 
30
 Under certain circumstances, appeals may be dismissed, remanded to the prior level, or escalated to 
the next level. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  9 
   
   
Table 3:  Percentage of ALJ Appeals That Were Fully  
Favorable to Appellants, by Medicare Program Area, FY 2010 
 
Percentage Fully  
Medicare Program Area 
  Favorable to Appellants 
Part A  62% 
 
Hospitals  72% 
Home Health/Hospice Agencies  62% 
 
Other Part A  61% 
  Skilled Nursing Facilities  51% 
Part B   59% 
 
        Transportation  67% 
 
        Diagnostic Testing  63% 
         Practitioner Services  60% 
        Other Part B   48% 
 
DMEPOS  53% 
 
Other*  26% 
 Part D  19% 
Part C  18% 
 
 Source:  OIG analysis of MAS data, 2012. 
*  This category includes appeals about beneficiary premiums and entitlement to Medicare. 
 
The fully favorable rate also varied substantially by appellant type.  For providers, 
it was 61 percent.  In contrast, the fully favorable rate was 28 and 22 percent for 
beneficiaries and State Medicaid agencies, respectively.  The rate was lower for 
beneficiaries than for providers, partly because the majority of beneficiary appeals 
dealt with Parts C and D, while providers rarely filed such appeals.  Overall, the 
fully favorable rate for providers who were frequent filers differed only slightly 
from the rate for other providers.  See Appendix B for more information about the 
fully favorable rates for each appellant type, as well as for providers that were and 
were not frequent filers.  
Differences between ALJ and QIC decisions were due to 
different interpretations of Medicare policies and other 
factors 
ALJs differed from QICs in their interpretation of Medicare policies, in their 
degree of specialization, and in their use of clinical experts.  These differences 
contributed to different decisions at the ALJ and QIC levels. 
ALJs tended to interpret Medicare policies less strictly than QICs 
Most ALJ and QIC staff agreed that reasonable people can interpret Medicare 
policies differently, and several staff emphasized that some policies need to be 
flexible to cover a wide range of beneficiary circumstances.  At the same time, 
both ALJ and QIC staff indicated that ALJs tended to interpret Medicare policies 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  10 
   
   
less strictly than QICs.  Most ALJ staff noted that ALJs often decided in favor of 
appellants when the intent, but not the letter, of a Medicare policy was met.  In 
contrast, most QICs noted that they try to follow Medicare policy strictly.  One 
QIC added that it approaches appeals expecting to uphold prior-level decisions 
unless the evidence to reverse is compelling. 
ALJ and QIC staff offered several examples to illustrate their differences in 
interpreting Medicare policies.  In one example, QICs denied home health 
services because beneficiaries did not meet the requirement to be homebound; 
then ALJs determined that the home health services were reasonable and 
necessary without focusing on the homebound requirement.  In another example, 
QICs denied payments because beneficiaries met only 9 out of 10 criteria in the 
Local Coverage Determination, but ALJs found that the beneficiaries met the 
broader intent of the policy and reversed the decision. 
In addition, ALJ and QIC staff commonly noted that some Medicare policies are 
unclear.  Several staff cited examples of policies with vague definitions, such as 
coverage for beneficiaries who have unique characteristics or are declining.  
Many ALJ staff emphasized the need to write policies more narrowly or more 
clearly, noting that unclear policies lead to more fully favorable decisions and to 
more variation among ALJs. 
ALJs and QICs differed in the degree to which they specialized in 
Medicare program areas and in their use of clinical experts 
Each of the QICs specializes in a Medicare program area:  two QICs are 
responsible for Part A appeals, two for Part B, and one for DMEPOS.  In contrast, 
ALJs typically decide appeals involving all Medicare program areas because their 
appeals are usually randomly assigned.31  Several ALJ staff noted that increased 
specialization would make the appeals system more efficient.  As one ALJ 
respondent noted, In a month, I will have 10 Part A, 10 Part B, 3 Part D ... 
[going] back and forth between different regulations ... its hard. 
Additionally, ALJs and QICs used clinical experts to different degrees.  QICs 
have medical directors and clinicians on staff to review decisions.  In contrast, 
ALJs do not have medical directors and clinicians on staff.  Several ALJ staff said 
ALJs tended to rely on testimony and other evidence from treating physicians.  
For example, one ALJ staff member said, [The ALJ] will listen to the treating 
physician and will give deference to the physicians opinion. 
The favorable rate varied widely by ALJ 
Some ALJs were much more likely than others to make decisions that were fully 
favorable to appellants.  Among the 66 ALJs, the fully favorable rate ranged from 
 
31 ALJ appeals must be assigned in rotation so far as practicable.  See 5 U.S.C.  3105. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  11 
   
   
18 to 85 percent.32  As shown in Figure 1, while about two-thirds of ALJs had 
fully favorable rates between 41 and 70 percent, 8 ALJs had fully favorable rates 
higher than 70 percent and 13 had fully favorable rates at or below 40 percent.  
Very little of this variation was associated with some ALJs deciding more appeals 
in certain Medicare program areas than other ALJs.  See Appendix C. 
Figure 1:  Number of ALJs by the Percentage of Appeals That Were Fully  
Favorable to Appellants, FY 2010 
20
15
s 
J
L
A
f 
o
r 10
e
b
m
u
N
5
0
1120%  2130%  3140%  4150%  5160%  6170%  7180%  8190% 
Percentage of Appeals Fully Favorable to Appellants 
 
Source:  OIG analysis of MAS data, 2012. 
 
Moreover, frequent filers often received fully favorable decisions at very different 
rates from different ALJs.  For example, a supplier with nearly  
600 appeals received fully favorable decisions at rates ranging from  
7 to 100 percent from the 17 ALJs who decided at least 10 of the suppliers 
appeals. 
According to many ALJ staff, different philosophies among ALJs contribute to the 
variation in fully favorable rates.  They said that given the same facts and the 
same applicable Medicare policy, some ALJs would make decisions that are 
favorable to appellants, while others would not.  One ALJ concluded, Some 
[ALJs] pay, some deny.  Another ALJ stated, I go towards protecting the 
Medicare Trust Fund[s]. 
 
32
 The analysis for this finding was limited to ALJs who decided at least 50 appeals as fully favorable, 
partially favorable, or unfavorable during FY 2010. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  12 
   
   
ALJs also varied in their use of on-the-record reviews.  An ALJ may make a 
decision after an on-the-record review of the case file, instead of after a hearing, if 
the appellant waives the right to a hearing or if the evidence supports a fully 
favorable decision for the appellant.  Among all ALJs, the percentage of appeals 
decided after on-the-record reviews ranged from less than 1 to 65 percent. 
CMS participated in 10 percent of ALJ appeals; these 
appeals were less likely to be decided fully in favor of 
appellants 
Overall, CMS participated in 10 percent of the appeals that ALJs decided in  
FY 2010.33  Participation varied substantially across Medicare program areas, 
with CMS participating in 18 percent of DMEPOS appeals, 9 percent of Part A 
appeals, and 5 percent of Part B appeals.  In 61 percent of the appeals in which 
CMS participated, it provided testimony during hearings.  In the remaining 
39 percent of appeals, CMS submitted position papers to the ALJs.  CMS rarely 
chose to be a party, which would have allowed it to submit evidence, call or cross-
examine witnesses, or appeal to the next level. 
When CMS participated, ALJs were less likely to decide fully in favor of 
appellants.  Overall, 44 percent of ALJ decisions were fully favorable to 
appellants when CMS participated.  In contrast, 60 percent of ALJ decisions were 
fully favorable when CMS did not participate.  As shown in Table 4, this 
difference was greatest for DMEPOS appeals. 
 
Table 4:  Fully Favorable Rates When CMS Participated and When CMS Did Not 
Participate, by Medicare Program Area, FY 2010  
Percentage of Appeals  
Fully Favorable to Appellants  Percentage 
Medicare Program Area  Point 
When CMS  When CMS Did  Difference* 
Participated  Not Participate 
Part A  59%  62%  4 
Part B  48%  59%  12 
DMEPOS  30%  58%  28 
     All Appeals  44%  60%  16 
Source:  OIG analysis of MAS data and CMS participation data, 2012. 
* Rows do not subtract to percentage point differences because of rounding. 
 
CMS and ALJ staff noted several benefits of CMS participation.  Most CMS staff 
cited an improved relationship between the two agencies, and many ALJ staff 
 
33 The analysis for this finding was limited to Part A, Part B, and DMEPOS appeals.  CMS does not 
participate in Parts C and D appeals, which typically involve disputes between appellants and their 
private plans. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  13 
   
   
noted that CMS often provided needed information.  Most CMS staff further 
noted that their participation in ALJ appeals has taught them to include more 
specific information in their decisions and position papers to make them more 
useful to ALJs. 
Citing these benefits, nearly all CMS staff reported plans to increase participation 
in ALJ appeals, especially by the contractors that originally denied the claims or 
recouped the claim payments.  A few staff noted that these contractors are often in 
the best position to defend their decisions. In FY 2010, only one of these 
contractors participated regularly, with QICs accounting for nearly all of the 
remaining participation.34  CMS staff also reported plans to become a party, rather 
than a participant, more often, stating that this will allow the agency to better 
present its position.  
Staff raised concerns about the acceptance of new evidence 
and the organization of case files 
Most CMS and ALJ staff noted that the requirements for accepting new evidence 
at the ALJ level are open to wide interpretation.  Starting in 2005, ALJs may 
accept new evidence only if they determine that appellants had good cause for 
waiting until the appeals reached the ALJ level to submit it.  Most ALJ staff said 
that they typically accepted new evidence when submitted.  As one ALJ 
explained, an ALJs role is to make a determined effort to find out all of the 
relevant information to make the best determination....  Maybe I let that color my  
determination of letting in new evidence.   
Nearly all CMS staff reported that the ALJs acceptance of new evidence reduced 
the efficiency of the appeals system.  Most of them noted that appellants are 
required, and have many opportunities, to submit evidence prior to the ALJ level.  
According to one CMS staff member, when ALJs accept new evidence without 
good cause, it eliminates the value of the two previous levels of appeal. 
Nearly all CMS and ALJ staff also identified problems with case files.  They 
reported that a case file at the ALJ level often differed in content, organization, 
and format compared to the same appeals  case file at the QIC level.  Staff noted 
that these differences created inefficiencies in the appeals process.  Most ALJ staff 
reported that incomplete or disorganized case files caused them to spend time  
requesting information from QICs or appellants, remanding appeals back to QICs, 
or reorganizing case files.  Many ALJ and CMS staff noted that the two agencies 
need to reach an agreement regarding how QICs should organize the case files 
before sending them to the ALJ level. 
 
34  CMS funded a demonstration project to increase participation by one of the DMEPOS contractors 
that make the initial decisions to pay or deny claims.   
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)   14  
   
   
In addition, problems arise because the QICs case files are almost entirely 
electronic, while ALJs accept only paper case files.  The QICs convert the 
electronic case files to paper format before sending them to the ALJs; most staff 
noted that this process is resource intensive and prone to error.  In a  
February 2011 report to Congress, the Chief ALJ acknowledged that her agency 
had a critical need to transform its case file process from paper to a fully 
electronic environment.35 
ALJ staff handled suspicions of fraud inconsistently 
When deciding an appeal, ALJ staff may come across evidence that suggests an 
appellant engaged in Medicare fraud.  For example, evidence may suggest that the 
Medicare services were not furnished or were not furnished as billed.  Nearly all 
ALJ staff reported having suspected appellants of Medicare fraud; however, they 
were inconsistent in how they handled their suspicions.  In addition, the agency 
does not have written policies about how ALJ staff should handle suspected fraud. 
Notably, ALJ staff differed in the extent to which they referred suspected fraud to 
their supervisors or to law enforcement.  While many staff had made at least one 
fraud referral, many others did not make referrals based on their suspicions.  
Several of those who did not refer stated that the evidence of fraud was limited 
and a referral would not have been appropriate.  Several others, however, 
indicated that making fraud referrals is not part of their job.  For example, one 
staff member said, [I] never referred and dont want to refer anything ... [it is] 
not our business here; another said there is an unspoken rule not to report 
[fraud]. 
When deciding an appeal, ALJ staff also differed in whether they sought 
additional information when they suspected fraud.  A few staff reported that they 
sought additional information by reviewing licensing databases, searching the 
Internet, or calling investigators.  Several staff also were in favor of more 
communication between law enforcement and ALJs regarding fraud 
investigations.  In contrast, other staff were opposed to having any additional 
information when deciding an appeal. 
ALJ staff also differed in how they made decisions when they suspected fraud.  
Several ALJs explained that they decide against appellants if the evidence lacks 
credibility and they suspect fraud.  For example, one ALJ reported that he denied 
a group of claims because all the medical records looked suspiciously similar.  In 
contrast, a few ALJs suggested that they assume the evidence is factual and do not 
assess whether it may have been falsified. 
Further, a few ALJ and CMS staff noted that having an appellant simultaneously 
in the appeals system and under investigation for fraud presented challenges.  In 
 
35
 OMHA, FY 2012 Justification of Estimates for Appropriations Committees, p. 4. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  15 
   
   
particular, CMS expressed concern that an appellant may manipulate the appeals 
system to influence the fraud investigation.  For example, appellants may 
selectively appeal claims to obtain favorable ALJ decisions.  Staff reported that 
favorable ALJ decisions may compromise law enforcements ability to get a 
conviction from a fraud investigation.   
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  16 
   
   
CONCLUSION AND RECOMMENDATIONS 
ALJs decide tens of thousands of appeals each year.  Because these decisions are 
critical to providers and beneficiaries and affect the Medicare program as a whole, 
it is imperative that the appeals process be efficient, effective, and fair. 
Our review found that the vast majority of ALJ appeals in FY 2010 were filed by 
providers, with a small number of providers accounting for nearly one-third of all 
appeals.  For 56 percent of appeals, ALJs reversed prior-level decisions by QICs 
and decided fully in favor of appellants.  Differences between ALJ and QIC 
decisions were due to different interpretations of Medicare policies and other 
factors.  These differences may provide appellants an incentive to appeal to the 
ALJ level, where they are likely to receive favorable decisions. 
Additionally, the favorable rate varied widely by ALJ.  Further, when CMS 
participated in appeals, ALJ decisions were less likely to be favorable to 
appellants.  In addition, ALJ and CMS staff raised concerns that the acceptance of 
new evidence and the organization of case files reduced the efficiency of the 
appeals system.  Lastly, ALJ staff handled suspicions of fraud inconsistently. 
Our findings highlight a number of inconsistencies and inefficiencies in the 
Medicare appeals process.  Together, they demonstrate that OMHA and CMS 
must take action to improve the appeals system, while maintaining ALJs 
independence. 
Therefore, we recommend that OMHA and CMS: 
Develop and Provide Coordinated Training on Medicare Policies to 
ALJs and QICs 
OMHA and CMS should work together to develop and provide training on 
Medicare policies to ALJ and QIC staff.  By coordinating training, OMHA and 
CMS will help ensure that knowledge of Medicare policies is consistent at the 
second and third levels of appeal.  OMHA and CMS should provide training at 
least annually and focus on policies that tend to be interpreted differently by ALJs 
and QICs or among ALJs.  For example, one area of focus should be Part A 
hospital appeals in which ALJs reversed prior-level decisions for nearly three-
quarters of appeals.  The agencies should identify training topics by analyzing 
appeals data and surveying staff. 
Identify and Clarify Medicare Policies That Are Unclear and 
Interpreted Differently 
Unclear policies can lead to inconsistencies between ALJs and QICs and among 
ALJs.  At least annually, CMS and OMHA should identify policies that are 
unclear and interpreted differently by soliciting input from CMS contractors and 
ALJ staff and by analyzing appeals data.  The agencies should focus on policies 
with vague definitions, such as beneficiaries who are declining, and on program 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  17 
   
   
areas with particularly high favorable rates, such as Medicare Part A.  CMS 
should then work to develop or clarify these policies, as needed. 
Standardize Case Files and Make Them Electronic 
To improve the efficiency of the appeals process, OMHA and CMS should make 
case files more consistent across the various levels of appeal.  Finalizing and 
enforcing a Memorandum of Understanding should be a first step toward 
standardizing the content and organization of case files.  As well as specifying 
how the documents in the case file should be organized, the memorandum should 
define a method, such as a checklist, for easily identifying which documents are 
in the case file.  OMHA and CMS should train staff on the memorandum 
requirements. 
In addition, OMHA should accelerate its Electronic Records Initiative to 
transition from paper to electronic files.  OMHA and CMS must coordinate this 
effort closely and should take other measures in the interim to reduce formatting 
differences in case files.  The agencies may require additional funding to complete 
the transition to electronic case files. 
Revise Regulations To Provide More Guidance to ALJs Regarding 
the Acceptance of New Evidence 
Current regulations regarding the acceptance of new evidence provide little 
guidance and only one example of good causewhen the QIC raises a new issue 
not discussed at the first level of appeal.  OMHA and CMS should revise these 
regulations to include additional examples as well as factors for ALJs to consider 
when determining good cause.  In particular, the regulations should specify that 
ALJs consider whether the appellant could have obtained the evidence earlier. 
Improve the Handling of Appeals From Appellants Who Are Also 
Under Fraud Investigation and Seek Statutory Authority To Postpone 
These Appeals When Necessary 
When Medicare providers are simultaneously in the appeals system and under 
investigation for fraud, both the appeals process and the investigations may be 
compromised.  OMHA and CMS should improve how these cases are handled.  
CMS should work with its contractors and law enforcement to identify and 
monitor the appeals of providers that are under investigation.  This information 
should be used to inform decisions about administrative and law enforcement 
actions and about whether CMS should participate at the ALJ level of appeal.   
Additionally, OMHA and CMS should seek statutory authority to postpone 
appeals at the levels they administer.  The agencies should make decisions to 
postpone appeals only after receiving a request from law enforcement and should 
work with law enforcement to define the circumstances under which appeals may 
be postponed.  Postponement decisions should be made by OMHA and CMS staff 
who are not directly responsible for deciding appeals.     
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  18 
   
   
We recommend that OMHA: 
Seek Statutory Authority To Establish a Filing Fee 
Given the concerns raised about appellants who filed frequently, OMHA should 
seek statutory authority to implement a modest filing fee.  Such a fee would only 
nominally affect the average appellant, but would encourage frequent filers to 
more carefully assess their appeals before filing.  The fee should not apply to 
beneficiaries.  OMHA should consider various options for making the fee 
effective and fair, such as scaling the fee to the dollar amount at issue. 
Implement a Quality Assurance Process To Review ALJ Decisions 
The range of fully favorable rates among ALJs raises concerns about whether all 
ALJs are applying Medicare policies in accordance with regulations.  Medicare 
regulations state that ALJs are bound by Medicare laws, regulations, and National 
Coverage Determinations and must give substantial deference to Local Coverage 
Determinations and CMS program guidance.  OMHA should implement a quality 
assurance process to review ALJ decisions.  OMHA could, for example, review a 
sample of ALJ decisions and, when needed, provide ALJs with additional training.  
OMHA may want to focus its efforts on certain types of appeals, such as those 
concerned with policies that tend to be interpreted differently among ALJs.  
OMHA should also assess ALJs use of on-the-record reviews to make decisions. 
Determine Whether Specialization Among ALJs Would Improve 
Efficiency 
OMHA should determine whether specialization among ALJs would improve the 
efficiency of the appeals process.  Any specialization would need to be consistent 
with the statutory requirement to randomly assign appeals.  If OMHA decides to 
implement specialization, it should develop policies and procedures describing the 
manner and extent to which ALJs will specialize.    
Develop Policies To Handle Suspicions of Fraud Appropriately and 
Consistently and Train Staff Accordingly 
OMHA should develop policies and provide training to ALJ staff regarding how 
to handle suspicions of fraud.  These policies and training should be developed in 
collaboration with CMS and OIG and should inform staff about when and how to 
refer suspicions of fraud.  The policies and training should also instruct staff to 
base decisions only on evidence in the case files and hearing testimony, as 
required by Federal regulation, and to consider the credibility of the evidence 
when making decisions.  OMHA should work with CMS and OIG periodically to 
keep informed about emerging fraud trends.   
We recommend that CMS: 
Continue To Increase CMS Participation in ALJ Appeals 
Given the benefits cited by both agencies, CMS should continue to increase its 
participation in ALJ appeals.  Building upon its current efforts, CMS should make 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  19 
   
   
strategic decisions about which contractors are in the best position to represent 
CMS and which appeals most warrant CMS participation, such as Part A hospital 
appeals or those from frequent filers.  CMS should establish participation 
guidelines and incentives for each type of contractor and should track the results 
of their participation.  The guidelines should indicate the circumstances in which a 
contractor should consider becoming a party, rather than a participant. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  20 
   
   
AGENCIES COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
OMHA and CMS concurred fully or in part with all 10 of our recommendations.  
With regard to the first recommendation, OMHA stated that it instituted, and 
CMS participated in, an annual symposium that offers ALJs training on a wide 
range of Medicare policies and emerging issues.  CMS added that it has invited 
OMHA to participate in its annual conference for contractor medical directors and 
that it will continue working with OMHA to identify new opportunities for 
collaboration. 
With regard to the second recommendation, OMHA noted that while it is beyond 
the scope of its mission to participate in Medicare policy development, it supports 
efforts to clarify unclear policies and increased communication with CMS when 
decisional trends reveal differing policy interpretations.  CMS noted the value of 
tracking appeals to determine which Medicare policies are most often at issue and 
stated that in some instances, it might be beneficial to clarify a particular policy.  
With regard to the third recommendation, OMHA stated that it is working with 
CMS to develop a Memorandum of Understanding regarding standardizing case 
files and to determine whether MAS can accommodate the electronic folder or 
whether a new operating system must be developed.  CMS added that it will 
continue to discuss with OMHA options to fully develop an electronic system.   
With regard to the fourth recommendation, OMHA stated that it will review 
regulations regarding acceptance of new evidence and will develop guidance and 
provide training to address ALJs concerns raised in the report.  CMS added that it 
will explore options for providing additional guidance regarding accepting new 
evidence at the ALJ level.    
With regard to the fifth recommendation, OMHA stated that it did not concur with 
staffs issuing determinations regarding postponement of ALJ decisions because 
of due process concerns. CMS raised the same concerns and further noted that 
postponing appeals could compromise fraud investigations.  At the same time, 
OMHA stated that it supports CMSs developing a mechanism to limit appeals to 
the ALJ level, and CMS proposed discussing concerns with OMHA to determine 
the best approach for handling these appeals.  In response, we recognize the 
seriousness of the due process and other concerns and emphasize that 
postponement should be considered only after weighing these concerns together 
with the potential impact of fraudulent activities on beneficiaries and the 
Medicare Trust Funds.  We further emphasize that the agencies should make 
decisions to postpone appeals only after receiving a request from law enforcement 
and that these postponement decisions should not be made by ALJs or others who 
are directly responsible for deciding appeals. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)   21  
   
   
With regard to the sixth through ninth recommendations, OMHA stated that it will 
evaluate whether or not filing fee authority is appropriate and, if so, seek authority 
to collect such fees.  It further noted that it has instituted a Quality Assurance 
Program based upon peer review of ALJ decisions.  OMHA also stated that 
although it is not convinced that ALJ specialization would improve case 
processing, it will conduct further evaluation.  Lastly, it stated that it has 
conducted training and continues to develop policies with respect to handling 
suspicions of fraud. 
With regard to the tenth recommendation, CMS stated that it plans to increase 
participation in ALJ appeals by the agencys contractors.  It will also enhance 
participation guidelines for contractors and monitor the results of participation to 
determine the most effective and efficient use of the resources currently available.   
The full text of OMHAs comments is provided in Appendix D, and the full text of 
CMSs comments is provided in Appendix E.   
   
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  22 
   
   
APPENDIX A 
Administrative Law Judge Appeals Filed by Each Type of Appellant, 
Fiscal Year 2010 
 
    Percentage of  Percentage of  Percentage of  
Medicare Program Area  Provider   Beneficiary   State Medicaid 
Appeals  Appeals  Agency Appeals 
Part A  40%  16%  90% 
Hospitals  9%  4%  <1% 
Home Health/ 
13%  1%  48% 
Hospice Agencies  
Other Part A  14%  8%  3% 
Skilled Nursing Facilities  4%  4%  39% 
Part B   34%  16%  <1% 
Transportation  5%  7%  <1% 
Diagnostic Testing   7%  1%  0% 
Practitioner Services  13%  3%  0% 
Other Part B  9%  5%  <1% 
Durable Medical Equipment, 
Prosthetics, Orthotics, and  25%  5%  0% 
Supplies 
Part C  1%  47%  10% 
Part D  <1%  8%  0% 
Other*  <1%  8%  0% 
     Total**  100%  100%  100% 
Source:  Office of Inspector General analysis of Medicare Appeals System data, 2012. 
* This category includes appeals about beneficiary premiums and entitlement to Medicare. 
** Total may not sum to 100 percent because of rounding. 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  23 
   
   
APPENDIX B 
Percentage of Administrative Law Judge Appeals That Were Fully Favorable to 
Appellants, Fiscal Year 2010 
 
Table B-1:  Percentage of Administrative Law Judge Appeals That Were Fully Favorable to 
Appellants by Type of Appellant, Fiscal Year 2010 
 
  Percentage of Appeals Fully Favorable to Appellants** 
  Medicare Program Area 
State Medicaid 
Providers  Beneficiaries 
  Agencies 
 
Part A  67%  36%  24% 
 
  Part B   59%  46%  n/a 
  Durable Medical Equipment, Prosthetics, 
53%  40%  n/a 
  Orthotics, and Supplies (DMEPOS) 
  Part C  15%  19%  7% 
 
Part D  15%  20%  n/a 
 
Other*  n/a  26%  n/a 
 
       Total  61%  28%  22% 
S ource:  Office of Inspector General (OIG) analysis of Medicare Appeals System (MAS) data, 2012. 
* This category includes appeals about beneficiary premiums and entitlement to Medicare. 
 
** The percentage of appeals with fully favorable decisions was calculated only if there were 50 or more appeals for that 
M edicare program area. 
 
Table B-2:  Percentage of Administrative Law Judge Appeals That Were Fully Favorable to 
Appellants by Frequent Filer Status, Fiscal Year 2010 
 
  Percentage of Appeals Fully Favorable to 
  Appellants** 
 
Medicare Program Area 
 
  Providers Who Were  Providers Who Were 
  Frequent Filers***  Not Frequent Filers 
 
 
Part A  67%  67% 
 
 
  Part B   70%  54% 
   
DMEPOS  50%  58% 
Part C  n/a  15% 
Part D  n/a  15% 
Other*  n/a  n/a 
     Total  61%  60% 
Source:  OIG analysis of MAS data, 2012. 
* This category includes appeals about beneficiary premiums and entitlement to Medicare. 
** The percentage of appeals with fully favorable decisions was calculated only if there were 50 or more appeals 
for that Medicare program area. 
*** A frequent filer is an appellant that had 50 or more appeals decided in fiscal year 2010. 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  24 
   
   
APPENDIX C 
Actual Fully Favorable Rates Compared to Expected Fully Favorable Rates by 
Administrative Law Judge,* Fiscal Year 2010 
 
100%
Actual
s  90%
t
n
a Expected
ell
p
p 80%
A
e 
h
t
o  70%
e t
bl
a
or 60%
v
a
F
y 
ull 50%
F
s 
al
e 40%
p
p
A
J 
AL 30%
f 
o
e 
g
a 20%
t
n
e
c
r
e
P 10%
0%
The 66 ALJs Sorted by Percentage of Decisions  
Fully Favorable to the Appellants 
 
Source:  Office of Inspector General analysis of Medicare Appeals System data, 2012.
Note:  To calculate each ALJs expected rate, we first determined the fully favorable rate among all ALJs for each Medicare program 
area; next, we multiplied these rates by the proportion of appeals the ALJ had in that program area and summed the results. 
*ALJ. 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  25 
  APPENDIX D 
APPENDIX D
Office of Medicare Hearings and Appeals Comments 
Office of Medicare Hearings and Appeals Comments
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Office of Medicare Hearings and Appeals 
Office ofMedicare Hearings andAppeals
Office of the Chief Judge 
Office oftheChiefJudge
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MEMORANDUM 
MEMORANDUM
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Chief Administrative Law Judge 
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Thank you for the opportunity to review and comment on the Office of Inspector General's 
Thank you for the opportunity to review and comment on the Office of Inspector General's
(OIG) draft report on Medicare appeals at the Administrative Law Judge (ALJ) level. The Office 
(OIG) draft report on Medicare appeals attheAdministrative LawJudge (AU) level.The Office
of Medicare Hearings and Appeals (OMHA) appreciates the thoroughness of the report and 
of Medicare Hearings and Appeals (OMHA) appreciates the thoroughness of the report and
concurs with many of the suggested recommendations which are based on the evaluation of ALJ 
concurs with many ofthe suggested recommendations which arebased on theevaluation ofALI
appeals during fiscal year 201 0. 
appeals during fiscal year20IO.
We are happy to report that a nwnber of recommendations are already bt:ing addressed through 
We arehappy toreport that anumber of recommendations are already being addressed through
OMHA's continuing efforts to review and improve operations. However, with respect to a few 
OMHA's continuing efforts to review and improve operations. However, with respect to a few
recommendations,  we  believe  that  more  evaluation  is  necessary.  Our  response  to  the 
recommendations, we believe that more evaluation is necessary. Our response to the
rereccoommmmenednadtaiotinosnsi siss seettf ofortrhth bbeeloloww.. 
RECOMMENDATION: Develop and Provide Coordinated Training on Medicare Policies to 
RECOMMENDATION: Develop and Provide Coordinated Training onMedicare Policies to
ALJs andQ/Cs 
ALJs andQICs
RESPONSE: CONCUR 
RESPONSE: CONCUR
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for all OMHA ALJs.  JES is conducted in three phases throughout the calendar year and offers 
for all OMHA AUs. JES isconducted inthree phases throughout the calendar year and offers
training on a wide range of Medicare policies and emerging OMHA issues.  The symposiwn 
training on a wide range of Medicare policies and emerging OMHA issues, The symposium
presenters include Centers for Medicare and Medicaid Services (CMS) subject matter experts, 
presenters include Centers for Medicare and Medicaid Services (CMS) subject matter experts,
Medicare Appeals Council (MAC) judges and OMHA's most experienced ALJs. OMHA seeks 
Medicare Appeals Council (MAC) judges and OMHA's most experienced AUs. OMHA seeks
input from  ALJs and CMS in identifying topics for  presentation based on new policies or 
input from AUs and CMS in identifying topics for presentation based on new policies or
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Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  27 
   
   
 
 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  28 
   
   
 
 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  29 
   
   
 
 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  30 
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DDAATTEE::  .SSEEPP 11 88 22001122 
TTOO:: 	 DDaanniieell RR.. LLeevviinnssoonn 
Inspector General
FFRROOMM::  Marilyn Tavenner
Acting Adm'lmstrator
SSUUBBJJEECCTT:: 	 OOffffiiccee ooff IInnssppeeccttoorr GGeenneerraall ((OOIIGG)) DDrraafftt RReeppoorrtt:: ""IImmpprroovveemmeenntsts AArree NNeeeeddeedd aatt 
tthhee AAddmmiinniisstrtraatitvivee LLaaww JJuuddggee LLeevveell ooff MMeeddiiccaarree AAppppeeaallss"" ((OOEEII--0022--1100-0-00034304)0) 
TThhaannkk yyoouu ffoorr tthhee ooppppoorrttuunnitiyty ttoo rreevviieeww aanndd ccoommmmeenntt oonn tthhee OOIIGG ddrraafftt rreeppoorrtt,, ""IImmpprroovveemmenentsts 
AArree NNeeeeddeedd aatt tthhee AAddmmiinniisstrtraatitvivee LLaaww JJuuddggee LLeevveell ooff MMeeddiiccaarree AAppppeeaallss."." IInn tthhee ddrraafftt rreeppoorrtt,, 
tthhee OOIIGG eexxaammiinneedd tthhee cchhaarraacctteerrisistitcicss ooff aappppeeaallss ddeecciiddeedd bbyy MMeeddiiccaarree aaddmmiinniisstrtraatitvivee llaaww jjuuddggeess 
((AAUUss)) iinn ffiissccaall yyeeaarr ((FFYY)) 22001100;; tthhee ddiiffffeerreenncceess bbeettwweeeenn AAUU aanndd pprriioorr--lleevveell ddeecciissiioonnss aanndd 
 ddiiffffeerreenncceess aammoonngg AAUUss;; aanndd tthhee eexxtteenntt ttoo wwhhiicchh tthhee CCeenntteerrss ffoorr MMeeddiiccaarree && MMeeddiiccaaidid SSeerrvviicceess 
((CCMMSS)) ppaarrttiicciippaatetedd iinn AAUU aappppeeaallss iinn FFYY 22001100.. WWee aapppprreecciiaatete tthhee ~OIGIG's's ttiimmee aanndd eeffffoorrtt iinn 
rreevviieewwiinngg oouurr pprroocceesssseess.. OOuurr rreessppoonnsseess ttoo tthhee OOIIGG's's rreeccoommmmeennddaatitoionnss aarree bbeellooww.. 
RReeccoommmmenednadtaiotinosns ttoo eCMMSS aanndd tthhee OOffffiiccee ooffMMeeddiiccaarree HHeeaarrininggss aannddAAppppeeaalsls ((OOMMHHAA):): 
OOIIGG RReeccoommmmenednadtiaotnion 
TThhee OOIIGG rreeccoommmmeennddss CCMMSS aanndd OOMMHHAA ddeevveelloopp aanndd pprroovviiddee ccoooorrddiinnaatetedd ttrraaiinniinngg oonn MMeeddiiccaarree 
ppoolliicciieess ttoo AAddmmiinniisstrtraatitvivee LLaaww JJuuddggeess ((AAUUss)) aanndd QQuuaalliiffiieedd IInnddeeppeennddeenntt CCoonnttrraacctotorsrs ((QQIICCss)).. 
CCMMSS RReessppoonnsese 
TThhee CCMMSS ccoonnccuurrss wwiitthh tthhiiss rreeccoommmmeennddaatitoionn.. IInn 22001111 aanndd 22001122,, CCMMSS ssttaaffff ppaarrttiicciippaatetedd iinn 
OOMMRHAA'5's aannnnuuaall JJuuddiicciiaall EEdduuccaattiioonn SSyymmppoossiiuumm,, aanndd ccoonndduucctteedd ttrraaiinniinngg oonn aa vvaarriieettyy ooff 
MMeeddiiccaarree ppoolliiccyy iissssuueess.. TThhee ssyymmppoossiiaa aaffffoorrdd AAUUss aanndd tthheeiirr ssttaaffffss aann ooppppoorrttuunnitiyty ttoo ddiissccuussss 
ggeenneerraall ppoolliiccyy aanndd pprroocceedduurraall iissssuueess wwiitthh CCMMSS.. TThhiiss ttrraaiinniinngg iiss mmuuttuuaallllyy bbeenneeffiicciaial,l, aanndd wwee 
wwoouulldd wweellccoommee tthhee ooppppoorrttuunnitiyty ttoo iinncclluuddee tthhee OQIICCss iinn ffuuttuurree sseessssiioonnss.. SSiimmiillaarrlyly,, iinn rreecceenntt 
yyeeaarrss,, CCMMSS hhaass iinnvviitteedd OOMMHHAA lleeaaddeerrsshhipip ttoo ppaarrttiicciippaatete iinn oouurr aannnnuuaall CCoonnttrraacctotorr MMeeddiiccaall 
DDiirreeccttoorr ccoonnffeerreennccee aatttteennddeedd bbyy CCMMSS ssttaaffff aanndd ssttaaffff ffrroomm oouurr MMeeddiiccaarree AAddmmiinniisstrtaratitvivee 
CCoonnttrraaccttoorrss ((MMAACCss)),, OQIICCss,, RReeccoovveerryy AAuuddiittoorrss ((RRAAss)),, aanndd ZZoonnee PPrrooggrraamm IInntteeggrriittyy CCoonnttrraacctotorsrs 
((ZZPPIICCss)).. LLiikkee tthhee JJuuddiicciiaall EEdduuccaattiioonn SSyymmppoossiiaa,, tthhiiss ccoonnffeerreennccee pprroovviiddeess aann ooppppoorrttuunnitiyty ffoorr oouurr 
ccoonnttrraaccttoorr ssttaaffff ttoo iinntteerraacctt wwiitthh aanndd aasskk qquueessttiioonnss ooff OOMMRHAA ssttaaffff aanndd sseenniioorr lleeaaddeerrsshhipip aabboouutt 
ppoolliiccyy aanndd pprroocceedduurraall iissssuueess.. FFiinnaallllyy,, oouurr OQIICCss aallssoo hhaavvee aacccceessss ttoo ttrraaiinniinngg aanndd eedduuccaattiioonnaall 
lImmpprorovevmemenetsnts AArree NNeeeeddeedd aatt tthhee AAddmmininisitsratrtaivteive LLaaww JJuuddggee LLeevveell ooff MMeeddicicaarere AAppppeeaalsls ((OOEEII--0022--1100-0-00033404)0)  3311   
   
 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  32 
   
   
 
 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  33 
   
   
 
 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  34 
   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Jodi Nudelman, Regional 
Inspector General for Evaluation and Inspections in the New York regional office, 
and Nancy Harrison and Meridith Seife, Deputy Regional Inspectors General. 
Judy Bartlett served as the team leader for this study.  Other Office of Evaluation 
and Inspections staff from the New York regional office who conducted the study 
include Rachel Bryan, Christine Moundas, Liz Osius, and Michael Rubin.  
Central office staff who provided support include Scott Manley and Debra Roush. 
 
 
 
 
 
 
Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340)  35 
   
Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.