Tuesday,

March 8, 2005

Part III

Department of 

Health and Human 

Services

Centers for Medicare & Medicaid Services 

42 CFR Parts 401 and 405

Medicare Program: Changes to the 

Medicare Claims Appeal Procedures; 

Interim Final Rule

11420 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 401 and 405

[CMS–4064–IFC] 

RIN 0938–AM73

Medicare Program: Changes to the 

Medicare Claims Appeal Procedures

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Interim final rule with comment 

period. 

SUMMARY: Medicare beneficiaries and, 

under certain circumstances, providers 

and suppliers of health care services, 

can appeal adverse determinations 

regarding claims for benefits under 

Medicare Part A and Part B under 

sections 1869 and 1879 of the Social 

Security Act (the Act). Section 521 of 

the Medicare, Medicaid, and SCHIP 

Benefits Act of 2000 (BIPA) amended 

section 1869 of the Act to provide for 

significant changes to the Medicare 

claims appeal procedures. This interim 

final rule responds to comments on the 

November 15, 2002 proposed rule 

regarding changes to these appeal 

procedures, establishes the 

implementing regulations, and explains 

how the new procedures will be 

implemented. It also sets forth 

provisions that are needed to implement 

the new statutory requirements enacted 

in Title IX of the Medicare Prescription 

Drug, Improvement, and Modernization 

Act of 2003 (MMA).

DATES: Effective date: These regulations 

are effective on May 1, 2005. However, 

in view of the wide span of applicability 

of these rules and the complex, 

intertwined nature of the affected 

appeal procedures, not all of these 

provisions can be implemented 

simultaneously. Please see section I.E. 

of the preamble for a full description of 

the implementation approach. 

Comment date: To be assured 

consideration, comments must be 

received at one of the addresses 

provided below, no later than 5 p.m. on 

May 9, 2005.

ADDRESSES: In commenting, please refer 

to file code CMS–4064–IFC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

three ways (no duplicates, please):

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http://

www.cms.hhs.gov/regulations/

ecomments. (Attachments should be in 

Microsoft Word, WordPerfect, or Excel; 

however, we prefer Microsoft Word.) 

2. By mail. You may mail written 

comments (one original and two copies) 

to the following address ONLY: Centers 

for Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–4064–IFC, 

P.O. Box 8011, Baltimore, MD 21244–

8011. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786–

7195 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section 

below.

FOR FURTHER INFORMATION CONTACT:

Michele Edmondson-Parrott, (410) 786–

6478 (for issues relating to general 

appeal rights). Janet Miller, (410) 786–

1588 (for issues relating to assignment 

or authorized representatives). Jennifer 

Eichhorn Frantz, (410) 786–9531 (for 

issues relating to initial determinations 

and redeterminations). Arrah TabeBedward, (410) 786–7129 or Jennifer 

Eichhorn Frantz, (410) 786–9531 (for 

issues relating to Qualified Independent 

Contractor (QIC) reconsiderations). 

Arrah Tabe-Bedward, (410) 786–7129 or 

John Scott (410) 786–3636 (for issues 

relating to expedited access to judicial 

review, Administrative Law Judge (ALJ) 

hearings and Medicare Appeals Council 

(MAC) reviews). Jennifer Collins, (410) 

786–1404 or Rosalind Little, (410) 786–

6972 (for issues relating to reopenings).

SUPPLEMENTARY INFORMATION:

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–4064–IFC 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. After the close of the 

comment period, CMS posts all 

electronic comments received before the 

close of the comment period on its 

public website. Comments received 

timely will be available for public 

inspection as they are received, 

generally beginning approximately 3 

weeks after publication of a document, 

at the headquarters of the Centers for 

Medicare & Medicaid Services, 7500 

Security Boulevard, Baltimore, 

Maryland 21244, Monday through 

Friday of each week from 8:30 a.m. to 

4 p.m. To schedule an appointment to 

view public comments, phone (410) 

786–7197. 

Copies: To order copies of the Federal 

Register containing this document, send 

your request to: New Orders, 

Superintendent of Documents, P.O. Box 

371954, Pittsburgh, PA 15250–7954. 

Specify the date of the issue requested 

and enclose a check or money order 

payable to the Superintendent of 

Documents, or enclose your Visa or 

Master Card number and expiration 

date. Credit card orders can also be 

placed by calling the order desk at (202) 

512–1800 (or toll-free at 1–888–293–

6498) or by faxing to (202) 512–2250. 

The cost for each copy is $10. As an 

alternative, you can view and 

photocopy the Federal Register

document at most libraries designated 

as Federal Depository Libraries and at 

many other public and academic 

libraries throughout the country that 

receive the Federal Register.

This Federal Register document is 

also available from the Federal Register

online database through GPO Access, a 

service of the U.S. Government Printing 

Office. The web site address is: http://

www.access.gpo.gov/nara/index.html. 

To assist readers in referencing 

sections contained in this preamble, we 

are providing the following table of 

contents.

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11421

Table of Contents 

I. Background 

A. Overview of Existing Medicare Program 

B. Medicare, Medicaid, and SCHIP Benefits 

Improvement and Protection Act (BIPA) 

of 2000

C. Related Provisions of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act (MMA) of 2003

D. Codification of Regulations 

E. Implementation of the New Appeal 

Requirements 

II. Analysis of and Responses to Public 

Comments 

A. Overview of Comments on November 

15, 2002 Proposed Rule 

B. Appeal Rights (§ 405.900 through 

§ 405.912) 

1. Basis and Scope, Definitions, General 

Rules, and Parties to Initial 

Determinations, Redeterminations, 

Reconsiderations, Hearings and Reviews 

(§ 405.902 through § 405.906) 

2. Medicaid State Agencies (§ 405.908) 

3. Appointed Representatives (§ 405.910) 

4. Assignment of Appeal Rights (§ 405.912) 

5. Initial Determinations (§ 405.920 

through § 405.928) 

6. Redeterminations (§ 405.940 through 

§ 405.958) 

7. Redetermination, Notification, and 

Subsequent Limitations on Evidence 

(§ 405.954, § 405.956, § 405.966) 

8. Reconsiderations (§ 405.960 through 

§ 405.978) 

9. Conduct of a Reconsideration (§ 405.968 

and § 405.976) 

10. Reopenings of Initial Determinations, 

Redeterminations, Reconsiderations, 

Hearings, and Reviews (§ 405.980 

through § 405.986) 

11. Expedited Access to Judicial Review 

(§ 405.990) 

12. ALJ Hearings (§ 405.1000 through 

§ 405.1066) 

13. Remand Authority (§ 405.1034) 

14. When May an ALJ Consolidate a 

Hearing? (§ 405.1044) 

15. When May an ALJ Dismiss a Request 

for Hearing? (§ 405.1052) 

16. Content of ALJ’s Decision (§ 405.1046) 

17. Appeals Involving Overpayments 

(§ 405.1064) 

18. Review by the MAC and Judicial 

Review (§ 405.1100 through § 405.1140) 

III. Response to Comments 

IV. Collection of Information Requirements 

V. Regulatory Impact Analysis 

VI. Waiver of Proposed Rulemaking

I. Background 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘BACKGROUND’’ at the beginning of 

your comments.] 

A. Overview of Existing Medicare 

Program 

The original Medicare program 

consists of two parts (Part A and Part B). 

Part A, known as the hospital insurance 

program, covers certain care provided to 

inpatients in hospitals, critical access 

hospitals, and skilled nursing facilities, 

as well as hospice care and some home 

health care. Part B, the supplementary 

medical insurance program, covers 

certain physicians’ services, outpatient 

hospital care, and other medical 

services that are not covered under Part 

A.

In addition to the original Medicare 

program, beneficiaries may elect to 

receive health care coverage under Part 

C of Medicare, the Medicare Advantage 

(MA) program. Under the MA program, 

an individual is entitled to those items 

and services (other than hospice care) 

for which benefits are available under 

Part A and Part B. An MA plan can 

provide additional health care items and 

services that are not covered under the 

original Medicare program. Beginning in 

January 2006, beneficiaries also can 

elect to receive prescription drug 

coverage under Part D of Medicare 

through the Medicare prescription drug 

benefit. 

Under the original Medicare program, 

a beneficiary can generally obtain health 

services from any institution, agency, or 

person qualified to participate in the 

Medicare program that undertakes to 

provide the service to the individual. 

After the care is provided, the provider 

or supplier (or, in some cases, a 

beneficiary) can submit a claim for 

benefits under the Medicare program to 

the appropriate government contractor, 

either a fiscal intermediary (FI) (for all 

Part A claims and certain Part B claims) 

or a carrier (for most claims under Part 

B). If the claim is for an item or service 

that falls within a Medicare benefit 

category, is reasonable and necessary for 

the individual, and is not otherwise 

excluded by statute or rule, then the 

contractor pays the claim. However, the 

Medicare program does not cover all 

health care expenses. Therefore, if the 

Medicare contractor determines that the 

medical care is not covered under the 

Medicare program, then it denies the 

claim. 

Generally, when a contractor denies a 

claim, it notifies the provider, supplier, 

or beneficiary of the denial and offers 

the opportunity to appeal the denial. 

The existing appeal procedures for 

original Medicare are set forth in 

regulations at 42 CFR part 405, subparts 

G and H. Separate procedures for 

appealing determinations made under 

the Part C program are set forth at 

subpart M of part 422. There is a 

similar, separate appeals process for 

Part D claim determinations set forth at 

subpart M of Part 423. After an 

appellant has exhausted the 

administrative appeal procedures 

offered under the Medicare program, the 

Medicare statute provides the 

opportunity for a dissatisfied individual 

to seek review in Federal court. 

Consistent with section 1852(g)(5) of 

the Act, the MA regulations provide that 

enrollees in MA plans who are 

dissatisfied with determinations 

regarding their Part C benefits have the 

right to a hearing before an 

Administrative Law Judge (ALJ), review 

by the Departmental Appeals Board 

(DAB), and judicial review at the 

Federal district court level in much the 

same manner as beneficiaries have 

under the fee-for-service Medicare 

program. These regulations are codified 

at §§ 422.600 through 422.612. Section 

1860D–4(h) of the Act establishes 

similar rights for enrollees in Medicare 

prescription drug plans. To the extent 

that there are any differences in the 

appeal procedures for these enrollees, 

we will address those differences in 

future Part C and Part D rulemaking 

documents. 

The regulations in part 405 subpart G 

beginning at § 405.701 describe 

reconsiderations and appeals under 

Medicare Part A. When a Medicare 

contractor makes a determination for a 

Part A claim, the beneficiary or, in some 

circumstances, the provider, can appeal 

the determination. (Consistent with 

sections 1861(u) and 1866(e) of the Act 

and § 400.202, the term ‘‘provider’’

generally includes hospitals, skilled 

nursing facilities (SNFs), home health 

agencies (HHAs), comprehensive 

outpatient rehabilitation facilities 

(CORFs), and hospices, as well as 

certain clinics, rehabilitation agencies, 

and public health agencies.) If the 

determination is appealed, then the 

contractor reconsiders the initial 

determination. If the contractor upholds 

the original determination, a party can 

request a hearing before an ALJ, 

provided that the amount in controversy 

is at least $100. If a party is dissatisfied 

with the ALJ’s decision, a party can 

request review by the DAB. The 

component within the DAB that is 

responsible for Medicare claim appeals 

is the Medicare Appeals Council (MAC). 

(Although the Medicare appeals 

regulations in part 405 contain some 

limited provisions regarding ALJ and 

MAC proceedings, these proceedings are 

generally governed by the Social 

Security Administration (SSA) 

regulations at 20 CFR part 404, subpart 

J.) MAC decisions constitute the final 

decision of the Secretary and can be 

appealed to a Federal court. Generally, 

the lower level of appeal must be 

exhausted before the appeal can be 

elevated to the next level.

Medicare Part B appeal procedures 

are set forth in part 405 subpart H 

(§ 405.801 et seq.). Under these 

11422 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

regulations, beneficiaries and suppliers 

that accept assignment for Medicare 

claims can appeal to a Medicare 

contractor for a review of the 

contractor’s initial determination that a 

claim cannot be paid, either in full or in 

part. (The term ‘‘supplier’’ is defined 

under section 1861(d) of the Act, as 

amended by section 901(b) of the MMA, 

and means a physician or other 

practitioner, a facility, or other entity 

(other than a provider of services that 

furnishes items or services) under 

Medicare. This regulation will use the 

term ‘‘supplier’’ to include physicians.) 

Suppliers that do not take assignment 

and providers, in some circumstances, 

also have appeal rights. 

If the contractor’s review results in a 

continued denial of the claim, and the 

amount in controversy is at least $100, 

the appellant can request a second level 

appeal known as a ‘‘fair hearing.’’ If the 

hearing officer upholds the denial, the 

appellant can request a hearing before 

an ALJ, provided that the appellant 

meets the amount-in-controversy 

requirement. (We published a ruling, 

CMS Ruling No. 02–1, which 

implemented the $100 amount-incontroversy requirement for Part B ALJ 

hearings specified in section 521 of 

BIPA for initial determinations made on 

or after October 1, 2002. See 67 FR 

62478, 62480 (Oct. 7, 2002). For initial 

determinations prior to October 1, 2002, 

the amount in controversy threshold 

was $500 for all services other than 

home health ($100).) Subsequent 

aspects of the appeals process for Part 

B claims are identical to those described 

above for a Part A claim. 

B. Medicare, Medicaid, and SCHIP 

Benefits Improvement and Protection 

Act of 2000

Section 521 of the Medicare, 

Medicaid, and SCHIP Benefits 

Improvement and Protection Act of 

2000, (Pub. L. 106–554) (BIPA), 

amended section 1869 of the Act to 

require revisions to the Medicare feefor-service appeals process. Among the 

major changes required by the BIPA 

amendments are—

• Establishing a uniform process for 

handling Medicare Part A and Part B 

appeals, including the introduction of a 

new level of appeal for Part A claims;

• Revising the time frames for filing 

a request for Part A and Part B appeals; 

• Imposing a 30-day time frame for 

certain ‘‘redeterminations’’ made by the 

contractors; 

• Requiring the establishment of a 

new appeals entity, the qualified 

independent contractor (QIC), to 

conduct ‘‘reconsiderations’’ of 

contractors’ initial determinations 

(including redeterminations) and 

allowing appellants to escalate cases to 

an ALJ hearing, if reconsiderations are 

not completed within 30 days; 

• Establishing a uniform amount in 

controversy threshold of $100 for Part B 

appeals at the ALJ level; 

• Imposing 90-day time limits for 

conducting ALJ and DAB appeals and 

allowing appellants to escalate cases to 

the next level of appeal if ALJs or the 

MAC do not meet the 90-day deadline; 

and 

• Imposing ‘‘de novo’’ review when 

the MAC reviews an ALJ decision made 

after a hearing. 

On November 15, 2002, we published 

in the Federal Register a comprehensive 

proposed rule (67 FR 69312) to 

implement the provisions of section 521 

of the BIPA, as well as other 

complementary changes needed to 

improve the Medicare claim appeal 

procedures. 

Revised section 1869 of the Act also 

requires that the Secretary establish a 

process by which a beneficiary can 

obtain an expedited determination if the 

beneficiary receives a notice from a 

provider of services that the provider 

plans to terminate all services or 

discharge the beneficiary from the 

provider. Previously, this right to an 

expedited review existed under statute 

only for hospital discharges (under 

sections 1154 and 1155 of the Act). On 

November 26, 2004, we published a 

separate final rule, Expedited 

Determination Procedures for Provider 

Service Terminations (69 FR 69252), to 

respond to comments on that aspect of 

the November 15, 2002 proposed rule 

and to set forth the regulations needed 

to establish new expedited review 

procedures for provider service 

terminations. 

C. Related Provisions of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) 

On December 8, 2003, the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173) was enacted. The MMA 

includes a number of provisions that 

affect the Medicare claim appeals 

process, each of which is summarized 

below. To the extent that the new 

statutory language has necessitated 

revisions or additions to our proposed 

regulations to ensure that they conform 

to the MMA, we have incorporated the 

needed changes into this interim final 

rule. A brief summary of these 

provisions follows. To the extent that 

the MMA provisions entail regulatory 

changes, a discussion of those changes 

is set forth in the appropriate section of 

this preamble. 

1. Requirement To Transfer the 

Administrative Law Judge Function to 

the Department of Health and Human 

Services (Section 931 of the MMA) 

Section 931 of the MMA requires 

transfer of the functions of 

administrative law judges (ALJs) 

responsible for hearing appeals under 

title XVIII of the Act (and related 

provisions of title XI of the Act) from 

the Commissioner of SSA to the 

Secretary of the Department of Health 

and Human Services (DHHS). These 

ALJs are required to be organizationally 

and functionally independent from CMS 

and must report to and fall under the 

general supervision of the Secretary of 

DHHS. The DHHS and SSA were 

required to jointly develop a plan to 

facilitate this transfer not later than 

April 1, 2004, and the transfer will take 

place no earlier than July 1, 2005, but 

not later than October 1, 2005. On 

March 25, 2004, DHHS and SSA 

submitted a report to the Congress that 

describes the process through which 

DHHS and SSA will accomplish the 

transfer of responsibility for the ALJ 

function. A copy of that report is 

available online at http://www.hhs.gov/

medicare/appealsrpt.pdf. 

2. Process for Expedited Access to 

Judicial Review (Section 932 of the 

MMA) 

Section 1869(b) of the Act provides 

for expedited access to judicial review 

in situations involving Medicare claims 

appeals. Section 932 of the MMA 

amends section 1869(b) of the Act by 

requiring a review entity to respond to 

a request for expedited access to judicial 

review in writing within 60 days after 

receiving the request. The term ‘‘review 

entity’’ means up to three reviewers 

who are ALJs or members of the 

Departmental Appeals Board as 

determined by the Secretary. If the 

review entity does not act within the 60-

day deadline, then the party can request 

judicial review. Expedited access to 

judicial review can be granted when the 

MAC does not have authority to decide 

questions of law or regulation relevant 

to matters in controversy and there is no 

material issue of fact in dispute. See

§ 405.990.

3. Revisions to the Medicare Fee-forService Appeals Process (Section 933 of 

the MMA) 

a. Requirement for Full and Early 

Presentation of Evidence (Section 

933(a)) 

Section 933(a) of the MMA amends 

section 1869(b) of the Act to require 

providers and suppliers to present any 

evidence for an appeal no later than the 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11423

QIC reconsideration level, unless there 

is good cause that prevented the timely 

introduction of the evidence. In this 

interim final rule with comment, we are 

adopting regulations to specify that in 

the absence of good cause, a provider, 

supplier, or beneficiary represented by a 

provider or supplier must present 

evidence at the QIC level. Evidence not 

presented by the parties at the QIC level 

cannot be introduced at a higher level 

of appeal. See § 405.956(b)(8), 

§ 405.966(a), § 405.1018, and 

§ 405.1122(c). 

b. Use of Patients’ Medical Records 

(Section 933(b)) 

Section 933(b) of the MMA amends 

section 1869(c)(3)(B)(i) of the Act to 

require QICs to review an individual’s 

medical records when conducting a 

reconsideration involving medical 

necessity. See § 405.968(a). 

c. Notice Requirements for Medicare 

Appeals (Section 933(c)) 

Section 933(c) of the MMA amends 

sections 1869(a), 1869(c), and 1869(d) of 

the Act to require appeal notices issued 

at the initial determination, 

redetermination, reconsideration, and 

ALJ levels to include certain 

information. As amended, section 

1869(a)(4) of the Act requires that a 

notice of an initial determination 

include the reasons for the 

determination, including whether a 

local medical review policy (LMRP) or 

local coverage determination (LCD) was 

used. The notice of initial determination 

must also include procedures for 

obtaining additional data concerning the 

determination and notification of any 

applicable appeal rights, including 

instructions on how to request a 

redetermination. See § 405.921(a). 

Section 1869(a)(5) of the Act specifies 

that a notice of redetermination must 

include the specific reasons for the 

redetermination, a summary of the 

clinical or scientific evidence used to 

make the redetermination, if applicable, 

information on how to obtain additional 

information concerning the 

redetermination, and notification of any 

applicable appeal rights. See § 405.956. 

Reconsideration notices, under the 

amended section 1869(c)(3)(E) of the 

Act, are required to include information 

about applicable appeal rights. See

§ 405.976. Section 1869(d) of the Act is 

also amended to require that notices of 

ALJ decisions give the specific reasons 

for the decision, including, if 

applicable, a summary of the clinical or 

scientific evidence used in making the 

decision, the procedures for obtaining 

additional information about the 

decision, and any applicable appeal 

rights. See § 405.1046(b). Additionally, 

section 933 of the MMA amends 

sections 1869(a), 1869(c), and 1869(d) of 

the Act to require all appeal notices to 

be written in a manner calculated to be 

understood by a beneficiary. 

d. Qualified Independent Contractors 

(QICs) (Section 933(d)) 

Prior to the MMA, section 1869(c) of 

the Act, as amended by section 521 of 

BIPA, required the Secretary to enter 

into contracts with at least 12 entities 

called qualified independent contractors 

(QICs) to conduct reconsiderations of 

contested claim determinations. Section 

1869(c) sets forth certain requirements 

for the QICs and their reviews and 

panels. Section 933(d) of the MMA 

makes a number of revisions to section 

1869(c) of the Act, including providing 

additional detail regarding the eligibility 

requirements for QICs (section 933(d)(1) 

of the MMA) and the eligibility 

requirements for QIC reviewers (section 

933(d)(2) of the MMA). We have added 

§ 405.968(c)(3) to reflect the requirement 

of section 1869(g)(1)(C) that where a 

claim pertains to the furnishing of 

treatment by a physician, or the 

provision of items or services by a 

physician, a reviewing professional 

must be a physician. In addition, section 

933(d)(3) of the MMA amended section 

1869(c)(4) of the Act to reduce from 12 

to 4 the minimum number of QICs with 

whom the Secretary must contract.

4. Process for the Correction of Minor 

Errors or Omissions Without Pursuing 

an Appeal (Section 937 of the MMA) 

Section 937 of the MMA requires that 

the Secretary develop a means of 

allowing providers and suppliers to 

correct minor errors or omissions to 

claims submitted under the programs 

under title XVIII without initiating an 

appeal. The statute specifies that this 

process be available no later than 

December 8, 2004. We have revised 

§ 405.980 to allow providers and 

suppliers to make these corrections 

through the reopenings process. See

§ 405.927 and § 405.980. 

This process was developed in 

consultation with Medicare contractors 

and representatives of providers and 

suppliers, as required by section 937 of 

the MMA. We published an article on 

April 30, 2004 that is available online at 

http://www.cms.hhs.gov/medlearn/

matters/mmarticles/2004/SE0420.pdf to 

address the implementation of section 

937 and consulted with providers and 

suppliers about this implementation 

during open door forums held between 

August 3 and August 31, 2004. We also 

created an e-mailbox, 

PBG937@cms.hhs.gov, for providers and 

suppliers to comment on our proposed 

implementation. The comment period 

closed September 10, 2004. 

5. Appeals by Providers When There Is 

No Other Party Available (Section 939 

of the MMA) 

In situations where a beneficiary dies 

and there is no other party available to 

appeal an unfavorable determination, 

section 939 of the MMA amends section 

1870 of the Act to permit a provider or 

supplier to file an appeal. See

§ 405.906(c). 

6. Revisions to the Appeals Time 

Frames and Amounts in Controversy 

(Section 940 of the MMA) 

Sections 1869(a)(3)(C)(ii) and 

1869(c)(3)(C)(i) of the Act as added by 

section 521 of BIPA established 30-day 

decision making time frames at both the 

redetermination and reconsideration 

levels. Additionally, section 1869 

(b)(1)(E) of the Act established the 

amount in controversy (AIC) 

requirement for ALJ hearing requests 

and judicial review as $100 and $1000, 

respectively. Section 940 of the MMA 

amended these provisions so that the 

decision-making time frame for 

redeterminations and reconsiderations 

is 60 days and the AICs for ALJ hearings 

and judicial review will now be 

adjusted annually, beginning on January 

1, 2005, by the percentage increase in 

the medical care component of the 

consumer price index (CPI) for all urban 

consumers and rounded to the nearest 

multiple of $10. See § 405.950(a), 

§ 405.970(a), and § 405.1006. A 

conforming amendment applies these 

AICs to the Part C MA program as well, 

and we have proposed that they apply 

to Part D when the new prescription 

drug benefit becomes available in 

January 2006. See 69 Fed. Reg. 46,866, 

46,910, and 46,911, 46,722 for the MA 

proposed rule and 69 Fed. Reg. 46,632 

for the Part D proposed rule. (The 

medical care component of the CPI 

increased by 4.5 percent in 2004. 

Consequently, the AIC in 2005 for ALJ 

hearings will remain $100, and the AIC 

for judicial review will be $1,050.) 

7. Determinations of Sustained or High 

Levels of Payment Errors (Section 935(a) 

of the MMA) 

Consistent with section 1893(f)(3) of 

the Act, as amended by section 935(a) 

of the MMA, determinations by the 

Secretary of sustained or high levels of 

payment errors are precluded from 

administrative or judicial review. See

§ 405.926(p).

11424 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

8. Limitations on Further Review of 

Prior Determinations (Section 938(a) of 

the MMA) 

Section 1869(h)(6) of the Act, as 

amended by section 938(a) of the MMA, 

requires that there must be no 

administrative or judicial review of 

‘‘prior determinations’’ on coverage of 

physicians’’ services, a new aspect of 

the Medicare program that the MMA 

specifies must begin by June 2005. See 

§ 405.926(q). 

D. Codification of Regulations 

The current regulations governing 

Medicare administrative appeals are set 

forth in 42 CFR part 405, subparts G and 

H. These regulations will continue to be 

necessary for an indefinite transition 

period until the completion of all 

appeals that result from initial 

determinations made before the 

implementation of the new procedures 

set forth in this interim final rule. 

However, the new BIPA and MMA 

provisions make possible a largely 

uniform set of appeals procedures that 

can be applied for claims under both 

Parts A and B of Medicare. Therefore, 

this interim final rule establishes a new 

subpart I of part 405 that sets forth in 

one location the administrative appeals 

requirements for Medicare carriers, 

fiscal intermediaries (FIs), QICs, ALJs, 

and the MAC. The major subjects 

covered in subpart I of part 405 are as 

follows: 

• General Rules (§ 405.900 through 

§ 405.912)—Definitions and 

requirements concerning initial 

determinations, parties to appeals, 

appointing a representative, and 

assigning appeal rights. 

• Initial Determinations (§ 405.920 

through § 405.928)—Requirements 

concerning the processing time frames 

for initial claim determinations, 

descriptions of actions that are initial 

determinations, and the effect of an 

initial determination. 

• Redeterminations (§ 405.940 

through § 405.958)—Requirements 

concerning requesting a 

redetermination, the redetermination 

process, applicable notice requirements, 

and the effect of a redetermination. 

• QIC Reconsiderations (§ 405.960 

through § 405.978)—Requirements 

concerning requesting a reconsideration, 

the reconsideration process, applicable 

notice requirements, and the effect of a 

reconsideration. 

• Reopenings (§ 405.980 through 

§ 405.986)—Requirements concerning 

reopening of determinations and 

decisions, including the good cause 

standard, content requirements for 

notices of revised determinations or 

decisions, and the effect of a revised 

determination or decision. 

• Expedited Access to Judicial Review 

(§ 405.990)—Requirements concerning 

obtaining expedited access to judicial 

review. 

• ALJ Hearings (§ 405.1000 through 

§ 405.1064)—Requirements concerning 

requesting a hearing, the hearing 

process, applicable notice requirements, 

the effect of an ALJ’s decision, and the 

applicability of national and local 

coverage determinations. 

• MAC Review (§ 405.1100 through 

§ 405.1140)—Requirements concerning 

requesting a review, the review process, 

applicable notice requirements, the 

effect of a review decision, and the 

requirements for requesting judicial 

review. 

E. Implementation of the New Appeal 

Requirements 

We believe that the changes set forth 

in this interim final rule, in conjunction 

with the introduction of a new casespecific appeal data system that we are 

now developing, will produce 

substantial improvements in the 

efficiency of the Medicare claims appeal 

process. We expect that the 

implementation of these new appeal 

procedures, along with the transfer of 

the ALJ function from SSA to DHHS, 

will reduce appellants’ concerns over 

the fairness and timeliness of Medicare 

appeal decisions. The introduction of 

QICs, in particular, will not only 

reassure appellants of the independence 

of the reconsideration process, but also 

offer them for the first time routine 

reconsideration, by a panel of 

physicians or other health care 

professionals, of all medical necessity 

issues. As a result, we believe these new 

procedures will lead, over time, to 

significant reductions in the need to 

pursue appeals at the later stages of the 

appeals system, such as ALJ hearings 

and MAC reviews. 

In the short term, however, we 

recognize that implementing the 

changes set forth in this interim final 

rule may prove challenging both for the 

entities responsible for conducting 

appeals and for appellants themselves. 

For example, there may be an initial 

increase in requests for second level 

appeals (that is, reconsiderations by 

QICs), given the availability of these 

new independent appeal entities and 

the introduction of physician review 

panels, as well as the fact that the time 

frame for a QIC decision is only half of 

the current time frame for a contractor 

fair hearing. Similarly, increases in 

requests for ALJ hearings or MAC 

reviews are also possible, in view of the 

establishment of relatively short 

decision-making time frames for these 

entities.

Another challenge involves the need 

for appeal entities to process appeals 

that were filed before and after the 

implementation of these new appeal 

procedures. For example, the DHHS 

ALJs and the MAC will need to continue 

processing appeals received before the 

implementation of QICs at the same 

time that they begin to receive appeals 

of QIC reconsiderations. Thus, until all 

appeals that were filed under the rules 

in effect before full implementation of 

these regulations are completed, 

different administrative deadlines and 

procedures may apply, depending on 

the timing and source of the previous, 

lower-level appeal decision. Based on 

previous experience, the need for 

parallel procedures could extend over a 

year, as all cases currently in the 

appeals pipeline are resolved. 

In addressing these challenges and 

implementing the new procedures, we 

need to balance the goal of 

implementing the new procedures as 

quickly as possible with our 

responsibility to facilitate a clear and 

well-organized transition to the new 

procedures for appellants and appeals 

entities alike. We also need to ensure 

that existing appeals continue to be 

carried out as expeditiously as possible 

as we transition fully to the new appeals 

procedures. These goals drive the 

implementation approach described 

below. 

The appeal procedures set forth in 

section 521 of BIPA were to take effect 

for initial determinations made on or 

after October 1, 2002. As discussed in 

the proposed rule, we were unable to 

fully implement the BIPA provisions by 

that date without disrupting other 

fundamental functions of the Medicare 

program (for example, the processing 

and payment of claims). We were also 

aware of the possibility of additional 

statutory changes, as were subsequently 

enacted in the MMA. Additionally, we 

recognize that the MMA has, in some 

cases, established specific deadlines for 

implementation of certain appeals 

provisions. For example, section 

933(a)(2) of the MMA establishes an 

effective date of October 1, 2004 for the 

prohibition on submission of new 

evidence, absent good cause, by 

providers or suppliers in any ALJ or 

MAC appeal if that evidence was not 

presented at the QIC reconsideration. 

For other provisions, the MMA either 

makes no explicit reference to an 

effective date, or specifies (under 

section 933(d)(4)) that certain MMA 

amendments will be effective as if 

included in the BIPA legislation; that is, 

as of October 1, 2002. In the absence of 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11425

a specific effective date, the provisions 

became effective on the date of 

enactment of the MMA. 

Given the unavoidable delays in full 

implementation of the BIPA changes, it 

will not be possible to meet all of the 

MMA deadlines. As a practical matter, 

full, effective implementation of both 

the MMA and BIPA provisions can be 

achieved only in concert with the 

availability of QICs in the Medicare 

appeals process. Thus, we believe that 

full implementation of these regulations 

must be premised on, and linked to, QIC 

implementation. 

As noted above, another important 

related MMA provision is the transfer of 

the ALJ hearing function for Medicare 

claims appeals from SSA to DHHS. 

Section 931(b) of the MMA mandates 

that this transition take place not earlier 

than July 1, 2005, and not later than 

October 1, 2005. We have also taken this 

impending change into account in 

establishing the implementation 

schedule for the new appeals provisions 

set forth in this interim final rule.

Based on all of these considerations, 

the table below illustrates the 

implementation approach that we are 

following for the provisions of this 

interim final rule:

IMPLEMENTATION APPROACH

Section(s) Effective 

§ 401.108 .................................................................................................. Effective date of interim final rule. 

§ 405.900–§ 405.928 ................................................................................. Effective date of interim final rule. 

§ 405.940, § 944(a), and § 944(b) ............................................................. FI initial determinations issued on or after May 1, 2005. Carrier initial 

determinations issued on or after January 1, 2006. 

§ 942(a) ..................................................................................................... Effective date of interim final rule. 

§ 405.942(b), § 405.944(c), § 405.946 through § 405.958 ........................ All requests for redeterminations received by FIs on and or after May 

1, 2005. All requests for redeterminations received by Carriers on or 

after January 1, 2006. 

§ 405.960–§ 405.978 ................................................................................. May 1, 2005 for redeterminations issued by FIs January 1, 2006 for redeterminations issued by Carriers. 

§ 405.980–§ 405.990 ................................................................................. Effective date of interim final rule. 

§ 405.1000–§ 405.1018 ............................................................................. Effective for all appeal requests stemming from a QIC reconsideration. 

§ 405.1020 ................................................................................................ July 1, 2005 for all ALJ hearing requests. 

§ 405.1022–§ 405.1140 ............................................................................. Effective for all appeal requests stemming from a QIC reconsideration. 

As the table reflects, we have 

concluded that the best approach to 

implement the new appeal procedures 

is to phase in the new procedures 

beginning in FY 2005. QIC 

reconsiderations will become available 

in two stages depending on if an FI or 

carrier carries out the redetermination. 

For all FI redeterminations issued on or 

after May 1, 2005, appellants will have 

a right to reconsideration by a QIC 

within 60 days of their request for 

reconsideration, as well as escalation to 

an ALJ if the reconsideration is not 

completed timely. Similarly, the new 

reconsideration and escalation 

procedures will take effect for all carrier 

redeterminations issued on or after 

January 1, 2006. Thus, in 2006, all new 

appeals will be carried out under the 

regulations set forth in this interim final 

rule, including provisions on—

• Reconsiderations by QICs; 

• The new statutory time frames for 

reconsiderations, ALJ hearings, and 

MAC reviews; 

• The possibility of escalation of 

cases where the time frames are not met; 

• The new notice and evidence rules; 

and 

• Medicare-specific ALJ procedures. 

The phased-in approach enables at 

least two QICs to begin carrying out 

reconsiderations of appealed FI 

redeterminations beginning in May 

2005, and thus to provide the second 

level reconsideration envisioned by the 

statute for Part A claims as soon as 

possible. In January 2006, at least four 

QICs will begin carrying out 

reconsiderations of appealed carrier 

redeterminations. We believe that this 

phased-in approach to QIC 

implementation constitutes the only 

viable approach for an undertaking of 

this magnitude and is critical to 

ensuring that we: (1) Minimize 

disruption among the current Medicare 

contractors and current appellants; and 

(2) have adequate opportunity to 

educate providers, suppliers, and 

beneficiaries about the new procedures. 

Phasing in the transition from the 

current process serves to eliminate any 

unnecessary risk in terms of our ability 

to manage major appeal transitions at all 

of our FIs and carriers simultaneously. 

In addition, these contractors are 

dealing at the same time with numerous 

statutorily mandated changes (such as 

the contracting reform changes required 

under Title IX of the MMA). 

We have chosen to implement the 

changes initially for redeterminations 

conducted by fiscal intermediaries for 

several reasons. Fiscal intermediaries 

are responsible for all appeals involving 

Part A claims, as well a limited number 

of Part B claims. The Part A process 

currently does not include a second 

level of contractor appeal prior to an 

ALJ hearing, unlike the Part B fair 

hearing procedure. Thus, introducing 

the QIC reconsideration step first for 

these claims ensures that Part A 

appellants have access to a second preALJ appeal process as soon as possible. 

Implementing the new procedures for 

appeals resulting from FI 

determinations also gives us an 

opportunity over several months to 

identify and address any process 

problems or other technical difficulties 

involved in the first stages of QIC 

reconsiderations before transitioning the 

much larger Part B appeals workload 

that is now performed by carriers. 

One unavoidable consequence of this 

change will be that some employees of 

current contractors will need to be 

either reassigned or discharged since the 

FIs and carriers will no longer be 

conducting fair hearings. However, we 

believe that the slightly longer transition 

for the much larger carrier workforce 

will help to ameliorate the potential 

human costs of this change.

Finally, we note that wherever it was 

feasible (that is, where the BIPA and 

MMA appeals provisions are not 

fundamentally premised on the 

introduction of QIC reconsiderations 

into the appeals process), we have 

already taken a series of steps to 

implement the new appeal provisions 

mandated by the statute, including most 

notably the transition to a uniform 

redetermination process by our FIs and 

carriers. We issued instructions (CR 

2620) to effect this change beginning on 

October 1, 2004. The instructions 

incorporate both the redetermination 

decision-making time frames and notice 

requirements required by the statute 

11426 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

(under sections 1869(a)(2), 1869(a)(3) 

and 1869(a)(5) of the Act, as amended 

by section 521 of BIPA and sections 933 

and 940 of the MMA). We have also 

issued instructions to the contractors 

regarding the implementation of section 

939 of the MMA (which took effect 

upon enactment of the MMA) 

concerning appeals by providers when 

there is no other party available because 

of the death of the beneficiary appellant. 

These regulations codify those changes. 

II. Analysis of and Responses to Public 

Comments 

A. Overview of Comments on November 

15, 2002 Proposed Rule 

We received 37 timely comments 

from organizations representing 

providers and suppliers, beneficiary 

advocacy groups, administrative law 

judges, law offices, health plans, and 

others. The issues most frequently 

raised by commenters include: 

Beneficiary protections, particularly for 

unrepresented beneficiaries; deadlines 

for filing appeals and time frames for 

decision-making; notices; differences 

between an assignee and an appointed 

representative of a beneficiary; authority 

of representatives of parties; time frames 

for the escalation of cases from one level 

to the next when adjudicators fail to 

meet their deadlines; the role of the new 

entities, qualified independent 

contractors (QICs), that will perform 

reconsiderations; evidentiary 

requirements; the perceived formality of 

administrative law judge (ALJ) 

procedures, especially adversarial 

proceedings whereby we enter the 

process in general, and the impact on 

beneficiaries in particular; whether an 

ALJ’s role changes and how much 

deference the ALJ gives to our policies; 

dismissals and remands of appeals; and 

distinctions between reopenings and 

appeals. 

These comments and our responses 

are discussed below, in order of the new 

regulations text. (For the convenience of 

the reader, we are presenting below a 

chart offering a sequential overview of 

the available procedures and related 

time frames associated with the former 

and current appeals process. This chart 

is for illustrative purposes only, and 

certain details (such as when escalation 

of a case is permissible) have been 

omitted for ease of presentation. For a 

full description of the applicable 

requirements, please consult the 

preamble material that follows and the 

regulations text.)


ER08MR05.000</GPH>
Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11427

B. Appeal Rights (§ 405.900 Through 

§ 405.912)

1. Basis and Scope, Definitions, General 

Rules, and Parties to Initial 

Determinations, Redeterminations, 

Reconsiderations, Hearings and Reviews 

(§ 405.900 Through § 405.906) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Appeal Rights—Basis and Scope, etc.’’

at the beginning of your comments.]

In the proposed rule, we proposed 

that providers would be allowed to file 

an administrative appeal of Medicare 

initial determinations to the same extent 

as beneficiaries. Currently, providers 

have limited rights to appeal Medicare 

initial determinations: providers can 

appeal Medicare determinations only 

when the determination involves a 

finding that: (1) The item or service is 

not covered because it constitutes 

custodial care, is not reasonable and 

necessary, or for certain other reasons; 

and (2) the provider knows, or 

reasonably could have been expected to 

know, that the item or service in 

question is not covered under Medicare 

(that is, there is a finding with respect 

to the limitation of liability provision 

under section 1879 of the Act). 

Regarding non-participating providers 

and suppliers, however, we proposed 

maintaining the current appeal policies. 

Consistent with section 940 of the 

MMA, in this interim final rule, we are 

making a change to § 405.904(a)(2) 

concerning the amounts in controversy 

for ALJ hearings and judicial review. 

Section 940 of the MMA requires the 

amount in controversy to be adjusted 

annually based on the medical care 

component of the consumer price index 

for all urban consumers. Accordingly, 

we have deleted specific references to 

the previous $100 and $1,000 threshold 

requirements. 

We have made two revisions to 

proposed § 405.906. In the proposed 

rule, we inadvertently omitted certain 

nonparticipating suppliers as potential 

parties to an initial determination. The 

interim final rule corrects that error by 

specifying under § 405.906(a)(2) that a 

nonparticipating supplier who has 

accepted assignment can be a party to 

an initial determination. 

Also, consistent with section 1870(h) 

of the Act, as amended by section 939(a) 

of the MMA, we have added a 

conforming provision to § 405.906(c) 

concerning parties to appeals. Where a 

provider or supplier is not already a 

party, revised § 405.906(c) permits the 

provider or supplier to appeal an initial 

determination relating to services it 

rendered to a beneficiary who 

subsequently dies. This provision is 

intended to give appeal rights to 

nonparticipating suppliers who are not 

considered parties to the initial 

determination and who may not have 

secured an assignment of appeal rights 

from the beneficiary. 

Comment: Several commenters sought 

clarification on whether the intent of the 

proposed rule was to give party status 

to providers on the basis of a ‘‘technical 

denial.’’ (A technical denial is a denial 

based on an item or service failing to 

meet all of the requirements of a 

Medicare-covered benefit, rather than 

on a determination that an item or 

service is not reasonable and necessary 

under section 1862(a)(1)(A) of the Act, 

or on a determination that an item or 

service constitutes custodial care.) Many 

interpreted the proposed rule as 

maintaining the current policy that 

providers do not have appeal rights for 

these types of denials. Other 

commenters believed that our intent 

was to allow providers to appeal to the 

same extent as beneficiaries and agreed 

with the proposal. Still other 

commenters questioned whether the 

change in policy to expand appeal rights 

for providers would mean that 

contractors would no longer deny 

claims because the claims failed to meet 

the requirements of the Medicare 

benefit. 

Response: A provider or supplier can 

appeal a properly submitted claim only 

after the contractor has issued an initial 

determination on that claim. Thus, if a 

contractor rejects a claim because the 

claim was improperly submitted (for 

example, the claim was missing the 

basic information needed to process it), 

that rejection does not constitute an 

initial determination. 

Currently, § 405.710(b) allows a 

provider to appeal an initial 

determination on Part A coverage only 

when a contractor determines: (1) That 

an item or service is not covered 

because it constitutes custodial care; (2) 

that an item or service is not covered 

because it did not qualify as covered 

home health services because the 

beneficiary was not confined to the 

home or did not need skilled nursing 

care on an intermittent basis; (3) that an 

item or service is not covered because 

it was a hospice service provided to a 

non-terminally ill individual; (4) that 

the item or service is not covered 

because it is not reasonable and 

necessary; and (5) either the beneficiary 

or provider of services, or both, knew, 

or could reasonably have been expected 

to know, that the item or service is 

excluded from Medicare coverage. 

Historically, only beneficiaries were 

afforded the right to appeal claims that 

were denied because the items or 

services failed to meet the requirements 

of the Medicare covered benefit (for 

example, a denial of home health 

services due to the lack of a physician 

certification). Despite this restriction, 

however, providers routinely accessed 

the appeals process by acting as the 

beneficiary’s appointed representative 

in situations where they would 

otherwise not have had appeal rights. 

As discussed in the proposed rule, a 

clear goal of the BIPA legislation was to 

establish a uniform appeals process for 

Part A and Part B claims, and thus for 

all beneficiaries, providers, and 

participating suppliers. In keeping with 

this goal, we believe that the interests of 

the appeals process would be best 

served by ensuring that providers are 

afforded an equal opportunity to be 

heard with regard to all Medicare initial 

determinations. Therefore, as proposed, 

we are specifying that Medicare 

providers may file administrative 

appeals of initial determinations to the 

same extent as beneficiaries. With this 

change, we achieve consistency in our 

approach to which individuals or 

entities can bring an appeal under Part 

A and Part B.

This interim final rule does not 

change the available bases for claim 

denials. Contractors may continue to 

deny claims on the basis that the item 

or service is not a Medicare benefit, or 

more precisely, that the item or service 

in question does not adhere to all the 

requirements set forth in the definition 

of the Medicare benefit. Rather, this 

interim final rule changes the appeals 

status of providers and participating 

suppliers, allowing them to appeal all 

denials on their own accord. 

Comment: One commenter requested 

clarification on whether a beneficiary 

can appeal even if the beneficiary has 

appointed a representative or initiated a 

valid assignment of appeal rights. The 

commenter expressed concern that 

under proposed § 405.906, any party to 

the initial determination can request a 

redetermination. A literal reading of this 

section would permit a beneficiary to 

pursue an appeal even if the beneficiary 

has an appointed representative or has 

assigned appeal rights to a provider or 

supplier. In addition, the commenter 

asked if beneficiaries could pursue an 

appeal at the same time as the provider. 

Response: The commenter raises two 

sets of issues: (1) The appeal rights of a 

beneficiary who has appointed a 

representative; and (2) the appeal rights 

of a beneficiary who has assigned these 

rights to a provider or supplier. 

Beneficiaries can either exercise their 

appeal rights themselves or through an 

appointed representative, or they can 

assign their appeal rights to the provider 

11428 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

or supplier that delivered the service or 

item. (We note that appointment of a 

representative and assignment of appeal 

rights are two different and unrelated 

actions.) Unlike assignment, 

appointment of a representative does 

not entail transferring one’s appeal 

rights, nor does it make the appointed 

representative a separate party to the 

appeal. An appointed representative is 

chosen by a party to assist a beneficiary 

in exercising appeal rights with respect 

to one or more initial determinations. 

The beneficiary retains party status 

during the appeals process, and 

therefore, never loses the right to appeal 

to subsequent levels of the appeals 

process. To avoid confusion regarding 

representation, either the beneficiary or 

the appointed representative (but not 

both the beneficiary and the appointed 

representative) should request the 

appeal. 

On the other hand, when a beneficiary 

completes a valid assignment of appeal 

rights, the beneficiary assigns appeal 

rights for the particular claim or claims 

to a provider or supplier who is not 

otherwise a party to the initial 

determination. If the beneficiary assigns 

appeal rights in accordance with 

§ 405.912(f), then the beneficiary 

transfers any right to request a 

redetermination, reconsideration, 

hearing, or MAC review with respect to 

the item or services at issue, unless the 

assignment is revoked in accordance 

with § 405.912(g). While it is not 

permissible for a beneficiary to file an 

appeal when a valid assignment of 

appeal rights is in force, it is possible for 

more than one party to file a request for 

an appeal on the same claim when no 

assignment of appeal rights has been 

made (for example, a beneficiary and a 

supplier that has accepted assignment of 

a claim). We are providing under 

§§ 405.944(c) and 405.964(c) that if 

more than one party timely files a 

request for redetermination or 

reconsideration on the same claim 

before a redetermination or 

reconsideration is made on the first 

timely filed request, the contractor or 

the QIC will consolidate the separate 

requests into one proceeding and issue 

one determination. These provisions are 

consistent with the longstanding policy 

that multiple parties have t he right to 

appeal the same claim. We note, 

however, that has been very rare for 

more than one party to exercise this 

right. 

Comment: One commenter pointed 

out that § 405.906(a)(1) lists a 

beneficiary who has filed a claim for 

payment or has had a claim for payment 

filed as a party to the initial 

determination. The commenter 

suggested that we revise this provision 

since beneficiaries in most instances do 

not file claims. 

Response: As a general rule, we 

require providers and suppliers to 

submit claims to seek reimbursement for 

items or services that they have 

delivered to beneficiaries. Thus, 

beneficiaries generally do not need to 

file claims, but they continue to have 

the right to do so. (In some situations, 

however, beneficiaries are prohibited 

from filing claims on their own, such as 

for glucose test strips.) Accordingly, we 

believe that it is necessary to maintain 

this language in the interim final rule to 

accommodate those rare instances 

where beneficiaries may submit claims 

(for example, because a supplier 

improperly refuses or fails to submit a 

timely claim with Medicare for 

reimbursement). For clarity, we have 

added § 405.926(n) and § 405.926(o) to 

reflect that a provider or supplier’s 

failure to request an initial 

determination or submit a timely claim 

does not constitute an initial 

determination, and that determinations 

with respect to whether an entity 

qualifies for an exception to the 

electronic claims submission 

requirement under 42 CFR, part 424, are 

not considered initial determinations.

2. Medicaid State Agencies (§ 405.908) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Medicaid State Agencies’’ at the 

beginning of your comments.]

In the proposed rule, we drafted a 

separate provision acknowledging the 

right of a Medicaid State Agency to 

pursue an appeal on behalf of a 

beneficiary who is entitled to benefits 

under both Medicare and Medicaid. We 

proposed that a Medicaid State Agency 

would not be considered a party, unless 

the agency actually pursued a 

redetermination on behalf of a dually 

eligible beneficiary. A contractor would 

not automatically send a Medicaid State 

Agency notice of determinations made 

during the administrative appeals 

process, nor would the agency be 

permitted to request QIC 

reconsiderations, ALJ hearings or MAC 

reviews, unless the agency actually filed 

a request for redetermination for a 

beneficiary. If a Medicaid State Agency 

filed a request for a redetermination, it 

would retain party status for the claim 

throughout the rest of the appeals 

process. 

Comment: With regard to a Medicaid 

State Agency filing an appeal on behalf 

of an individual that is entitled to both 

Medicare and Medicaid benefits, one 

commenter recommended that we 

clarify the definition of a dual eligible. 

Response: A dual eligible beneficiary 

is one who is eligible for and enrolled 

to receive benefits under both the 

Medicare and Medicaid programs. To 

clarify this concept, we have replaced 

the proposed text ‘‘dually eligible for 

Medicare and Medicaid’’ in § 405.908. 

Instead, the text now states that ‘‘[w]hen 

a beneficiary is enrolled to receive 

benefits under both Medicare and 

Medicaid, the Medicaid State Agency 

may file a request for an appeal with 

respect to a claim for items or services 

furnished to a dual eligible beneficiary.’’

We note that we further clarified in this 

provision that the Medicaid State 

Agency’s appeal is only with respect to 

services for which has made payment or 

for which it may be liable. 

Comment: A commenter 

recommended that we clarify what 

qualifies as a timely filed 

redetermination request under 

§ 405.908. 

Response: A request for a 

redetermination by a Medicaid State 

Agency will be considered timely if it 

meets the requirements at § 405.942. 

Section 405.942(a) specifies that a 

request for a redetermination must be 

filed within 120 calendar days from the 

date the party receives the notice of the 

initial determination. Although the 

Medicaid State Agency is not a party to 

the initial determination, it is filing a 

redetermination request with respect to 

a claim for items and services furnished 

to a beneficiary. Therefore, the 

timeliness of the request will be 

determined by the date that the 

beneficiary receives the initial 

determination notice, otherwise known 

as the Medicare Summary Notice 

(MSN). For purposes of calculating the 

date of receipt of the MSN under 

§ 405.942(a)(1), it is presumed that the 

beneficiary received the MSN 5 days 

after the date on the MSN, unless there 

is evidence to the contrary. 

3. Appointed Representatives 

(§ 405.910) 

[If you would like to comment on issues 

in this section, please include the 

caption ‘‘Appointed Representatives’’ at 

the beginning of your comments.]

Under proposed § 405.910, we 

incorporated and modified several of 

the provisions in 20 CFR part 404, 

subpart R, and 42 CFR part 405, 

subparts G and H, as they relate to the 

representation of parties. These 

provisions eliminated the need for 

incorporation of the existing SSA 

regulations regarding appointment of 

representatives. 

Proposed § 405.910(a) sets forth the 

definition of appointed representative as 

an individual authorized by a party, or 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11429

under State law, to act on the party’s 

behalf in dealing with any of the levels 

of the appeals process. Appointed 

representatives do not have 

independent party status and take 

action only on behalf of the individual 

or entity they represent. 

Under proposed § 405.910(d), we set 

forth that in order to be valid, an 

appointment both needs to be in 

writing, and signed by the party making 

the appointment and the individual 

agreeing to accept the appointment 

(even when the individual being 

appointed is an attorney). Proposed 

section § 405.910(e) establishes the time 

frame governing the duration of 

representation as: (1) The life of an 

individual appeal, and (2) for purposes 

of appeals of other initial 

determinations, one year from its 

original effectuation.

New section 1869(b)(1)(B)(iv) of the 

Act makes clear that section 206(a)(4) 

does not apply in the case of Medicare 

appeals. This section permits the award 

of attorney’s fees (not to exceed 25 

percent) from a claimant’s entitlement 

to past-due disability benefits. 

Therefore, in proposed § 405.910(f), we 

are explicit that no award of attorney 

fees can be made against the Medicare 

trust funds. However, we requested 

comments on petitions to ALJs to review 

and approve attorney fees. 

In proposed § 405.910(g) through 

§ 405.910(k), we delineated the 

responsibilities and rights of an 

appointed representative. In proposed 

§ 405.910(l), we established the rules 

regarding delegation. (Delegation is the 

act of empowering another to act as a 

representative.) In order for an 

appointed representative to designate 

another person to act as a representative 

(the designee), the appointed 

representative must: (1) Give the 

designee’s name to the party; (2) secure 

the designee’s acceptance of both the 

representation and the requirements of 

that representation; and (3) secure the 

represented party’s acceptance of the 

new arrangement with a signed, written 

document. We note that the decision on 

whether to have an appointed 

representative belongs to the party, and 

we neither encourage nor discourage 

representation. Therefore, under 

proposed § 405.910(m), a party would 

have the ability to revoke an 

appointment for any reason, at any time. 

Comment: A commenter suggested 

amending the regulation to require that 

appointed representatives for providers 

be members of the bar. However, this 

commenter also recommended 

permitting non-attorneys to act as 

representatives for beneficiaries, but 

only if these representatives waived 

receipt of a fee for their services. 

Response: Section 1869(b)(1)(B)(iv) of 

the Act establishes that the 

requirements set out in sections 205(j) 

and 206 of the Act govern who may 

serve as a representative for a Medicare 

beneficiary. Section 405.910 of the 

regulations permits anyone who 

satisfies the requirements outlined in 

section 205(j)(2) to act as a 

representative. The provisions of 

§ 405.910(b) discuss persons not 

qualified to act as an appointed 

representative. Nothing in section 

205(j)(2) requires appointed 

representatives to be members of the 

bar. Therefore, we do not agree that it 

is appropriate or necessary to limit 

providers’ access to the administrative 

appeals process by requiring them to 

retain attorneys if they wish to appoint 

a representative. 

Similarly, there is nothing in section 

205(j)(2) that requires non-attorneys 

who represent beneficiaries to waive 

their fees. However, we agree with the 

commenter that certain precautions be 

taken to prevent a conflict of interest 

when the party that provides an item or 

service is the same party representing 

the beneficiary in a claim appeal. 

Therefore, in accordance with section 

1869(b)(1)(B)(iii) of the Act, new 

§ 405.910(f)(3) requires that a provider 

or supplier who both furnished the 

service being appealed and represents 

the beneficiary in the Medicare claim 

appeal, must waive the right to collect 

a fee for acting as the appointed 

representative. Additionally, if the 

appeal involves a question of liability 

under section 1879 of the Act, the 

provider or supplier may not represent 

the beneficiary unless the provider or 

supplier also waives the right to collect 

payment for the item or service at issue. 

Comment: We solicited comments on 

our proposal to require attorneys to 

petition ALJs for review and approval of 

fees. A few commenters suggested that 

appointed representatives who are 

members of the bar of one of the fifty 

States, the District of Columbia, or 

Puerto Rico, not be required to petition 

an ALJ in order to collect a fee. Instead, 

one commenter suggested that oversight 

should be left to the bar of which the 

attorney is a member. 

There were also a number of 

comments regarding the ability of 

appointed representatives to charge fees. 

The commenters noted that the 

proposed rule addressed only fees 

charged by attorney representatives, and 

recommended that we address fees for 

non-attorneys in this interim final rule. 

One commenter recommended that the 

final rule include explicit language 

requiring non-attorney representatives 

to waive any right to charge and receive 

a fee. Finally, other commenters 

inquired about the applicability of the 

Equal Access to Justice Act (EAJA) to 

the new appeals process and 

recommended that the final rule 

reference the availability of attorney’s 

fees.

Response: Section 1869(b)(1)(B)(iv) of 

the Act establishes that the provisions of 

sections 205(j) and 206 (other than 

subsection (a)(4)) of the Act apply to 

representation for Medicare claim 

appeals in the same manner as they 

apply to representation for Social 

Security claims. By incorporating these 

sections, the Congress maintained that 

for appeals before the Secretary, 

appointed representatives, including 

attorneys, must obtain approval of fees 

before charging a party. 

Consistent with the current practice of 

fee petitions before ALJs, and sections 

205(j) and 206 (other than subsection 

(a)(4)) of the Act, as applied by section 

1869(b)(1)(B)(iv) of the Act, we are 

requiring in new § 405.910(f)(1) that an 

attorney or other person who represents 

a beneficiary, and who wishes to charge 

a fee for services rendered in connection 

with an appeal before the Secretary, 

must seek approval of the fee from the 

Secretary. Although it would be up to 

the Secretary to determine the 

reasonableness of the fee, we do not 

believe the provisions in sections 

206(a)(2) and 206(a)(3) of the Act will be 

relevant in determining whether a fee is 

reasonable. In Social Security appeals, 

those provisions limit a representative’s 

fee, in certain instances, to the lesser of 

25 percent of past due benefits or $4,000 

(with the $4,000 cap subject to an 

update factor determined by the 

Commissioner of Social Security). 

Unlike Social Security appeals, 

Medicare appeals do not involve pastdue cash benefits; moreover, the 

benefits at issue can vary from as little 

as $100 (the minimum amount in 

controversy for an ALJ appeal) to 

$100,000 or more, and we do not believe 

that applying a 25 percent test to these 

divergent figures is reasonable. 

Therefore, the test in sections 206(a)(2) 

and 206(a)(3) of the Act is irrelevant in 

determining the reasonableness of 

representatives’ fees. Also, section 

206(a)(4) does not apply, because the 

Medicare program does not involve 

past-due cash benefits. The process for 

obtaining fee approval will be further 

described either in future rulemaking or 

in ALJ and MAC level procedural 

manuals or other issuances, as 

appropriate. 

We do not consider services below the 

ALJ hearing level in connection with 

11430 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

claims in proceedings before Medicare 

contractors (such as intermediaries, 

carriers, QICs, QIOs and other 

independent review entities) to be 

services provided in connection with 

proceedings before the Secretary. 

Section 206(a) authorizes the 

Commissioner of Social Security to 

prescribe rules and regulations to 

govern the representation of claimants 

in proceedings before the 

Commissioner. This provision has been 

interpreted to include proceedings at 

the ALJ level and above. Thus, appeals 

before the Secretary of HHS have long 

been interpreted to include only the ALJ 

level and above. Therefore, the fee 

petition provisions do not apply to 

services rendered below the ALJ hearing 

level, nor do they apply to 

representatives of non-beneficiary 

appellants. 

We also agree that fee limitations are 

appropriate for certain non-attorneys 

who represent beneficiaries. 

Accordingly, § 405.910(f)(3) requires 

providers and suppliers who furnished 

the items or services in question to 

waive the right to charge and collect any 

fee for representing a beneficiary in a 

claim appeal. This is required by section 

1869(b)(1)(B)(iii) of the Act. To ensure 

that this policy is followed consistently, 

we will revise the Appointment of 

Representative form, CMS–1696–U4, to 

reflect this policy. In § 405.910(f)(4), we 

also added that the Secretary does not 

review fee arrangements made by a 

beneficiary for the purposes of making 

a claim for third party payment (as 

defined in 42 CFR § 411.21) even though 

that representation may ultimately 

include representation for a Medicare 

Secondary Payer recovery claim. 

Guidelines for the application of 

Equal Access to Justice Act (EAJA) to 

claims before the Department may be 

found at 45 CFR part 13. (The final rule 

was published in the Federal Register at 

69 FR 2843 (January 21, 2004)). The 

final rule governs the applicability of 

EAJA to the Medicare claim appeals 

process. The Department intends to 

review the EAJA provisions to 

determine what, if any, amendments 

may be necessary to reflect the changes 

being implemented in this regulation. 

Comment: A commenter asked what, 

if anything, are the consequences of 

failing to satisfy all seven of the 

requirements set out in proposed 

§ 405.910(d) for making out a valid 

appointment. 

Response: All of the requirements in 

new § 405.910(c) are necessary to 

complete a valid appointment of 

representation. To clarify this matter, 

we are specifying under new 

§ 405.910(d) that if any of the required 

elements are missing or defective, 

adjudicators must contact the party with 

a description of the missing 

documentation or information. Unless 

the defect is cured, the prospective 

appointed representative lacks the 

authority to act on behalf of the party, 

and is not entitled to obtain or receive 

any information related to the appeal, 

including the appeal decision. An 

individual may also use a CMS–1696 

form to appoint a representative. That 

form contains all of the required 

elements to complete a valid 

appointment of representation. 

Comment: We received several 

responses to our request for comments 

regarding alternative time frames for the 

duration of an appointment of 

representative. Some commenters 

simply wanted clarification of the 

policy in the proposed rule. Others 

understood our proposal to make 

appointments valid for one year, but 

wondered if the one-year period began 

on the date-of-service for the appealed 

claim, or on the date that the 

beneficiary, provider or supplier 

authorized another individual to appeal 

on their behalf. One commenter argued 

that because we offered no indication 

that representatives were initiating 

appeals without the consent of the 

appellants, limiting the duration of 

appointments would serve only to 

create unnecessary hardships for 

appellants. Providers, and suppliers 

would be prevented or delayed from 

entering the claim appeals process, and 

beneficiaries with chronic conditions 

would be required to renew the 

appointment every year.

Response: A number of the comments 

that we received indicate some 

confusion between the appointed 

representative provisions at § 405.910 

and the assignment provisions at 

§ 405.912. Appointing a representative 

and assigning appeal rights are two 

different and unrelated actions under 

the new appeals process. Beneficiaries 

have the option of either assigning their 

appeal rights to a provider or supplier, 

or appointing a representative to 

exercise their appeal rights for them. 

Under the assignment provision, a 

beneficiary transfers his or her right to 

appeal a specific claim or claims to a 

provider or supplier who is not already 

a party to the initial determination. In 

doing so, the beneficiary completely 

relinquishes any right to appeal the 

claim or claims at issue and the 

provider or supplier becomes a party 

and may appeal. 

Appointing a representative, however, 

does not transfer a party’s appeal rights, 

nor does it make the appointed 

representative a party to the appeal. An 

appointed representative is chosen by a 

party for the duration of one year to 

assist the party in exercising appeal 

rights for one or more initial 

determinations. We believe that once an 

appeal of an initial determination has 

been filed, the appointed representative 

retains the right to manage that appeal 

through the entire appeals process, 

regardless of how long it takes to reach 

a final decision. In § 405.910(e)(3), we 

state that unless revoked, an 

appointment is valid for the life of the 

appeal. 

In § 405.910(e)(4), we made an 

exception for appointments signed in 

connection with Medicare Secondary 

Payer recovery claims, because liability, 

no-fault, and worker’s compensation 

claims often take more than one year to 

resolve. Where an appointment of 

representative is related to these 

recovery claims, the appointment is 

valid from the date that it is signed 

through the duration of any subsequent 

appeal. 

We do not agree that either an 

appointment or the representative’s 

ability to file appeals of future claims 

continues indefinitely. Appointed 

representatives have unlimited access to 

protected health care information, and 

as we stated in the proposed rule, we 

have an affirmative duty to ensure that 

our adjudicators only disclose protected 

health information to authorized third 

parties. Taking this into consideration, 

we believe that it is both necessary and 

appropriate to limit the duration of an 

appointment and a representative’s 

ability to file additional appeals to a 

period of one year, beginning on the day 

that the appointment becomes effective. 

In § 405.910(i)(4), we specifiy that for 

initial determinations involving MSP 

recovery issues, the notice of initial 

determination must be sent to the 

beneficiary and appointed 

representative. This differs from nonMSP determinations where only the 

beneficiary receives the notice of initial 

determination to prevent more than the 

minimum amount of personally 

identifiable health information from 

being disclosed. Unlike other notices of 

initial determination, which may 

include information on claims not at 

issue, MSP notices of initial 

determination are limited to include 

only the minimum necessary amount of 

information related to the claims at 

issue. 

Section 405.910(e)(1) clarifies that the 

effective date of the appointment is the 

day that the Appointment of 

Representative (AOR) form or other 

written instrument contains the 

signatures of both the party and 

appointed representative. Also, we are 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11431

requiring under § 405.910(e)(2) that 

during this one-year period, 

representatives must submit a copy of 

the signed and dated original 

appointment with each additional 

appeal that they file on behalf of the 

party. 

Finally, we made one other significant 

change to § 405.910. Although we 

proposed provisions in the context of 

appeals, we solicited comments on 

whether the appointment of 

representative procedures should apply 

for initial determination purposes as 

well. We did not receive comments on 

this issue, but we believe there is no 

reason to imply that different 

procedures or rules apply to initial 

determinations. Therefore, we have 

provided under § 405.910(a) of this 

interim final rule that the appointment 

of representative provisions apply for 

initial determinations, as well as for 

appeals. Also, under § 405.910(e)(3), an 

appointment signed in connection with 

the party’s efforts to request payment of 

a claim is valid from the date that 

appointment is signed for the duration 

of any subsequent appeal, unless the 

appointment is specifically revoked. 

When a contractor issues an initial 

determination, it sends a notice of that 

action only to the party, and not to the 

party’s appointed representative. 

Comment: One commenter was 

concerned about the inability of an 

appointed representative to delegate an 

appointment to another person without 

first obtaining the party’s signature. The 

commenter opined that requiring a 

beneficiary’s signature in order to 

delegate an appointment would greatly 

impede a beneficiary’s ability to receive 

timely representation. By way of 

example, the commenter noted that a 

signature requirement would prevent a 

family member acting as a 

representative for an incapacitated 

beneficiary from retaining an attorney or 

paralegal to represent the beneficiary in 

a Medicare claim appeal. Additionally, 

the commenter stated that the signature 

requirement would prevent appointed 

representatives who are members of a 

law firm or a legal services organization 

from designating a new representative 

within the firm or organization when 

program turnover or workload 

necessitated a change.

Response: Although we appreciate the 

administrative benefits to be gained 

from allowing an appointed 

representative to delegate an 

appointment to another individual, the 

privacy concerns that we noted 

previously seriously impact our ability 

to permit delegation in most instances. 

We believe that the benefits that are 

gained by ensuring that a beneficiary is 

made aware when an appointment has 

been delegated outweigh the burden of 

obtaining the beneficiary’s consent. We 

also do not believe that this requirement 

will greatly impede the beneficiary’s 

ability to receive timely representation. 

In the case where a beneficiary is no 

longer mentally capable of giving 

consent or signing the appointment of 

representative form, the family member 

or friend should refer to State law. As 

defined in § 405.902, an authorized 

representative is an individual 

authorized under State or other 

applicable law to act on behalf of a 

beneficiary or other party involved in 

the appeal. Unlike an appointed 

representative, an authorized 

representative ‘‘stands in the shoes’’ of 

the beneficiary. State requirements 

differ with respect to what is required 

to legally represent an incompetent 

beneficiary. Individuals appointed or 

designated under State statutes may act 

as authorized representatives. For 

example, some States have health care 

consent statutes providing for health 

care decision-making by surrogates on 

behalf of patients who lack advance 

directives and guardians. Other States 

have laws that grant authority to 

individuals with durable powers of 

attorney. In an emergency, a 

disinterested third party, such as a 

public guardianship agency, may be an 

authorized representative, for example, 

in a situation where the beneficiary’s 

inability to act has arisen suddenly (for 

example, a medical emergency, a 

traumatic accident, an emotionally 

traumatic incident, disabling drug 

interaction, or stroke), and there is no 

one who can be genuinely considered to 

be the beneficiary’s choice as his or her 

authorized representative. Thus, an 

individual who has legal authority 

under State law is able to make 

decisions on behalf of a beneficiary, 

including the ability to delegate the 

appointment to another person, without 

first obtaining the beneficiary’s 

signature. 

Attorneys in law firms and legal 

service organizations present a unique 

situation. As a general rule, attorneys 

within the same law firm already are 

obligated to observe strict 

confidentiality rules with respect to 

client information, and therefore, the 

common practice of delegating cases to 

other attorneys within the firm does not 

warrant privacy concerns. Thus, we 

believe it is appropriate to permit 

attorneys to delegate another attorney 

within the same firm or organization as 

a substitute representative. Section 

405.910(l)(2) is amended to reflect this 

policy. 

Comment: A commenter asked that 

we provide information on how to 

change an appointed representative 

during the appeals process. 

Response: As indicated in the 

proposed rule, we believe that the 

decision of whether to retain an 

appointed representative be left entirely 

to the party bringing the appeal. Section 

405.910(m) permits a party to revoke an 

appointment at any time and for any 

reason by submitting a signed, written 

statement to the entity processing the 

appeal. The revocation is effective once 

it is received by the entity hearing the 

appeal. The party can then appoint a 

new representative. 

4. Assignment of Appeal Rights 

(§ 405.912) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Assignment of Appeal Rights’’ at the 

beginning of your comments.]

Under proposed § 405.912, we created 

new regulatory procedures for the 

assignment of appeal rights by a 

beneficiary to a supplier or provider of 

services. We proposed that a provider or 

supplier that furnished the item or 

service at issue and that wanted to take 

assignment of a beneficiary’s appeal 

rights for a particular claim must waive 

any right to payment from the 

beneficiary in order to fully protect 

beneficiaries when their appeal rights 

are assigned. This does not prohibit the 

provider or supplier from recovery of 

any coinsurance or deductible or 

claiming payment in full where the 

beneficiary has signed an Advance 

Beneficiary Notice (ABN) accepting 

responsibility for payment. We 

proposed that the assignment be valid 

for the duration of the appeals process, 

but only for the items or services listed 

on the assignment form.

Comment: One commenter requested 

clarification on whether an assignment 

applies to an individual item or service, 

or to all items or services within an 

entire claim. The commenter believed 

that assigning different providers or 

suppliers for multiple items or services 

within a claim would be too confusing. 

Response: We do not believe that it is 

appropriate or necessary to require 

beneficiaries to relinquish their rights to 

appeal individual items or services. 

Consistent with our longstanding policy 

where we allow beneficiaries to appeal 

individual items or services within a 

single claim, § 405.912 permits 

beneficiaries to assign their appeal 

rights for individual items or services to 

providers and suppliers. We believe that 

this will not cause confusion since each 

claim originates from a single provider 

or supplier. The provider or supplier 

11432 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

needs to ensure that the assignment 

form includes the full range of items or 

services furnished on the date of 

service. 

Comment: One commenter expressed 

concern that obtaining assignment after 

services were provided would adversely 

affect providers with transient 

populations because their beneficiary 

contact information is usually for 

temporary residences. The commenter 

suggested that the assignment form be 

available to be signed at admission. 

Response: We understand the 

concerns of the commenter, and agree 

that the assignment form may be 

completed at admission. Section 

405.912(c) does not prevent a provider 

and beneficiary from being able to 

complete and execute the assignment at 

the time that the beneficiary receives 

services. When a provider needs to 

appeal an initial determination that 

denies payment for the services 

rendered, the provider can submit the 

previously signed assignment form with 

the request for redetermination. 

Comment: One commenter suggested 

that the regulation be clarified to ensure 

that the waiver of collection from the 

beneficiary applies even if the appeal is 

unsuccessful. 

Response: We agree that the 

regulation should be clarified to specify 

that the waiver of the right to collect 

payment by the assignee remains valid 

in the event of an unfavorable 

determination or decision. We have 

amended our proposed § 405.912(d)(1) 

to specify that the waiver remains in 

effect regardless of the outcome of the 

appeal decision. We have also taken the 

opportunity to correct an omission in 

§ 405.912(d)(1). The waiver of payment 

also remains in effect if the assignment 

is revoked under § 405.912(g)(2) or 

§ 405.912(g)(3). That is, if the assignee 

fails to file an appeal of an unfavorable 

decision or if an act or omission by the 

assignee is determined to be contrary to 

the financial interests of the beneficiary, 

the assignee will not be able to collect 

payment from the beneficiary. 

Comment: One commenter 

recommended that the waiver of the 

right to collect from the beneficiary 

apply regardless of whether there is an 

ABN in effect. The commenter 

expressed concern that a provider or 

supplier might be inclined to require a 

beneficiary to sign an ABN for any item 

or service in order to protect any future 

collection of payment. 

Response: We prohibit providers and 

suppliers from routinely issuing ABNs 

for all services. ABNs generally are 

issued only when the provider or 

supplier has reason to believe that 

Medicare is not likely to cover the 

furnished services. Thus, we are 

maintaining the provision at 

§ 405.912(d)(2) that an assignee that 

furnished the item or service is not 

prohibited from recovering payment 

when an ABN has been properly 

executed. We believe an alternative 

policy would create disincentives for 

providers and suppliers to bring appeals 

on behalf of beneficiaries when they 

believe Medicare is denying coverage 

improperly. If providers and suppliers 

are faced with the choice of appealing 

what they believe to be an erroneous 

denial or collecting from the beneficiary 

in the event of an unfavorable decision, 

they may simply decide to place the 

burden of appeal on the beneficiary. 

Comment: Some commenters raised 

concerns about our proposal to permit 

beneficiaries to revoke an assignment. 

One commenter recommended that 

assignment be irrevocable until the 

appeal is filed or the deadline for filing 

has expired in order to prevent a 

provider or supplier from wasting 

resources pursuing an appeal. The 

commenter suggested that we establish 

a time frame for a beneficiary to revoke 

an assignment. Another commenter 

requested that we define the specific 

circumstances that constitute 

abandonment. 

Response: We believe that it is 

unnecessary to establish a time frame to 

limit a beneficiary’s right to revoke an 

assignment. The inherent nature of an 

assignment protects the interests of a 

beneficiary since transferring the appeal 

rights to a provider or supplier 

precludes the provider or supplier from 

collecting payment from the beneficiary 

in the event of an unfavorable 

determination. We believe that 

beneficiaries will rarely revoke an 

assignment; therefore, the possibility of 

providers and suppliers unnecessarily 

pursuing appeals is remote. A somewhat 

more likely scenario involves 

abandonment, that is, inaction on the 

part of the assignee to undertake or 

proceed in the appeals process. Section 

405.912(g)(2) addresses this situation by 

specifying that an assignment may be 

revoked ‘‘[b]y abandonment if the 

assignee does not file an appeal of an 

unfavorable decision.’’

Comment: One commenter supported 

the use of a standardized form for 

assignment. The commenter suggested 

that the form include an explanation of 

assignment and what an assignee does 

for a beneficiary. The commenter also 

suggested that proposed § 405.912(d)(2) 

should be revised to reflect that the 

assignment may be executed by the 

beneficiary or his or her representative. 

Response: We agree with the 

commenter and are developing a 

standardized form for assignment, as 

required by section 1869(b)(1)(C) of the 

Act. This form, which has been 

consumer-tested with the beneficiary 

population, contains extensive 

information to assist beneficiaries in 

understanding the assignment and 

execution of their appeal rights. 

As mentioned in an earlier response, 

we added a definition of an ‘‘authorized 

representative’’ at § 405.902. Authorized 

representatives (for example, a legal 

guardian or someone with a power of 

attorney) possess all the rights 

associated with the appeals process to 

the same extent as beneficiaries. 

Therefore, we do not believe that it is 

necessary for new § 405.912(c)(2) to 

reflect that an authorized representative 

may execute an assignment of appeal 

rights on behalf of a beneficiary. 

Appointed representatives under 

§ 405.910, including attorneys, may 

assist the beneficiary or another party 

with Medicare appeals, but they do not 

have any other rights or responsibilities 

with respect to the beneficiary or 

another party, and may not sign 

documents as the beneficiary or party. 

Thus, an appointed representative may 

not assign appeal rights under § 405.912 

without the beneficiary’s or other 

party’s consent.

5. Initial Determinations (§ 405.920 

Through § 405.928) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Initial Determinations’’ at the 

beginning of your comments.]

Section 1869(a)(2)(A) of the Act 

establishes that for all claims other than 

clean claims (a clean claim is a claim 

that has no defect or impropriety), an 

initial determination must be 

concluded, and a notice of that 

determination must be mailed, by no 

later than 45 days after the carrier or 

fiscal intermediary receives the claim. 

We proposed that interest would not 

accrue on non-clean claims that were 

not adjudicated within 45 days. By 

definition, non-clean claims are often 

claims that require additional 

documentation, and therefore take 

additional time to process. 

With respect to clean claims, section 

1869(a)(2)(B) of the Act requires that 

interest accrues if clean claims are not 

processed within 30 days. This standard 

remains the same as specified in 

sections 1816(c)(2) and 1842(c)(2) of the 

Act. 

We proposed to continue to notify 

parties of the initial determination in 

writing. The proposed content of the 

notices included the basis for the 

determination and notification to the 

parties of their right to a 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11433

redetermination if they were dissatisfied 

with the outcome of the initial 

determination. Consistent with existing 

policy, the Remittance Advice (RA) and 

Medicare Summary Notice (MSN) 

would be used as a notice of initial 

determination. 

We also proposed the types of actions 

that constitute initial determinations, as 

well as those that do not constitute 

initial determinations. We generally 

proposed to maintain the existing 

policies concerning initial 

determinations, while at the same time 

unifying the Part A and Part B rules. We 

have also included examples specific to 

Medicare Secondary Payer situations in 

listing the type of actions that constitute 

initial determinations. We specified our 

longstanding policy that SSA will 

continue to make Part A and Part B 

entitlement and enrollment 

determinations. As noted previously in 

section I.C.1 of this interim final rule, 

section 931 of the MMA requires the 

transfer of ALJ hearing functions from 

SSA to HHS. Although SSA will 

continue to make Part A and Part B 

entitlement and enrollment 

determinations and reconsiderations 

subject to the requirements set out at 20 

CFR Part 404, Subpart J, HHS will be 

responsible for reviewing entitlement 

and enrollment decisions at the ALJ and 

MAC levels. We note, however, that this 

regulation does not provide the specific 

procedural requirements that will apply 

to the adjudication of entitlement 

appeals. These instructions will instead 

be provided separately once this interim 

final rule is published. We believe that 

this approach will ensure that 

beneficiaries, providers, suppliers, and 

other interested parties receive clear 

guidance regarding the procedures for 

appealing an entitlement determination 

at each level of the appeals process. 

We addressed the circumstances 

under which an appeal can be filed 

when a beneficiary disputes the 

computation of coinsurance amounts. 

Previously, our rules stated that 

beneficiaries could appeal Medicare 

determinations regarding the 

‘‘application of the coinsurance 

feature.’’ We clarified this provision to 

state that the contractor’s ‘‘computation 

of coinsurance’’ was considered an 

initial determination, and therefore, 

could be appealed. In making this 

proposal, we considered that for most 

Part B services, beneficiaries were 

responsible for a 20 percent coinsurance 

payment and, since the contractor 

calculated the percentage, a beneficiary 

should be able to appeal the contractor’s 

computation. In instances where the 

coinsurance amount was not computed 

by the contractor, but rather, was an 

amount prescribed by regulation (for 

example, outpatient services), the issue 

of the appropriateness of the 

coinsurance amount was not appealable 

since it was an automatically calculated 

amount based directly on a fee schedule 

exempt from review. 

We also specified that there be no 

administrative appeal rights available 

for certain aspects of initial 

determinations. For example, under 

section 1833(t) of the Social Security 

Act (the Act), administrative appeals are 

prohibited for issues involving the 

calculation of coinsurance amounts for 

outpatient services subject to 

prospective payment rules, and under 

section 1848(i) of the Act, the values 

used to calculate allowable amounts 

under the physician fee schedule may 

not be the subject of an administrative 

appeal. Additionally, we proposed some 

further examples of actions that are not 

initial determinations, such as waiver of 

interest determinations and certain 

Medicare Secondary Payer actions.

Comment: One commenter suggested 

that the initial determination notice 

contain more details about requesting a 

redetermination, such as the 

documentation needed to pursue an 

appeal. The commenter recommended 

that the notice give exact citations for 

the rules and policies upon which the 

determination is based and explain how 

to obtain them. The commenter also 

suggested that the notice include a toll 

free number that appellants can call to 

receive copies of coverage rules and 

policies. 

Response: We agree with the 

commenter that initial determination 

notices contain information necessary 

for beneficiaries to initiate appeals. 

However, we believe that existing notice 

requirements are fully compatible with 

this objective, and we do not believe 

that additional detail is appropriate. 

Currently, beneficiaries receive initial 

determination notices through the 

Medicare Summary Notice (MSN), and 

providers and suppliers receive notices 

on the Remittance Advice (RA). The 

MSN is a consumer-tested, customerfriendly monthly statement that lists all 

of the services or supplies billed to 

Medicare during a 30-day period. It 

contains information about requesting 

an appeal on the bottom of the last page 

and at the back of each page. The MSN 

indicates the date that an appeal must 

be filed in order for it to be considered 

timely. The MSN also allows 

beneficiaries to appeal by circling an 

item, explaining why they disagree, and 

signing and sending the notice, or a 

copy of the notice, to a specified 

address. 

We also agree with the commenter 

that MSNs indicate when the basis for 

a claim denial involves a local or 

national coverage determination. 

Effective during 2003, CMS now 

requires fiscal intermediaries and 

carriers to provide references to 

coverage policies when they describe 

the basis for claim denials. However, 

based on nationwide testing of Medicare 

beneficiary focus groups, CMS does not 

include regulatory citations in MSNs 

because they are confusing to 

beneficiaries. We believe that referring 

to a local or national coverage 

determination is more meaningful to 

beneficiaries in helping them 

understand the reason their claim has 

been denied. 

The MSN contains the Medicare tollfree number so that beneficiaries can 

obtain information about various 

aspects of the Medicare program, 

including individual claim 

determinations. Beneficiaries can also 

use the toll-free number to request a 

copy of the coverage rule or policy used 

as the basis to deny a claim, or they may 

access the policies via the Internet. 

Thus, in light of the information 

already contained in MSNs, we do not 

believe that it is necessary to modify the 

initial determination notices sent to 

beneficiaries. However, we believe it is 

appropriate to include in the regulations 

the explicit notice requirements that are 

set forth under section 933(c)(1) of the 

MMA. Therefore, § 405.921(a)(1) 

specifies that contractors must write the 

MSNs in a manner calculated to be 

understood by the beneficiary. We have 

also set forth the statutory content 

requirements as to the contents of the 

notice in § 405.921(a)(2). That is, the 

notice must contain the reasons for the 

determination, including whether a 

local medical review policy, local 

coverage determination, or national 

coverage determination was applied, the 

procedures for obtaining additional 

information concerning the 

determination, such as the specific 

provision of the policy, manual, law, or 

regulation used in making the 

determination, and notification to the 

parties of their right to a 

redetermination if they are dissatisfied 

with the outcome of the initial 

determination. The notice also must 

include instructions on how to request 

a redetermination. Again, we believe 

that the existing MSNs meet all the new 

MMA requirements and have codified 

these beneficiary notice requirements in 

§ 405.921(a). Furthermore, although the 

statutory requirements apply only with 

respect to beneficiary notices, we have 

adopted very similar requirements for 

notices to providers and suppliers under 

11434 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

§ 405.921(b). The format and content 

requirements adopted as the national 

standard for remittance advice 

transactions under HIPAA and the 

corresponding CMS requirements for 

electronic and paper remittance advice 

notices already require use of messages 

or codes to explain initial 

determinations, and the reasons for any 

full or partial denial decisions that 

apply to services on a claim, as well as 

the appeal rights in relation to the 

decision. Thus, the MMA requirements 

for beneficiary notices are generally 

already in use in the remittance advice 

notices to providers and suppliers.

Finally, we note that contractors will 

issue MSNs to beneficiaries only, and 

not to appointed representatives or 

assignees. Throughout § 405.910, we 

have reinforced the concept that 

appointed representatives have the same 

right as beneficiaries to receive 

information on claims only after an 

appeal has been filed. Consistent with 

HIPAA, a contractor may not disclose 

protected health information without a 

valid appointment. MSNs encompass a 

range of health services and supplies 

that were billed to Medicare within a 

30-day period. Because an appointed 

representative may not have authority to 

receive information on all such services 

or supplies, we believe that it is 

appropriate for contractors to 

disseminate MSNs only to beneficiaries. 

Furthermore, we believe that it is 

unnecessary to incur the substantial 

costs to modify the standard systems to 

generate MSNs to appointed 

representatives. 

Comment: We received several 

comments regarding procedures that 

should be established when contractors 

do not meet the statutory deadlines for 

making initial determinations. Section 

521 of BIPA maintains the existing 30-

day time frame for 95 percent of clean 

claims under sections 1816(c)(2) and 

1842(c)(2) of the Act, and establishes a 

45-day time frame for claims that are 

defective or require special treatment or 

substantiating documentation. Some 

commenters believe that we should 

create an escalation provision for initial 

determinations similar to the escalation 

provisions required by statute for QIC 

reconsiderations, ALJ hearings and 

MAC reviews. This would enable 

parties to proceed to the 

redetermination level of the appeals 

process when contractors fail to meet 

the 45-day statutory time frame. One 

commenter recommended that when the 

contractor fails to make an initial 

determination within 45 days, the claim 

bypasses the redetermination level and 

advances to the reconsideration level. 

Some commenters argued for 

contractor penalties such as strict 

contractor evaluations, sanctions, or 

non-renewal of contracts based on 

noncompliance beyond a reasonable 

threshold. These commenters believed 

that any exceptions to the 45-day rule 

should be narrow. Other commenters 

urged us to assess interest penalties for 

non-clean claims that would mirror the 

provision for clean claims. Still other 

commenters thought that the 45-day 

time frame for non-clean claims might 

be too stringent and that we should set 

up specific, achievable time frames with 

appropriate penalties to ensure 

compliance. 

Response: We understand the 

commenters’ concerns regarding the 

need for contractors to process claims 

timely and pay them promptly. It is also 

important that contractors employ 

appropriate medical review strategies to 

ensure the appropriate payment of 

billed claims. When a contractor 

undertakes medical review on a claim, 

it is not always possible to pay within 

45 days, particularly if a provider or 

supplier does not submit the additional 

documentation requested in a timely 

manner. We believe that protecting the 

Medicare Trust Funds through medical 

review of certain questionable claims 

that are flagged by our system edits is 

preferable to making inappropriate 

payments, absent proper evidence. We 

retain reputable independent third-party 

auditing firms to ensure that contractors 

are following all Medicare laws, rules, 

and regulations. 

In addition, we strongly believe that 

providers and suppliers play a vital role 

in the FIs’ and carriers’ ability to meet 

their decision-making time frames. If 

providers and suppliers submit clean 

claims, they can avoid the delays that 

are associated with processing nonclean claims. The more complete the 

claim is upon initial submission, the 

greater the ability of the Medicare 

contractor to process the claim quickly. 

Until a determination can be made, 

however, we continue to believe that no 

interest should accrue on non-clean 

claims. In addition, the Congress has 

authorized interest only in the case of 

clean, complete claims. 

We also believe that it would be 

inefficient and result in unnecessary 

costs to escalate undeveloped claims to 

the redetermination or reconsideration 

levels. These claims could not be 

reviewed or reconsidered because there 

would be no initial determination to 

review. Furthermore, the Congress 

weighed the merits of escalation and 

chose to implement that option only at 

the QIC level and above. 

Comment: A few commenters 

suggested that we define the terms 

‘‘non-clean’’ and ‘‘clean’’ in the context 

of claims. 

Response: As defined in sections 

1816(c)(2)(B)(i) and 1842(c)(2)(B)(i) of 

the Act, ‘‘[t]he term ‘‘clean’’ claim 

means a claim that has no defect or 

impropriety (including any lack of any 

required substantiating documentation) 

or particular circumstance requiring 

special treatment that prevents timely 

payment from being made on the 

claim.’’ Claims that do not meet this 

definition are considered ‘‘non-clean’’

claims. Since the term ‘‘clean claim’’ is 

clearly defined in statute, we are 

maintaining this definition as proposed 

in § 405.902. 

We have also included in § 405.902 

other statutory and regulatory 

definitions, such as, beneficiary, 

provider, supplier, carrier and fiscal 

intermediary. We did not define these 

terms in the proposed rule because they 

are defined in 42 CFR part 400. 

However, for the convenience of 

Medicare appellants, we have decided 

to provide definitions in this section as 

well. 

Comment: One commenter believed 

that we should clearly state whether a 

beneficiary who has paid for an item or 

service up front is entitled to any 

interest that would accrue if the 

contractor does not pay the clean claim 

within the statutory time frame, 

regardless of whether the claim was 

submitted by the beneficiary or on the 

beneficiary’s behalf. The commenter 

argued that in this situation, the 

beneficiary would suffer irreparable 

harm by the delay in processing the 

claim, as opposed to the provider or 

supplier, and paying interest to them 

would result in their unjust enrichment.

Response: In the agreement and 

attestation statement signed by a 

provider, the provider agrees not to 

charge beneficiaries for services for 

which beneficiaries are entitled to have 

payment made on their behalf by the 

Medicare program. In accordance with 

the provider participation agreement, 

the provider may only bill the 

beneficiary upfront for any unmet 

deductible and the applicable 

coinsurance. Therefore, institutional 

providers are always paid directly by 

the FI, including any applicable interest. 

Likewise, participating suppliers and 

suppliers who accept assignment are 

also precluded from charging the 

beneficiary more than the unmet 

deductible and the applicable 

coinsurance. If the supplier collects any 

additional payment from the beneficiary 

before submitting the claim, the 

supplier must show on the claim form 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11435

the amount collected. The carrier then 

will refund directly to the beneficiary 

the additional payment along with any 

applicable interest on the over collected 

amount. In situations where the 

supplier does not accept assignment on 

a claim, the carrier makes payment 

directly to the beneficiary and includes 

any applicable interest regardless of 

whether he or she paid the supplier upfront for the item or service. 

Comment: One commenter asserted 

that the proposed rule’s reference to 

SSA making initial determinations with 

regard to entitlement issues was 

incorrect. 

Response: We disagree with the 

commenter and maintain our 

longstanding policy that SSA makes 

initial determinations concerning 

applications for enrollment, as well as 

determinations regarding Part A and 

Part B entitlement. Consistent with our 

current regulations at 42 CFR 

§ 405.704(a)(3) and § 405.704(a)(4), we 

have also added language to 

§ 405.924(a)(3) to specify that an initial 

determination includes a denial of a 

request for withdrawal of an application 

for hospital or supplementary medical 

insurance or a denial of a request for 

cancellation of a request for withdrawal 

of an application for hospital or 

supplementary medical insurance. 

Section 405.904(a)(1) clarifies the 

jurisdictional authority of SSA and 

DHHS with respect to initial 

determinations and appeals for 

applications and entitlement issues. 

That is, SSA will continue to perform 

initial determinations and 

reconsiderations, and DHHS’’ ALJs and 

MAC will conduct hearings and 

reviews. As noted above, we intend to 

provide further guidance on how ALJs 

and the MAC will process entitlement 

appeals in separate instructions. 

Comment: We received a comment on 

whether proposed § 405.924(b)(13), 

which defines an initial determination 

as a determination having a current or 

potential effect on the amount of 

benefits to be paid, includes Resource 

Utilization Group (RUG) categories. The 

commenter asked that we clarify in the 

final rule that the appeal rights for RUG 

reclassifications established in CMS 

Transmittal A–00–08 are continued in 

the final rule. The commenter also 

believes that proposed § 405.906(a)(3) 

and § 405.940 appeared to grant 

providers the right to seek 

redeterminations when a RUG is down 

coded to another category. However, the 

commenter noted that this conflicted 

with the reopening provisions at 

§ 405.980, which seemed to suggest that 

all adjustments to claims must be 

handled through the reopenings 

process. 

Response: As the commenter points 

out, CMS Transmittal A–00–08, which 

is now in the Program Integrity Manual 

at Chapter 6, allows skilled nursing 

facilities (SNFs) to appeal denials based 

on section 1862(a)(1)(A) of the Act. 

Nothing in this interim final rule limits 

the right of appeal created by CMS 

Transmittal A–00–08. 

Although down coding a RUG 

category may be considered an initial 

determination under new 

§ 405.924(b)(12), if the down coding was 

alleged to be the result of a clerical error 

as defined in § 405.980(a)(3), then the 

request for appeal likely can be 

processed as a request for reopening. 

This approach is consistent with section 

937(a) of the MMA and the reopening 

provisions at § 405.980, whereby errors 

or omissions may be corrected without 

pursuing appeal. We note that, in this 

interim final rule, we have added a new 

section at § 405.927 regarding initial 

determinations that may be subject to 

the reopenings. 

We also note that we have added 

specific language to new 

§ 405.924(b)(13) to make it clear that the 

issue of whether a waiver of adjustment 

or recovery under sections 1870(b) and 

1870(c) of the Act is appropriate is an 

initial determination with respect to a 

provider, supplier, or beneficiary in the 

context of both non-Medicare Secondary 

Payer overpayments and Medicare 

Secondary Payer recovery claims.

Comment: One commenter questioned 

whether the amount of coinsurance 

owed under the outpatient prospective 

payment system (OPPS) would be 

considered an initial determination, 

given that § 405.924(b)(5) indicates that 

the computation of coinsurance 

amounts constitutes an initial 

determination. The commenter pointed 

out that § 405.926(b) states that 

‘‘coinsurance amounts prescribed by 

regulation for outpatient services under 

the prospective payment system’’ are 

not initial determinations. The 

commenter believed that section 

1833(t)(12) of the Act does not preclude 

administrative and judicial review of 

the computation of OPPS coinsurance 

amounts. 

Response: Section 4523(a) of the 

Balanced Budget Act of 1997 (BBA) 

amended section 1833 of the Act by 

adding subsection (t) which provides for 

the implementation of a prospective 

payment system (PPS) for outpatient 

services. Section 1833(t)(12) of the Act 

precludes administrative or judicial 

review of the calculation of the 

unadjusted coinsurance amount, as well 

as administrative or judicial review of 

coinsurance amounts directly premised 

on base amounts calculated pursuant to 

section 1833(t)(3) of the Act. Therefore, 

the unadjusted coinsurance amount 

under 1833(t)(3) of the Act is not an 

initial determination subject to any type 

of review. On the other hand, if a party 

believes that an item or service was 

incorrectly coded, leading to a higher 

coinsurance amount for that service, the 

party can challenge that determination 

in an appeal. 

Comment: One commenter argued 

that inherent reasonableness is an initial 

determination under proposed 

§ 405.924(b)(13) because it is an issue 

that has a present or potential effect on 

the amount of benefits to be paid under 

Part A or Part B. Another commenter 

believed that a party who is dissatisfied 

with an initial determination should be 

able to appeal a claim where the amount 

of payment was determined based on 

the application of an inherent 

reasonableness policy. 

Response: Sections 1842(b)(8) and 

1842(b)(9) of the Act authorize the 

Secretary to deviate from the payment 

methodologies prescribed in the Act if 

the application of those methodologies 

would result in a payment amount for 

a particular service or group of services 

that is determined to be grossly 

excessive or deficient, and therefore, is 

not inherently reasonable. Section 

1842(b)(8)(A)(i) of the Act requires the 

Secretary to describe in regulations the 

factors to be considered in determining 

an amount that is realistic and 

equitable. 

Furthermore, pursuant to section 

1842(b)(9) of the Act, before making any 

adjustment for inherent reasonableness, 

the Secretary is required to publish a 

notice of proposed determination in the 

Federal Register and allow no less than 

60 days for public comment on the 

proposed determination. The public 

comment period on proposed inherent 

reasonableness adjustments gives the 

public an opportunity to raise issues 

and concerns regarding these 

adjustments. All issues and concerns 

that the public raises are given full 

consideration, and a final determination 

is published before the actual 

adjustments in payments are made. Any 

adjustment would be broadly applicable 

to a given service or group of services, 

rather than just to an individual claim 

determination. Thus, we do not believe 

that the Congress intended for inherent 

reasonableness adjustments to payment 

amounts to constitute initial 

determinations that are subject to the 

appeals process. We have modified 

§ 405.926(c) to clarify this issue. 

We agree with the commenter that 

where the amount of payment on a 

11436 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

claim was determined based on an 

inherent reasonableness policy, this 

would result in an initial determination 

that is appealable. It is important to note 

the difference between an initial 

determination made on a specific claim, 

and the payment policy or methodology 

used to make that initial determination. 

The latter is not considered an 

appealable initial determination under 

this subpart. 

We have added six items that also do 

not constitute initial determinations 

under § 405.926. Under § 405.926(n), we 

incorporated CMS’’ longstanding policy 

that a finding that a provider or supplier 

failed to submit a claim, or failed to 

submit a timely claim, despite being 

requested to do so by the beneficiary or 

the beneficiary’s subrogee, does not 

constitute an initial determination, and 

would preclude the claim from being 

subject to the appeals process. Second, 

consistent with section 1893(f)(3)(A) of 

the Act, as amended by section 935(a) 

of the MMA, we have added a 

conforming provision at § 405.926(p) 

that determinations by the Secretary of 

sustained or high levels of payment 

errors are precluded from administrative 

or judicial review. Also, consistent with 

section 938(a) of the MMA, § 405.926(q) 

provides that a contractor’s prior 

determination related to coverage of 

physicians’ services is not subject to the 

administrative appeals process or 

judicial review. However, a negative 

determination would not prevent an 

individual from obtaining a service, 

seeking reimbursement and, in the event 

of a denied claim, appealing the denial 

under section 1869(b) of the Act. 

Finally, consistent with established 

policies, we have added three items at 

§ 405.926(o), § 405.926(r), and 

§ 405.926(s). Under § 405.926(o), 

determinations with respect to whether 

an entity qualifies for an exception to 

the electronic claims submission 

requirement under part 424 of this 

chapter are not initial determinations. 

Section 405.926’’ provides that requests 

for anticipated payment under the home 

health prospective payment system 

under § 409.43(c)(ii)(2) are not initial 

determinations. Lastly, claim 

submissions on forms or formats that are 

incomplete, invalid, or do not meet the 

requirements for a Medicare claim and 

are returned or rejected to the provider 

or supplier also do not constitute initial 

determinations. We welcome comments 

on these additions.

6. Redeterminations (§ 405.940 through 

§ 405.958) 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘Redeterminations’’ at the 

beginning of your comments.] 

a. Requesting and Filing a 

Redetermination Request 

In the proposed rule, we proposed to 

continue the policy of permitting parties 

to file their requests for a 

redetermination not only with the 

appropriate CMS contractor, as 

indicated on the notice of initial 

determination, but also at a local SSA or 

CMS office. In maintaining this policy 

for filing requests, we proposed that the 

date the redetermination request would 

be considered to be filed meant the date 

the contractor, SSA, or CMS received 

the request. Additionally, we specified 

that for purposes of issuing a 

redetermination, the date of timely 

filing would be considered as the date 

that the contractor responsible for the 

redetermination received the 

redetermination request. We proposed 

to allow extensions to the time frames 

for redetermination requests if a party 

showed good cause for missing the 120-

day deadline. In order to determine 

whether a party had shown good cause 

for missing the deadline, the contractor 

would consider: the circumstances that 

kept the party from making the request 

on time; whether the contractor’s 

actions misled the party; and whether 

the party had any physical, mental, 

educational, or language limitations that 

prevented the party from filing a timely 

request, or from understanding or 

knowing the need to file a timely 

request for redetermination. 

We also indicated that 

redetermination requests would need to 

be made in writing. Previously, Part B 

requests for review could be made by 

telephone; however, we proposed to 

eliminate telephone requests in order to 

provide a reliable record of the request, 

and to encourage the submission of 

evidence to support the request. We 

proposed that requests would need to be 

made using a standard CMS form. 

Alternatively, when not made on a CMS 

form, the request would need to contain 

all the elements listed in § 405.944(b), 

that is, the beneficiary’s name, Medicare 

health insurance claim (HIC) number, 

specific date of service, and 

identification of the item or service for 

which the party was requesting the 

redetermination, and the name and 

signature of the party or appointed 

representative. 

We solicited comments on alternative 

approaches that would be convenient 

and easy for appellants. We also 

proposed that a beneficiary or 

beneficiary’s appointed representative 

could continue to file a request for an 

appeal using the instructions on the 

MSN, that is, he or she could satisfy the 

requirements by circling an item on the 

MSN, signing the bottom of the MSN, 

and returning the MSN to the 

contractor. In situations where more 

than one party requested a 

redetermination on the same claim, we 

proposed that the contractor would 

consolidate the requests into one 

proceeding in order to avoid 

duplication. 

Comment: Several commenters 

suggested that we clarify the procedures 

for how fiscal intermediaries and 

carriers calculate and record the receipt 

date for redetermination requests. One 

commenter recommended that we 

establish that the receipt date is the date 

the request first arrives at the 

appropriate address. Another 

commenter objected to presuming that 

the receipt of the initial determination, 

which is used to calculate the time 

frame for a redetermination request, will 

be 5 days after the date of the initial 

determination notice. The commenter 

argued that often appellants receive 

initial determinations much later than 

the date on the notice. In some cases, 

the provider does not receive the initial 

determination until a month later. The 

commenter believed that 10 days would 

be a more realistic time frame for 

contractors to assume receipt and begin 

calculating whether a party met the 120-

day time frame for requesting a 

redetermination. 

A few commenters requested that we 

define ‘‘evidence to the contrary’’ of the 

presumed 5-day receipt date in order to 

prevent discrepancies in how different 

contractors handle requests for 

redeterminations. One commenter 

suggested that ‘‘evidence to the 

contrary’’ should be a receipt from a 

mail delivery service containing the 

date of delivery to the appropriate 

address. Another commenter asked 

whether a date stamp by the provider 

would be an acceptable way to verify 

the date of receipt of an initial 

determination. 

Response: We appreciate the concerns 

about calculating and recording the 

receipt date for appeal requests based on 

the delivery time for the initial 

determination notice. We agree that a 

uniform process needs to be used for 

calculating and recording the date of 

receipt of an appeal request. Thus, we 

proposed to incorporate into the 

regulations CMS’s clear, longstanding 

policy that the date of receipt is 

presumed to be 5 days after the date of 

the initial determination notice. We will 

carefully monitor our contractors to 

ensure that they calculate the time 

frames appropriately. If we determine 

that any additional instructions are 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11437

needed, we will provide them in 

manual instructions. 

We understand that in some cases the 

initial determination notice will be 

received later than 5 days from the date 

of the notice, which is why the 

regulations allow more than 5 days 

where there is evidence to the contrary. 

An example of evidence to the contrary 

would include a postmark date or a 

receipt from a mail service containing 

the date of delivery to the party. We do 

not believe it would be appropriate to 

attempt to include in regulations all the 

possible ways for a party to demonstrate 

when the party received an initial 

determination notice. Instead, we will 

allow adjudicators to exercise their 

discretion as to whether a party’s 

evidence demonstrates that the party 

received the initial determination 

beyond 5 days from the date on the 

notice. Finally, we note that 120 days is 

a significant amount of time for a party 

to file an appeal and that appellants also 

have an opportunity to request an 

extension of this deadline; thus, we 

believe that the calculation of the 

receipt date for appeal requests based on 

the prevailing 5-day standard will not 

pose an undue hardship for most 

appellants.

Comment: One commenter requested 

clarification on whether adjudicators 

could request appellants to provide 

proof to support good cause for failing 

to file an appeal within the allotted time 

frame. 

Response: Adjudicators may request 

appellants to provide supporting 

documentation that demonstrates that 

they have good cause for filing an 

appeal beyond the deadline. We 

strongly encourage appellants to 

provide supporting documentation 

when requesting a contractor, QIC, ALJ, 

or the MAC to consider good cause for 

filing an appeal late. In fact, an 

adjudicator can summarily dismiss a 

request made on the basis of good cause 

when there is no evidence to support 

the request. 

Comment: Some commenters raised 

objections to beginning the decisionmaking time frame on the date that the 

contractor received the redetermination 

request if an appellant filed an appeal 

at an alternative location. One 

commenter agreed with this approach, 

but indicated it would be difficult for 

appellants to know when the time frame 

for making a decision started. The 

commenter suggested that we add a 

requirement that the contractor notify 

the appellant when the request has been 

received and the date the time frame 

began. Another commenter suggested 

that we establish a definitive deadline 

by which an appeal would be presumed 

received by the appropriate contractor 

for purposes of tracking the adjudication 

time frame. The commenter thought that 

an appellant should be able to presume 

that a contractor received a request 

within 60 days; and therefore, the 

appellant should expect a decision 

within 90 days. Another commenter 

suggested that CMS develop a webbased system for local SSA, CMS or 

contractor staff to enter and 

immediately transmit the request to the 

appropriate adjudicator. A few 

commenters believed that the delayed 

decision-making time frame penalized 

beneficiaries for something that was 

beyond their control. They argued that 

the policy would be unfair to 

beneficiaries because they would not 

receive a timely decision when they 

used an alternative filing location. 

Response: We recognize the 

commenters’ concerns about the 

confusion and potential delays involved 

in transmitting requests filed at 

alternative locations to the appropriate 

contractor. Further, as noted above, 

under section 931 of the MMA, SSA’s 

role in the Medicare claims appeal 

process will end with the impending 

transfer of the ALJ function from SSA to 

DHHS no later than October 1, 2005. In 

view of the reduced role of SSA in the 

processing of Medicare appeals, we do 

not believe it is appropriate to specify 

in the regulations that appeals may be 

filed at SSA offices. We have revised 

§ 405.942(a) to eliminate the reference to 

alternative filing locations. We believe 

that directing appellants to only one 

filing location will reduce confusion 

and eliminate the potential delay in 

transmitting the request. We will also 

allow an extension to the filing deadline 

when a party, in good faith, sends a 

request to a government agency within 

the time period to file and the request 

does not reach the appropriate 

contractor until after the time period to 

file expires.

The elimination of alternative 

locations will obviate any routine need 

for notices informing appellants of the 

date of receipt at the adjudicating 

contractor. Given the elimination of 

alternative filing locations, we think it 

would be unnecessarily burdensome on 

contractors to notify all appellants of the 

receipt date, given that it could be easily 

calculated to within a few days. In 

addition, we are actively exploring the 

development of a web-based system that 

would permit appellants to access realtime information about the status of 

their appeals. 

Comment: We received several 

comments on whether redetermination 

requests should be accepted orally or in 

writing. One commenter disagreed with 

the elimination of accepting requests 

over the telephone. The commenter 

believed that taking requests by 

telephone is a convenient and simple 

method for filing an appeal. Another 

commenter pointed out that telephone 

requests facilitated meeting the 

decision-making time frame. The 

commenter also indicated that 

telephone appeals are advantageous 

because additional documentation can 

be requested while the appellant is on 

the phone. Other commenters agreed 

that requests for redeterminations be 

made in writing only. They stated that 

when the request and the response are 

given on the telephone, it leaves room 

for interpretation on what occurred 

during the telephone call. Also, it could 

be difficult for the QIC to construct the 

case file if the redetermination was 

handled over the telephone. The 

commenter suggested alternative 

methods such as the use of a secure 

system for fax or electronic mail 

requests. Another commenter agreed 

with our discussion in the preamble to 

the proposed rule that the changes to 

the reopening process could resolve the 

types of issues addressed in the current 

telephone appeals process, and 

encouraged our efforts to clarify the 

reopening rules. 

Response: We recognize that initiating 

a redetermination over the telephone 

can under some circumstances provide 

a faster process for appellants than a 

written appeal. In the past, providers 

and suppliers generally initiated 

reviews by phone for routine, 

uncomplicated matters. However, 

section 937(a) of the MMA requires 

CMS to develop a process whereby, in 

the case of minor errors or omissions 

that are detected in the submission of 

claims, a provider or supplier can be 

given an opportunity to correct these 

minor errors or omissions without the 

need to initiate an appeal. Contractors 

would also continue to handle these 

types of issues over the telephone 

through procedures other than appeals, 

such as reopenings, including any 

associated adjustments. The reopening 

process is discussed in more detail later 

in this preamble under its own heading. 

Written requests offer other 

advantages of efficiency and accuracy. 

An appellant submitting a written 

request can submit evidence at the same 

time as the request. The early 

submission of evidence leads to 

resolving appeals at lower levels and 

promotes more accurate decisionmaking. Furthermore, many appeals 

involve judgment calls that require 

thought, research and analysis, much of 

which cannot be addressed in a phone 

call. Also, as noted by a commenter, 

11438 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

written appeals aid contractors in 

developing case files for use at later 

appeal stages. 

Thus, as proposed, we will require 

that appellants request redeterminations 

in writing. We will work on identifying 

simple and convenient methods for 

appellants to request redeterminations 

in writing, such as via facsimile or 

electronic mail request. Finally, we note 

that contractors are by no means 

prevented from communicating with 

appellants by phone in situations where 

contact by telephone can provide 

information needed to resolve an 

appeal. 

Comment: Some commenters raised 

questions about requests for 

redetermination made by more than one 

party. A few commenters objected to our 

proposal that where two or more parties 

requested an appeal on the same initial 

determination, the contractor’s deadline 

for processing the appeal would be 

based on the latest filed request. One 

commenter disagreed with the 

consolidation of multiple requests into 

one proceeding, and argued that this 

would result in unwarranted delays. 

The commenter suggested that we 

stipulate in this final regulation that the 

decision-making time frame starts with 

the first request for redetermination. 

The commenter also thought that 

contractors should be required to act on 

beneficiary appeals when they are 

received, rather than waiting to see if 

another party appeals. Another 

commenter was concerned whether the 

contactor would wait until the end of 

the full 120-day filing deadline to see if 

another party would request an appeal.

Response: Instances when more than 

one party files a request for an appeal 

of the same claim have always been 

rare, and we do not expect any change 

in this regard under the new appeals 

procedures. Although we appreciate the 

concern that contractors might wait 120 

days to see if another party appeals, 

contractors could not do so even if they 

wanted to, given the requirement that 

they process a redetermination within 

60 days of a timely filed request. A 

delay will occur only if another request 

is received before the contractor issues 

a decision. Therefore, we do not believe 

that consolidating the decision-making 

time frame for appeals with multiple 

parties will create an impediment to the 

efficient resolution of appeals. To the 

contrary, we believe that when another 

party subsequently requests an appeal 

before a decision has been made on the 

original request, fairness demands that 

the two requests be combined into one 

case. We have amended § 405.944(c) to 

clarify this point. 

Comment: Several commenters made 

recommendations about the place and 

method of filing redetermination 

requests. One commenter suggested that 

all review organizations have an address 

for delivery services other than the U.S. 

Postal Service. The commenter stated 

that appellants sometimes wish to use 

private services to deliver their appeals, 

particularly to ensure that contractors 

receive the appeals timely. A few 

commenters suggested that CMS 

provide appellants an opportunity to 

submit a redetermination request via 

facsimile or via e-mail. The commenter 

believed that these alternatives would 

create better efficiencies for appellants. 

Response: We encourage appellants to 

use delivery services that will ensure 

the timely receipt by contractors of 

appeal requests. We will explore with 

contractors ways to achieve efficiencies 

in the appeals process, including 

establishing addresses for private 

delivery services. We also will look into 

the extent to which contractors can set 

up a process to accept facsimile and 

electronic requests in compliance with 

applicable security and privacy policies 

and procedures. Should these changes 

prove feasible, we will implement them 

through manual instructions. 

Comment: Several commenters urged 

us to make the standard form for 

requesting a redetermination widely 

available to ensure accessibility by 

beneficiaries. They suggested including 

the form for requesting a 

redetermination with the initial 

determination notice. Alternatively, the 

initial determination should provide 

information about where to obtain the 

standard form. Commenters 

recommended that the standard form be 

available upon request by telephone, on 

the Internet, and at all SSA and CMS 

contractor offices. 

Response: We agree that standardized 

forms should be readily accessible to 

beneficiaries. As mentioned earlier in 

our discussion about initial 

determinations, beneficiaries now 

routinely receive Medicare Summary 

Notices (MSNs). The MSN contains 

information on the appeals process and 

instructions for requesting an appeal. 

Beneficiaries can use the MSN to 

request an appeal by circling the item or 

service with which they disagree, 

explaining why they disagree, signing 

the MSN, and returning it or a copy to 

the specified address. Consumer testing 

has shown that the information on the 

MSN is complete and easy for 

beneficiaries to understand. In most 

cases, we believe that allowing 

beneficiaries to use the MSN to request 

an appeal is a more effective practice 

than referring them to a required form. 

We will ensure that customer service 

representatives at our 1–800–

MEDICARE number provide 

beneficiaries with accurate information 

on how they may obtain standardized 

appeal forms. Updated appeal forms 

will continue to be available on the 

Internet at http://www.cms.hhs.gov/

forms and http://www.Medicare.gov/

Basics/forms, as well as at CMS 

contractor offices. 

b. Evidence Submitted With the 

Redetermination Request 

In the proposed rule, we specified 

that a party should explain why he or 

she disagrees with the contractor’s 

initial determination and include any 

evidence that the party believes should 

be considered by the contractor in 

making its redetermination. We wanted 

to encourage appellants to make their 

case at the earliest possible level. To 

facilitate this goal, we proposed that if 

appellants could not submit relevant 

documentation along with their 

redetermination requests, then they 

could provide later submissions. 

However, since it would be difficult to 

process the redetermination within the 

appropriate time frame, we proposed to 

permit contractors to extend the 

decision-making time frame by up to 14 

days based on the later submission of 

evidence.

Comment: One commenter suggested 

that prior to issuing a redetermination, 

the contractor should request the 

necessary documentation from the 

appellant and allow the appellant 14 

days to either submit the documentation 

requested or to certify that there are no 

additional records to submit. The 

commenter also indicated that if the 

appellant failed to provide the 

documentation, an unfavorable decision 

should be rendered based on failure to 

provide the necessary documentation. 

The commenter also questioned 

whether it was our intent to preclude 

the QIC from accepting documentation 

other than what is requested in the 

redetermination letter. 

Response: We believe that the 

efficiency and accuracy of the appeals 

process is enhanced when appellants 

submit all necessary documentation 

with their redetermination requests. 

Although appellants have the 

opportunity to submit evidence related 

to the claim at issue at any time during 

the redetermination process, we 

strongly encourage appellants to submit, 

at the time of their request, all evidence 

that they want to be considered. If 

supporting documentation is not 

submitted with the request, the 

contractor may contact the appellant to 

try to obtain the missing information. 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11439

The contractor will not necessarily 

uphold an unfavorable initial 

determination based solely on the lack 

of documentation submission. The 

contractor must make a decision based 

on the information in the case file. 

If the contractor believes that the 

appellant is missing specific 

information or documentation necessary 

for processing the redetermination, but 

cannot obtain the information before its 

deadline, the contractor will uphold the 

claim denial and then list the specific 

missing information in the 

redetermination letter. If the appellant 

requests a QIC reconsideration, the 

appellant should submit the 

documentation specified in the 

redetermination notice with the request 

for reconsideration. The QIC may accept 

any additional documentation, even if it 

is not specified in the redetermination 

notice. If the appellant fails to submit 

this evidence before the QIC issues its 

reconsideration, the appellant may be 

precluded from introducing the 

evidence at higher levels of the appeals 

process, absent a showing of good cause. 

(See the discussion below regarding the 

regulatory and statutory requirements 

for full and early presentation of 

evidence.) 

c. Conducting a Redetermination and 

Time Frame for Making a Decision 

Section 1869 of the Act provides little 

or no guidance with respect to the 

conduct of redeterminations, with the 

exception of establishing the filing and 

decision-making time frames. Thus, 

with few exceptions, we did not 

propose major changes to the existing 

procedures for first level appeals of 

claim determinations. To assist 

appellants who might be unable to 

submit relevant documentation along 

with the request for redetermination, 

and to promote the resolution of appeals 

at the earliest possible level, we 

proposed to allow later submission of 

documentation. If the appellant 

submitted evidence after the request, an 

automatic 14-day extension would be 

added to the decision-making time 

frame. See § 405.946(b). 

Comment: One commenter contended 

that CMS exceeded its statutory 

authority by changing the standard with 

respect to the established time frame for 

a decision on a request for 

redetermination. The commenter 

disagreed with the proposal of an 

automatic 14-day extension to the time 

frame when an appellant submits 

evidence after the request. Another 

commenter agreed that additional time 

might be necessary to issue a decision 

when a party submits additional 

evidence. The commenter noted that we 

did not specify whether a party could 

submit additional evidence more than 

once, and if so, what the impact would 

be on the decision-making deadline. For 

example, would a 14-day extension 

apply each time a party submitted 

additional evidence, or would there by 

only one extension, regardless of how 

many times a party submitted additional 

evidence? The commenter suggested 

that we specify that there are no limits 

on evidence submission at the 

redetermination level and that a party 

can submit additional evidence as many 

times as it deems appropriate until a 

specific point near the time to issue a 

decision. The commenter recommended 

that evidence should be permitted until 

5 days prior to the decision-making 

deadline (for example, additional 

evidence could be submitted until 55 

days after the contractor received the 

redetermination request). 

Response: We believe allowing 

extensions of decision-making time 

frames under some circumstances is 

consistent with the statute. We believe 

that an appeal request should include 

the pertinent evidence for an 

adjudicator to make an appropriate 

determination, as indicated in 

§ 405.946(a). If the evidence is not 

submitted with the request, the 14-day 

extension allows time for an adjudicator 

to carefully review and consider 

additional evidence. It is unreasonable 

first to expect an adjudicator to prepare 

a decision based on incomplete 

information submitted with the appeal 

request, and then in as little as a few 

days, potentially rewrite a decision 

based on new evidence.

While a party, by regulation, may 

submit additional evidence as many 

times as it deems appropriate until the 

contractor issues a decision, the impact 

is that the contractor may extend its 

decision-making deadline by up to 14 

days each time. The only way to avoid 

the need for extended decision-making 

time frames would be to preclude the 

submission of additional evidence by 

appellants after they file their 

redetermination requests. Note that 

although the contractor may extend the 

deadline, this does not mean that we 

expect the contractor to take the 

maximum time to issue the decision in 

all cases. As mentioned in the comment 

above, we urge appellants to submit all 

necessary documentation with their 

requests in order to avoid delays. We 

note that from the outset, appellants 

have twice the amount of time to 

request an appeal as adjudicators do to 

conduct the appeal. 

Comment: Some commenters argued 

that we should impose penalties on 

fiscal intermediaries and carriers that 

fail to meet the 60-day deadline for 

issuing a redetermination. In addition, 

the commenters recommended that we 

establish specific remedies for 

appellants, such as the ability to 

escalate cases to QICs, when contractors 

fail to meet their time frames. One 

commenter argued that nonenforcement of the time frame would 

have a negative impact on beneficiaries, 

since they cannot proceed to the QIC 

until the contractor issues a 

redetermination. 

Response: We do not believe that it is 

appropriate to permit escalation of 

redeterminations when contractors do 

not meet their deadlines. We believe 

this is consistent with the statute in that 

the Congress seems to have weighed the 

merits of escalation and chose to 

implement that option only at the QIC 

level and above. The statute also already 

directs that the Secretary monitor the 

timeliness of all contractors’

redeterminations. Sections 1816(f) and 

1842(b)(2) of the Act require us to 

develop criteria, standards and 

procedures to evaluate a fiscal 

intermediary’s or carrier’s performance 

of its functions. Measuring the 

timeliness of redeterminations is a 

critical part of this process, and a 

contractor’s inability to process 

redeterminations within the required 

60-day time frame will be enforced 

through corrective action plans and 

other tools that CMS has available to 

ensure that carriers and fiscal 

intermediaries fulfill their statutory and 

contractual obligations. Under our 

ongoing Contractor Performance 

Evaluation (CPE) process, CMS devotes 

extensive resources to onsite surveys of 

contractors to ensure that they meet 

these obligations. 

Comment: One commenter 

recommended that we prohibit 

Medicare contractors and QICs from 

raising new issues during an appeal. 

Any issues that are different from those 

in dispute should be raised through the 

reopening process. The commenter 

stated that bringing up new issues 

creates great confusion for appellants. 

Response: A redetermination consists 

of a fresh examination of all the issues 

involved in a claim to determine 

whether it is payable. Therefore, the 

redetermination is not limited to 

validating the original reason for the 

denial of the claim at issue in the 

appeal. All applicable statutory and 

regulatory provisions, as well as CMSissued policies and procedures, bind 

contractors making redeterminations 

(for example, CMS Rulings, Medicare 

manual instructions, program 

memoranda, national coverage 

determinations, local coverage 

11440 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

determinations, and regional medical 

review determinations). As a result, all 

these authorities must be considered as 

part of the redetermination. 

d. Withdrawals and Dismissals 

In the proposed rule, we proposed to 

allow parties to withdraw 

redetermination requests within 14 days 

of the original request in order to avoid 

situations where the request for 

withdrawal and the decision crossed in 

the mail. We also proposed several 

reasons a contractor might dismiss a 

request (for example, where a request 

for redetermination did not contain the 

minimum elements for a 

redetermination request set forth in 

proposed § 405.944). We also proposed 

to dismiss a request if the party filing 

the request died and there was no 

information in the record to determine 

whether another party might be 

prejudiced by the redetermination.

We also proposed that when a 

contractor dismissed a request, a written 

notice would be sent to the parties. 

Also, a dismissal could be vacated at 

any time within 6 months from the date 

of the dismissal notice for good and 

sufficient cause. Finally, an appellant 

could request a QIC reconsideration of 

the dismissal within 60 days of the 

dismissal notice. See proposed 

§ 405.974(b). 

Comment: A commenter 

recommended that the dismissal notice 

under § 405.952(c) should inform the 

appellant of the right to request that the 

contractor vacate the dismissal within 6 

months. 

Response: We agree that the dismissal 

notice should include information about 

vacating the dismissal. We have revised 

§ 405.952(c) to require that the dismissal 

notice state that there is a right to 

request that the contractor vacate the 

dismissal action. 

Comment: Proposed § 405.952(a) 

permits a party to withdraw its appeal 

request by filing a written and signed 

request for withdrawal within 14 

calendar days of the filing of the 

redetermination request. A commenter 

questioned whether a contractor would 

disregard a request for withdrawal made 

after the 14th day. The commenter 

argued that there was no legitimate 

reason to issue a redetermination if 

someone wanted to withdraw an appeal 

request. The commenter recommended 

that as long as the withdrawal request 

was received before the contractor 

issued a redetermination, then the 

request for redetermination should be 

dismissed. 

Response: We agree with the 

commenter and will not limit requests 

for withdrawal to within 14 days of 

filing the request for redetermination. 

Under this interim final rule, a request 

for withdrawal must be received before 

a redetermination has been issued. We 

encourage appellants to submit written 

requests early to avoid having the notice 

of a redetermination and a request to 

withdraw cross in the mail. 

Comment: Proposed § 405.952(b)(2) 

requires a contractor to dismiss a 

request for a redetermination if the 

contractor determines that a party has 

failed to make out a valid request for 

redetermination that substantially 

complies with § 405.944. Proposed 

§ 405.944(b) requires an appellant to 

either use a standard CMS form or 

submit a written request containing four 

elements: (1) The beneficiary’s name; (2) 

the beneficiary’s health insurance claim 

number; (3) the specific services(s) and 

item(s) for which the redetermination 

has been requested, as well as the 

specific date(s) of service; and (4) the 

name and signature of the party or 

appointed representative of the party. 

Two commenters pointed out that these 

elements do not mirror the requirements 

contained on the current standard CMS 

form to request a review. 

The commenters requested us to 

clarify if the current review form would 

comply with § 405.944. They also 

inquired as to whether we would 

develop a new form. If CMS developed 

a new form, the commenters suggested 

providing space on the form for all of 

the required elements listed in the 

proposed rule. Additionally, one 

commenter requested that CMS develop 

and disseminate a standard form as 

quickly as possible so that parties can 

become familiar with the information 

required in the form. 

Response: We realize that the current 

standard forms for requesting a review 

and reconsideration, CMS forms 1964 

and 2649 respectively, do not contain 

all of the elements required under 

§ 405.944. However, we are in the 

process of revising all of our current 

appeal forms. The standard CMS form 

will contain all of the elements 

specified in § 405.944. Once we 

complete the new forms, they will be 

released and made available to 

appellants at contractor offices, CMS 

offices, on the Internet, and by calling 

1–800–MEDICARE. We intend to release 

the new forms in conjunction with the 

implementation of these interim final 

regulations. 

Comment: One commenter contended 

that allowing contractors to dismiss 

redeterminations when appellants fail to 

make out valid requests effectively 

denies appellants the ability to pursue 

appeals. Other commenters maintained 

that requiring specific elements in order 

to make a request would penalize 

unrepresented beneficiaries or those 

that have limited English-speaking 

abilities or mental capacity. One 

commenter argued that unrepresented 

beneficiaries should be given notice of 

any deficiencies and an opportunity to 

correct and file an amended 

redetermination request within a 

reasonable time period (for example, 10 

business days after receipt of the 

notice). The commenter also 

recommended that the notice of an 

incomplete request should inform the 

party of the information necessary to 

request a redetermination; otherwise, 

the party would not know what 

information was missing.

Response: We do not agree that 

contractors should be required to inform 

appellants of the defects in their 

redetermination requests instead of 

being able to issue dismissals. Section 

405.944(b) requires only four elements 

for making out a valid redetermination 

request: (1) The beneficiary’s name; (2) 

the Medicare health insurance claim 

number; (3) the specific services(s) and 

item(s) for which the redetermination is 

requested and the specific date(s) of 

service; and (4) the name and signature 

of the party or representative of the 

party. This constitutes the minimum 

information needed to process an 

appeal, and we believe that it is entirely 

appropriate to require the party 

appealing to provide this basic 

information. Absent this information, it 

would be difficult, if not impossible, to 

ascertain whether the individual 

requesting the appeal is in fact a party 

or representing a party, or to identify the 

claim at issue. We believe that accepting 

appeal requests with insufficient basic 

information about the claim and 

requiring contractors to inform 

appellants of the defects in their appeal 

requests would make for an inefficient 

appeals process. Note that identification 

of the specific items or services for 

which a redetermination is being 

requested can be accomplished in a 

variety of relatively simple ways. For 

example, a beneficiary may simply 

circle the denied service in question on 

the MSN. Alternatively, for revised 

initial determinations (for example, 

overpayment cases or Medicare 

Secondary Payer recovery cases), 

appellants can meet this criterion by 

including a copy of the ‘‘demand letter’’

used to initiate these cases. Thus, 

meeting these minimum requirements is 

not onerous. 

In arriving at the decision to allow 

contractors to dismiss invalid 

redetermination requests under 

§ 405.952(b)(2), we considered the fact 

that a dismissal does not necessarily 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11441

terminate a party’s right to file an 

appeal. If the 120-day time frame for 

filing a redetermination has not expired 

at the time a contractor issues a 

dismissal, then a party may correct the 

defect and resubmit the appeal. Also, a 

contractor may vacate a dismissal at any 

time within 6 months from the date of 

the dismissal notice, if good and 

sufficient cause is shown. Alternatively, 

if a party believes that the contractor 

inappropriately dismissed a request, the 

party can request a reconsideration by 

the QIC within 60 days of the dismissal. 

Therefore, we are adopting our 

proposed policy in this interim final 

rule of dismissing requests that do not 

meet the requirements of § 405.944. A 

contractor may, but is not required to, 

contact appellants to give them an 

opportunity to cure a defect in their 

redetermination request before 

dismissing it. We believe that this 

policy is reasonable given that it is clear 

how a party must make out a valid 

redetermination request. As under the 

former appeals process, we will 

continue to allow a beneficiary to file an 

appeal by following the requirements 

detailed on the MSN. We will instruct 

our contractors to take into 

consideration any special needs of 

unrepresented beneficiaries, or those 

with limited capacities or abilities. Also, 

we are in the process of creating a 

redetermination form that will assist 

appellants who are unfamiliar with the 

process (for example, unrepresented 

beneficiaries) with their requests. 

Comment: One commenter requested 

clarification on the circumstances under 

which a request for redetermination 

would be dismissed when a beneficiary 

dies. The commenter requested 

clarification about any potential liability 

of the deceased beneficiary’s estate, 

including recovery by a State. The 

commenter believed that § 405.952(b)(4) 

also should clarify the situations an 

adjudicator must consider to determine 

whether dismissing the redetermination 

request may prejudice another party. 

The commenter indicated that in almost 

every situation, the beneficiary’s estate 

would be prejudiced by the 

determination and argued that a 

dismissal would preclude the 

beneficiary’s family or estate from 

protecting its right to seek 

reimbursement. 

Response: We have revised the 

proposed language in § 405.952(b)(4) to 

make the needed clarifications. A 

contractor will dismiss a 

redetermination request when the 

beneficiary whose claim is being 

appealed dies while the request is 

pending, under the following 

circumstances: (1) The beneficiary’s 

surviving spouse or estate has no 

remaining financial interest in the case 

based on whether either remains liable 

for the services or subsequent similar 

services; (2) no other individual or 

entity with a financial interest in the 

case wishes to pursue the appeal; and 

(3) no other party filed a valid and 

timely redetermination request. For 

example, the contractor will dismiss the 

request if the beneficiary or the 

beneficiary’s representative filed the 

request for redetermination but the 

beneficiary was not held liable for the 

services at issue. The contractor will 

inquire whether another party wishes to 

continue the appeal. However, the 

contractor will not be required to 

inquire whether any other party wishes 

to continue the appeal unless a valid 

and timely request for redetermination 

is filed. We wish to note that when a 

beneficiary dies and the request for 

redetermination is subsequently 

dismissed, a party, including the 

beneficiary’s estate, may request the 

contractor to vacate the dismissal under 

§ 405.932(c) for good and sufficient 

cause. Examples of good and sufficient 

cause include when there is the 

possibility of Medicaid liability or when 

there is a possibility the State (which 

pays Medicaid funds) will attempt 

recovery of its payment from the estate. 

As mentioned in our discussion above 

on parties to initial determinations and 

appeals, § 405.906(c) now establishes 

that in the event of the death of a 

beneficiary, a provider or supplier may 

appeal if there is no other party 

available to appeal an initial 

determination. Thus, the provider or 

supplier of the item or service may 

request a redetermination in these 

situations, consistent with the clear 

direction of section 939 of the MMA. 

Comment: A commenter requested 

that we clarify the meaning of 

‘‘otherwise transmit’’ in proposed 

§ 405.952(d) in terms of a contractor 

providing a dismissal notice to the 

parties at their last known addresses. 

The commenter pointed out that the 

type of transmission is particularly 

important for beneficiaries who do not 

have access to facsimile and electronic 

mail. 

Response: The dismissal notice, like a 

redetermination notice, will be 

delivered through first class U.S. mail. 

Although contractors do not currently 

transmit notices by facsimile or 

electronic mail, we want to ensure that 

the regulations allow them the 

flexibility to do so in the future should 

CMS believe that other notification 

methods are appropriate. Nevertheless, 

even if contractors use alternate means 

to provide dismissal notices, we will 

instruct contractors to allow parties to 

elect their preferred method of delivery.

7. Redetermination, Notification, and 

Subsequent Limitations on Evidence’’

(§ 405.954, § 405.956, and § 405.966)

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Redetermination, Notification, and 

Subsequent Limitations on Evidence’’ at 

the beginning of your comments.]

When a contractor’s redetermination 

fully reverses the initial determination, 

we proposed to maintain the current 

policy that proper notification would be 

achieved through the MSN or the RA, 

which contractors send to beneficiaries, 

and providers and suppliers, 

respectively. If a redetermination 

affirmed the initial determination, either 

in whole or in part, we proposed that a 

redetermination notice contain: (1) A 

clear statement indicating the extent to 

which the redetermination is favorable 

or unfavorable; (2) a summary of the 

facts; (3) an explanation of how the 

pertinent laws, regulations, coverage 

rules, and CMS policies apply to the 

facts of the case; (4) a summary of the 

rationale for the redetermination; (5) 

notification to the parties of their right 

to a reconsideration, the procedures that 

a party would follow in order to request 

a reconsideration, and the time limit for 

requesting a reconsideration; (6) a 

statement of the specific missing 

documentation that would need to be 

submitted with a request for a 

reconsideration; (7) an explanation that 

if the specific supporting 

documentation specified in the notice is 

not submitted with the request for a 

reconsideration, the evidence will not 

be considered at an ALJ hearing, unless 

the appellant demonstrates good cause 

as to why the evidence was not 

provided previously; and (8) any other 

requirements specified by CMS. When a 

redetermination notice is sent to a 

provider or supplier announcing a full 

or partial reversal of the initial 

determination, the Medicare contractor 

must also issue an electronic or paper 

remittance notice to the provider or 

supplier to explain the payment. 

In general, the proposed requirements 

for the redetermination notice were 

similar to existing instructions 

concerning the content of contractor 

appeal determinations. However, our 

proposal that contractors also specify 

supporting documentation that would 

need to accompany a reconsideration 

request was a new requirement. 

Comment: We received many 

comments on the requirement for the 

redetermination notice to include a 

statement of the specific missing 

11442 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

documentation that must be submitted 

with the reconsideration request. In 

general, the commenters agreed with the 

requirement to identify additional 

supporting documentation in the 

redetermination notice. They also 

agreed that this change would improve 

the efficiency of the appeals process by 

assisting appellants in knowing the type 

of documentation to submit. 

Several other commenters objected to 

this provision. Two commenters argued 

that the statute and Medicare 

regulations require filing certain 

documentation with particular types of 

claims (for example, claims for power 

wheel chairs require submission of a 

power wheelchair Certificate of Medical 

Necessity (CMN)). They argued that if 

the statute and regulations do not 

require the submission of a particular 

piece of documentation, but a contractor 

needs that documentation before it will 

pay a claim, then the contractor should 

be required to explain why it needs the 

documentation and consider the impact 

of requiring compliance with the a 

request (consistent with the Paperwork 

Reduction Act of 1995 (PRA)). They 

proposed that the carrier or fiscal 

intermediary explain in detail the 

rationale for collecting any additional 

documentation not required for 

submitting a particular claim. The 

commenter argued that the rationale 

should include the legal and medical 

necessity reason for such collection. 

Response: We believe that the appeals 

time frames and procedures mandated 

by section 521 of BIPA and Title IX of 

the MMA clearly require greater 

efficiency in the Medicare appeals 

process. This belief is reinforced by 

section 933(a) of the MMA, which 

requires that a provider or supplier may 

not, in any subsequent level of appeal, 

introduce evidence that was not 

presented at the reconsideration 

conducted by the QIC, unless there is 

good cause that precluded the 

introduction of that evidence at or 

before that reconsideration. However, 

absent advance notice of what 

documents are needed to support a 

claim, appellants may have difficulty 

determining what constitutes relevant 

evidence for their claim appeals. Thus, 

although not required by the statute, we 

believe that requiring contractor 

redetermination notices to identify 

necessary missing documentation will 

provide very valuable information for 

appellants to present their cases to QICs. 

Therefore, we believe this provision is 

advantageous to appellants since it 

should result in a better understanding 

of the basis for the unfavorable 

redetermination and lead to more 

accurate reconsiderations.

Comment: One commenter 

recommended revising the new 

evidence provisions to preclude the 

subsequent submission of information 

only to the extent that it involves 

objective medical information (for 

example, a specific blood gas percentage 

or patient height and weight). Another 

commenter suggested that we 

distinguish between the submission of 

new evidence that involves readily 

available clinical documentation 

directly implicated in the claim dispute 

and other evidence (for example, expert 

opinions, clarifying treating physicians’

opinions, or evidence from providers 

not directly involved in the dispute). 

The commenter recommended only 

precluding clinical documentation. 

Other commenters argued that this 

provision was too burdensome for 

providers, suppliers, and beneficiaries, 

particularly when they do not have easy 

access to supporting documentation that 

may be required. Some of the 

commenters suggested that we exempt 

beneficiaries from these rules because 

they do not have ready access to 

medical records and other 

documentation. 

One commenter believed that the 

proposed rule was too lenient and 

recommended that we limit the rules on 

submission of evidence at the 

redetermination and reconsideration 

levels. The commenter suggested that 

we require appellants to sign a form 

certifying that they do not have any 

more records to submit. 

Response: We do not believe that it is 

either practical or consistent with the 

statute to limit the requirement on full 

and early presentation of evidence by 

attempting to distinguish between 

evidence that is readily available to the 

provider and that which is obtained 

from providers not directly involved in 

the claim dispute. Similarly, we cannot 

limit this provision to objective medical 

information. Given the vast amount of 

medical services and items that could be 

involved in a claim dispute, it would be 

extremely difficult to draw clear 

distinctions among the numerous types 

of documentation that might be needed. 

Nevertheless, where it is not feasible to 

obtain this documentation, as indicated 

in § 405.1028, an ALJ will make a 

determination on whether good cause 

for failure to submit the evidence to the 

QIC exists. This applies to all 

documentation, including the items 

listed in the notice of redetermination. 

Finally, we note that, consistent with 

section 933(a) of the MMA, we have 

specified in the interim final rule that 

the limitation on the presentation of 

new evidence, absent good cause, 

applies only to providers and suppliers, 

and not to beneficiary appellants. The 

limitation on the presentation of new 

evidence will also apply to beneficiaries 

represented by providers or suppliers to 

ensure that providers or suppliers do 

not attempt to circumvent these rules by 

offering to represent beneficiaries. 

Further, to the extent that beneficiaries 

may not be as sophisticated as providers 

or suppliers regarding the 

administrative appeals process this 

consideration would not apply in the 

case of a beneficiary represented by a 

provider or supplier. Thus, although 

contractor redetermination notices will 

uniformly identify any necessary 

missing documentation, beneficiaries, 

except those represented by providers or 

suppliers, will still be permitted to 

introduce evidence after the QIC 

reconsideration level (although for 

efficiency reasons, they would be better 

served by doing so as soon as possible). 

We believe it would be unnecessarily 

burdensome to require appellants to 

certify that they have no further 

evidence to submit. (See section II.D.3 

below for a further discussion of rules 

related to evidence at QIC 

reconsiderations.) 

Comment: Several commenters made 

additional suggestions for improving the 

notices that inform parties of the 

decision on an appeal. Some 

commenters suggested including a form 

to request a reconsideration on the back 

of the redetermination notice. Other 

commenters suggested that CMS make 

available upon request the laws, 

regulations, policy manuals, national 

coverage determinations (NCDs), local 

coverage determinations (LCDs), and 

local medical review policies (LMRPs) 

that were used to make the decision. 

They recommended that notices should 

include the correct citations to the 

appropriate provisions. One commenter 

recommended that if the MSN is used 

to inform a beneficiary of a 

redetermination that is wholly 

favorable, the MSN should be sent 

within the proper time frame. This 

commenter also suggested that the 

appointed representative receive a copy 

of the decision.

Response: We agree that including a 

form to request a reconsideration with 

the redetermination notice would assist 

appellants and help them to provide the 

information QICs need to process 

reconsiderations. At one time, we had 

considered including a reconsideration 

request form on the reverse side of the 

redetermination notice, but consumertesting results indicated that appellants 

found this confusing. We intend to 

continue exploring how best to make 

available a reconsideration request form 

with the redetermination. Consistent 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11443

with section 1869(a)(5) of the Act, as 

amended by section 933(c)(1) of the 

MMA, we require in § 405.956(b)(9) that 

contractors make available upon request 

correct information on the laws, 

regulations, policy manuals, national 

coverage determinations (NCDs), local 

coverage determinations (LCDs), and 

local medical review policies (LMRPs) 

that were used to make the decision. 

We appreciate the commenter’s 

concern about receiving MSNs within a 

reasonable amount of time from the date 

of a fully favorable redetermination. 

However, it is more efficient and costeffective for beneficiaries to receive 

MSNs on a monthly basis, as opposed 

to each time a claim or appeal is 

processed. Thus, if an adjustment is 

made to a claim as the result of an 

appeal decision, the beneficiary will not 

receive the MSN until the next 

scheduled monthly release. We believe 

that this is an acceptable amount of 

time, and it continues a longstanding 

Medicare practice. CMS will monitor 

contractor performance in this regard. 

To ensure that appellants are made 

aware of the outcome of a fully 

favorable redetermination in a timely 

manner, we added § 405.956(a) and 

§ 405.956(c) to reflect that contractors 

must send a written notice to the 

appellant within 60 calendar days of 

receipt of the request for a 

redetermination. The written notice 

must contain a clear statement 

indicating that the redetermination is 

wholly favorable to the appellant. 

Additionally, we wish to clarify that 

all parties to the appeal are required to 

receive a copy of an unfavorable or 

partially favorable redetermination 

notice, with the sole exception of 

overpayment cases involving multiple 

beneficiaries. Our experience has been 

that beneficiaries often are confused by 

the copies of notices that they receive in 

conjunction with overpayment and 

recovery letters to providers and 

suppliers. To minimize confusion, 

under § 405.956(a)(2), we specify that in 

these situations, contractors are 

permitted to issue written notices only 

to appellants. 

Although we agree that an appointed 

representative must receive a copy of 

the redetermination, we do not agree, 

for privacy reasons, that the appointed 

representative also should receive a 

copy of the MSN. MSNs contain 

information about other claims filed 

during the previous month, with which 

the appointed representative may have 

no authorized involvement. 

Comment: A commenter pointed out 

that we did not impose a deadline for 

a contractor to make payment on a claim 

after a favorable decision. The 

commenter recommended that we 

require payment to be made within 60 

days of the date of the favorable 

decision. 

Response: We agree that payment 

should be made within a reasonable 

time from the date of a favorable 

determination. We will continue to 

evaluate contractors’ performance in 

effectuating favorable decisions. 

8. Reconsiderations (§ 405.960 Through 

§ 405.978)

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Reconsiderations’’ at the beginning of 

your comments.] 

a. Time Frame for Filing a 

Reconsideration Request 

Proposed § 405.962(a) specified that 

appellants who wished to file a request 

for reconsideration would be required to 

do so within 180 days of receipt of the 

redetermination notice, or within 

additional time as the QIC might allow 

for good cause. In proposed § 405.964, 

we set forth the place and method for 

filing a request for reconsideration. We 

would permit parties to file requests 

with the QIC, CMS, or SSA offices. For 

purposes of establishing whether an 

appellant had timely filed a request for 

reconsideration, a request would be 

considered filed on the date it was 

received by the QIC, SSA, or CMS. 

However, for reconsideration requests 

submitted to CMS or SSA offices, the 

QIC’s decision-making period would not 

begin until the QIC received the request. 

We also specified that reconsideration 

requests could either be made using a 

standard CMS form, or some other 

written document, as long as it 

contained the key elements captured by 

the form; that is, the beneficiary’s name, 

HIC number, date(s) of service and 

service(s) at issue, and the name and 

signature of the party or representative 

of the party. If the reconsideration 

request did not contain any one of the 

essential elements referenced above, we 

proposed that the QIC would dismiss 

the reconsideration on the basis that the 

party failed to make out a valid request. 

We also proposed in §§ 405.964(c) 

and 405.970(b)(3) that QICs would 

consolidate multiple requests for 

reconsideration into a single 

proceeding, and would issue one 

reconsideration determination to all 

parties within 30 days of the latest 

reconsideration request. 

Proposed § 405.970 set forth the 

general requirement that QICs would 

complete their reconsiderations within 

30 days of receiving a timely filed 

request. By no later than the close of the 

30-day decision-making period, a QIC 

would either issue its reconsideration, 

notify all parties that it would not be 

able to complete its review by the 

decision-making deadline, or dismiss 

the request for reconsideration. 

Pursuant to section 1869(c) of the Act, 

the notice that the QIC is unable to 

complete its reconsideration within the 

decision-making period would advise 

the appellant of the right to request 

escalation of the appeal to an ALJ. 

Under § 405.970(d), appellants would be 

able to submit a written request 

directing the QIC to escalate the appeal. 

We proposed that whenever a QIC 

received an escalation request, the QIC 

would take one of two actions within 5 

days: (1) Complete its reconsideration 

and notify the parties of its decision; or 

(2) acknowledge the escalation request 

in writing and forward the case file to 

the ALJ. 

Comment: A few commenters 

expressed concern about how appellants 

that filed appeals at alternative sites 

would know whether or when the 

proper adjudicator received their 

reconsideration request. To address this 

situation, the commenters 

recommended requiring adjudicators to 

send acknowledgement letters to 

appellants that file at alternative 

locations. Other commenters suggested 

requiring all adjudicators to use 

addresses that are accessible by delivery 

other than the U.S. postal service to 

enable appellants to file directly with 

the proper adjudicator. 

Response: As discussed above in the 

context of requests for redeterminations, 

we agree with the commenter that 

appellants who use alternate filing 

locations would have difficulty 

determining if and when the proper 

adjudicator received their request. Our 

experience has been that very few 

appellants use alternative filing 

locations (for example, SSA field 

offices). However, when they do so, 

requests often do not arrive timely at the 

proper adjudicating entity. Moreover, as 

noted previously, consistent with 

section 931 of the MMA, SSA will no 

longer play a role in Medicare claims 

appeals. For these reasons, and 

consistent with the policy for 

redetermination requests, we have 

revised § 405.964(a) to specify that all 

requests for a reconsideration must be 

filed with the QIC indicated on the 

notice of redetermination. Just as we 

plan to do with intermediaries and 

carriers, we also will explore with QICs 

ways that we can create efficiencies in 

the appeals process, including 

establishing addresses for private 

delivery services. 

Comment: Many commenters 

disagreed with the proposal of ‘‘tolling 

11444 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

the decision-making clock’’ for a QIC 

reconsideration when an appeal is filed 

at an alternative location (for example, 

at an SSA office rather than with the 

QIC). Commenters perceived this 

provision as unfairly penalizing 

appellants that used alternative filing 

locations. Rather than beginning the 

decision-making time frame only when 

a QIC receives an appeal request, 

commenters suggested that CMS 

develop an electronic filing system. An 

electronic filing system would allow 

appellants to continue filing their 

appeals at alternative filing locations 

and permit adjudicators to receive the 

appeals almost immediately, thereby 

eliminating the need to toll the 

decision-making clock. (Note that the 

issue of tolling the decision-making 

deadline also applies to other levels of 

the appeals process.) 

Response: As discussed above, we 

believe the best way to facilitate a QIC’s 

ability to adjudicate a reconsideration 

timely is to require that all 

reconsideration requests be filed at the 

QIC. Thus, the comments on the ‘‘tolling 

of the clock’’ issue are no longer 

pertinent. Note that redetermination 

notices will clearly specify the proper 

entity to whom to direct a 

reconsideration request. We do 

recognize that the development of an 

electronic filing system would make the 

appeals process more efficient; 

therefore, we intend to pursue this goal 

both with QICs and the new Medicare 

administrative contractors that are 

mandated by the MMA.

Comment: Some commenters inquired 

whether carriers and intermediaries 

would be required to create case files, or 

to forward redetermination letters and 

documentation to the QIC for 

reconsiderations. One commenter 

argued that the QIC’s success in meeting 

its decision-making time frame would 

depend upon the contractors’

compliance with a time frame to 

forward cases to the QICs. If contractors 

are responsible for forwarding case files 

to QICs, the commenters suggested that 

CMS establish a time frame in the 

regulation for performing this activity. 

One commenter recommended a 15-day 

time frame to complete both the 

preparation and forwarding of the case 

file. 

Response: In order to achieve the 

statutory time frame for QIC decisions, 

efficient processing and forwarding of 

case files to the QICs is essential. From 

an appellant’s perspective, however, 

this will be a seamless process, and we 

believe that the proper vehicle to 

address the mechanics of case file 

transmission is through our contractor 

evaluation process and manual 

instructions, rather than through 

regulations. 

Comment: Some commenters pointed 

out that currently, some contractors 

define the date of receipt as the day that 

the contractor logs in the request, while 

others define it as the day the request is 

received in the contractor’s mailroom. 

To eliminate confusion, one commenter 

asked that CMS clarify in the final rule 

that the date of receipt of a 

reconsideration request would be the 

date that the request arrived in the QIC’s 

mailroom. 

Response: We recognize the need for 

consistency in this regard and agree that 

inefficiencies in logging in an appeal 

request should not adversely affect an 

appellant. We intend to address the 

issue through the QIC contracts and 

instructions. 

b. Withdrawal or Dismissal of a Request 

for Reconsideration 

Proposed § 405.972 established 

provisions for withdrawing and 

dismissing requests for reconsideration. 

We proposed that appellants should be 

able to withdraw their reconsideration 

requests by filing a written request for 

withdrawal to the QIC within 14 

calendar days of filing the 

reconsideration request. Under 

proposed § 405.972(b), we set forth the 

reasons why a QIC would dismiss a 

request for reconsideration (for example, 

if the party failed to make out a valid 

request consistent with the 

requirements identified in § 405.964). 

We also proposed under § 405.972(e) to 

allow appellants to request an ALJ 

review of a QIC dismissal of a 

reconsideration request if the request 

was filed within 60 days of the QIC’s 

dismissal notice. 

Comment: Some commenters asked us 

to give a rationale for allowing appeals 

of dismissals and remanding reversed 

dismissals. Other commenters argued 

that a reconsideration regarding the 

dismissal of a redetermination request 

should be final and not appealable. In 

addition, the same commenters asked 

that we include a provision that a 

subsequent reversal of a dismissal have 

no effect on a party’s appeal rights. 

Response: Although we recognize that 

permitting appeals of dismissals can be 

inefficient at times, we believe our 

approach of providing for review of 

dismissals at the next adjudicative level 

balances the need for review with the 

need for finality. Because dismissals 

will only be based on the circumstances 

involving the appeal request (for 

example, whether the party included 

the proper elements in its appeal 

request, (or whether it is a proper party 

to request an appeal) rather than the 

merits on whether the claim is payable, 

we do not believe further review is 

necessary. Accordingly we are adding 

§ 405.1004(c) to specify that an ALJ’s 

decision with respect to a QIC’s 

dismissal of a reconsideration request is 

final and not subject to further review. 

Finally, we are not adopting the 

commenter’s suggestion that a 

subsequent reversal of a dismissal have 

no effect on a party’s appeal rights. On 

the contrary, a subsequent reversal by 

an ALJ of a dismissal would restore the 

party’s reconsideration rights. Thus, it is 

necessary for the case to be remanded 

for the QIC to render a decision on the 

substantive issue of whether a claim 

must be paid. 

Comment: We received many 

comments and questions on the 

procedural aspects of the dismissal 

provision in the reconsideration section 

of the proposed rule. Commenters asked 

us to specify the circumstances in 

which a dismissal would be appropriate 

and to identify what an appellant would 

need to show in order to successfully 

appeal the dismissal of a 

reconsideration request. The 

commenters also asked us to clarify the 

circumstances under which an 

adjudicator can dismiss a 

reconsideration request when a 

beneficiary dies.

Response: Section 405.972(b) 

describes the circumstances that 

warrant dismissal of a reconsideration 

request, either entirely or as to any 

stated issue. A dismissal is appropriate 

when the person or entity requesting a 

reconsideration is not a proper party 

under § 405.906 or does not otherwise 

have a right to a reconsideration under 

section 1869(b) of the Act. A dismissal 

also is warranted where a party fails to 

make out a valid request for 

reconsideration under § 405.964(a) and 

§ 405.964(b) or fails to file a request 

within the proper time frame under 

§ 405.962. 

On appeal, the party contesting the 

dismissal must provide evidence 

sufficient to refute the basis for the 

dismissal. For example, if a 

reconsideration request were dismissed 

because the person filing the appeal is 

not a proper party, then the appellant 

would have to show that they are in fact 

a proper party. 

We have amended § 405.972(b)(4) to 

identify, in the event of a beneficiaryappellant’s death, the circumstances an 

adjudicator must consider to determine 

whether dismissing the reconsideration 

request prejudices another party. The 

adjudicator will look to determine 

whether all three circumstances are 

present: (1) The beneficiary’s surviving 

spouse or estate has no remaining 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11445

financial interest in the case, based on 

whether either remains liable for the 

services, or for subsequent similar 

services under the limitation of liability 

provisions, based on the denial of the 

services at issue; (2) no other individual 

or entity with a financial interest in the 

case wishes to pursue the appeal; and 

(3) no other party to the redetermination 

filed a valid and timely reconsideration 

request. For example, the QIC will 

dismiss the request if the beneficiary or 

the beneficiary’s appointed 

representative filed the request for 

reconsideration, but the beneficiary was 

not held liable for the services at issue. 

The QIC will inquire whether the 

provider or supplier of the item or 

service wishes to continue the appeal. 

However, the QIC will not be required 

to inquire whether any other party 

wishes to continue the appeal unless a 

valid and timely request for 

reconsideration is filed by another 

party. We wish to note that when a 

beneficiary dies and the request is 

subsequently dismissed, a party, 

including the beneficiary’s estate, may 

request the contractor to vacate the 

dismissal under § 405.972(d) for good 

and sufficient cause. Examples of good 

and sufficient cause include the 

possibility of Medicaid liability or the 

possibility that the State (which pays 

Medicaid funds) will attempt recovery 

of its payment from the estate. 

As mentioned in our discussion above 

on parties to initial determinations and 

appeals, § 405.906(c) reflects that in the 

event of the death of a beneficiary, a 

provider or supplier will be able to 

appeal if no other party is available to 

appeal the redetermination. Thus, the 

provider or supplier of the item or 

service is able to request reconsideration 

in these circumstances. 

Comment: Some commenters 

criticized the policy regarding 

dismissals of incomplete 

reconsideration requests. Rather than 

dismissing incomplete reconsideration 

requests, commenters thought that a 

better policy would be to inform 

appellants of the defect and afford them 

an opportunity to cure the defect. At a 

minimum, the commenters suggested an 

exception for beneficiaries. 

Response: Consistent with the 

previous discussion of dismissals of 

redetermination requests, we do not 

agree with the commenters that QICs 

must be required to inform appellants of 

the defects in their reconsideration 

requests instead of being able to issue 

dismissals. We believe that this policy 

is reasonable given the new 

redetermination notice requirements 

and the simplicity of the elements of a 

valid reconsideration request. 

Section 405.964(b) requires only five 

elements for making out a valid 

reconsideration request: (1) The 

beneficiary’s name; (2) the beneficiary’s 

Medicare health insurance claim 

number; (3) the specific service(s) and 

item(s) for which the reconsideration is 

requested and the specific date(s) of 

service; (4) the name and signature of 

the party or representative of the party; 

and (5) the name of the contractor that 

made the redetermination. We added 

the requirement that the party specify 

the contractor that made the 

redetermination to facilitate the QIC 

obtaining the case file from the 

appropriate contractor. Since QICs need 

this basic information in order to 

process an appeal, we believe that it is 

appropriate to require the party 

appealing to provide adequate 

information to identify the specific 

claim at issue. Further, the name and 

signature of the appellant is necessary to 

ascertain whether the individual 

requesting the appeal is in fact a party. 

This basic information is all that is 

required under § 405.964(b), and it 

essentially mirrors the information that 

would have already been provided by 

an appellant at the redetermination 

level. Thus, we believe that requiring 

QICs to accept appeal requests with 

insufficient information about the claim 

and to inform appellants of the defects 

in their appeal requests makes for an 

inefficient appeals process. 

As under the former appeals process, 

CMS will create a standardized 

reconsideration form that will assist 

appellants, particularly unrepresented 

beneficiaries, with their requests. 

Furthermore, a dismissal of a request for 

reconsideration does not necessarily 

terminate a party’s right to file an 

appeal. If the 180-day time frame for 

filing a request for reconsideration has 

not expired at the time a QIC issues a 

dismissal, then a party may correct the 

defect and resubmit the appeal. 

Additionally, if a party believes its 

reconsideration was inappropriately 

dismissed, it can either ask the QIC to 

vacate its dismissal, or appeal the 

dismissal to an ALJ.

Comment: A few commenters asked 

how the dismissal of a consolidated 

appeal or a remand resulting from a 

reversed dismissal affects a party’s 

appeal rights. 

Response: Under § 405.964(c), QICs 

are required to consolidate multiple 

requests for reconsideration of the same 

claim into one proceeding. The 

dismissal of a party’s individual appeal 

request within a consolidated appeal 

does not affect any remaining party’s 

appeal. When a dismissal is appealed to 

the next level, the adjudicator will 

determine if the dismissal is correct. If 

the adjudicator reverses the dismissal, 

the dismissal is vacated and remanded 

to the previous level of appeal. The 

remand of a vacated dismissal is meant 

to ensure that appeals are resolved at 

the lowest level possible. If one party’s 

appeal is remanded on a consolidated 

appeal, all other parties’ appeals on the 

same claim are remanded. The previous 

adjudicator will reopen the dismissal 

and issue a new determination. This 

new determination will provide appeal 

rights. 

Comment: A few commenters opined 

that appellants should be able to 

withdraw a reconsideration request any 

time after filing the appeal request, but 

before a decision is rendered. 

Response: Consistent with our policy 

for redetermination requests, we agree 

with the commenters that an appellant 

should be allowed to withdraw an 

appeal request any time after a request 

is filed, but before the QIC issues a 

decision. Thus, we have removed the 

proposed provision that a withdrawal 

request must be filed with the QIC 

within 14 calendar days of the filing of 

the reconsideration request. Section 

405.972(a) now reads ‘‘an appellant that 

files a request for reconsideration may 

withdraw its request by filing a written 

and signed request for withdrawal 

* * *. The request for withdrawal must 

be received in the QIC’s mailroom 

before the reconsideration is issued.’’

c. Evidence Submitted With the 

Reconsideration Request 

Proposed § 405.966(a) describes the 

type of evidence that accompanies 

reconsideration requests and specifies 

that the failure to submit documentation 

listed in the redetermination notice at 

the reconsideration level generally 

prevents the introduction of that 

evidence at subsequent appeal levels. 

Under proposed § 405.966(b), if 

appellants submit additional 

documentation after their request for 

reconsideration has been filed, 

including documentation listed in the 

redetermination notice, the late 

submission results in an automatic 14-

day extension of the QIC’s decisionmaking time frame. Section 933(a) of the 

MMA subsequently added a similar, 

new statutory requirement with respect 

to the full and early presentation of 

evidence. 

Comment: When filing a request for 

reconsideration, proposed § 405.966(a) 

requires a party to present evidence and 

allegations of fact or law related to the 

issue in dispute and explain why it 

disagrees with the redetermination. In 

addition, the evidence would need to 

include any missing documentation 

11446 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

identified in the redetermination notice. 

Absent good cause, the failure to submit 

evidence generally prevents its 

introduction at subsequent levels of the 

appeals process. Many commenters 

perceived this ‘‘penalty’’ for failing to 

comply with the requirement for early 

presentation of evidence as too harsh. 

Some argued that requiring 

beneficiaries to submit evidence and 

make allegations of fact and law at the 

reconsideration level changes the nature 

of the appeal from an informal review 

to an adversarial proceeding. These 

commenters believe that beneficiaries 

generally lack the resources and 

sophistication to make a showing at the 

time a reconsideration request is filed 

and are better able to present evidence 

and explain their case in a hearing. 

Other commenters indicated that 

requiring early presentation of evidence 

is unfair to all appellants, not just 

beneficiaries, especially since the 

proposed rule would allow CMS to 

enter an appeal as a party at the ALJ 

level and to submit evidence and 

position papers. To address this issue, 

commenters recommended either 

eliminating this provision entirely, or 

creating an exception to this 

requirement for unrepresented 

beneficiaries. 

Response: Section 1869(b)(3) of the 

Act, as amended by section 933(a)(1) of 

the MMA, now specifies that providers 

and suppliers may not introduce 

evidence in any appeal that was not 

presented at the reconsideration 

conducted by the QIC, unless there is 

good cause that prevented the 

introduction of that evidence at or 

before that reconsideration. This 

statutory change is largely consistent 

with the policy identified in the 

proposed rule; therefore, we are 

adopting this provision as proposed for 

provider and supplier appellants. 

However, we are establishing an 

exception to the ‘‘full and early 

presentation of evidence’’ requirement 

for beneficiaries. Specifically, we have 

added § 405.966(c) to allow beneficiaryappellants to submit documentation that 

was specified as missing in the notice of 

redetermination at any time during a 

pending appeal without the need for 

good cause. Note that § 405.966(c)(2) 

clarifies that this exception does not 

apply to beneficiaries who are 

represented by providers or suppliers. 

See the discussion above at Section II, 

B&, ‘‘Redetermination, Notification, and 

Subsequent Limitations on Evidence’’, 

for a complete discussion of this issue. 

We will develop manual instructions 

requiring QICs to help beneficiaryappellants to obtain documentation 

requested in the notice of 

redetermination. 

Any case involving the late 

submission of evidence, including 

appeals by beneficiaries, will continue 

to result in a 14-day extension of the 

decision-making time frame. We believe 

this policy is necessary to encourage all 

appellants to submit evidence with their 

appeal requests and to ensure that 

adjudicators have adequate time to 

thoroughly review all evidence prior to 

issuing a decision. A 14-day extension 

does not apply when the submission of 

evidence is in response to a request by 

a QIC, unless the QIC’s request pertains 

to documentation specified in the 

redetermination notice. 

Any evidence submitted after the 

reconsideration level by providers, 

suppliers, or beneficiaries who are 

represented by a provider or supplier, 

will be evaluated against a good cause 

standard for late filing described at 

§ 405.1028. Note that the full and early 

presentation of evidence requirement 

established under section 933 of the 

MMA and § 405.966 does not apply to 

CMS, and therefore, it does not limit 

CMS’ ability to introduce evidence at 

the ALJ level. CMS still must submit 

any evidence within the time frame 

designated by the ALJ. An extension of 

this deadline is permissible for good 

cause at the discretion of the ALJ. 

Comment: Proposed § 405.966(b) 

allows the QIC to automatically extend 

its time frame by 14 additional days 

when a party submits additional 

evidence after filing its reconsideration 

request. One commenter recommended 

that the automatic 14-day extension 

apply only once, even if an appellant 

makes more than one late submission. 

Response: Consistent with our policy 

for redeterminations, a party may 

submit additional evidence as many 

times as it deems appropriate until the 

QIC issues a decision, but the QIC may 

extend its decision-making deadline by 

up to 14 days each time. Thus, we have 

clarified in § 405.966(b) that the 14-day 

extension applies each time a party 

submits additional evidence. We note 

that this provision also applies to late 

submissions of evidence by other parties 

to the appeal. The 14-day extension 

allows time for the QIC to carefully 

review and consider the additional 

evidence. Again, although the QIC may 

extend the deadline, by no means do we 

anticipate that QICs will use the 

maximum time to issue decisions in all 

cases. The only time that the submission 

of evidence will not trigger the 

automatic 14-day extension is when the 

QIC requests documentation not 

previously requested in the 

redetermination notice.

9. Conduct of a Reconsideration 

(§ 405.968 and § 405.976) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Conduct of a Reconsideration’’ at the 

beginning of your comments.]

In proposed § 405.968, we defined a 

QIC reconsideration as ‘‘an 

independent, on-the-record review of an 

initial determination, including the 

redetermination.’’ If an initial 

determination involved a finding on 

whether an item or service was 

reasonable and necessary for the 

diagnosis or treatment of illness or 

injury (under section 1862(a)(1)(A)) of 

the Act, a QIC’s reconsideration must be 

based on clinical experience and 

medical, technical, and scientific 

evidence, to the extent applicable. 

Under proposed § 405.968(b), QICs 

would be bound by NCDs. QICs would 

be required to follow LCDs, LMRPs and 

CMS program guidance unless the 

appellant questioned the policy and 

provided a persuasive reason why the 

policy should not be followed. 

Under proposed § 405.976, we specify 

that reconsiderations be in writing and 

contain several substantive elements, 

including: (1) A clear statement as to 

whether the reconsideration is favorable 

or unfavorable; (2) a summary of the 

facts; (3) an explanation of how the 

pertinent laws, regulations, coverage 

rules, and CMS policies apply to the 

facts; (4) an explanation of the medical 

and scientific rationale for the 

reconsideration when the case involved 

determining whether an item or service 

was reasonable or necessary for the 

diagnosis or treatment of an illness or 

injury; and (5) a clear statement of the 

QIC’s rationale for its decision. 

Consistent with proposed 

§ 405.968(b)(3), if the QIC’s decision 

conflicts with an LCD, LMRP, or with 

program guidance (for example, a CMS 

manual instruction), the notice needs to 

include the QIC’s rationale for not 

following the policy in question. 

Similarly, consistent with proposed 

§ 405.976(b)(5), the reconsideration 

notice needs to address how any 

missing documentation affects the 

reconsideration and the limitations on 

the presentation of evidence at the ALJ 

hearing level. 

Comment: We received many 

comments on the provision requiring 

QICs to give deference to a local 

coverage determination (LCD) or local 

medical review policy (LMRP) unless an 

appellant questions the policy and 

provides a reason why the policy should 

not be followed that the QIC finds 

persuasive. Some commenters thought 

that CMS had exceeded its statutory 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11447

authority by binding QICs to LCDs and 

LMRPs and questioned the propriety of 

requiring QICs to give deference to 

policies that they allege sometimes 

contradict statutes and regulations, and 

that are not promulgated through noticeand-comment rulemaking. They also 

expressed concern over whether 

unrepresented beneficiaries would be 

able to effectively challenge CMS 

policies and noted that requiring QICs 

to give deference to LCDs and LMRPs 

would prevent QICs from reviewing 

these policies. 

Response: We continue to believe that 

it is both appropriate and consistent 

with the statutory intent of BIPA to 

require QICs to consider LCDs and 

LMRPs and other CMS program 

guidance and to apply these policies 

appropriately in a particular case. A QIC 

is not required to follow a given policy 

in an individual case if it believes that 

the policy is not legally persuasive 

under specific circumstances. However, 

this does not mean a QIC may ignore or 

invalidate an LCD for all subsequent 

appeals. The Congress created a new 

and entirely separate process for 

reviewing the validity of LCDs in 

section 1869(f) of the Act, as added by 

section 522 of BIPA. Section 1869(f) of 

the Act permits beneficiaries who are 

seeking coverage from an item or service 

to challenge the reasonableness of an 

LCD. A challenge to an LCD under 

section 522 of BIPA is reviewed by an 

ALJ. 

As the commenter suggests, however, 

we have reevaluated the proposed 

requirement that a QIC could choose not 

to follow LCDs, LMRPs, and CMS 

program guidance only if the appellant 

questioned the policy and provided a 

persuasive reason why the policy 

should not be followed. As a result, we 

have revised § 405.968 to provide that a 

QIC may decline to follow a policy in 

a particular case either at the request of 

a party or at its own discretion. 

Thus, as revised, § 405.968 states that 

a QIC is not bound by LCDs, LMRPs, or 

CMS program guidance, but will give 

substantial deference to these policies if 

they are applicable to a particular case. 

Moreover, a QIC may decline to follow 

a policy if the QIC determines, either at 

a party’s request or at its own discretion, 

that the policy does not apply to the 

facts of the particular case. Thus, QICs 

will not review LCDs, LMRPs, or other 

CMS guidance. Rather, they will 

evaluate the applicability of the LCD, 

LMRP, or CMS guidance to a particular 

claim denial. Their decisions will not 

affect subsequent cases and are not 

precedential. A QIC does not have the 

authority to require CMS or a contractor 

to withdraw or revise its LCDs, LMRPs, 

or other guidance. This amended 

provision eliminates the burden 

imposed on appellants, including 

beneficiaries, to challenge CMS policies 

in the claim appeals process. (See 

section II.G.5 of this preamble for a 

related discussion of ALJ and MAC 

consideration of local coverage 

policies.) 

We also note that section 522 of BIPA 

created a new review process that 

enables certain beneficiaries to 

challenge LCDs at the ALJ hearing and 

MAC review levels and NCDs at the 

MAC review level. Thus, we believe that 

it is important to note how the coverage 

appeals process could affect QICs in 

processing claim appeals. 

If a party appeals a denial that is 

based on an LCD or NCD by filing only 

a claim appeal, then adjudicators will 

apply the coverage policy that was in 

place on the date the item or service was 

received, regardless of whether some 

other beneficiary has filed a coverage 

appeal based on the same LCD or NCD. 

This policy is consistent with original 

Medicare policy that requires LCD or 

NCD changes to only be applied 

prospectively to requests for payment.

If an appellant files both a claim and 

a coverage appeal based on the same 

initial determination, both appeals will 

go forward. The claim appeal 

adjudication time frames will not be 

impacted because the appeals will be 

conducted simultaneously. In 

adjudicating the claim appeal, 

adjudicators will apply the coverage 

policy that was in place on the date the 

item or service was provided, unless the 

appellant receives a favorable coverage 

appeal decision. If the appellant 

receives the favorable coverage decision 

prior to a decision being issued for the 

claim appeal, then pursuant to 42 CFR 

§ 426.488 and § 426.560, the claim 

appeal will be adjudicated without 

consideration of the invalidated LCD or 

NCD provision(s). If an appellant 

receives a favorable decision in the 

coverage appeal after receiving an 

unfavorable claim appeal decision, then 

the appellant is entitled to have the 

claim appeal reopened and revised for 

good cause, subject to the provisions in 

§ 405.980 and § 405.986, without 

consideration of the invalid LCD or NCD 

provision(s). As a result of these 

clarifications, we have added 

§ 405.1034(c) to permit ALJs to remand 

an appeal to a QIC in this situation. 

Comment: Although a few 

commenters agreed with the proposal 

that all QIC proceedings would be ‘‘onthe-record,’’ most commenters opposed 

this proposed policy and recommended 

that QICs be required to offer appellants 

an opportunity for a hearing, as has 

been the case under the existing Part B 

fair hearing process. Commenters stated 

that requiring all QIC proceedings to be 

held on-the-record was contrary to 

congressional intent and would limit an 

appellant’s ability to interact with the 

adjudicator. The commenters believed 

that appellants would be deprived of an 

important opportunity to provide 

adjudicators with clarifications and 

additional information not contained in 

the record, and that adjudicators would 

not have an opportunity to personally 

assess a beneficiary’s physical/mental 

condition. Commenters suggested that 

beneficiary appellants in particular 

would be adversely affected by this 

policy. Other commenters agreed that 

QICs should not be required to conduct 

in-person or telephone reconsiderations 

within the statutory decision-making 

time frame, but expressed concern over 

the accuracy of the QICs’ on-the-record 

decisions. 

Response: As the commenters point 

out, under the existing appeals process, 

appellants have had an opportunity to 

request a ‘‘fair hearing’’ with respect to 

Part B determinations. This process, 

which has involved on-the-record, 

telephone, or in-person proceedings, has 

served as the second level of appeals for 

Part B claims, consistent with section 

1842(b)(3)(C) of the Act, which specifies 

that an individual will be granted an 

opportunity for a fair hearing by the 

carrier in any case where the amount in 

controversy is at least $100. Section 

1842(b)(2)(B)(ii) of the Act establishes a 

120-day deadline for the fair hearing 

decision. The existing regulations 

governing appeals under Medicare Part 

B, in Subpart H of Part 405, describe the 

available hearing procedures. 

However, the right to a fair hearing 

has never been part of the appeals 

process for Part A claims. For these 

claims, § 405.710 establishes a right to a 

‘‘reconsideration.’’ Neither the statute 

nor the implementing regulations under 

Subpart G of Part 405 provide for any 

type of hearing before the ALJ level for 

Part A claims. Neither the statute nor 

the regulations establish a minimum 

amount in controversy for Part A 

reconsiderations. 

In contrast to the pre-BIPA statute, 

revised section 1869 of the Act 

establishes a uniform set of appeals 

requirements for all Part A and Part B 

claim determinations. The required 

procedures now available under the 

statute consist of a ‘‘redetermination’’ by 

an intermediary or carrier, a 

‘‘reconsideration’’ by a QIC, a ‘‘hearing’’

before an ALJ, and then a ‘‘review’’ by 

the DAB. As under the existing Part A 

process, the statute does not establish 

any minimum amount in controversy 

11448 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

for reconsiderations and sets this 

amount at only $100 for ALJ hearings. 

Section 1869 of the Act, as amended 

by BIPA and the MMA, does not 

require, or even mention, a hearing at 

the QIC level. Instead, section 

1869(c)(3)(B)(i) of the Act specifies that 

in conducting a reconsideration, the QIC 

‘‘* * * shall review initial 

determinations’’ and that when the 

determination involves whether an item 

or service is reasonable and necessary 

under section 1862(a)(1)(A) of the Act, 

‘‘* * * such review shall include 

consideration of the facts and 

circumstances of the initial 

determination by a panel of physicians 

or other appropriate health care 

professionals and [decisions] shall be 

based on applicable information, 

including clinical experience (including 

the medical records of the individual 

involved) and medical, technical, and 

scientific evidence.’’ The statute then 

specifically provides for ‘‘hearings’’ at 

the ALJ level under section 1869(d)(1). 

Finally, the Congress established 

rigorous decision-making time frames at 

all levels of the appeals process that will 

significantly reduce the amount of time 

in which an appellant who chooses to 

use the ALJ process will obtain a 

decision. 

Taking into consideration all of the 

above information, we believe our 

proposal is consistent with the 

substantially revised appeals 

methodology, including faster decisionmaking time frames, physician 

reviewers, and lower amount in 

controversy thresholds. We believe that 

the Congress was fully aware of the 

historical meaning of the terms 

‘‘reconsideration’’ and ‘‘hearing’’ and 

did not use them lightly in the new 

statute. Appellants retain the right to a 

hearing at the ALJ level, and this 

hearing will take place generally within 

the same time frame as a ‘‘fair hearing’’

under the previous Part B appeals 

process. Thus, we continue to believe 

that the statute does not intend or 

require that the QIC reconsideration 

process include an opportunity for a 

hearing. Finally, we note that QICs are 

not precluded from contacting 

appellants and obtaining necessary 

information from them by phone or 

other means.

Comment: A few commenters 

inquired about the QICs’ ability to hear 

or raise new issues. One commenter 

recommended that QICs be prohibited 

from raising new issues. Most 

commenters, however, agreed that QICs 

should be able to hear or raise new 

issues not raised at the initial 

determination or redetermination levels. 

In a related question, another 

commenter asked whether a QIC panel 

would adjudicate an appeal if a section 

1862(a)(1)(A) issue (that is, a medical 

necessity issue) was raised for the first 

time at the reconsideration level. 

Response: A reconsideration is a new 

and independent review of an initial 

determination and we believe 

adjudicators at the reconsideration level 

should be permitted to raise and 

develop any issues that they believe are 

relevant to the claims in the case at 

hand. Accordingly, we have added 

§ 405.968(b)(5) to clarify this policy. 

Section 1869(c)(3)(B)(i) of the Act 

requires that a reconsidered 

determination involve consideration by 

a panel of physicians or other health 

care professionals when the initial 

determination is based on section 

1862(a)(1)(A) of the Act. Thus, if a 

medical necessity issue was raised for 

the first time at the reconsideration 

level, we believe that review by a panel 

of health professionals would be 

required. Although the panel may 

consider new issues involving the 

claims in dispute, it must not adjudicate 

new claims for which the contractor has 

not issued a redetermination. 

Comment: One commenter thought 

that the redetermination and 

reconsideration levels were redundant 

and suggested eliminating one in order 

to make the appeals process more 

efficient. 

Response: Section 1869(a)(3)(A) of the 

Act gives appellants who are 

dissatisfied with their initial 

determination the right to request a 

redetermination. If an appellant is 

dissatisfied with the redetermination, 

then section 1869(b)(1)(A) of the Act 

grants the appellant the right to request 

a reconsideration. Thus, both the 

redetermination and reconsideration 

levels are unambiguously required by 

statute. It is not within CMS’ discretion 

to eliminate either the redetermination 

or reconsideration levels of appeal. 

a. Time Frame for Making a 

Reconsideration 

Comment: Proposed section 

405.970(c) specified that, by no later 

than the close of the 30-day decisionmaking time frame, a QIC must issue to 

the parties either a reconsideration, a 

dismissal, or a notice stating that the 

QIC will not be able to complete its 

review by the deadline. The notice 

would also advise the appellant of the 

right to request escalation of the appeal 

to an ALJ. CMS further specified that, 

whenever a QIC receives an escalation 

request, the QIC, within 5 days, would 

either complete its reconsideration and 

notify the parties of the decision, or 

acknowledge the escalation request and 

forward the case file to an ALJ. 

A number of commenters felt that 

BIPA unequivocally requires QICs to 

issue reconsiderations within 30 days of 

their receipt of a request for 

reconsideration. Thus, they were critical 

of the proposed policy to allow a QIC 

to issue a notice to an appellant 

indicating that it is unable to complete 

a reconsideration within the prescribed 

decision-making time frame. The 

commenters complained that allowing 

QICs to issue these notices, rather than 

an actual reconsideration, contradicts 

the statutory intent and creates a 

loophole for QICs to avoid compliance 

with the decision-making time frames 

established by BIPA. 

Response: We realize that the 

Congress intends for QICs to issue 

reconsiderations in response to timely 

filed reconsideration requests within 60 

days as stated in section 1869(c)(3)(C)(i) 

of the Act (as amended by section 

940(a)(2) of the MMA). We disagree, 

however, with the assertion that the 

drafters envisioned that QICs would be 

able to issue timely decisions for every 

reconsideration request no matter what 

the circumstances involved. To the 

contrary, the Congress clearly expected 

that there would be situations in which 

QICs would not be able to comply with 

the statutory decision-making time 

frames, as evidenced by the inclusion of 

the escalation provisions of section 

1869(c)(3)(C)(ii) of the Act, 

‘‘Consequences of Failure to Meet 

Deadline.’’ Here, the Congress created a 

new right for appellants to escalate 

appeals to the ALJ level in the event that 

the QIC failed to mail the notice of 

reconsideration within the decisionmaking time frame. In order to 

accommodate appellants’ ability to 

exercise this right, it is essential that 

QICs provide appellants with a notice 

when a reconsideration cannot be 

issued timely. 

Sections 405.970(a)(2) and 

405.970(c)(2), therefore, do not conflict 

with the statutory intent or create a 

loophole for avoiding compliance with 

the statutory decision-making time 

frames. Rather, these provisions help 

guarantee that appellants will be able to 

exercise their right to escalate an appeal 

by ensuring that appellants receive 

timely notice of the QIC’s inability to 

issue a reconsideration within the 

statutory time frame. We believe this 

process is highly preferable to not 

informing an appellant of this fact. We 

also wish to point out that if an 

escalation request is received prior to 

the end of the 60-day adjudication 

period, the QIC will proceed with its 

review of the reconsideration request 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11449

and either (1) issue its reconsideration 

by the end of 65 days (the 60-day period 

plus 5 days from receipt of the request 

to escalate) or (2) send notification to 

the party on the 60-day deadline that 

the QIC cannot complete its review by 

the 60-day deadline and escalate the 

request at that time.

Comment: Two commenters 

expressed concern over applying the 30-

day decision-making time frame to 

reconsiderations of post-pay audit cases 

involving statistical sampling. The 

commenters stated that the large volume 

of claims to be reviewed for these types 

of cases would prevent QICs from ever 

meeting the 30-day time frame or would 

force the QICs to simply rubberstamp 

the redetermination in order to meet the 

30-day deadline. The commenters 

further surmised that ALJs would 

regularly overturn QIC reconsiderations 

on these ‘‘big box’’ cases for lack of 

development. The commenters 

recommended that CMS either provide 

a longer decision-making time frame for 

these types of cases, or bypass the 

reconsideration level for these cases and 

allow appellants to go to the ALJ 

hearing level if they are dissatisfied 

with the audit determination. 

Response: We appreciate the 

commenters’ observation that it will be 

difficult for the QICs to process ‘‘big 

box’’ cases resulting from complex postpayment audits that involve individual 

consideration of multiple claims in a 

timely manner, even under the new 60-

day time frame established by section 

940(a)(2) of the MMA. At this point, we 

do not have a basis for direct evaluation 

of this issue since the QICs are not yet 

conducting reconsiderations. However, 

we know that in the former appeals 

process when a fair hearing officer 

receives a ‘‘big-box’’ case, it generally 

has taken 60 days to review the 

extensive medical records and other 

documentation associated with these 

cases. As mentioned in the previous 

response, we believe that the Congress 

expected that there would be situations 

in which QICs would not be able to 

comply with the decision-making time 

frame, as evidenced by the inclusion of 

the escalation provision of section 

1869(c)(3)(C)(ii) of the Act. Thus, if an 

adjudicator fails to complete a 

reconsideration of a ‘‘big-box’’ case 

within 60 days, an appellant has the 

option of either waiting for the QIC’s 

reconsideration, or requesting escalation 

of the case to the ALJ hearing level. We 

intend to work very closely with 

carriers, FIs, and QICs to identify ways 

to streamline the redetermination case 

file transmission and reconsideration 

procedures in order to facilitate the 

achievement of this deadline. 

b. Notice of a Reconsideration 

Comment: Because the proposed rule 

gives providers and participating 

suppliers the same appeal rights as 

beneficiaries, some commenters 

wondered who would receive the 

reconsideration notice if both the 

beneficiary and the provider or supplier 

filed timely appeals. 

Response: Section 405.964(c) 

establishes that ‘‘[i]f more than one 

party timely files a request for 

reconsideration on the same claim 

before a reconsideration is made on the 

first timely filed request, the QIC must 

consolidate the separate requests into 

one proceeding and issue one 

reconsideration.’’ Thus, pursuant to 

§§ 405.970(c)(1) and 405.976(a)(1), all of 

the parties will receive a copy of the 

reconsideration. This applies to all 

reconsiderations, including 

consolidated cases. To minimize 

confusion for beneficiaries who have no 

financial liability in overpayment cases 

involving multiple beneficiaries, we 

added an exception at § 405.976(a)(2) 

that QICs need to issue written notices 

only to the appellants in these cases. 

Therefore, the beneficiary will only 

receive a written notice of the 

reconsideration in such an overpayment 

case when he or she files an appeal 

request or it is a consolidated case.

We also note that we have added a 

requirement at § 405.976(b)(7) that the 

QIC must also indicate whether the 

amount in controversy meets the 

threshold requirement for an ALJ 

hearing if the reconsideration is 

partially or fully unfavorable. We 

believe this addition will be beneficial 

to appellants as well as to adjudicators 

at those levels where AICs apply. 

c. Publication of Reconsiderations 

Comment: Citing the statutory 

requirement to make reconsiderations 

available, two commenters suggested 

that the final rule include information 

about publication of QIC 

reconsiderations. Specifically, the 

commenters thought that CMS should 

establish a time frame for publication of 

QIC decisions and identify how the 

public would be able to view and obtain 

copies of reconsiderations, in order to 

ensure that appellants have access to 

prior reconsiderations as they make 

their own reconsideration requests. 

Response: Section 1869(c)(3)(G) of the 

Act requires QICs to make 

reconsiderations available, but does not 

require CMS or the QICs to ‘‘publish’’

all reconsiderations. However, we do 

not believe that this interim final 

regulation is the appropriate vehicle to 

provide information regarding the 

availability of reconsiderations. CMS is 

working with the QICs to determine 

how best to provide the public with 

specific information regarding prior QIC 

reconsiderations. 

Although we expect QICs to issue 

consistent reconsiderations, and 

appellants will have access to those 

prior reconsiderations, it is worth noting 

that reconsiderations, like all other 

Medicare administrative appeal 

decisions, have no precedential value. 

Moreover, based on current workload, 

there may be as many as one million 

QIC reconsiderations a year; given the 

large volume of anticipated 

reconsiderations, we do not intend to 

‘‘publish’’ them, but we will ensure they 

are made available. 

d. QIC Qualifications 

Comment: Many commenters asked 

that the final rule include more explicit 

information about the QICs. In 

particular, commenters wanted the final 

rule to identify the minimum 

qualifications for the QIC panel 

members and reviewers, clearly define 

the role of the QIC panel in the 

reconsideration process, and describe 

the on-going training that would be 

made available to the panel members 

and reviewers. Most of these 

commenters strongly believe that QIC 

panelists should be licensed, practicing 

health care professionals with sufficient 

expertise in the relevant area of 

medicine involved in the appeal, and 

also possess some legal experience. One 

commenter suggested that the 

requirements currently used for Quality 

Improvement Organization (QIO) 

reviewers might be a good model for 

developing the QIC reviewers’

qualifications. Commenters also asked 

that the final rule spell out the 

provisions that would be put in place to 

ensure the QICs’ independence. 

Response: We agree with commenters 

that details regarding the qualifications 

of the QICs’ panel members and 

reviewers, the structure of the QICs, and 

their operational policies need to be 

established before implementation of 

the new appeals process. Both BIPA and 

the MMA have provided extensive 

direction in regard to QIC independence 

requirements and the eligibility 

requirements for QIC reviewers, and we 

intend to ensure through the QIC 

contracting process that QICs are fully 

compliant with these requirements. We 

have also established QIC training 

requirements through the procurement 

process. However, we do not believe it 

is necessary or appropriate to address 

these types of issues in regulations, and 

instead will follow the normal business 

11450 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

practice of including this information in 

the contracts with the QICs. 

Comment: Although commenters 

overwhelmingly agreed that using 

panels of health care professionals at the 

QIC level would be an improvement 

over the current appeals process, at least 

one commenter questioned the costeffectiveness of using these panels for 

appeals involving low dollar claims and 

recommended that we develop 

alternative ways of reviewing these 

kinds of appeals. 

Response: We appreciate the 

commenter’s concern and recognize that 

using panels of physicians and other 

health care professionals to review 

appeals of section 1862(a)(1)(A) denials 

will not always be cost-effective. 

However, based on the unambiguous 

language in section 1869(c)(3)(B)(i) of 

the Act, the Congress clearly intended 

that panels of physicians or other health 

care professionals review all appeals 

involving determinations on whether an 

item or service is reasonable or 

necessary, regardless of the dollar value 

of the claim(s) involved. We intend to 

work with QIC’s to determine the most 

cost-effective means of fulfilling this 

statutory requirement.

10. Reopenings of Initial 

Determinations, Redeterminations, 

Reconsiderations, Hearings and Reviews 

(§ 405.980 through § 405.986) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Reopenings of Initial Determinations, 

Reconsiderations, Hearings, and 

Reviews’’ at the beginning of your 

comments.]

Section 1869(b)(1)(G) of the Act, as 

added by BIPA, provides for the 

reopening and revision of any initial 

determination or reconsidered 

determination according to guidelines 

prescribed by the Secretary. As we 

pointed out in the proposed rule, clear 

reopening provisions are needed not 

only to comply with BIPA, but also to 

address longstanding confusion over the 

reopening rules for Medicare claim 

determinations. Thus, we proposed to 

establish a unified set of reopening 

regulations that consolidate and clarify 

the existing reopening provisions of 

subparts G and H of part 405. (See 67 

FR 69327.) 

First, proposed § 405.980(a) 

establishes the general rule that a 

reopening is a remedial action taken by 

a carrier, intermediary, QIC, ALJ, the 

MAC, or any other entity designated by 

CMS to change a final determination or 

decision made with respect to an initial 

determination, redetermination, 

reconsideration, hearing, or review, 

even though the determination or 

decision may have been correct based 

upon the evidence of record. (For 

purposes of reopenings, the term 

‘‘contractors’’ includes carriers, 

intermediaries, and program safeguard 

contractors.) Under proposed 

§ 405.980(a)(4), we define a clerical 

error as human and mechanical 

mistakes (for example, mathematical or 

computational mistakes, or inaccurate 

data entry). 

Proposed § 405.980(b) through 

§ 405.980(e) specify the time frames and 

requirements for reopening initial 

determinations, redeterminations, 

reconsiderations, hearing decisions, and 

reviews, both for reopenings initiated by 

contractors, QICs, ALJs, or the MAC, as 

well as those requested by parties. 

Either a party can request a reopening, 

or a contractor can reopen on its own 

motion, for any reason, within one year 

from the date of the notice of the initial 

determination or redetermination. A 

party or a contractor has a 4-year time 

frame for requesting or initiating 

reopenings for good cause. However, 

although a party can request a 

reopening, the contractor can 

nevertheless determine that there is not 

good cause to reopen the case. (An 

example of good cause to reopen based 

on a clerical error is when payment for 

a claim is denied because an erroneous 

code, which is not covered by Medicare, 

was used and it is later determined that 

the procedure was miscoded.) We also 

proposed that a contractor can reopen 

within 5 years from the date of the 

initial determination or redetermination 

if the contractor discovers a pattern of 

billing errors or identifies an 

overpayment extrapolated from a 

statistical sample. 

Finally, we proposed to maintain the 

longstanding policy that reopenings are 

permitted at any time on claim 

determinations that have been procured 

through fraud or similar fault. Proposed 

§ 405.980(b)(4)(ii) defines similar fault 

as ‘‘to obtain, retain, convert, seek, or 

receive Medicare funds to which a 

person knows or should reasonably be 

expected to know that he or she or 

another for whose benefit Medicare 

funds are obtained, retained, converted, 

sought, or received is not legally 

entitled. This includes, but is not 

limited to, a failure to demonstrate that 

it filed a proper claim as defined in part 

411 of this chapter.’’ Similar fault is 

intended to cover instances where 

Medicare payment is obtained by those 

with no legal rights to the funds, but 

where law enforcement is not 

proceeding with a recovery based on 

fraud. This includes instances where a 

provider has been paid twice for the 

same claim where the contractor 

erroneously pays for codes that should 

not have been paid, but there is no 

evidence that the provider intentionally 

failed to refund the money; or where 

there is the manipulation of legitimate 

codes to obtain a higher reimbursement. 

While this last example might appear to 

be an example of fraud, it is also an 

example of an instance when the similar 

fault provision might be used. The 

similar fault provision is appropriately 

used where fraudulent behavior is 

suspected but law enforcement is not 

proceeding with recovery on the basis of 

fraud. 

Proposed § 405.980(d)(1) and 

§ 405.980(e)(3) provide 180 days from 

the date of a reconsideration for either 

a party to request, or a QIC to initiate, 

a reopening. Similarly, both the parties 

and the adjudicators at the ALJ and 

MAC levels also have 180 days from the 

date of a hearing or review decision to 

request or initiate a reopening. The 

party, QIC, ALJ, or the MAC have to 

establish good cause for a reopening.

Proposed § 405.982 through § 405.984 

require contractors, QICs, ALJs, or the 

MAC to mail notices of revised 

determinations or decisions based on 

reopened determinations, 

reconsiderations, or decisions to the 

appropriate parties at their last known 

addresses. In the case of a reopening 

that results in a favorable decision and 

issuance of additional payment to a 

provider or supplier, a revised 

remittance advice (RA) must be issued 

to the provider or supplier that explains 

the payment and reports the appeal 

rights; this RA will serve as the notice 

of the reopening determination. In the 

case of a reconsideration that results in 

additional payment to a provider or 

supplier, both a reconsideration 

determination notice and an electronic 

or paper remittance advice notice must 

be issued. Proposed § 405.986 specifies 

how a party, contractor, QIC, ALJ, or the 

MAC would establish good cause for a 

reopening. In this interim final rule, we 

have revised proposed § 405.986(b), to 

clarify that although a change in 

substantive law or interpretative policy 

is not good cause for reopening, the 

provision does not preclude contractors 

from reopening claims to effectuate a 

decision issued under section 1869(f) of 

the Act, as amended by section 522 of 

BIPA. The final regulation 

implementing the coverage appeals 

process was published after the notice 

of proposed rulemaking for this 

regulation was issued. Thus, we have 

now added language at § 405.980(b)(5) 

to enable contractors to reopen claim 

determinations at any time in order to 

effectuate favorable coverage appeals 

decisions issued to a beneficiary. We 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11451

wish to make clear that this provision 

does not allow retroactive application of 

coverage decisions to payment denials. 

a. Reasons and Conditions for 

Reopenings 

Comment: Several commenters 

mentioned that the proposed definition 

for a reopening does not acknowledge 

that the purpose of a reopening is to 

ensure correct payment amounts; and 

therefore, a reopening may result from 

either an overpayment or an 

underpayment. They believed that CMS 

should clarify in the regulations that a 

reopening can be initiated for either an 

overpayment or an underpayment. 

Response: We agree with the 

commenter that the underlying goal of 

the reopening process is to pay claims 

appropriately, subject to considerations 

of administrative finality. In the 

proposed rule (67 FR 69327), we state 

that, ‘‘the purpose for conducting a 

reopening should be to change the 

determinations or decisions that result 

in either overpayments or 

underpayments.’’ To accommodate this 

concept in the regulations, we have 

added text at § 405.980(a)(1) that makes 

clear that a reopening is an action to 

change a final determination or decision 

that results in either an overpayment or 

an underpayment. 

Comment: One commenter requests 

clarification on the conditions for 

reopening. The commenter seeks further 

clarification on whether good cause is 

required for reopenings that occur 

within 1 year from the date of the initial 

determination or redetermination, or 

whether a contractor would grant a 

request for reopening for any reason 

within the one-year time frame. 

Response: The authority for a 

contractor to reopen a claim or appeal 

within one year from the date of the 

initial determination or redetermination 

for any reason exists under 

§ 405.750(b)(1) and § 405.841(a). 

Therefore, we have removed proposed 

text formerly in § 405.980(a)(2)(i) in 

order to avoid the implication that 

contractor reopenings within one year 

are premised on good cause. This is 

consistent with § 405.980(b)(1) and 

§ 405.980(c)(1), which maintain the 

authority for contractors to reopen 

claims or appeals within 1 year for any 

reason. Thus, contractors do not need to 

establish good cause under § 405.986(a) 

to reopen within 1 year. 

We also note that under 

§ 405.980(b)(3), contractors may reopen 

at any time if there exists reliable 

evidence that an initial determination 

was procured by fraud or similar fault. 

In addition, we have added § 405.986(c) 

to provide that if a third party payer 

changes its assessment of whether it has 

primary payment responsibility more 

than 1 year after the date of Medicare’s 

initial determination, the contractor is 

without authority to find good cause to 

reopen a claim. 

b. Distinguishing Between Reopenings 

and Appeals 

Comment: Two commenters express 

uncertainty over whether CMS intends 

for contractors to process corrections of 

clerical errors as reopenings or appeals. 

One commenter contends that CMS 

provides conflicting information by 

suggesting in one section of the 

preamble that adjustments resulting 

from clerical errors are handled through 

the reopenings process, while stating in 

another section of the preamble, that 

either a party would need to exhaust all 

appeal rights, or the time limit to file an 

appeal would need to expire, in order 

for the contractor to conduct a 

reopening to correct these errors. 

Another commenter maintains that the 

proposed rule requires human or 

mechanical errors to go through the 

appeals process instead.

Response: As we stated in the 

proposed rule, ‘‘requests for adjustments 

to claims resulting from clerical errors 

must be handled through the reopenings 

process. Therefore, when a contractor 

makes an adjustment to a claim, the 

contractor is not processing an appeal, 

but instead, conducting a reopening’’

(67 FR 69327). Moreover, section 937 of 

the MMA subsequently amended the 

Act to specify that in the case of minor 

errors or omissions that are detected in 

the submission of claims, CMS must 

give a provider or supplier an 

opportunity to correct that error or 

omission without the need to initiate an 

appeal. We equate the MMA’s minor 

errors or omissions to fall under our 

definition of clerical errors, located in 

§ 405.980(a)(3). We believe that it is 

neither cost efficient nor necessary for 

contractors to correct clerical errors 

through the appeals process. Thus, 

§ 405.927 and § 405.980(a)(3) require 

that clerical errors be processed as 

reopenings rather than appeals. 

Consistent with the process that we 

developed in consultation with 

Medicare contractors, and 

representations of providers and 

suppliers as required under section 937 

of the MMA, we have made a 

conforming change at § 405.980(a)(3) to 

specify that contractors must grant 

reopenings for clerical errors or 

omissions. Section 405.980(a)(4) of this 

interim final rule states that a contractor 

may reopen and revise its initial 

determination or redetermination on its 

own motion at any time if the initial 

determination is unfavorable, in whole 

or in part, to the party thereto, but only 

for the purpose of correcting a clerical 

error on which that determination was 

based. In the event that a contractor 

does not believe that a clerical error 

exists, the contractor must dismiss the 

reopening request and advise the party 

of its ability to pursue to the appeals 

process on the claim denial, provided 

the timeframe to request an appeal has 

not expired. It should be noted that the 

party would be requesting an appeal of 

the original denial, not the dismissal of 

the reopening request. Reopenings 

continue to be discretionary actions on 

the part of the contractors; therefore, 

their decision not to reopen is not 

subject to appeal. 

Similarly, we believe that improper 

denials based on duplicate claims 

essentially involve clerical errors that 

can be best resolved through the 

reopenings process. When a provider or 

supplier receives a denial based on the 

contractor’s determination that the 

claim is a duplicate and the provider or 

supplier believes the denial is incorrect, 

and the contractor agrees that the denial 

was incorrect, the contractor should 

reopen the denial. Thus, we added text 

at § 405.980(a)(3)(iii) to specify that if a 

provider or supplier wishes to resolve a 

denial based on a claim being 

erroneously identified as a duplicate, 

the contractor should process the 

request as a reopening rather than as an 

appeal. In the event the contractor does 

not believe the denial was improper, the 

contractor must dismiss the reopening 

request and advise the party of any 

appeal rights, provided the timeframe to 

request an appeal on the original denial 

has not expired. 

Comment: One commenter was 

concerned that the proposed rule would 

limit opportunities for reopenings, 

because proposed § 405.980(a)(5) would 

preclude a reopening when a party has 

filed an appeal request. The commenter 

asked whether one can assume that a 

reopening will not be granted when a 

provider requests an appeal of a denial 

or partial payment such as that resulting 

from a provider submitting an incorrect 

CPT code, diagnosis code, or modifier. 

Response: Under normal 

circumstances, a valid request for an 

appeal must be processed as an appeal, 

and once an adjudicator receives a valid 

appeal request, the entity that made the 

previous determination generally no 

longer has jurisdictional authority to 

reopen that determination. We have 

revised § 405.980(a)(4) to clarify this 

point. 

Section 405.980(a)(4) ensures that the 

reopening and appeal processes are not 

engaged at the same time. We recognize, 

11452 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

however, that in certain situations, it 

will be apparent that the provider that 

is requesting an appeal is actually 

bringing a clerical error to the attention 

of the contractor. Under this interim 

final rule, irrespective of the provider’s 

or supplier’s request for an appeal, a 

contractor will treat the request for 

appeal of a clerical error as a request for 

a reopening. Therefore, as a practical 

matter, under § 405.980(a)(4), the 

contractor must transfer the provider’s 

or supplier’s appeal request to the 

reopenings unit for processing. On the 

other hand, if a contractor receives a 

request for a reopening, but disagrees 

that the issue is a clerical error, then the 

contractor must dismiss the reopening 

request and advise the party of any 

appeal rights, provided that the 

timeframe to request an appeal on the 

original denial has not expired. 

CMS understands that educational 

efforts must be undertaken in 

conjunction with this regulation to 

make the provider and supplier 

communities aware of their ability, and 

the contractor’s obligation to resolve 

clerical errors through the reopenings 

process. Until that education occurs, 

many providers and suppliers may 

continue to believe that their only, or 

best, recourse is to request an appeal. 

c. Similar Fault and Reopenings Within 

5 Years

Comment: As noted above, proposed 

§ 405.980(b)(4)(ii) defines similar fault 

as ‘‘to obtain, retain, convert, seek, or 

receive Medicare funds to which a 

person knows or should reasonably be 

expected to know that he or she or 

another for whose benefit Medicare 

funds are obtained, retained, converted, 

sought, or received is not legally 

entitled. This includes, but is not 

limited to, a failure to demonstrate that 

it filed a proper claim as defined in part 

411 of this chapter.’’ Several 

commenters believe that this definition 

is too broad and allows contractors to 

reopen almost any claim, for any reason. 

Response: The definition of similar 

fault covers situations where a 

contractor identifies an inappropriate 

billing that does not rise to the level of 

fraud. It is necessary to define similar 

fault as those situations when a 

contractor has identified inappropriate 

billing by a provider or supplier that 

knows or could have been reasonably 

expected to know that the claim should 

not have been paid for items or services, 

but the situation is not one where a law 

enforcement agency has made a 

determination that the billing is 

fraudulent. The similar fault provision 

is appropriately used where fraudulent 

behavior is suspected but law 

enforcement is not proceeding with 

recovery on the basis of fraud. We do 

not believe this definition is overly 

broad, given the implicit requirement 

that the fault be ‘‘similar’’ to fraud. 

Comment: Several commenters 

express concern over the provision in 

the proposed rule at § 405.980(b)(3), 

which allows a contractor to reopen 

initial determinations and 

redeterminations within 5 years of 

discovering a pattern of billing errors, or 

identifying an overpayment 

extrapolated from a statistical sample. 

The commenters point out the difficulty 

and burden in locating documentation 

on older claims. The commenters also 

argue that CMS does not provide a 

rationale for the proposed 5-year time 

frame. 

Response: CMS proposed this 

provision in an effort to accommodate 

overpayments identified by external 

auditors and law enforcement agencies. 

There were instances where auditors 

utilized a 5-year sampling methodology, 

identified an overpayment, and 

instructed the Medicare contractor to 

recoup the overpayment. Since the audit 

results were usually amounts 

extrapolated from a statistical sample 

based on 5 years of records, carriers and 

intermediaries experienced difficulty 

collecting the overpayments because 

§ 405.750(b)(2) and § 405.841(b) bound 

carriers and intermediaries to a 4-year 

limit for the identification and 

collection of overpayments where a law 

enforcement agency did not make a 

fraud determination. 

However, we recognize providers’

concerns with this proposal and 

consequently have decided to remove it 

from the final regulation. To the extent 

that law enforcement findings suggest a 

need for reopenings in situations that 

involve inappropriate billing patterns, 

but fall short of outright fraud, 

contractors may rely on the similar fault 

provision at § 405.980(b)(3) to reopen 

claims. 

Comment: One commenter asks 

whether proposed § 405.980(b)(4), 

which allows contractors to reopen 

initial determinations procured by fraud 

or similar fault, is limited to initial 

determinations that have not been 

appealed or reopened. 

Response: Section § 405.980(a)(4) of 

this interim final rule requires that 

when a party files a valid request for an 

appeal, the adjudicator no longer has 

jurisdiction to reopen the pending claim 

or appeal at issue. However, in cases of 

fraud or similar fault, the government 

may be pursuing legal action for claims 

it suspects are fraudulent, an activity 

which falls outside of the administrative 

appeals process. In the event legal 

action results in a favorable decision for 

CMS, CMS has the ability to reopen the 

claims in question and recoup any 

overpayment. Additionally, if a claim 

has gone through the appeals process on 

a completely separate issue, CMS may 

reopen the claim, but only to address an 

issue not previously decided on appeal. 

For example, if a claim is denied as not 

medically necessary and that denial on 

medical necessity is the issue being 

brought before the adjudicator on 

appeal, yet an issue of fraud is 

discovered on the same claim, the claim 

may be reopened to address the issue of 

fraud not previously considered on 

appeal. The reopening action on the 

fraud issue would occur only after the 

claim had proceeded through the 

appeals process on the medical 

necessity issue. Any unfavorable 

decision that was issued based on the 

subsequent reopening would generate 

appeal rights and any party to that 

determination would be able to contest 

any new denial through the appeals 

process. A previously appealed claim 

could also be reopened by the 

adjudicator to correct a later discovered 

clerical error.

Comment: One commenter asks if it is 

CMS’ intent to revise § 405.355(b), 

which allows a reopening for the 

collection of an overpayment within 3 

years from the date of the initial 

determination. 

Response: Section 405.355(b) pertains 

to the waiver of an adjustment or 

recovery from a provider or other 

individual who is deemed to be without 

fault. The provision does not address a 

contractor’s ability to reopen an initial 

determination or redetermination, and 

is not affected by this interim final rule. 

d. Authority To Reopen 

Comment: One commenter 

recommends that CMS require in the 

regulation text that a determination or 

decision can be reopened only by the 

entity that rendered the decision. For 

example, only a QIC can reopen a QIC’s 

decision. 

Response: As originally proposed, 

§§ 405.980(a)(1)(i) through 

405.980(a)(1)(iv) specify that only the 

entity that issues a determination, 

reconsideration or other decision can 

initiate a reopening of that decision. 

Although this remains true in most 

instances, we note that this interim final 

rule contains an exception to this 

general principle at § 405.980(a)(1)(iv), 

whereby the MAC can reopen an ALJ’s 

hearing decision. It should be noted that 

this is a continuation of CMS’ current 

practice and does not constitute a 

change in policy. We also note that 

§ 405.986(b) specifies that a change in 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11453

legal interpretation, regulations, or 

program instructions (or a declaration of 

what the law means or meant), whether 

by the judiciary or otherwise, does not 

form a basis for reopening. 

e. Time Frames and Notice 

Requirements 

Comment: One commenter 

recommends that CMS establish a time 

frame for processing and completing 

reopenings. 

Response: We agree that, wherever 

possible, a party must have a reasonable 

expectation as to the administrative 

finality of a decision on a claim or 

claims in question. However, since an 

adjudicator can reopen at any time for 

fraud or similar fault, we do not believe 

that CMS can establish meaningful time 

frames for processing and completing 

reopenings. Instead, CMS will monitor 

the processing of reopenings by 

contractors during performance reviews 

and desk audits. 

Comment: One commenter states that 

an adjudicator must be required to send 

both a reopening notice and a decision 

notice resulting from the reopening. The 

commenter contends that a reopening 

notice helps the party determine the 

adjudicator’s time frame for issuing a 

decision. Also, the decision notice must 

provide the basis and evidence 

supporting the reopening. 

Response: We are not requiring 

adjudicators to provide a notice to a 

party when they reopen claims and 

appeals, since any action that might 

result from the reopening will result in 

a party receiving a notice of the 

revision. Section 405.982 provides that 

adjudicators must issue notices of 

revised determinations or decisions 

which, in the event of an adverse 

revised determination or decision, must 

state the rationale and basis for the 

revision, and information about appeal 

rights. In the case of an adverse 

determination, a party would need this 

information should the party decide to 

appeal. In addition, if a contractor’s 

reopening of an initial determination 

results in an overpayment 

determination, then the contractor must 

issue a demand letter to the affected 

party. If the reopening results in a 

favorable determination, then a revised 

MSN and RA will be generated. 

f. Establishing an Evidentiary Burden of 

Proof To Reopen 

Comment: One commenter 

recommends that CMS add to the 

regulation text that a contractor has an 

evidentiary burden of proof, particularly 

with respect to those reopening actions 

that occur after the 1-year limit on 

reopenings for any reason. 

Response: Our policy that, within 1 

year, for any reason, contractors may 

reopen claims and parties may request 

reopenings, is fair and equitable; 

moreover, no evidentiary standard is 

needed in the those situations. For 

reopenings after that time, the rules we 

proposed are sufficient; that is, 

contractors must have good cause for 

reopening claims within 4 years and 

must have obtained reliable evidence for 

reopening at any time for fraud or 

similar fault. No matter what the 

outcome of a reopened and revised 

determination, parties retain the right to 

challenge the new determination at the 

appropriate appeal level. 

g. Inability To Appeal a Decision on 

Whether To Reopen 

Comment: One commenter expresses 

concern that a party cannot seek review 

of a determination not to grant a request 

for reopening. The commenter argues 

that not allowing an appeal violates a 

party’s due process rights.

Response: It is our longstanding rule 

that failure to grant a request for 

reopening is not reviewable. The 

Supreme Court has upheld this concept. 

See Your Home Visiting Nurses 

Services, Inc. v. Shalala, 525 U.S. 449 

(1999); Califano v. Sanders, 430 U.S. 99 

(1977). This does not violate the party’s 

due process rights, because the 

administrative appeals process for 

Medicare claims already affords ample 

due process to the party. The reopenings 

process simply offers, but does not 

guarantee, an additional process if a 

party misses the time frame for filing an 

appeal or if the party has exhausted his 

or her appeal rights. For purposes of 

administrative finality and efficiency, 

CMS cannot sanction an endless cycle 

of reopening requests and appeals. 

h. Enforcement of the Good Cause 

Standard 

Comment: One commenter 

recommends that CMS create 

enforcement provisions for the good 

cause standard when contractors reopen 

claims. The commenter says that 

contractors often ignore the guidelines 

set out in regulations and manuals and 

cite a request for medical records as 

good cause for a reopening, even though 

the medical records existed at the time 

the contractor initially reviewed the 

claim. 

Response: The regulations require that 

contractors abide by the good cause 

standard for reopening actions after one 

year from the date of the initial or 

revised determination. CMS assesses a 

contractor’s compliance with Federal 

laws, regulations and manual 

instructions during audits and 

evaluations of the contractors’

performance. Thus, the necessary 

monitoring and enforcement 

mechanisms are already in place. 

i. Applying Similar Reopening 

Standards to Adjudicators and Parties 

Comment: One commenter 

recommends that CMS apply the same 

reopening standards to adjudicators and 

parties and that a party be able to 

challenge an adjudicator’s reopening 

action. 

Response: As discussed above, an 

adjudicator’s decision on whether to 

reopen a claim or an appeal is 

discretionary and not subject to an 

appeal. However, the reopening 

standards that apply to parties and 

adjudicators are very similar in this 

interim final rule. The only provisions 

that necessitate a difference are those 

provisions, which allow adjudicators to 

reopen at any time if reliable evidence 

exists that a determination or decision 

was procured by fraud or similar fault, 

and § 405.980(b)(5), which allows 

contractors to reopen at any time to 

effectuate a decision issued under the 

coverage appeals process. Clearly, a 

party that obtains payment through 

fraudulent or other similar means has 

no use for this provision. Again, if a 

contractor issues a revised 

determination or decision that is 

unfavorable, the affected party has the 

right to appeal. 

11. Expedited Access to Judicial Review 

(EAJR) (§ 405.990) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Expedited Access to Judicial Review’’

at the beginning of your comments.]

In proposed § 405.990, we incorporate 

the current regulations governing the 

expedited appeals process (EAP) at 

§ 405.718 and § 405.853 with only two 

changes. First, since under BIPA the 

appeals process is the same for both Part 

A and B claims, we consolidated the 

Part A and B regulations governing 

expedited review of cases involving 

those claims. Second, under BIPA, ALJs 

are bound by all NCDs rather than only 

by NCDs based on section 1862(a)(1)(A) 

of the Act. Therefore, the regulations no 

longer limit expedited review to cases 

involving NCDs based on section 

1862(a)(1)(A) of the Act. 

In addition, we establish under 

proposed § 405.992 the standards that 

apply to ALJs and the MAC for policies 

that are not subject to the expedited 

appeals process. These standards have 

been moved to § 405.1060 in this 

interim final rule and are discussed in 

detail in the ALJ section. (See section 

II.G.5 of this preamble). 

11454 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

Comment: One commenter questions 

the requirement in § 405.990 for a 

$1,000 amount in controversy and the 

requirement for unanimous, written 

concurrence from all parties in order to 

request use of the EAP. The same 

commenter also requests that we make 

a number of clarifications in § 405.990, 

including stating explicitly that use of 

the EAP is not automatic, the decision 

by the review entity is not reviewable, 

and certification from the review entity 

does not trigger an action in Federal 

district court; the appellant must file a 

suit. 

Response: As noted above, proposed 

§ 405.990 includes no significant 

changes to the existing EAP process. 

The policies cited by the commenter 

(decisions to certify a case are not 

reviewable, a certification does not 

automatically trigger a Federal suit and 

written concurrence from all parties) are 

longstanding elements of the EAP 

process. Since publication of the 

proposed rule, however, the MMA has 

revised the applicable statutory 

requirements. In this interim final rule, 

we intend to maintain the proposed 

policies, as well as the changes 

necessitated by section 932 of the MMA. 

Therefore, we are revising § 405.990 so 

that it is consistent with the MMA 

requirements.

Section 932 of the MMA states that 

the Secretary must establish a process 

under which a provider or supplier or 

a beneficiary may obtain access to 

judicial review when a review entity 

determines that the Departmental 

Appeals Board (DAB) does not have the 

authority to decide the question or law 

or regulation relevant to the matters in 

controversy and that there is no material 

issue of fact in dispute. As a result, we 

are modifying proposed § 405.990(f)(1) 

and § 405.990(f)(2) to require that 

requests for expedited access to judicial 

review (EAJR) be evaluated by a review 

entity. (Note that in this interim final 

rule we have replaced references to the 

EAP with EAJR in order to avoid 

confusion with the expedited appeals 

process under § 405.1200 through 

§ 405.1206, which permits beneficiaries 

to request an expedited appeal of 

provider service terminations.) Also, in 

§ 405.990(a), we define a review entity 

as a decision-making body composed of 

up to three reviewers who are ALJs or 

members of the DAB, as determined by 

the Secretary. The MMA also establishes 

a 60-day decision-making time frame for 

EAJR requests. Therefore, we have 

amended § 405.990(f)(2) to implement 

this change. 

Section 932 of the MMA provides that 

a review entity’s determination ‘‘shall 

be considered a final decision and not 

subject to review by the Secretary.’’ This 

language plainly has two effects—(1) a 

review entity’s determination that is 

favorable to the party requesting EAJR is 

the final agency decision for purposes of 

judicial review, and (2) an ALJ or the 

MAC may not alter an unfavorable 

determination in the regular appeals 

process. Therefore, in § 405.990(f)(3), we 

are prohibiting an ALJ or the MAC from 

reviewing a decision by the review 

entity that either certifies that the 

requirements for EAJR are met, or 

denies the request. In § 405.990(h)(3), 

we cross reference to § 405.1136 since 

requests for EAJR certified by the review 

entity must also meet the requirements 

under that section for filing a civil 

action in a Federal district court. 

Finally, as required under the MMA, 

if a provider, supplier, or beneficiary is 

granted judicial review, § 405.990(j) 

requires the application of interest to 

the AIC. 

12. ALJ Hearings (§ 405.1000 Through 

§ 405.1064

[If you choose to comment on issues in 

this section, please include the caption 

‘‘ALJ Hearings’’ at the beginning of your 

comments.] 

a. Introduction 

In the proposed rule, we included 

new procedures to both implement 

section 1869 of the Act, as amended by 

BIPA, and codify in the Medicare 

regulations at 42 CFR, part 405, subpart 

I, all of the requirements that apply to 

ALJ and MAC proceedings. Most of the 

previous regulations used by the ALJs 

and the MAC were set forth in 20 CFR, 

part 404 of SSA’s regulations, which 

focuses on SSA’s disability appeals 

procedures. We note that we are 

generally carrying over relevant 

provisions of these rules applicable to 

Medicare proceedings, but will discuss 

in the preamble any new regulations 

that make substantive changes to the 

ALJ and MAC processes.

In addition to receiving comments on 

the proposed new provisions, we 

received some comments on the carry 

over of regulations that are already in 

effect for Medicare ALJ hearings and 

MAC review. Since most of these 

comments were associated with general 

concerns about changes to the ALJ 

process, we note them, where 

applicable, in the sections below. 

Finally, as noted above, this interim 

final rule includes some straightforward 

changes to the ALJ and MAC process 

required by the MMA. 

b. Escalation 

(1) General Application 

One of the most significant changes 

required under section 521 of BIPA is 

the introduction of an appellant’s right 

to escalate a case to an ALJ if a QIC fails 

to make a timely reconsideration, or to 

the MAC if an ALJ hearing does not 

produce a timely decision on an appeal 

of a QIC reconsideration. As we noted 

in the proposed rule, the statute does 

not allow an appellant to proceed 

beyond the initial contractor level until 

he or she has received a redetermination 

from that contractor, even if the 

contractor does not issue the initial 

determination or redetermination 

within the statutory time frames. This is 

consistent with the pre-BIPA 

regulations, which require an appellant 

to complete all steps of the appeals 

process in sequence, except when an 

appellant invokes the expedited appeals 

process described in §§ 405.718 [Part A 

appeals] and 405.853 [Part B appeals]. 

BIPA, however, adds the option to 

advance a case to the next level of 

appeal when, in certain circumstances, 

an adjudicator does not act on the 

appeal within the statutory deadline. In 

the proposed rule, we use the term 

‘‘escalation’’ to describe this movement 

of a case to the next level of appeal. 

Section 1869(c)(3)(C)(i) of the Act, as 

amended by section 940(a)(2) of the 

MMA, requires the QICs to decide 

appeals within 60 days. Sections 

1869(c) and 1869(d) of the Act, as 

amended by the MMA, now provide 

that an appellant may escalate an appeal 

as follows: (1) By requesting an ALJ 

hearing if the QIC does not decide the 

appeal within 60 days; (2) by requesting 

a review by the MAC if the ALJ does not 

decide the appeal of a QIC 

reconsideration within 90 days; and (3) 

by requesting judicial review if the MAC 

does not complete its review of an ALJ 

decision within 90 days. (At the ALJ 

and MAC levels, the statutory time 

period for completing the action begins 

on the date the appeal is timely filed.) 

When an appellant does not request 

escalation to the next level, the case 

remains with the current adjudicator 

until a final action is issued. We have 

revised proposed §§ 405.990 and 

405.1136(c) to conform to these 

requirements. 

We emphasized in the proposed rule 

that appellants must consider carefully 

the type of review that is best to resolve 

their case before deciding to escalate an 

appeal, because the type of proceedings 

and adjudicator varies with each step. 

For example, appellants who escalate a 

case from the ALJ level to the MAC will 

ordinarily not have the opportunity to 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11455

present their case during an oral 

hearing, unless they received an oral 

hearing at the ALJ level before 

escalating their case to the MAC. We 

also indicated that the statutory 

decision making deadlines apply only 

where there is a decision issued at the 

prior level. We did not propose any 

alternate deadlines for escalated cases, 

but encouraged comments on whether 

the final rule must include time frames 

and, if so, what time frames are be 

appropriate. 

Comment: Most commenters on this 

point argue that allowing unlimited 

time for escalated cases is contrary to 

statutory intent; they recommended that 

cases that are escalated to the ALJ and 

MAC levels be subject to a time limit. 

Commenters varied, however, on how to 

establish appropriate time frames. 

Recommendations included: (1) 

Requiring escalated cases to be decided 

within the ‘‘normal’’ 90 days; (2) adding 

an additional 30 days to the ‘‘normal’’

90-day time frame; and (3) adding the 

adjudication time frame from the 

previous level to the current level. 

Under the third recommendation, which 

preceded the enactment of the MMA, a 

case escalated from the QIC level to the 

ALJ would have a 120-day time frame 

(the pre-MMA 30-day QIC time frame 

plus the 90-day ALJ time frame) and a 

case escalated from the ALJ level to the 

MAC would have a 180-day time frame 

(90-day ALJ time frame plus the 90-day 

MAC time frame.) Adjusting this 

suggestion to reflect the new MMA 

adjudication period for the QICs, the 

time frame for the ALJ level would be 

150 days.

Response: We hold that our original 

proposal is consistent with the language 

of the statute. Moreover, as we noted in 

the proposed rule, when ALJs and the 

MAC receive cases that have not 

completed the process below, they will 

require more time to determine what 

issues are properly before them and how 

to resolve those issues. As indicated in 

the proposed rule, however, we see 

value in establishing time limits for 

escalated cases to ensure that appellants 

do not wait indefinitely for a decision. 

After considering the commenters’

suggestions, we have decided to 

establish a 180-day decision deadline 

for cases escalated to the ALJ and MAC 

levels. (For purposes of this discussion, 

we call these requirements the 

‘‘escalated time frames.’’) These new 

time frames are, in essence, a 

modification of the third 

recommendation described above. 

Given the nature of ALJ proceedings, 

which includes scheduling and 

conducting a hearing, we do not believe 

that adding the QIC’s adjudication time 

is sufficient. 

As a corollary to the above decision, 

we are revising the regulations to 

provide that, in certain circumstances, 

an appellant has a right to escalate a 

case to the next level when the ALJ or 

MAC does not decide that case within 

its escalated time frame. Thus, 

§ 405.1016(c) now specifies that for a 

case escalated to an ALJ, the ALJ must 

issue a decision no later than 180 days 

after the date that the request for 

escalation is received by the ALJ hearing 

office. We also revised sections 

405.1100 and 405.1106(b) to establish a 

parallel deadline for a case that is 

escalated from the ALJ to the MAC. 

(2) Specific Provisions Affected by 

Escalation 

In the proposed rule, we note that the 

statute does not provide a specific 

mechanism for appellants to request 

escalation, nor does it indicate the effect 

of an escalation request on case 

development or other adjudication 

efforts the QIC, ALJ or MAC may be 

conducting when the escalation request 

is received. We are particularly 

concerned about the adverse impact on 

appellants and adjudicators if cases that 

are close to completion are deemed 

automatically escalated at the end of the 

statutory adjudication period. To 

alleviate this problem, we proposed 

that, when a QIC, ALJ, or the MAC 

receives a request for escalation after the 

adjudication period has expired, it will 

defer sending the case to the next level 

for 5 days after the request is received. 

If possible, the QIC or ALJ will issue its 

action within the 5-day period. If fully 

favorable to all parties, the 

determination or decision will be sent to 

the appropriate CMS contractor for 

effectuation. If the action is not fully 

favorable, any party to the appeal can 

file a request for an ALJ hearing or MAC 

review, as applicable, within the 60-day 

appeals period. If the QIC or ALJ is not 

able to decide the case within the 5-day 

period, the appellant will be notified 

and the case will be forwarded to the 

next level of appeal. We provide in 

proposed § 405.1104(b) the procedures 

an ALJ must follow when the ALJ is not 

able to issue a final action or remand 

within 5 days of receipt of the request 

for escalation. 

We also proposed similar rules for 

cases in which an appellant requests 

escalation from the MAC level to 

Federal district court when the amount 

in controversy is $1,000 or more. We 

proposed that the MAC can, if feasible, 

issue a final action within 5 days of the 

request for escalation. We also provided 

in proposed § 405.1132(b), that when 

the MAC is not able to issue a final 

action within 5 days of receipt of the 

request for escalation, it will send a 

notice to the appellant acknowledging 

receipt of the request for escalation. A 

party can then file an action in Federal 

district court within 60 days after it 

receives notice of the MAC’s decision. 

Comment: One commenter expresses 

concern that the procedures outlined in 

§ 405.1132(b) are not parallel to the 

procedures governing escalation from 

the QIC and ALJ levels, and are too 

burdensome. The commenter suggests 

that if the MAC does not issue an action 

within 5 days of the receipt of the 

request for escalation, the appellant 

must be able to proceed directly to court 

without issuance of a MAC ‘‘decision.’’

Response: Our use of the word 

‘‘decision’’ in proposed § 405.1132(b) 

was an error and did not convey clearly 

the intention of the provision. We are 

revising the regulation to clarify that 

when the MAC issues its ‘‘notice’’

acknowledging that the MAC has not 

been able to complete its action within 

the statutory period, the appellant can 

file a civil action with the district court 

within 60 days of receipt of the MAC’s 

acknowledgment notice. We recognize 

that the commenter may view the notice 

as an unnecessary step, since an 

appellant escalating to the ALJ or MAC 

level need only file the request for 

escalation and wait for a response 

(either an action from the QIC or ALJ or 

a notice that the case has been 

forwarded to the next level). However, 

we believe that the notice described in 

§ 405.1132(a)(2) of this final rule will 

benefit appellants in several ways. We 

anticipate that some appellants may file 

a request for escalation before the 

MAC’s 90-day period has expired; 

prompt notification of when the time 

period will expire and an indication, if 

possible, of when the MAC anticipates 

issuing its decision, will save appellants 

unnecessary court costs. We also note 

that BIPA has not changed the 

mechanism whereby appellants who are 

dissatisfied with the final decision of 

the Secretary may bring a civil action in 

Federal district court. Section 

1869(b)(1)(A) of the Act provides that 

judicial review of the Secretary’s final 

decision continues to be governed by 

section 205(g) of the Act. Under that 

provision, appellants seeking judicial 

review of the Secretary’s action must 

file a civil action within 60 days of the 

Secretary’s decision, or within any 

additional time allowed by the 

Secretary. We believe that the notice we 

intend to provide under § 405.1132(b) is 

within our authority under section 

205(g), and will provide a useful 

benchmark for both appellants and the 

11456 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

courts to determine when a civil action 

in an escalated case is timely filed. We 

have revised the regulation text of 

§ 405.1132(b) to make the effect of the 

notice clearer.

Similarly, we have retained, at 

§ 405.1134, the provision carried over 

from SSA’s appeals regulations that 

allows the MAC to extend the time to 

file a civil action for good cause. This 

regulation is also consistent with the 

language in section 205(g) quoted above, 

and provides protection for beneficiaries 

and other appellants who may need 

additional time to file a civil action or 

who wish to protect their right to 

commence a civil action while a request 

to the MAC to reopen its action is 

pending. In our experience, the above 

provisions are particularly helpful to 

beneficiaries proceeding pro se and in 

no way diminish their access to the 

Federal courts. 

c. Conduct of ALJ Hearing—General 

Rules 

In our November 15, 2002 proposed 

rule, we discussed how ALJ hearings in 

Medicare cases are currently conducted 

and how we proposed to conduct those 

hearings in the future. Section 

1869(b)(1)(A) of the Act, as amended by 

BIPA, provides that any individual who 

is dissatisfied with an initial 

determination can request a 

reconsideration, as well as a hearing, 

provided that the request for the hearing 

is timely filed and that the amount in 

controversy requirements are met, as 

provided by section 205(b) of the Act. 

Traditionally, the Secretary has granted 

individuals entitled to a 205(b) hearing 

an in-person hearing. Regulations at 20 

CFR § 404.948, which are incorporated 

into the current regulations governing 

Part A and Part B appeals, allow an 

appellant to waive an in-person hearing 

and request a decision based on the 

written record. We stated in the 

proposed rule that we would continue 

that policy and we did not receive any 

comments on this proposal. 

We also indicated in the proposed 

rule that we intend to offer appellants 

an opportunity for hearings by 

telephone or videoteleconferencing 

(VTC), as available. We note at the time 

the proposed rule was published, VTC 

was available only at selected hearing 

sites throughout the country. We also 

explained the advantages of offering 

telephone and VTC hearings as 

alternatives to in-person hearings. These 

advantages include: (1) Providing a 

hearing in a convenient setting for 

beneficiaries who have trouble traveling 

even short distances; and (2) providing 

a more convenient site for providers and 

suppliers who may not wish to travel to 

a more distant hearing site. Finally, we 

stated that we were proposing the above 

alternatives to an in-person hearing 

because we believed they would enable 

ALJs to complete more cases within the 

90-day adjudication period and give 

some appellants, who currently waive 

their right to a hearing and request an 

on-the-record decision because of 

traveling or scheduling difficulties, an 

opportunity to present their case orally. 

On January 5, 2001, SSA issued a 

proposed rule in which it proposed to 

authorize use of VTC in conducting 

hearings before ALJs. See 66 FR 1059. 

SSA’s final rule with comment (68 FR 

5211), published February 3, 2003, 

addressed the public comments on the 

proposed rule and invited comment on 

the one significant change in the final 

rule, which provides that appellants 

may object to VTC only with respect to 

their own appearance. Because SSA’s 

ALJs have been conducting Medicare 

hearings, the reasons articulated in the 

final rule with comment for adopting 

VTC as a alternative to an in-person 

hearing reflect SSA’s experience with 

conducting Medicare hearings, as well 

as retirement and disability hearings. In 

responding to public comments, the 

final rule with comment identifies the 

factors that supported including VTC as 

a means of providing a 205(b) hearing. 

In summary, SSA found that: 

• Use of VTC, where available, has 

decreased the necessity of sending ALJs 

to remote sites to hold in-person 

hearings. This, in turn, has decreased 

processing times, since to make travel to 

remote hearing sites as effective as 

possible, ALJ hearing offices ordinarily 

wait until they have a sufficient number 

of hearing requests to schedule a full 

day of hearings. 

• Use of VTC decreases the difficulty 

of obtaining expert witnesses for a 

hearing, since it can be difficult to find 

medical experts who are available to 

travel to remote sites. 

• The time ALJs have spent traveling 

to remote sites can be used to perform 

their adjudicatory responsibilities. 

• Surveys of appellants, including 

beneficiaries, rated VTC procedures 

positively. A large percentage has rated 

the procedures as ‘‘convenient’’ or ‘‘very 

convenient.’’ Test data showed that 

processing time for these hearings was 

substantially less than for hearings 

conducted at remote sites, and that the 

ratio of hearings held to hearings 

scheduled was significantly higher for 

hearings using VTC procedures than for 

hearings scheduled in person.

Because SSA’s regulations at 20 CFR, 

part 404 subpart J governing procedures 

for ALJ hearings are incorporated by 

reference in the former regulations 

governing Part A and Part B appeals, 

SSA’s VTC rules, codified at 20 CFR 

§§ 404.929, 404.936, 404.938 and 

404.950, have been effective for Part A 

and Part B ALJ hearings since March 5, 

2003. Like other relevant SSA rules, we 

have incorporated certain policies 

regarding the use of VTC into this 

interim final rule. (On December 11, 

2003, SSA issued a final rule on VTC, 

which responded to comments on the 

February 3, 2003, rulemaking, but did 

not change any of the regulation text. 

See 68 FR 69003). Thus, where 

available, ALJs have been conducting 

hearings via VTC in Medicare cases for 

over a year. Our knowledge of this new 

process, as well as our experience with 

telephone and in-person hearings and 

on-the-record decisions, forms the basis 

of our responses to the comments 

described below. 

Comment: One commenter states that 

the proposed rule does not indicate 

whether a party may object to the type 

of hearing (in-person, by VTC, or by 

telephone) scheduled by the ALJ. The 

commenter also notes that a proposal for 

Medicare ALJ hearings conducted by 

telephone was rejected after criticism 

from claimant organizations, legal 

groups and other organizations was 

received. One of the main concerns at 

that time was a fact finder’s potential 

difficulty in assessing witness 

credibility and demeanor in a telephone 

hearing. 

Response: This interim final rule 

makes clear that an appellant can object 

to the type of hearing scheduled by the 

ALJ, including proceedings by 

telephone or VTC. As noted in our 

discussion in the proposed rule, some 

appellants waive any type of oral 

hearing on the grounds that they believe 

that written submissions to the ALJ will 

adequately present their case. In the 

past, others have waived the right to an 

oral hearing, stating that they are unable 

to leave their homes or cannot travel as 

far as the ALJ hearing office or other 

designated site. In our experience, 

telephone and VTC hearings offer an 

opportunity for individuals to present 

their case orally without the burden of 

extensive travel and, thus, provide an 

alternative to presenting their case 

solely in writing. Given these 

advantages and benefits, we are 

convinced of the advantages of 

incorporating VTC procedures into the 

Medicare hearings process, particularly 

in view of the BIPA time frames. 

Therefore, we have revised § 405.1020 

to require ALJ hearings to be conducted 

by VTC if the VTC technology is 

available, but allow the appellant to 

request an in-person hearing, which will 

be granted upon a finding of good cause, 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11457

with the understanding that the request 

constitutes a waiver of the 90-day time 

frame for holding a hearing and 

rendering an opinion. 

ALJs may determine that an in-person 

hearing should be conducted if VTC 

technology is not available or special or 

extraordinary circumstances exist. For 

example, an ALJ could find special and 

extraordinary circumstances for holding 

an in-person hearing when the case 

presents complex, challenging or novel 

presentation issues that necessitate an 

in-person hearing. Similarly, an 

appellant’s proximity to and ability to 

go to the local hearing office for the 

hearing may constitute special and 

extraordinary circumstances that 

warrant the scheduling of an in-person 

hearing. 

Additionally, § 405.1020(e)(4) of this 

interim final rule specifies that a party 

who objects to either a VTC or 

telephone hearing has a right to request 

an in-person hearing, which will be 

granted upon a finding of good cause. 

An ALJ could find good cause to grant 

a request for an in-person hearing when 

a party demonstrates that the case 

presents complex, challenging or novel 

presentation issues that necessitate an 

in-person hearing. Similarly, an ALJ 

may find good cause to schedule a 

hearing based on a party’s proximity to 

and ability to go to the local hearing 

office. Consistent with SSA’s current 

policy, § 405.1020(i)(5) provides that a 

party may object to the use of a VTC or 

telephone hearing only with respect to 

his or her own testimony, but not with 

respect to the entire hearing. 

We anticipate that providers and 

suppliers will be particularly interested 

in VTC hearings, because they reduce 

the amount of nonproductive travel time 

previously associated with in-person 

hearings. 

We believe that VTC and telephone 

hearings are convenient not only for 

providers and suppliers, but also for 

beneficiaries and their representatives. 

In particular, we note that many 

beneficiaries are represented by an adult 

child whose ability to take time off from 

work to attend an in-person hearing is 

often limited. Use of telephone hearings 

and VTC enables these individuals to 

pursue their parents’ appeals without 

undue disruption of their daily routine. 

Moreover, because the interim final rule 

makes clear that an in-person hearing 

may be requested by all appellants, 

appellants who believe that their appeal 

can be presented effectively only in 

person, will have the right to request an 

in-person hearing, which will be 

granted upon a finding of good cause. In 

light of the new policy on the use of 

VTC and telephones for ALJ hearings, 

§ 405.1020, § 405.1022, and § 405.1036 

require ALJs to conduct VTC hearings 

whenever the technology is available 

and allow ALJs to offer to conduct 

telephone hearings if the hearing 

request or administrative record 

suggests that a telephone hearing may 

be more convenient for one or more of 

the parties. 

d. Actions That Are Reviewable by an 

ALJ 

Current regulations governing the Part 

A and Part B appeals process do not 

provide ALJs jurisdiction to overturn 

dismissals issued by a contractor or a 

carrier hearing officer. In the proposed 

rule, we proposed giving ALJs the 

authority to decide or review all final 

actions issued by a QIC, including 

dismissals for untimely filing, failure to 

exhaust administrative remedies, or res 

judicata. The proposed rule also 

specifies that if an ALJ decides that the 

QIC’s dismissal is improper, the ALJ 

will remand the case to the QIC for a 

substantive decision.

Comment: One commenter questions 

the propriety of allowing an ALJ to 

review a contractor’s dismissal order 

and whether that review constitutes a 

reopening of the contractor’s action. 

Response: Under the pre-BIPA 

appeals process, ALJs have sometimes 

identified contractor dismissals that 

were inappropriate. Because the 

regulations did not provide appellants a 

direct right of appeal of dismissals, 

referring those cases to CMS or the 

contractor was cumbersome and 

delayed the resolution of the appellant’s 

appeal. We believe that providing a 

direct right of appeal will provide both 

a simpler and more cost-effective 

method to challenge a dismissal the 

party believes is inappropriate. Because 

we are providing a direct appeal right, 

the ALJ’s remand to the contractor is not 

a reopening of the contractor’s dismissal 

order. To clarify the effect of the remand 

order, we have revised § 405.1004(b) to 

provide that when the ALJ determines 

that the QIC’s dismissal was in error, the 

ALJ will vacate the QIC’s dismissal and 

remand the case to the QIC for a 

reconsideration. Consistent with the 

discussion above regarding appeals to 

QICs of contractor dismissals, appeals of 

dismissals will be permitted only at the 

next adjudicative level, and we have 

added § 405.1004(c) to clarify that an 

ALJ’s decision regarding a QIC’s 

dismissal of a reconsideration request is 

final and there is no subsequent appeal 

right. 

e. Authorities That Are Binding on an 

ALJ 

In the proposed rule, we explain that 

the Medicare statute, CMS regulations, 

and CMS Rulings bind ALJs. Prior to 

BIPA, ALJs and the MAC were also 

bound by NCDs, based on section 

1862(a)(1) of the Act, but not NCDs, 

based on other statutory provisions. 

Under BIPA, all NCDs, whether based 

on section 1862(a)(1) of the Act or on 

other grounds, are binding on ALJs and 

the MAC. This change is reflected in 

§§ 405.732 and 405.860, as amended at 

68 FR 63692, 63715, 63716 (November 

7, 2003), and is also reflected in 

§ 405.1060 of this interim final rule. 

We also note a change in this interim 

final rule to § 401.108, which pertains to 

the binding nature of CMS Rulings on 

CMS components, and SSA to the extent 

that it adjudicates matters under the 

jurisdiction of CMS. In light of the 

transfer of responsibility for the ALJ 

hearing function from SSA to HHS, we 

are amending § 401.108(c) and creating 

a new § 405.1063 to specify that CMS 

Rulings bind HHS components that 

adjudicate matters under CMS’

jurisdiction. We recognize that this is an 

expansion of the current policy, but 

believe this new requirement will help 

ensure consistency among appeals 

decisions. 

In the proposed rule, we also address 

the degree to which ALJs and the MAC 

must defer to non-binding CMS and 

contractor policies such as LCDs, 

LMRPs, manual instructions and 

program memoranda. As reflected in 

proposed § 405.992, ALJs and the MAC 

are expected to give deference to these 

policies. The proposed regulations also 

provide, however, that a party can 

request that an ALJ or MAC disregard a 

policy, but the request must provide a 

rationale for why the policy should not 

be followed in the particular case. 

Comment: Several commenters 

disagreed with the proposed regulation, 

because they believed that it placed an 

undue burden on appellants, 

particularly unrepresented beneficiaries, 

to identify policies applicable to their 

case and to explain why the policy 

should not be followed. 

Response: New § 405.1060 through 

§ 405.1062 alter the regulation text 

proposed under § 405.992 to clarify the 

applicability of NCDs, LCDs, LMRPS, 

and CMS program guidance to ALJs and 

the MAC. Section 405.1062 gives ALJs 

and the MAC the authority to consider 

whether guidance documents (for 

example, LCDs, LMRPs, and manuals) 

should apply to a specific claim for 

benefits on their own motion, rather 

than doing so only at the appellant’s 

11458 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

request. This eliminates barriers for 

those beneficiaries who are not able to 

raise these issues on their own. We note, 

however, that particularly with the 

advent of the Internet, an increasing 

number of beneficiary appeals contain 

challenges to medical policies citing 

medical research and other grounds. 

These appeals will be easier to pursue 

because notices of redetermination 

under § 405.956 will now include more 

detailed explanations concerning the 

basis for a claim denial, including the 

application of a LMRP or LCD. 

Comment: Requiring ALJs to defer to 

CMS and contractor policy alters the 

ALJ’s role as an independent fact finder 

and, thus, changes the character of a 

205(b) hearing.

Response: We disagree with the 

commenter’s characterization of the 

proposed hearing process. Under this 

regulation, ALJs will continue their 

traditional role as independent 

evaluators of the facts presented in an 

individual case. Requiring an ALJ to 

consider CMS policy and give 

substantial deference to it, if applicable 

to a particular case, does not alter the 

ALJ’s role as fact finder. Indeed, ALJs 

have always been bound by Medicare 

policies included in CMS regulations, 

CMS rulings, and NCDs based on 

section 1862(a)(1) of the Act. 

The Federal courts have considered 

and applied deference standards in 

considering the validity of various 

Medicare policies, and have also 

recognized that ALJs and the MAC 

properly consider issues relating to 

deference as well. For example, in 

Abiona v. Thompson, 237 F. Supp. 2d 

258 (E.D.N.Y. 2002), the court upheld a 

decision in which the MAC denied 

anesthesiologists’ requests for payment 

of post-surgical administration of 

patient-controlled analgesia (PCA). In its 

decision, the MAC relied, inter alia, on 

the preamble to the Medicare physician 

fee schedule and a CMS program 

memorandum, both of which provided 

that payment for physician services 

related to PCA was included in the 

global fee paid to the surgeon and, 

therefore, was not routinely payable to 

anesthesiologists. 

In response to the above comments 

and to provide a clearer standard of 

review, we have revised the regulation 

to provide that: (1) ALJs and the MAC 

must give substantial deference to LCDs, 

LMRPs, CMS manuals or other program 

guidance; (2) the applicability of a CMS 

manual instruction or other non-binding 

issuance may be raised by either the 

appellant or the MAC or ALJ on their 

own motion; and (3) the ALJ or MAC 

may decline to follow a policy in a 

particular case, but must explain the 

reason why the policy was not followed. 

These decisions apply only for purposes 

of the appeal in question, and do not 

have precedential effect. 

The ALJ or MAC will review the facts 

of the particular case to determine 

whether and how the policy in question 

applies to the specific claim for benefits. 

If an ALJ or MAC decision concludes 

that a policy should not be followed, the 

decision will explain why the policy 

was not followed in light of the facts of 

the particular case. We believe this will 

provide a useful framework for deciding 

cases in which a particular, non-binding 

policy is the focus of the appeal. 

Section 522 of BIPA created a new 

coverage appeals process that enables 

certain beneficiaries to challenge LCDs 

and NCDs. Because a beneficiary can 

conceivably bring an appeal under both 

the section 522 coverage appeals 

process and the section 521 claims 

appeal process, we are clarifying in this 

interim final rule how adjudicators will 

handle simultaneous appeals. These 

clarifications are consistent with CMS’

final rule that created the new process 

to allow LCD and NCD challenges. See

68 FR 63692 (November 7, 2003). If a 

party appeals a denial that is based on 

an LCD or NCD by filing only a claim 

appeal, then adjudicators will apply the 

coverage policy that was in place on the 

date the item or service was received, 

regardless of whether some other 

beneficiary has filed a coverage appeal 

based on the same LCD or NCD. This 

policy is consistent with original 

Medicare policy that requires changes to 

LCD or NCDs to be applied 

prospectively to requests for payment. 

If an appellant files both a claim and 

a coverage appeal based on the same 

initial determination, both appeals will 

go forward. The claim appeal 

adjudication time frames will not be 

impacted because the appeals will be 

conducted simultaneously. In 

adjudicating the claim appeal, 

adjudicators will apply the coverage 

policy that was in place on the date the 

item or service was provided, unless the 

appellant receives a favorable coverage 

appeal decision. If the appellant 

receives the favorable coverage decision 

prior to a decision being issued for the 

claim appeal, then pursuant to 42 CFR 

§ 426.488 and § 426.560, the claim 

appeal will be adjudicated without 

consideration of the invalidated LCD or 

NCD provision(s). If an appellant 

receives a favorable decision in the 

coverage appeal after receiving an 

unfavorable claim appeal decision, then 

the appellant is entitled to have the 

claim appeal reopened and revised for 

good cause, subject to the provisions in 

§ 405.980 and § 405.986, without 

consideration of the invalid LCD or NCD 

provision(s). As a result of these 

clarifications, we have added 

§ 405.1034(c) to permit ALJs to remand 

an appeal to a QIC in this situation. 

f. Aggregating Claims To Meet the 

Amount in Controversy 

Prior to the enactment of section 521 

of BIPA, the statute and regulations 

provided different amounts in 

controversy for Part A and Part B 

appeals. Under Part A, an appellant 

received a reconsideration of the initial 

determination regardless of the 

monetary value of the claim, but had to 

meet a $100 threshold to receive a 

hearing before an ALJ. Similarly, an 

appellant contesting an initial 

determination issued on a Part B claim 

received a review determination 

regardless of the amount in controversy. 

However, there was a $100 amount in 

controversy requirement for a Part B 

carrier hearing and a $500 threshold for 

an ALJ hearing with respect to a Part B 

claim determination (except for home 

health where the threshold for ALJ 

appeals was $100).

The pre-BIPA aggregation provisions 

found at former section 1869(b)(2) of the 

Act directed the Secretary to devise a 

system for allowing appellants to 

combine claims to meet the amount in 

controversy as follows:

In determining the amount in controversy, 

the Secretary, under regulations, shall allow 

two or more claims to be aggregated if the 

claims involve the delivery of similar or 

related services to the same individual or 

involve common issues of law and fact 

arising from services furnished to two or 

more individuals.

The Secretary implemented the above 

provisions in a final regulation 

published March 16, 1994 (the existing 

regulations can be found in § 405.740 

and § 405.817). The regulation 

established two methods of aggregation: 

one for individual appellants and one 

for multiple appellants. Individual 

appellants appealing either Part A or 

Part B claims were allowed to aggregate 

two or more claims within a specified 

period, regardless of issue, to meet the 

jurisdictional minimums for a carrier 

hearing and ALJ hearing. Multiple 

appellants, however, were allowed to 

aggregate their claims only under the 

statutory requirements; that is, if the 

claims involved the delivery of similar 

or related services to the same 

individual or common issues of law and 

fact arising from services furnished to 

two or more individuals. 

BIPA 521 changed the amount in 

controversy requirements. Section 

1869(b)(1)(E) of the Act provides that 

the amount in controversy for an ALJ 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11459

hearing will be $100 for appeals of both 

Part A and Part B claims. In addition, 

the aggregation provisions were revised: 

Two or more appeals are allowed to be 

aggregated when the appeals either 

involve the delivery of similar or related 

services to the same individual by one 

or more providers and suppliers, or 

there are common issues of law and fact 

arising from services furnished to two or 

more individuals by one or more 

providers or suppliers. 

In the proposed rule, we proposed to 

limit aggregation of claims under BIPA 

to those that meet the statutory 

requirements for aggregation, that is, 

those that involve the delivery of similar 

or related services to the same 

individual, or common issues of law 

and fact arising from services furnished 

to two or more individuals. Individual 

appellants will no longer be allowed to 

aggregate all timely filed claims, 

regardless of issue. We explained that 

this change was appropriate because 

under BIPA, unlike the previous appeals 

system, appellants will have a right to 

appeal to an independent contractor (a 

QIC) regardless of a claim’s monetary 

value. We also proposed the following 

related policies: 

• To continue our pre-BIPA policy of 

restricting claims that may be aggregated 

to those that are appealed within 60 

days after receipt of all reconsiderations 

being appealed, because to do otherwise 

would in essence extend the time to file 

a request for hearing beyond the 60-day 

limit; 

• To provide separate rules for claims 

that are escalated from the QIC to the 

ALJ level to ensure that only appeals 

that meet the amount in controversy 

requirements are escalated to the ALJ 

level; and 

• To require appellants to explain in 

their request for aggregation why they 

believe the claims involve common 

issues of law and fact or the delivery of 

similar or related services. 

Comment: Two commenters believe 

that the proposed limits on aggregation 

are too restrictive, because some claims 

with low dollar amounts, but involving 

important issues, will not reach the ALJ 

level. One commenter added that there 

are some claims, such as therapy 

evaluations, that usually fall below the 

$100 limit. Another commenter 

recommended that the 60-day deadline 

to file a request for ALJ hearing be tolled 

to enable an appellant to aggregate the 

appeal with another claim still pending 

with the QIC. 

Response: The statute requires ALJs 

and the MAC to apply the applicable 

amount in controversy standard under 

§ 405.1006 for an ALJ hearing. 

Moreover, as we noted in the preamble 

to the proposed rule, with the creation 

of the QICs, appellants will have access 

to a review by an independent 

contractor regardless of a claim’s 

monetary value. Our experience 

suggests that the large majority of Part 

A and Part B appeals decided by the 

QICs will equal or exceed the threshold 

amount in controversy. We also believe 

that the QIC review will provide 

sufficient due process for claims below 

the threshold amount in controversy. (In 

addition, as noted below, the Congress 

has recently provided that the amount 

in controversy be increased annually 

beginning in 2005.) Moreover, as 

explained in the proposed rule, 

extending or tolling the time for an 

appellant to aggregate a claim with 

another would in essence extend the 

statutory deadline to file a request for 

hearing beyond the 60-day deadline and 

would also prevent ALJs and the MAC 

from completing appeals within the 

statutory deadlines. 

Comment: Several commenters asked 

for specific guidance in calculating the 

amount in controversy for services 

where reimbursement is governed by a 

specific formula or fee schedule. 

Response: The interim final rule does 

not alter the pre-BIPA regulation’s 

instructions for calculating the amount 

remaining in controversy. Regardless of 

the type of service or payment 

methodology, the amount remaining in 

controversy for an ALJ hearing is 

computed as the actual amount charged 

the individual for the items and services 

in question, less any amount for which 

payment has been made by the initial 

contractor or ordered by the QIC, and 

less any deductible and applicable 

coinsurance amounts. (Section 

405.1006(d)(1)). 

Finally, section 940(b)(1) of the MMA 

provides that, for requests for an ALJ 

hearing or judicial review made after 

2004, the amount in controversy 

thresholds will be increased by the 

percentage increase in the medical care 

component of the consumer price index 

for all urban consumers (U.S. city 

average) for July 2003 to the July 

preceding the year involved. Amounts 

determined under this formula that are 

not a multiple of $10 will be rounded 

to the nearest multiple of $10. We have 

proposed to revise § 405.1002, 

§ 405.1006, and § 405.1136(a) to reflect 

this statutory change. When this 

formula results in revisions to the 

amount in controversy, CMS will alert 

the public through a Federal Register

notice, or other appropriate vehicle.

g. The ALJ Hearing 

(1) When CMS or Its Contractors May 

Participate in an ALJ Hearing 

As we explained in the proposed rule, 

previous regulations have not addressed 

whether CMS or its contractors can 

participate in ALJ hearings. Occasions 

have arisen, however, in which an ALJ 

has determined that input from CMS or 

a contractor will help resolve an issue 

in a case. In some instances, ALJs have 

requested position papers, testimony, or 

other evidence from CMS or a 

contractor, but these proceedings have 

been cumbersome, because the 

regulations did not provide specific 

procedures for input. After reviewing 

the outcome of other cases, CMS, as 

well as the Department’s Office of 

Inspector General (in its report issued in 

September 1999 (OEI–04–97–00160)), 

concluded that the cases might have 

been resolved more appropriately if 

CMS or the contractor had been party to 

the appeal. 

In response to the above concerns, we 

included several provisions in the 

proposed rule that define the extent to 

which CMS and its contractors may 

participate in the hearing process. We 

were also mindful that section 

1869(c)(3)(J) of the Act specifically 

provides that the new independent 

contractors, the QICs, will participate in 

hearings to the extent required by the 

Secretary. Consistent with this 

provision, we proposed to revise our 

regulations to allow a representative of 

CMS, or a CMS contractor, to participate 

in an ALJ hearing at the request of an 

ALJ, the QIC or CMS. Participation may 

include filing position papers (within 

the time frame specified by the ALJ) or 

providing testimony to clarify factual or 

policy issues in a case, but will not 

include those aspects of full party status 

(for example, the right to call witnesses 

or to cross-examine the witnesses of the 

appellant or another party to the 

hearing). Because the role of a 

participant will be non-adversarial, we 

proposed to allow participation of the 

QIC, CMS, or CMS’ contractors in cases 

brought by all appellants, including 

beneficiaries. We also explained in the 

proposed rule that an ALJ will not have 

the authority to require CMS or a 

contractor to participate in a case, nor 

may the ALJ draw any inferences if CMS 

or a contractor decides not to 

participate. Consistent with the practice 

before an ALJ, we amended § 405.1120 

and § 405.1124 by adding language to 

clarify that the MAC is prohibited from 

drawing any adverse inferences if CMS 

or a contractor decides not to participate 

in a MAC review. 

11460 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

In addition, we proposed allowing 

CMS or its contractor to enter an appeal 

at the ALJ level as a party, unless an 

unrepresented beneficiary brings the 

appeal. In this circumstance, CMS or its 

contractor will have all the rights of a 

party, including the right to call 

witnesses or cross-examine other 

witnesses, to submit additional 

evidence within the time frame 

specified by the ALJ, and to seek MAC 

review of a decision adverse to CMS. 

Similar to the participation rules, an 

ALJ will not have the authority to 

require CMS or a contractor to enter a 

case as a party or to draw any inferences 

if it does not participate in the case. 

One reason for these proposals is to 

allow ALJs and the MAC to resolve 

issues of fact and law more quickly and 

reduce the need for remands for 

additional development. Another aim is 

to reduce the number of cases referred 

to the MAC for own motion review 

because factual issues have not been 

addressed during the ALJ proceedings. 

In that regard, we note that these new 

regulations link CMS’ ability to refer 

certain types of cases to the MAC for 

own motion review to the extent to 

which CMS has been a party or has 

participated in the appeal below. For 

example, under § 405.1110(b), if CMS or 

its contractor does not participate as a 

party or otherwise in a case at the ALJ 

level, any subsequent referral to the 

MAC for own motion review is limited 

to ALJ decisions or dismissals 

containing errors of law or a broad 

policy or procedural issue that may 

affect the public interest. This provision 

affords appellants a measure of 

administrative finality when CMS 

chooses not to participate as a party or 

otherwise in a case at the ALJ level and 

the resolution of the case hinges on the 

weight of the evidence rather than the 

controlling law and policy. 

Comment: Although we received 

some positive comments concerning 

expanding CMS’ role in the appeals 

process, most of the commenters who 

addressed this aspect of the proposed 

regulations are opposed or suggested 

modifications to the process. Those 

opposed are concerned that allowing 

CMS or its contractors to be parties or 

participate will change the nature of the 

hearing from an informal process to an 

adversarial hearing process not 

contemplated by the Congress. Some of 

these commenters stated that the change 

will particularly disadvantage 

beneficiaries. 

Response: We disagree to some extent 

with the commenters’ characterization 

of the nature of the ALJ hearing process 

under the pre-BIPA statutory and 

regulatory scheme. While CMS or its 

contractors are not explicitly recognized 

as parties in fee-for service appeals 

under the pre-BIPA statute (former 

section 1869(b)(2) of the Act), appeals 

brought by enrollees of managed care 

organizations (MCOs) are, by statute and 

regulation, adversarial at the ALJ, MAC, 

and Federal district court levels. 

Notably, sections 1852(g)(5) and 

1876(c)(5)(B) of the Act, which reference 

the right to a ‘‘205(b) hearing,’’ provide 

that the MCO, as well as the enrollee, is 

a party to the hearing. MCOs that 

receive adverse decisions at the ALJ and 

MAC levels may appeal those decisions 

to the MAC and Federal district court, 

as applicable. 

Our experience with these managed 

care hearings and appeals suggests that 

most beneficiaries, including those who 

are not represented, are able to 

participate fully in the hearing process 

even when the MCO appears at the 

hearing. This is due, in part, to the 

control exercised by the ALJ, one of 

whose roles is to ensure that all parties 

receive a full and fair hearing. We 

expect that ALJs will continue to fulfill 

this role under these new rules for feefor-service appeals. Neither the existing 

nor the proposed regulations 

contemplate that the ALJ will conduct a 

trial-like proceeding with formal rules 

of evidence. (Moreover, as noted above, 

CMS or its contractors may not invoke 

full party status when the appellant is 

an unrepresented beneficiary.)

In addition, fee-for-service appeals 

conducted under 42 CFR part 405, 

subparts G and H, are currently 

adversarial when liability under 

sections 1879 or 1842(l)(1)(C) of the Act 

is an issue. When a provider or supplier 

has concluded that the service it 

provided to a beneficiary is not covered 

and asserts that it has informed the 

beneficiary of potential non-coverage 

before providing the service, the 

interests of the provider or supplier and 

the beneficiary concerning liability are 

adverse and can be contested during the 

ALJ hearing. 

We also disagree with the 

commenters’ conclusion that the 

Congress did not envision that CMS or 

its contractors might, in some instances, 

be represented at a hearing and before 

the MAC. As noted in the proposed rule, 

section 1869(c)(3)(J) of the Act provides 

that the new independent contractors, 

the QICs, will participate in hearings to 

the extent required by the Secretary. 

This is a clear indication that the 

Congress recognized the benefit of 

agency participation in the appeals 

process. Thus, we continue to believe 

that limited expansion of CMS role in 

the ALJ hearing process is appropriate, 

necessary, and consistent with the 

statute. 

Comment: As noted above, several 

commenters favored the provision 

allowing CMS’ and its contractors to 

invoke party status or otherwise 

participate at the hearing level, stating 

that participation will create a full and 

fair record. These commenters suggested 

various changes to the regulations to 

clarify who may participate and how the 

various parties to the hearing would be 

notified. 

Response: Consistent with the above 

comments, we expect that allowing 

CMS or a contractor party status or 

participation, combined with the new 

rules concerning the submission of 

evidence, will create a record that is 

more complete at an earlier stage in the 

appeals process. These commenters 

noted the benefit to the Medicare 

program of a fully developed record that 

clearly conveys the program’s coverage 

and payment policies. We believe a 

fully developed record will benefit all 

participants to the hearing. For example, 

after the statute was amended in 1986 

to provide for ALJ hearings for Part B 

claims, some beneficiaries appealed the 

amount of payment awarded to their 

physicians under the reasonable cost 

system because they did not understand 

how the amounts had been calculated. 

In those circumstances, the hearing and 

resulting decision essentially served an 

informational purpose. Similarly, CMS 

participation at a hearing may assist 

beneficiaries, as well as adjudicators, in 

understanding concepts (for example, 

the distinction between hospital 

inpatient and observation admissions) 

that may affect coverage for certain 

benefits. We also hope to alleviate the 

difficult position that many ALJs 

currently face in adjudicating a case 

completely and impartially when the 

appellant introduces expert evidence, in 

the form of testimony, for the first time 

during the ALJ proceedings, and the ALJ 

does not have a routine avenue of 

obtaining information on the same topic 

from the agency. 

We also expect that a fully developed 

record at the ALJ level or below will 

lead to a reduction in MAC remands to 

the ALJ level, as well as CMS referrals 

to the MAC for own motion review. In 

order to encourage this development, 

§ 405.1110(c)(2) provides that if CMS or 

its contractor does not participate at the 

ALJ level, the MAC will exercise own 

motion review only if the ALJ’s action 

contains an error of law or abuse of 

discretion material to the outcome of the 

case, or if the case presents a broad 

policy or procedural issue that may 

affect the general public interest. In 

other words, cases in which CMS or its 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11461

contractor decide not to participate at 

the ALJ level as a party or otherwise 

will not be reviewed by the MAC on its 

own motion if the perceived error 

concerns the ALJ’s evaluation of the 

facts of the case rather than an error of 

law or procedure. 

Proposed section 405.1000 listed the 

types of contractors that may participate 

as parties in hearings before an ALJ, to 

include Quality Improvement 

Organizations (QIOs). Therefore, we 

have amended § 405.1000 to include 

this technical change.

Comment: Several commenters noted 

that the proposed regulations do not 

address sufficiently how the 

participation of CMS or its contractors 

will affect ALJ hearing procedures such 

as the issuance of the notice of hearing 

and the potential for discovery. 

Response: We have modified several 

of the regulations to clarify how a 

hearing will be handled when CMS or 

its contractor invokes party status or 

decides to participate in a hearing. For 

example, in § 405.1020(c) we require the 

ALJ to send a copy of the notice of 

hearing to both the QIC and the 

contractor that issued the initial 

determination. (The QIC or the 

contractor will be responsible for 

advising CMS of any significant cases in 

which the agency may decide to 

participate.) 

Comment: Several commenters raised 

concerns that the proposed regulations 

contain more formal procedures than 

the previous regulations and will, 

therefore, inhibit the ability of an 

unrepresented beneficiary to pursue an 

appeal. 

Response: Many of the provisions 

cited by the commenters are identical to 

those that have been part of the current 

regulations since 1980 and, in our 

experience, have not been difficult for 

unrepresented beneficiaries to follow. 

For example, a few commenters 

suggested that the requirement that a 

beneficiary object to the issues in the 

notice of hearing will require the 

beneficiary to file formal objections or 

pleadings. This is not the intent of the 

regulation, nor in our experience has it 

inhibited beneficiaries from pursuing 

their requests for hearings. Section 

405.1024 of the regulation is a carryover 

from 20 CFR § 404.939, which has 

applied to Social Security retirement, 

disability, and Medicare hearings since 

August 1980. See 45 FR 52078, 52081 

(August 5, 1980). We decided to 

maintain this regulation not to formalize 

the proceedings, but rather to give 

beneficiaries and other parties the 

opportunity to make corrections in 

those instances, albeit rare, in which the 

ALJ hearing office does not correctly 

identify the issue to be decided or the 

parties to the hearing. It is in the interest 

of the parties and the adjudicator to 

correct these mistakes at the earliest 

opportunity so that hearings do not have 

to be postponed or supplemented 

because necessary parties were not sent 

the notice of hearing or appropriate 

expert witnesses were not obtained 

because the issues before the ALJ were 

not properly identified before the 

hearing. Parties may respond to the 

notice, as they do now, in an informal 

manner. The regulation does not require 

or anticipate formal written 

submissions. 

Comment: Several commenters 

indicated that while the proposed rules 

include a provision for issuing 

subpoenas, they do not require CMS to 

respond to discovery requests or orders. 

Response: BIPA does not explicitly 

provide for discovery during ALJ 

proceedings, and given the time frames 

for adjudications under BIPA, we do not 

envision that most hearings will include 

discovery. However, in light of these 

and other comments relating to 

discovery, we believe it is appropriate to 

permit discovery when an ALJ hearing 

is adversarial (that is, whenever CMS or 

its contractor is a party to an ALJ 

hearing). Therefore, we have added 

§ 405.1037 to permit limited discovery 

when CMS participates in an ALJ 

hearing as a party. Our experience 

indicates that most information that is 

relevant to issues before an ALJ can be 

obtained by direct request by the ALJ or 

subpoena. Therefore, we anticipate that 

extensive discovery will not be 

necessary. 

In general, we allow discovery for 

matters relevant to the specific subject 

matter of the ALJ hearing, but only if 

they are not privileged or otherwise 

protected from disclosure, and the ALJ 

determines that the discovery request is 

not unreasonable, unduly burdensome 

or expensive, or otherwise 

inappropriate. We also limit discovery 

by permitting a party only to (1) request 

of another party the reasonable 

production of documents for inspection 

and copying, and (2) take the deposition 

of another party if the proposed 

deponent agrees to the deposition or the 

ALJ finds that the proposed deposition 

is necessary and appropriate in order to 

secure the deponent’s testimony for an 

ALJ hearing. An ALJ will decide on a 

case-by-case basis the time frame within 

which a party that seeks discovery must 

submit its request and when all 

discovery must be concluded. 

Section 405.1037(d) sets forth rules 

for motions to compel and protective 

orders. A party that files a motion to 

compel or a protective order must also 

include a self-sworn declaration 

describing the movant’s efforts to 

resolve or narrow the discovery dispute. 

As a general rule, the MAC may 

review an ALJ discovery or disclosure 

ruling only during the course of its 

review as specified in § 405.1100, 

§ 405.1102, § 405.1104, or § 405.1110. 

However, there may be immediate MAC 

review where an ALJ’s ruling authorizes 

discovery or disclosure of a matter for 

which an objection based on privilege or 

other protection from disclosure (such 

as case preparation, confidentiality, or 

undue burden) was made to the ALJ. An 

ALJ must stay all proceedings affected 

by a ruling for a minimum of 15 days 

when the ALJ receives notice that a 

party intends to seek MAC review of the 

ruling. If the MAC grants a request for 

review or takes own motion review of a 

ruling, the ALJ ruling will be stayed 

until the MAC issues a written decision 

that affirms, reverses, or modifies, the 

ALJ’s ruling. When CMS requests 

review of an ALJ ruling, the MAC must 

grant the request, and the ruling is 

automatically stayed pending the MAC’s 

order. With respect to requests from a 

party other than CMS for review of a 

discovery ruling, if the MAC does not 

grant review or take own motion review 

within the time allotted for the stay, 

then the stay will be lifted and the 

ruling will stand.

If a party requests discovery against 

another party to the ALJ hearing, the 

ALJ adjudication time frame specified in 

§ 405.1016 will be tolled. Tolling the 

ALJ’s decision-making time frame 

pending resolution of the discovery 

dispute will ensure that ALJs have an 

appropriate opportunity to consider the 

merits of an appeal, while also 

maintaining an appellant’s ability to 

escalate to the MAC if the ALJ is unable 

to issue a decision within the statutory 

time frame. 

In developing the discovery 

procedures, we considered their 

potential effects on appellants and other 

parties to an appeal. We believe that 

reasonable discovery can enhance the 

fairness of proceedings and the accuracy 

of decisions. We also believe that 

discovery should be limited to hearings 

where CMS has joined as a party 

because it has not been previously 

available for ALJ hearings and these 

hearings will be adversarial because of 

CMS party status. Additionally, ALJs 

will not be able to schedule and hold 

hearings in an efficient manner if broad 

discovery is permitted. As previously 

mentioned, we expect the number of 

appeals in which CMS elects to 

participate as a party to be quite low. 

When CMS does participate as a party, 

we expect the need for discovery to be 

11462 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

minimal. Also, because we anticipate 

that the majority of appeals in which 

CMS elects to participate as a party will 

involve overpayments, CMS will not 

arbitrarily invoke party status, subject 

itself to possible discovery requests, and 

risk additional interest liability in an 

attempt to delay the proceedings. 

Therefore, we believe that it is unlikely 

that these procedures regarding 

discovery will negatively impact the 

appellant and other parties to an appeal. 

When all other discovery efforts have 

failed, parties may also obtain evidence 

by requesting subpoenas. The Social 

Security Act provides for the use of 

subpoenas, and the proposed 

regulations, like the current SSA 

regulations applicable to ALJ hearings, 

allow an ALJ, through independent 

initiative or at the request of a party, to 

issue subpoenas concerning the 

attendance and testimony of witnesses 

and production of evidence. The ALJ 

will rule on whether and to what extent 

a party’s requests for subpoenas will be 

granted, taking into account any 

objections that may be raised. We note 

that if a party fails to comply with a 

subpoena, neither the ALJ nor a party 

may seek judicial enforcement; instead, 

the ALJ must make application to the 

Secretary for such enforcement. 

Similarly, the Administrative Procedure 

Act and the current regulations 

applicable to Part A and Part B appeals 

allow the MAC to issue subpoenas. 

Therefore, we have amended § 405.1122 

by adding paragraph (d), which largely 

mirrors § 405.1036(f) and describes the 

MAC’s ability to issue subpoenas and 

the requirements for submitting a 

subpoena request. 

We recognize that this interim final 

rule does not fully discuss how the 

discovery and subpoena provisions 

apply to CMS when it enters an ALJ 

hearing as a party. Therefore, following 

publication of this interim final rule 

containing the regulatory provisions on 

subpoena and discovery procedures, we 

will issue a CMS Ruling clarifying the 

application of these provisions to CMS. 

(2) Issues Before an ALJ 

In the proposed rule, we generally 

adopted the provisions from 20 CFR 

§ 404.946 regarding issues before an 

ALJ. Section 405.1032(a) generally 

discusses the types of issues that an ALJ 

may consider at a hearing. ALJs may 

consider all of the issues brought out in 

the previous determinations that were 

not decided entirely in a party’s favor. 

Under certain circumstances, ALJs may 

also consider issues decided favorably. 

Comment: Some commenters objected 

to § 405.1032(a) allowing an ALJ to 

consider issues decided favorably to a 

party by a QIC or other contractor even 

if those issues are not raised on appeal. 

One commenter suggested that this 

regulation places the ALJ ‘‘in an 

appellate position.’’

Response: This regulation is a direct 

carryover from a currently applicable 

regulation at 20 CFR § 404.946(a). In our 

experience, it is rarely used in the 

Medicare context. We decided to retain 

it, however, to give the ALJ the 

authority to remedy clearly inconsistent 

outcomes that sometimes present 

themselves in a case before an ALJ. For 

example, an ALJ who has been asked to 

reverse a determination that the second 

week of skilled nursing facility services 

was not medically necessary may 

discover that the beneficiary did not 

have a 3-day qualifying inpatient 

hospital stay. Section 405.1032(a) 

allows the ALJ to take jurisdiction of an 

earlier, fully favorable determination 

with respect to the first week of care, 

which is also subject to the 3-day 

qualifying stay requirement, but only if: 

(1) That determination may be properly 

reopened under the reopening 

regulations; and (2) the ALJ gives proper 

notice to the parties that this issue will 

be addressed. Although we anticipate 

that this provision will be rarely 

invoked, we have included it in the 

regulation to address the type of 

situation described above.

Section 405.1032(c) discusses 

whether an ALJ can consider a claim 

that is not the subject of a hearing 

request. This paragraph was added to 

address CMS’’ concerns that ALJs not 

consider claims that have not been 

previously adjudicated. Section 

405.1032(c) prohibits an ALJ from 

taking jurisdiction of a claim that has 

not been adjudicated at the lower 

appeals levels through the QIC level. It 

is important to note the distinction 

between new claims versus new issues 

for purposes of applying § 405.1032. A 

new issue is one that is raised for the 

first time at the ALJ level, that is 

relevant to the dates of service that are 

before the ALJ, but was not previously 

considered in the appeal. For example, 

if a claim was previously denied for a 

reason other than medical necessity and 

the appellant raises a medical necessity 

issue at the ALJ hearing level, the 

medical necessity issue is new, since it 

is relevant to the claim but not the 

original dispute in the appeal. A new 

claim, however, is a claim that has not 

completed the appeals process at the 

through the QIC level. A claim can only 

be combined with an appeal at the ALJ 

level if it has already been reconsidered 

by a QIC. 

(3) Parties to an ALJ Hearing 

In proposed § 405.1020(a), we stated 

that the ALJ must send the notice of 

hearing to ‘‘all parties and the QIC that 

issued the reconsideration 

determination.’’ We received several 

comments concerning whether ALJs are 

always required to send notices of 

hearing to ‘‘all parties.’’

Comment: ALJs currently encounter 

significant difficulties in determining 

who receives the notice of hearing when 

the appeal concerns either a large 

number of initial claims filed by a single 

provider or supplier, or a postpayment 

audit involving statistical sampling and 

a resulting overpayment assessed 

against a provider or supplier. Although 

the beneficiaries who received the items 

or services technically may be parties to 

these appeals, in many instances they 

have not been involved in the 

proceedings below and, due to the 

application of the limitation of liability 

and overpayment provisions, may have 

no financial liability for the services at 

issue. Attempting to locate and send 

notices of hearing to these beneficiaries 

is extremely time-consuming and will 

hinder the ALJ’s efforts to hold a 

hearing and issue a decision within the 

90-day adjudication period. 

Response: We have modified the 

notice of hearings requirements in 

§ 405.1020(c) to clarify that an ALJ is 

not required to send a notice of hearing 

to a party who has not participated in 

the determinations below and whose 

liability status for the items or services 

in dispute has not been altered since the 

initial determination. We believe that 

this will ensure that all parties who 

have an interest in the appeal are given 

an opportunity to participate, while at 

the same time alleviating the ALJ 

hearing office’s obligation to contact 

those individuals who have not pursued 

their appeals rights at the earlier levels, 

or have no financial interest in the 

outcome. However, the regulation does 

not prohibit the ALJ from notifying a 

party who has not previously 

participated in the appeal, if the ALJ’s 

pre-hearing development suggests that 

the party’s interests may be adversely 

affected by the outcome of the case.

h. Filing Requests for ALJ Hearing and 

MAC Review—Time and Place 

Section 1869(b)(1)(D)(ii) of the Act 

provides that ‘‘[t]he Secretary shall 

establish in regulations time limits for 

the filing of a request for a hearing by 

the Secretary in accordance with 

provisions in sections 205 and 206.’’ In 

addition, section 1869(d)(1)(A) of the 

Act provides that ‘‘[e]xcept as provided 

in subparagraph (B), an administrative 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11463

law judge shall conduct and conclude a 

hearing on a decision of a qualified 

independent contractor under 

subsection (c) and render a decision on 

such hearing by not later than the end 

of the 90-day period beginning on the 

date a request for hearing has been 

timely filed.’’ Similarly, section 

1869(d)(2)(A) of the Act provides that 

the MAC ‘‘shall conduct and conclude 

a review of [an ALJ decision] and make 

a decision or remand the case to the 

administrative law judge for 

reconsideration by not later than the 

end of the 90-day period beginning on 

the date a request for review has been 

timely filed.’’

Section 205(b) of the Act gives an 

appellant 60 days to request a hearing. 

The current regulations governing 

appeals of Medicare claims provide for 

appealing from the contractor’s 

determination or decision to an ALJ 

and, thereafter, from the ALJ level to the 

MAC. In the proposed rule, we stated 

that we will continue to require parties 

to file their appeals to the ALJ level and 

the MAC within 60 days. We also stated 

that ALJs and the MAC will continue to 

follow most of the general principles 

currently found in 20 CFR § 404.933 and 

42 CFR § 405.722 when they decide 

whether an appeal has been timely filed 

for purposes of establishing the 

appellant’s right to appeal. These 

regulations provide that an appeal is 

considered filed on the day it is 

received by a Social Security office, 

CMS, including its contractors, an ALJ, 

or, in the case of a request for MAC 

review, the MAC. We stated in the 

proposed rule that we will continue to 

calculate the 60-day filing period based 

on the date the appeal is actually 

received by one of the above offices, as 

reflected in proposed § 405.1014(b). 

However, for purposes of calculating the 

90-day adjudication period that governs 

ALJ and MAC actions, we stated that if 

a request for ALJ hearing was not filed 

directly with the ALJ hearing office or 

a request for MAC review was not filed 

directly with the MAC, the 90-day 

adjudication period would not begin 

until the appeal is received by the ALJ 

or MAC, as applicable. Finally, we 

indicated that in those requests for 

hearing or MAC review in which an 

appellant does not file an appeal within 

the 60-day filing period but contends 

that there is good cause for filing late, 

the 90-day adjudication period will 

begin with the date the good-cause 

explanation is received by the ALJ or 

MAC, as applicable, assuming that the 

ALJ or MAC determines that the 

explanation provides good cause for 

filing the appeal late. 

Comment: We did not receive any 

adverse comments concerning starting 

the calculation of the 90-day 

adjudication period from the date when 

an adjudicator receives an appellant’s 

good cause explanation for filing an 

appeal late. However, we received 

several comments objecting to tolling 

the 90-day adjudication period for 

appeals not filed directly with the ALJ 

hearing office or MAC until the appeal 

reaches the appropriate adjudicator. 

Commenters objected for essentially two 

reasons: (1) They felt that tolling the 

adjudication period was contrary to the 

Congress’ direction that the appeals be 

completed within 90 days and (2) that 

beneficiaries and other appellants must 

not be penalized for delays caused by 

the government and its contractors. 

Suggested solutions included increased 

coordination between SSA and CMS 

local offices with the appeals entities 

and establishing deemed or presumed 

dates of receipt for appeals whose actual 

receipt is delayed because the 

component that initially received the 

appeal does not forward it timely to the 

adjudicator. 

Response: As noted in the proposed 

rule, and discussed in detail above in 

both the contractor and QIC context, 

directing appellants to only one filing 

location will reduce confusion and 

eliminate potential delays in 

transmitting the appeal request. 

Similarly, in the case of ALJ hearings or 

MAC reviews, requiring appellants to 

file their appeals with a single appeals 

entity will be the simplest and most 

efficient way of eliminating the delays 

that concern the commenters. In two 

sections of the proposed rule, SSA was 

listed as a filing location. As mentioned 

previously, given the reduced role of 

SSA in the processing of Medicare 

appeals, we believe that an explicit 

regulatory reference to SSA field offices 

is no longer appropriate. Therefore, we 

have revised § 405.1014(b) and 

§ 405.1106(a) to eliminate the references 

to SSA as an alternative filing location. 

We intend to instruct the QICs to 

include in their reconsideration notices 

the appropriate entity to whom a 

subsequent appeal must be directed. We 

will also continue our efforts to make 

forms for requesting an ALJ hearing and 

MAC review accessible and easy to use. 

In that regard, we note that a specific 

form for requesting MAC review with 

directions for filing under the current 

regulations is available on the 

Departmental Appeals Board’s Web site 

at http://www.hhs.gov/dab.

Consistent with our managed care 

regulations, §§ 405.1106(a) and 

405.1106(b) require that an appellant 

send a copy of the request for review (or 

escalation) to the other parties involved 

in the appeal. Although the MAC will 

not dismiss an appeal on the grounds 

that the appellant failed to satisfy this 

requirement, the adjudication deadline 

will be tolled if the appellant fails to 

copy the other parties. This is one of 

several provisions we will monitor for 

effectiveness, and we will assess the 

need for changes as we gain experience 

with the new process. 

Comment: One commenter suggested 

that the ALJ be required to notify the 

appellant when the request for review is 

received, so that the appellant will 

know when the 90-day adjudication 

period begins.

Response: We agree with the 

commenter. ALJ hearing offices and the 

MAC routinely send acknowledgment 

notices to the appellant when they 

receive a request for hearing or MAC 

review. However, this interim final rule 

requires ALJ hearing requests to be filed 

with the entity specified in the notice of 

reconsideration. Therefore, the decisionmaking time frame begins on the date an 

appeal is timely filed with this entity. 

Accordingly, § 405.1014(b) has been 

modified to require ALJ hearing offices 

to send appellants a notice of the date 

of receipt of an appeal request only 

when a hearing office receives a request 

that was initially filed with an entity 

other than the one specified in the 

notice of reconsideration. Similarly, 

§ 405.1016(a) now requires notice of the 

date of receipt to be sent only when a 

request for MAC review is filed with an 

entity other than the MAC or ALJ 

hearing office. 

i. Adjudication Deadlines 

Section 1869(d)(1)(A) of the Act 

provides that, unless the appellant 

waives the statutory adjudication 

deadline, the ALJ ‘‘shall conduct and 

conclude a hearing on a decision of a 

[QIC]’’ and issue a decision within 90 

days from the date a request for hearing 

is timely filed. As we discussed in the 

proposed rule, we interpret this 

provision as requiring an ALJ to decide 

a case within 90 days only when the 

QIC has issued a final action in a case. 

Therefore, we proposed that when an 

appellant escalates an appeal from the 

QIC to the ALJ level, the proceedings 

before the ALJ will not be subject to the 

90-day limit. 

Comment: As noted in our discussion 

of escalation, we received several 

comments objecting to the above 

proposal. Some commenters stated that 

cases escalated from the QIC level to the 

ALJ level be subject to the 90-day limit, 

and others suggested an extended, but 

still limited, time frame. 

11464 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

Response: As indicated in our 

discussion above, this interim final rule 

requires that ALJs complete their action 

in cases escalated from the QIC level to 

the ALJ level within 180 days of the 

date of receipt of the escalation request. 

We also proposed that the 90-day 

adjudication period be tolled when 

delays in submitting evidence or 

requests for postponement of a hearing 

by an appellant, rather than the ALJ’s 

actions, extend the length of the 

proceedings. We received no specific 

objections to this proposal. Because we 

have now limited cases escalated from 

the QIC level to the ALJ level to a 180-

day adjudication period, we have 

included in the final regulation text that 

an appellant’s actions that delay the 

proceedings will similarly toll the 180-

day adjudication deadline. 

Comment: One commenter asked us 

to clarify the effect of the statutory 

provision that allows an appellant to 

waive the 90-day adjudication period. 

The commenter asked if this provision 

allows an appellant to, in essence, agree 

to an extension of the adjudication 

period for a limited period. 

Response: We agree with the 

commenter that in some instances the 

appellant may benefit by agreeing to a 

limited extension of the adjudication 

period in order to give the ALJ sufficient 

time to obtain additional testimony or 

evidence, or otherwise consider the 

appeal and issue a decision. Section 

405.1036(d), consistent with section 

1869(d)(1)(B) of the Act, allows an 

appellant to waive the adjudication 

period. We have modified that section 

to provide that the waiver may be for a 

specific period of time agreed upon by 

the ALJ and the appellant. 

13. Remand Authority (§ 405.1034) 

In the proposed rule, we noted that 

the current regulations governing 

Medicare appeals do not contain clear 

guidance concerning if and when an 

ALJ can remand a case to a contractor 

for further proceedings. We proposed 

giving ALJs remand authority for three 

specific reasons: (1) When the ALJ 

decides that the QIC’s dismissal of a 

request for reconsideration was 

improper; (2) when the record provided 

to an ALJ lacks the technical 

information needed to resolve the case, 

which only the contractor can provide; 

and (3) when an appellant submits new 

evidence to the ALJ without providing 

a good reason for not providing it at the 

QIC level. 

Comment: We did not receive any 

comments concerning the ALJ’s 

authority to remand when the ALJ 

decides that the QIC’s dismissal of a 

request for reconsideration was 

improper. However, several commenters 

expressed concern that the mandatory 

remand provisions altered the ALJ’s role 

as the trier of fact, as well as the de novo 

aspect of an ALJ hearing. Others 

contend that it will be unfair to restrict 

a party’s right to submit new evidence 

not considered by the QIC, and at the 

same time allow CMS to submit 

evidence and position papers if it 

participates in a case. Many others 

reference specific situations in which 

they said the prohibition concerning the 

introduction of new evidence should 

not be applied, or, alternatively, in 

which good cause to introduce the 

evidence should be found.

Response: As noted earlier in this 

rule, the MMA amended several of 

BIPA’s appeal provisions. Effective 

October 1, 2004, section 1869(b)(3) of 

the Act, as amended by section 933(a) 

of the MMA, requires that a provider of 

services or supplier not introduce 

evidence in any appeal that was not 

presented at the reconsideration 

conducted by the QIC, unless there is 

good cause that prevented the 

introduction of that evidence at or 

before the reconsideration. 

This new statutory provision is more 

restrictive than the proposed rule, in 

which we proposed only to require that 

evidence specifically identified in the 

notice of redetermination be produced 

no later than the reconsideration level. 

In accordance with section 933(a) of the 

MMA, we have amended § 405.1028 and 

§ 405.1122(c) to require providers and 

suppliers to submit all evidence at the 

reconsideration level unless there is 

good cause for not submitting it at, or 

before, that level. Similarly, in 

§ 405.1028, we require beneficiaries 

who are represented by a provider or 

supplier to submit all evidence at the 

reconsideration level unless there is 

good cause for not submitting it at, or 

before, that level. Although the statute 

does not require application of this 

standard to beneficiaries who are 

represented by providers or suppliers, 

we think it is appropriate to extend the 

requirements of section 933(a) to these 

beneficiaries. Doing so will likely 

prevent a provider or supplier from 

subverting the requirement for full and 

early presentation of evidence simply by 

offering to represent a beneficiary, 

rather than appealing on its own behalf. 

In light of these changes, we have 

eliminated the portions of proposed 

§ 405.1030 and § 405.1034 that would 

have required an ALJ to remand a case 

to the QIC when an appellant 

introduced new evidence at the ALJ 

level without good cause. Although an 

ALJ or the MAC may not rely on 

evidence submitted untimely in 

deciding the substantive issue(s) in an 

appeal, unless good cause is found for 

the late submission of evidence, 

§ 405.1042(a)(2) ensures that the 

excluded evidence will become a part of 

the record, and that the ALJ or MAC 

will explain in its action why the 

evidence has been excluded. 

Comment: Several commenters noted 

that, while the appellant’s right to 

submit new evidence beyond the QIC 

level is restrained by the good cause 

standard, the regulations do not appear 

to place similar restrictions on CMS or 

its contractors if they decide to submit 

evidence at the hearing. 

Response: We disagree with the 

commenters’ position that it is unfair to 

prevent providers and suppliers from 

submitting new evidence at the ALJ 

level, while allowing CMS or its 

contractors to submit evidence at the 

ALJ level if the agency elects to join the 

appeal as a party. We have also 

considered these comments in light of 

the statutory change described above 

that impose a good cause standard on 

providers and suppliers for purposes of 

submitting evidence beyond the QIC 

level. CMS and its contractors are not 

permitted to participate in the appeals 

process prior to the ALJ level. 

Consequently, they are also prohibited 

from submitting evidence in either the 

redetermination or the reconsideration. 

Therefore, if CMS elects to join an 

appeal as a party, the agency should be 

afforded an opportunity to present 

evidence and the ALJ level is the 

earliest opportunity for this to take 

place. We anticipate that there are 

several scenarios in which an ALJ will 

need to consider whether a provider or 

supplier appellant’s request to introduce 

new evidence at the ALJ level must be 

granted for good cause. 

While it is not possible to delineate in 

a regulation all of the situations that can 

constitute good cause, we note that the 

type of new evidence that may be 

introduced at various levels of appeal 

will also be affected by the number of 

issues that are considered during the 

course of an appeal. For example, if a 

QIC disagrees with a contractor’s denial 

of a claim on technical grounds, it may 

still determine that the claim is not 

payable because the service was not 

medically reasonable and necessary. 

Since the issue of medical necessity 

may not have been addressed until the 

QIC’s determination, the ALJ will need 

to take that into account when 

determining whether the appellant has 

good cause to produce additional 

evidence on the medical necessity issue 

at the ALJ level. Similarly, in instances 

in which CMS introduces evidence at 

the ALJ level that was not part of the 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11465

record below, the ALJ should consider 

whether the introduction of this 

evidence constitutes good cause for 

granting an appellant’s request to 

introduce new evidence. 

Comment: One commenter objects to 

the provision that allows an ALJ to 

remand to the QIC when the record 

provided to the ALJ lacks technical 

information that is material to resolving 

the case, and only the contractor can 

provide the information. The 

commenter suggests that the ALJ retain 

the appeal and ask the contractor to 

forward the information to the ALJ. 

Response: We anticipate that most 

appeal files forwarded to the ALJ will 

have all of the documents necessary to 

decide the case. In the rare instance in 

which the file lacks necessary technical 

information, we believe that the most 

effective way of completing the record 

is to return the case, via remand, to the 

contractor. However, § 405.1034 will 

give an ALJ the option of either 

remanding the case to the contractor, or 

asking the contractor to forward the 

missing information to the ALJ hearing 

office. In the event that we move to an 

electronic file system, we will consider 

revising this provision further.

14. When an ALJ Can Consolidate a 

Hearing (§ 405.1044) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘ALJ—Consolidation of Hearing’’ at the 

beginning of your comments.]

We have continued the longstanding 

practice of allowing ALJs to consolidate 

requests for hearing where appropriate. 

We added in the proposed rule, 

however, a provision requiring an ALJ 

to notify CMS of the intent to 

consolidate hearings because we believe 

that the consolidation of hearings may 

affect CMS’ decision on whether to 

participate or invoke party status. 

Comment: We received one comment 

on this provision. The commenter 

recommends that a beneficiary have the 

right to object to a request for 

consolidation of the beneficiary’s appeal 

with those of another party (for 

example, a provider or supplier 

appealing numerous appeals on the 

same issue). The commenter’s concern 

is that consolidation of the appeal will 

eliminate the 90-day deadline for 

resolution of the case. The commenter 

also states that consolidation will 

complicate the hearing and make it 

more difficult for the beneficiary to 

assert rights in the appeal. 

Response: We expect the situation 

described by the commenter to occur 

only rarely. In our experience, providers 

and suppliers make requests for 

consolidation of hearings in cases 

involving identical coverage and 

payment issues for the same item or 

service provided to multiple 

beneficiaries. In the majority of these 

cases, the liability of individual 

beneficiaries has been waived or, if not, 

the beneficiary has not filed an appeal 

or otherwise participated in the 

determinations below, and has not filed 

a separate request for ALJ hearing. 

However, if the beneficiary and the 

provider or supplier, as applicable, both 

file a request for hearing in response to 

the same QIC reconsideration, the 

provider or supplier may not, in 

essence, waive the beneficiary’s right to 

an ALJ action within 90 days because it 

wants to consolidate that determination 

with other similar appeals. Beneficiaries 

who do not waive the 90-day 

adjudication period in order to 

participate in the consolidated 

proceedings must be mindful, however, 

that their case will be decided without 

the benefit of any of the testimony that 

can be given at the consolidated 

hearing, and that their decision may be 

revised if the evidence considered and 

resulting outcome of the consolidated 

hearing provides a basis for reopening 

the beneficiary’s case. 

15. When an ALJ Can Dismiss a Request 

for a Hearing (§ 405.1052) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘When an ALJ Can Dismiss a Request 

for a Hearing’’ at the beginning of your 

comments.]

We note that CMS’ pre-BIPA 

regulations did not address this issue; 

rather, ALJs followed the regulations at 

20 CFR § 404.957. Those regulations 

were designed to resolve appeals filed 

by applicants for Social Security 

retirement and disability benefits. 

Therefore we proposed new regulations 

that address the specific procedural 

issues that arise in Medicare claims 

appeals. We described an ALJ’s 

authority to dismiss a request for 

hearing on several grounds, including: 

The death of the beneficiary when there 

is no substitute party with a remaining 

financial interest; dismissals in response 

to a request for withdrawal; dismissals 

based on a previous determination or 

decision about the appellant’s rights on 

the same facts and on the same issue or 

issues, and dismissals based on 

abandonment. We received one 

comment concerning dismissals related 

to the survival of an appeal following 

the death of the beneficiary, and one 

concerning when, if ever, an ALJ may 

vacate a dismissal. 

Comment: We received a general 

comment concerning whether ALJs can 

be given the authority to vacate their 

own dismissal orders. 

Response: SSA’s regulations include a 

provision allowing ALJs to vacate their 

own dismissals. However, in practice, 

this provision has not been an effective 

remedy in Medicare appeals because the 

claims folder is no longer in the ALJ 

hearing office and is unavailable to the 

ALJ by the time the request to vacate the 

order is received in the ALJ hearing 

office. Moreover, resolutions of these 

requests have been delayed or 

complicated when appellants have 

simultaneously asked the ALJ to vacate 

the dismissal order and asked the MAC 

to review the dismissal. In light of these 

problems, we believe that the better 

practice is to provide only for an appeal 

of the dismissal order to the MAC.

Comment: We proposed that either 

the ALJ or the MAC could dismiss a 

request for hearing or review, as 

applicable, when a beneficiary dies 

before an appeal is filed, or during the 

pendency of the appeal. We did not 

receive any comments concerning the 

ALJ’s right to dismiss the request for 

hearing, but did receive a comment 

concerning a MAC’s dismissal on the 

same grounds. The commenter states 

that the MAC must hold a hearing at the 

request of the beneficiary’s estate on the 

issue of whether there is any remaining 

financial liability of the estate that 

establishes the estate as a substitute 

party that can continue the appeal. 

Response: In our experience, it is not 

necessary to hold a hearing at either the 

ALJ or MAC level to resolve whether the 

beneficiary’s estate has a right to a 

hearing or MAC review. The issue in 

these circumstances is whether there 

remains an interested, substitute party 

who has a remaining financial interest 

in the outcome of the appeal. As 

indicated in the proposed rule, this 

remaining financial interest can be 

established if the beneficiary either paid 

for the service (and, thus, the 

beneficiary’s surviving spouse or estate 

is seeking reimbursement on behalf of 

the beneficiary) or the beneficiary’s 

spouse or estate continues to be 

potentially financially liable to pay for 

the service. Conversely, if the 

beneficiary’s liability for the service was 

waived and that determination was not 

used as a basis to establish the 

beneficiary’s liability for subsequent 

services, the beneficiary’s spouse or 

estate has no remaining financial 

interest in the appeal. Neither the 

statute nor existing regulations require a 

hearing before an appeal may be 

dismissed on the above issue, and, in 

our experience, a determination of the 

estate’s remaining financial liability, if 

any, can be established without a 

11466 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

hearing. We wish to note that when a 

beneficiary dies and the appeal is 

subsequently dismissed, a party, 

including the beneficiary’s estate, may 

ask the MAC to vacate the dismissal 

under § 405.1108(b). Examples of 

situations in which a dismissal should 

be vacated include when there is the 

possibility of Medicaid liability or when 

there is a possibility the State (which 

pays Medicaid funds) will attempt 

recovery of its payment from the estate. 

We note, however, that section 939 of 

the MMA now provides that, if a 

beneficiary dies and there is no 

substitute party available to appeal a 

determination, the provider or supplier 

who furnished the item or service can 

pursue the appeal. We have amended 

§ 405.1052(a)(5) to reflect this change. 

However, because a beneficiary’s estate 

may have an interest in having Medicare 

cover a service so that a State (which 

pays Medicaid funds) will not attempt 

to recover its Medicaid payment from 

the estate, adjudicators may only 

dismiss requests involving dually 

eligible beneficiaries pursuant to the 

requirements set out in § 405.1052. 

16. Content of ALJ’s Decision 

(§ 405.1046) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Content of ALJ’s Decision’’ at the 

beginning of your comments.]

Section 405.1046 of the proposed rule 

sets forth general rules regarding the 

ALJ’s decision notice. We received no 

comments on these provisions. 

Subsequently, section 933(c)(3) of the 

MMA amended section 1869(d) of the 

Act to provide that an ALJ decision 

must be written in a manner calculated 

to be understood by the beneficiary and 

must include: 

• The specific reasons for the 

decision (including, to the extent 

appropriate, a summary of the clinical 

or scientific evidence used in making 

the decision); 

• The procedures for obtaining 

additional information concerning the 

decision; and 

• Notification of the right to appeal 

the decision and instructions on how to 

initiate such an appeal. 

1. These provisions have now been 

incorporated in § 405.1046(b) of this 

interim final rule. The new provisions 

are basically verbatim restatements of 

the statute and are completely 

compatible with, although more 

detailed than, the proposed provisions. 

2. In addition to changes needed to 

implement section 933(c)(3) of the 

MMA, we have added paragraph (c) to 

§ 405.1046 to clarify CMS’ long-standing 

position that ALJ decisions are not final 

for purposes of determining the actual 

amount of payment due. ALJ decisions 

involving underpayments often indicate 

that Medicare must make payment for a 

service, but do not calculate a specific 

underpayment amount to be made. 

These determinations are not final, 

because the contractor must still 

calculate the underpayment amount by 

determining the principal amount to be 

paid. In addition, if the ALJ makes a 

finding concerning payment when the 

amount of payment was not an issue 

before the ALJ, the contractor may 

independently determine the payment 

amount. Therefore, the date of the final 

determination for purposes of 

determining when interest charges on 

underpayments begin accruing is the 

date that the contractor completes the 

calculation and makes the written 

determination of the principal amount 

that Medicare owes.

17. Appeals Involving Overpayments 

(§ 405.1064) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Appeals Involving Overpayments’’ at 

the beginning of your comments.]

A decision that is based on only a 

portion of a statistical sample does not 

accurately reflect the entire record. 

Therefore, we have added § 405.1064 to 

set forth a general rule regarding ALJ 

decisions that are based on statistical 

samples. The effect of this technical 

change is that when an appeal from the 

QIC involves an overpayment issue and 

the QIC relies on a statistical sample in 

reaching a decision, the ALJ must base 

his or her decision on a review of all 

claims in the same statistical sample. 

18. Review by the MAC and Judicial 

Review (§ 405.1100 Through § 405.1140) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Review by the MAC and Judicial 

Review’’ at the beginning of your 

comments.] 

a. Introduction 

The component of the Departmental 

Appeals Board (DAB) that decides cases 

brought under section 521 of BIPA is 

called the Medicare Appeals Council 

(MAC). Prior to this interim final rule, 

the MAC considered requests for review 

of Medicare cases under the procedures 

used by SSA’s Appeals Council. See 20 

CFR §§ 404.966 through 404.985. In the 

proposed rule, we proposed that some 

of the regulations governing the SSA’s 

Appeals Council be modified to meet 

the particular needs of the Medicare 

process and proposed adding other 

regulations to effectuate the BIPA 

provisions governing MAC review. 

b. MAC Review of an ALJ’s Action/De 

Novo Review 

Under the regulations governing the 

pre-BIPA process, the MAC could deny 

or dismiss a request for review, or it 

could grant the request for review and 

either issue a decision or remand the 

case to an ALJ. The MAC could also 

review an ALJ’s action in order to 

dismiss a request for hearing for any 

reason for which it could have been 

dismissed by the ALJ. The MAC also 

had the authority under the pre-BIPA 

process to review an ALJ’s action on its 

own motion, provided that it took 

review of the case within 60 days after 

the date of the hearing decision or 

dismissal. In the proposed rule, we 

described the factors the MAC 

considered under the pre-BIPA 

regulations in deciding whether to grant 

review. We also noted that if the MAC 

denied review of an ALJ’s decision 

under those regulations, the ALJ’s 

action, not the denial of review, was the 

final decision of the Secretary and was 

reviewable in Federal district court on 

a substantial evidence standard. 

BIPA establishes a new standard for 

MAC review of an ALJ’s action. Section 

1869(d)(2)(A) of the Act directs the 

MAC to conduct its review of an ALJ 

decision and make a decision or remand 

the case to the ALJ within 90 days of a 

request for review. Section 1869(d)(2)(B) 

of the Act specifies that the MAC 

reviews the case de novo. In addition, 

section 1869(d)(3)(A) of the Act allows 

parties to request a review by the MAC 

if within 90 days of timely filing a 

request for an ALJ hearing, the ALJ has 

not issued a decision, ‘‘notwithstanding 

any requirements for a hearing for 

purposes of the party’s right to such a 

review.’’

We proposed under § 405.1100 that 

when a party requests a MAC review, 

the MAC reviews the ALJ’s decision de 

novo. The party does not have the right 

to a hearing before the MAC, and the 

MAC considers all evidence in the 

administrative record. If a case requires 

additional evidence or proceedings at 

the ALJ level, the MAC remands the 

case to the ALJ for further action. 

Otherwise, the MAC communicates its 

final action on the case by issuing a 

final decision or order that adopts, 

modifies, or reverses the ALJ’s action, as 

appropriate. We also proposed other 

changes to the MAC’s current 

procedures to accommodate the statute’s 

changes to the MAC’s standard of 

review, as well as the adjudication 

deadlines. (Some of the changes 

concerning time and place of filing a 

review and other changes that affect 

both the ALJ and MAC process are 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11467

discussed earlier in this preamble.) 

Because an ALJ’s decision is not final 

and binding on all parties if the MAC 

reverses the ALJ’s decision, we have 

amended § 405.1048 to make that point 

clear.

Consistent with our managed care 

regulations, §§ 405.1106(a) and 

405.1106(b) require that an appellant 

must send a copy of the request for 

MAC review or escalation to the MAC 

and to the other parties involved in the 

appeal. Although the MAC will not 

dismiss an appeal on the grounds that 

the appellant failed to satisfy this 

requirement, the deadline will be tolled 

if the appellant fails to copy the other 

parties. 

Comment: Most of the comments we 

received concerning MAC review 

pertained to the MAC’s procedures 

when a case is escalated from the ALJ 

level to the MAC. However, one 

commenter expressed the concern that 

the MAC’s de novo review standard 

would diminish an ALJ’s authority to 

make findings of fact. 

Response: Section 1869(d)(2)(B) of the 

Act requires the MAC to conduct any 

review of an ALJ’s decision under a de 

novo review standard. Therefore, when 

the MAC reviews an ALJ’s decision, the 

MAC will not apply a substantial 

evidence standard when it considers an 

ALJ’s findings of fact. However, an ALJ’s 

findings and conclusions on factual 

issues will still carry weight, 

particularly with respect to the 

credibility of witnesses, and by no 

means do the BIPA changes diminish an 

ALJ’s authority to make findings of fact. 

As we indicated in the proposed rule, 

the MAC must carefully consider all 

evidence in the record in conducting its 

review. It must then adopt, modify, or 

reverse the ALJ’s decision, or remand 

the case to an ALJ for further 

proceedings (the MAC can also dismiss 

a request for review). Note that under 

§ 405.1112, an appellant’s request for a 

review must identify the parts of the 

ALJ decision with which the appellant 

disagrees and explain why the ALJ’s 

findings and conclusions are wrong. 

The MAC will limit its review to those 

exceptions, unless the appellant is an 

unrepresented beneficiary. Thus, the 

MAC will review an ALJ’s findings of 

fact or conclusion only when 

specifically challenged by an appellant. 

Under those circumstances, or in the 

case of an unrepresented beneficiary 

appellant, the de novo review standard 

will apply. Note that the MAC can 

remand the case to an ALJ if the MAC 

determines that additional evidence is 

needed or additional action by the ALJ 

is required. 

c. Escalation of an Appeal From the ALJ 

Level to the MAC 

Section 1869(d)(3)(A) of the Act, as 

amended by section 521 of BIPA, 

provides that if an ALJ does not issue a 

decision within the 90-day adjudication 

period, ‘‘the party requesting the 

hearing may request a review by [the 

MAC], notwithstanding any 

requirements for a hearing for purposes 

of the [appellant’s] right to such a 

review.’’ We originally proposed that 

cases escalated to the MAC from the ALJ 

level under this provision would not be 

subject to the 90-day adjudication 

deadline. As discussed earlier in this 

preamble, we have decided to require 

that the MAC complete its action in an 

escalated case within 180 days of the 

receipt of the request for escalation. 

We also indicated in the proposed 

rule that we interpret section 

1869(d)(3)(A) of the Act to mean that 

only the person or entity that requests 

the ALJ hearing can escalate the appeal 

to the MAC if the ALJ does not meet the 

90-day adjudication deadline. For 

example, where CMS has entered a case 

as a party, it may not seek escalation. 

We did not receive any comments 

concerning this proposal. We also stated 

that we believed that the statute does 

not require the MAC to hold a hearing 

when a case is escalated from the ALJ 

to MAC level.

Comment: We received several 

comments that the MAC be required to 

hold a hearing when a case is escalated 

from the ALJ level. Some commenters 

note that proposed § 405.1108(d)(2) 

allows the MAC to hold a hearing. 

Response: As we noted in the 

proposed rule, the statute describes 

different procedures and standards for 

adjudication or review for the various 

steps of appeal. Just as some appellants 

in the pre-BIPA process chose different 

processes at the carrier hearing level (inperson hearing, telephone hearing, or 

on-the-record decision) and made 

similar choices at the ALJ level, 

appellants who consider escalating their 

cases will have to determine how 

important it is in their case to receive 

the type of process provided at a 

particular level. As we explained in the 

proposed rule, the statute does not 

require that the MAC hold a hearing if 

a case is escalated to it; rather, the 

statute allows escalation 

‘‘notwithstanding any requirements for 

a hearing.’’ Moreover, § 405.1108(d)(2) 

does not establish an appellant’s right to 

a hearing before the MAC; rather, it 

gives the MAC the option to hold a 

hearing when the MAC concludes that 

it is necessary. Therefore, although an 

appellant who escalates a case to the 

MAC can request that the MAC hold a 

hearing, the MAC has the authority to 

deny the request and decide the case on 

the written record. 

We also explained that when the 

MAC receives a case escalated from the 

ALJ level, the MAC might issue a 

decision, dismiss either the request for 

hearing or request for review on 

procedural grounds, or, if the 

administrative record is insufficient to 

take any of the above actions, remand 

the case to the ALJ for specific 

development and a decision. 

Comment: Some commenters state 

that it is inappropriate for the MAC to 

remand a case to an ALJ that has been 

escalated to the MAC because the ALJ 

has not decided the case within the 90-

day period. Instead, the MAC must 

correct any deficiencies in the record 

itself. 

Response: We do not anticipate that 

the MAC will routinely remand an 

escalated case to the ALJ. However, we 

need to retain this option for those rare 

occasions in which the MAC cannot 

resolve the case at its level, or when the 

request for escalation and the other 

remedies requested by the appellant in 

the request for review are mutually 

exclusive. For example, where an ALJ 

fails to issue a decision after a hearing 

that the appellant does not believe was 

a fair hearing, the appellant might 

escalate at the end of the 90-day 

adjudication period for the purpose of 

requesting a hearing and decision by a 

different ALJ. Here, if the MAC 

concludes that the appellant did not 

receive a fair hearing before the first ALJ 

and determines that the appropriate 

remedy is a hearing before a different 

ALJ, then the MAC can remand that case 

accordingly. 

C. Miscellaneous Comments 

Comment: We received a number of 

questions about the prioritization of 

appeals once the new BIPA appeals 

process is implemented. In particular, 

commenters are concerned that at the 

post-redetermination levels of appeal, 

requests filed on or after the effective 

date of the BIPA changes will receive 

priority because of the new adjudication 

deadlines and the possibility of 

escalation. Commenters request that we 

clarify how adjudicators will be 

expected to prioritize appeal requests. 

They recommended that CMS require 

that appeal requests be adjudicated in 

the order in which they are received. In 

a related comment, we were asked to 

clarify what impact, if any, 

implementation of the new appeals 

process will have on appeals that are 

already in progress. 

11468 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

Response: As discussed in section I–

E of this preamble, we are fully 

cognizant of these important issues and 

have taken them into consideration in 

developing an implementation approach 

for these new requirements. In general, 

we agree with commenters that 

adjudicators can be expected to 

continue to carry out appeals in the 

order in which appeal requests are 

received. Thus, CMS intends to work 

closely with the FIs and carriers to 

ensure that all appeal requests are 

completed on a timely basis. Similarly, 

CMS, SSA, and HHS are working 

together to reduce the backlog of cases 

at the ALJ and MAC levels, and thus, 

minimize this problem. 

Comment: In the current appeals 

process, contractors are required to 

effectuate appeal decisions within 30 

days. A commenter asked what 

effectuation time frame(s) FIs and 

carriers will be required to adhere to in 

the new appeals process. 

Response: The current appeal 

regulations do not require carriers or 

fiscal intermediaries to effectuate ALJ or 

MAC decisions within a specific time 

frame. The effectuation time frames that 

our contractors follow in the current 

appeals process are based on manual 

requirements. Neither BIPA nor MMA 

impose any statutory requirements for 

effectuation of appeals decisions. 

Nonetheless, it is our intention to 

maintain the current manual 

requirements for effectuation of ALJ and 

MAC decisions in the new appeals 

process. The relevant manual provisions 

can be found in the Internet-only 

Manual (IOM)(Medicare Claims 

Processing Manual (Pub. 100–4) at 

Chapter 29 Sections 60.20.2, 60.22, and 

60.24. In conjunction with 

implementation of the new appeals 

process, an additional section will be 

added to the IOM detailing the 

effectuation time frames for QIC 

decisions. 

Comment: One commenter asks 

whether the changes implemented by 

BIPA also apply to the Medicare Cost 

Program. 

Response: The changes to appeal 

procedures that are required under 

section 521 of BIPA, and Title IX, 

Subtitle D, of the MMA, apply only to 

claim determinations with respect to 

Part A and Part B of Medicare. However, 

section 1876(c)(5) of the Act and 

§ 417.600 of the Medicare cost plan 

regulations establish that cost plan 

enrollees have a right to an ALJ hearing 

and a subsequent right to MAC and 

judicial review. Thus, the new ALJ and 

MAC regulations will generally apply to 

cost plans. We intend to address this 

issue in further detail in either a CMS 

Ruling or future rulemaking.

Comment: Under the proposed rule, 

CMS has the option of joining certain 

appeals at the ALJ level. A commenter 

recommends that if CMS elects to join 

an appeal, the agency must be required 

to hire an attorney to represent it. 

Response: In the current claim 

appeals process, appellants and other 

parties retain almost complete 

discretion to elect or not to elect an 

appointed representative. With few 

exceptions, parties can choose any 

person to act as their appointed 

representative. In the new appeals 

process, as in the old, we believe that all 

decisions with respect to the selection 

of an appointed representative should 

be left up to the party, regardless of 

whether the party is a beneficiary or 

CMS. Accordingly, the Appointed 

Representative provisions found in 

section 405.910 of the interim final rule 

maintain our current policy of giving 

parties almost complete control over the 

selection of an appointed representative. 

As a party to an appeal, CMS enjoys the 

same rights and privileges as any other 

party, including control over its 

selection of an appointed representative. 

Comment: One commenter asks us to 

clarify what, if any, continuing 

education will be available to QICs and 

ALJs. 

Response: The new Administrative 

QIC (AdQIC) will have primary 

responsibility for fulfilling the 

educational and training needs of the 

QICs. 

III. Response to Comments 

Because of the large number of items 

of correspondence we normally receive 

on Federal Register documents 

published for comments, we are not able 

to acknowledge or respond to them 

individually. We will consider all 

comments concerning the provisions of 

the interim final rule that we receive by 

the date and time specified in the DATES

section of this preamble, and respond to 

those comments in the preamble to the 

final rule. 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

(PRA) of 1995, we are required to 

provide 30-day notice in the Federal 

Register and solicit public comment 

when a collection of information 

requirement is submitted to the Office of 

Management and Budget (OMB) for 

review and approval. In order to fairly 

evaluate whether an information 

collection should be approved by OMB, 

section 3506(c)(2)(A) of the PRA of 1995 

requires that we solicit comment on the 

following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

Therefore, we are soliciting public 

comments on each of these issues for 

the information collection requirements 

discussed below. 

The PRA exempts most of the 

information collection activities 

referenced in this Interim Final Rule 

with Comment. In particular, 5 CFR 

1320.4 excludes collection activities 

during the conduct of administrative 

actions such as redeterminations, 

reconsiderations, and/or appeals. 

Specifically, these actions are taken 

after the initial determination or a 

denial of payment. There is, however, 

one requirement contained in this rule 

that is subject to the PRA because the 

burden is imposed prior to an 

administrative action or denial of 

payment. This requirement is discussed 

below. 

Section 405.910 Appointed 

Representatives 

In summary, section 405.910 states an 

individual or entity may appoint a 

representative to act on their behalf in 

exercising their rights to an initial 

determination or appeal. This 

appointment of representation must be 

in writing and must include all of the 

required elements specified in this 

section. 

The burden associated with this 

requirement is the time and effort of the 

individual or entity to prepare an 

appointment of representation 

containing all of the required 

information of this section. In an effort 

to reduce some of the burden associated 

with this requirement, we have 

developed a standardized format that 

the individual/entity may opt to use.

We estimate that approximately 

27,277 individuals and entities will 

elect to appoint a representative to act 

on their behalf each year. Because we 

have developed the optional 

standardized form, we estimate that it 

should only take approximately 15 

minutes to supply the required 

information to comply with the 

requirements of this section. Therefore, 

we estimate the total burden to be 6,819 

hours on an annual basis. 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11469

If you wish to view the proposed 

standardized notices and the supporting 

documentation, you can download a 

copy from the CMS Web site at http://

www.cms.hhs.gov/regulations/pra/.

We have submitted a copy of this final 

rule to OMB for its review of the 

information collection requirements 

described above. These requirements are 

not effective until they have been 

approved by OMB. 

If you comment on any of these 

information collection and record 

keeping requirements, please mail 

copies directly to the following:

Centers for Medicare & Medicaid 

Services, Office of Strategic 

Operations and Regulatory Affairs, 

Regulations Development and 

Issuances Group, Attn: Dawn 

Willinghan, CMS–4064–IFC Room 

C5–14–03, 7500 Security Boulevard, 

Baltimore, MD 21244–1850; and 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10235, New Executive 

Office Building, Washington, DC 

20503, Attn: Christopher Martin, CMS 

Desk Officer Comments submitted to 

OMB may also be e-mailed to the 

following address: e-mail: 

Christopher_Martin@omb.eop.gov or 

faxed to OMB at (202) 395–6974. 

V. Regulatory Impact Analysis 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Regulatory Impact Analysis’’ at the 

beginning of your comments.] 

A. Introduction 

We have examined the impact of this 

interim final rule with comment under 

the criteria of Executive Order 12866 

(September 1993, Regulatory Planning 

and Review), section 1102(b) of the 

Social Security Act, the Regulatory 

Flexibility Act (RFA) (Pub. L. 96–354), 

the Unfunded Mandates Reform Act of 

1995 (Pub. L. 104–4), and Executive 

Order 13132. Executive Order 12866 

directs agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more annually). 

Although we do not expect this interim 

final rule to have a substantial financial 

impact on beneficiaries, providers, or 

suppliers, we anticipate that Federal 

costs to implement this rule may exceed 

the $100 million threshold. Therefore, 

this is a major rule and in compliance 

with Executive Order 12866, we have 

prepared the RIA below. In accordance 

with the provisions of Executive Order 

12866, this regulation was reviewed by 

the Office of Management and Budget. 

The RFA requires agencies, in issuing 

certain rules, to analyze options for 

regulatory relief of small businesses. For 

purposes of the RFA, small entities 

include small businesses, nonprofit 

organizations, and government agencies. 

Most hospitals and most other providers 

and suppliers are small entities, either 

by nonprofit status or by having 

revenues of $25 million or less 

annually. For purposes of the RFA, all 

providers and suppliers affected by this 

regulation are considered to be small 

entities. Individuals and States are not 

included in the definition of a small 

entity. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis for a rule that may have 

a significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. 

We are not preparing analyses for 

either the RFA or section 1102(b) of the 

Act. As discussed in further detail 

below, we are uncertain how many 

small entities will be affected by this 

rule. The purpose of this interim final 

rule is to improve the efficiency of the 

claims review and appeals process, and 

to the extent that these changes shorten 

the appeals process, these regulations 

should reduce the associated burden on 

small entities. Similarly, the impact on 

small rural hospitals is likely to be 

negligible or slightly positive. Therefore, 

we are certifying that the interim final 

rule will not have a significant impact 

on a substantial number of small rural 

hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that would include any Federal 

mandate that may result in expenditure 

in any one year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $100 million. This rule 

will not have this effect on State, local, 

or tribal governments, or on the private 

sector. 

B. Scope of the Changes 

We did not receive any comments 

regarding the impact analysis provided 

in the proposed rule. Therefore, this 

analysis largely repeats the proposed 

rule impact analysis and estimates. This 

interim final rule adopts most of the 

proposed provisions and adds changes 

required under the MMA. The impact of 

any changes is discussed below.

As discussed in detail above in 

section II of this preamble, this interim 

final rule establishes new regulations 

concerning appeals procedures for 

Medicare claims determinations, 

consistent with section 1869 of the Act 

as amended by section 521 of BIPA 2000 

and sections 931, 932, 933, 935, 937, 

939, and 940 of the MMA. 

Among the significant changes 

required by the BIPA and MMA 

amendments are: 

• Establishing a uniform process for 

handling Medicare Part A and Part B 

appeals, including the introduction of a 

new level of appeal for Part A claims. 

• Revising the time frames for filing 

a request for a Part A and Part B appeal. 

• Requiring appeals notices issued at 

the redetermination, reconsideration, 

and ALJ levels to include specific 

information. 

• Imposing a 60-day time frame for 

redeterminations made by fiscal 

intermediaries and carriers. 

• Requiring the establishment of a 

new appeals entity, the qualified 

independent contractor (QIC), to 

conduct ‘‘reconsiderations’’ of 

contractors’ initial determinations 

including redeterminations, and 

allowing appellants to escalate the case 

to an ALJ hearing, if reconsiderations 

are not completed within 60 days. 

• Requiring providers and suppliers 

to present all evidence for an appeal no 

later than the QIC reconsideration level, 

unless the appellant demonstrates good 

cause as to why that evidence was not 

provided previously. 

• Establishing uniform amount in 

controversy thresholds for ALJ hearings 

and judicial review that will be adjusted 

annually by the medical care 

component of the Consumer Price Index 

for all urban consumers. 

• Establishing a 90-day time limit for 

conducting ALJ and DAB appeals and 

allowing appellants to escalate a case to 

the next level of appeal if ALJs or the 

MAC do not meet their deadlines. 

• Establishing a requirement for ‘‘de 

novo’’ review when the MAC reviews an 

ALJ decision made after a hearing. 

This interim final rule does not 

establish new rules, or alter existing 

rules, with respect to the substantive 

standards for determining whether a 

Medicare claim is payable. Claims that 

enter the administrative appeals process 

represent an extremely small portion of 

the total number of claims that Medicare 

processes each year. In FY 2003, for 

11470 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

example, Medicare contractors 

processed 1.05 billion claims; of these 

only about 5.7 million were appealed. 

Thus, the number of Medicare claims 

that enter the administrative appeals 

system represents only about 0.5 

percent of the total number of claims 

filed with Medicare. Moreover, the 5.7 

million figure represents the total 

number of claims appealed, not the 

number of appellants. From our 

experience, the vast majority of appeal 

requests are filed by a relatively limited 

group of appellants. Therefore, the 

number of providers, physicians and 

other suppliers, as well as beneficiaries 

who enter the appeals process is far 

fewer than the 5.7 million claims that 

are appealed. Given the small 

percentage of claims and appellants 

involved in the administrative appeals 

process, we believe that this interim 

final rule will have little or no effect on 

most Medicare providers and suppliers. 

The changes set forth are even less 

likely to affect beneficiaries, whose 

appeals are estimated to constitute no 

more than 3 to 5 percent of total 

appeals. As discussed in detail below, 

however, for those providers, suppliers, 

and beneficiaries who do file appeals of 

Medicare claim determinations, the 

effects of this interim final rule should 

be positive. 

C. Anticipated Effects on Providers, 

Physicians and Other Suppliers, and 

Beneficiaries 

We expect that the changes set forth 

in this interim final rule will produce 

substantial improvements in the 

consistency and efficiency of the claims 

appeal process. For the most part, the 

anticipated positive impact of the 

interim final rule on providers, 

physicians and other suppliers will be 

similar to the anticipated effects on 

beneficiary appellants, although again 

the impact on the provider and supplier 

communities would be more 

pronounced due to the much greater 

volume of provider and supplier 

appeals. We include a brief discussion 

of the anticipated impact of major 

changes below. 

In general, we do not anticipate that 

the introduction of these new appeals 

procedures will have a substantive 

impact on the final results of claims 

appeals; that is, there is no reason to 

believe that the use of QICs, or other 

changes required by BIPA and the 

MMA, will result in any change in the 

extent to which appeals eventually 

result in favorable decisions for 

providers, suppliers, or beneficiaries. 

Thus, we do not anticipate that these 

changes will have a quantifiable impact 

on Medicare claims payments. From an 

administrative perspective, however, 

the introduction of better notice 

requirements, new independent review 

entities, and mandatory physician 

review of medical necessity issues 

should increase appellants’ confidence 

in the Medicare appeals process. Thus, 

we believe that the implementation of 

requirements that ensure appellants of 

both the fairness of the decision-making 

process and the accuracy and 

consistency of the decisions reached can 

eventually lead to measurable 

reductions in the need for the elevation 

of appeals to the slower, more costly 

levels of the appeals system (for 

example, ALJ hearings and MAC or 

Federal court review). 

In the short term, it will not be 

surprising if there is an initial spike in 

requests for reconsiderations by QICs 

given the reduced time frame for these 

second level appeals, the availability of 

new appeal entities, and the 

introduction of physician review panels. 

Similarly, it is foreseeable that the 

number of requests for ALJ hearings or 

MAC reviews may increase given the 

establishment of relatively short 

decision-making time frames for these 

entities.

Most of the major changes set forth in 

this interim final rule (for example, as 

the new time frames for appeals 

decisions) are mandated by the statutes 

and thus, are not subject to the 

Secretary’s discretion. To the extent that 

we have exercised discretion (for 

example, in establishing procedures for 

conducting appeals), we have attempted 

to balance the need for accurate, 

expeditious appeals decisions with our 

responsibilities to implement these 

changes in a cost-effective manner. 

A discussion of the anticipated 

impacts of key provisions follows. 

1. Decision Making Time Frames and 

Escalation 

Perhaps the most significant changes 

set forth are the reductions in 

mandatory time frames for issuing 

decisions on appeals. In general, this 

means faster receipt of decisions and, 

for favorable decisions, faster payment. 

For example, under the interim final 

rule, the time frame for a 

reconsideration (formally called a 

carrier hearing) has been reduced from 

120 days to 60 days. If the decision is 

favorable (that is, the appeal results in 

a reversal of an initial determination 

that a claim could not be paid), 

effectuation of the favorable decision 

will be initiated as soon as a decision is 

reached. Given the reduced decisionmaking time frames, payments will be 

received substantially sooner than 

under the current system. These benefits 

to appellants will extend to all levels of 

the Medicare administrative appeals 

process. 

In addition to the new time frames for 

making decisions, the interim final rule 

will allow appellants the option of 

escalating an appeal to an ALJ if the QIC 

fails to make a decision timely. 

Escalation is also available at the 

appellants’ option from the ALJ level to 

the MAC if an ALJ fails to issue a 

hearing decision on a QIC decision 

within 90 days of a request for an appeal 

of a QIC reconsideration (or similarly 

from the MAC to Federal court). Clearly, 

these options will be a positive change 

for appellants, who have greater control 

of their appeals and a viable recourse 

during the appeals process if, during 

one stage of the appeals process, their 

appeal is not decided timely. 

Overall, these changes will reduce the 

amount of time that it takes for a claim 

to make its way through the 

administrative appeals process. In the 

past, it generally took 3 to 5 years for 

appealed claims to reach resolution at 

the MAC level. We anticipate that a 

claim will now take about 18 months to 

make its way through the entire 

administrative appeals process. 

2. Transfer of ALJ Function 

After the proposed rule was published 

in the Federal Register, a significant 

development occurred involving the 

transfer of the ALJ function. Section 931 

of the MMA requires the responsibility 

for the functions of ALJs for hearing 

appeals under title XVIII of the Act (and 

related provisions on title XI of the Act) 

to be transferred from the Commissioner 

of SSA to the Secretary of the DHHS. 

For the most part, organizational 

responsibility for this function should 

not have a material impact on 

appellants. To the extent that there is an 

impact, it should be positive since ALJs 

will now be able to focus solely on 

Medicare issues instead of both SSA 

and Medicare issues. Note that although 

this rule reflects the transfer of the ALJ 

function from SSA to DHHS, the rule 

does not implement this change.

3. Review of Claims by a Panel of Health 

Care Professionals 

Another important change 

implemented through this interim final 

rule is the requirement that a panel of 

physicians or other qualified health care 

professionals conduct QIC 

reconsiderations when the initial 

determination being appealed involves a 

medical necessity issue. BIPA mandates 

that when an initial determination 

involves a finding on whether an item 

or service is reasonable and necessary 

for the diagnosis or treatment of an 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11471

illness or injury, a QIC’s reconsideration 

must be based on clinical experience 

and medical, technical, and scientific 

evidence to the extent applicable. MMA 

further provides that if a claim is for 

treatment, items, or services furnished 

by a physician, the reviewing 

professional must also be a physician. 

We believe that this change will give 

appellants more confidence that a fair 

decision has been reached, potentially 

reducing their need to pursue 

subsequent appeals. Thus, the 

introduction of routine involvement of 

physicians and other health care 

professionals into the appeals process 

should produce administrative finality 

at an earlier level of the process and 

benefit both appellants and the 

Medicare program. 

4. Decision Letters and Documentation 

Requirements 

An important aspect of the proposed 

rule concerns the content of the notices 

sent to parties when a contractor 

upholds its initial determination. These 

requirements include a written 

summary of the rationale for the 

redetermination decision and the 

identification of any specific missing 

documentation that contributed to the 

decision to deny the claim in question. 

Since publication of the proposed rule, 

section 933(c) of the MMA amended 

sections 1869(a), 1869(c), and 1869(d) of 

the Act and established statutory notice 

requirements that are very similar to 

those we proposed. Those statutory 

requirements have been incorporated 

into this interim final rule. We believe 

that these policies will provide 

appellants with the information they 

need to build their case early in the 

appeals process. We believe the impact 

of these requirements will be to produce 

more accurate decisions at the QIC 

reconsideration level, based on all the 

appropriate medical information, rather 

than appeals often needing to be raised 

to an ALJ before needed documentation 

is produced. This will give 

beneficiaries, providers, and suppliers 

more detail about why their claim was 

denied and allow them to fashion their 

appeal accordingly. 

In addition, section 1869(b)(3) of the 

Act, as amended by section 933(a)(1) of 

the MMA, now specifies that providers 

and suppliers may not introduce 

evidence in any appeal that was not 

presented at the reconsideration 

conducted by the QIC. As a matter of 

policy, we also have extended this 

requirement to beneficiaries represented 

by providers and suppliers. This will 

ensure that providers and suppliers do 

not attempt to circumvent this evidence 

requirement by offering to represent 

beneficiaries. If the information is not 

submitted to the QIC, but instead is 

presented later in the appeals process, 

the evidence will not be considered 

unless the appellant demonstrates good 

cause why the information was not 

submitted to the QIC. We believe the 

end result of these provisions will be 

that appeals are resolved at the earliest 

possible administrative level, which is a 

positive result for all appellants. 

5. Appeal Rights

In the past, providers could appeal in 

their own right only when the item or 

service was not covered because it 

constituted custodial care, was not 

reasonable and necessary, or in certain 

other limited situations when the 

determinations involved a finding with 

respect to the limitation of liability 

provision under section 1879 of the Act. 

In order to appeal in other 

circumstances, providers must have 

acted as representatives of beneficiaries. 

In the interim final rule, we permit 

participating providers to appeal to the 

same extent as beneficiaries, or 

suppliers who take assignment. Also, 

consistent with section 1870(h) of the 

Act, as amended by section 939(a) of the 

MMA, we permit a provider or supplier 

to appeal a claim denial where that 

provider or supplier has rendered items 

or services to a beneficiary who 

subsequently dies and there is no other 

party available to appeal the denial. We 

believe these changes will have several 

positive impacts on appellants. For 

example, they should eliminate any 

confusion providers may have in 

determining whether they have standing 

to appeal an initial determination, and 

they remove the burden for the provider 

of obtaining an appointment of 

representative from a beneficiary. Thus, 

this interim final rule expands both 

provider and supplier appeal rights. 

D. Effects on the Medicare Program 

In the final analysis, the primary 

financial impact of implementing these 

changes falls upon the government 

agencies responsible for conducting 

appeals; that is, CMS and DHHS. 

Deciding appeals within shorter 

timeframes and establishing new 

independent review entities to conduct 

these appeals entail significant new 

costs, as does the development of an 

appeals-specific data system to track the 

results of these appeals. By establishing 

shorter decisionmaking timeframes and 

improved procedures in the Medicare 

appeals system, BIPA and the MMA 

created additional opportunities and 

incentives for providers, suppliers, and 

beneficiaries to request appeals. Also, 

the statute no longer provides for any 

minimum amount in controversy (AIC) 

for appeals below the ALJ level, and 

lowers the AIC from $500 to $100 (plus 

an annual increase based on the CPI) for 

Part B claim determinations that are 

appealed to an ALJ. The AIC for Part A 

claims remains at $100 (plus an annual 

increase based on the CPI). 

Thus, although we anticipate that the 

impact of these changes will be positive 

for the provider, physician, supplier, 

and beneficiary communities, 

implementing these procedures has 

generated substantial costs to the 

Medicare program. CMS’ FY 2004 

operating plan included $10 million for 

QIC implementation start-up costs and 

$6 million for the Medicare Appeals 

System (MAS), which will be used to 

track appeals electronically. In addition, 

CMS plans to spend $6 million from the 

FY 2004–2005 Medicare Modernization 

Act appropriation for MAS. Higher 

spending is likely in FY 2006, as more 

of the appeals workload is transferred 

over to the QICs, not to mention the 

additional costs to implement necessary 

changes at the ALJ and MAC appeals 

levels. 

E. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent interim 

final and final rules) that imposes 

substantial direct requirement costs on 

State and local governments, preempts 

State law, or otherwise has Federalism 

implications. This rule does not have a 

substantial effect on State or local 

governments.

VI. Waiver of Proposed Rulemaking 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register to provide a period for public 

comment before the provisions of a 

document take effect. However, section 

553(b) of the Administrative Procedure 

Act provides for waiver of this 

procedure, if an agency for good cause 

finds that the notice and comment 

procedure is impracticable, 

unnecessary, or contrary to the public 

interest and incorporates a statement of 

the finding and the reasons for it into 

the notice issued. 

Subsequent to the publication of the 

proposed rule on November 15, 2002, 

the Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (P.L. 108–173) was enacted on 

December 8, 2003. Title IX of the MMA 

includes a number of essentially 

nondiscretionary provisions that 

directly affect the Medicare claims 

appeals process. As discussed below, 

we find good cause to incorporate these 

11472 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

requirements into this interim final rule, 

rather than to issue a notice of proposed 

rulemaking to address statutory 

changes. Due to the close relationship 

between the provisions of the rule that 

address new MMA requirements and 

the policies that were included in the 

November 15, 2002 proposed rule, we 

are soliciting comments on all 

provisions contained in this interim 

final rule and, as required under section 

902 of the MMA, will publish a 

subsequent final rule addressing any 

comments received in response to this 

interim final rule not later than 3 years 

after the publication date of this rule. 

The BIPA section 521 provisions have 

previously been subject to comment in 

the proposed rule of November 15, 

2002. The comments received in 

response to that proposed rule are 

described in this interim final rule, and 

the policies included in this interim 

final rule reflect those comments. 

As a rule, the MMA appeals 

provisions are straightforward and selfexplanatory and do not involve 

significant agency discretion in how 

they should be implemented. For 

example, section 940 of the MMA 

establishes new decisionmaking 

timeframes for both redeterminations 

and reconsiderations, and it would be 

unnecessary and contrary to the public 

interest not to implement these 

deadlines as soon as possible. Similarly, 

section 939 of the MMA establishes new 

appeal rights for providers when a 

beneficiary dies and there is no other 

party available to appeal a 

determination; not implementing this 

provision as soon as practicable would 

again be contrary to the public interest. 

Not only would proposed rulemaking 

be unnecessary and contrary to the 

public interest, it would also be 

impracticable. The BIPA provisions that 

were set forth in our proposed rule are 

in many cases inextricably linked with 

the subsequent MMA provisions, and it 

would be virtually impossible to finalize 

the proposed rule without incorporating 

the MMA provisions. Moreover, the 

MMA legislation mandated provisions 

that were nearly identical to those set 

forth in the proposed rule, such as the 

requirements concerning the full and 

early presentation of evidence under 

section 933(a) of the MMA and the new 

notice requirements for Medicare 

appeals under 933(c) of the MMA. Even 

absent the MMA provisions, the 

requirements set forth in this interim 

final rule would have constituted logical 

outgrowths of the proposed rule, and it 

would be both impracticable and 

illogical not to incorporate these 

requirements into this regulation. 

Thus, we believe there is good cause 

to include the appeals provisions of the 

MMA along with the appeals provisions 

of BIPA (which were previously 

addressed in the proposed rule) in this 

interim final rule. Publishing these 

provisions in an interim final rule will 

give the public ample opportunity to 

submit comments. Note that given the 

close linkage between many of the 

proposed requirements and those set 

forth under the MMA, we believe it is 

appropriate to consider comments on all 

aspects of this rule, including those that 

have previously been subject to notice 

and comment. Publication of this 

interim final rule will serve the public 

interest by ensuring that Medicare 

beneficiaries, providers, and suppliers 

have access to the improved Medicare 

appeals system as expeditiously as 

possible, consistent with congressional 

intent.

List of Subjects 

42 CFR Part 401

Claims, Freedom of information, 

Health facilities, Medicare, Privacy. 

42 CFR Part 405

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medical 

devices, Medicare, Reporting and 

recordkeeping requirements, Rural 

areas, X-rays.

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below:

PART 401—GENERAL 

ADMINISTRATIVE REQUIREMENTS

Subpart B—Confidentiality and 

Disclosure

■ 1. The authority citation for part 401 

continues to read as follows:

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). Subpart F is also issued under the 

authority of the Federal Claims Collection 

Act (31 U.S.C. 3711).

■ 2. Amend § 401.108 by revising 

paragraph (c) to read as follows:

§ 401.108 CMS rulings.

* * * * *

(c) CMS Rulings are published under 

the authority of the Administrator, CMS. 

They are binding on all CMS 

components, on all HHS components 

that adjudicate matters under the 

jurisdiction of CMS, and on the Social 

Security Administration to the extent 

that components of the Social Security 

Administration adjudicate matters 

pertaining to Medicare Part A and 

Medicare Part B under the jurisdiction 

of CMS.

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED

■ 3. The authority citation for part 405 

continues to read as follows:

Authority: Secs. 205(a) 1102, 1861, 

1862(a), 1869, 1871, 1874, 1881, and 1886(k) 

of the Social Security Act (42 U.S.C. 405(a) 

1302, 1395x, 1395y(a), 1395ff, 1395hh, 

1395kk, 1395rr and 1395ww(k)), and Sec. 353 

of the Public Health Service Act (42 U.S.C. 

263a).

■ 4. Add a new subpart I, § 405.900 

through § 405.1140 to read as follows:

Subpart I—Determinations, 

Redeterminations, Reconsiderations, 

and Appeals Under Original Medicare 

(Parts A and B)

Sec. 

405.900 Basis and scope. 

405.902 Definitions. 

405.904 Medicare initial determinations, 

redeterminations and appeals: General 

description. 

405.906. Parties to the initial 

determinations, redeterminations, 

reconsiderations, hearings and reviews. 

405.908 Medicaid State agencies. 

405.910 Appointed representatives. 

405.912 Assignment of appeal rights. 

Initial Determinations 

405.920 Initial determinations. 

405.921 Notice of initial determination. 

405.922 Time frame for processing initial 

determinations. 

405.924 Actions that are initial 

determinations. 

405.926 Actions that are not initial 

determinations. 

405.927 Initial determinations subject to the 

reopenings process. 

405.928 Effect of the initial determination. 

Redeterminations 

405.940 Right to a redetermination. 

405.942 Time frame for filing a request for 

a redetermination. 

405.944 Place and method of filing a 

request for a redetermination. 

405.946 Evidence to be submitted with the 

redetermination request. 

405.948 Conduct of a redetermination. 

405.950 Time frame for making a 

redetermination. 

405.952 Withdrawal or dismissal of a 

request for a redetermination. 

405.954 Redetermination. 

405.956 Notice of a redetermination. 

405.958 Effect of a redetermination. 

Reconsideration 

405.960 Right to a reconsideration. 

405.962 Time frame for filing a request for 

a reconsideration. 

405.964 Place and method of filing a 

request for a reconsideration. 

405.966 Evidence to be submitted with the 

reconsideration request. 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11473

405.968 Conduct of a reconsideration. 

405.970 Time frame for making a 

reconsideration. 

405.972 Withdrawal or dismissal of a 

request for a reconsideration. 

405.974 Reconsideration. 

405.976 Notice of a reconsideration. 

405.978 Effect of a reconsideration. 

Reopenings 

405.980 Reopenings of initial 

determinations, redeterminations, and 

reconsiderations, hearings and reviews. 

405.982 Notice of a revised determination 

or decision. 

405.984 Effect of a revised determination or 

decision. 

405.986 Good cause for reopening. 

Expedited Access to Judicial Review 

405.990 Expedited access to judicial 

review. 

ALJ Hearings 

405.1000 Hearing before an ALJ: General 

rule. 

405.1002 Right to an ALJ hearing. 

405.1004 Right to ALJ review of QIC notice 

of dismissal. 

405.1006 Amount in controversy required 

to request an ALJ hearing and judicial 

review. 

405.1008 Parties to an ALJ hearing. 

405.1010 When CMS or its contractors may 

participate in an ALJ hearing. 

405.1012 When CMS or its contractors may 

be a party to a hearing.

405.1014 Request for an ALJ hearing. 

405.1016 Time frames for deciding an 

appeal before an ALJ. 

405.1018 Submitting evidence before the 

ALJ hearing. 

405.1020 Time and place for a hearing 

before an ALJ. 

405.1022 Notice of a hearing before an ALJ. 

405.1024 Objections to the issues. 

405.1026 Disqualification of the ALJ. 

405.1028 Prehearing case review of 

evidence submitted to the ALJ by the 

appellant. 

405.1030 ALJ hearing procedures. 

405.1032 Issues before an ALJ. 

405.1034 When an ALJ may remand a case 

to the QIC. 

405.1036 Description of an ALJ hearing 

process. 

405.1037 Discovery. 

405.1038 Deciding a case without a hearing 

before an ALJ. 

405.1040 Prehearing and posthearing 

conferences. 

405.1042 The administrative record. 

405.1044 Consolidated hearing before an 

ALJ. 

405.1046 Notice of an ALJ decision. 

405.1048 The effect of an ALJ’s decision. 

405.1050 Removal of a hearing request from 

an ALJ to the MAC. 

405.1052 Dismissal of a request for a 

hearing before an ALJ. 

405.1054 Effect of dismissal of a request for 

a hearing before an ALJ. 

Applicability of Medicare Coverage Policies 

405.1060 Applicability of nation coverage 

determinations (NCDs). 

405.1062 Applicability of local coverage 

determinations and other policies not 

binding on the ALJ and MAC. 

405.1063 Applicability of CMS rulings. 

405.1064 ALJ decisions involving statistical 

samples. 

Medicare Appeals Council Review 

405.1100 Medicare Appeals Council 

review: General. 

405.1102 Request for MAC review when an 

ALJ issues decision or dismissal. 

405.1104 Request for MAC review when an 

ALJ does not issue a decision timely. 

405.1106 Where a request for review or 

escalation may be filed. 

405.1108 MAC actions when request for 

review or escalation is filed. 

405.1110 MAC reviews on its own motion. 

405.1112 Content of request for review. 

405.1114 Dismissal of request for review. 

405.1116 Effect of dismissal of request for 

MAC review or request for hearing. 

405.1118 Obtaining evidence from the 

MAC. 

405.1120 Filling briefs with the MAC. 

405.1122 What evidence may be submitted 

to the MAC. 

405.1124 Oral argument. 

405.1126 Case remanded by the MAC. 

405.1128 Action of the MAC. 

405.1130 Effect of the MAC’s decision. 

405.1132 Request for escalation to Federal 

district court. 

405.1134 Extension of time to file action in 

Federal district court. 

405.1136 Judicial review. 

405.1138 Case remanded by a Federal 

district court. 

405.1140 MAC review of ALJ decision in a 

case remanded by a Federal district 

court.

Subpart I—Determinations, 

Redeterminations, Reconsiderations, 

and Appeals Under Original Medicare 

(Part A and Part B)

§ 405.900 Basis and scope. 

(a) Statutory basis. This subpart is 

based on the provisions of sections 1869 

(a) through (e) and (g) of the Act. 

(b) Scope. This subpart establishes the 

requirements for appeals of initial 

determinations for benefits under Part A 

or Part B of Medicare, including the 

following: 

(1) The initial determination of 

whether an individual is entitled to 

benefits under Part A or Part B. 

(Regulations governing reconsiderations 

of these initial determinations are at 20 

CFR, part 404, subpart J). 

(2) The initial determination of the 

amount of benefits available to an 

individual under Part A or Part B. 

(3) Any other initial determination 

relating to a claim for benefits under 

Part A or Part B, including an initial 

determination made by a quality 

improvement organization under 

section 1154(a)(2) of the Act or by an 

entity under contract with the Secretary 

(other than a contract under section 

1852 of the Act) to administer 

provisions of titles XVIII or XI of the 

Act.

§ 405.902 Definitions. 

For the purposes of this subpart, the 

term—

ALJ means an Administrative Law 

Judge of the Department of Health and 

Human Services. 

Appellant means the beneficiary, 

assignee or other person or entity that 

has filed and pursued an appeal 

concerning a particular initial 

determination. Designation as an 

appellant does not in itself convey 

standing to appeal the determination in 

question. 

Appointed representative means an 

individual appointed by a party to 

represent the party in a Medicare claim 

or claim appeal. 

Assignee means: 

(1) A supplier that furnishes items or 

services to a beneficiary and has 

accepted a valid assignment of a claim 

or 

(2) A provider or supplier that 

furnishes items or services to a 

beneficiary, who is not already a party, 

and has accepted a valid assignment of 

the right to appeal a claim executed by 

the beneficiary. 

Assignment of a claim means the 

transfer by a beneficiary of his or her 

claim for payment to the supplier in 

return for the latter’s promise not to 

charge more for his or her services than 

what the carrier finds to be the 

Medicare-approved amount, as provided 

in § 424.55 and § 424.56 of this chapter.

Assignment of appeal rights means 

the transfer by a beneficiary of his or her 

right to appeal under this subpart to a 

provider or supplier who is not already 

a party, as provided in section 

1869(b)(1)(C) of the Act. 

Assignor means a beneficiary whose 

provider of services or supplier has 

taken assignment of a claim or an appeal 

of a claim. 

Authorized representative means an 

individual authorized under State or 

other applicable law to act on behalf of 

a beneficiary or other party involved in 

the appeal. The authorized 

representative will have all of the rights 

and responsibilities of a beneficiary or 

party, as applicable, throughout the 

appeals process. 

Beneficiary means an individual who 

is enrolled to receive benefits under 

Medicare Part A or Part B. 

Carrier means an organization that 

has entered into a contract with the 

Secretary in accordance to section 1842 

of the Act and is authorized to make 

determinations for Part B of title XVIII 

of the Act. 

11474 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

Clean claim means a claim that has no 

defect or impropriety (including any 

lack of required substantiating 

documentation) or particular 

circumstance requiring special 

treatment that prevents timely payment 

from being made on the claim under 

title XVIII within the time periods 

specified in sections 1816(c) and 

1842(c) of the Act. 

Family member means for purposes of 

the QIC reconsideration panel under 

§ 405.968 the following persons as they 

relate to the physician or healthcare 

provider. 

(1) The spouse (other than a spouse 

who is legally separated from the 

physician or health care professional 

under a decree of divorce or separate 

maintenance); 

(2) Children (including stepchildren 

and legally adopted children); 

(3) Grandchildren; 

(4) Parents; and 

(5) Grandparents. 

Fiscal Intermediary means an 

organization that has entered into a 

contract with CMS in accordance with 

section 1816 of the Act and is 

authorized to make determinations and 

payments for Part A of title XVIII of the 

Act, and Part B provider services as 

specified in § 421.5(c) of this chapter. 

MAC stands for the Medicare Appeals 

Council within the Departmental 

Appeals Board of the U.S. Department 

of Health and Human Services. 

Party means an individual or entity 

listed in § 405.906 that has standing to 

appeal an initial determination and/or a 

subsequent administrative appeal 

determination. 

Provider means a hospital, critical 

access hospital, skilled nursing facility, 

comprehensive outpatient rehabilitation 

facility, home health agency, or hospice 

that has in effect an agreement to 

participate in Medicare, or clinic, 

rehabilitation agency, or public health 

agency that has in effect a similar 

agreement, but only to furnish 

outpatient physical therapy or speech 

pathology services, or a community 

mental health center that has in effect a 

similar agreement but only to furnish 

partial hospitalization services. 

Qualified Independent Contractor 

(QIC) means an entity which contracts 

with the Secretary in accordance with 

section 1869 of the Act to perform 

reconsiderations under § 405.960 

through § 405.978. 

Quality Improvement Organization 

(QIO) means an entity that contracts 

with the Secretary in accordance with 

sections 1152 and 1153 of the Act and 

42 CFR subchapter F, to perform the 

functions described in section 1154 of 

the Act and 42 CFR subchapter F, 

including expedited determinations as 

described in § 405.1200 through 

§ 405.1208. 

Reliable evidence means evidence 

that is relevant, credible, and material. 

Remand means to vacate a lower level 

appeal decision, or a portion of the 

decision, and return the case, or a 

portion of the case, to that level for a 

new decision. 

Similar fault means to obtain, retain, 

convert, seek, or receive Medicare funds 

to which a person knows or should 

reasonably be expected to know that he 

or she or another for whose benefit 

Medicare funds are obtained, retained, 

converted, sought, or received is not 

legally entitled. This includes, but is not 

limited to, a failure to demonstrate that 

he or she filed a proper claim as defined 

in part 411 of this chapter. 

Supplier means, unless the context 

otherwise requires, a physician or other 

practitioner, a facility, or other entity 

(other than a provider of services) that 

furnishes items or services under 

Medicare. 

Vacate means to set aside a previous 

action.

§ 405.904 Medicare initial determinations, 

redeterminations and appeals: General 

description. 

(a) General overview. (1) Entitlement 

appeals. The SSA makes an initial 

determination on an application for 

Medicare benefits and/or entitlement of 

an individual to receive Medicare 

benefits. A beneficiary who is 

dissatisfied with the initial 

determination may request, and SSA 

will perform, a reconsideration in 

accordance with 20 CFR part 404, 

subpart J if the requirements for 

obtaining a reconsideration are met. 

Following the reconsideration, the 

beneficiary may request a hearing before 

an Administrative Law Judge (ALJ) 

under this subpart (42 CFR part 405, 

subpart I). If the beneficiary obtains a 

hearing before an ALJ and is dissatisfied 

with the decision of the ALJ, he or she 

may request the Medicare Appeals 

Council (MAC) to review the case. 

Following the action of the MAC, the 

beneficiary may be entitled to file suit 

in Federal district court.

(2) Claim appeals. The Medicare 

contractor makes an initial 

determination when a claim for 

Medicare benefits under Part A or Part 

B is submitted. A beneficiary who is 

dissatisfied with the initial 

determination may request that the 

contractor perform a redetermination of 

the claim if the requirements for 

obtaining a redetermination are met. 

Following the contractor’s 

redetermination, the beneficiary may 

request, and the Qualified Independent 

Contractor (QIC) will perform, a 

reconsideration of the claim if the 

requirements for obtaining a 

reconsideration are met. Following the 

reconsideration, the beneficiary may 

request, and the ALJ will conduct a 

hearing if the amount remaining in 

controversy and other requirements for 

an ALJ hearing are met. If the 

beneficiary is dissatisfied with the 

decision of the ALJ, he or she may 

request the MAC to review the case. If 

the MAC reviews the case and issues a 

decision, and the beneficiary is 

dissatisfied with the decision, the 

beneficiary may file suit in Federal 

district court if the amount remaining in 

controversy and the other requirements 

for judicial review are met. 

(b) Non-beneficiary appellants. In 

general, the procedures described in 

paragraph (a) of this section are also 

available to parties other than 

beneficiaries either directly or through a 

representative acting on a party’s behalf, 

consistent with the requirements of this 

subpart I. A provider generally has the 

right to judicial review only as provided 

under section 1879(d) of the Act; that is, 

when a determination involves a finding 

that services are not covered because—

(1) They were custodial care (see 

§ 411.15(g) of this chapter); they were 

not reasonable and necessary (see 

§ 411.15(k) of this chapter); they did not 

qualify as covered home health services 

because the beneficiary was not 

confined to the home or did not need 

skilled nursing care on an intermittent 

basis (see § 409.42(a) and (c)(1) of this 

chapter); or they were hospice services 

provided to a non-terminally ill 

individual (see § 418.22 of this chapter); 

and 

(2) Either the provider or the 

beneficiary, or both, knew or could 

reasonably be expected to know that 

those services were not covered under 

Medicare.

§ 405.906 Parties to the initial 

determinations, redeterminations, 

reconsiderations, hearings and reviews. 

(a) Parties to the initial determination.

The parties to the initial determination 

are the following individuals and 

entities: 

(1) A beneficiary who files a claim for 

payment under Medicare Part A or Part 

B or has had a claim for payment filed 

on his or her behalf, or in the case of 

a deceased beneficiary, when there is no 

estate, any person obligated to make or 

entitled to receive payment in 

accordance with part 424, subpart E of 

this chapter. Payment by a third party 

payer does not entitle that entity to 

party status. 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11475

(2) A supplier who has accepted 

assignment for items or services 

furnished to a beneficiary that are at 

issue in the claim. 

(3) A provider of services who files a 

claim for items or services furnished to 

a beneficiary. 

(b) Parties to the redetermination, 

reconsideration, hearing and MAC. The 

parties to the redetermination, 

reconsideration, hearing, and MAC 

review are—

(1) The parties to the initial 

determination in accordance with 

paragraph (a) of this section, except 

under paragraph (a)(1) of this section 

where a beneficiary has assigned appeal 

rights under § 405.912; 

(2) A State agency in accordance with 

§ 405.908; 

(3) A provider or supplier that has 

accepted an assignment of appeal rights 

from the beneficiary according to 

§ 405.912; 

(4) A non-participating physician not 

billing on an assigned basis who, in 

accordance with section 1842(l) of the 

Act, may be liable to refund monies 

collected for services furnished to the 

beneficiary because those services were 

denied on the basis of section 1862(a)(1) 

of the Act; and 

(5) A non-participating supplier not 

billing on an assigned basis who, in 

accordance with sections 1834(a)(18) 

and 1834(j)(4) of the Act, may be liable 

to refund monies collected for items 

furnished to the beneficiary. 

(c) Appeals by providers and 

suppliers when there is no other party 

available. If a provider or supplier is not 

already a party to the proceeding in 

accordance with paragraphs (a) and (b) 

of this section, a provider of services or 

supplier may appeal an initial 

determination relating to services it 

rendered to a beneficiary who 

subsequently dies if there is no other 

party available to appeal the 

determination.

§ 405.908 Medicaid State agencies. 

When a beneficiary is enrolled to 

receive benefits under both Medicare 

and Medicaid, the Medicaid State 

agency may file a request for an appeal 

with respect to a claim for items or 

services furnished to a dually eligible 

beneficiary only for services for which 

the Medicaid State agency has made 

payment, or for which it may be liable. 

A Medicaid State agency is considered 

a party only when it files a timely 

redetermination request with respect to 

a claim for items or services furnished 

to a beneficiary in accordance with 42 

CFR parts 940 through 958. If a State 

agency files a request for 

redetermination, it may retain party 

status at the QIC, ALJ, MAC, and 

judicial review levels.

§ 405.910 Appointed representatives. 

(a) Scope of representation. An 

appointed representative may act on 

behalf of an individual or entity in 

exercising his or her right to an initial 

determination or appeal. Appointed 

representatives do not have party status 

and may take action only on behalf of 

the individual or entity that they 

represent. 

(b) Persons not qualified. A party may 

not name as an appointed 

representative, an individual who is 

disqualified, suspended, or otherwise 

prohibited by law from acting as a 

representative in any proceedings before 

DHHS, or in entitlement appeals, before 

SSA. 

(c) Completing a valid appointment.

For purposes of this subpart, an 

appointment of representation must: 

(1) Be in writing and signed and dated 

by both the party and individual 

agreeing to be the representative; 

(2) Provide a statement appointing the 

representative to act on behalf of the 

party, and in the case of a beneficiary, 

authorizing the adjudicator to release 

identifiable health information to the 

appointed representative. 

(3) Include a written explanation of 

the purpose and scope of the 

representation; 

(4) Contain both the party’s and 

appointed representative’s name, phone 

number, and address; 

(5) Identify the beneficiary’s Medicare 

health insurance claim number;

(6) Include the appointed 

representative’s professional status or 

relationship to the party; 

(7) Be filed with the entity processing 

the party’s initial determination or 

appeal. 

(d) Curing a defective appointment of 

representative.

(1) If any one of the seven elements 

named in paragraph (c) of this section 

is missing from the appointment, the 

adjudicator should contact the party and 

provide a description of the missing 

documentation or information. 

(2) Unless the defect is cured, the 

prospective appointed representative 

lacks the authority to act on behalf of 

the party, and is not entitled to obtain 

or receive any information related to the 

appeal, including the appeal decision. 

(e) Duration of appointment. (1) 

Unless revoked, an appointment is 

considered valid for 1 year from the date 

that the Appointment of Representative 

(AOR) form or other conforming written 

instrument contains the signatures of 

both the party and the appointed 

representative. 

(2) To initiate an appeal within the 1-

year time frame, the representative must 

file a copy of the AOR form, or other 

conforming written instrument, with the 

appeal request. Unless revoked, the 

representation is valid for the duration 

of an individual’s appeal of an initial 

determination. 

(3) For an initial determination of a 

Medicare Secondary Payer recovery 

claim, an appointment signed in 

connection with the party’s efforts to 

make a claim for third party payment is 

valid from the date that appointment is 

signed for the duration of any 

subsequent appeal, unless the 

appointment is specifically revoked. 

(f) Appointed representative fees. (1) 

General rule. An appointed 

representative for a beneficiary who 

wishes to charge a fee for services 

rendered in connection with an appeal 

before the Secretary must obtain 

approval of the fee from the Secretary. 

Services rendered below the ALJ level 

are not considered proceedings before 

the Secretary. 

(2) No fees or costs against trust 

funds. No award of attorney or any other 

representative’s fees or any costs in 

connection with an appeal may be made 

against the Medicare trust funds. 

(3) Special rules for providers and 

suppliers. A provider or supplier that 

furnished the items or services to a 

beneficiary that are the subject of the 

appeal may represent that beneficiary in 

an appeal under this subpart, but the 

provider or supplier may not charge the 

beneficiary any fee associated with the 

representation. If a provider or supplier 

furnishes services or items to a 

beneficiary, the provider or supplier 

may not represent the beneficiary on the 

issues described in section 1879(a)(2) of 

the Act, unless the provider or supplier 

waives the right to payment from the 

beneficiary for the services or items 

involved in the appeal. 

(4) Special rules for purposes of third 

party payment. The Secretary does not 

review fee arrangements made by a 

beneficiary for purposes of making a 

claim for third party payment (as 

defined in 42 CFR 411.21) even though 

the representation may ultimately 

include representation for a Medicare 

Secondary Payer recovery claim. 

(5) Reasonableness of representative 

fees. In determining the reasonableness 

of a representative’s fee, the Secretary 

will not apply the test specified in 

sections 206(a)(2) and (a)(3) of the Act. 

(g) Responsibilities of an appointed 

representative. (1) An appointed 

representative has an affirmative duty 

to—

(i) Inform the party of the scope and 

responsibilities of the representation; 

11476 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

(ii) Inform the party of the status of 

the appeal and the results of actions 

taken on behalf of the party, including, 

but not limited to, notification of appeal 

determinations, decisions, and further 

appeal rights; 

(iii) Disclose to a beneficiary any 

financial risk and liability of a nonassigned claim that the beneficiary may 

have; 

(iv) Not act contrary to the interest of 

the party; and 

(v) Comply with all laws and CMS 

regulations, CMS Rulings, and 

instructions. 

(2) An appeal request filed by a 

provider or supplier described in 

paragraph (f)(3) of this section must also 

include a statement signed by the 

provider or supplier stating that no 

financial liability is imposed on the 

beneficiary in connection with that 

representation. If applicable, the appeal 

request must also include a signed 

statement that the provider or supplier 

waives the right to payment from the 

beneficiary for services or items 

regarding issues described in section 

1879(a)(2) of the Act.

(h) Authority of an appointed 

representative. An appointed 

representative may, on behalf of the 

party—

(1) Obtain appeals information about 

the claim to the same extent as the 

party; 

(2) Submit evidence; 

(3) Make statements about facts and 

law; and 

(4) Make any request, or give, or 

receive, any notice about the appeal 

proceedings. 

(i) Notice or request to an appointed 

representative.

(1) Initial determinations. When a 

contractor takes an action or issues an 

initial determination, it sends the action 

or notice to the party. 

(2) Appeals. When a contractor, QIC, 

ALJ, or the MAC takes an action or 

issues a redetermination, 

reconsideration, or appeal decision, in 

connection with an initial 

determination, it sends notice of the 

action to the appointed representative. 

(3) The contractor, QIC, ALJ or MAC 

sends any requests for information or 

evidence regarding a claim that is 

appealed to the appointed 

representative. The contractor sends any 

requests for information or evidence 

regarding an initial determination to the 

party. 

(4) For initial determinations and 

appeals involving Medicare Secondary 

Payer recovery claims, the adjudicator 

sends notices and requests to both the 

beneficiary and the appointed 

representative. 

(j) Effect of notice or request to an 

appointed representative. A notice or 

request sent to the appointed 

representative has the same force and 

effect as if was sent to the party. 

(k) Information available to the 

appointed representative. An appointed 

representative may obtain any and all 

appeals information applicable to the 

claim at issue that is available to the 

party. 

(l) Delegation of appointment by 

appointed representative. An appointed 

representative may not designate 

another individual to act as the 

appointed representative of the party 

unless—

(1) The appointed representative 

provides written notice to the party of 

the appointed representative’s intent to 

delegate to another individual. The 

notice must include: 

(i) The name of the designee; and 

(ii) The designee’s acceptance to be 

obligated and comply with the 

requirements of representation under 

this subpart. 

(2) The party accepts the designation 

as evidenced by a written statement 

signed by the party. This signed 

statement is not required when the 

appointed representative and designee 

are attorneys in the same law firm or 

organization. 

(m) Revoking the appointment of 

representative. (1) A party may revoke 

an appointment of representative 

without cause at any time. 

(2) Revocation. Revocation is not 

effective until the adjudicator receives a 

signed, written statement from the 

party. 

(3) Death of the party. (i) The death 

of a party terminates the authority of the 

appointed representative, except as 

specified in paragraph (m)(3)(ii) of this 

section. 

(ii) A party’s death does not terminate 

an appeal that is in progress if another 

individual or entity may be entitled to 

receive or obligated to make payment 

for the items or services that are the 

subject of the appeal. The appointment 

of representative remains in effect for 

the duration of the appeal except for 

MSP recovery claims.

§ 405.912 Assignment of appeal rights. 

(a) Who may be an assignee. Only a 

provider, or supplier that—

(1) Is not a party to the initial 

determination as defined in § 405.906; 

and 

(2) Furnished an item or service to the 

beneficiary may seek assignment of 

appeal rights from the beneficiary for 

that item or service. 

(b) Who may not be an assignee. An 

individual or entity who is not a 

provider or supplier may not be an 

assignee. A provider or supplier that 

furnishes an item or service to a 

beneficiary may not seek assignment for 

that item or service when considered a 

party to the initial determination as 

defined in § 405.906. 

(c) Requirements for a valid 

assignment of appeal right. The 

assignment of appeal rights must—

(1) Be executed using a CMS standard 

form; 

(2) Be in writing and signed by both 

the beneficiary assigning his or her 

appeal rights and by the assignee;

(3) Indicate the item or service for 

which the assignment of appeal rights is 

authorized; 

(4) Contain a waiver of the assignee’s 

right to collect payment from the 

assignor for the specific item or service 

that are the subject of the appeal except 

as set forth in paragraph (d)(2) of this 

section; and 

(5) Be submitted at the same time the 

request for redetermination or other 

appeal is filed. 

(d) Waiver of right to collect payment.

(1) Except as specified in paragraph 

(d)(2) of this section, the assignee must 

waive the right to collect payment for 

the item or service for which the 

assignment of appeal rights is made. If 

the assignment is revoked under 

paragraph (g)(2) or (g)(3) of this section, 

the waiver of the right to collect 

payment nevertheless remains valid. A 

waiver of the right to collect payment 

remains in effect regardless of the 

outcome of the appeal decision. 

(2) The assignee is not prohibited 

from recovering payment associated 

with coinsurance or deductibles or 

when an advance beneficiary notice is 

properly executed. 

(e) Duration of a valid assignment of 

appeal rights. Unless revoked, the 

assignment of appeal rights is valid for 

all administrative and judicial review 

associated with the item or service as 

indicated on the standard CMS form, 

even in the event of the death of the 

assignor. 

(f) Rights of the assignee. When a 

valid assignment of appeal rights is 

executed, the assignor transfers all 

appeal rights involving the particular 

item or service to the assignee. These 

include, but are not limited to—

(1) Obtaining information about the 

claim to the same extent as the assignor; 

(2) Submitting evidence; 

(3) Making statements about facts or 

law; and 

(4) Making any request, or giving, or 

receiving any notice about appeal 

proceedings. 

(g) Revocation of assignment. When 

an assignment of appeal rights is 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11477

revoked, the rights to appeal revert to 

the assignee. An assignment of appeal 

rights may be revoked in any of the 

following ways: 

(1) In writing by the assignor. The 

revocation of assignment must be 

delivered to the adjudicator and the 

assignor, and is effective on the date of 

receipt by the adjudicator. 

(2) By abandonment if the assignee 

does not file an appeal of an unfavorable 

decision. 

(3) By act or omission by the assignee 

that is determined by an adjudicator to 

be contrary to the financial interests of 

the assignor. 

(h) Responsibilities of the assignee.

Once the assignee files an appeal, the 

assignee becomes a party to the appeal. 

The assignee must meet all 

requirements for appeals that apply to 

any other party. 

Initial Determinations

§ 405.920 Initial determinations. 

After a claim is filed with the 

appropriate contractor in the manner 

and form described in subpart C of part 

424 of this chapter, the contractor 

must—

(a) Determine if the items and services 

furnished are covered or otherwise 

reimbursable under title XVIII of the 

Act; 

(b) Determine any amounts payable 

and make payment accordingly; and 

(c) Notify the parties to the initial 

determination of the determination in 

accordance with § 405.921.

§ 405.921 Notice of initial determination. 

(a) Notice of initial determination sent 

to the beneficiary. (1) The notice must 

be written in a manner calculated to be 

understood by the beneficiary, and sent 

to the last known address of the 

beneficiary; 

(2) Content of the notice. The notice 

of initial determination must contain—

(i) The reasons for the determination, 

including whether a local medical 

review policy, a local coverage 

determination, or national coverage 

determination was applied; 

(ii) The procedures for obtaining 

additional information concerning the 

contractor’s determination, such as a 

specific provision of the policy, manual, 

law or regulation used in making the 

determination; 

(iii) Information on the right to a 

redetermination if the beneficiary is 

dissatisfied with the outcome of the 

initial determination and instructions 

on how to request a redetermination; 

and 

(iv) Any other requirements specified 

by CMS. 

(b) Notice of initial determination sent 

to providers and suppliers.

(1) An electronic or paper remittance 

advice (RA) notice is the notice of initial 

determination sent to providers and 

suppliers that accept assignment. The 

electronic RA must comply with the 

format and content requirements of the 

standard adopted for national use by 

covered entities under the Health 

Insurance Portability and 

Accountability Act (HIPAA) and related 

CMS manual instructions. When a paper 

RA is mailed, it must comply with CMS 

manual instructions that parallel the 

HIPAA data content and coding 

requirements. 

(2) The notice of initial determination 

must contain: 

(i) The basis for any full or partial 

denial determination of services or 

items on the claim; 

(ii) Information on the right to a 

redetermination if the provider or 

supplier is dissatisfied with the 

outcome of the initial determination; 

(iii) All applicable claim adjustment 

reason and remark codes to explain the 

determination; 

(iv) The source of the RA and who 

may be contacted if the provider or 

supplier requires further information;

(v) All content requirements of the 

standard adopted for national use by 

covered entities under HIPAA; and 

(vi) Any other requirements specified 

by CMS.

§ 405.922 Time frame for processing initial 

determinations. 

The contractor issues initial 

determinations on clean claims within 

30 days of receipt if they are submitted 

by or on behalf of the beneficiary who 

received the items and/or services; 

otherwise, interest must be paid at the 

rate specified at 31 U.S.C. 3902(a) for 

the period beginning on the day after 

the required payment date and ending 

on the date payment is made.

§ 405.924 Actions that are initial 

determinations. 

(a) Applications and entitlement of 

individuals. SSA makes initial 

determinations and processes 

reconsiderations with respect to an 

individual on the following: 

(1) A determination with respect to 

entitlement to hospital insurance or 

supplementary medical insurance under 

Medicare. 

(2) A disallowance of an individual’s 

application for entitlement to hospital 

or supplementary medical insurance, if 

the individual fails to submit evidence 

requested by SSA to support the 

application. (SSA specifies in the initial 

determination the conditions of 

entitlement that the applicant failed to 

establish by not submitting the 

requested evidence). 

(3) A denial of a request for 

withdrawal of an application for 

hospital or supplementary medical 

insurance, or a denial of a request for 

cancellation of a request for withdrawal. 

(4) A determination as to whether an 

individual, previously determined as 

entitled to hospital or supplementary 

medical insurance, is no longer entitled 

to those benefits, including a 

determination based on nonpayment of 

premiums. 

(b) Claims made by or on behalf of 

beneficiaries. The Medicare contractor 

makes initial determinations regarding 

claims for benefits under Medicare Part 

A and Part B. A finding that a request 

for payment or other submission does 

not meet the requirements for a 

Medicare claim as defined in § 424.32 of 

this chapter, is not considered an initial 

determination. An initial determination 

for purposes of this subpart includes, 

but is not limited to, determinations 

with respect to: 

(1) If the items and/or services 

furnished are covered under title XVIII; 

(2) In the case of determinations on 

the basis of section 1879(b) or (c) of the 

Act, if the beneficiary, or supplier who 

accepts assignment under § 424.55 of 

this chapter knew, or could reasonably 

have expected to know at the time the 

items or services were furnished, that 

the items or services were not covered; 

(3) In the case of determinations on 

the basis of section 1842(l)(1) of the Act, 

if the beneficiary or physician knew, or 

could reasonably have expected to know 

at the time the services were furnished, 

that the services were not covered; 

(4) Whether the deductible is met; 

(5) The computation of the 

coinsurance amount; 

(6) The number of days used for 

inpatient hospital, psychiatric hospital, 

or post-hospital extended care; 

(7) The number of home health visits 

used; 

(8) Periods of hospice care used; 

(9) Requirements for certification and 

plan of treatment for physician services, 

durable medical equipment, therapies, 

inpatient hospitalization, skilled 

nursing care, home health, hospice, and 

partial hospitalization services; 

(10) The beginning and ending of a 

spell of illness, including a 

determination made under the 

presumptions established under 

§ 409.60(c)(2) of this chapter, and as 

specified in § 409.60(c)(4) of this 

chapter; 

(11) The medical necessity of services, 

or the reasonableness or appropriateness 

of placement of an individual at an 

11478 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

acute level of patient care made by the 

Quality Improvement Organization 

(QIO) on behalf of the contractor in 

accordance with § 476.86(c)(1) of this 

chapter; 

(12) Any other issues having a present 

or potential effect on the amount of 

benefits to be paid under Part A or Part 

B of Medicare, including a 

determination as to whether there was 

an underpayment of benefits paid under 

Part A or Part B, and if so, the amount 

thereof; 

(13) If a waiver of adjustment or 

recovery under sections 1870(b) and (c) 

of the Act is appropriate:

(i) When an overpayment of hospital 

insurance benefits or supplementary 

medical insurance benefits (including a 

payment under section 1814(e) of the 

Act) was made for an individual; or 

(ii) For a Medicare Secondary Payer 

recovery claim against a beneficiary or 

against a provider or supplier. 

(14) If a particular claim is not 

payable by Medicare based upon the 

application of the Medicare Secondary 

Payer provisions of section 1862(b) of 

the Act. 

(15) Under the Medicare Secondary 

Payer provisions of sections 1862(b) of 

the Act that Medicare has a recovery 

claim against a provider, supplier, or 

beneficiary for services or items that 

were already paid by the Medicare 

program, except when the Medicare 

Secondary Payer recovery claim against 

the provider or supplier is based upon 

failure to file a proper claim as defined 

in part 411 of this chapter because this 

action is a reopening. 

(c) Determinations by QIOs. An initial 

determination for purposes of this 

subpart also includes a determination 

made by a QIO that: 

(1) A provider can terminate services 

provided to an individual when a 

physician certified that failure to 

continue the provision of those services 

is likely to place the individual’s health 

at significant risk; or 

(2) A provider can discharge an 

individual from the provider of services.

§ 405.926 Actions that are not initial 

determinations. 

Actions that are not initial 

determinations and are not appealable 

under this subpart include, but are not 

limited to—

(a) Any determination for which CMS 

has sole responsibility, for example—

(1) If an entity meets the conditions 

for participation in the program; 

(2) If an independent laboratory meets 

the conditions for coverage of services; 

(b) The coinsurance amounts 

prescribed by regulation for outpatient 

services under the prospective payment 

system; 

(c) Any issue regarding the 

computation of the payment amount of 

program reimbursement of general 

applicability for which CMS or a carrier 

has sole responsibility under Part B 

such as the establishment of a fee 

schedule set forth in part 414 of this 

chapter, or an inherent reasonableness 

adjustment pursuant to § 405.502(g), 

and any issue regarding the cost report 

settlement process under Part A; 

(d) Whether an individual’s appeal 

meets the qualifications for expedited 

access to judicial review provided in 

§ 405.990; 

(e) Any determination regarding 

whether a Medicare overpayment claim 

must be compromised, or collection 

action terminated or suspended under 

the Federal Claims Collection Act of 

1966, as amended; 

(f) Determinations regarding the 

transfer or discharge of residents of 

skilled nursing facilities in accordance 

with § 483.12 of this chapter; 

(g) Determinations regarding the 

readmission screening and annual 

resident review processes required by 

subparts C and E of part 483 of this 

chapter; 

(h) Determinations for a waiver of 

Medicare Secondary Payer recovery 

under section 1862(b) of the Act; 

(i) Determinations for a waiver of 

interest; 

(j) Determinations for a finding 

regarding the general applicability of the 

Medicare Secondary Payer provisions 

(as opposed to the application in a 

particular case); 

(k) Determinations under the 

Medicare Secondary Payer provisions of 

section 1862(b) of the Act that Medicare 

has a recovery against an entity that was 

or is required or responsible (directly, as 

an insurer or self-insurer, as a third 

party administrator, as an employer that 

sponsors or contributes to a group 

health plan or a large group health plan, 

or otherwise,) to make payment for 

services or items that were already 

reimbursed by the Medicare program; 

(l) A contractor’s, QIC’s, ALJ’s, or 

MAC’s determination or decision to 

reopen or not to reopen an initial 

determination, redetermination, 

reconsideration, hearing decision, or 

review decision; 

(m) Determinations that CMS or its 

contractors may participate in or act as 

parties in an ALJ hearing or MAC 

review; 

(n) Determinations that a provider or 

supplier failed to submit a claim or 

failed to submit a timely claim despite 

being requested to do so by the 

beneficiary or the beneficiary’s 

subrogee; 

(o) Determinations with respect to 

whether an entity qualifies for an 

exception to the electronic claims 

submission requirement under part 424 

of this chapter; 

(p) Determinations by the Secretary of 

sustained or high levels of payment 

errors in accordance with section 

1893(f)(3)(A) of the Act; 

(q) A contractor’s prior determination 

related to coverage of physicians’

services; 

(r) Requests for anticipated payment 

under the home health prospective 

payment system under § 409.43(c)(ii)(2) 

of this chapter; and 

(s) Claim submissions on forms or 

formats that are incomplete, invalid, or 

do not meet the requirements for a 

Medicare claim and returned or rejected 

to the provider or supplier.

§ 405.927 Initial determinations subject to 

the reopenings process. 

Minor errors or omissions in an initial 

determination must be corrected only 

through the contractor’s reopenings 

process under § 405.980(a)(3).

§ 405.928 Effect of the initial 

determination. 

(a) An initial determination described 

in § 405.924(a) is binding unless it is 

revised or reconsidered in accordance 

with 20 CFR 404.907, or revised as a 

result of a reopening in accordance with 

20 CFR 404.988.

(b) An initial determination described 

in § 405.924(b) is binding upon all 

parties to the initial determination 

unless—

(1) A redetermination is completed in 

accordance with § 405.940 through 

§ 405.958; or 

(2) The initial determination is 

revised as a result of a reopening in 

accordance with § 405.980. 

(c) An initial determination listed in 

§ 405.924(b) where a party submits a 

timely, valid request for redetermination 

under § 405.942 through § 405.944 must 

be processed as a redetermination under 

§ 405.948 through § 405.958 unless the 

initial determination involves a clerical 

error or other minor error or omission. 

Redeterminations

§ 405.940 Right to a redetermination. 

A person or entity that may be a party 

to a redetermination in accordance with 

§ 405.906(b) and that is dissatisfied with 

an initial determination may request a 

redetermination by a contractor in 

accordance with § 405.940 through 

§ 405.958, regardless of the amount in 

controversy.

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11479

§ 405.942 Time frame for filing a request 

for a redetermination. 

(a) Time frame for filing a request.

Except as provided in paragraph (b) of 

this section, any request for 

redetermination must be filed within 

120 calendar days from the date a party 

receives the notice of the initial 

determination. 

(1) For purposes of this section, the 

date of receipt of the initial 

determination will be presumed to be 5 

days after the date of the notice of initial 

determination, unless there is evidence 

to the contrary. 

(2) The request is considered as filed 

on the date it is received by the 

contractor. 

(b) Extending the time frame for filing 

a request. General rule. If the 120-day 

period in which to file a request for a 

redetermination has expired and a party 

shows good cause, the contractor may 

extend the time frame for filing a 

request for redetermination. 

(1) How to request an extension. A 

party may file a request for an extension 

of time for filing a request for a 

redetermination with the contractor. 

The party should include any evidence 

supporting the request for extension. 

The request for redetermination 

extension must—

(i) Be in writing; 

(ii) State why the request for 

redetermination was not filed within the 

required time frame; and 

(iii) Meet the requirements of 

§ 405.944. 

(2) How the contractor determines if 

good cause exists. In determining if a 

party has good cause for missing a 

deadline to request a redetermination, 

the contractor considers—

(i) The circumstances that kept the 

party from making the request on time; 

(ii) If the contractor’s action(s) misled 

the party; and 

(iii) If the party had or has any 

physical, mental, educational, or 

linguistic limitations, including any 

lack of facility with the English 

language, that prevented the party from 

filing a timely request or from 

understanding or knowing about the 

need to file a timely request. 

(3) Examples of good cause. Examples 

of circumstances when good cause may 

be found to exist include, but are not 

limited to, the following situations: 

(i) The party was prevented by serious 

illness from contacting the contractor in 

person, in writing, or through a friend, 

relative, or other person; or 

(ii) The party had a death or serious 

illness in his or her immediate family; 

or 

(iii) Important records of the party 

were destroyed or damaged by fire or 

other accidental cause; or 

(iv) The contractor gave the party 

incorrect or incomplete information 

about when and how to request a 

redetermination; or 

(v) The party did not receive notice of 

the determination or decision; or 

(vi) The party sent the request to a 

Government agency in good faith within 

the time limit, and the request did not 

reach the appropriate contractor until 

after the time period to file a request 

expired.

§ 405.944 Place and method of filing a 

request for a redetermination. 

(a) Filing location. The request for 

redetermination must be filed with the 

contractor indicated on the notice of 

initial determination.

(b) Content of redetermination 

request. The request for redetermination 

must be in writing and should be made 

on a standard CMS form. A written 

request that is not made on a standard 

CMS form is accepted if it contains the 

same required elements as follows: 

(1) The beneficiary’s name; 

(2) The Medicare health insurance 

claim number; 

(3) Specific service(s) and/or item(s) 

for which the redetermination is being 

requested and the specific date(s) of the 

service; 

(4) The name and signature of the 

party or the representative of the party. 

(c) Requests for redetermination by 

more than one party. If more than one 

party timely files a request for 

redetermination on the same claim 

before a redetermination is made on the 

first timely filed request, the contractor 

must consolidate the separate requests 

into one proceeding and issue one 

redetermination.

§ 405.946 Evidence to be submitted with 

the redetermination request. 

(a) Evidence submitted with the 

request. When filing the request for 

redetermination, a party must explain 

why it disagrees with the contractor’s 

determination and should include any 

evidence that the party believes should 

be considered by the contractor in 

making its redetermination. 

(b) Evidence submitted after the 

request. When a party submits 

additional evidence after filing the 

request for redetermination, the 

contractor’s 60-day decision-making 

time frame is automatically extended for 

14 calendar days for each submission.

§ 405.948 Conduct of a redetermination. 

A redetermination consists of an 

independent review of an initial 

determination. In conducting a 

redetermination, the contractor reviews 

the evidence and findings upon which 

the initial determination was based, and 

any additional evidence the parties 

submit or the contractor obtains on its 

own. An individual who was not 

involved in making the initial 

determination must make a 

redetermination. The contractor may 

raise and develop new issues that are 

relevant to the claims in the particular 

case.

§ 405.950 Time frame for making a 

redetermination. 

(a) General rule. The contractor mails, 

or otherwise transmits, written notice of 

the redetermination or dismissal to the 

parties to the redetermination at their 

last known addresses within 60 

calendar days of the date the contractor 

receives a timely filed request for 

redetermination. 

(b) Exceptions. (1) If a contractor 

grants an appellant’s request for an 

extension of the 120-day filing deadline 

made in accordance with § 405.942(b), 

the 60-day decision-making time frame 

begins on the date the contractor 

receives the late-filed request for 

redetermination, or when the request for 

an extension is granted, whichever is 

later. 

(2) If a contractor receives from 

multiple parties timely requests for 

redetermination of a claim 

determination, consistent with 

§ 405.944(c), the contractor must issue a 

redetermination or dismissal within 60 

days of the latest filed request. 

(3) If a party submits additional 

evidence after the request for 

redetermination is filed, the contractor’s 

60-day decision-making time frame is 

extended for 14 calendar days for each 

submission, consistent with 

§ 405.946(b).

§ 405.952 Withdrawal or dismissal of a 

request for a redetermination. 

(a) Withdrawing a request. A party 

that files a request for redetermination 

may withdraw its request by filing a 

written and signed request for 

withdrawal. The request for withdrawal 

must contain a clear statement that the 

appellant is withdrawing the request for 

a redetermination and does not intend 

to proceed further with the appeal. The 

request must be received in the 

contractor’s mailroom before a 

redetermination is issued. The appeal 

will proceed with respect to any other 

parties that have filed a timely request 

for redetermination. 

(b) Dismissing a request. A contractor 

dismisses a redetermination request, 

either entirely or as to any stated issue, 

under any of the following 

circumstances: 

11480 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

(1) When the person or entity 

requesting a redetermination is not a 

proper party under § 405.906(b) or does 

not otherwise have a right to a 

redetermination under section 1869(a) 

of the Act; 

(2) When the contractor determines 

the party failed to make out a valid 

request for redetermination that 

substantially complies with § 405.944; 

(3) When the party fails to file the 

redetermination request within the 

proper filing time frame in accordance 

with § 405.942; 

(4) When a beneficiary or the 

beneficiary’s representative files a 

request for redetermination, but the 

beneficiary dies while the request is 

pending, and all of the following criteria 

apply: 

(i) The beneficiary’s surviving spouse 

or estate has no remaining financial 

interest in the case. In deciding this 

issue, the contractor considers if the 

surviving spouse or estate remains liable 

for the services for which payment was 

denied or a Medicare contractor held 

the beneficiary liable for subsequent 

similar services under the limitation of 

liability provisions based on the denial 

of payment for services at issue; 

(ii) No other individual or entity with 

a financial interest in the case wishes to 

pursue the appeal; and 

(iii) No other party filed a valid and 

timely redetermination request under 

§ 405.942 and § 405.944; 

(5) When a party filing the 

redetermination request submits a 

timely written request for withdrawal 

with the contractor; or

(6) When the contractor has not 

issued an initial determination on the 

claim or the matter for which a 

redetermination is sought. 

(c) Notice of dismissal. A contractor 

mails or otherwise transmits a written 

notice of the dismissal of the 

redetermination request to the parties at 

their last known addresses. The notice 

states that there is a right to request that 

the contractor vacate the dismissal 

action. 

(d) Vacating a dismissal. If good and 

sufficient cause is established, a 

contractor may vacate its dismissal of a 

request for redetermination within 6 

months from the date of the notice of 

dismissal. 

(e) Effect of dismissal. The dismissal 

of a request for redetermination is final 

and binding, unless it is modified or 

reversed by a QIC under § 405.974(b) or 

vacated under paragraph (d) of this 

section.

§ 405.954 Redetermination. 

Upon the basis of the evidence of 

record, the contractor adjudicates the 

claim(s), and renders a redetermination 

affirming or reversing, in whole or in 

part, the initial determination in 

question.

§ 405.956 Notice of a redetermination. 

(a) Notification to parties. (1) General 

rule. Written notice of a redetermination 

affirming, in whole or in part, the initial 

determination must be mailed or 

otherwise transmitted to all parties at 

their last known addresses in 

accordance with the time frames 

established in § 405.950. Written notice 

of a redetermination fully reversing the 

initial determination must be mailed or 

otherwise transmitted to the appellant 

in accordance with the time frames 

established in § 405.950. If the 

redetermination results in issuance of 

supplemental payment to a provider or 

supplier, the Medicare contractor must 

also issue an electronic or paper RA 

notice to the provider or supplier. 

(2) Overpayment cases involving 

multiple beneficiaries who have no 

liability. In an overpayment case 

involving multiple beneficiaries who 

have no liability, the contractor may 

issue a written notice only to the 

appellant. 

(b) Content of the notice for 

affirmations, in whole or in part. For 

decisions that are affirmations, in whole 

or in part, of the initial determination, 

the redetermination must be written in 

a manner calculated to be understood by 

a beneficiary, and contain—

(1) A clear statement indicating the 

extent to which the redetermination is 

favorable or unfavorable; 

(2) A summary of the facts, including, 

as appropriate, a summary of the 

clinical or scientific evidence used in 

making the redetermination; 

(3) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case; 

(4) A summary of the rationale for the 

redetermination in clear, 

understandable language; 

(5) Notification to the parties of their 

right to a reconsideration and a 

description of the procedures that a 

party must follow in order to request a 

reconsideration, including the time 

frame within which a reconsideration 

must be requested; 

(6) A statement of any specific 

missing documentation that must be 

submitted with a request for a 

reconsideration, if applicable; 

(7) A statement that all evidence the 

appellant wishes to introduce during 

the claim appeals process should be 

submitted with the request for a 

reconsideration; 

(8) Notification that evidence not 

submitted to the QIC as indicated in 

paragraph (b)(6) of this section, is not 

considered at an ALJ hearing or further 

appeal, unless the appellant 

demonstrates good cause as to why that 

evidence was not provided previously; 

and 

(9) The procedures for obtaining 

additional information concerning the 

redetermination, such as specific 

provisions of the policy, manual, or 

regulation used in making the 

redetermination. 

(10) Any other requirements specified 

by CMS. 

(c) Content of the notice for a full 

reversal. For decisions that are full 

reversals of the initial determination, 

the redetermination must be in writing 

and contain—

(1) A clear statement indicating that 

the redetermination is wholly favorable; 

(2) Any other requirements specified 

by CMS. 

(d) Exception for beneficiary appeal 

requests. (1) The notice must inform 

beneficiary appellants that the 

requirements of paragraph (b)(8) of this 

section are not applicable for purposes 

of beneficiary appeals. 

(2) This exception does not apply for 

appeal requests from beneficiaries who 

are represented by providers or 

suppliers.

§ 405.958 Effect of a redetermination. 

In accordance with section 1869 

(a)(3)(D) of the Act, once a 

redetermination is issued, it becomes 

part of the initial determination. The 

redetermination is final and binding 

upon all parties unless—

(a) A reconsideration is completed in 

accordance with § 405.960 through 

§ 405.978; or 

(b) The redetermination is revised as 

a result of a reopening in accordance 

with § 405.980. 

Reconsideration

§ 405.960 Right to a reconsideration. 

A person or entity that is a party to 

a redetermination made by a contractor 

as described under § 405.940 through 

§ 405.958, and is dissatisfied with that 

determination, may request a 

reconsideration by a QIC in accordance 

with § 405.962 through § 405.966, 

regardless of the amount in controversy.

§ 405.962 Timeframe for filing a request for 

a reconsideration. 

(a) Timeframe for filing a request.

Except as provided in paragraph (b) of 

this section, any request for a 

reconsideration must be filed within 

180 calendar days from the date the 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11481

party receives the notice of the 

redetermination. 

(1) For purposes of this section, the 

date of receipt of the redetermination 

will be presumed to be 5 days after the 

date of the notice of redetermination, 

unless there is evidence to the contrary. 

(2) For purposes of meeting the 180-

day filing deadline, the request is 

considered as filed on the date it is 

received by the QIC. 

(b) Extending the time for filing a 

request. (1) General rule. A QIC may 

extend the 180-day timeframe for filing 

a request for reconsideration for good 

cause. 

(2) How to request an extension. A 

party to the redetermination must file its 

request for an extension of the time for 

filing the reconsideration request with 

its request for reconsideration. A party 

should include evidence to support the 

request for extension. The request for 

reconsideration and request for 

extension must—

(i) Be in writing; 

(ii) State why the request for 

reconsideration was not filed within the 

required timeframe; and 

(iii) Meet the requirements of 

§ 405.964. 

(3) How the QIC determines whether 

good cause exists. In determining 

whether a party has good cause for 

missing a deadline to request 

reconsideration, the QIC applies the 

good cause provisions contained in 

§ 405.942(b)(2) and (b)(3).

§ 405.964 Place and method of filing a 

request for a reconsideration. 

(a) Filing location. The request for 

reconsideration must be filed with the 

QIC indicated on the notice of 

redetermination. 

(b) Content of reconsideration request.

The request for reconsideration must be 

in writing and should be made on a 

standard CMS form. A written request 

that is not made on a standard CMS 

form is accepted if it contains the same 

required elements, as follows: 

(1) The beneficiary’s name; 

(2) Medicare health insurance claim 

number; 

(3) Specific service(s) and item(s) for 

which the reconsideration is requested 

and the specific date(s) of service; 

(4) The name and signature of the 

party or the representative of the party; 

and 

(5) The name of the contractor that 

made the redetermination. 

(c) Requests for reconsideration by 

more than one party. If more than one 

party timely files a request for 

reconsideration on the same claim 

before a reconsideration is made on the 

first timely filed request, the QIC must 

consolidate the separate requests into 

one proceeding and issue one 

reconsideration.

§ 405.966 Evidence to be submitted with 

the reconsideration request. 

(a) Evidence submitted with the 

request. When filing a request for 

reconsideration, a party should present 

evidence and allegations of fact or law 

related to the issue in dispute and 

explain why it disagrees with the initial 

determination, including the 

redetermination. 

(1) This evidence must include any 

missing documentation identified in the 

notice of redetermination, consistent 

with § 405.956(b)(6). 

(2) Absent good cause, failure to 

submit all evidence, including 

documentation requested in the notice 

of redetermination prior to the issuance 

of the notice of reconsideration 

precludes subsequent consideration of 

that evidence. 

(b) Evidence submitted after the 

request. Each time a party submits 

additional evidence after filing the 

request for reconsideration, the QIC’s 

60-day decisionmaking timeframe is 

automatically extended by up to 14 

calendar days for each submission. This 

extension does not apply to timely 

submissions of documentation 

specifically requested by a QIC, unless 

the documentation was originally 

requested in the notice of 

redetermination. 

(c) Exception for beneficiaries and 

State Medicaid Agencies that file 

reconsideration requests. (1) 

Beneficiaries and State Medicaid 

Agencies that file requests for 

reconsideration are not required to 

comply with the requirements of 

paragraph (a) of this section. However, 

the automatic 14-day extension 

described in paragraph (b) of this 

section applies to each evidence 

submission made after the request for 

reconsideration is filed. 

(2) Beneficiaries who are represented 

by providers or suppliers must comply 

with the requirements of paragraph (a) 

of this section.

§ 405.968 Conduct of a reconsideration. 

(a) General rules. (1) A 

reconsideration consists of an 

independent, on-the-record review of an 

initial determination, including the 

redetermination and all issues related to 

payment of the claim. In conducting a 

reconsideration, the QIC reviews the 

evidence and findings upon which the 

initial determination, including the 

redetermination, was based, and any 

additional evidence the parties submit 

or that the QIC obtains on its own. If the 

initial determination involves a finding 

on whether an item or service is 

reasonable and necessary for the 

diagnosis or treatment of illness or 

injury (under section 1862(a)(1)(A) of 

the Act), a QIC’s reconsideration must 

involve consideration by a panel of 

physicians or other appropriate health 

care professionals, and be based on 

clinical experience, the patient’s 

medical records, and medical, technical, 

and scientific evidence of record to the 

extent applicable.

(b) Authority of the QIC. (1) National 

coverage determinations (NCDs), CMS 

Rulings, and applicable laws and 

regulations are binding on the QIC. 

(2) QICs are not bound by LCDs, 

LMRPs, or CMS program guidance, such 

as program memoranda and manual 

instructions, but give substantial 

deference to these policies if they are 

applicable to a particular case. A QIC 

may decline to follow a policy, if the 

QIC determines, either at a party’s 

request or at its own discretion, that the 

policy does not apply to the facts of the 

particular case. 

(3) If a QIC declines to follow a policy 

in a particular case, the QIC’s 

reconsideration explains the reasons 

why the policy was not followed. 

(4) A QIC’s decision to decline to 

follow a policy under this section 

applies only to the specific claim being 

reconsidered and does not have 

precedential effect. 

(5) A QIC may raise and develop new 

issues that are relevant to the claims in 

a particular case provided that the 

contractor rendered a redetermination 

with respect to the claims. 

(c) Qualifications of the QIC’s panel 

members. (1) Members of a QIC’s panel 

who conduct reconsiderations must 

have sufficient medical, legal, and other 

expertise, including knowledge of the 

Medicare program. 

(2) When a redetermination is made 

with respect to whether an item or 

service is reasonable and necessary 

(section 1862(a)(1)(A) of the Act), the 

QIC designates a panel of physicians or 

other appropriate health care 

professionals to consider the facts and 

circumstances of the redetermination. 

(3) Where a claim pertains to the 

furnishing of treatment by a physician, 

or the provision of items or services by 

a physician, a reviewing professional 

must be a physician. 

(d) Disqualification of a QIC panel 

member. No physician or health care 

professional employed by or otherwise 

working for a QIC may review 

determinations regarding—

(1) Health care services furnished to a 

patient if that physician or health care 

11482 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

professional was directly responsible for 

furnishing those services; or 

(2) Health care services provided in or 

by an institution, organization, or 

agency, if that physician or health care 

professional or any member of the 

physician’s family or health care 

professional’s family has, directly or 

indirectly, a significant financial 

interest in that institution, organization, 

or agency (see the term family member 

as defined in § 405.902).

§ 405.970 Timeframe for making a 

reconsideration. 

(a) General rule. Within 60 calendar 

days of the date the QIC receives a 

timely filed request for reconsideration 

or any additional time provided by 

paragraph (b) of this section, the QIC 

mails, or otherwise transmits to the 

parties at their last known addresses, 

written notice of—

(1) The reconsideration; 

(2) Its inability to complete its review 

within 60 days in accordance with 

paragraphs (c) through (e) of this 

section; or 

(3) Dismissal. 

(b) Exceptions. (1) If a QIC grants an 

appellant’s request for an extension of 

the 180-day filing deadline made in 

accordance with § 405.962(b), the QIC’s 

60-day decision-making timeframe 

begins on the date the QIC receives the 

late filed request for reconsideration, or 

when the request for an extension that 

meets the requirements of § 405.962(b) 

is granted, whichever is later. 

(2) If a QIC receives timely requests 

for reconsideration from multiple 

parties, consistent with § 405.964(c), the 

QIC must issue a reconsideration, notice 

that it cannot complete its review, or 

dismissal within 60 days for each 

submission of the latest filed request. 

(3) Each time a party submits 

additional evidence after the request for 

reconsideration is filed, the QIC’s 60-

day decisionmaking timeframe is 

extended by up to 14 days for each 

submission, consistent with 

§ 405.966(b). 

(c) Responsibilities of the QIC. Within 

60 days of receiving a request for a 

reconsideration, or any additional time 

provided for under paragraph (b) of this 

section, a QIC must take one of the 

following actions: 

(1) Notify all parties of its 

reconsideration, consistent with 

§ 405.976. 

(2) Notify the appellant that it cannot 

complete the reconsideration by the 

deadline specified in paragraph (b) of 

this section and offer the appellant the 

opportunity to escalate the appeal to an 

ALJ. The QIC continues to process the 

reconsideration unless it receives a 

written request from the appellant to 

escalate the case to an ALJ after the 

adjudication period has expired. 

(3) Notify all parties that it has 

dismissed the request for 

reconsideration consistent with 

§ 405.972. 

(d) Responsibilities of the appellant. If 

an appellant wishes to exercise the 

option of escalating the case to an ALJ, 

the appellant must notify the QIC in 

writing. 

(e) Actions following appellant’s 

notice. (1) If the appellant fails to notify 

the QIC, or notifies the QIC that the 

appellant does not choose to escalate 

the case, the QIC completes its 

reconsideration and notifies the 

appellant of its action consistent with 

§ 405.972 or § 405.976. 

(2) If the appellant notifies the QIC 

that the appellant wishes to escalate the 

case, the QIC must take one of the 

following actions within 5 days of 

receipt of the notice or 5 days from the 

end of the applicable adjudication 

period under paragraph (a) or (b) of this 

section: 

(i) Complete its reconsideration and 

notify all parties of its decision 

consistent with § 405.972 or § 405.976.

(ii) Acknowledge the escalation notice 

in writing and forward the case file to 

the ALJ hearing office.

§ 405.972 Withdrawal or dismissal of a 

request for a reconsideration. 

(a) Withdrawing a request. An 

appellant that files a request for 

reconsideration may withdraw its 

request by filing a written and signed 

request for withdrawal. The request for 

withdrawal must—

(1) Contain a clear statement that the 

appellant is withdrawing the request for 

reconsideration and does not intend to 

proceed further with the appeal. 

(2) Be received in the QIC’s mailroom 

before the reconsideration is issued. 

(b) Dismissing a request. A QIC 

dismisses a reconsideration request, 

either entirely or as to any stated issue, 

under any of the following 

circumstances: 

(1) When the person or entity 

requesting reconsideration is not a 

proper party under § 405.906(b) or does 

not otherwise have a right to a 

reconsideration under section 1869(b) of 

the Act; 

(2) When the QIC determines that the 

party failed to make out a valid request 

for reconsideration that substantially 

complies with § 405.964(a) and (b); 

(3) When the party fails to file the 

reconsideration request in accordance 

with the timeframes established in 

§ 405.962; 

(4) When a beneficiary or the 

beneficiary’s representative files a 

request for reconsideration, but the 

beneficiary dies while the request is 

pending, and all of the following criteria 

apply: 

(i) The beneficiary’s surviving spouse 

or estate has no remaining financial 

interest in the case. In deciding this 

issue, the QIC considers if the surviving 

spouse or estate remains liable for the 

services for which payment was denied 

or a Medicare contractor held the 

beneficiary liable for subsequent similar 

services under the limitation of liability 

provisions based on the denial of 

payment for services at issue; 

(ii) No other individual or entity with 

a financial interest in the case wishes to 

pursue the appeal; and 

(iii) No other party to the 

redetermination filed a valid and timely 

request for reconsideration under 

§ 405.962 and § 405.964. 

(5) When a party filing for the 

reconsideration submits a written 

request of withdrawal to the QIC and 

satisfies the criteria set forth in 

paragraph (a) of this section before the 

reconsideration has been issued; or 

(6) When the contractor has not 

issued a redetermination on the initial 

determination for which a 

reconsideration is sought. 

(c) Notice of dismissal. A QIC mails or 

otherwise transmits written notice of the 

dismissal of the reconsideration request 

to the parties at their last known 

addresses. The notice states that there is 

a right to request that the contractor 

vacate the dismissal action. The appeal 

will proceed with respect to any other 

parties that have filed a timely request 

for reconsideration. 

(d) Vacating a dismissal. If good and 

sufficient cause is established, a QIC 

may vacate its dismissal of a request for 

reconsideration within 6 months of the 

date of the notice of dismissal. 

(e) Effect of dismissal. The dismissal 

of a request for reconsideration is final 

and binding, unless it is modified or 

reversed by an ALJ under § 405.1004 or 

vacated under paragraph (d) of this 

section.

§ 405.974 Reconsideration. 

(a) Reconsideration of a contractor 

determination. Except as provided in 

§ 405.972, upon the basis of the 

evidence of record, the QIC must issue 

a reconsideration affirming or reversing, 

in whole or in part, the initial 

determination, including the 

redetermination, in question. 

(b) Reconsideration of contractor’s 

dismissal of a redetermination request.

(1) A party to a contractor’s dismissal of 

a request for redetermination has a right 

to have the dismissal reviewed by a QIC, 

if the party files a written request for 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11483

review of the dismissal with the QIC 

within 60 days after receipt of the 

contractor’s notice of dismissal. 

(2) If the QIC determines that the 

contractor’s dismissal was in error, it 

vacates the dismissal and remands the 

case to the contractor for a 

redetermination. 

(3) A QIC’s reconsideration of a 

contractor’s dismissal of a 

redetermination request is final and not 

subject to any further review.

§ 405.976 Notice of a reconsideration. 

(a) Notification to parties. (1) General 

rules. (i) Written notice of the 

reconsideration must be mailed or 

otherwise transmitted to all parties at 

their last known addresses, in 

accordance with the timeframes 

established in § 405.970(a) or (b).

(ii) The notice must be written in a 

manner reasonably calculated to be 

understood by a beneficiary. 

(iii) The QIC must promptly notify the 

entity responsible for payment of claims 

under Part A or Part B of its 

reconsideration. If the reconsideration 

results in issuance of supplemental 

payment to a provider or supplier, the 

Medicare contractor must also issue an 

electronic or paper RA notice to the 

provider or supplier. 

(2) Overpayment cases involving 

multiple beneficiaries who have no 

liability. In an overpayment case 

involving multiple beneficiaries who 

have no liability, the QIC may issue a 

written notice only to the appellant. 

(b) Content of the notice. The 

reconsideration must be in writing and 

contain—

(1) A clear statement indicating 

whether the reconsideration is favorable 

or unfavorable; 

(2) A summary of the facts, including 

as appropriate, a summary of the 

clinical or scientific evidence used in 

making the reconsideration; 

(3) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies, apply to the facts of the 

case, including, where applicable, the 

rationale for declining to follow an LCD, 

LMRP, or CMS program guidance; 

(4) In the case of a determination on 

whether an item or service is reasonable 

or necessary under section 1862(a)(1)(A) 

of the Act, an explanation of the 

medical and scientific rationale for the 

decision; 

(5) A summary of the rationale for the 

reconsideration. 

(i) If the notice of redetermination 

indicated that specific documentation 

should be submitted with the 

reconsideration request, and the 

documentation was not submitted with 

the request for reconsideration, the 

summary must indicate how the missing 

documentation affected the 

reconsideration; and 

(ii) The summary must also specify 

that, consistent with § 405.956(b)(8) and 

§ 405.966(b), all evidence, including 

evidence requested in the notice of 

redetermination, that is not submitted 

prior to the issuance of the 

reconsideration will not be considered 

at an ALJ level, or made part of the 

administrative record, unless the 

appellant demonstrates good cause as to 

why the evidence was not provided 

prior to the issuance of the QIC’s 

reconsideration. This requirement does 

not apply to beneficiaries, unless the 

beneficiary is represented by a provider 

or supplier or to State Medicaid 

Agencies; 

(6) Information concerning to the 

parties’ right to an ALJ hearing, 

including the applicable amount in 

controversy requirement and 

aggregation provisions; 

(7) A statement of whether the 

amount in controversy needed for an 

ALJ hearing is met when the 

reconsideration is partially or fully 

unfavorable; 

(8) A description of the procedures 

that a party must follow in order to 

obtain an ALJ hearing of an expedited 

reconsideration, including the time 

frame under which a request for an ALJ 

hearing must be filed; 

(9) If appropriate, advice as to the 

requirements for use of the expedited 

access to judicial review process set 

forth in § 405.990; 

(10) The procedures for obtaining 

additional information concerning the 

reconsideration, such as specific 

provisions of the policy, manual, or 

regulation used in making the 

reconsideration; and 

(11) Any other requirements specified 

by CMS.

§ 405.978 Effect of a reconsideration. 

A reconsideration is final and binding 

on all parties, unless—

(a) An ALJ decision is issued in 

accordance to a request for an ALJ 

hearing made in accordance with 

§ 405.1014; 

(b) A review entity issues a decision 

in accordance to a request for expedited 

access to judicial review under 

§ 405.990; or 

(c) The reconsideration is revised as a 

result of a reopening in accordance with 

§ 405.980. 

Reopenings

§ 405.980 Reopenings of initial 

determinations, redeterminations, and 

reconsiderations, hearings and reviews. 

(a) General rules. (1) A reopening is a 

remedial action taken to change a final 

determination or decision that resulted 

in either an overpayment or 

underpayment, even though the 

determination or decision was correct 

based on the evidence of record. That 

action may be taken by—

(i) A contractor to revise the initial 

determination or redetermination; 

(ii) A QIC to revise the 

reconsideration; 

(iii) An ALJ to revise the hearing 

decision; or 

(iv) The MAC to revise the hearing or 

review decision. 

(2) If a contractor issues a denial of a 

claim because it did not receive 

requested documentation during 

medical review and the party 

subsequently requests a 

redetermination, the contractor must 

process the request as a reopening. 

(3) Notwithstanding paragraph (a)(4) 

of this section, a contractor must 

process clerical errors (which includes 

mirror errors and omissions) as 

reopenings, instead of redeterminations 

as specified in § 405.940. If the 

contractor receives a request for 

reopening and disagrees that the issue is 

a clerical error, the contractor must 

dismiss the reopening request and 

advise the party of any appeal rights, 

provided the timeframe to request an 

appeal on the original denial has not 

expired. For purposes of this section, 

clerical error includes human and 

mechanical errors on the part of the 

party or the contractor such as—

(i) Mathematical or computational 

mistakes; 

(ii) Inaccurate data entry; or 

(iii) Denials of claims as duplicates.

(4) When a party has filed a valid 

request for an appeal of an initial 

determination, redetermination, 

reconsideration, hearing, or MAC 

review, no adjudicator has jurisdiction 

to reopen a claim at issue until all 

appeal rights are exhausted. Once the 

appeal rights have been exhausted, the 

contractor, QIC, ALJ, or MAC may 

reopen as set forth in this section. 

(5) The contractor’s, QIC’s, ALJ’s, or 

MAC’s decision on whether to reopen is 

final and not subject to appeal. 

(6) A Medicare secondary payer 

demand to recover a conditional 

payment, based upon a provider’s or 

supplier’s failure to demonstrate that it 

filed a proper claim with a plan, 

program, or insurer, as defined in 

§ 411.21 of this chapter, because this 

action is a reopening. 

11484 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

(b) Time frames and requirements for 

reopening initial determinations and 

redeterminations initiated by a 

contractor. A contractor may reopen and 

revise its initial determination or 

redetermination on its own motion—

(1) Within 1 year from the date of the 

initial determination or redetermination 

for any reason. 

(2) Within 4 years from the date of the 

initial determination or redetermination 

for good cause as defined in § 405.986. 

(3) At any time if there exists reliable 

evidence as defined in § 405.902 that 

the initial determination was procured 

by fraud or similar fault as defined in 

§ 405.902. 

(4) At anytime if the initial 

determination is unfavorable, in whole 

or in part, to the party thereto, but only 

for the purpose of correcting a clerical 

error on which that determination was 

based. 

(5) At any time to effectuate a 

decision issued under the coverage 

appeals process. 

(c) Time frame and requirements for 

reopening initial determinations and 

redeterminations requested by a party.

(1) A party may request that a contractor 

reopen its initial determination or 

redetermination within 1 year from the 

date of the initial determination or 

redetermination for any reason. 

(2) A party may request that a 

contractor reopen its initial 

determination or redetermination 

within 4 years from the date of the 

initial determination or redetermination 

for good cause in accordance with 

§ 405.986. 

(3) A party may request that a 

contractor reopen its initial 

determination at any time if the initial 

determination is unfavorable, in whole 

or in part, to the party thereto, but only 

for the purpose of correcting a clerical 

error on which that determination was 

based. Third party payer error does not 

constitute clerical error. See

§ 405.986(c). 

(d) Time frame and requirements for 

reopening reconsiderations, hearing 

decisions and reviews initiated by a 

QIC, ALJ, or the MAC. (1) A QIC may 

reopen its reconsideration on its own 

motion within 180 days from the date of 

the reconsideration for good cause in 

accordance with § 405.986. If the QIC’s 

reconsideration was procured by fraud 

or similar fault, then the QIC may 

reopen at any time. 

(2) An ALJ may reopen its hearing 

decision on its own motion within 180 

days from the date of the decision for 

good cause in accordance with 

§ 405.986. If the ALJ’s decision was 

procured by fraud or similar fault, then 

the ALJ may reopen at any time.

(3) The MAC may reopen its review 

decision on its own motion within 180 

days from the date of the review 

decision for good cause in accordance 

with § 405.986. If the MAC’s decision 

was procured by fraud or similar fault, 

then the MAC may reopen at any time. 

(e) Time frames and requirements for 

reopening reconsiderations, hearing 

decisions, and reviews requested by a 

party. (1) A party to a reconsideration 

may request that a QIC reopen its 

reconsideration within 180 days from 

the date of the reconsideration for good 

cause in accordance with § 405.986. 

(2) A party to a hearing may request 

that an ALJ reopen his or her decision 

within 180 days from the date of the 

hearing decision for good cause in 

accordance with § 405.986. 

(3) A party to a review may request 

that the MAC reopen its decision within 

180 days from the date of the review 

decision for good cause in accordance 

with § 405.986.

§ 405.982 Notice of a revised 

determination or decision. 

(a) When adjudicators initiate 

reopenings. When any determination or 

decision is reopened and revised as 

provided in § 405.980, the contractor, 

QIC, ALJ, or the MAC must mail its 

revised determination or decision to the 

parties to that determination or decision 

at their last known address. In the case 

of a full or partial reversal resulting in 

issuance of a payment to a provider or 

supplier, a revised electronic or paper 

remittance advice notice must be issued 

by the Medicare contractor. An adverse 

revised determination or decision must 

state the rationale and basis for the 

reopening and revision and any right to 

appeal. 

(b) Reopenings initiated at the request 

of a party. The contractor, QIC, ALJ, or 

the MAC must mail its revised 

determination or decision to the parties 

to that determination or decision at their 

last known address. In the case of a full 

or partial reversal resulting in issuance 

of a payment to a provider or supplier, 

a revised electronic or paper remittance 

advice notice must be issued by the 

Medicare contractor. An adverse revised 

determination or decision must state the 

rationale and basis for the reopening 

and revision and any right to appeal.

§ 405.984 Effect of a revised determination 

or decision. 

(a) Initial determinations. The 

revision of an initial determination is 

binding upon all parties unless a party 

files a written request for a 

redetermination that is accepted and 

processed in accordance with § 405.940 

through § 405.958. 

(b) Redeterminations. The revision of 

a redetermination is binding upon all 

parties unless a party files a written 

request for a QIC reconsideration that is 

accepted and processed in accordance 

with § 405.960 through § 405.978. 

(c) Reconsiderations. The revision of 

a reconsideration is binding upon all 

parties unless a party files a written 

request for an ALJ hearing that is 

accepted and processed in accordance 

with § 405.1000 through § 405.1064. 

(d) ALJ Hearing decisions. The 

revision of a hearing decision is binding 

upon all parties unless a party files a 

written request for a MAC review that 

is accepted and processed in accordance 

with § 405.1100 through § 405.1130. 

(e) MAC review. The revision of a 

MAC review is binding upon all parties 

unless a party files a civil action in 

which a Federal district court accepts 

jurisdiction and issues a decision. 

(f) Appeal of only the portion of the 

determination or decision revised by the 

reopening. Only the portion of the 

initial determination, redetermination, 

reconsideration, or hearing decision 

revised by the reopening may be 

subsequently appealed. 

(g) Effect of a revised determination or 

decision. A revised determination or 

decision is binding unless it is appealed 

or otherwise reopened.

§ 405.986 Good cause for reopening. 

(a) Establishing good cause. Good 

cause may be established when—

(1) There is new and material 

evidence that—

(i) Was not available or known at the 

time of the determination or decision; 

and 

(ii) May result in a different 

conclusion; or 

(2) The evidence that was considered 

in making the determination or decision 

clearly shows on its face that an obvious 

error was made at the time of the 

determination or decision. 

(b) Change in substantive law or 

interpretative policy. A change of legal 

interpretation or policy by CMS in a 

regulation, CMS ruling, or CMS general 

instruction, or a change in legal 

interpretation or policy by SSA in a 

regulation, SSA ruling, or SSA general 

instruction in entitlement appeals, 

whether made in response to judicial 

precedent or otherwise, is not a basis for 

reopening a determination or hearing 

decision under this section. This 

provision does not preclude contractors 

from conducting reopenings to 

effectuate coverage decisions issued 

under the authority granted by section 

1869(f) of the Act. 

(c) Third party payer error. A request 

to reopen a claim based upon a third 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11485

party payer’s error in making a primary 

payment determination when Medicare 

processed the claim in accordance with 

the information in its system of records 

or on the claim form does not constitute 

good cause for reopening. 

(d) MSP recovery claim. A 

determination under the Medicare 

Secondary Payer provisions of Section 

1862(b) of the Act that Medicare has an 

MSP recovery claim for services or 

items that were already reimbursed by 

the Medicare program is not a 

reopening.

Expedited Access to Judicial Review

§ 405.990 Expedited access to judicial 

review. 

(a) Process for expedited access to 

judicial review. (1) For purposes of this 

section, a ‘‘review entity’’ means an 

entity of up to three reviewers who are 

ALJs or members of the Departmental 

Appeals Board (DAB), as determined by 

the Secretary. 

(2) In order to obtain expedited access 

to judicial review (EAJR), a review 

entity must certify that the Medicare 

Appeals Council (MAC) does not have 

the authority to decide the question of 

law or regulation relevant to the matters 

in dispute and that there is no material 

issue of fact in dispute. 

(3) A party may make a request for 

EAJR only once with respect to a 

question of law or regulation for a 

specific matter in dispute in an appeal. 

(b) Conditions for making the 

expedited appeals request. (1) A party 

may request EAJR in place of an ALJ 

hearing or MAC review if the following 

conditions are met: 

(i) A QIC has made a reconsideration 

determination and the party has filed a 

request for—

(A) an ALJ hearing in accordance with 

§ 405.1002 and a final decision of the 

ALJ has been issued; 

(B) MAC review in accordance with 

§ 405.1102 and a final decision of the 

MAC has not been issued; or 

(ii) The appeal has been escalated 

from the QIC to the ALJ level after the 

period described in § 405.970(a) and 

§ 405.970(b) has expired, and the QIC 

does not issue a final action within the 

time frame described in § 405.970(e). 

(2) The requestor is a party, as defined 

in paragraph (e) of this section. 

(3) The amount remaining in 

controversy meets the requirements of 

§ 405.1006(b) or (c). 

(4) If there is more than one party to 

the reconsideration, hearing, or MAC 

review, each party concurs, in writing, 

with the request for the EAJR. 

(5) There are no material issues of fact 

in dispute. 

(c) Content of the request for EAJR.

The request for EAJR must—

(1) Allege that there are no material 

issues of fact in dispute and identify the 

facts that the requestor considers 

material and that are not disputed; and 

(2) Assert that the only factor 

precluding a decision favorable to the 

requestor is—

(i) A statutory provision that is 

unconstitutional, or a provision of a 

regulation or national coverage 

determination and specify the statutory 

provision that the requestor considers 

unconstitutional or the provision of a 

regulation or a national coverage 

determination that the requestor 

considers invalid, or 

(ii) A CMS Ruling that the requester 

considers invalid; 

(3) Include a copy of any QIC 

reconsideration and of any ALJ hearing 

decision that the requester has received; 

(4) If any QIC reconsideration or ALJ 

hearing decision was based on facts that 

the requestor is disputing, state why the 

requestor considers those facts to be 

immaterial; and 

(5) If any QIC reconsideration or ALJ 

hearing decision was based on a 

provision of a law, regulation, national 

coverage determination or CMS Ruling 

in addition to the one the requestor 

considers unconstitutional or invalid, a 

statement as to why further 

administrative review of how that 

provision applies to the facts is not 

necessary. 

(d) Place and time for an EAJR 

request. (1) Method and place for filing 

request. The requestor may include an 

EAJR request in his or her request for an 

ALJ hearing or MAC review, or, if an 

appeal is already pending with an ALJ 

or the MAC, file a written EAJR request 

with the ALJ hearing office or MAC 

where the appeal is being considered. 

The ALJ hearing office or MAC forwards 

the request to the review entity within 

5 calendar days of receipt. 

(2) Time of filing request. The party 

may file a request for the EAJR—

(i) If the party has requested a hearing, 

at any time before receipt of the notice 

of the ALJ’s decision; or 

(ii) If the party has requested MAC 

review, at any time before receipt of 

notice of the MAC’s decision. 

(e) Parties to the EAJR. The parties to 

the EAJR are the persons or entities who 

were parties to the QIC’s 

reconsideration determination and, if 

applicable, to the ALJ hearing. 

(f) Determination on EAJR request. (1) 

The review entity described in 

paragraph (a) of this section will 

determine whether the request for EAJR 

meets all of the requirements of 

paragraphs (b), (c), and (d) of this 

section. 

(2) Within 60 days after the date the 

review entity receives a request and 

accompanying documents and materials 

meeting the conditions in paragraphs 

(b), (c), and (d) of this section, the 

review entity will issue either a 

certification in accordance to paragraph 

(g) of this section or a denial of the 

request. 

(3) A determination by the review 

entity either certifying that the 

requirements for EAJR are met pursuant 

to paragraph (g) of this section or 

denying the request is final and not 

subject to review by the Secretary. 

(4) If the review entity fails to make 

a determination within the time frame 

specified in paragraph (f)(2) of this 

section, then the requestor may bring a 

civil action in Federal district court 

within 60 days of the end of the time 

frame. 

(g) Certification by the review entity.

If a party meets the requirements for the 

EAJR, the review entity certifies in 

writing that—

(1) The material facts involved in the 

claim are not in dispute;

(2) Except as indicated in paragraph 

(g)(3) of this section, the Secretary’s 

interpretation of the law is not in 

dispute; 

(3) The sole issue(s) in dispute is the 

constitutionality of a statutory 

provision, or the validity of a provision 

of a regulation, CMS Ruling, or national 

coverage determination; 

(4) But for the provision challenged, 

the requestor would receive a favorable 

decision on the ultimate issue (such as 

whether a claim should be paid); and 

(5) The certification by the review 

entity is the Secretary’s final action for 

purposes of seeking expedited judicial 

review. 

(h) Effect of certification by the review 

entity. If an EAJR request results in a 

certification described in paragraph (g) 

of this section—

(1) The party that requested the EAJR 

is considered to have waived any right 

to completion of the remaining steps of 

the administrative appeals process 

regarding the matter certified. 

(2) The requestor has 60 days, 

beginning on the date of the review 

entity’s certification within which to 

bring a civil action in Federal district 

court. 

(3) The requestor must satisfy the 

requirements for venue under section 

1869(b)(2)(C)(iii) of the Act, as well as 

the requirements for filing a civil action 

in a Federal district court under 

§ 405.1136(a) and § 405.1136(c) through 

§ 405.1136(f). 

11486 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

(i) Rejection of EAJR. (1) If a request 

for EAJR request does not meet all the 

conditions set out in paragraphs (b), (c) 

and (d) of this section, or if the review 

entity does not certify a request for 

EAJR, the review entity advises in 

writing all parties that the request has 

been denied, and returns the request to 

the ALJ hearing office or the MAC, 

which will treat it as a request for 

hearing or for MAC review, as 

appropriate. 

(2) Whenever a review entity forwards 

a rejected EAJR request to an ALJ 

hearing office or the MAC, the appeal is 

considered timely filed and the 90-day 

decision making time frame begins on 

the day the request is received by the 

hearing office or the MAC. 

(j) Interest on any amounts in 

controversy. (1) If a provider or supplier 

is granted judicial review in accordance 

with this section, the amount in 

controversy, if any, is subject to annual 

interest beginning on the first day of the 

first month beginning after the 60-day 

period as determined in accordance 

with paragraphs (f)(4) or (h)(2) of this 

section, as applicable. 

(2) The interest is awarded by the 

reviewing court and payable to a 

prevailing party. 

(3) The rate of interest is equal to the 

rate of interest applicable to obligations 

issued for purchase by the Federal 

Supplementary Medical Insurance Trust 

Fund for the month in which the civil 

action authorized under this subpart is 

commenced. 

(4) No interest awarded in accordance 

with this paragraph shall be income or 

cost for purposes of determining 

reimbursement due to providers or 

suppliers under Medicare. 

ALJ Hearings

§ 405.1000 Hearing before an ALJ: General 

rule. 

(a) If a party is dissatisfied with a 

QIC’s reconsideration or if the 

adjudication period specified in 

§ 405.970 for the QIC to complete its 

reconsideration has elapsed, the party 

may request a hearing. 

(b) A hearing may be conducted inperson, by video-teleconference (VTC), 

or by telephone. At the hearing, the 

parties may submit evidence (subject to 

the restrictions in § 405.1018 and 

§ 405.1028), examine the evidence used 

in making the determination under 

review, and present and/or question 

witnesses. 

(c) In some circumstances, a 

representative of CMS or its contractor, 

including the QIC, QIO, fiscal 

intermediary or carrier, may participate 

in or join the hearing as a party. (see

§ 405.1010 and § 405.1012). 

(d) The ALJ issues a decision based on 

the hearing record. 

(e) If all parties to the hearing waive 

their right to appear at the hearing in 

person or by telephone or videoteleconference, the ALJ may make a 

decision based on the evidence that is 

in the file and any new evidence that is 

submitted for consideration. 

(f) The ALJ may require the parties to 

participate in a hearing if it is necessary 

to decide the case. If the ALJ determines 

that it is necessary to obtain testimony 

from a non-party, he or she may hold a 

hearing to obtain that testimony, even if 

all of the parties have waived the right 

to appear. In that event, however, the 

ALJ will give the parties the opportunity 

to appear when the testimony is given, 

but may hold the hearing even if none 

of the parties decide to appear. 

(g) An ALJ may also issue a decision 

on the record on his or her own 

initiative if the evidence in the hearing 

record supports a fully favorable 

finding.

§ 405.1002 Right to an ALJ hearing. 

(a) A party to a QIC reconsideration 

may request a hearing before an ALJ if—

(1) The party files a written request 

for an ALJ hearing within 60 days after 

receipt of the notice of the QIC’s 

reconsideration; and 

(2) The party meets the amount in 

controversy requirements of § 405.1006. 

(b) A party who files a timely appeal 

before a QIC and whose appeal 

continues to be pending before a QIC at 

the end of the period described in 

§ 405.970 has a right to a hearing before 

an ALJ if—

(1) The party files a written request 

with the QIC to escalate the appeal to 

the ALJ level after the period described 

in § 405.970(a) and (b) has expired and 

the party files the request in accordance 

with § 405.970(d); 

(2) The QIC does not issue a final 

action within 5 days of receiving the 

request for escalation in accordance 

with § 405.970(e)(2); and 

(3) The party has an amount 

remaining in controversy specified in 

§ 405.1006.

§ 405.1004 Right to ALJ review of QIC 

notice of dismissal. 

(a) A party to a QIC’s dismissal of a 

request for reconsideration has a right to 

have the dismissal reviewed by an ALJ 

if—

(1) The party files a written request 

for an ALJ review within 60 days after 

receipt of the notice of the QIC’s 

dismissal; and 

(2) The party meets the amount in 

controversy requirements of § 405.1006. 

(b) If the ALJ determines that the 

QIC’s dismissal was in error, he or she 

vacates the dismissal and remands the 

case to the QIC for a reconsideration. 

(c) An ALJ’s decision regarding a 

QIC’s dismissal of a reconsideration 

request is final and not subject to further 

review.

§ 405.1006 Amount in controversy 

required to request an ALJ hearing and 

judicial review. 

(a) Definitions. For the purposes of 

aggregating claims to meet the amount 

in controversy requirement for an ALJ 

hearing or judicial review: 

(1) ‘‘Common issues of law and fact’’

means the claims sought to be 

aggregated are denied, or payment is 

reduced, for similar reasons and arise 

from a similar fact pattern material to 

the reason the claims are denied or 

payment is reduced. 

(2) ‘‘Delivery of similar or related 

services’’ means like or coordinated 

services or items provided to one or 

more beneficiaries. 

(b) ALJ review. To be entitled to a 

hearing before an ALJ, the party must 

meet the amount in controversy 

requirements of this section. 

(1) For ALJ hearing requests, the 

required amount remaining in 

controversy must be $100 increased by 

the percentage increase in the medical 

care component of the consumer price 

index for all urban consumers (U.S. city 

average) as measured from July 2003 to 

the July preceding the current year 

involved. 

(2) If the figure in paragraph (b)(1) of 

this section is not a multiple of $10, 

then it is rounded to the nearest 

multiple of $10. The Secretary will 

publish changes to the amount in 

controversy requirement in the Federal 

Register when necessary. 

(c) Judicial review. To be entitled to 

judicial review, a party must meet the 

amount in controversy requirements of 

this subpart at the time it requests 

judicial review. 

(1) For review requests, the required 

amount remaining in controversy must 

be $1,000 or more, adjusted as specified 

in paragraphs (b)(1) and (b)(2) of this 

section. 

(2) [Reserved] 

(d) Calculating the amount remaining 

in controversy. (1) The amount 

remaining in controversy is computed 

as the actual amount charged the 

individual for the items and services in 

question, reduced by—

(i) Any Medicare payments already 

made or awarded for the items or 

services; and 

(ii) Any deductible and coinsurance 

amounts applicable in the particular 

case. 

(2) Notwithstanding paragraph (d)(1) 

of this section, when payment is made 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11487

for items or services under section 1879 

of the Act or § 411.400 of this chapter, 

or the liability of the beneficiary for 

those services is limited under § 411.402 

of this chapter, the amount in 

controversy is computed as the amount 

that the beneficiary would have been 

charged for the items or services in 

question if those expenses were not paid 

under § 411.400 of this chapter or if that 

liability was not limited under § 411.402 

of this chapter, reduced by any 

deductible and coinsurance amounts 

applicable in the particular case. 

(e) Aggregating claims to meet the 

amount in controversy—

(1) Appealing QIC reconsiderations to 

the ALJ level. Either an individual 

appellant or multiple appellants may 

aggregate two or more claims to meet 

the amount in controversy for an ALJ 

hearing if—

(i) The claims were previously 

reconsidered by a QIC; 

(ii) The request for ALJ hearing lists 

all of the claims to be aggregated and is 

filed within 60 days after receipt of all 

of the reconsiderations being appealed; 

and 

(iii) The ALJ determines that the 

claims that a single appellant seeks to 

aggregate involve the delivery of similar 

or related services, or the claims that 

multiple appellants seek to aggregate 

involve common issues of law and fact. 

Part A and Part B claims may be 

combined to meet the amount in 

controversy requirements. 

(2) Aggregating claims that are 

escalated from the QIC level to the ALJ 

level. Either an individual appellant or 

multiple appellants may aggregate two 

or more claims to meet the amount in 

controversy for an ALJ hearing if—

(i) The claims were pending before 

the QIC in conjunction with the same 

request for reconsideration; 

(ii) The appellant(s) requests 

aggregation of the claims to the ALJ 

level in the same request for escalation; 

and 

(iii) The ALJ determines that the 

claims that a single appellant seeks to 

aggregate involve the delivery of similar 

or related services, or the claims that 

multiple appellants seek to aggregate 

involve common issues of law and fact. 

Part A and Part B claims may be 

combined to meet the amount in 

controversy requirements.

(f) Content of request for aggregation.

When an appellant(s) seeks to aggregate 

claims in a request for an ALJ hearing, 

the appellant(s) must—

(1) Specify all of the claims the 

appellant(s) seeks to aggregate; and 

(2) State why the appellant(s) believes 

that the claims involve common issues 

of law and fact or delivery of similar or 

related services.

§ 405.1008 Parties to an ALJ hearing. 

(a) Who may request a hearing. Any 

party to the QIC’s reconsideration may 

request a hearing before an ALJ. 

However, only the appellant (that is, the 

party that filed and maintained the 

request for reconsideration by a QIC) 

may request that the appeal be escalated 

to the ALJ level if the QIC does not 

complete its action within the time 

frame described in § 405.970. 

(b) Who are parties to the ALJ hearing.

The party who filed the request for 

hearing and all other parties to the 

reconsideration are parties to the ALJ 

hearing. In addition, a representative of 

CMS or its contractor may be a party 

under the circumstances described in 

§ 405.1012.

§ 405.1010 When CMS or its contractors 

may participate in an ALJ hearing. 

(a) An ALJ may request, but may not 

require, CMS and/or one or more of its 

contractors, to participate in any 

proceedings before the ALJ, including 

the oral hearing, if any. CMS and/or one 

or more of its contractors, including a 

QIC, may also elect to participate in the 

hearing process. 

(b) If CMS or one or more of its 

contractors elects to participate, it 

advises the ALJ, the appellant, and all 

other parties identified in the notice of 

hearing of its intent to participate no 

later than 10 days after receiving the 

notice of hearing. 

(c) Participation may include filing 

position papers or providing testimony 

to clarify factual or policy issues in a 

case, but it does not include calling 

witnesses or cross-examining the 

witnesses of a party to the hearing. 

(d) When CMS or its contractor 

participates in an ALJ hearing, the 

agency or its contractor may not be 

called as a witness during the hearing. 

(e) CMS or its contractor must submit 

any position papers within the time 

frame designated by the ALJ. 

(f) The ALJ cannot draw any adverse 

inferences if CMS or a contractor 

decides not to participate in any 

proceedings before an ALJ, including 

the hearing.

§ 405.1012 When CMS or its contractors 

may be a party to a hearing. 

(a) CMS and/or one or more of its 

contractors, including a QIC, may be a 

party to an ALJ hearing unless the 

request for hearing is filed by an 

unrepresented beneficiary. 

(b) CMS and/or the contractor(s) 

advises the ALJ, appellant, and all other 

parties identified in the notice of 

hearing that it intends to participate as 

a party no later than 10 days after 

receiving the notice of hearing. 

(c) When CMS or one or more of its 

contractors participate in a hearing as a 

party, it may file position papers, 

provide testimony to clarify factual or 

policy issues, call witnesses or crossexamine the witnesses of other parties. 

CMS or its contractor(s) will submit any 

position papers within the time frame 

specified by the ALJ. CMS or its 

contractor(s), when acting as parties, 

may also submit additional evidence to 

the ALJ within the time frame 

designated by the ALJ. 

(d) The ALJ may not require CMS or 

a contractor to enter a case as a party or 

draw any adverse inferences if CMS or 

a contractor decides not to enter as a 

party.

§ 405.1014 Request for an ALJ hearing. 

(a) Content of the request. The request 

for an ALJ hearing must be made in 

writing. The request must include all of 

the following—

(1) The name, address, and Medicare 

health insurance claim number of the 

beneficiary whose claim is being 

appealed. 

(2) The name and address of the 

appellant, when the appellant is not the 

beneficiary. 

(3) The name and address of the 

designated representatives if any. 

(4) The document control number 

assigned to the appeal by the QIC, if 

any. 

(5) The dates of service. 

(6) The reasons the appellant 

disagrees with the QIC’s reconsideration 

or other determination being appealed. 

(7) A statement of any additional 

evidence to be submitted and the date 

it will be submitted.

(b) When and where to file. The 

request for an ALJ hearing after a QIC 

reconsideration must be filed—

(1) Within 60 days from the date the 

party receives notice of the QIC’s 

reconsideration; 

(2) With the entity specified in the 

QIC’s reconsideration. The appellant 

must also send a copy of the request for 

hearing to the other parties. Failure to 

do so will toll the ALJ’s 90-day 

adjudication deadline until all parties to 

the QIC reconsideration receive notice 

of the requested ALJ hearing. If the 

request for hearing is timely filed with 

an entity other than the entity specified 

in the QIC’s reconsideration, the 

deadline specified in § 405.1016 for 

deciding the appeal begins on the date 

the entity specified in the QIC’s 

reconsideration receives the request for 

hearing. If the request for hearing is 

filed with an entity, other than the 

11488 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

entity specified in the QIC’s 

reconsideration, the ALJ hearing office 

must notify the appellant of the date of 

receipt of the request and the 

commencement of the 90-day 

adjudication time frame. 

(c) Extension of time to request a 

hearing. (1) If the request for hearing is 

not filed within 60 calendar days of 

receipt of the QIC’s reconsideration, an 

appellant may request an extension for 

good cause (See §§ 405.942(b)(2) and 

405.942(b)(3)). 

(2) Any request for an extension of 

time must be in writing, give the reasons 

why the request for a hearing was not 

filed within the stated time period, and 

must be filed with the entity specified 

in the notice of reconsideration. 

(3) If the ALJ finds there is good cause 

for missing the deadline, the time 

period for filing the hearing request will 

be extended. To determine whether 

good cause for late filing exists, the ALJ 

uses the standards set forth in 

§ 405.942(b)(2) and § 405.942(b)(3). 

(4) If a request for hearing is not 

timely filed, the adjudication period in 

§ 405.1016 begins the date the ALJ 

hearing office grants the request to 

extend the filing deadline.

§ 405.1016 Time frames for deciding an 

appeal before an ALJ. 

(a) When a request for an ALJ hearing 

is filed after a QIC has issued a 

reconsideration, the ALJ must issue a 

decision, dismissal order, or remand to 

the QIC, as appropriate, no later than 

the end of the 90-day period beginning 

on the date the request for hearing is 

received by the entity specified in the 

QIC’s notice of reconsideration, unless 

the 90-day period has been extended as 

provided in this subpart. 

(b) The adjudication period specified 

in paragraph (a) of this section begins on 

the date that a timely filed request for 

hearing is received by the entity 

specified in the QIC’s reconsideration, 

or, if it is not timely filed, the date that 

the ALJ hearing office grants any 

extension to the filing deadline. 

(c) When an appeal is escalated to the 

ALJ level because the QIC has not 

issued a reconsideration determination 

within the period specified in § 405.970, 

the ALJ must issue a decision, dismissal 

order, or remand to the QIC, as 

appropriate, no later than the end of the 

180-day period beginning on the date 

that the request for escalation is 

received by the ALJ hearing office, 

unless the 180-day period is extended as 

provided in this subpart. 

(d) When CMS is a party to an ALJ 

hearing and a party requests discovery 

under § 405.1037 against another party 

to the hearing, the adjudication periods 

discussed in paragraph (a) and (c) of this 

section is tolled.

§ 405.1018 Submitting evidence before the 

ALJ hearing. 

(a) Except as provided in this section, 

parties must submit all written evidence 

they wish to have considered at the 

hearing with the request for hearing (or 

within 10 days of receiving the notice of 

hearing). 

(b) If a party submits written evidence 

later than 10 days after receiving the 

notice of hearing, the period between 

the time the evidence was required to 

have been submitted and the time it is 

received is not counted toward the 

adjudication deadline specified in 

§ 405.1016. 

(c) Any evidence submitted by a 

provider, supplier, or beneficiary 

represented by a provider or supplier 

that is not submitted prior to the 

issuance of the QIC’s reconsideration 

determination must be accompanied by 

a statement explaining why the 

evidence is not previously submitted to 

the QIC, or a prior decision-maker (see 

§ 405.1028). 

(d) The requirements of this section 

do not apply to oral testimony given at 

a hearing, or to evidence submitted by 

an unrepresented beneficiary.

§ 405.1020 Time and place for a hearing 

before an ALJ. 

(a) General. The ALJ sets the time and 

place for the hearing, and may change 

the time and place, if necessary.

(b) Determining how appearances are 

made. The ALJ will direct that the 

appearance of an individual be 

conducted by videoteleconferencing 

(VTC) if the ALJ finds that VTC 

technology is available to conduct the 

appearance. The ALJ may also offer to 

conduct a hearing by telephone if the 

request for hearing or administrative 

record suggests that a telephone hearing 

may be more convenient for one or more 

of the parties. The ALJ, with the 

concurrence of the Managing Field 

Office ALJ, may determine that an inperson hearing should be conducted if—

(1) VTC technology is not available; or 

(2) Special or extraordinary 

circumstances exist. 

(c) Notice of hearing. (1) The ALJ will 

send a notice of hearing to all parties 

that filed an appeal or otherwise 

participated in any of the 

determinations in paragraphs (c) 

through (i) of this section, any party 

who was found liable for the services at 

issue subsequent to the initial 

determination, the contractor that 

issued the initial determination, and the 

QIC that issued the reconsideration, 

advising them of the proposed time and 

place of the hearing. 

(2) The notice of hearing will require 

all parties to the ALJ hearing (and any 

potential participant from CMS or its 

contractor who wishes to attend the 

hearing) to reply to the notice by: 

(i) Acknowledging whether they plan 

to attend the hearing at the time and 

place proposed in the notice of hearing; 

or 

(ii) Objecting to the proposed time 

and/or place of the hearing. 

(d) A party’s right to waive a hearing.

A party may also waive the right to a 

hearing and request that the ALJ issue 

a decision based on the written 

evidence in the record. As provided in 

§ 405.1000, the ALJ may require the 

parties to attend a hearing if it is 

necessary to decide the case. If the ALJ 

determines that it is necessary to obtain 

testimony from a non-party, he or she 

may still hold a hearing to obtain that 

testimony, even if all of the parties have 

waived the right to appear. In those 

cases, the ALJ will give the parties the 

opportunity to appear when the 

testimony is given but may hold the 

hearing even if none of the parties 

decide to appear. 

(e) A party’s objection to time and 

place of hearing. (1) If a party objects to 

the time and place of the hearing, the 

party must notify the ALJ at the earliest 

possible opportunity before the time set 

for the hearing. 

(2) The party must state the reason for 

the objection and state the time and 

place he or she wants the hearing to be 

held. 

(3) The request must be in writing. 

(4) The ALJ may change the time or 

place of the hearing if the party has 

good cause. (Section 405.1052(a)(2) 

provides the procedures the ALJ follows 

when a party does not respond to a 

notice of hearing and fails to appear at 

the time and place of the hearing.) 

(f) Good cause for changing the time 

or place. The ALJ can find good cause 

for changing the time or place of the 

scheduled hearing and reschedule the 

hearing if the information available to 

the ALJ supports the party’s contention 

that—

(1) The party or his or her 

representative is unable to attend or to 

travel to the scheduled hearing because 

of a serious physical or mental 

condition, incapacitating injury, or 

death in the family; or 

(2) Severe weather conditions make it 

impossible to travel to the hearing; or 

(3) Good cause exists as set forth in 

paragraph (g) of this section. 

(g) Good cause in other 

circumstances. (1) In determining 

whether good cause exists in 

circumstances other than those set forth 

in paragraph (f) of this section, the ALJ 

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considers the party’s reason for 

requesting the change, the facts 

supporting the request, and the impact 

of the proposed change on the efficient 

administration of the hearing process. 

(2) Factors evaluated to determine the 

impact of the change include, but are 

not limited to, the effect on processing 

other scheduled hearings, potential 

delays in rescheduling the hearing, and 

whether any prior changes were granted 

the party. 

(3) Examples of other circumstances a 

party might give for requesting a change 

in the time or place of the hearing 

include, but are not limited to, the 

following: 

(i) The party has attempted to obtain 

a representative but needs additional 

time. 

(ii) The party’s representative was 

appointed within 10 days of the 

scheduled hearing and needs additional 

time to prepare for the hearing. 

(iii) The party’s representative has a 

prior commitment to be in court or at 

another administrative hearing on the 

date scheduled for the hearing. 

(iv) A witness who will testify to facts 

material to a party’s case is unavailable 

to attend the scheduled hearing and the 

evidence cannot be otherwise obtained. 

(v) Transportation is not readily 

available for a party to travel to the 

hearing. 

(vi) The party is unrepresented, and is 

unable to respond to the notice of 

hearing because of any physical, mental, 

educational, or linguistic limitations 

(including any lack of facility with the 

English language) that he or she has. 

(h) Effect of rescheduling hearing. If a 

hearing is postponed at the request of 

the appellant for any of the above 

reasons, the time between the originally 

scheduled hearing date and the new 

hearing date is not counted toward the 

adjudication deadline specified in 

§ 405.1016.

(i) A party request for an in-person 

hearing. (1) If a party objects to a VTC 

hearing or to the ALJ’s offer to conduct 

a hearing by telephone, the party must 

notify the ALJ at the earliest possible 

opportunity before the time set for the 

hearing and request an in-person 

hearing. 

(2) The party must state the reason for 

the objection and state the time or place 

he or she wants the hearing to be held. 

(3) The request must be in writing. 

(4) A request for an in-person hearing 

shall constitute a waiver of the 90-day 

time frame specified in § 405.1016. 

(5) The ALJ may grant the request, 

with the concurrence of the Managing 

Field Office ALJ, upon a finding of good 

cause and will reschedule the hearing 

for a time and place when the party may 

appear in person before the ALJ.

§ 405.1022 Notice of a hearing before an 

ALJ. 

(a) Issuing the notice. After the ALJ 

sets the time and place of the hearing, 

notice of the hearing will be mailed to 

the parties and other potential 

participants, as provided in 

§ 405.1020(c) at their last known 

addresses, or given by personal service, 

unless the parties have indicated in 

writing that they do not wish to receive 

this notice. The notice is mailed or 

served at least 20 days before the 

hearing. 

(b) Notice information. (1) The notice 

of hearing contains a statement of the 

specific issues to be decided and will 

inform the parties that they may 

designate a person to represent them 

during the proceedings. 

(2) The notice must include an 

explanation of the procedures for 

requesting a change in the time or place 

of the hearing, a reminder that, if the 

appellant fails to appear at the 

scheduled hearing without good cause, 

the ALJ may dismiss the hearing 

request, and other information about the 

scheduling and conduct of the hearing. 

(3) The appellant will also be told if 

his or her appearance or that of any 

other party or witness is scheduled by 

VTC, telephone, or in person. If the ALJ 

has scheduled the appellant or other 

party to appear at the hearing by VTC, 

the notice of hearing will advise that the 

scheduled place for the hearing is a VTC 

site and explain what it means to appear 

at the hearing by VTC. 

(4) The notice advises the appellant or 

other parties that if they object to 

appearing by VTC or telephone, and 

wish instead to have their hearing at a 

time and place where they may appear 

in person before the ALJ, they must 

follow the procedures set forth at 

§ 405.1020(i) for notifying the ALJ of 

their objections and for requesting an inperson hearing. 

(c) Acknowledging the notice of 

hearing. (1) If the appellant, any other 

party to the reconsideration, or their 

representative does not acknowledge 

receipt of the notice of hearing, the ALJ 

hearing office attempts to contact the 

party for an explanation. 

(2) If the party states that he or she did 

not receive the notice of hearing, an 

amended notice is sent to him or her by 

certified mail or e-mail, if available. (See 

§ 405.1052 for the procedures the ALJ 

follows in deciding if the time or place 

of a scheduled hearing will be changed 

if a party does not respond to the notice 

of hearing).

§ 405.1024 Objections to the issues. 

(a) If a party objects to the issues 

described in the notice of hearing, he or 

she must notify the ALJ in writing at the 

earliest possible opportunity before the 

time set for the hearing, and no later 

than 5 days before the hearing. 

(b) The party must state the reasons 

for his or her objections and send a copy 

of the objections to all other parties to 

the appeal. 

(c) The ALJ makes a decision on the 

objections either in writing or at the 

hearing.

§ 405.1026 Disqualification of the ALJ. 

(a) An ALJ cannot conduct a hearing 

if he or she is prejudiced or partial to 

any party or has any interest in the 

matter pending for decision. 

(b) If a party objects to the ALJ who 

will conduct the hearing, the party must 

notify the ALJ within 10 calendar days 

of the date of the notice of hearing. The 

ALJ considers the party’s objections and 

decides whether to proceed with the 

hearing or withdraw. 

(c) If the ALJ withdraws, another ALJ 

will be appointed to conduct the 

hearing. If the ALJ does not withdraw, 

the party may, after the ALJ has issued 

an action in the case, present his or her 

objections to the MAC in accordance 

with § 405.1100 et seq. The MAC will 

then consider whether the hearing 

decision should be revised or a new 

hearing held before another ALJ. If the 

case is escalated to the MAC after a 

hearing is held but before the ALJ issues 

a decision, the MAC considers the 

reasons the party objected to the ALJ 

during its review of the case and, if the 

MAC deems it necessary, may remand 

the case to another ALJ for a hearing and 

decision.

§ 405.1028 Prehearing case review of 

evidence submitted to the ALJ by the 

appellant. 

(a) Examination of any new evidence.

After a hearing is requested but before 

it is held, the ALJ will examine any new 

evidence submitted with the request for 

hearing (or within 10 days of receiving 

the notice of hearing) as specified in 

§ 405.1018, by a provider, supplier, or 

beneficiary represented by a provider or 

supplier to determine whether the 

provider, supplier, or beneficiary 

represented by a provider or supplier 

had good cause for submitting the 

evidence for the first time at the ALJ 

level. 

(b) Determining if good cause exists.

An ALJ finds good cause, for example, 

when the new evidence is material to an 

issue addressed in the QIC’s 

reconsideration and that issue was not 

11490 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

identified as a material issue prior to the 

QIC’s reconsideration.

(c) If good cause does not exist. If the 

ALJ determines that there was not good 

cause for submitting the evidence for 

the first time at the ALJ level, the ALJ 

must exclude the evidence from the 

proceeding and may not consider it in 

reaching a decision. 

(d) Notification to all parties. As soon 

as possible, but no later than the start of 

the hearing, the ALJ must notify all 

parties that the evidence is excluded 

from the hearing.

§ 405.1030 ALJ hearing procedures. 

(a) General rule. A hearing is open to 

the parties and to other persons the ALJ 

considers necessary and proper. 

(b) At the hearing. At the hearing, the 

ALJ fully examines the issues, questions 

the parties and other witnesses, and 

may accept documents that are material 

to the issues consistent with § 405.1018 

and § 405.1028. 

(c) Missing evidence. The ALJ may 

also stop the hearing temporarily and 

continue it at a later date if he or she 

believes that there is material evidence 

missing at the hearing. If the missing 

evidence is in the possession of the 

appellant, and the appellant is a 

provider, supplier, or a beneficiary 

represented by a provider or supplier, 

the ALJ must determine if the appellant 

had good cause for not producing the 

evidence earlier. 

(d) Good cause exists. If good cause 

exists, the ALJ considers the evidence in 

deciding the case and the adjudication 

period specified in § 405.1016 is tolled 

from the date of the hearing to the date 

the evidence is submitted. 

(e) Good cause does not exist. If the 

ALJ determines that there was not good 

cause for not submitting the evidence 

sooner, the evidence is excluded. 

(f) Reopen the hearing. The ALJ may 

also reopen the hearing at any time 

before he or she mails a notice of the 

decision in order to receive new and 

material evidence pursuant to § 405.986. 

The ALJ may decide when the evidence 

is presented and when the issues are 

discussed.

§ 405.1032 Issues before an ALJ. 

(a) General rule. The issues before the 

ALJ include all the issues brought out in 

the initial determination, 

redetermination, or reconsideration that 

were not decided entirely in a party’s 

favor. (For purposes of this provision, 

the term ‘‘party’’ does not include a 

representative of CMS or one of its 

contractors that may be participating in 

the hearing.) However, if evidence 

presented before the hearing causes the 

ALJ to question a favorable portion of 

the determination, he or she notifies the 

parties before the hearing and may 

consider it an issue at the hearing. 

(b) New issues—(1) General. The ALJ 

may consider a new issue at the hearing 

if he or she notifies all of the parties 

about the new issue any time before the 

start of the hearing. The new issue may 

include issues resulting from the 

participation of CMS at the ALJ level of 

adjudication and from any evidence and 

position papers submitted by CMS for 

the first time to the ALJ. The ALJ or any 

party may raise a new issue; however, 

the ALJ may only consider a new issue 

if its resolution—

(i) Could have a material impact on 

the claim or claims that are the subject 

of the request for hearing; and 

(ii) Is permissible under the rules 

governing reopening of determinations 

and decisions (see § 405.980). 

(2) [Reserved] 

(c) Adding claims to a pending 

appeal. An ALJ cannot add any claim, 

including one that is related to an issue 

that is appropriately before an ALJ, to a 

pending appeal unless it has been 

adjudicated at the lower appeals levels 

and all parties are notified of the new 

issue(s) before the start of the hearing.

§ 405.1034 When an ALJ may remand a 

case to the QIC. 

(a) General. If an ALJ believes that the 

written record is missing information 

that is essential to resolving the issues 

on appeal and that information can be 

provided only by CMS or its contractors, 

then the ALJ may either: 

(1) Remand the case to the QIC that 

issued the reconsideration or 

(2) Retain jurisdiction of the case and 

request that the contractor forward the 

missing information to the appropriate 

hearing office. 

(b) ALJ remands a case to a QIC.

Consistent with § 405.1004 (b), the ALJ 

will remand a case to the appropriate 

QIC if the ALJ determines that a QIC’s 

dismissal of a request for 

reconsideration was in error. 

(c) Relationship to local and national 

coverage determination appeals 

process. (1) The ALJ remands an appeal 

to the QIC that made the reconsideration 

if the appellant is entitled to relief 

pursuant to 42 CFR 426.460(b)(1), 

426.488(b), or 426.560(b)(1).

(2) Unless the appellant is entitled to 

relief pursuant to 42 CFR 426.460(b)(1), 

426.488(b), or 426.560(b)(1), the ALJ 

applies the LCD or NCD in place on the 

date the item or service was provided.

§ 405.1036 Description of an ALJ hearing 

process. 

(a) The right to appear and present 

evidence. (1) Any party to a hearing has 

the right to appear before the ALJ to 

present evidence and to state his or her 

position. A party may appear by videoteleconferencing (VTC), telephone, or in 

person as determined under § 405.1020. 

(2) A party may also make his or her 

appearance by means of a 

representative, who may make the 

appearance by VTC, telephone, or in 

person, as determined under § 405.1020. 

(3) Witness testimony may be given 

and CMS participation may also be 

accomplished by VTC, telephone, or in 

person, as determined under § 405.1020. 

(b) Waiver of the right to appear. (1) 

A party may send the ALJ a written 

statement indicating that he or she does 

not wish to appear at the hearing. 

(2) The appellant may subsequently 

withdraw his or her waiver at any time 

before the notice of the hearing decision 

is issued; however, by withdrawing the 

waiver the appellant agrees to an 

extension of the adjudication period as 

specified in § 405.1016 that may be 

necessary to schedule and hold the 

hearing. 

(3) Other parties may withdraw their 

waiver up to the date of the scheduled 

hearing, if any. Even if all of the parties 

waive their right to appear at a hearing, 

the ALJ may require them to attend an 

oral hearing if he or she believes that a 

personal appearance and testimony by 

the appellant or any other party is 

necessary to decide the case. 

(c) Presenting written statements and 

oral arguments. A party or a person 

designated to act as a party’s 

representative may appear before the 

ALJ to state the party’s case, to present 

a written summary of the case, or to 

enter written statements about the facts 

and law material to the case in the 

record. A copy of any written statements 

must be provided to the other parties to 

a hearing, if any, at the same time they 

are submitted to the ALJ. 

(d) Waiver of adjudication period. At 

any time during the hearing process, the 

appellant may waive the adjudication 

deadline specified in § 405.1016 for 

issuing a hearing decision. The waiver 

may be for a specific period of time 

agreed upon by the ALJ and the 

appellant. 

(e) What evidence is admissible at a 

hearing. The ALJ may receive evidence 

at the hearing even though the evidence 

is not admissible in court under the 

rules of evidence used by the court. 

(f) Subpoenas. (1) When it is 

reasonably necessary for the full 

presentation of a case, an ALJ may, on 

his or her own initiative or at the 

request of a party, issue subpoenas for 

the appearance and testimony of 

witnesses and for a party to make books, 

records, correspondence, papers, or 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11491

other documents that are material to an 

issue at the hearing available for 

inspection and copying. 

(2) A party’s written request for a 

subpoena must—

(i) Give the names of the witnesses or 

documents to be produced; 

(ii) Describe the address or location of 

the witnesses or documents with 

sufficient detail to find them; 

(iii) State the important facts that the 

witness or document is expected to 

prove; and

(iv) Indicate why these facts cannot be 

proven without issuing a subpoena. 

(3) Parties to a hearing who wish to 

subpoena documents or witnesses must 

file a written request for the issuance of 

a subpoena with the requirements set 

out in paragraph (f)(2) of this section 

with the ALJ within 10 calendar days of 

receipt of the notice of hearing. 

(4) Where a party has requested a 

subpoena, a subpoena will be issued 

only where a party—

(i) Has sought discovery; 

(ii) Has filed a motion to compel; 

(iii) Has had that motion granted by 

the ALJ; and 

(iv) Nevertheless, has not received the 

requested discovery. 

(5) Reviewability of subpoena 

rulings—

(i) General rule. An ALJ ruling on a 

subpoena request is not subject to 

immediate review by the MAC. The 

ruling may be reviewed solely during 

the course of the MAC’s review 

specified in § 405.1102, § 405.1104, or 

§ 405.1110, as applicable. Exception. To 

the extent a subpoena compels 

disclosure of a matter for which an 

objection based on privilege, or other 

protection from disclosure such as case 

preparation, confidentiality, or undue 

burden, was made before an ALJ, the 

MAC may review immediately the 

subpoena or that portion of the 

subpoena as applicable. 

(ii) Where CMS objects to a discovery 

ruling, the MAC must take review and 

the discovery ruling at issue is 

automatically stayed pending the MAC’s 

order. 

(iii) Upon notice to the ALJ that a 

party or non-party, as applicable, 

intends to seek MAC review of the 

subpoena, the ALJ must stay all 

proceedings affected by the subpoena. 

(iv) The ALJ determines the length of 

the stay under the circumstances of a 

given case, but in no event is the stay 

less than 15 days beginning after the day 

on which the ALJ received notice of the 

party or non-party’s intent to seek MAC 

review. 

(v) If the MAC grants a request for 

review of the subpoena, the subpoena or 

portion of the subpoena, as applicable, 

is stayed until the MAC issues a written 

decision that affirms, reverses, or 

modifies the ALJ’s action on the 

subpoena. 

(vi) If the MAC does not grant review 

or take own motion review within the 

time allotted for the stay, the stay is 

lifted and the ALJ’s action stands. 

(6) Enforcement. (i) If the ALJ 

determines, whether on his or her own 

motion or at the request of a party, that 

a party or non-party subject to a 

subpoena issued under this section has 

refused to comply with the subpoena, 

the ALJ may request the Secretary to 

seek enforcement of the subpoena in 

accordance with section 205(e) of the 

Act, 42 U.S.C. 405(e). 

(ii) Any enforcement request by an 

ALJ must consist of a written notice to 

the Secretary describing in detail the 

ALJ’s findings of noncompliance and 

his or her specific request for 

enforcement, and providing a copy of 

the subpoena and evidence of its receipt 

by certified mail by the party or 

nonparty subject to the subpoena. 

(iii) The ALJ must promptly mail a 

copy of the notice and related 

documents to the party subject to the 

subpoena, and to any other party and 

affected non-party to the appeal. 

(g) Witnesses at a hearing. Witnesses 

may appear at a hearing. They testify 

under oath or affirmation, unless the 

ALJ finds an important reason to excuse 

them from taking an oath or affirmation. 

The ALJ may ask the witnesses any 

questions relevant to the issues and 

allows the parties or their designated 

representatives to do so.

§ 405.1037 Discovery. 

(a) General rules. (1) Discovery is 

permissible only when CMS elects to 

participate in an ALJ hearing as a party. 

(2) The ALJ may permit discovery of 

a matter that is relevant to the specific 

subject matter of the ALJ hearing, 

provided the matter is not privileged or 

otherwise protected from disclosure and 

the ALJ determines that the discovery 

request is not unreasonable, unduly 

burdensome or expensive, or otherwise 

inappropriate. 

(3) Any discovery initiated by a party 

must comply with all requirements and 

limitations of this section, along with 

any further requirements or limitations 

ordered by the ALJ. 

(b) Limitations on discovery. Any 

discovery before the ALJ is limited.

(1) A party may request of another 

party the reasonable production of 

documents for inspection and copying. 

(2) A party may not take the 

deposition, upon oral or written 

examination, of another party unless the 

proposed deponent agrees to the 

deposition or the ALJ finds that the 

proposed deposition is necessary and 

appropriate in order to secure the 

deponent’s testimony for an ALJ 

hearing. 

(3) A party may not request 

admissions or send interrogatories or 

take any other form of discovery not 

permitted under this section. 

(c) Time limits. (1) A party’s discovery 

request is timely if the date of receipt of 

a request by another party is no later 

than the date specified by the ALJ 

hearing. 

(2) A party may not conduct discovery 

any later than the date specified by the 

ALJ. 

(3) Before ruling on a request to 

extend the time for requesting discovery 

or for conducting discovery, the ALJ 

must give the other parties to the appeal 

a reasonable period to respond to the 

extension request. 

(4) The ALJ may extend the time in 

which to request discovery or conduct 

discovery only if the requesting party 

establishes that it was not dilatory or 

otherwise at fault in not meeting the 

original discovery deadline. 

(5) If the ALJ grants the extension 

request, it must impose a new discovery 

deadline and, if necessary, reschedule 

the hearing date so that all discoveries 

end no later than 45 days before the 

hearing. 

(d) Motions to compel or for protective 

order. (1) Each party is required to make 

a good faith effort to resolve or narrow 

any discovery dispute. 

(2) A party may submit to the ALJ a 

motion to compel discovery that is 

permitted under this section or any ALJ 

order, and a party may submit a motion 

for a protective order regarding any 

discovery request to the ALJ. 

(3) Any motion to compel or for 

protective order must include a selfsworn declaration describing the 

movant’s efforts to resolve or narrow the 

discovery dispute. The declaration must 

also be included with any response to 

a motion to compel or for protective 

order. 

(4) The ALJ must decide any motion 

in accordance with this section and any 

prior discovery ruling in the appeal. 

(5) The ALJ must issue and mail to 

each party a discovery ruling that grants 

or denies the motion to compel or for 

protective order in whole or in part; if 

applicable, the discovery ruling must 

specifically identify any part of the 

disputed discovery request upheld and 

any part rejected, and impose any limits 

on discovery the ALJ finds necessary 

and appropriate. 

(e) Reviewability of discovery and 

disclosure rulings—

11492 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

(1) General rule. An ALJ discovery 

ruling, or an ALJ disclosure ruling such 

as one issued at a hearing is not subject 

to immediate review by the MAC. The 

ruling may be reviewed solely during 

the course of the MAC’s review 

specified in § 405.1100, § 405.1102, 

§ 405.1104, or § 405.1110, as applicable. 

(2) Exception. To the extent a ruling 

authorizes discovery or disclosure of a 

matter for which an objection based on 

privilege, or other protection from 

disclosure such as case preparation, 

confidentiality, or undue burden, was 

made before the ALJ, the MAC may 

review that portion of the discovery or 

disclosure ruling immediately. 

(i) Where CMS objects to a discovery 

ruling, the MAC must take review and 

the discovery ruling at issue is 

automatically stayed pending the MAC’s 

order.

(ii) Upon notice to the ALJ that a party 

intends to seek MAC review of the 

ruling, the ALJ must stay all 

proceedings affected by the ruling. 

(iii) The ALJ determines the length of 

the stay under the circumstances of a 

given case, but in no event must the 

length of the stay be less than 15 days 

beginning after the day on which the 

ALJ received notice of the party or nonparty’s intent to seek MAC review. 

(iv) Where CMS requests the MAC to 

take review of a discovery ruling or 

where the MAC grants a request for 

review made by a party other than CMS 

of a ruling, the ruling is stayed until the 

time the MAC issues a written decision 

that affirms, reverses, modifies, or 

remands the ALJ’s ruling. 

(v) With respect to a request from a 

party, other than CMS, for review of a 

discovery ruling, if the MAC does not 

grant review or take own motion review 

within the time allotted for the stay, the 

stay is lifted and the ruling stands. 

(f) Adjudication time frames. If a 

party requests discovery from another 

party to the ALJ hearing, the ALJ 

adjudication time frame specified in 

§ 405.1016 is tolled until the discovery 

dispute is resolved.

§ 405.1038 Deciding a case without a 

hearing before an ALJ. 

(a) Decision wholly favorable. If the 

evidence in the hearing record supports 

a finding in favor of appellant(s) on 

every issue, the ALJ may issue a hearing 

decision without giving the parties prior 

notice and without holding a hearing. 

The notice of the decision informs the 

parties that they have the right to a 

hearing and a right to examine the 

evidence on which the decision is 

based. 

(b) Parties do not wish to appear. (1) 

The ALJ may decide a case on the 

record and not conduct a hearing if—

(i) All the parties indicate in writing 

that they do not wish to appear before 

the ALJ at a hearing, including a hearing 

conducted by telephone or 

videoconferencing, if available; or 

(ii) The appellant lives outside the 

United States and does not inform the 

ALJ that he or she wants to appear, and 

there are no other parties who wish to 

appear. 

(2) When a hearing is not held, the 

decision of the ALJ must refer to the 

evidence in the record on which the 

decision was based.

§ 405.1040 Prehearing and posthearing 

conferences. 

(a) The ALJ may decide on his or her 

own, or at the request of any party to the 

hearing, to hold a prehearing or 

posthearing conference to facilitate the 

hearing or the hearing decision. 

(b) The ALJ informs the parties of the 

time, place, and purpose of the 

conference at least 7 calendar days 

before the conference date, unless a 

party indicates in writing that it does 

not wish to receive a written notice of 

the conference. 

(c) At the conference, the ALJ may 

consider matters in addition to those 

stated in the notice of hearing, if the 

parties consent in writing. A record of 

the conference is made. 

(d) The ALJ issues an order stating all 

agreements and actions resulting from 

the conference. If the parties do not 

object, the agreements and actions 

become part of the hearing record and 

are binding on all parties.

§ 405.1042 The administrative record. 

(a) Creating the record. (1) The ALJ 

makes a complete record of the 

evidence, including the hearing 

proceedings, if any. 

(2) The record will include marked as 

exhibits, the documents used in making 

the decision under review, including, 

but not limited to, claims, medical 

records, written statements, certificates, 

reports, affidavits, and any other 

evidence the ALJ admits. In the record, 

the ALJ must also discuss any evidence 

excluded under § 405.1028 and include 

a justification for excluding the 

evidence. 

(3) The appellant may review the 

record at the hearing, or, if a hearing is 

not held, at any time before the ALJ’s 

notice of decision is issued. 

(4) If a request for review is filed or 

the case is escalated to the MAC, the 

complete record, including any 

recording of the hearing, is forwarded to 

the MAC. 

(5) A typed transcription of the 

hearing is prepared if a party seeks 

judicial review of the case in a Federal 

district court within the stated time 

period and all other jurisdictional 

criteria are met, unless, upon the 

Secretary’s motion prior to the filing of 

an answer, the court remands the case.

(b) Requesting and receiving copies of 

the record.

(1) A party may request and receive a 

copy of all or part of the record, 

including the exhibits list, documentary 

evidence, and a copy of the tape of the 

oral proceedings. The party may be 

asked to pay the costs of providing these 

items. 

(2) If a party requests all or part of the 

record from the ALJ and an opportunity 

to comment on the record, the time 

beginning with the ALJ’s receipt of the 

request through the expiration of the 

time granted for the party’s response 

does not count toward the 90-day 

adjudication deadline.

§ 405.1044 Consolidated hearing before an 

ALJ. 

(a) A consolidated hearing may be 

held if one or more of the issues to be 

considered at the hearing are the same 

issues that are involved in another 

request for hearing or hearings pending 

before the same ALJ. 

(b) It is within the discretion of the 

ALJ to grant or deny an appellant’s 

request for consolidation. In considering 

an appellant’s request, the ALJ may 

consider factors such as whether the 

claims at issue may be more efficiently 

decided if the requests for hearing are 

combined. In considering the 

appellant’s request for consolidation, 

the ALJ must take into account the 

adjudication deadlines for each case and 

may require an appellant to waive the 

adjudication deadline associated with 

one or more cases if consolidation 

otherwise prevents the ALJ from 

deciding all of the appeals at issue 

within their respective deadlines. 

(c) The ALJ may also propose on his 

or her own motion to consolidate two or 

more cases in one hearing for 

administrative efficiency, but may not 

require an appellant to waive the 

adjudication deadline for any of the 

consolidated cases. 

(d) Before consolidating a hearing, the 

ALJ must notify CMS of his or her 

intention to do so, and CMS may then 

elect to participate in the consolidated 

hearing, as a party, by sending written 

notice to the ALJ within 10 days after 

receipt of the ALJ’s notice of the 

consolidation. 

(e) If the ALJ decides to hold a 

consolidated hearing, he or she may 

make either a consolidated decision and 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11493

record or a separate decision and record 

on each claim. The ALJ ensures that any 

evidence that is common to all claims 

and material to the common issue to be 

decided is included in the consolidated 

record or each individual record, as 

applicable.

§ 405.1046 Notice of an ALJ decision. 

(a) General rule. Unless the ALJ 

dismisses the hearing, the ALJ will issue 

a written decision that gives the 

findings of fact, conclusions of law, and 

the reasons for the decision. The 

decision must be based on evidence 

offered at the hearing or otherwise 

admitted into the record. The ALJ mails 

a copy of the decision to all the parties 

at their last known address, to the QIC 

that issued the reconsideration 

determination, and to the contractor that 

issued the initial determination. For 

overpayment cases involving multiple 

beneficiaries, where there is no 

beneficiary liability, the ALJ may choose 

to send written notice only to the 

appellant. In the event a payment will 

be made to a provider or supplier in 

conjunction with this ALJ decision, the 

contractor must also issue a revised 

electronic or paper remittance advice to 

that provider or supplier. 

(b) Content of the notice. The decision 

must be written in a manner calculated 

to be understood by a beneficiary and 

must include—

(1) The specific reasons for the 

determination, including, to the extent 

appropriate, a summary of any clinical 

or scientific evidence used in making 

the determination; 

(2) The procedures for obtaining 

additional information concerning the 

decision; and 

(3) Notification of the right to appeal 

the decision to the MAC, including 

instructions on how to initiate an appeal 

under this section. 

(c) Limitation on decision. When the 

amount of payment for an item or 

service is an issue before the ALJ, the 

ALJ may make a finding as to the 

amount of payment due. If the ALJ 

makes a finding concerning payment 

when the amount of payment was not 

an issue before the ALJ, the contractor 

may independently determine the 

payment amount. In either of the 

aforementioned situations, an ALJ’s 

decision is not final for purposes of 

determining the amount of payment 

due. The amount of payment 

determined by the contractor in 

effectuating the ALJ’s decision is a new 

initial determination under § 405.924. 

(d) Timing of decision. The ALJ issues 

a decision by the end of the 90-day 

period beginning on the date when the 

request for hearing is received in the 

ALJ hearing office, unless the 90-day 

period is extended as provided in 

§ 405.1016. 

(e) Recommended decision. An ALJ 

issues a recommended decision if he or 

she is directed to do so in the MAC’s 

remand order. An ALJ may not issue a 

recommended decision on his or her 

own motion. The ALJ mails a copy of 

the recommended decision to all the 

parties at their last known address.

§ 405.1048 The effect of an ALJ’s decision. 

The decision of the ALJ is binding on 

all parties to the hearing unless—

(a) A party to the hearing requests a 

review of the decision by the MAC 

within the stated time period or the 

MAC reviews the decision issued by an 

ALJ under the procedures set forth in 

§ 405.1110, and the MAC either issues a 

final action or the appeal is escalated to 

Federal district court under the 

provisions at § 405.1132 and the Federal 

district court issues a decision. 

(b) The decision is reopened and 

revised by an ALJ or the MAC under the 

procedures explained in § 405.980;

(c) The expedited access to judicial 

review process at § 405.990 is used; 

(d) The ALJ’s decision is a 

recommended decision directed to the 

MAC and the MAC issues a decision; or 

(e) In a case remanded by a Federal 

district court, the MAC assumes 

jurisdiction under the procedures in 

§ 405.1138 and the MAC issues a 

decision.

§ 405.1050 Removal of a hearing request 

from an ALJ to the MAC. 

If a request for hearing is pending 

before an ALJ, the MAC may assume 

responsibility for holding a hearing by 

requesting that the ALJ send the hearing 

request to it. If the MAC holds a hearing, 

it conducts the hearing according to the 

rules for hearings before an ALJ. Notice 

is mailed to all parties at their last 

known address informing them that the 

MAC has assumed responsibility for the 

case.

§ 405.1052 Dismissal of a request for a 

hearing before an ALJ. 

Dismissal of a request for a hearing is 

in accordance with the following: 

(a) An ALJ dismisses a request for a 

hearing under any of the following 

conditions: 

(1) At any time before notice of the 

hearing decision is mailed, if only one 

party requested the hearing and that 

party asks to withdraw the request. This 

request may be submitted in writing to 

the ALJ or made orally at the hearing. 

The request for withdrawal must 

include a clear statement that the 

appellant is withdrawing the request for 

hearing and does not intend to further 

proceed with the appeal. If an attorney, 

or other legal professional on behalf of 

a beneficiary or other appellant files the 

request for withdrawal, the ALJ may 

presume that the representative has 

advised the appellant of the 

consequences of the withdrawal and 

dismissal. 

(2) Neither the party that requested 

the hearing nor the party’s 

representative appears at the time and 

place set for the hearing, if—

(i) The party was notified before the 

time set for the hearing that the request 

for hearing might be dismissed without 

further notice for failure to appear; 

(ii) The party did not appear at the 

time and place of hearing and does not 

contact the ALJ hearing office within 10 

days and provide good cause for not 

appearing; or 

(iii) The ALJ sends a notice to the 

party asking why the party did not 

appear; and the party does not respond 

to the ALJ’s notice within 10 days or 

does not provide good cause for the 

failure to appear. 

(iv) In determining whether good 

cause exists under this paragraph (a)(2), 

the ALJ considers any physical, mental, 

educational, or linguistic limitations 

(including any lack of facility with the 

English language), that the party may 

have. 

(3) The person or entity requesting a 

hearing has no right to it under 

§ 405.1002. 

(4) The party did not request a hearing 

within the stated time period and the 

ALJ has not found good cause for 

extending the deadline, as provided in 

§ 405.1014(d). 

(5) The beneficiary whose claim is 

being appealed died while the request 

for hearing is pending and all of the 

following criteria apply: 

(i) The request for hearing was filed 

by the beneficiary or the beneficiary’s 

representative, and the beneficiary’s 

surviving spouse or estate has no 

remaining financial interest in the case. 

In deciding this issue, the ALJ considers 

if the surviving spouse or estate remains 

liable for the services that were denied 

or a Medicare contractor held the 

beneficiary liable for subsequent similar 

services under the limitation of liability 

provisions based on the denial of the 

services at issue. 

(ii) No other individuals or entities 

that have a financial interest in the case 

wish to pursue an appeal under 

§ 405.1002. 

(iii) No other individual or entity filed 

a valid and timely request for an ALJ 

hearing in accordance to § 405.1020. 

(6) The ALJ dismisses a hearing 

request entirely or refuses to consider 

11494 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

any one or more of the issues because 

a QIC, an ALJ or the MAC has made a 

previous determination or decision 

under this subpart about the appellant’s 

rights on the same facts and on the same 

issue(s) or claim(s), and this previous 

determination or decision has become 

final by either administrative or judicial 

action. 

(7) The appellant abandons the 

request for hearing. An ALJ may 

conclude that an appellant has 

abandoned a request for hearing when 

the ALJ hearing office attempts to 

schedule a hearing and is unable to 

contact the appellant after making 

reasonable efforts to do so. 

(b) Notice of dismissal. The ALJ mails 

a written notice of the dismissal of the 

hearing request to all parties at their last 

known address. The notice states that 

there is a right to request that the MAC 

vacate the dismissal action.

§ 405.1054 Effect of dismissal of a request 

for a hearing before an ALJ. 

The dismissal of a request for a 

hearing is binding, unless it is vacated 

by the MAC under § 405.1108(b). 

Applicability of Medicare Coverage 

Policies

§ 405.1060 Applicability of national 

coverage determinations (NCDs). 

(a) General rule. (1) An NCD is a 

determination by the Secretary of 

whether a particular item or service is 

covered nationally under Medicare. 

(2) An NCD does not include a 

determination of what code, if any, is 

assigned to a particular item or service 

covered under Medicare or a 

determination of the amount of payment 

made for a particular item or service. 

(3) NCDs are made under section 

1862(a)(1) of the Act as well as under 

other applicable provisions of the Act.

(4) An NCD is binding on all Medicare 

contractors, including QIOs, QICs, 

Medicare Advantage Organizations, 

Prescription Drug Plans and their 

sponsors, HMOs, CMPs, HCPPs, ALJs 

and the MAC. 

(b) Review by an ALJ. (1) An ALJ may 

not disregard, set aside, or otherwise 

review an NCD. 

(2) 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. 

(c) Review by the MAC. (1) The MAC 

may not disregard, set aside, or 

otherwise review an NCD for purposes 

of a section 1869 claim appeal, except 

that the DAB may review NCDs as 

provided under part 426 of this title. 

(2) The 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.

§ 405.1062 Applicability of local coverage 

determinations and other policies not 

binding on the ALJ and MAC. 

(a) ALJs and the MAC are not bound 

by LCDs, LMRPs, or CMS program 

guidance, such as program memoranda 

and manual instructions, but will give 

substantial deference to these policies if 

they are applicable to a particular case. 

(b) If an ALJ or MAC declines to 

follow a policy in a particular case, the 

ALJ or MAC decision must explain the 

reasons why the policy was not 

followed. An ALJ or MAC decision to 

disregard such policy applies only to 

the specific claim being considered and 

does not have precedential effect. 

(c) An ALJ or MAC may not set aside 

or review the validity of an LMRP or 

LCD for purposes of a claim appeal. An 

ALJ or the DAB may review or set aside 

an LCD (or any part of an LMRP that 

constitutes an LCD) in accordance with 

part 426 of this title.

§ 405.1063 Applicability of CMS Rulings. 

CMS Rulings are published under the 

authority of the Administrator, CMS. 

Consistent with § 401.108 of this 

chapter, rulings are binding on all CMS 

components, on all HHS components 

that adjudicate matters under the 

jurisdiction of CMS, and on the Social 

Security Administration to the extent 

that components of the Social Security 

Administration adjudicate matters 

under the jurisdiction of CMS.

§ 405.1064 ALJ decisions involving 

statistical samples. 

When an appeal from the QIC 

involves an overpayment issue and the 

QIC used a statistical sample in reaching 

its reconsideration, the ALJ must base 

his or her decision on a review of the 

entire statistical sample used by the 

QIC. 

Medicare Appeals Council Review

§ 405.1100 Medicare Appeals Council 

review: General. 

(a) The appellant or any other party to 

the hearing may request that the MAC 

review an ALJ’s decision or dismissal. 

(b) Under circumstances set forth in 

§ 405.1104 and 405.1108, the appellant 

may request that a case be escalated to 

the MAC for a decision even if the ALJ 

has not issued a decision or dismissal in 

his or her case. 

(c) When the MAC reviews an ALJ’s 

decision, it undertakes a de novo 

review. The MAC issues a final action 

or remands a case to the ALJ within 90 

days of receipt of the appellant’s request 

for review, unless the 90-day period is 

extended as provided in this subpart. 

(d) When deciding an appeal that was 

escalated from the ALJ level to the 

MAC, the MAC will issue a final action 

or remand the case to the ALJ within 

180 days of receipt of the appellant’s 

request for escalation, unless the 180-

day period is extended as provided in 

this subpart.

§ 405.1102 Request for MAC review when 

ALJ issues decision or dismissal. 

(a) A party to the ALJ hearing may 

request a MAC review if the party files 

a written request for a MAC review 

within 60 days after receipt of the ALJ’s 

decision or dismissal. A party 

requesting a review may ask that the 

time for filing a request for MAC review 

be extended if—

(1) The request for an extension of 

time is in writing; 

(2) It is filed with the MAC; and 

(3) It explains why the request for 

review was not filed within the stated 

time period. If the MAC finds that there 

is good cause for missing the deadline, 

the time period will be extended. To 

determine whether good cause exists, 

the MAC uses the standards outlined at 

§§ 405.942(b)(2) and 405.942(b)(3). 

(b) A party does not have the right to 

seek MAC review of an ALJ’s remand to 

a QIC or an ALJ’s affirmation of a QIC’s 

dismissal of a request for 

reconsideration. 

(c) For purposes of requesting MAC 

review (§ 405.1100 through § 405.1140), 

unless specifically excepted the term, 

‘‘party,’’ includes CMS where CMS has 

entered into a case as a party according 

to § 405.1012. The term, ‘‘appellant,’’

does not include CMS, where CMS has 

entered into a case as a party according 

to § 405.1012.

§ 405.1104 Request for MAC review when 

an ALJ does not issue a decision timely. 

(a) Requesting escalation. An 

appellant who files a timely request for 

hearing before an ALJ and whose appeal 

continues to be pending before the ALJ 

at the end of the applicable ALJ 

adjudication period under § 405.1016 

may request MAC review if—

(1) The appellant files a written 

request with the ALJ to escalate the 

appeal to the MAC after the 

adjudication period has expired; and 

(2) The ALJ does not issue a final 

action or remand the case to the QIC 

within the latter of 5 days of receiving 

the request for escalation or 5 days from 

the end of the applicable adjudication 

period set forth in § 405.1016.

(b) Escalation. (1) If the ALJ is not 

able to issue a final action or remand 

within the time period set forth in 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11495

paragraph (a)(2) of this section, he or 

she sends notice to the appellant. 

(2) The notice acknowledges receipt 

of the request for escalation, and 

confirms that the ALJ is not able to issue 

a final action or remand order within 

the statutory time frame. 

(3) If the ALJ does not act on a request 

for escalation within the time period set 

forth in paragraph (a)(2) of this section 

or does not send the required notice to 

the appellant, the QIC decision becomes 

a final administrative decision for 

purposes of MAC review. 

(c) No escalation. If the ALJ’s 

adjudication period set forth in 

§ 405.1016 expires, the case remains 

with the ALJ until a final action is 

issued and the appellant does not 

request escalation to the MAC or the 

appellant requests escalation to the 

MAC.

§ 405.1106 Where a request for review or 

escalation may be filed. 

(a) When a request for a MAC review 

is filed after an ALJ has issued a 

decision or dismissal, the request for 

review may be filed with the MAC or 

the hearing office that issued the ALJ’s 

decision or dismissal. The appellant 

must also send a copy of the request for 

review to the other parties to the ALJ 

decision or dismissal. Failure to copy 

the other parties tolls the MAC’s 

adjudication deadline set forth in 

§ 405.1100 until all parties to the 

hearing receive notice of the request for 

MAC review. If the request for review is 

timely filed with the ALJ hearing office 

rather than the MAC, the MAC’s 

adjudication period to conduct a review 

begins on the date the request for review 

is received by the MAC. Upon receipt of 

a request for review from an entity other 

than the ALJ hearing office, the MAC 

will send written notice to the appellant 

of the date of receipt of the request and 

commencement of the adjudication time 

frame. 

(b) If an appellant files a request to 

escalate an appeal to the MAC level 

because the ALJ has not completed his 

or her action on the request for hearing 

within the adjudication deadline under 

§ 405.1016, the request for escalation 

must be filed with both the ALJ and the 

MAC. The appellant must also send a 

copy of the request for escalation to the 

other parties. Failure to copy the other 

parties tolls the MAC’s adjudication 

deadline set forth in § 405.1100 until all 

parties to the hearing receive notice of 

the request for MAC review. In a case 

that has been escalated from the ALJ, 

the MAC’s 180-day period to issue a 

final action or remand the case to the 

ALJ begins on the date the request for 

escalation is received by the MAC.

§ 405.1108 MAC actions when request for 

review or escalation is filed. 

(a) Except as specified in paragraphs 

(c) and (d) of this section, when a party 

requests that the MAC review an ALJ’s 

decision, the MAC will review the ALJ’s 

decision de novo. The party requesting 

review does not have a right to a hearing 

before the MAC. The MAC will consider 

all of the evidence in the administrative 

record. Upon completion of its review, 

the MAC may adopt, modify, or reverse 

the ALJ’s decision or remand the case to 

an ALJ for further proceedings. 

(b) When a party requests that the 

MAC review an ALJ’s dismissal, the 

MAC may deny review or vacate the 

dismissal and remand the case to the 

ALJ for further proceedings. 

(c) The MAC will dismiss a request 

for review when the party requesting 

review does not have a right to a review 

by the MAC, or will dismiss the request 

for a hearing for any reason that the ALJ 

could have dismissed the request for 

hearing. 

(d) When an appellant requests 

escalation of a case from the ALJ level 

to the MAC, the MAC may take any of 

the following actions: 

(1) Issue a decision based on the 

record constructed at the QIC and any 

additional evidence, including oral 

testimony, entered in the record by the 

ALJ before the case was escalated. 

(2) Conduct any additional 

proceedings, including a hearing, that 

the MAC determines are necessary to 

issue a decision. 

(3) Remand the case to an ALJ for 

further proceedings, including a 

hearing. 

(4) Dismiss the request for MAC 

review because the appellant does not 

have the right to escalate the appeal. 

(5) Dismiss the request for a hearing 

for any reason that the ALJ could have 

dismissed the request.

§ 405.1110 MAC reviews on its own 

motion. 

(a) General rule. The MAC may decide 

on its own motion to review a decision 

or dismissal issued by an ALJ. CMS or 

any of its contractors may refer a case 

to the MAC for it to consider reviewing 

under this authority anytime within 60 

days after the date of an ALJ’s decision 

or dismissal. 

(b) Referral of cases. (1) CMS or any 

of its contractors may refer a case to the 

MAC if, in their view, the decision or 

dismissal contains an error of law 

material to the outcome of the claim or 

presents a broad policy or procedural 

issue that may affect the public interest. 

CMS may also request that the MAC 

take own motion review of a case if—

(i) CMS or its contractor participated 

in the appeal at the ALJ level; and 

(ii) In CMS’ view, the ALJ’s decision 

or dismissal is not supported by the 

preponderance of evidence in the record 

or the ALJ abused his or her discretion. 

(2) CMS’s referral to the MAC is made 

in writing and must be filed with the 

MAC no later than 60 days after the 

ALJ’s decision or dismissal is issued. 

The written referral will state the 

reasons why CMS believes that the MAC 

must review the case on its own motion. 

CMS will send a copy of its referral to 

all parties to the ALJ’s action and to the 

ALJ. Parties to the ALJ’s action may file 

exceptions to the referral by submitting 

written comments to the MAC within 20 

days of the referral notice. A party 

submitting comments to the MAC must 

send such comments to CMS and all 

other parties to the ALJ’s decision. 

(c) Standard of review. (1) Referral by 

CMS after participation at the ALJ level. 

If CMS or its contractor participated in 

an appeal at the ALJ level, the MAC 

exercises its own motion authority if 

there is an error of law material to the 

outcome of the case, an abuse of 

discretion by the ALJ, the decision is 

not consistent with the preponderance 

of the evidence of record, or there is a 

broad policy or procedural issue that 

may affect the general public interest. In 

deciding whether to accept review 

under this standard, the MAC will limit 

its consideration of the ALJ’s action to 

those exceptions raised by CMS. 

(2) Referral by CMS when CMS did 

not participate in the ALJ proceedings or 

appear as a party. The MAC will accept 

review if the decision or dismissal 

contains an error of law material to the 

outcome of the case or presents a broad 

policy or procedural issue that may 

affect the general public interest. In 

deciding whether to accept review, the 

MAC will limit its consideration of the 

ALJ’s action to those exceptions raised 

by CMS.

(d) MAC’s action. If the MAC decides 

to review a decision or dismissal on its 

own motion, it will mail the results of 

its action to all the parties to the hearing 

and to CMS if it is not already a party 

to the hearing. The MAC may adopt, 

modify, or reverse the decision or 

dismissal, may remand the case to an 

ALJ for further proceedings or may 

dismiss a hearing request. The MAC 

must issue its action no later than 90 

days after receipt of the CMS referral, 

unless the 90-day period has been 

extended as provided in this subpart. 

The MAC may not, however, issue its 

action before the 20-day comment 

period has expired, unless it determines 

that the agency’s referral does not 

provide a basis for reviewing the case. 

If the MAC does not act within the 

applicable adjudication deadline, the 

11496 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

ALJ’s decision or dismissal remains the 

final action in the case.

§ 405.1112 Content of request for review. 

(a) The request for MAC review must 

be filed with the MAC or appropriate 

ALJ hearing office. The request for 

review must be in writing and must be 

made on a standard form. A written 

request that is not made on a standard 

form is accepted if it contains the 

beneficiary’s name; Medicare health 

insurance claim number; the specific 

service(s) or item(s) for which the 

review is requested; the specific date(s) 

of service; the date of the ALJ’s final 

action, if any, if the party is requesting 

escalation from the ALJ to the MAC, the 

hearing office in which the appellant’s 

request for hearing is pending; and the 

name and signature of the party or the 

representative of the party; and any 

other information CMS may decide. 

(b) The request for review must 

identify the parts of the ALJ action with 

which the party requesting review 

disagrees and explain why he or she 

disagrees with the ALJ’s decision, 

dismissal, or other determination being 

appealed. For example, if the party 

requesting review believes that the ALJ’s 

action is inconsistent with a statute, 

regulation, CMS Ruling, or other 

authority, the request for review should 

explain why the appellant believes the 

action is inconsistent with that 

authority. 

(c) The MAC will limit its review of 

an ALJ’s actions to those exceptions 

raised by the party in the request for 

review, unless the appellant is an 

unrepresented beneficiary. For purposes 

of this section only, we define a 

representative as anyone who has 

accepted an appointment as the 

beneficiary’s representative, except a 

member of the beneficiary’s family, a 

legal guardian, or an individual who 

routinely acts on behalf of the 

beneficiary, such as a family member or 

friend who has a power of attorney.

§ 405.1114 Dismissal of request for review. 

The MAC dismisses a request for 

review if the party requesting review 

did not file the request within the stated 

period of time and the time for filing has 

not been extended. The MAC also 

dismisses the request for review if—

(a) The party asks to withdraw the 

request for review; 

(b) The party does not have a right to 

request MAC review; or 

(c) The beneficiary whose claim is 

being appealed died while the request 

for review is pending and all of the 

following criteria apply: 

(1) The request for review was filed by 

the beneficiary or the beneficiary’s 

representative, and the beneficiary’s 

surviving spouse or estate has no 

remaining financial interest in the case. 

In deciding this issue, the MAC 

considers whether the surviving spouse 

or estate remains liable for the services 

that were denied or a Medicare 

contractor held the beneficiary liable for 

subsequent similar services under the 

limitation of liability provisions based 

on the denial of the services at issue; 

(2) No other individual or entity with 

a financial interest in the case wishes to 

pursue an appeal under § 405.1102; 

(3) No other party to the ALJ hearing 

filed a valid and timely review request 

under § 405.1102 and § 405.1112.

§ 405.1116 Effect of dismissal of request 

for MAC review or request for hearing. 

The dismissal of a request for MAC 

review or denial of a request for review 

of a dismissal issued by an ALJ is 

binding and not subject to further 

review unless reopened and vacated by 

the MAC. The MAC’s dismissal of a 

request for hearing is also binding and 

not subject to judicial review.

§ 405.1118 Obtaining evidence from the 

MAC. 

A party may request and receive a 

copy of all or part of the record of the 

ALJ hearing, including the exhibits list, 

documentary evidence, and a copy of 

the tape of the oral proceedings. 

However, the party may be asked to pay 

the costs of providing these items. If a 

party requests evidence from the MAC 

and an opportunity to comment on that 

evidence, the time beginning with the 

MAC’s receipt of the request for 

evidence through the expiration of the 

time granted for the party’s response 

will not be counted toward the 90-day 

adjudication deadline.

§ 405.1120 Filing briefs with the MAC.

Upon request, the MAC will give the 

party requesting review, as well as all 

other parties, a reasonable opportunity 

to file briefs or other written statements 

about the facts and law relevant to the 

case. Any party who submits a brief or 

statement must send a copy to all of the 

other parties. Unless the party 

requesting review files the brief or other 

statement with the request for review, 

the time beginning with the date of 

receipt of the request to submit the brief 

and ending with the date the brief is 

received by the MAC will not be 

counted toward the adjudication 

timeframe set forth in § 405.1100. The 

MAC may also request, but not require, 

CMS or its contractor to file a brief or 

position paper if the MAC determines 

that it is necessary to resolve the issues 

in the case. The MAC will not draw any 

adverse inference if CMS or a contractor 

either participates, or decides not to 

participate in MAC review.

§ 405.1122 What evidence may be 

submitted to the MAC. 

(a) Appeal before the MAC on request 

for review of ALJ’s decision. (1) If the 

MAC is reviewing an ALJ’s decision, the 

MAC limits its review of the evidence 

to the evidence contained in the record 

of the proceedings before the ALJ. 

However, if the hearing decision 

decides a new issue that the parties 

were not afforded an opportunity to 

address at the ALJ level, the MAC 

considers any evidence related to that 

issue that is submitted with the request 

for review. 

(2) If the MAC determines that 

additional evidence is needed to resolve 

the issues in the case and the hearing 

record indicates that the previous 

decision-makers have not attempted to 

obtain the evidence, the MAC may 

remand the case to an ALJ to obtain the 

evidence and issue a new decision. 

(b) Appeal before MAC as a result of 

appellant’s request for escalation. (1) If 

the MAC is reviewing a case that is 

escalated from the ALJ level to the 

MAC, the MAC will decide the case 

based on the record constructed at the 

QIC and any additional evidence, 

including oral testimony, entered in the 

record by the ALJ before the case was 

escalated. 

(2) If the MAC receives additional 

evidence with the request for escalation 

that is material to the question to be 

decided, or determines that additional 

evidence is needed to resolve the issues 

in the case, and the record provided to 

the MAC indicates that the previous 

decision-makers did not attempt to 

obtain the evidence before escalation, 

the MAC may remand the case to an ALJ 

to consider or obtain the evidence and 

issue a new decision. 

(c) Evidence related to issues 

previously considered by the QIC. (1) If 

new evidence related to issues 

previously considered by the QIC is 

submitted to the MAC by a provider, 

supplier, or a beneficiary represented by 

a provider or supplier, the MAC must 

determine if the provider, supplier, or 

the beneficiary represented by a 

provider or supplier had good cause for 

submitting it for the first time at the 

MAC level. 

(2) If the MAC determines that good 

cause does not exist, the MAC must 

exclude the evidence from the 

proceeding, may not consider it in 

reaching a decision, and may not 

remand the issue to an ALJ. 

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11497

(3) The MAC must notify all parties if 

it excludes the evidence. The MAC may 

remand to an ALJ if—

(i) The ALJ did not consider the new 

evidence submitted by the provider, 

supplier, or beneficiary represented by a 

provider or supplier because good cause 

did not exist; and 

(ii) The MAC finds that good cause 

existed under § 405.1028 and the ALJ 

should have reviewed the evidence. 

(iii) The new evidence is submitted by 

a party that is not a provider, supplier, 

or a beneficiary represented by a 

provider or supplier. 

(d) Subpoenas. (1) When it is 

reasonably necessary for the full 

presentation of a case, the MAC may, on 

its own initiative or at the request of a 

party, issue subpoenas requiring a party 

to make books, records, correspondence, 

papers, or other documents that are 

material to an issue at the hearing 

available for inspection and copying. 

(2) A party’s request for a subpoena 

must—

(i) Give a sufficient description of the 

documents to be produced; 

(ii) State the important facts that the 

documents are expected to prove; and 

(iii) Indicate why these facts could not 

be proven without issuing a subpoena. 

(3) A party to the MAC review on 

escalation that wishes to subpoena 

documents must file a written request 

that complies with the requirements set 

out in paragraph (d)(2) of this section 

within 10 calendar days of the request 

for escalation. 

(4) A subpoena will issue only where 

a party—

(i) Has sought discovery; 

(ii) Has filed a motion to compel; 

(iii) Has had that motion granted; and 

(iv) Nevertheless, has still not 

received the requested discovery. 

(e) Reviewability of subpoena 

rulings—

(1) General rule. A MAC ruling on a 

subpoena request is not subject to 

immediate review by the Secretary. 

(2) Exception. (i) To the extent a 

subpoena compels disclosure of a matter 

for which an objection based on 

privilege, or other protection from 

disclosure such as case preparation, 

confidentiality, or undue burden, was 

made before the MAC, the Secretary 

may review immediately that subpoena 

or portion of the subpoena. 

(ii) Upon notice to the MAC that a 

party or non-party, as applicable, 

intends to seek Secretary review of the 

subpoena, the MAC must stay all 

proceedings affected by the subpoena. 

(iii) The MAC determines the length 

of the stay under the circumstances of 

a given case, but in no event is less than 

15 days after the day on which the MAC 

received notice of the party or nonparty’s intent to seek Secretary review. 

(iv) If the Secretary grants a request 

for review, the subpoena or portion of 

the subpoena, as applicable, is stayed 

until the Secretary issues a written 

decision that affirms, reverses, modifies, 

or remands the MAC’s action for the 

subpoena. 

(v) If the Secretary does not grant 

review or take own motion review 

within the time allotted for the stay, the 

stay is lifed and the MAC’s action 

stands. 

(f) Enforcement. (1) If the MAC 

determines, whether on its own motion 

or at the request of a party, that a party 

or non-party subject to a subpoena 

issued under this section has refused to 

comply with the subpoena, the MAC 

may request the Secretary to seek 

enforcement of the subpoena in 

accordance with section 205(c) of the 

Act, 42 U.S.C. 405(c). 

(2) Any enforcement request by the 

MAC must consist of a written notice to 

the Secretary describing in detail the 

MAC’s findings of noncompliance and 

its specific request for enforcement, and 

providing a copy of the subpoena and 

evidence of its receipt by certified mail 

by the party or nonparty subject to the 

subpoena. 

(3) The MAC must promptly mail a 

copy of the notice and related 

documents to the party or non-party 

subject to the subpoena, and to any 

other party and affected non-party to the 

appeal. 

(4) If the Secretary does not grant 

review or take own motion review 

within the time allotted for the stay, the 

stay is lifted and the subpoena stands.

§ 405.1124 Oral argument. 

A party may request to appear before 

the MAC to present oral argument. 

(a) The MAC grants a request for oral 

argument if it decides that the case 

raises an important question of law, 

policy, or fact that cannot be readily 

decided based on written submissions 

alone. 

(b) The MAC may decide on its own 

that oral argument is necessary to 

decide the issues in the case. If the MAC 

decides to hear oral argument, it tells 

the parties of the time and place of the 

oral argument at least 10 days before the 

scheduled date. 

(c) In case of a previously 

unrepresented beneficiary, a newly 

hired representative may request an 

extension of time for preparation of the 

oral argument and the MAC must 

consider whether the extension is 

reasonable. 

(d) The MAC may also request, but 

not require, CMS or its contractor to 

appear before it if the MAC determines 

that it may be helpful in resolving the 

issues in the case.

(e) The MAC will not draw any 

inference if CMS or a contractor decides 

not to participate in the oral argument.

§ 405.1126 Case remanded by the MAC. 

(a) When the MAC may remand a 

case. Except as specified in 

§ 405.1122(c), the MAC may remand a 

case in which additional evidence is 

needed or additional action by the ALJ 

is required. The MAC will designate in 

its remand order whether the ALJ will 

issue a final decision or a recommended 

decision on remand. 

(b) Action by ALJ on remand. The ALJ 

will take any action that is ordered by 

the MAC and may take any additional 

action that is not inconsistent with the 

MAC’s remand order. 

(c) Notice when case is returned with 

a recommended decision. When the ALJ 

sends a case to the MAC with a 

recommended decision, a notice is 

mailed to the parties at their last known 

address. The notice tells them that the 

case was sent to the MAC, explains the 

rules for filing briefs or other written 

statements with the MAC, and includes 

a copy of the recommended decision. 

(d) Filing briefs with the MAC when 

ALJ issues recommended decision. (1) 

Any party to the recommended decision 

may file with the MAC briefs or other 

written statements about the facts and 

law relevant to the case within 20 days 

of the date on the recommended 

decision. Any party may ask the MAC 

for additional time to file briefs or 

statements. The MAC will extend this 

period, as appropriate, if the party 

shows that it has good cause for 

requesting the extension. 

(2) All other rules for filing briefs with 

and obtaining evidence from the MAC 

follow the procedures explained in this 

subpart. 

(e) Procedures before the MAC. (1) 

The MAC, after receiving a 

recommended decision, will conduct 

proceedings and issue its decision or 

dismissal according to the procedures 

explained in this subpart. 

(2) If the MAC determines that more 

evidence is required, it may again 

remand the case to an ALJ for further 

inquiry into the issues, rehearing, 

receipt of evidence, and another 

decision or recommended decision. 

However, if the MAC decides that it can 

get the additional evidence more 

quickly, it will take appropriate action.

§ 405.1128 Action of the MAC. 

(a) After it has reviewed all the 

evidence in the administrative record 

and any additional evidence received, 

11498 Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 

subject to the limitations on MAC 

consideration of additional evidence in 

§ 405.1122, the MAC will make a 

decision or remand the case to an ALJ. 

(b) The MAC may adopt, modify, or 

reverse the ALJ hearing decision or 

recommended decision. 

(c) The MAC mails a copy of its 

decision to all the parties at their last 

known addresses. For overpayment 

cases involving multiple beneficiaries 

where there is no beneficiary liability 

the MAC may choose to send written 

notice only to the appellant. In the event 

the decision will result in a payment to 

a provider or supplier, the Medicare 

contractor must issue any electronic or 

paper remittance advice notice to that 

provider or supplier.

§ 405.1130 Effect of the MAC’s decision. 

The MAC’s decision is binding on all 

parties unless a Federal district court 

issues a decision modifying the MAC’s 

decision or the decision is revised as the 

result of a reopening in accordance with 

§ 405.980. A party may file an action in 

a Federal district court within 60 days 

after the date it receives notice of the 

MAC’s decision.

§ 405.1132 Request for escalation to 

Federal court. 

(a) If the MAC does not issue a 

decision or dismissal or remand the case 

to an ALJ within the adjudication period 

specified in § 405.1100, or as extended 

as provided in this subpart, the 

appellant may request that the appeal, 

other than an appeal of an ALJ 

dismissal, be escalated to Federal 

district court. Upon receipt of a request 

for escalation, the MAC may—

(1) Issue a decision or dismissal or 

remand the case to an ALJ, if that action 

is issued within the latter of 5 calendar 

days of receipt of the request for 

escalation or 5 calendar days from the 

end of the applicable adjudication time 

period set forth in § 405.1100; or 

(2) If the MAC is not able to issue a 

decision or dismissal or remand as set 

forth in paragraph (a)(1) of this section, 

it will send a notice to the appellant 

acknowledging receipt of the request for 

escalation and confirming that it is not 

able to issue a decision, dismissal or 

remand order within the statutory time 

frame. 

(b) A party may file an action in a 

Federal district court within 60 days 

after the date it receives the MAC’s 

notice that the MAC is not able to issue 

a final action or remand unless the party 

is appealing an ALJ dismissal.

§ 405.1134 Extension of time to file action 

in Federal district court. 

(a) Any party to the MAC’s decision 

or to a request for EAJR that has been 

certified by the review entity other than 

CMS may request that the time for filing 

an action in a Federal district court be 

extended. 

(b) The request must—

(1) Be in writing. 

(2) Give the reasons why the action 

was not filed within the stated time 

period. 

(3) Be filed with the MAC. 

(c) If the party shows that he or she 

had good cause for missing the 

deadline, the time period will be 

extended. To determine whether good 

cause exists, the MAC uses the 

standards specified in § 405.942(b)(2) or 

(b)(3).

§ 405.1136 Judicial review. 

(a) General rules. (1) To the extent 

authorized by sections 1869, 

1876(c)(5)(B), and 1879(d) of the Act, a 

party to a MAC decision, or an appellant 

who requests escalation to Federal 

district court if the MAC does not 

complete its review of the ALJ’s 

decision within the applicable 

adjudication period, may obtain a court 

review if the amount remaining in 

controversy satisfies the requirements of 

§ 405.1006(c). 

(2) If the MAC’s adjudication period 

set forth in § 405.1100 expires and the 

appellant does not request escalation to 

Federal district court, the case remains 

with the MAC until a final action is 

issued. 

(b) Court in which to file civil action.

(1) Any civil action described in 

paragraph (a) of this section must be 

filed in the district court of the United 

States for the judicial district in which 

the party resides or where such 

individual, institution, or agency has its 

principal place of business. 

(2) If the party does not reside within 

any judicial district, or if the individual, 

institution, or agency does not have its 

principal place of business within any 

such judicial district, the civil action 

must be filed in the District Court of the 

United States for the District of 

Columbia. 

(c) Time for filing civil action. (1) Any 

civil action described in paragraph (a) of 

this section must be filed within the 

time periods specified in § 405.1130, 

§ 405.1132, or § 405.1134, as applicable. 

(2) For purposes of this section, the 

date of receipt of the notice of the 

MAC’s decision or the MAC’s notice 

that it is not able to issue a decision 

within the statutory timeframe shall be 

presumed to be 5 calendar days after the 

date of the notice, unless there is a 

reasonable showing to the contrary. 

(3) Where a case is certified for 

judicial review in accordance with the 

expedited access to judicial review 

process in § 405.990, the civil action 

must be filed within 60 days after 

receipt of the review entity’s 

certification, except where the time is 

extended by the ALJ or MAC, as 

applicable, upon a showing of good 

cause.

(d) Proper defendant. (1) In any civil 

action described in paragraph (a) of this 

section is filed, the Secretary of HHS, in 

his or her official capacity, is the proper 

defendant. Any civil action properly 

filed shall survive notwithstanding any 

change of the person holding the Office 

of the Secretary of HHS or any vacancy 

in such office. 

(2) If the complaint is erroneously 

filed against the United States or against 

any agency, officer, or employee of the 

United States other than the Secretary, 

the plaintiff will be notified that he or 

she has named an incorrect defendant 

and is granted 60 days from the date of 

receipt of the notice in which to 

commence the action against the correct 

defendant, the Secretary. 

(e) Prohibition against judicial review 

of certain Part B regulations or 

instructions. Under section 1869(e)(1) of 

the Act, a court may not review a 

regulation or instruction that relates to 

a method of payment under Medicare 

Part B if the regulation was published, 

or the instructions issued, before 

January 1, 1991. 

(f) Standard of review. (1) Under 

section 205(g) of the Act, the findings of 

the Secretary of HHS as to any fact, if 

supported by substantial evidence, are 

conclusive. 

(2) When the Secretary’s decision is 

adverse to a party due to a party’s 

failure to submit proof in conformity 

with a regulation prescribed under 

section 205(a) of the Act pertaining to 

the type of proof a party must offer to 

establish entitlement to payment, the 

court will review only whether the 

proof conforms with the regulation and 

the validity of the regulation.

§ 405.1138 Case remanded by a Federal 

district court. 

When a Federal district court remands 

a case to the Secretary for further 

consideration, unless the court order 

specifies otherwise, the MAC, acting on 

behalf of the Secretary, may make a 

decision, or it may remand the case to 

an ALJ with instructions to take action 

and either issue a decision, take other 

action, or return the case to the MAC 

with a recommended decision. If the 

MAC remands a case, the procedures 

specified in § 405.1140 will be followed.

Federal Register / Vol. 70, No. 44 / Tuesday, March 8, 2005 / Rules and Regulations 11499

§ 405.1140 MAC review of ALJ decision in 

a case remanded by a Federal district court. 

(a) General rules. (1) In accordance 

with § 405.1138, when a case is 

remanded by a Federal district court for 

further consideration and the MAC 

remands the case to an ALJ, a decision 

subsequently issued by the ALJ becomes 

the final decision of the Secretary unless 

the MAC assumes jurisdiction. 

(2) The MAC may assume jurisdiction 

based on written exceptions to the 

decision of the ALJ that a party files 

with the MAC or based on its authority 

under paragraph (c) of this section. 

(3) The MAC either makes a new, 

independent decision based on the 

entire record that will be the final 

decision of the Secretary after remand, 

or remands the case to an ALJ for further 

proceedings. 

(b) A party files exceptions 

disagreeing with the decision of the ALJ.

(1) If a party disagrees with an ALJ 

decision described in paragraph (a) of 

this section, in whole or in part, he or 

she may file exceptions to the decision 

with the MAC. Exceptions may be filed 

by submitting a written statement to the 

MAC setting forth the reasons for 

disagreeing with the decision of the ALJ. 

The party must file exceptions within 

30 days of the date the party receives 

the decision of the ALJ or submit a 

written request for an extension within 

the 30-day period. The MAC will grant 

a timely request for a 30-day extension. 

A request for an extension of more than 

30 days must include a statement of 

reasons as to why the party needs the 

additional time and may be granted if 

the MAC finds good cause under the 

standard established in § 405.942(b)(2) 

or (b)(3). 

(2) If written exceptions are timely 

filed, the MAC considers the party’s 

reasons for disagreeing with the 

decision of the ALJ. If the MAC 

concludes that there is no reason to 

change the decision of the ALJ, it will 

issue a notice addressing the exceptions 

and explaining why no change in the 

decision of the ALJ is warranted. In this 

instance, the decision of the ALJ is the 

final decision of the Secretary after 

remand. 

(3) When a party files written 

exceptions to the decision of the ALJ, 

the MAC may assume jurisdiction at any 

time. If the MAC assumes jurisdiction, 

it makes a new, independent decision 

based on its consideration of the entire 

record adopting, modifying, or reversing 

the decision of the ALJ or remanding the 

case to an ALJ for further proceedings, 

including a new decision. The new 

decision of the MAC is the final 

decision of the Secretary after remand. 

(c) MAC assumes jurisdiction without 

exceptions being filed. (1) Any time 

within 60 days after the date of the 

decision of the ALJ, the MAC may 

decide to assume jurisdiction of the case 

even though no written exceptions have 

been filed. 

(2) Notice of this action is mailed to 

all parties at their last known address. 

(3) The parties will be provided with 

the opportunity to file briefs or other 

written statements with the MAC about 

the facts and law relevant to the case. 

(4) After the briefs or other written 

statements are received or the time 

allowed (usually 30 days) for submitting 

them has expired, the MAC will either 

issue a final decision of the Secretary 

affirming, modifying, or reversing the 

decision of the ALJ, or remand the case 

to an ALJ for further proceedings, 

including a new decision. 

(d) Exceptions are not filed and the 

MAC does not otherwise assume 

jurisdiction. If no exceptions are filed 

and the MAC does not assume 

jurisdiction of the cases within 60 days 

after the date of the ALJ’s decision, the 

decision of the ALJ becomes the final 

decision of the Secretary after remand.

Dated: January 12, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: January 12, 2005. 

Tommy G. Thompson, 

Secretary.

[FR Doc. 05–4062 Filed 3–1;–05; 2:07 pm] 

BILLING CODE 4120–01–P