Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

IMPROVEMENTS ARE NEEDED 

AT THE ADMINISTRATIVE LAW 

JUDGE LEVEL OF MEDICARE 

APPEALS

Daniel R. Levinson 

Inspector General

November 2012

OEI-02-10-00340 
EXECUTIVE SUMMARY: IMPROVEMENTS ARE NEEDED AT THE 

ADMINISTRATIVE LAW JUDGE LEVEL OF MEDICARE APPEALS

OEI-02-10-00340

WHY WE DID THIS STUDY 

Administrative law judges (ALJ) within the Office of Medicare Hearings and Appeals (OMHA) 

decide appeals at the third level of the Medicare appeals system. In 2005, among other changes, 

ALJs were required to follow new regulations addressing how to apply Medicare policy, when to 

accept new evidence, and how the Centers for Medicare & Medicaid Services (CMS) participates 

in appeals. Medicare providers and beneficiaries may appeal certain decisions related to claims 

for health care services and items. 

HOW WE DID THIS STUDY

We based this study on an analysis of all ALJ appeals decided in fiscal year (FY) 2010; 

structured interviews with ALJs and other staff; structured interviews with Qualified 

Independent Contractors (QIC), which administer the second level of appeal, and CMS staff; 

policies, procedures, and other documents; and data on CMS participation in ALJ appeals. 

WHAT WE FOUND

Providers filed the vast majority of ALJ appeals in FY 2010, with a small number accounting for 

nearly one-third of all appeals. For 56 percent of appeals, ALJs reversed QIC decisions and 

decided in favor of appellants; this rate varied substantially across Medicare program areas. 

Differences between ALJ and QIC decisions were due to different interpretations of Medicare 

policies and other factors. In addition, the favorable rate varied widely by ALJ. When CMS 

participated in appeals, ALJ decisions were less likely to be favorable to appellants. Staff raised 

concerns about the acceptance of new evidence and the organization of case files. Finally, ALJ 

staff handled suspicions of fraud inconsistently.

WHAT WE RECOMMEND

We recommend that OMHA and CMS: (1) develop and provide coordinated training on 

Medicare policies to ALJs and QICs, (2) identify and clarify Medicare policies that are unclear 

and interpreted differently, (3) standardize case files and make them electronic, (4) revise

regulations to provide more guidance to ALJs regarding the acceptance of new evidence, and 

(5) improve the handling of appeals from appellants who are also under fraud investigation and 

seek statutory authority to postpone these appeals when necessary. Further, we recommend that 

OMHA: (6) seek statutory authority to establish a filing fee, (7) implement a quality assurance 

process to review ALJ decisions, (8) determine whether specialization among ALJs would 

improve consistency and efficiency, and (9) develop policies to handle suspicions of fraud 

appropriately and consistently and train staff accordingly. Finally, we recommend that CMS: 

(10) continue to increase CMS participation in ALJ appeals. OMHA and CMS concurred fully 

or in part with all 10 of our recommendations.
 

TABLE OF CONTENTS

Objectives ....................................................................................................1 

Background ..................................................................................................1 

Methodology ................................................................................................4 

Findings........................................................................................................8 

Providers filed 85 percent of the appeals decided by ALJs in 

FY 2010 ............................................................................................8 

For 56 percent of appeals, ALJs reversed prior-level 

decisions and decided fully in favor of appellants ...........................9 

Differences between ALJ and QIC decisions were due to 

different interpretations of Medicare policies and other factors ....10 

The favorable rate varied widely by ALJ ....................................... 11 

CMS participated in 10 percent of ALJ appeals; these appeals 

were less likely to be decided fully in favor of appellants .............13 

Staff raised concerns about the acceptance of new evidence and 

the organization of case files ..........................................................14 

ALJ staff handled suspicions of fraud inconsistently ....................15 

Conclusion and Recommendations ............................................................17 

Agencies’ Comments and Office of Inspector General Response .21 

Appendixes ................................................................................................23 

A: Administrative Law Judge Appeals Filed by Each Type of 

Appellant, Fiscal Year 2010 ...........................................................23 

B: Percentage of Administrative Law Judge Appeals That 

Were Fully Favorable to Appellants, Fiscal Year 2010 ..................24 

C: Actual Fully Favorable Rates Compared to Expected Fully 

Favorable Rates by Administrative Law Judge, Fiscal 

Year 2010 .......................................................................................25 

D: Office of Medicare Hearings and Appeals Comments ............26 

E: Centers for Medicare & Medicaid Services Comments ...........31 

Acknowledgments......................................................................................35 
 

OBJECTIVES

1. To describe the characteristics of appeals decided by Medicare administrative 

law judges (ALJ) in fiscal year (FY) 2010. 

2. To describe differences between ALJ and prior-level decisions and differences 

among ALJs. 

3. To determine the extent to which the Centers for Medicare & Medicaid 

Services (CMS) participated in ALJ appeals in FY 2010. 

BACKGROUND 

Medicare providers and beneficiaries may appeal certain decisions related to 

claims for health care services and items.1

 The administrative appeals process 

includes four levels; ALJs decide appeals at the third level. In 2005, the 

responsibility for conducting ALJ appeals was transferred from the Social 

Security Administration (SSA) to the Department of Health and Human Services 

(HHS).2 

Among other changes, ALJs were required to follow new regulations that 

addressed how Medicare policy must be applied, when new evidence may be 

accepted, and how CMS can participate in appeals.3 Before these changes were 

introduced, two Office of Inspector General (OIG) reports found a number of 

problems with Medicare appeals.4 In particular, OIG found that the different 

levels of appeal did not consistently apply the same standards and that CMS’s 

ability to defend its decisions was limited. The 2005 regulatory changes were 

intended to address many of these concerns. 

This report is the first to assess the impact of these changes on ALJ appeals. In 

particular, it describes the characteristics of appeals decided by ALJs, differences 

between ALJ and prior-level decisions, differences among ALJs, and CMS’s 

participation in ALJ appeals.

The Medicare Administrative Appeals Process

There are four levels of appeal: 

• Level One, administered by CMS Medicare Administrative Contractors; 

1 For the purposes of this report, we use “provider” to refer to both providers and suppliers that provide 

items and services under Medicare Parts A and B. 

2 The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, P.L. 108-173 § 931.

3 42 CFR §§ 405.1010, 405.1012, 405.1028, and 405.1062(a).

4 OIG, Medicare Administrative Appeals: ALJ Hearing Process, OEI-04-97-00160, September 1999; 

OIG, Medicare Administrative Appeals: The Potential Impact of BIPA, OEI-04-01-00290, 

January 2002.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 2

• Level Two, administered by CMS Qualified Independent Contractors 

(QIC); 

• Level Three, administered by ALJs; and

• Level Four, administered by the Medicare Appeals Council.5

When a party is dissatisfied with CMS’s payment decision on a claim, that party

may appeal. The party that files an appeal is called the appellant. If appellants 

receive unfavorable decisions at one level, they may appeal to the next level.6 

Appellants include Medicare beneficiaries; Medicare providers, such as 

physicians, suppliers, and hospitals; and State Medicaid agencies. State Medicaid 

agencies may appeal when there is a question of whether Medicare, rather than 

Medicaid, should pay for the services or items received by beneficiaries who are 

eligible for both Medicare and Medicaid coverage (known as dually eligible 

beneficiaries).

The first level of appeal is administered by the CMS contractors that make the 

initial decisions to pay or deny claims.

7

 At the second level, two QICs conduct 

Part A appeals; two conduct Part B appeals; and one conducts appeals for durable 

medical equipment, prosthetics, orthotics, and supplies (DMEPOS). At the first 

two levels, decisions are made after the contractors review the evidence in the 

case files.8

The third level of appeal is conducted by ALJs and differs substantially from the 

first two levels. One of the major differences is that the appellant has the right to 

a hearing before an ALJ. Under certain circumstances, however, the ALJ may not 

conduct a hearing and instead may make a decision after reviewing the evidence 

in the case file (known as an on-the-record review).9

An ALJ may make a decision that is fully favorable, partially favorable, or

unfavorable to the appellant.10 These decisions must be based on evidence in the 

5 The third and fourth levels apply to most types of appeals, but the first two levels apply only to 

appeals related to Medicare Parts A and B claims. 

6 The first two levels of appeal do not require a minimum dollar amount to be at issue, but the ALJ 

level does. In FY 2010, this threshold was $130. See 42 CFR § 405.1006. None of the levels of 

appeal require appellants to pay a filing fee.

7 Of the 1.1 billion Parts A and B claims that CMS contractors processed in 2010, 117 million were 

denied and 2.7 million were appealed to the first level. See CMS, Fact Sheet: Original Medicare (FeeFor-Service) Appeals Data – 2010. Accessed at https://www.cms.gov/Medicare/Appeals-andGrievances/OrgMedFFSAppeals/Downloads/Factsheet2010.pdf on August 8, 2012. 8 The case file refers to the administrative record and includes claims, medical records, and other 

evidence. See 42 CFR § 405.1044(b).

9 An ALJ may make a decision after an on-the-record review if the parties waive their right to a hearing 

or if the evidence supports a fully favorable decision for the appellant. 

See 42 CFR §§ 405.1000(e)–(g). See also 42 CFR § 405.1038.

10 Under certain circumstances, an ALJ may also dismiss an appeal or remand it to the prior level. 

See 42 CFR §§ 405.1034 and 405.1052. 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 3

case files and on hearing testimony.11 The law protects ALJs’ independence to 

ensure that their decisions are impartial and free from HHS influence.12 Any 

party who is dissatisfied with the ALJ’s decision may appeal to the Medicare 

Appeals Council. When deciding appeals, adjudicators at all four levels conduct a 

new, independent review of the evidence and are not bound by the prior levels’ 

findings and decisions.13 After exhausting the four levels of the administrative 

appeals process, parties may seek judicial review in Federal District Court.

Changes to Medicare ALJ Appeals

In 2005, HHS established the Office of Medicare Hearings and Appeals (OMHA), 

which created a group of ALJs dedicated to deciding Medicare appeals. These 

ALJs were required to follow new regulations that addressed how Medicare 

policy must be applied, when new evidence may be accepted, and how CMS may 

participate in appeals.

Prior to 2005, ALJs were bound by Medicare laws, regulations, and National 

Coverage Determinations when making decisions, but were not bound by Local 

Coverage Determinations or CMS program guidance. In 2005, new regulations 

were introduced that required ALJs to “give substantial deference” to these latter 

policies and to provide an explanation if they decline to follow one of these 

policies in an appeal.

14

Prior to 2005, appellants were allowed to submit new evidence at the ALJ level 

without restrictions. Beginning in 2005, an appellant must explain in writing the 

reason for submitting new evidence and ALJs may accept the new evidence only 

if they determine that the appellant had “good cause” for waiting until the ALJ 

level to submit it.

15

Before 2005, CMS was not allowed to participate in ALJ appeals, which were 

established as a nonadversarial system for appellants to present their cases before 

neutral judges.16 Under the new regulations, however, CMS may choose to 

participate in ALJ appeals as either a participant or a party. As a participant, CMS 

11 42 CFR § 405.1046(a).

12 5 U.S.C. § 554(d).

13 This type of review is referred to as de novo. See CMS, Medicare Claims Processing Manual, Pub.

No. 100-04, ch. 29, § 110; 42 CFR §§ 405.948, 405.968(a)(1), 405.1000(d), and 405.1100(c). 

14 42 CFR § 405.1062(a)–(b). Prior to these regulations, Federal case law established that adjudicators 

should give deference to agency guidance, such as Local Coverage Determinations. See Shalala v. 

Guernsey Memorial Hospital, 514 US 87 (1995). QICs are also bound by Medicare laws, regulations, 

and National Coverage Determinations and must give substantial deference to Local Coverage 

Determinations and CMS program guidance. See 42 CFR § 405.968(b). 15 42 U.S.C. § 1395ff(b)(3). This restriction applies to providers and represented beneficiaries, but not 

to unrepresented beneficiaries. It also does not apply to oral testimony presented during the hearing. 

See 42 CFR §§ 405.1018(c) and 405.1028. 16 Before 2005, CMS participated occasionally when an ALJ requested its participation. 

See 70 Fed. Reg. 11459 (Mar. 8, 2005).
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 4

may submit position papers and provide testimony during the hearing.17 As a 

party, CMS may also submit evidence to the ALJ, call or cross-examine witnesses 

during the hearing, and appeal to the next level.18 CMS contractors, rather than 

the agency, typically participate in ALJ appeals. 

Related Work

This report is part of OIG’s continuing work on Medicare ALJ appeals. Two OIG 

reports evaluated ALJ appeals when they were administered by SSA.19 These 

reports found that the different levels of appeal did not consistently apply the 

same standards and that CMS’s ability to defend its decisions was limited. OIG 

recommended requiring the different levels of appeal to apply the same standards, 

creating a dedicated ALJ corps for Medicare, and allowing increased participation 

from CMS at the ALJ level. 

In addition, two OIG reports evaluated ALJ appeals after the transition from SSA 

to OMHA.20 These reports were focused on the timeliness of ALJ appeals and on 

the format of ALJ hearings, which included, for the first time, telephone and video 

teleconference hearings in addition to the in-person hearings used by SSA. The 

reports found that OMHA did not decide a number of its cases in a timely manner 

during its first 13 months of operation, but that timeliness improved by its third 

year of operation. In addition, OIG found that most appellants who were 

interviewed were satisfied with their hearing formats. 

METHODOLOGY

We based this study on an analysis of: (1) data on appeals decided in FY 2010; 

(2) structured interviews with ALJs and other OMHA staff; (3) structured

interviews with QIC and CMS staff; (4) policies, procedures, and other 

documents; and (5) data on CMS participation in ALJ appeals. 

Appeals Data

We obtained data on ALJ appeals from the Medicare Appeals System (MAS), a 

database that tracks appeals at the second and third levels. Using these data, we 

examined several characteristics of the appeals decided by ALJs in FY 2010. 

We calculated the percentage of ALJ appeals for each appellant type—

beneficiaries, providers, and State Medicaid agencies. We determined whether 

17 42 CFR § 405.1010(c).

18 42 CFR § 405.1012.

19 OIG, Medicare Administrative Appeals: ALJ Hearing Process, OEI-04-97-00160, September 1999; 

OIG, Medicare Administrative Appeals: The Potential Impact of BIPA, OEI-04-01-00290, 

January 2002.

20 OIG, Medicare Administrative Law Judge Hearings: Early Implementation, 2005–2006, 

OEI-02-06-00110, July 2008; OIG, Medicare Administrative Law Judge Hearings: Update, 

2007–2008, OEI-02-06-00111, January 2009.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 5

the different types of appellants were more likely to file appeals related to certain 

Medicare program areas (e.g., Part A hospital appeals).21 We also calculated the 

number of appeals associated with each unique appellant and identified the 

appellants who filed frequently.22 We considered appellants to be frequent filers 

if they had 50 or more appeals decided in FY 2010. 

Next, we calculated the percentage of appeals associated with each type of ALJ 

decision: fully favorable to the appellant, partially favorable to the appellant, 

unfavorable to the appellant, or other.23 In addition, we determined the extent to 

which the fully favorable rate varied by Medicare program area and by appellant 

type.

We then analyzed how the fully favorable rate varied by ALJ.24 We determined 

whether the variation in fully favorable rates was associated with some ALJs’ 

deciding more appeals in certain Medicare program areas than other ALJs. To 

conduct this analysis, we compared each ALJ’s actual fully favorable rate to that 

ALJ’s expected fully favorable rate.

25 In addition, we determined the extent to 

which frequent filers received different favorable rates from different ALJs. 

Finally, we determined whether certain ALJs were more likely than others to 

decide appeals after an on-the-record review of the case file.

We also obtained data from MAS on appeals that QICs decided in FY 2010. We 

used these data to calculate the percentage of QIC appeals that were fully 

favorable to appellants. 

Structured Interviews With ALJs and Other OMHA Staff

We conducted structured interviews with the Chief ALJ, the Executive Director of 

OMHA, the Managing ALJ from each field office, and a sample of ALJ teams.26 

21 We analyzed DMEPOS appeals separately from other Part B appeals throughout the report.

22 To identify unique appellants, we took into account appellant information, such as name and 

Medicare identifier. In MAS, the Medicare identifiers include National Provider Identifiers and Health 

Insurance Claim Numbers, among others. Additionally, for appellants who were providers, we linked 

Medicare identifiers to information in CMS’s Provider Enrollment, Chain, and Ownership System to 

determine which providers were part of a chain. We considered all providers that had the same 

Medicare identifier or that were part of the same chain to be unique appellants.

23 Under certain circumstances, ALJs may dismiss appeals or remand them to the prior level; appellants 

may also escalate appeals to the next level if ALJs do not make timely decisions. 

See 42 CFR §§ 405.1034, 405.1052, and 405.1104.

24 For this analysis, of the 72 ALJs, we included the 66 who decided at least 50 appeals as fully 

favorable, partially favorable, or unfavorable during FY 2010. These ALJs accounted for 99 percent of 

all appeals. 

25 To determine each ALJ’s expected rate, we first calculated the fully favorable rate among all ALJs 

for each Medicare program area; next, we multiplied these rates by the percentage of appeals that the 

ALJ had in that program area and summed the results.

26 OMHA’s central office and one of its field offices are located in Arlington, Virginia. The other three 

field offices are in Miami, Florida; Cleveland, Ohio; and Irvine, California. At the time of the 

interviews, the Virginia field office had 4 ALJ teams and the other three had 13, 21, and 18 ALJ teams, 

respectively. For the purposes of this report, we refer to all respondents as ALJ staff.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 6

We randomly selected 20 percent of the ALJ teams from each field office, for a 

total of 12 ALJ teams. The teams were each made up of an ALJ, an attorney, and 

other staff. We interviewed the ALJ and the attorney from each team. Our 

questions focused on ALJs’ approaches to decisionmaking, including their 

application of Medicare policies and their acceptance of new evidence, and on 

their experience with CMS participation in appeals. We conducted these 

interviews in December 2010 and January 2011. 

Structured Interviews With QIC and CMS Staff

We conducted structured interviews with key staff from the three CMS divisions 

that oversee the contractors that administer the first two levels of appeal, as well 

as other contractors that participate in ALJ appeals.27 We also conducted 

structured interviews with key staff from each of the five QICs and the 

Administrative QIC, which provides support to the QICs.28 Our questions 

focused on the QICs’ and other contractors’ experience participating in ALJ 

appeals and on the QICs’ approaches to decisionmaking. We conducted these 

interviews in August and September 2011. 

Review of Documentation

In the fall of 2010, we requested and reviewed written policies, procedures, and 

training materials from OMHA and CMS. We used these documents primarily to 

validate the information from our interviews. 

CMS Participation Data

We obtained data from CMS regarding its contractors’ participation in ALJ 

appeals that were decided in FY 2010.29 For each appeal, CMS indicated which 

contractor participated, whether the contractor was a participant or a party, and 

whether it submitted a position paper or testified at the ALJ hearing. We merged 

these data with the MAS data.

We then calculated the percentage of all ALJ appeals in which CMS participated 

and assessed how the rate of participation varied by Medicare program area and 

by type of contractor. We also determined the extent to which CMS was a 

participant versus a party and the extent to which it submitted position papers 

versus testified at ALJ hearings. Lastly, we compared the ALJ favorable rates 

when CMS participated to when it did not participate. 

27 These other contractors include the Zone Program Integrity Contractors, Program Safeguard 

Contractors, and Recovery Audit Contractors, all of which take steps to recoup inappropriate Medicare 

payments. 

28 For the purposes of this report, we refer to CMS and contractor respondents as CMS staff.

29 These data were limited to Medicare Part A, Part B, and DMEPOS appeals. CMS does not 

participate in Parts C and D appeals, which typically involve disputes between appellants and their 

private plans. 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 7

Standards

This study was conducted in accordance with the Quality Standards for Inspection 

and Evaluation issued by the Council of the Inspectors General on Integrity and 

Efficiency.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 8

FINDINGS

Providers filed 85 percent of the appeals decided by ALJs in 

FY 2010

Providers filed 85 percent of the 40,682 appeals that ALJs decided in FY 2010. 

These providers included physicians, suppliers, and hospitals, among others. As 

shown in Table 1, beneficiaries filed 11 percent of the appeals, while State 

Medicaid agencies filed 3 percent. State Medicaid agencies may appeal when 

there is a question of whether Medicare, rather than Medicaid, should pay for the 

services or items received by a dually eligible beneficiary.

Table 1: Percentage of ALJ Appeals by Appellant Type, FY 2010

Type of Appellant Number of 

Appellants

Number of

Appeals

Percentage 

of Appeals 

Provider 6,102 34,542 85%

Beneficiary 4,429 4,631 11%

State Medicaid Agency 5 1,361 3%

Unknown 120 148 <1%

 Total 10,656 40,682 100%

Source: OIG analysis of MAS data, 2012.

Providers, beneficiaries, and State Medicaid agencies tended to file different types 

of appeals. Providers were more likely than other appellant types to file Part B 

and DMEPOS appeals, while beneficiaries were more likely to file 

Parts C and D appeals. State Medicaid agencies were more likely than other 

appellant types to file Part A appeals, especially home health, hospice, and skilled 

nursing facility appeals. For example, 90 percent of State Medicaid agency 

appeals were Part A appeals, while only 40 percent of provider appeals and 

16 percent of beneficiary appeals were Part A appeals. See Appendix A for more 

information on appeals by appellant type. 

A small number of providers accounted for nearly one-third of all 

appeals

Certain providers filed appeals much more frequently than others. On average, 

providers filed six appeals each. However, 96 providers were frequent filers that 

filed at least 50 appeals each, with 1 provider filing 1,046 appeals. While these 

providers represented 2 percent of all providers, they accounted for nearly onethird of all ALJ appeals in FY 2010. These providers were twice as likely as other 

providers to file DMEPOS appeals. No beneficiaries were frequent filers. 

However, 4 State Medicaid agencies filed at least 50 appeals each; 2 of these filed 

more than 500 appeals each. 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 9

Many ALJ staff raised concerns about the frequent filers. Several staff noted that 

some of these appellants appeal every payment denial. A few staff said that these 

appellants have an incentive to appeal because the cost is minimal and a favorable 

decision is likely.

For 56 percent of appeals, ALJs reversed prior-level 

decisions and decided fully in favor of appellants 

ALJs may decide appeals in several ways: fully favorable to appellants, partially 

favorable to appellants, or unfavorable to appellants.30 As shown in Table 2, ALJs 

reversed prior-level decisions by QICs and decided fully in favor of appellants in 

56 percent of appeals in FY 2010. In contrast, QICs decided fully in favor of 

appellants in 20 percent of appeals in FY 2010. 

Table 2: Percentage of ALJ Appeals by Decision, FY 2010

Appeal Decision Percentage of Appeals

Fully favorable to the appellant 56%

Partially favorable to the appellant 6%

Unfavorable to the appellant 24%

Dismissed, remanded, or escalated 14%

 Total 100%

Source: OIG analysis of MAS data, 2012.

The ALJ fully favorable rate varied substantially across Medicare program areas. 

As shown in Table 3, the fully favorable rate was the highest for Part A hospital 

appeals at 72 percent, while the rates were the lowest for Parts C and D appeals at

18 and 19 percent, respectively. Several ALJ staff noted that an ALJ typically has 

less discretion when deciding Parts C and D appeals because the beneficiary has 

agreed to a contract with a private plan that covers or does not cover the specific 

service or drug.

30 Under certain circumstances, appeals may be dismissed, remanded to the prior level, or escalated to 

the next level.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 10

Table 3: Percentage of ALJ Appeals That Were Fully 

Favorable to Appellants, by Medicare Program Area, FY 2010

The fully favorable rate also varied substantially by appellant type. For providers, 

it was 61 percent. In contrast, the fully favorable rate was 28 and 22 percent for 

beneficiaries and State Medicaid agencies, respectively. The rate was lower for 

beneficiaries than for providers, partly because the majority of beneficiary appeals 

dealt with Parts C and D, while providers rarely filed such appeals. Overall, the 

fully favorable rate for providers who were frequent filers differed only slightly 

from the rate for other providers. See Appendix B for more information about the 

fully favorable rates for each appellant type, as well as for providers that were and 

were not frequent filers. 

Differences between ALJ and QIC decisions were due to

different interpretations of Medicare policies and other 

factors

ALJs differed from QICs in their interpretation of Medicare policies, in their 

degree of specialization, and in their use of clinical experts. These differences 

contributed to different decisions at the ALJ and QIC levels.

ALJs tended to interpret Medicare policies less strictly than QICs

Most ALJ and QIC staff agreed that reasonable people can interpret Medicare 

policies differently, and several staff emphasized that some policies need to be 

flexible to cover a wide range of beneficiary circumstances. At the same time, 

both ALJ and QIC staff indicated that ALJs tended to interpret Medicare policies 

Medicare Program Area Percentage Fully 

Favorable to Appellants 

Part A 62%

Hospitals 72%

Home Health/Hospice Agencies 62%

Other Part A 61%

Skilled Nursing Facilities 51%

Part B 59%

 Transportation 67%

 Diagnostic Testing 63%

 Practitioner Services 60%

 Other Part B 48%

DMEPOS 53%

Other* 26%

Part D 19%

Part C 18%

Source: OIG analysis of MAS data, 2012.

* This category includes appeals about beneficiary premiums and entitlement to Medicare.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 11

less strictly than QICs. Most ALJ staff noted that ALJs often decided in favor of 

appellants when the intent, but not the letter, of a Medicare policy was met. In 

contrast, most QICs noted that they try to follow Medicare policy strictly. One 

QIC added that it approaches appeals expecting to uphold prior-level decisions 

unless the evidence to reverse is compelling. 

ALJ and QIC staff offered several examples to illustrate their differences in 

interpreting Medicare policies. In one example, QICs denied home health 

services because beneficiaries did not meet the requirement to be homebound; 

then ALJs determined that the home health services were reasonable and 

necessary without focusing on the homebound requirement. In another example, 

QICs denied payments because beneficiaries met only 9 out of 10 criteria in the 

Local Coverage Determination, but ALJs found that the beneficiaries met the 

broader intent of the policy and reversed the decision. 

In addition, ALJ and QIC staff commonly noted that some Medicare policies are 

unclear. Several staff cited examples of policies with vague definitions, such as 

coverage for beneficiaries who have “unique characteristics” or are “declining.” 

Many ALJ staff emphasized the need to write policies more narrowly or more 

clearly, noting that unclear policies lead to more fully favorable decisions and to 

more variation among ALJs. 

ALJs and QICs differed in the degree to which they specialized in 

Medicare program areas and in their use of clinical experts

Each of the QICs specializes in a Medicare program area: two QICs are 

responsible for Part A appeals, two for Part B, and one for DMEPOS. In contrast, 

ALJs typically decide appeals involving all Medicare program areas because their 

appeals are usually randomly assigned.31 Several ALJ staff noted that increased 

specialization would make the appeals system more efficient. As one ALJ 

respondent noted, “In a month, I will have 10 Part A, 10 Part B, 3 Part D ... 

[going] back and forth between different regulations ... it’s hard.” 

Additionally, ALJs and QICs used clinical experts to different degrees. QICs 

have medical directors and clinicians on staff to review decisions. In contrast, 

ALJs do not have medical directors and clinicians on staff. Several ALJ staff said 

ALJs tended to rely on testimony and other evidence from treating physicians. 

For example, one ALJ staff member said, “[The ALJ] will listen to the treating 

physician and will give deference to the physician’s opinion.” 

The favorable rate varied widely by ALJ

Some ALJs were much more likely than others to make decisions that were fully 

favorable to appellants. Among the 66 ALJs, the fully favorable rate ranged from 

31 ALJ appeals must be assigned “in rotation so far as practicable.” See 5 U.S.C. § 3105.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 12

18 to 85 percent.32 As shown in Figure 1, while about two-thirds of ALJs had 

fully favorable rates between 41 and 70 percent, 8 ALJs had fully favorable rates 

higher than 70 percent and 13 had fully favorable rates at or below 40 percent. 

Very little of this variation was associated with some ALJs’ deciding more appeals 

in certain Medicare program areas than other ALJs. See Appendix C.

Figure 1: Number of ALJs by the Percentage of Appeals That Were Fully 

Favorable to Appellants, FY 2010

Source: OIG analysis of MAS data, 2012.

Moreover, frequent filers often received fully favorable decisions at very different 

rates from different ALJs. For example, a supplier with nearly 

600 appeals received fully favorable decisions at rates ranging from 

7 to 100 percent from the 17 ALJs who decided at least 10 of the supplier’s 

appeals.

According to many ALJ staff, different philosophies among ALJs contribute to the 

variation in fully favorable rates. They said that given the same facts and the 

same applicable Medicare policy, some ALJs would make decisions that are 

favorable to appellants, while others would not. One ALJ concluded, “Some 

[ALJs] pay, some deny.” Another ALJ stated, “I go towards protecting the 

Medicare Trust Fund[s].” 

32 The analysis for this finding was limited to ALJs who decided at least 50 appeals as fully favorable, 

partially favorable, or unfavorable during FY 2010.

0

5

10

15

20

11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90%

Number of ALJs

Percentage of Appeals Fully Favorable to Appellants
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 13

ALJs also varied in their use of on-the-record reviews. An ALJ may make a 

decision after an on-the-record review of the case file, instead of after a hearing, if 

the appellant waives the right to a hearing or if the evidence supports a fully 

favorable decision for the appellant. Among all ALJs, the percentage of appeals 

decided after on-the-record reviews ranged from less than 1 to 65 percent. 

CMS participated in 10 percent of ALJ appeals; these 

appeals were less likely to be decided fully in favor of 

appellants 

Overall, CMS participated in 10 percent of the appeals that ALJs decided in 

FY 2010.33 Participation varied substantially across Medicare program areas, 

with CMS participating in 18 percent of DMEPOS appeals, 9 percent of Part A 

appeals, and 5 percent of Part B appeals. In 61 percent of the appeals in which 

CMS participated, it provided testimony during hearings. In the remaining 

39 percent of appeals, CMS submitted position papers to the ALJs. CMS rarely 

chose to be a party, which would have allowed it to submit evidence, call or crossexamine witnesses, or appeal to the next level.

When CMS participated, ALJs were less likely to decide fully in favor of 

appellants. Overall, 44 percent of ALJ decisions were fully favorable to 

appellants when CMS participated. In contrast, 60 percent of ALJ decisions were 

fully favorable when CMS did not participate. As shown in Table 4, this 

difference was greatest for DMEPOS appeals.

Table 4: Fully Favorable Rates When CMS Participated and When CMS Did Not 

Participate, by Medicare Program Area, FY 2010 

Medicare Program Area

Percentage of Appeals 

Fully Favorable to Appellants Percentage 

Point 

When CMS Difference*

Participated

When CMS Did 

Not Participate

Part A 59% 62% 4 

Part B 48% 59% 12

DMEPOS 30% 58% 28

 All Appeals 44% 60% 16

Source: OIG analysis of MAS data and CMS participation data, 2012.

* Rows do not subtract to percentage point differences because of rounding.

CMS and ALJ staff noted several benefits of CMS participation. Most CMS staff 

cited an improved relationship between the two agencies, and many ALJ staff 

33 The analysis for this finding was limited to Part A, Part B, and DMEPOS appeals. CMS does not 

participate in Parts C and D appeals, which typically involve disputes between appellants and their 

private plans.
 

noted that CMS often provided needed information. Most CMS staff further 

noted that their participation in ALJ appeals has taught them to include more 

specific information in their decisions and position papers to make them more 

useful to ALJs. 

Citing these benefits, nearly all CMS staff reported plans to increase participation 

in ALJ appeals, especially by the contractors that originally denied the claims or 

recouped the claim payments. A few staff noted that these contractors are often in 

the best position to defend their decisions. In FY 2010, only one of these 

contractors participated regularly, with QICs accounting for nearly all of the 

remaining participation.34 CMS staff also reported plans to become a party, rather 

than a participant, more often, stating that this will allow the agency to better 

present its position. 

Staff raised concerns about the acceptance of new evidence 

and the organization of case files 

Most CMS and ALJ staff noted that the requirements for accepting new evidence 

at the ALJ level are open to wide interpretation. Starting in 2005, ALJs may 

accept new evidence only if they determine that appellants had good cause for 

waiting until the appeals reached the ALJ level to submit it. Most ALJ staff said 

that they typically accepted new evidence when submitted. As one ALJ 

explained, an ALJ’s role “is to make a determined effort to find out all of the 

relevant information to make the best determination.... Maybe I let that color my 

determination of letting in new evidence.” 

Nearly all CMS staff reported that the ALJs’ acceptance of new evidence reduced 

the efficiency of the appeals system. Most of them noted that appellants are 

required, and have many opportunities, to submit evidence prior to the ALJ level. 

According to one CMS staff member, when ALJs accept new evidence without 

good cause, it “eliminates the value of the two previous levels of appeal.” 

Nearly all CMS and ALJ staff also identified problems with case files. They 

reported that a case file at the ALJ level often differed in content, organization, 

and format compared to the same appeal’s case file at the QIC level. Staff noted 

that these differences created inefficiencies in the appeals process. Most ALJ staff 

reported that incomplete or disorganized case files caused them to spend time 

requesting information from QICs or appellants, remanding appeals back to QICs, 

or reorganizing case files. Many ALJ and CMS staff noted that the two agencies 

need to reach an agreement regarding how QICs should organize the case files 

before sending them to the ALJ level. 

34 CMS funded a demonstration project to increase participation by one of the DMEPOS contractors 

that make the initial decisions to pay or deny claims. 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 14 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 15

In addition, problems arise because the QICs’ case files are almost entirely 

electronic, while ALJs accept only paper case files. The QICs convert the 

electronic case files to paper format before sending them to the ALJs; most staff 

noted that this process is resource intensive and prone to error. In a 

February 2011 report to Congress, the Chief ALJ acknowledged that her agency 

had “a critical need to transform its case file process from paper to a fully 

electronic environment.”35

ALJ staff handled suspicions of fraud inconsistently

When deciding an appeal, ALJ staff may come across evidence that suggests an 

appellant engaged in Medicare fraud. For example, evidence may suggest that the 

Medicare services were not furnished or were not furnished as billed. Nearly all 

ALJ staff reported having suspected appellants of Medicare fraud; however, they 

were inconsistent in how they handled their suspicions. In addition, the agency 

does not have written policies about how ALJ staff should handle suspected fraud. 

Notably, ALJ staff differed in the extent to which they referred suspected fraud to 

their supervisors or to law enforcement. While many staff had made at least one 

fraud referral, many others did not make referrals based on their suspicions. 

Several of those who did not refer stated that the evidence of fraud was limited 

and a referral would not have been appropriate. Several others, however, 

indicated that making fraud referrals is not part of their job. For example, one 

staff member said, “[I] never referred and don’t want to refer anything ... [it is] 

not our business here;” another said “there is an unspoken rule not to report 

[fraud].” 

When deciding an appeal, ALJ staff also differed in whether they sought 

additional information when they suspected fraud. A few staff reported that they 

sought additional information by reviewing licensing databases, searching the 

Internet, or calling investigators. Several staff also were in favor of more 

communication between law enforcement and ALJs regarding fraud 

investigations. In contrast, other staff were opposed to having any additional 

information when deciding an appeal. 

ALJ staff also differed in how they made decisions when they suspected fraud. 

Several ALJs explained that they decide against appellants if the evidence lacks 

credibility and they suspect fraud. For example, one ALJ reported that he denied 

a group of claims because all the medical records looked suspiciously similar. In 

contrast, a few ALJs suggested that they assume the evidence is factual and do not 

assess whether it may have been falsified.

Further, a few ALJ and CMS staff noted that having an appellant simultaneously 

in the appeals system and under investigation for fraud presented challenges. In 

35 OMHA, FY 2012 Justification of Estimates for Appropriations Committees, p. 4.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 16

particular, CMS expressed concern that an appellant may manipulate the appeals 

system to influence the fraud investigation. For example, appellants may 

selectively appeal claims to obtain favorable ALJ decisions. Staff reported that 

favorable ALJ decisions may compromise law enforcement’s ability to get a 

conviction from a fraud investigation. 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 17

CONCLUSION AND RECOMMENDATIONS

ALJs decide tens of thousands of appeals each year. Because these decisions are 

critical to providers and beneficiaries and affect the Medicare program as a whole, 

it is imperative that the appeals process be efficient, effective, and fair.

Our review found that the vast majority of ALJ appeals in FY 2010 were filed by 

providers, with a small number of providers accounting for nearly one-third of all 

appeals. For 56 percent of appeals, ALJs reversed prior-level decisions by QICs 

and decided fully in favor of appellants. Differences between ALJ and QIC 

decisions were due to different interpretations of Medicare policies and other 

factors. These differences may provide appellants an incentive to appeal to the 

ALJ level, where they are likely to receive favorable decisions. 

Additionally, the favorable rate varied widely by ALJ. Further, when CMS 

participated in appeals, ALJ decisions were less likely to be favorable to 

appellants. In addition, ALJ and CMS staff raised concerns that the acceptance of 

new evidence and the organization of case files reduced the efficiency of the 

appeals system. Lastly, ALJ staff handled suspicions of fraud inconsistently. 

Our findings highlight a number of inconsistencies and inefficiencies in the 

Medicare appeals process. Together, they demonstrate that OMHA and CMS 

must take action to improve the appeals system, while maintaining ALJs’ 

independence. 

Therefore, we recommend that OMHA and CMS:

Develop and Provide Coordinated Training on Medicare Policies to 

ALJs and QICs

OMHA and CMS should work together to develop and provide training on 

Medicare policies to ALJ and QIC staff. By coordinating training, OMHA and 

CMS will help ensure that knowledge of Medicare policies is consistent at the 

second and third levels of appeal. OMHA and CMS should provide training at 

least annually and focus on policies that tend to be interpreted differently by ALJs 

and QICs or among ALJs. For example, one area of focus should be Part A 

hospital appeals in which ALJs reversed prior-level decisions for nearly threequarters of appeals. The agencies should identify training topics by analyzing 

appeals data and surveying staff. 

Identify and Clarify Medicare Policies That Are Unclear and 

Interpreted Differently

Unclear policies can lead to inconsistencies between ALJs and QICs and among 

ALJs. At least annually, CMS and OMHA should identify policies that are 

unclear and interpreted differently by soliciting input from CMS contractors and 

ALJ staff and by analyzing appeals data. The agencies should focus on policies 

with vague definitions, such as beneficiaries who are “declining,” and on program 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 18

areas with particularly high favorable rates, such as Medicare Part A. CMS 

should then work to develop or clarify these policies, as needed. 

Standardize Case Files and Make Them Electronic

To improve the efficiency of the appeals process, OMHA and CMS should make 

case files more consistent across the various levels of appeal. Finalizing and 

enforcing a Memorandum of Understanding should be a first step toward 

standardizing the content and organization of case files. As well as specifying 

how the documents in the case file should be organized, the memorandum should 

define a method, such as a checklist, for easily identifying which documents are 

in the case file. OMHA and CMS should train staff on the memorandum 

requirements.

In addition, OMHA should accelerate its Electronic Records Initiative to 

transition from paper to electronic files. OMHA and CMS must coordinate this 

effort closely and should take other measures in the interim to reduce formatting 

differences in case files. The agencies may require additional funding to complete 

the transition to electronic case files.

Revise Regulations To Provide More Guidance to ALJs Regarding 

the Acceptance of New Evidence

Current regulations regarding the acceptance of new evidence provide little 

guidance and only one example of good cause—when the QIC raises a new issue 

not discussed at the first level of appeal. OMHA and CMS should revise these

regulations to include additional examples as well as factors for ALJs to consider 

when determining good cause. In particular, the regulations should specify that 

ALJs consider whether the appellant could have obtained the evidence earlier.

Improve the Handling of Appeals From Appellants Who Are Also

Under Fraud Investigation and Seek Statutory Authority To Postpone 

These Appeals When Necessary

When Medicare providers are simultaneously in the appeals system and under 

investigation for fraud, both the appeals process and the investigations may be 

compromised. OMHA and CMS should improve how these cases are handled. 

CMS should work with its contractors and law enforcement to identify and 

monitor the appeals of providers that are under investigation. This information 

should be used to inform decisions about administrative and law enforcement 

actions and about whether CMS should participate at the ALJ level of appeal. 

Additionally, OMHA and CMS should seek statutory authority to postpone 

appeals at the levels they administer. The agencies should make decisions to 

postpone appeals only after receiving a request from law enforcement and should 

work with law enforcement to define the circumstances under which appeals may 

be postponed. Postponement decisions should be made by OMHA and CMS staff

who are not directly responsible for deciding appeals. 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 19

We recommend that OMHA:

Seek Statutory Authority To Establish a Filing Fee

Given the concerns raised about appellants who filed frequently, OMHA should 

seek statutory authority to implement a modest filing fee. Such a fee would only 

nominally affect the average appellant, but would encourage frequent filers to 

more carefully assess their appeals before filing. The fee should not apply to 

beneficiaries. OMHA should consider various options for making the fee 

effective and fair, such as scaling the fee to the dollar amount at issue.

Implement a Quality Assurance Process To Review ALJ Decisions

The range of fully favorable rates among ALJs raises concerns about whether all 

ALJs are applying Medicare policies in accordance with regulations. Medicare 

regulations state that ALJs are bound by Medicare laws, regulations, and National 

Coverage Determinations and must give substantial deference to Local Coverage 

Determinations and CMS program guidance. OMHA should implement a quality 

assurance process to review ALJ decisions. OMHA could, for example, review a 

sample of ALJ decisions and, when needed, provide ALJs with additional training. 

OMHA may want to focus its efforts on certain types of appeals, such as those 

concerned with policies that tend to be interpreted differently among ALJs. 

OMHA should also assess ALJs’ use of on-the-record reviews to make decisions.

Determine Whether Specialization Among ALJs Would Improve 

Efficiency

OMHA should determine whether specialization among ALJs would improve the 

efficiency of the appeals process. Any specialization would need to be consistent 

with the statutory requirement to randomly assign appeals. If OMHA decides to 

implement specialization, it should develop policies and procedures describing the 

manner and extent to which ALJs will specialize. 

Develop Policies To Handle Suspicions of Fraud Appropriately and 

Consistently and Train Staff Accordingly

OMHA should develop policies and provide training to ALJ staff regarding how 

to handle suspicions of fraud. These policies and training should be developed in 

collaboration with CMS and OIG and should inform staff about when and how to 

refer suspicions of fraud. The policies and training should also instruct staff to 

base decisions only on evidence in the case files and hearing testimony, as 

required by Federal regulation, and to consider the credibility of the evidence 

when making decisions. OMHA should work with CMS and OIG periodically to 

keep informed about emerging fraud trends. 

We recommend that CMS:

Continue To Increase CMS Participation in ALJ Appeals

Given the benefits cited by both agencies, CMS should continue to increase its 

participation in ALJ appeals. Building upon its current efforts, CMS should make 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 20

strategic decisions about which contractors are in the best position to represent 

CMS and which appeals most warrant CMS participation, such as Part A hospital 

appeals or those from frequent filers. CMS should establish participation 

guidelines and incentives for each type of contractor and should track the results 

of their participation. The guidelines should indicate the circumstances in which a 

contractor should consider becoming a party, rather than a participant.
 

AGENCIES’ COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

OMHA and CMS concurred fully or in part with all 10 of our recommendations. 

With regard to the first recommendation, OMHA stated that it instituted, and 

CMS participated in, an annual symposium that offers ALJs training on a wide 

range of Medicare policies and emerging issues. CMS added that it has invited 

OMHA to participate in its annual conference for contractor medical directors and 

that it will continue working with OMHA to identify new opportunities for 

collaboration. 

With regard to the second recommendation, OMHA noted that while it is beyond 

the scope of its mission to participate in Medicare policy development, it supports 

efforts to clarify unclear policies and increased communication with CMS when 

decisional trends reveal differing policy interpretations. CMS noted the value of 

tracking appeals to determine which Medicare policies are most often at issue and 

stated that in some instances, it might be beneficial to clarify a particular policy. 

With regard to the third recommendation, OMHA stated that it is working with 

CMS to develop a Memorandum of Understanding regarding standardizing case 

files and to determine whether MAS can accommodate the electronic folder or 

whether a new operating system must be developed. CMS added that it will 

continue to discuss with OMHA options to fully develop an electronic system. 

With regard to the fourth recommendation, OMHA stated that it will review 

regulations regarding acceptance of new evidence and will develop guidance and 

provide training to address ALJs’ concerns raised in the report. CMS added that it 

will explore options for providing additional guidance regarding accepting new 

evidence at the ALJ level. 

With regard to the fifth recommendation, OMHA stated that it did not concur with 

staff’s issuing determinations regarding postponement of ALJ decisions because 

of due process concerns. CMS raised the same concerns and further noted that 

postponing appeals could compromise fraud investigations. At the same time, 

OMHA stated that it supports CMS’s developing a mechanism to limit appeals to 

the ALJ level, and CMS proposed discussing concerns with OMHA to determine 

the best approach for handling these appeals. In response, we recognize the 

seriousness of the due process and other concerns and emphasize that 

postponement should be considered only after weighing these concerns together 

with the potential impact of fraudulent activities on beneficiaries and the 

Medicare Trust Funds. We further emphasize that the agencies should make 

decisions to postpone appeals only after receiving a request from law enforcement 

and that these postponement decisions should not be made by ALJs or others who 

are directly responsible for deciding appeals. 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 21 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 22

With regard to the sixth through ninth recommendations, OMHA stated that it will 

evaluate whether or not filing fee authority is appropriate and, if so, seek authority 

to collect such fees. It further noted that it has instituted a Quality Assurance 

Program based upon peer review of ALJ decisions. OMHA also stated that 

although it is not convinced that ALJ specialization would improve case 

processing, it will conduct further evaluation. Lastly, it stated that it has 

conducted training and continues to develop policies with respect to handling 

suspicions of fraud. 

With regard to the tenth recommendation, CMS stated that it plans to increase 

participation in ALJ appeals by the agency’s contractors. It will also enhance 

participation guidelines for contractors and monitor the results of participation to 

determine the most effective and efficient use of the resources currently available. 

The full text of OMHA’s comments is provided in Appendix D, and the full text of 

CMS’s comments is provided in Appendix E. 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 23

APPENDIX A

Administrative Law Judge Appeals Filed by Each Type of Appellant, 

Fiscal Year 2010

Medicare Program Area

Percentage of 

Provider 

Appeals

Percentage of 

Beneficiary 

Appeals

Percentage of 

State Medicaid 

Agency Appeals

Part A 40% 16% 90%

Hospitals 9% 4% <1%

Home Health/

Hospice Agencies 13% 1% 48%

Other Part A 14% 8% 3%

Skilled Nursing Facilities 4% 4% 39%

Part B 34% 16% <1%

Transportation 5% 7% <1%

Diagnostic Testing 7% 1% 0%

Practitioner Services 13% 3% 0%

Other Part B 9% 5% <1%

Durable Medical Equipment, 

Prosthetics, Orthotics, and 

Supplies

25% 5% 0%

Part C 1% 47% 10%

Part D <1% 8% 0%

Other* <1% 8% 0%

 Total** 100% 100% 100%

Source: Office of Inspector General analysis of Medicare Appeals System data, 2012.

* This category includes appeals about beneficiary premiums and entitlement to Medicare.

** Total may not sum to 100 percent because of rounding.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 24

APPENDIX B

Percentage of Administrative Law Judge Appeals That Were Fully Favorable to 

Appellants, Fiscal Year 2010

Table B-1: Percentage of Administrative Law Judge Appeals That Were Fully Favorable to 

Appellants by Type of Appellant, Fiscal Year 2010

Table B-2: Percentage of Administrative Law Judge Appeals That Were Fully Favorable to 

Appellants by Frequent Filer Status, Fiscal Year 2010

Medicare Program Area

Percentage of Appeals Fully Favorable to Appellants**

Providers Beneficiaries State Medicaid 

Agencies

Part A 67% 36% 24%

Part B 59% 46% n/a

Durable Medical Equipment, Prosthetics, 

Orthotics, and Supplies (DMEPOS) 53% 40% n/a

Part C 15% 19% 7%

Part D 15% 20% n/a

Other* n/a 26% n/a

 Total 61% 28% 22%

Source: Office of Inspector General (OIG) analysis of Medicare Appeals System (MAS) data, 2012.

* This category includes appeals about beneficiary premiums and entitlement to Medicare.

** The percentage of appeals with fully favorable decisions was calculated only if there were 50 or more appeals for that 

Medicare program area.

Medicare Program Area

Percentage of Appeals Fully Favorable to 

Appellants**

Providers Who Were 

Frequent Filers***

Providers Who Were 

Not Frequent Filers

Part A 67% 67%

Part B 70% 54%

DMEPOS 50% 58%

Part C n/a 15%

Part D n/a 15%

Other* n/a n/a

 Total 61% 60%

Source: OIG analysis of MAS data, 2012.

* This category includes appeals about beneficiary premiums and entitlement to Medicare.

** The percentage of appeals with fully favorable decisions was calculated only if there were 50 or more appeals 

for that Medicare program area.

*** A frequent filer is an appellant that had 50 or more appeals decided in fiscal year 2010.
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 25

APPENDIX C

Actual Fully Favorable Rates Compared to Expected Fully Favorable Rates by 

Administrative Law Judge,* Fiscal Year 2010

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Percentage of ALJ Appeals Fully Favorable to the Appellants

The 66 ALJs Sorted by Percentage of Decisions 

Fully Favorable to the Appellants

Actual

Expected

Source: Office of Inspector General analysis of Medicare Appeals System data, 2012.

Note: To calculate each ALJ’s expected rate, we first determined the fully favorable rate among all ALJs for each Medicare program 

area; next, we multiplied these rates by the proportion of appeals the ALJ had in that program area and summed the results.

*ALJ.
APPENDIX D

Office of Medicare Hearings and Appeals Comments

DEPARTMENT OF HEALTH AND HUMAN SERVICES Office of the Secretary

Office of Medicare Hearings and Appeals

Office of the Ch ief Judge

1700 North Moore Street, Suite 1800

Arlington, VA 22209

(703) 235-0635 Main Line

(703) 235-0700 Facsimile

MEMORANDUM

Date: September 14,2012

To: Daniel R. Levinson

Inspector General

From: Nancy J Qriswold

Chief Administrative Law Judge

Subject: Office of Inspector General Draft Report: Improvements are needed at

The Administrative Law Judge Level of Medicare Appeals, OEI-02-10-00340

Thank you for the opportunity to review and comment on the Office of Inspector General's

(OIG) draft report on Medicare appeals at the Administrative Law Judge (AU) level. The Office

of Medicare Hearings and Appeals (OMHA) appreciates the thoroughness of the report and

concurs with many of the suggested recommendations which are based on the evaluation of ALI

appeals during fiscal year 20 IO.

We are happy to report that a number of recommendations are already being addressed through

OMHA's continuing efforts to review and improve operations. However, with respect to a few

recommendations, we believe that more evaluation is necessary. Our response to the

recommendations is set forth below.

RECOMMENDATION: Develop and Provide Coordinated Training on Medicare Policies to

ALJs andQICs

RESPONSE: CONCUR

Beginning in fiscal year 2010, OMHA instituted an annual Judicial Education Symposium (JES)

for all OMHA AUs. JES is conducted in three phases throughout the calendar year and offers

training on a wide range of Medicare policies and emerging OMHA issues, The symposium

presenters include Centers for Medicare and Medicaid Services (CMS) subject matter experts,

Medicare Appeals Council (MAC) judges and OMHA's most experienced AUs. OMHA seeks

input from AUs and CMS in identifying topics for presentation based on new policies or

APPENDIX D 

Office of Medicare Hearings and Appeals Comments 

DEPARTMENT OF HEALTH AND HUMAN SERVICES Offtce of the SecretaJY 

Office of Medicare Hearings and Appeals 

Office of the Chief Judge 

1700 North Moore Street, Suite 1800 

Arlington, VA 22209 

(703) 235-0635 Main Line 

(703) 235-0700 Facsimile 

MEMORANDUM 

Date: September 14, 2012 

To: Daniel R. Levinson 

Inspector General 

~ 

From: Nancy fl iswold 

Chief Administrative Law Judge 

Subject: Office of Inspector General Draft Report: Improvements are needed at 

The Administrative Law Judge Level ofMedicare Appeals, OEl-02-l 0-00340 

Thank you for the opportunity to review and comment on the Office of Inspector General's 

(OIG) draft report on Medicare appeals at the Administrative Law Judge (ALJ) level. The Office 

of Medicare Hearings and Appeals (OMHA) appreciates the thoroughness of the report and 

concurs with many of the suggested recommendations which are based on the evaluation of ALJ 

appeals during fiscal year 201 0. 

We are happy to report that a nwnber of recommendations are already bt:ing addressed through 

OMHA's continuing efforts to review and improve operations. However, with respect to a few 

recommendations, we believe that more evaluation is necessary. Our response to the 

recommendations is set forth below. 

RECOMMENDATION: Develop and Provide Coordinated Training on Medicare Policies to 

ALJs andQ/Cs 

RESPONSE: CONCUR 

Beginning in fiscal year 2010, OMHA instituted an annual Judicial Education Symposium (JES) 

for all OMHA ALJs. JES is conducted in three phases throughout the calendar year and offers 

training on a wide range of Medicare policies and emerging OMHA issues. The symposiwn 

presenters include Centers for Medicare and Medicaid Services (CMS) subject matter experts, 

Medicare Appeals Council (MAC) judges and OMHA's most experienced ALJs. OMHA seeks 

input from ALJs and CMS in identifying topics for presentation based on new policies or 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-1 0-00340) 26 Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-1 0·00340) 26
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 27
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 28
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 29
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 30
APPENDIX E

Centers for Medicare & Medicaid Services Comments

DEPARTMENT OF HEALTH & HUMAN SERVICES Centers tor Medicare & Medicaid Services

Administrator

Washington, DC 20201

DATE: SEP 1 8 2012

TO: Daniel R. Levinson

Inspector General

FROM: Marilyn Tavenner

Acting Adm'lmstrator

SUBJECT: Office of Inspector General (OIG) Draft Report: "Improvements Are Needed at

the Administrative Law Judge Level of Medicare Appeals" (OEI-02-10-00340)

Thank you for the opportunity to review and comment on the OIG draft report, "Improvements

Are Needed at the Administrative Law Judge Level of Medicare Appeals." In the draft report,

the OIG examined the characteristics of appeals decided by Medicare administrative law judges

(AUs) in fiscal year (FY) 2010; the differences between AU and prior-level decisions and

• differences among AUs; and the extent to which the Centers for Medicare & Medicaid Services

(CMS) participated in AU appeals in FY 2010. We appreciate the ~IG's time and effort in

reviewing our processes. Our responses to the OIG's recommendations are below.

Recommendations to eMS and the Office of Medicare Hearings and Appeals (OMHA):

OIG Recommendation

The OIG recommends CMS and OMHA develop and provide coordinated training on Medicare

policies to Administrative Law Judges (AUs) and Qualified Independent Contractors (QICs).

CMS Response

The CMS concurs with this recommendation. In 2011 and 2012, CMS staff participated in

OMRA '5 annual Judicial Education Symposium, and conducted training on a variety of

Medicare policy issues. The symposia afford AUs and their staffs an opportunity to discuss

general policy and procedural issues with CMS. This training is mutually beneficial, and we

would welcome the opportunity to include the OICs in future sessions. Similarly, in recent

years, CMS has invited OMHA leadership to participate in our annual Contractor Medical

Director conference attended by CMS staff and staff from our Medicare Administrative

Contractors (MACs), OICs, Recovery Auditors (RAs), and Zone Program Integrity Contractors

(ZPICs). Like the Judicial Education Symposia, this conference provides an opportunity for our

contractor staff to interact with and ask questions of OMRA staff and senior leadership about

policy and procedural issues. Finally, our OICs also have access to training and educational

lmprovements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 31

APPENDIX E 

Centers for Medicare & Medicaid Services Comments 

DEPARTMENT OF HEALTH Centers tor Medicare & Medicaid Services & HUMAN SERVICES 

Administrator 

Washington, DC 20201 

DATE: .SEP 1 8 2012 

TO: 	 Daniel R. Levinson 

FROM: 

SUBJECT: 	 Office of Inspector General (OIG) Draft Report: "Improvements Are Needed at 

the Administrative Law Judge Level of Medicare Appeals" (OEI-02-10-00340) 

Thank you for the opportunity to review and comment on the OIG draft report, "Improvements 

Are Needed at the Administrative Law Judge Level of Medicare Appeals." In the draft report, 

the OIG examined the characteristics of appeals decided by Medicare administrative law judges 

(AUs) in fiscal year (FY) 2010; the differences between AU and prior-level decisions and 

differences among AUs; and the extent to which the Centers for Medicare & Medicaid Services 

(CMS) participated in AU appeals in FY 2010. We appreciate the OIG's time and effort in 

reviewing our processes. Our responses to the OIG's recommendations are below. 

Recommendations to CMS and the Office ofMedicare Hearings andAppeals (OMHA): 

OIG Recommendation 

The OIG recommends CMS and OMHA develop and provide coordinated training on Medicare 

policies to Administrative Law Judges (AUs) and Qualified Independent Contractors (QICs). 

CMS Response 

The CMS concurs with this recommendation. In 2011 and 2012, CMS staff participated in 

OMHA's annual Judicial Education Symposium, and conducted training on a variety of 

Medicare policy issues. The symposia afford AUs and their staffs an opportunity to discuss 

general policy and procedural issues with CMS. This training is mutually beneficial, and we 

would welcome the opportunity to include the QICs in future sessions. Similarly, in recent 

years, CMS has invited OMHA leadership to participate in our annual Contractor Medical 

Director conference attended by CMS staff and staff from our Medicare Administrative 

Contractors (MACs), QICs, Recovery Auditors (RAs), and Zone Program Integrity Contractors 

(ZPICs). Like the Judicial Education Symposia, this conference provides an opportunity for our 

contractor staff to interact with and ask questions of OMHA staff and senior leadership about 

policy and procedural issues. Finally, our QICs also have access to training and educational 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 31 
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 32
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 33
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 34
 

Improvements Are Needed at the Administrative Law Judge Level of Medicare Appeals (OEI-02-10-00340) 35

ACKNOWLEDGMENTS

This report was prepared under the direction of Jodi Nudelman, Regional 

Inspector General for Evaluation and Inspections in the New York regional office, 

and Nancy Harrison and Meridith Seife, Deputy Regional Inspectors General.

Judy Bartlett served as the team leader for this study. Other Office of Evaluation 

and Inspections staff from the New York regional office who conducted the study 

include Rachel Bryan, Christine Moundas, Liz Osius, and Michael Rubin. 

Central office staff who provided support include Scott Manley and Debra Roush. 
Office of Inspector General

http://oig.hhs.gov

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components:

Office of Audit Services

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS.

Office of Evaluation and Inspections

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties.

Office of Counsel to the Inspector General

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.