89506 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 

1The terms of the court order refer to denials of 

Part A coverage. Consistent with the court order, 

the appeals processes proposed in this rule do not 

extend to enrollees in Medicare Advantage (MA) 

plans. Medicare Advantage plan enrollees have 

existing rights that afford enrollees the right to 

appeal a plan organization determination where the 

plan refuses to provide or pay for services, in whole 

or in part, including the type or level of services, 

that the enrollee believes should be furnished or 

arranged for by the MA organization. 42 CFR 

422.560 through 422.634. For example, if an MA 

plan refuses to authorize an inpatient admission, 

the enrollee may request a standard or expedited 

plan reconsideration of that organization 

determination. 42 CFR 422.566(b), 422.568 through 

422.572. 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405, 476, and 489 

[CMS–4204–P] 

RIN 0938–AV16 

Medicare Program: Appeal Rights for 

Certain Changes in Patient Status 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health and Human Services (HHS). 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

implement an order from the Federal 

district court for the District of 

Connecticut in Alexander v. Azar that 

requires HHS to establish appeals 

processes for certain Medicare 

beneficiaries who are initially admitted 

as hospital inpatients but are 

subsequently reclassified as outpatients 

receiving observation services during 

their hospital stay and meet other 

eligibility criteria. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, by 

February 26, 2024. 

ADDRESSES: In commenting, please refer 

to file code CMS–4204–P. 

Comments, including mass comment 

submissions, must be submitted in one 

of the following three ways (please 

choose only one of the ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–4204–P, P.O. Box 8013, Baltimore, 

MD 21244–8013. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–4204–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

David Danek, david.danek@

cms.hhs.gov, for issues related to the 

retrospective process. 

Janet Miller, janet.miller@

cms.hhs.gov, for issues related to the 

prospective process. 

Shaheen Halim, shaheen.halim@

cms.hhs.gov for issues related to Quality 

Improvement Organization review. 

SUPPLEMENTARY INFORMATION: 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. We post all comments 

received before the close of the 

comment period on the following 

website as soon as possible after they 

have been received: http://

www.regulations.gov. Follow the search 

instructions on that website to view 

public comments. CMS will not post on 

Regulations.gov public comments that 

make threats to individuals or 

institutions or suggest that the 

individual will take actions to harm the 

individual. CMS continues to encourage 

individuals not to submit duplicative 

comments. We will post acceptable 

comments from multiple unique 

commenters even if the content is 

identical or nearly identical to other 

comments. 

I. Executive Summary 

The purpose of this proposed rule is 

to establish appeals processes to comply 

with a court order issued in the case 

Alexander v. Azar, 613 F. Supp. 3d 559 

(D. Conn. 2020), aff’d sub nom., Barrows 

v. Becerra, 24 F.4th 116 (2d Cir. 2022). 

The proposed processes would apply to 

certain Medicare beneficiaries who are 

initially admitted as hospital inpatients 

but are subsequently reclassified as 

outpatients receiving observation 

services during their hospital stay and 

meet other eligibility criteria. 

The proposed processes would 

consist of the following: 

• Expedited appeals: We are 

proposing an expedited appeals process 

for certain beneficiaries who disagree 

with the hospital’s decision to reclassify 

their status from inpatient to outpatient 

receiving observation services (resulting 

in a denial of coverage for the hospital 

stay under Part A). Eligible beneficiaries 

would be entitled to request an 

expedited appeal regarding that 

decision prior to discharge from the 

hospital. Appeals would be conducted 

by a Beneficiary & Family Centered 

Care—Quality Improvement 

Organization (BFCC–QIO). 

• Standard appeals: We are 

proposing that beneficiaries who do not 

file an expedited appeal would have the 

opportunity to file a standard appeal 

(that is, an appeal requested by a 

beneficiary eligible for an expedited 

appeal, but filed outside of the 

expedited timeframes) regarding the 

hospital’s decision to reclassify their 

status from inpatient to outpatient 

receiving observation services (resulting 

in a denial of coverage for the hospital 

stay under Part A). Under our proposal, 

these standard appeals will follow 

similar procedures to the expedited 

appeals process but without the 

expedited timeframes to file and for the 

QIO to make decisions. 

• Retrospective appeals: We are 

proposing a retrospective review 

process for certain beneficiaries to 

appeal denials of Part A coverage of 

hospital services (and certain SNF 

services, as applicable), for specified 

inpatient admissions involving status 

changes that occurred prior to the 

implementation of the prospective 

appeals process, dating back to January 

1, 2009. Consistent with existing claims 

appeals processes, we are proposing that 

Medicare Administrative Contractors 

(MACs) will perform the first level of 

appeal, followed by Qualified 

Independent Contractor (QIC) 

reconsiderations, Administrative Law 

Judge (ALJ) hearings, review by the 

Medicare Appeals Council, and judicial 

review. 

II. Background 

This proposed rule sets forth new 

appeals procedures to implement the 

court order in Alexander v. Azar, 613 F. 

Supp. 3d 559 (D. Conn. 2020), aff’d sub 

nom., Barrows v. Becerra, 24 F.4th 116 

(2d Cir. 2022). In this order, the court 

directed the Department of Health and 

Human Services (HHS) to ‘‘permit all 

members of the . . . class to appeal the 

denial of their Part A coverage’’ and to 

establish appeal procedures for certain 

beneficiaries in Medicare Part A and B 

(‘‘Original Medicare’’) who are initially 

admitted to a hospital as an inpatient by 

a physician but whose status during 

their stay is changed to outpatient by 

the hospital, thereby effectively denying 

Part A coverage for their hospital stay.1

In some cases, the status change also 


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2For the purposes of these proposed procedures, 

a beneficiary is considered an outpatient receiving 

observation services when the hospital changes a 

beneficiary’s status from inpatient to outpatient 

while the beneficiary is in the hospital and the 

beneficiary subsequently receives observation 

services following a valid order for such services. 

See proposed 42 CFR 405.931(h). 

3As explained in 42 CFR 489.21(y), the Medicare 

Outpatient Observation Notice (MOON) is a written 

notice furnished by a hospital to Medicare 

beneficiaries who receive observation services as an 

outpatient for more than 24 hours. The notice 

explains why the beneficiary is not an inpatient and 

also explains the consequences of being an 

outpatient rather than an inpatient. A copy of the 

notice is available to download at https://

www.reginfo.gov/public/do/PRAViewICR?ref_

nbr=202212-0938-016. 

affects the availability of Part A 

coverage for a beneficiary’s posthospital extended care services 

furnished in a skilled nursing facility 

(SNF). The court imposed additional 

conditions on the right to appeal as 

described in detail in this proposed 

rule. 

The court’s order requires new appeal 

procedures be afforded to the following 

class: Medicare beneficiaries who, on or 

after January 1, 2009— 

• Have been or will have been 

formally admitted as a hospital 

inpatient; 

• Have been or will have been 

subsequently reclassified by the hospital 

as an outpatient receiving ‘‘observation 

services’’; 2

• Have received or will have received 

an initial determination or Medicare 

Outpatient Observation Notice 

(MOON) 3 indicating that the 

observation services are not covered 

under Medicare Part A; and 

• Either—(1) were not enrolled in 

Part B coverage at the time of their 

hospitalization; or (2) stayed at the 

hospital for 3 or more consecutive days 

but were designated as inpatients for 

fewer than 3 days, unless more than 30 

days has passed after the hospital stay 

without the beneficiary’s having been 

admitted to a skilled nursing facility. 

Medicare beneficiaries who meet the 

requirements of the foregoing sentence 

but who pursued an administrative 

appeal and received a final decision of 

the Secretary before September 4, 2011, 

are excluded from the class. 

The court determined that 

beneficiaries who are members of the 

class described previously have been 

deprived of due process and ordered the 

following: 

• Class members shall have an 

opportunity to appeal the denial of their 

Part A coverage. 

• Class members who have stayed, or 

will have stayed, at a hospital for 3 or 

more consecutive days, but who were 

designated as inpatients for fewer than 

3 days, shall have the right to an appeal 

through an expedited appeals process 

substantially similar to the existing 

expedited process for challenging 

hospital discharges. 

• Class members shall be permitted to 

argue that their inpatient admission 

satisfied the relevant criteria for Part A 

coverage—for example, that the medical 

record supported a reasonable 

expectation of a medically necessary 

two-midnight stay at the time of the 

physician’s initial inpatient order, in the 

case of a post-Two Midnight Rule 

hospital stay—and that the hospital 

utilization review committee’s (URC) 

determination to the contrary was 

therefore erroneous. If a class member 

prevails, then for the purposes of 

determining Part A benefits, including 

both Part A hospital coverage and Part 

A SNF coverage, the beneficiary’s 

reclassification as an outpatient that 

resulted from the URC’s erroneous 

determination shall be disregarded. 

• For class members whose due 

process rights were violated, or will 

have been violated, prior to the 

availability of the procedural 

protections as previously set forth, such 

beneficiaries shall be afforded a 

meaningful opportunity to appeal the 

denial of their Part A coverage, as well 

as effective notice of this right. 

In addition, on December 9, 2022, the 

district court issued an ‘‘Order 

Clarifying Judgment’’ with respect to the 

claims for outpatient hospital services 

received by beneficiaries who were 

enrolled in Part B of the program at the 

time such services were furnished. In 

this clarifying order, the judge stated 

that while he intended to provide a 

meaningful opportunity for class 

members whose due process rights were 

violated to appeal the denial of Part A 

coverage, he also stressed the need to 

provide a remedy for class members 

who endured undercompensated stays 

at skilled nursing facilities. He further 

stated that, since class members with 

Part B coverage had much of their past 

hospital stays paid for by such coverage, 

he did not intend to require the 

unwinding of previously approved Part 

B outpatient hospital claims so they 

could be reprocessed as Part A claims. 

The clarification states that if a class 

member enrolled in Part B coverage at 

the time of their hospitalization prevails 

in an appeal of a claim, then an 

adjustment of payment for the 

underlying hospital services (including 

any applicable deductible and 

coinsurance amounts) is not required, 

and Part A payment for covered SNF 

services may be made without any 

adjustment to the payment for the 

underlying hospital services. 

In section III.A. of this proposed rule, 

we describe the proposed procedures 

that would be available to members of 

the class described previously 

(hereinafter, eligible beneficiaries) to 

appeal denials of Part A coverage of 

hospital services (and certain SNF 

services, as applicable), for specified 

inpatient admissions involving status 

changes that occurred prior to the 

implementation of the prospective 

appeals process, dating back to January 

1, 2009. We refer to this as the 

retrospective appeals process. In section 

III.B. of this proposed rule, we describe 

the expedited and standard appeals 

procedures that would be available 

prospectively (meaning to beneficiaries 

whose status is changed after the 

effective date of this rule and after the 

implementation and availability of the 

procedures established by the rule) to 

eligible beneficiaries who, among other 

things, are admitted as hospital 

inpatients and are reclassified by 

hospitals as outpatients receiving 

observation services. 

Once we publish a final rule regarding 

the procedures for these new appeals, 

we intend to specify the implementation 

date for filing appeal requests for 

retrospective and prospective appeals. 

When the prospective process is fully 

implemented, eligible beneficiaries who 

are hospitalized and receive notice of 

their appeal rights and wish to pursue 

an appeal will be expected to utilize the 

prospective procedures (proposed 42 

CFR 405.1210 through 405.1212). 

Eligible beneficiaries who are 

hospitalized and entitled to an appeal 

under these procedures prior to the 

implementation date of the prospective 

process will be able to utilize the 

retrospective appeals process, subject to 

the filing limitation proposed in 

§ 405.932(a)(2)(i)(B). 

Accordingly, we are proposing new 

retrospective and prospective appeals 

processes to implement the court’s order 

as detailed in this proposed rule. 

III. Provisions of the Proposed 

Regulations 

A. Retrospective Appeals 

1. Overview 

The retrospective appeals required by 

the court order constitute a new process 

under the Medicare program, as the 

appeals would be based on alleged 

entitlement to coverage for services that 

were not actually billed to the program 

on a claim. That is, under existing 

claims appeals processes for the 

Original Medicare program, a 

beneficiary is asking for a determination 

on whether specific items and services 

billed on a claim for payment should 


ddrumheller on DSK120RN23PROD with PROPOSALS2
89508 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 

4Section 205(a) of the Act, incorporated into Title 

XVIII by section 1872 of the Act, provides that the 

Secretary ‘‘shall have full power and authority to 

make rules and regulations and to establish 

procedures, not inconsistent with the provisions of 

this title, which are necessary or appropriate to 

carry out such provisions[.]’’ Section 1871 of the 

Act states that the Secretary shall prescribe such 

regulations as may be necessary to carry out the 

administration of the insurance programs under this 

title. 

have been covered and paid, not 

whether items and services should have 

been billed or whether there should 

have been coverage when there is no 

claim. Sections 205(a), 1871, and 1872 

of the Social Security Act (the Act) 

provide the Secretary authority to 

establish regulations to carry out the 

administration of the insurance 

programs under Title XVIII of the Act.4

The new retrospective appeals 

procedures required under the court 

order do not fit into the existing claims 

appeals process for Original Medicare 

claims established under section 1869 of 

the Act. However, in our view, these 

new procedures would have similarities 

to the longstanding claims appeals 

procedures with which Medicare 

beneficiaries are familiar. Accordingly, 

we are proposing new procedures to 

govern the retrospective appeals process 

in proposed 42 CFR 405.931 through 

405.938 that would be based, in large 

part and to the extent appropriate, on 

the existing claims appeals procedures 

in the existing provisions in 42 CFR part 

405 Subpart I (as authorized under 

section 1869 of the Act). 

We provide more detail about the 

proposed procedures at each level of the 

administrative appeals process 

following this overview, and we have 

included flowcharts to depict the 

overall proposed appeals process for 

retrospective reviews (in Figure 1) and 

prospective reviews (in Figure 2). 

BILLING CODE 4120–01–P 


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ddrumheller on DSK120RN23PROD with PROPOSALS2EP27DE23.001</GPH>

FIGURE 1: PROPOSED RETROSPECTIVE REVIEW PROCESS 

365 days to file** 

180 days to file** 

60 days to file** 

60 days to file** 

60 days to file** 

First Level of Appeal 

Second Level of Appeal 

Third Level of Appeal 

Fourth Level of Appeal 

Judicial review 

AIC = Amount In Controversy 

AU= Administrative Law Judge 

MAC= Medicare Administrative Contractor 

OMHA = Office of Medicare Hearings and Appeals 

QIC = Qualified Independent Contractor 

*The AIC requirement for an AU hearing and Federal District Court is 

adjusted annually in accordance with the medical care component of the 

consumer price index. The chart reflects the amounts for calendar year 

2024 and is subject to change each calendar year. 

•• Filing deadlines are from date of receipt of the notice/decision (presumed 

to be 5 days from the date of the notice unless evidence to the contrary). 
89510 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 

BILLING CODE 4120–01–C 

In § 405.931(b)(2), we are proposing to 

define the term ‘‘eligibility contractor’’ 

to mean the contractor that would serve 

as a single point of contact for incoming 

retrospective appeal requests. As 

proposed in § 405.932(a) through (e), the 

eligibility contractor would determine if 

the request for appeal is valid, including 

whether the request is timely and 

contains the required elements for an 

appeal. In addition, we are proposing 

that the eligibility contractor would 

determine whether the individual 

submitting the request (or the individual 

for whom a request is submitted, in the 

case of a request filed by a 

representative) meets the definition of a 

class member as defined by the court, 

and is, thus, an eligible party entitled to 

an appeal under the terms of the court 

order. The eligibility contractor would 


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FIGURE 2: PROPOSED EXPEDITED (PROSPECTIVE) APPEALS PROCESS 

AIC = Amount In 

Controversy AU = 

Administrative Law 

Judge 

Before release from the hospital 

Noon the next calendar day 

60 days to file* 

60 days to file* 

60 days to file* 

OMHA = Office of Medicare Hearings and Appeals 

First Level of Appeal 

Second Level of Appeal 

Third Level of Appeal 

Fourth Level of Appeal 

Judicial review 
Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 89511 

5The amount in controversy requirement for CY 

2024 is $180 for a hearing before an Administrative 

Law Judge, and $1,840 for judicial review. See 

https://www.govinfo.gov/content/pkg/FR-2023-09- 

29/pdf/2023-21500.pdf. 

6Appointed representative means an individual 

appointed by a party to represent the party in a 

Medicare claim or claim appeal. Authorized 

Continued 

then either deny or approve each appeal 

request received and notify the 

individual (or their representative) of 

the determination. For those requests 

that are denied (that is, the beneficiary 

has not demonstrated s/he meets the 

definition of a class member and is not 

eligible for an appeal, or the appeal 

request is not otherwise valid), we are 

proposing in § 405.932(e) that the 

individual filing the request (or their 

representative) would have an 

opportunity to correct any errors and/or 

demonstrate why the appeal request 

should be approved. An individual’s 

request to review a denial must be 

received by the eligibility contractor 

within 60 calendar days of the 

individual’s receipt of the denial notice 

under proposed § 405.932(e)(2). For 

appeal requests that are approved (that 

is, the beneficiary satisfies the 

requirements for class membership— 

and thus, is determined to be an eligible 

party—and the request is valid), the 

eligibility contractor would forward 

those requests to the processing 

contractor to conduct the first level 

appeal. 

In § 405.931(b)(3), we are proposing 

that the processing contractor would 

perform the first level of appeal. The 

processing contractor would be the 

MAC that currently has jurisdiction over 

Part A claims for the hospital at which 

the beneficiary was initially admitted 

prior to being subject to a status change. 

As proposed in § 405.932(f) through (i), 

processing contractors would generally 

follow existing procedures that govern 

redeterminations (42 CFR 405.940 

through 405.958), as appropriate, except 

as we have otherwise proposed in 

§ 405.932. 

In § 405.934, we are proposing that 

eligible parties (or their representatives) 

who are dissatisfied with the processing 

contractor’s appeal decision would have 

the opportunity to request a 

reconsideration to be performed by a 

QIC. We are proposing that the QICs 

would generally utilize existing 

procedures that govern reconsiderations 

(42 CFR 405.960 through 405.978), as 

appropriate, except as we have 

otherwise proposed in § 405.934. 

Following a reconsideration, in 

§ 405.936 we are proposing that eligible 

parties (or their representatives) who are 

dissatisfied with the reconsideration 

would be able to request a hearing 

before an Administrative Law Judge 

(ALJ) (or review by an attorney 

adjudicator) if the claims under appeal 

meet the amount in controversy 

requirement.5 In § 405.936(c), we are 

proposing a new method of calculating 

the amount in controversy that reflects 

the differences between these new 

appeals and typical claims appeals 

under existing procedures. In addition, 

under proposed § 405.938, eligible 

parties (or their representatives), would 

be able to request review by the 

Medicare Appeals Council (hereinafter, 

Council). As with the first two levels of 

appeal, we are proposing that these new 

appeals before an ALJ (or attorney 

adjudicator) and the Council would 

generally follow existing procedures in 

42 CFR 405.1000 through 1140, as 

appropriate, except as we have 

otherwise proposed in §§ 405.936 

through 405.938. Eligible parties would 

also be able to request judicial review 

under the existing provisions in 42 CFR 

405.1136. 

In § 405.932(a)(2), we are proposing to 

limit the time to file a request for a 

retrospective appeal to 365 calendar 

days following the implementation date 

of the final rule. We have provided 

notice of the pending appeals process 

for class members since July 2022 on 

both Medicare.gov and CMS.gov and we 

will continue to update those websites 

with information as this rulemaking 

proceeds and as we begin to implement 

the final rule. Thus, when this 

rulemaking is concluded and 

procedures are finalized, effective, and 

operational, we believe we would have 

afforded eligible beneficiaries ample 

time to gather necessary documentation 

in anticipation of filing appeal requests. 

2. Party Status, Authorized 

Representatives, and Appointed 

Representatives 

The court order instructs HHS to 

establish new appeals procedures for 

certain beneficiaries, specifically, 

beneficiaries who are members of the 

defined class, as previously described in 

the overview and in proposed 

§ 405.931(b). The court’s decision noted 

that some class members suffered 

financial or other consequences as a 

result of the change in their status from 

inpatient to outpatient receiving 

observation services, including having 

to pay for the costs of post-hospital 

extended care services in a SNF out of 

pocket because they did not satisfy the 

statutory requirement for SNF coverage 

of having a 3 consecutive day qualifying 

inpatient stay (see section 1861(i) of the 

Act). In addition, other class members 

had to pay for their hospital services 

themselves because they lacked 

Medicare Part B coverage. The court 

directed HHS to afford class members a 

right to appeal certain denials of Part A 

coverage which are defined later is this 

section. The court ordered an appeal 

process be made available to those class 

members who did not have such a 

process available if their hospital stays, 

dating back to January 1, 2009, met the 

conditions of the order. Accordingly, in 

§ 405.931(b)(1) we are proposing to 

define an eligible party as an individual 

who meets the definition of a class 

member in Alexander v. Azar. In that 

case, the court adopted the following 

class definition: a Medicare beneficiary 

who, on or after January 1, 2009— 

• Was formally admitted as a hospital 

inpatient; 

• While in the hospital was 

subsequently reclassified as an 

outpatient receiving observation 

services (as defined in § 405.931(h)); 

• Has received an initial 

determination (as defined in § 405.920) 

or a Medicare Outpatient Observation 

Notice (MOON) (as described in 

§ 489.20(y)) indicating that the 

observation services are not covered 

under Medicare Part A; and 

• Either— 

++ Was not enrolled in the 

Supplementary Medical Insurance 

program (that is, Medicare Part B 

coverage) at the time of beneficiary’s 

hospitalization; or 

++ Stayed at the hospital for 3 or 

more consecutive days but was 

designated as an inpatient for fewer 

than 3 days, unless more than 30 

calendar days has passed after the 

hospital stay without the beneficiary’s 

having been admitted to a SNF. 

An eligible party would be entitled to 

request an appeal under the proposed 

retrospective process. 

In contrast, the court’s decision did 

not include providers as class members 

entitled to additional appeals 

procedures and did not require HHS to 

afford new appeal rights to providers in 

these new appeals proceedings. 

Accordingly, in § 405.931(b) and (c), we 

are proposing to limit party status in 

these new appeals to beneficiaries who 

meet the definition of a class member as 

specified in the court order. 

As we believe some beneficiaries who 

are members of the class may require 

assistance with their appeal requests, 

we are proposing to apply existing rules 

regarding appointed representatives and 

authorized representatives (see 

§§ 405.902 and 405.910) to these new 

appeals.6 There may also be some 


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representative means an individual authorized 

under State or other applicable law to act on behalf 

of a beneficiary involved in the appeal (for example, 

a beneficiary’s legal guardian, surrogate decisionmaker for an incapacitated beneficiary, or an SSAappointed representative payee). The authorized 

representative will have all of the rights and 

responsibilities of a beneficiary or party, as 

applicable, throughout the appeals process and 

does not need a further appointment. 

7We acknowledge that payment by Medicare 

would not have been made in appeals brought by 

a beneficiary who was not enrolled in Part B at the 

time of hospitalization. In those situations, the 

beneficiary would have been responsible for 

payment for outpatient services furnished by the 

hospital. 

8Typically, an authorized representative will be 

a legal guardian, representative payee or someone 

acting under state law on behalf of a beneficiary (for 

example, a family member with a durable power of 

attorney). Often these authorized representatives are 

family members or other individuals who are 

unfamiliar with the technical requirements of the 

existing claim appeals process. We believe it is 

reasonable to treat appeals filed by authorized 

representatives under these proposed procedures, 

like other existing claim appeals filed by family 

members (that is, as if the appeal was filed by an 

unrepresented beneficiary). 

9For example, under these proposed procedures, 

if the final rule specifies an implementation date of 

April 1, 2025, an eligible party who was 

hospitalized after January 1, 2009 (through the 

implementation date of the prospective appeals 

process) would have until March 31, 2026, to file 

a request for appeal with the eligibility contractor. 

Details regarding the filing location will be 

specified once the retrospective process is 

operational. 

situations in which a class member has 

died since their hospitalization and, as 

applicable, admission to a SNF. Our 

existing rules in § 405.906(a)(1) permit 

certain successors in interest to file 

appeals on behalf of a deceased 

beneficiary. Thus, in § 405.931(d)(3) we 

are proposing to apply those rules to 

deceased class members who would 

have been eligible to request an appeal 

under the proposed procedures for 

retrospective appeals. However, 

contrary to existing claims appeals 

procedures, in § 405.931(d)(1)(i) we are 

proposing to exclude providers from 

representing beneficiaries in these new 

appeals, and we are proposing to 

prohibit the assignment of appeal rights 

to providers as well. Since the decision 

to change a patient’s status is made by 

the hospital, we have concerns that the 

interests of a class member could 

conflict with the interests of a hospital 

or SNF, and we are concerned that a 

class member’s challenge to their denial 

of Part A coverage resulting from a 

change in status from inpatient to 

outpatient receiving observation 

services may not be appropriately 

represented by the hospital that 

initiated that change, determined that 

outpatient services were appropriate for 

the beneficiary, and in most cases, 

previously received payment for 

outpatient services. We have similar 

concerns regarding representation by 

SNFs that already received payment for 

the SNF services at issue. Unlike most 

existing claims appeals, where the 

primary issue under review is the 

denied coverage and payment for items 

and/or services billed on a claim, the 

issue on appeal under these procedures 

is whether services meet the relevant 

criteria for coverage and payment under 

the inpatient hospital benefit under Part 

A of the program rather than under the 

Part B outpatient benefit where payment 

was, in most cases,7 previously made to 

the hospital, and the consequences of 

that decision on coverage of SNF 

services. Moreover, as we are 

implementing procedures required 

under the court’s order under the 

Secretary’s rulemaking authority in 

sections 205(a), 1871, and 1872 of the 

Act, we believe the provisions of section 

1869 of the Act guide, but do not 

explicitly govern, the appeals 

procedures for the new retrospective 

appeals ordered by the court and 

proposed in this proposed rule. 

We are proposing to include a 

definition of ‘‘unrepresented 

beneficiary’’ applicable to appeals under 

proposed §§ 405.931 through 405.938. 

In the existing claims appeals process in 

42 CFR part 405 Subpart I, certain 

procedural requirements do not apply to 

an unrepresented beneficiary. However, 

that term is not defined in existing 

regulations. Therefore, in 

§ 405.931(d)(5), we propose to define an 

unrepresented beneficiary as a 

beneficiary who is an eligible party and: 

(1) has not appointed a representative 

under § 405.910; or (2) has an 

authorized representative as defined in 

§ 405.902; 8 or (3) has appointed as its 

representative, 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; or (4) in the case of 

a deceased beneficiary, the appeal 

request is filed by an eligible party who 

meets the conditions set forth in 

§ 405.906(a)(1). 

We are also proposing to incorporate 

certain existing policies that would 

apply in the new appeals procedures for 

the convenience of appellants and 

adjudicators. For example, in 

§ 405.931(f), we propose that the date of 

receipt of a notice or decision sent by 

the eligibility contractor, processing 

contractor or other appeals adjudicator 

is presumed to be 5 calendar days 

following the date on the notice unless 

there is evidence to the contrary. In 

addition, in § 405.931(g) we propose 

that for the purposes of determining 

whether a beneficiary has a qualifying 

inpatient stay for SNF eligibility and for 

eligibility as a class member, days are 

counted consistent with existing policy 

in § 409.30 (that is, 3 consecutive 

calendar days starting with the 

admission day but not counting the 

discharge day). 

In proposed § 405.931(h), we explain 

that for the purposes of determining 

eligibility for an appeal under these 

procedures, a beneficiary is considered 

an outpatient receiving observation 

services when the hospital changes a 

beneficiary’s status from inpatient to 

outpatient while the beneficiary is in 

the hospital and the beneficiary 

subsequently receives observation 

services following a valid order for such 

services. 

3. Appeal Requests and Determinations 

of Eligibility by the Eligibility 

Contractor 

In § 405.932, we are proposing to 

channel all retrospective appeal 

requests from eligible parties through a 

single point of contact, the eligibility 

contractor. We are proposing, in 

§ 405.932(a)(2) for a retrospective 

appeal, that the appeal request filed by 

an eligible party (or their representative) 

must be received by the eligibility 

contractor within 365 calendar days 

from the implementation date specified 

when this rule is finalized.9 Details 

regarding the deadline to file an appeal 

and where such appeals should be filed 

would be posted to Medicare.gov once 

the retrospective appeals process is 

operational. A single point of contact 

will relieve beneficiaries of the burden 

of determining which contractor is 

currently responsible for claims 

processed many years ago in order to 

file their appeal request. In addition, 

due to the complexity of the 

requirements for determining eligibility 

as a class member for an appeal, we 

believe having a single point of contact 

would promote consistency in such 

determinations and would provide a 

better overall experience for eligible 

beneficiaries pursuing their appeal 

rights. 

We anticipate eligible parties (or their 

representatives) will provide relevant 

information to demonstrate their 

eligibility as a member of the class 

afforded appeal rights in the court order 

as proposed in § 405.932(a) through (c), 

including medical records that may 

serve to document certain conditions of 

eligibility under the court order. 

Medical records would also assist in 

determining whether the beneficiary 

received observation services following 

the reclassification from inpatient to 


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10However, if an eligible party paid out of pocket 

for some or all of the SNF services, including 

situations where a denial by a third-party insurer 

resulted in the beneficiary making out of pocket 

payments for some or all of the SNF services, then 

those SNF services that resulted in out of pocket 

payments would be eligible for an appeal under 

these proposed processes. 

outpatient receiving observation 

services. However, we understand the 

challenges beneficiaries and their 

representatives may face in obtaining 

and producing such information in 

situations where significant time may 

have passed since a beneficiary was 

hospitalized. Therefore, we are 

proposing in § 405.932(c)(2), that the 

eligibility contractor would work with 

MACs, eligible parties, and providers, 

whenever necessary, to attempt to 

obtain the information needed to make 

such determinations. In our existing 

claims appeals process, contractors 

routinely seek records from providers to 

assist beneficiaries filing appeals when 

the beneficiary is unable to provide 

records needed to adjudicate the appeal. 

In § 405.932(b), we are proposing that 

eligible parties (or their representatives) 

provide, in writing, certain minimum 

basic information in their appeal 

request, so the eligibility and processing 

contractors may identify the prior 

claims filed for the hospital stay and 

SNF services, as applicable, that serve 

as the basis for the retrospective appeal. 

These required elements for an appeal 

request (which are similar to existing 

requirements for requesting a 

redetermination under § 405.944) 

include the beneficiary’s name, 

Medicare number (the number on the 

beneficiary’s Medicare card), name of 

the hospital and the dates of 

hospitalization, and the name of the 

skilled nursing facility and the dates of 

stay (as applicable). If the appeal 

includes SNF services not covered by 

Medicare, the written request must also 

include an attestation to the out-ofpocket payment(s) made by the 

beneficiary for such SNF services and 

must include documentation of 

payments made to the SNF for such 

services. CMS would prepare a model 

form that appellants may use to file 

requests for a retrospective appeal under 

these provisions. Once the appeal 

process is operational, this notice would 

be available online at Medicare.gov to 

download and complete and would be 

available to request in printed or 

accessible form by calling 1–800– 

MEDICARE. 

We are also proposing in 

§ 405.932(b)(2) that eligible parties attest 

to their out-of-pocket costs (other than 

customary cost sharing paid to a thirdparty payer or insurer) paid for SNF 

services not covered by Medicare 

because the statutory requisite, 3 

consecutive day inpatient hospital stay, 

was not met. (We note that for the 

purposes of determining coverage of 

SNF services under section 1861 of the 

Act, inpatient hospital days are counted 

in accordance with longstanding, 

existing policy in § 409.30, that is, a 

patient must have a qualifying inpatient 

stay of at least 3 consecutive calendar 

days starting with the admission day but 

not counting the discharge day. See 

proposed § 405.931(g).) 

In cases where a third-party payer or 

insurer covered all of the cost of SNF 

services of an eligible party, we are 

proposing that such services be 

excluded from consideration in the 

retrospective appeals process. 

(Payments for SNF services made by a 

family member would not be considered 

payment by a third-party payer but 

would be considered out-of-pocket 

payment for the eligible party.) In light 

of the clarification to the court order 

indicating that the new appeal processes 

are intended to provide a remedy for 

class members who already endured 

uncompensated or undercompensated 

stays at skilled nursing facilities, we do 

not believe the court order requires the 

readjudication of such paid services 

under a Medicare appeal process if 

payment for that care is provided by 

another insurer.10 Moreover, 

readjudicating these claims potentially 

puts Medicare trust fund dollars at risk 

for making duplicate payments to 

providers for previously compensated 

care, as Medicare does not have 

authority to compel refunds with 

respect to payments made by third-party 

payers to providers. In addition, 

focusing our efforts on situations 

involving payments for denied services 

made by beneficiaries (or their families) 

focuses resources for appeals for 

beneficiaries (or their families) that paid 

out of pocket for the cost of care. 

We are proposing in § 405.932(d) that 

the eligibility contractor would be 

responsible for determining the validity 

of requests for appeal under these 

provisions, that is, whether the request 

is filed by an eligible party, is timely 

filed, and contains the required 

elements for a valid request specified in 

§ 405.932(b)(1) and (2). The eligibility 

contractor would issue a decision to 

approve or deny such requests. In 

proposed § 405.932(d)(1)(ii), we would 

require the eligibility contractor to issue 

a written decision within 60 calendar 

days of receipt of a valid appeal request 

from the eligible party (or their 

representative). We propose in 

§ 405.932(d)(2) that approved requests 

(meaning those meeting both eligibility 

and filing requirements), would be 

forwarded to the processing contractor 

(the MAC with jurisdiction over the 

hospital claim), and the processing 

contractor would perform the appeal. 

Under proposed § 405.932(d)(3), 

requests that are not eligible for an 

appeal or do not meet the requirements 

under proposed in §§ 405.931 and 

405.932 would be denied. However, we 

are proposing that individuals receiving 

a notice of denial of an appeal request 

would have an opportunity to request a 

review of the denial by the eligibility 

contractor in order to provide additional 

clarification, or correct any deficiencies 

in the filing, under the provisions 

proposed in § 405.932(e). Our proposed 

approach to handling requests that are 

ineligible for an appeal differs slightly 

from how similar appeal requests are 

handled under existing claims appeals 

procedures in § 405.952. Under existing 

rules, such requests are dismissed, and 

dismissals may be reviewed and vacated 

by the adjudicator who issued the 

dismissal or appealed to the next level 

adjudicator to determine if the dismissal 

was appropriate. However, given the 

complexity of the eligibility 

requirements, the age of the service in 

question and in many cases, the lack of 

a claim to review, in our view the most 

effective and efficient approach to 

resolving eligibility concerns is to keep 

these disputes with the eligibility 

contractor, requiring review by an 

individual not involved with the initial 

denial determination. 

4. Conduct of Appeals by Processing 

Contractors 

Currently, MACs perform the first 

level of administrative appeal for 

Medicare claims (see 42 CFR 405.940 

through 405.958). We are proposing a 

similar process for these new appeals, 

utilizing existing procedures, as 

appropriate, with MACs performing the 

first level of retrospective appeals under 

this rule. Specifically, we are proposing 

that the MAC that currently has 

jurisdiction over Part A claims from the 

relevant hospital would be responsible 

for conducting the retrospective appeal 

as the processing contractor. Where we 

believe the procedures for the new 

retrospective appeals would need to 

differ from existing claims appeals 

procedures, we are proposing new 

processes. For example, in 

§ 405.931(b)(1) and (c), we are proposing 

that party status for these appeals be 

limited to the eligible class members (or 

their authorized representatives). 

In § 405.932(f)(1), we are proposing 

that if the processing contractor 

determines there is necessary 

information missing from the appeal 


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11We note that a previously paid claim is still 

subject to reopening under § 405.980 for other 

reasons unrelated to the appeal decision (for 

example, if payment for the claim was procured by 

fraud or similar fault). 

case file, the processing contractor 

would attempt to obtain the information 

from the provider and/or the eligible 

party (or their representative), as 

applicable. We are proposing that the 

processing contractor afford entities up 

to 60 calendar days to submit requested 

information. If the requested 

information is not submitted in the 

specified timeframe, we propose that 

the processing contractor would make a 

decision based on the information 

available. 

In proposed § 405.932(f)(3), we are 

requiring processing contractors to issue 

a written decision within 60 calendar 

days of receipt of a valid appeal request 

from the eligibility contractor. However, 

in cases where the processing contractor 

needs additional information to conduct 

the appeal from the eligible party (or 

their representative) or a provider, in 

§ 405.932(f)(1), we are proposing that 

the time between the request for such 

information and when it is received (up 

to 60 calendar days) would not count 

towards the 60-day adjudication 

timeframe. If the requested information 

is not sent to the processing contractor, 

then we are proposing that the time 

afforded by the contractor for 

submission of the information would 

not count towards the adjudication 

timeframe. In effect, the 60-day timeline 

on which the processing contractor 

must make its decision will be tolled 

during the period between the date the 

processing contractor requests 

information from the provider and/or 

the eligible party and the later of the 

date that information is received or the 

deadline by which the information is 

requested has passed. 

Under proposed § 405.932(f) and (g), 

based on the information available, the 

processing contractors would determine 

whether the hospital admission, and as 

applicable, SNF services, satisfied the 

relevant criteria for Part A coverage at 

the time of the admission, 

notwithstanding subsequent 

reclassification by the hospital, and 

whether the hospital services, and as 

applicable, SNF services, should have 

been covered under Part A. If the 

processing contractor determines that 

the hospital admission and, as 

applicable, SNF services satisfied the 

relevant criteria for Part A coverage at 

the time services were furnished, it 

would render a favorable decision and 

would send written notice to the eligible 

party (or their representative). The 

notice would explain the rationale for, 

and effect of, the decision, similar to 

existing notices for redeterminations. 

In § 405.932(g)(4), when applicable, 

we are proposing that processing 

contractors would send notice of a 

favorable decision to the SNF that 

furnished services to the beneficiary in 

order to inform the SNF of the reason 

for the decision and the effect of the 

decision. In addition, under 

§ 405.932(g)(2) and (6), processing 

contractors would send SNFs notice of 

a partially favorable decision where the 

beneficiary’s hospital inpatient 

admission would have met the criteria 

for Part A coverage, but the SNF 

services subsequently received by the 

beneficiary do not meet the relevant 

criteria for Part A coverage (for example, 

if the services are determined not 

medically reasonable and necessary 

under § 1862(a)(1)(A) of the Act). The 

notice of a partially favorable decision 

sent to a SNF informs the SNF of the 

reason the hospital services were 

determined to meet the relevant criteria 

for Part A coverage, and the reasons the 

SNF services were determined not to be 

covered under Part A. We are proposing 

that the processing contractor also 

explain that the notice is being sent to 

the SNF for informational purposes 

only, and that only the eligible party (or 

the eligible party’s representative) may 

appeal the decision to the QIC under 

proposed § 405.934. An eligible party 

may appeal a partially favorable 

decision with respect to coverage of 

SNF services to the QIC under proposed 

§ 405.934 in the same manner as 

unfavorable decisions with respect to 

Part A coverage of the hospital services. 

In addition, in § 405.932(g)(5), with 

respect to an appeal filed by a 

beneficiary not enrolled in Medicare 

Part B at the time of hospitalization, we 

are proposing that processing 

contractors would send notice of a 

favorable decision to the hospital to 

inform the hospital of the reason for the 

decision and the effect of the decision. 

Providers are reminded that under 

sections 1814 and 1866 of the Act, 

§§ 489.20 and 489.21, and the terms of 

the provider agreement, providers may 

not collect any amounts for covered 

services other than applicable 

coinsurance and deductible. 

Accordingly, in the case of a favorable 

appeal decision that involves SNF 

services paid for by the beneficiary, we 

are proposing in § 405.932(g)(4) and 

(h)(2)(i) that SNFs would be required to 

refund any payments collected from the 

beneficiary for the covered SNF services 

(see 42 CFR part 489 Subpart D 

regarding the requirements for handling 

of incorrect collections). Similarly, in 

the case of a favorable appeal decision 

rendered for a beneficiary who was not 

enrolled in Medicare Part B at the time 

of hospitalization, we are proposing in 

§ 405.932(g)(5) and (h)(2)(ii) that 

hospitals would be required to refund 

any payments collected for the 

outpatient hospital services. 

Furthermore, we believe that the 

Medicare statute requires a provider of 

services to submit new claims in order 

to determine the amount of benefits due 

for covered services and to receive 

payment under Part A of the program. 

Under section 1814(a)(1) of the Act, and 

42 CFR 424.33, and 42 CFR 424.51, 

payment for Part A services furnished to 

an individual may be made only to a 

provider of services eligible to receive 

payment under section 1866 of the Act 

after a request for payment (a claim) is 

filed with Medicare by the provider. 

The clarifying order issued by the court 

stated that the program is not required 

to unwind previously filed Part B 

outpatient hospital claims in order to 

make payment for covered SNF services 

in the case of a favorable decision 

(meaning for the purposes of 

effectuating a favorable decision, any 

existing Part B outpatient hospital claim 

will not be reopened or revised by the 

MAC to reflect an appeal decision that 

the class member’s hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time of the admission, 

and the hospital will not be required to 

submit a claim for inpatient services 

under Medicare Part A 11). However, the 

clarification only applies to beneficiary 

class members who were enrolled in 

Medicare Part B at the time of 

hospitalization. Thus, in the case of a 

beneficiary class member who was not 

enrolled in Medicare Part B at the time 

of hospitalization, we are proposing in 

§ 405.932(h)(2)(ii) that following a 

favorable appeal decision and making 

any required refund for payments 

received for covered services, the 

hospital may submit a new Part A 

inpatient claim to Medicare in order to 

determine the appropriate amount of 

benefits and for Medicare to make 

payment for inpatient hospital services 

under Part A. We are also proposing in 

§ 405.932(h)(2)(ii) that the claim must be 

submitted by the hospital within 180 

calendar days after the hospital receives 

its notice of a favorable appeal decision 

for the eligible party. 

In addition, if a favorable appeal 

decision includes eligible SNF services 

that are covered, in § 405.932(h)(2)(i), 

we are proposing that following a 

refund of amounts collected from the 

beneficiary, the SNF may then submit a 

claim (or claims) for such services to 

Medicare in order to determine the 


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appropriate amount of benefits, and for 

Medicare to make payment for the 

covered SNF services. The SNF claim, 

following a favorable appeal decision 

(that is, the hospital admission satisfied 

the relevant criteria for Part A coverage 

as an inpatient at the time of admission 

and the SNF services met relevant Part 

A coverage criteria), would be processed 

without regard to the hospital’s 

erroneous reclassification of the 

beneficiary as an outpatient receiving 

observation services. We are also 

proposing in § 405.932(h)(2)(i) that the 

SNF submit the claim within 180 

calendar days after receiving the notice 

of a favorable appeal decision for the 

eligible party. CMS would issue 

operating instructions related to the 

submission of new claims by a SNF and 

a hospital when this rulemaking is 

finalized and effective. 

If the processing contractor 

determines that the hospitalization did 

not meet applicable Part A inpatient 

coverage requirements, we are 

proposing in § 405.932(g)(3) the MAC 

would send notice of its unfavorable 

decision to the eligible party (or their 

representative). If the processing 

contractor determines that the hospital 

admission meets applicable Part A 

inpatient coverage requirements, but the 

SNF services eligible for the appeal do 

not meet applicable coverage 

requirements, we are also proposing in 

§ 405.932(g)(2) that the processing 

contractor would send notice of its 

partially favorable decision to the 

eligible party (or their representative). 

The notice of an unfavorable or partially 

favorable decision would inform the 

eligible party (or their representative) of 

the right to request a reconsideration 

with a QIC under proposed § 405.934 

and would provide detailed information 

about the requirements for filing the 

request and where the request must be 

filed. 

5. Conduct of Reconsiderations by 

Qualified Independent Contractors 

In § 405.934(a), we are proposing that 

the second level of retrospective appeals 

be performed by QICs. As with the first 

level of appeal, we are proposing that 

the second level of retrospective appeal 

generally follow existing procedures for 

reconsiderations outlined in §§ 405.960 

through 405.978, as appropriate, except 

as specified in the provisions proposed 

in this rule. Under proposed 

§ 405.934(a), eligible parties (or their 

representative) who are dissatisfied with 

a MAC’s unfavorable decision in 

proposed § 405.932(g)(2) may file a 

request for reconsideration with the QIC 

within 180 calendar days of receipt of 

the MAC’s notice. The MAC’s decision 

would specify the elements required for 

the request for reconsideration, and we 

propose that those elements would be 

the same as the existing requirements 

for a reconsideration set forth in 

§ 405.964. Requests for reconsideration 

under § 405.934 that are untimely or 

incomplete would be handled 

consistent with existing procedures for 

dismissals in § 405.972. 

Consistent with the conduct of 

reconsiderations under existing 

procedures in § 405.968, the QICs shall 

review all evidence furnished during 

the first level of appeal and any 

additional evidence submitted with the 

request for reconsideration. Under 

proposed § 405.934(c), the QIC 

determines if the inpatient admission, 

and as applicable, SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the QIC issues notice of 

its decision to the eligible party (or their 

representative). 

We are proposing in § 405.934(c)(3) 

that the QIC mail or otherwise transmit 

notice of its decision within 60 calendar 

days of receipt of the request for 

reconsideration. We are also proposing 

to apply existing procedures in 

§ 405.970 regarding the calculation of 

decision-making timeframes, and the 

provisions regarding the escalation of 

cases for a QIC’s failure to meet such 

timeframes, as appropriate, to these new 

appeals. In proposed § 405.934(c)(4), the 

notice of a favorable decision sent by 

the QIC to the eligible party (or their 

representative) would include an 

explanation of the decision and 

information regarding the effect of the 

decision, as well as other information 

similar to that found in existing 

reconsideration notices under § 405.974. 

In § 405.934(c)(5), when applicable, 

we are proposing that QICs would send 

notice of a favorable reconsideration to 

the SNF that furnished services to the 

beneficiary in order to inform the SNF 

of the reason for its decision and the 

effect of the decision. In addition, in 

§ 405.934(c)(6), with respect to an 

appeal filed by a beneficiary not 

enrolled in Medicare Part B at the time 

of hospitalization, we are proposing that 

the QIC would send notice of a 

favorable decision to the hospital to 

inform the hospital of the reason for its 

decision and the effect of the decision. 

In addition, we are proposing that the 

QIC would send the SNF notice of a 

partially favorable decision where the 

inpatient admission meets the criteria 

for Part A coverage, but the SNF 

services do not meet the relevant criteria 

for Part A coverage (for example, if the 

services are determined not medically 

reasonable and necessary under section 

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

a partially favorable decision sent to a 

SNF would inform the SNF of the 

reason the hospital services were 

determined to meet the relevant criteria 

for Part A coverage, and the reason the 

SNF services were determined not to be 

covered under Part A. We are proposing 

that the QIC also explain that the notice 

is being sent to the SNF for 

informational purposes only, and that 

only the eligible party may appeal the 

decision to an ALJ under § 405.936. An 

eligible party would have the right to 

appeal such a partially favorable 

decision with respect to the coverage of 

SNF services under proposed § 405.936 

in the same manner as unfavorable 

decisions with respect to Part A 

coverage of the hospital services. 

Consistent with the processes 

following a favorable first level of 

appeal decision, as previously 

described, in the case of a beneficiary 

who was not enrolled in Medicare Part 

B at the time of hospitalization, we are 

proposing in § 405.934(d)(2)(ii) that 

following a favorable appeal decision 

and making any required refund for 

payments received for covered services, 

the hospital may submit a new Part A 

inpatient claim to Medicare in order to 

determine the appropriate amount of 

benefits, and for Medicare to make 

payment for inpatient hospital services. 

We are also proposing in 

§ 405.934(d)(2)(ii) that the claim must be 

submitted by the hospital within 180 

calendar days after the hospital receives 

its notice of favorable reconsideration 

for the eligible party. 

In addition, if a favorable appeal 

decision includes eligible SNF services 

that are covered, in § 405.934(d)(2)(i), 

we are proposing that following a 

refund of amounts collected from the 

beneficiary, the SNF may then submit a 

claim (or claims) for such services in 

order to determine the appropriate 

amount of benefits, and that Medicare 

would make payment for the covered 

SNF services. We are also proposing in 

§ 405.934(d)(2)(ii) that the SNF submit 

the claim within 180 calendar days after 

receiving the notice of a favorable 

appeal decision for the eligible party. 

If the QIC determines that the 

hospitalization did not meet applicable 

Part A inpatient coverage requirements, 

we are proposing in § 405.934(c)(2) that 

the QIC would send notice of its 

unfavorable decision to the eligible 

party (or their representative). If the QIC 

determines that the hospital admission 

meets applicable Part A inpatient 

coverage requirements, but the SNF 

services eligible for the appeal do not 

meet applicable coverage requirements, 

we are also proposing in § 405.934(c)(2) 


ddrumheller on DSK120RN23PROD with PROPOSALS2
89516 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 

12For calendar year 2024, the minimum amount 

in controversy for a hearing at the OMHA level is 

$180, and for judicial review the minimum amount 

in controversy is $1,840. These amounts are 

calculated annually in accordance with 

section1869(b)(1)(E) of the Act, and notice of the 

minimum amounts for the following calendar year 

is published in the Federal Register and is available 

on https://www.cms.gov/medicare/appealsgrievances/fee-for-service/third-level-appeal. 

that the QIC would send notice of its 

partially favorable decision to the 

eligible party (or their representative). 

The notice of an unfavorable or partially 

favorable decision would inform the 

eligible party (or their representative) of 

the right to request a hearing before an 

ALJ (or review by an attorney 

adjudicator) under proposed § 405.936 

and would provide detailed information 

about the requirements for filing the 

request and where the request must be 

filed. 

6. Conduct of Hearings Before 

Administrative Law Judges and 

Decisions by Administrative Law Judges 

or Attorney Adjudicators 

Currently, the third level of claims 

appeals are performed by ALJs and 

attorney adjudicators within the HHS 

Office of Medicare Hearings and 

Appeals (OMHA). As with the first two 

levels of appeal, we are proposing in 

§ 405.936(b) that the third level of 

retrospective appeal generally follow 

existing procedures for claims appeals 

in §§ 405.1000 through 405.1063, as 

appropriate, except as specified in the 

provisions proposed in this rule. Under 

proposed § 405.936(a), eligible parties 

(or their representative) who are 

dissatisfied with either a QIC’s 

dismissal of a request for 

reconsideration, or an unfavorable 

reconsideration in proposed 

§ 405.934(c)(2), may file a request in 

writing with the OMHA within 60 

calendar days of receipt of the QIC’s 

notice. The reconsideration notice 

would specify the elements required for 

the request for hearing, and we propose 

that these elements would mirror 

existing requirements for appeal 

requests in § 405.1014(a)(1). We are also 

proposing that untimely or incomplete 

requests would be handled under 

existing procedures for dismissals in 

§ 405.1014(e) and § 405.1052. 

As we previously noted, in some 

respects, the nature of the appeals 

required by the court order dictate a 

new implementation approach that 

cannot utilize existing procedures. For 

example, ordinarily under current 

claims appeals procedures, adjudicators 

review claims that contain denied items 

or services to determine whether items 

and/or services billed on a Medicare 

claim are covered and whether payment 

may be made. In addition, under 

§ 405.1006, billed charges on claims 

submitted to Medicare serve as the basis 

for determining the amount in 

controversy required for an appeal at the 

third level of appeal and for judicial 

review in federal district court. 

However, under this proposed process, 

with respect to the relevant hospital 

stay, there is no inpatient hospital claim 

and no denial of billed services. 

For retrospective appeals, we are 

proposing to incorporate the existing 

amount in controversy requirement 

required for a hearing before an ALJ or 

judicial review in federal court 

consistent with section 1869(b)(1)(E) of 

the Act and § 405.1006.12 However, 

with respect to the methodology for 

calculating the amount in controversy, 

we cannot utilize the existing method 

for claims appeals in § 405.1006(d)(1) to 

calculate such amount. The procedures 

in existing regulations require the use of 

actual charges from the disputed 

claim(s) billed to Medicare, and in the 

scenario giving rise to appeal rights in 

the court order, no Part A inpatient 

claim will have been filed. Without a 

Part A inpatient claim, there are no 

billed charges for the denied Part A 

coverage to serve as the basis for 

calculating the amount in controversy. 

Other methods in § 405.1006(d) for 

calculating the amount in controversy 

are designed for appeals that are 

factually different than these new 

appeals, and thus, we do not believe it 

would be appropriate to adopt other 

existing calculation methods to apply 

them here. 

In the case of a beneficiary who was 

enrolled in Medicare Part B at the time 

of hospitalization, we believe it would 

be appropriate to utilize the billed 

charges on a claim filed by the hospital 

for Part B outpatient hospital services as 

the basis for calculating the amount in 

controversy for these new appeals. 

Since we do not have a Part A inpatient 

claim for the hospital services furnished 

to the beneficiary, we do not have 

available to us the costs of the denied 

Part A services that are at issue in the 

appeal to serve as the basis for the 

amount in controversy. While the billed 

charges for outpatient services will 

differ from those that would have been 

billed on an inpatient claim, we believe 

it is reasonable to use the billed charges 

on the approved outpatient claim for the 

purposes of determining the amount in 

controversy, and in § 405.936(c)(2) we 

propose including those charges in 

calculating the amount in controversy 

for a hearing before an ALJ and for 

judicial review in federal district court. 

We emphasize that, as explained in 

section III.A.4 of this proposed rule, for 

beneficiaries enrolled in Part B at the 

time of hospitalization, we will not 

make an adjustment of payment related 

to the previously submitted Part B 

outpatient hospital claim (including any 

deductible and coinsurance amounts) 

when effectuating a favorable appeal 

decision. Nevertheless, we are 

proposing that the billed charges for the 

outpatient hospital services would be 

included in determining whether the 

amount in controversy requirement is 

met because we do not have available to 

us the costs of the denied Part A 

hospital services at issue in the appeal 

and because we believe that for 

purposes of determining the amount in 

controversy it is appropriate to attribute 

a dollar amount to the hospital services 

at issue, even if ultimately we would 

not adjust the payment for the hospital 

services. 

For any billed SNF services that are 

included in the appeal, the billed 

charges on a claim submitted by the 

SNF would be utilized in calculating the 

amount in controversy. However, in 

cases where a claim was not submitted 

by the SNF because the services were 

not covered, the amount the beneficiary 

was charged for SNF services, as 

reflected in an itemized statement 

received by the beneficiary or evidence 

of payments made by the beneficiary to 

the SNF, would be used in determining 

the amount in controversy. 

Thus, we are proposing in 

§ 405.936(c)(2) that the billed charges on 

the Part B outpatient claim and the 

billed charges for any SNF claim at 

issue in the appeal, or the billed charges 

paid by the beneficiary in the absence 

of a claim, would serve as the amount 

in controversy for hearings before an 

ALJ and for judicial review in federal 

district court. Furthermore, as the cost 

sharing for a Part A inpatient claim will 

be different than the cost sharing for the 

Part B outpatient claim, we are not 

reducing the amount in controversy by 

any applicable cost sharing, or other 

payments made for the Part B outpatient 

hospital claim as we do for existing 

calculation methods. Nor are we 

factoring in any cost sharing or 

payments made related to the SNF 

claim, as applicable, to reduce the 

amount in controversy. 

For beneficiaries who are eligible 

parties because they were not enrolled 

in Medicare Part B at the time of their 

hospitalization, in most situations, we 

do not believe hospitals would have 

submitted a claim to the program for 

Part B outpatient services. Therefore, for 

beneficiaries who were not enrolled in 

Part B at the time of hospitalization and 

did not have a claim submitted to 

Medicare on their behalf for hospital 


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outpatient services, we are proposing in 

§ 405.936(c)(3) to calculate the amount 

in controversy by using the hospital’s 

billed charges to the beneficiary for such 

outpatient services. We believe the 

hospital’s charges to the beneficiary, as 

reflected in an itemized statement 

received by the beneficiary, or evidence 

of payments made to the hospital, are a 

reasonable estimation of the financial 

impact of the denial of Part A coverage 

to the beneficiary and the amount at 

issue in the appeal. In addition, the 

billed charges for SNF services, if any, 

paid by the beneficiary would also be 

used in computing the amount in 

controversy for appeals involving 

beneficiaries not enrolled in Medicare 

Part B at the time of hospitalization. 

Consistent with the conduct of 

appeals before ALJs and attorney 

adjudicators under existing procedures 

in §§ 405.1028 through 405.1030, we are 

proposing that ALJs and attorney 

adjudicators review all evidence 

furnished during the first two levels of 

appeal and any additional evidence 

submitted by the beneficiary with the 

request for hearing or request for review 

of a dismissal. Under proposed 

§ 405.936(d), the ALJ or attorney 

adjudicator determines if the inpatient 

admission, and as applicable, SNF 

services, satisfied the relevant criteria 

for Part A coverage at the time the 

services were furnished, and then issues 

notice of the decision to the eligible 

party (or their representative). In 

proposed § 405.936(d)(2), we explain 

that the notice of an unfavorable 

decision or partially favorable decision 

(that is, a decision where Part A 

coverage is approved for the hospital 

admission, but Part A coverage is not 

approved for applicable SNF services 

that are at issue in the appeal) would be 

sent to the eligible party (or their 

representative). In proposed 

§ 405.936(d)(3), the notice of a favorable 

decision sent to the eligible party (or 

their representative) would include an 

explanation of the decision and 

information regarding the effect of the 

decision, as well as other information 

similar to that found in existing notices 

under § 405.1046. 

In § 405.936(d)(4), when applicable, 

we are proposing that the ALJ or 

attorney adjudicator would send notice 

of a favorable reconsideration to the 

SNF that furnished services to the 

beneficiary in order to inform the SNF 

of the reason for the decision and the 

effect of the decision. In addition, in 

§ 405.936(d)(5), with respect to an 

appeal filed by a beneficiary not 

enrolled in Medicare Part B at the time 

of hospitalization, we are proposing that 

the ALJ or attorney adjudicator would 

send notice of a favorable decision to 

the hospital to inform the hospital of the 

reason for the decision and the effect of 

the decision. In the case of a partially 

favorable decision, we are proposing in 

§ 405.936(d)(2) that notice would be 

sent to the SNF as an informational 

copy, and in proposed § 405.936(d)(6) 

we specify the elements included in the 

notice sent to the SNF. The notice of a 

partially favorable decision sent to a 

SNF would inform the SNF of the 

reason the hospital services were 

determined meet the relevant criteria for 

Part A coverage, and the reason the SNF 

services were determined not to be 

covered under Part A. We are proposing 

that the ALJ or attorney adjudicator also 

explain that the notice is being sent to 

the SNF for informational purposes 

only, and that only the eligible party 

may appeal the decision to the Council 

under § 405.938. 

In § 405.936(d)(7), we are proposing to 

utilize the existing procedures in 

§ 405.1016 regarding the calculation of 

timeframes within which ALJs and 

attorney adjudicators must issue 

decisions, including applicable waivers 

and extensions to the adjudication 

timeframe, and the option for an eligible 

party (or their representative) to escalate 

an appeal for failure to issue a decision 

in the applicable timeframe. 

Consistent with the processes at the 

first two levels of appeal, as previously 

described, in the case of a beneficiary 

who was not enrolled in Medicare Part 

B at the time of hospitalization, we are 

proposing in § 405.936(e)(2)(ii) that 

following a favorable appeal decision 

and making any required refund for 

payments received for covered services, 

the hospital may submit a new Part A 

inpatient claim to Medicare in order to 

determine the appropriate amount of 

benefits, and for Medicare to make 

payment for inpatient hospital services. 

We are also proposing in 

§ 405.936(e)(2)(ii) that the claim must be 

submitted by the hospital within 180 

calendar days after the hospital receives 

its notice of favorable decision for the 

eligible party. 

In addition, if a favorable appeal 

decision includes eligible SNF services 

that are covered, in § 405.936(e)(2)(i), 

we are proposing that following a 

refund of amounts collected from the 

beneficiary, the SNF may then submit a 

claim (or claims) for such services in 

order to determine the appropriate 

amount of benefits, and for Medicare to 

make payment for the covered SNF 

services. We are also proposing in 

§ 405.936(e)(2)(i) that the SNF submit 

the claim within 180 calendar days after 

receiving the notice of a favorable 

appeal decision for the eligible party. 

If the ALJ or attorney adjudicator 

determines that the hospital admission 

did not meet applicable Part A inpatient 

coverage requirements, we are 

proposing in § 405.936(d)(2) and 

(d)(3)(vii) the ALJ or attorney 

adjudicator would send notice of the 

unfavorable decision to the eligible 

party (or their representative). If the ALJ 

or attorney adjudicator determines that 

the hospital admission meets applicable 

Part A inpatient coverage requirements, 

but the SNF services eligible for the 

appeal do not meet applicable coverage 

requirements, we are also proposing in 

§ 405.936(d)(2) that the ALJ or attorney 

adjudicator would send notice of its 

partially favorable decision to the 

eligible party (or their representative). 

The notice of an unfavorable or partially 

favorable decision would inform the 

eligible party (or their representative) of 

the right to request review by the 

Council under proposed § 405.938 and 

would provide detailed information 

about the requirements for filing the 

request and where the request must be 

filed. 

In proposed § 405.936(e) and (f), we 

explain the effect of an ALJ or attorney 

adjudicator decision as binding on the 

eligible party unless it is further 

appealed or reopened. The reopening of 

an ALJ or attorney adjudicator decision 

would be processed under existing 

procedures in § 405.980(d) and (e). The 

effect of an ALJ or attorney adjudicator 

decision is consistent with the effect of 

decisions at other levels in the appeals 

process, as previously described. We are 

proposing that an eligible party (or their 

representative) who is dissatisfied with 

an unfavorable decision by an ALJ or 

attorney adjudicator may request review 

by the Council under proposed 

§ 405.938(a), and the ALJ or attorney 

adjudicator decision notice would 

provide detailed information about the 

process for filing such a request. 

7. Conduct of Review by the Medicare 

Appeals Council 

Under § 405.938, we are proposing 

that retrospective reviews at the fourth 

level of appeal would be conducted by 

the Council and would generally follow 

existing procedures for claims appeals 

in §§ 405.1100 through 405.1130, except 

as specified in the provisions proposed 

in this rule. Under proposed 

§ 405.938(a), eligible parties (or their 

representative) who are dissatisfied with 

either a dismissal of a request for 

hearing by an ALJ or attorney 

adjudicator, or an unfavorable ALJ or 

attorney adjudicator decision in 

proposed § 405.936(d)(2) may file a 

request in writing with the Council 

within 60 calendar days of receipt of the 


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13For example, under § 405.1106(a), if a party 

submits a timely filed request for Council review 

with an entity other than the entity specified in the 

notice of the ALJ’s or attorney adjudicator’s action, 

the Council’s adjudication period to conduct a 

review begins on the date the request for review is 

received by the entity specified in the notice of the 

ALJ’s or attorney adjudicator’s action. In other 

words, if an ALJ decision specifies that a party must 

submit a request for Council review with the 

Council, and the party mistakenly files their request 

with, for example, OMHA, then the Council’s 

adjudication time period does not begin until the 

Council receives the request for review from 

OMHA. 

notice from the ALJ or attorney 

adjudicator. The request must include 

the elements specified in the notice 

issued by the ALJ or attorney 

adjudicator, and we propose to use the 

existing requirements for requests for 

Council review in § 405.1112. We are 

proposing that untimely or incomplete 

requests would be handled under 

existing procedures in §§ 405.1100 

through 405.1116. 

We are proposing that the Council 

would review appeal requests and 

requests for review of dismissal actions 

under existing procedures in 

§§ 405.1100 through 405.1132, as 

applicable. Under proposed 

§ 405.938(c)(1), the Council makes a 

decision or remands the case to an ALJ 

or attorney adjudicator. We are 

proposing in § 405.938(c)(2) that the 

Council may adopt, modify, or reverse 

the decision of an ALJ or attorney 

adjudicator, consistent with existing 

Council procedures. In § 405.938(c)(3), 

we are proposing the Council would 

send notice of its decision, or its remand 

to an ALJ or attorney adjudicator, to the 

eligible party (or their representative), 

and we propose that a decision would 

contain information regarding the effect 

of a favorable decision. In the case of an 

unfavorable or partially favorable 

decision, we are proposing that the 

Council include information about filing 

a request for judicial review under 

existing procedures in 405.1136. We 

also explain in proposed § 405.938(c)(3) 

that a partially favorable decision issued 

by the Council refers to a determination 

that the inpatient admission satisfied 

the relevant criteria for Part A coverage, 

but the SNF services did not satisfy the 

relevant criteria for Part A coverage. 

Notice of a partially favorable decision 

is sent to the eligible party (or their 

representative), and to the SNF that 

furnished services under appeal, but for 

informational purposes only. 

In addition, we are proposing in 

§ 405.938(c)(4), when applicable, the 

Council would send notice of a decision 

favorable to an eligible party to the 

hospital and the SNF that furnished 

services. The notice would explain the 

effect of the decision as specified in 

proposed § 405.938(d), including the 

provider’s obligation to refund 

payments collected for services 

determined to be covered following the 

appeal. The notice would also explain, 

as applicable, the process for a SNF or 

a hospital to submit a claim for the 

covered services to determine the 

amount of benefits due following the 

refund of payments previously 

collected. 

In § 405.938(c)(5), we are proposing to 

utilize the existing procedures in 

§ 405.1100 regarding the calculation of 

timeframes within which the Council 

must issue decisions, including 

applicable waivers and extensions to the 

adjudication timeframe,13 and the 

option for an eligible party (or their 

representative) to escalate an appeal for 

failure to issue a decision in the 

applicable timeframe. 

In proposed § 405.938(e) and (f), we 

explain that a Council decision is 

considered final and binding on the 

eligible party unless it is reopened and 

revised, or in the case of an unfavorable 

decision, a Federal district court issues 

a decision modifying the Council 

decision. The reopening of a Council 

decision would be processed under 

existing procedures in § 405.980(d) and 

(e). The effect of a favorable Council 

decision is consistent with the effect of 

decisions at other levels in the appeals 

process, as previously described. We are 

proposing in § 405.938(e)(1) that an 

eligible party (or their representative) 

who meets the requirements to escalate 

a case under § 405.1132 or is dissatisfied 

with an unfavorable decision by the 

Council, may request judicial review 

consistent with existing procedures in 

§§ 405.1132 through 405.1136. Based on 

its existing procedures, the Council’s 

decision notice would provide detailed 

information about the process for filing 

such a request. 

8. Judicial Review 

We are proposing in § 405.938(f)(1) 

that eligible parties dissatisfied with a 

final decision of the Council whose 

claims meet the amount in controversy 

requirement in proposed § 405.936(c) 

may request judicial review in Federal 

district court under the existing 

procedures in § 405.1136. In addition, 

under proposed § 405.938(f)(2), an 

eligible party (or their representative) 

who satisfies the amount in controversy 

requirement in proposed § 405.936(c) 

and is entitled to escalate a case from 

the Council to Federal district court 

upon satisfying the criteria set forth in 

§ 405.1132, may request judicial review 

under the existing procedures in 

§ 405.1136. 

B. Prospective Appeal Rights 

1. Overview 

This proposed rule would also 

establish and implement a new notice 

requirement and an expedited appeals 

process, on a prospective basis, for 

certain beneficiaries whose status was 

changed from inpatient to outpatient 

receiving observation services while 

they were still in the hospital. The 

proposed expedited appeals process 

parallels the process in effect for 

inpatient hospital discharge appeals set 

forth at 42 CFR 405.1205 through 1206, 

with some differences. In its order dated 

March 26, 2020, the court indicated that 

HHS should use a process for the 

expedited appeals that is ‘‘substantially 

similar’’ to the existing process for 

expedited hospital discharge appeals at 

§§ 405.1205 through 405.1208; under 

that hospital discharge appeals process, 

beneficiaries receive a notice of their 

rights and may request an expedited 

determination by a Quality 

Improvement Organization (QIO) about 

the hospital’s decision to discharge the 

beneficiary. While the processes are 

largely similar, a notable difference is 

that the issue under appeal in this 

proposed process relates to the change 

of status from an inpatient to an 

outpatient receiving observation 

services. This change of status may 

affect cost sharing for the hospital stay 

as well as whether any post hospital 

care in a skilled nursing facility would 

be covered by Medicare. 

CMS contracts with QIOs, pursuant to 

Title XI, Part B of the Act and section 

1862(g) of the Act, to perform certain 

statutorily required functions and 

contractual quality improvement and 

other activities for the purposes of 

improving the quality of care furnished 

to Medicare beneficiaries with respect to 

Medicare covered items and services. 

The QIO Program is part of the HHS’ 

national quality strategy for providing 

quality and patient centered care to 

Medicare beneficiaries. Section 

1154(a)(1) of the Act establishes certain 

review functions of QIOs, including that 

QIOs review the services furnished to 

Medicare beneficiaries by physicians, 

other healthcare practitioners, and 

institutional and non-institutional 

providers of services (as defined in 

section 1861(u) of the Act and including 

hospitals). In addition, under section 

1154(a)(18) of the Act, QIOs must also 

provide, subject to the terms of their 

contract with CMS, such other activities 

as the Secretary determines may be 

necessary for the purposes of improving 

the quality of care furnished to 

individuals with respect to items and 

services for which payment may be 


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14Under section 1155 of the Act, a beneficiary 

who is entitled to benefits under title XVIII (that is, 

a Medicare beneficiary) and who is dissatisfied with 

a determination made by a QIO in conducting its 

review responsibilities shall be entitled to a 

reconsideration of such determination by the 

reviewing organization (that is, the QIO). For the 

purposes of these proposed appeals, section 1155 of 

the Act authorizes the QIO to conduct a 

reconsideration of its expedited determination 

regarding the hospital reclassification under 

proposed § 405.1211 to determine if an eligible 

beneficiary is entitled to coverage under Part A of 

the program. 

15Since the court order specifically requires the 

provision of appeal rights to a defined set of class 

members, and that definition does not include the 

provider of services (that is, hospitals and SNFs), 

we are limiting party status for these new appeals 

to the defined class members. We note that this 

limitation currently exists for hospital discharge 

appeals procedures in §§ 405.1205 and 405.1206, 

where a provider of services does not have party 

status. 

made under Medicare. This flexibility 

allows CMS to establish and further 

define the types of reviews performed 

by the QIOs in order to meet evolving 

needs and issues pertaining to 

healthcare delivered under the Medicare 

program. 

As discussed in sections II. and III.A. 

of this rule, a recent court decision 

requires the Secretary to implement an 

appeal process for certain Medicare 

beneficiaries that is substantially similar 

to the existing hospital discharge 

appeals conducted by QIOs under 

§§ 405.1205 through 405.1208. See 

Alexander v. Azar, 613 F. Supp. 3d 559 

(D. Conn. 2020)), aff’d sub nom., 

Barrows v. Becerra, 24 F.4th 116 (2d Cir. 

2022). These new review and appeals 

activities are within the scope of the 

Secretary’s authority under section 

1154(a)(18) of the Act to contract with 

QIOs to perform additional activities 

that are not already specified in section 

1154 of the Act or other provisions. 

Section 1155 of the Act governs appeals 

of QIO determinations that are made 

under Title XI, subpart B, which 

includes section 1154 of the Act. 

Therefore, the proposed new QIO 

determinations, performed under 

section 1154(a)(18) of the Act, are 

subject to the appeal process specified 

in section 1155 of the Act.14 Based on 

the QIOs’ expertise and longstanding 

performance of similar functions, CMS 

has determined that the QIOs are the 

most appropriate entity to perform 

beneficiary-initiated appeals of hospital 

reclassifications of inpatients to 

outpatients receiving observation 

services proposed in §§ 405.1211 

through 405.1212. 

This proposed expedited appeals 

process would be available to 

beneficiaries 15 who, after formally 

being admitted as an inpatient, have 

subsequently been reclassified by the 

hospital as an outpatient while the 

beneficiary is still in the hospital, 

receive observation services following 

the reclassification, and met one of the 

following two criteria: 

• Their stay in the hospital was at 

least 3 days. 

• Did not have Medicare Part B 

coverage (these eligible beneficiaries 

would not need to remain in the 

hospital for at least 3 days to be eligible 

for an appeal). 

We are proposing in new 

§ 405.1210(a)(3) the criteria that must be 

met for a beneficiary to be eligible for 

the new prospective appeal rights. We 

are proposing to require hospitals to 

deliver, as soon as possible after certain 

conditions are met and prior to release 

from the hospital, a new standardized 

beneficiary notice, informing eligible 

beneficiaries of the change in their 

status, the resulting effect on Medicare 

coverage of their stay, and their appeal 

rights if they wish to challenge that 

change. This new notice will be called 

the Medicare Change of Status Notice 

(MCSN). This new notice follows the 

format and structure of the Important 

Message from Medicare (IM), which is 

the notice hospitals are required, by 

§ 405.1205, to provide to beneficiaries to 

inform them of their right to appeal an 

inpatient hospital discharge. See section 

IV.D. of this proposed rule for details on 

how to obtain a copy of the proposed 

MCSN form. 

We considered alternatives to creating 

a new notice for this process. One 

consideration was standardizing and 

adding appeals information to the 

required written Condition Code 44 

notification used by hospitals to inform 

beneficiaries when their status is 

changed from inpatient to outpatient 

after review by a hospital utilization 

review committee and the entire 

episode will be billed as outpatient. 

However, those eligible for this new 

process would be a small subset of the 

population receiving the existing 

Condition Code 44 notification. 

Specifically, individuals would not only 

require a change of status from inpatient 

to outpatient, they must also meet the 

criteria set forth in proposed § 405.1210 

(a)(2) and (3) to pursue an appeal 

regarding a change in status. The vast 

majority of beneficiaries receiving the 

existing notification of inpatient to 

outpatient change will not be eligible for 

this new appeals process and would 

likely find the inclusion of information 

about an appeals process for which they 

are not eligible confusing. We also 

considered adding appeals information 

to the Medicare Outpatient Observation 

Notice (MOON). The MOON (42 CFR 

489.20(y)) is used to inform 

beneficiaries who receive observation 

services for a certain amount of time 

that they are not hospital inpatients, but 

rather outpatients receiving observation 

services. However, like the change in 

status notice mentioned earlier, the 

MOON would be overbroad and the vast 

majority of beneficiaries receiving it 

would not be eligible for an appeal in 

this new process. Further, per section 

1866(a)(1)(Y) of the Act, the MOON is 

only required for beneficiaries who have 

been outpatients receiving observation 

services for more than 24 hours, yet we 

are proposing that, for prospective 

appeals, beneficiaries reclassified from 

inpatients to outpatients receiving 

observation services be eligible for an 

appeal if any amount of time is spent in 

observation following the status change 

(in this respect, we are expanding the 

population of beneficiaries eligible for 

an appeal beyond the class as defined 

by the court, and not limiting eligibility 

to those beneficiaries who have received 

a MOON). Because the MOON is not 

required for observation stays shorter 

than 24 hours, using the MOON would 

likely result in not all eligible 

beneficiaries receiving notification of 

their appeal rights under the proposed 

new process. We concluded that a 

targeted appeals notice, delivered only 

to those beneficiaries eligible for this 

specific appeal, would be the most 

effective and efficient means of 

informing eligible beneficiaries of their 

appeal rights. 

The proposed MCSN contains a 

similar layout and language to the IM 

and includes information on the change 

in coverage, a description of appeal 

rights and how to appeal, and the 

implications for skilled nursing facility 

coverage following the hospital stay. We 

believe that by proposing the delivery of 

this largely generic notice, the notice 

delivery burden on hospitals would be 

as minimal as possible, without any 

adverse effect on patient rights. Much of 

the verbiage in the MCSN has been used 

in similar, consumer-tested CMS 

beneficiary notices which were subject 

to multiple comment periods during the 

PRA renewal process as language 

included in the IM and another similar 

Medicare appeals notice, the Notice of 

Medicare Non-Coverage. 

We have reviewed the notice delivery 

procedures for the IM notice related to 

inpatient hospital discharges and have 

mirrored that process in this new 

process, wherever possible. In 

proposing this approach, our goal is to 

design notice procedures that balance a 

beneficiary’s need to be informed about 

his or her appeal rights in an 

appropriate and timely manner, without 


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imposing unnecessary burdens on 

hospitals. 

We are proposing to require hospitals 

to deliver the notice to eligible 

beneficiaries as soon as possible after a 

beneficiary is eligible for this process 

per § 405.1210(a)(2) and (3), but no later 

than 4 hours prior to discharge. For 

beneficiaries with Part B, we propose 

that the notice must be delivered as 

soon as possible after the hospital 

reclassifies the beneficiary from 

inpatient to outpatient receiving 

observation services and the third day 

in the hospital is reached. Beneficiaries 

will likely not reach this required third 

day in the hospital until very close to 

release from the hospital. This is 

because these will be beneficiaries that 

hospitals have determined do not need 

an inpatient level of care and thus, the 

overall length of the hospital stay is not 

expected to exceed a few days. For 

beneficiaries without Medicare Part B 

coverage, we are proposing that 

hospitals must deliver the notice as 

soon as possible after the change in 

status from inpatient to outpatient 

receiving observation services because a 

3-day hospital stay is not required for 

these beneficiaries to be part of the class 

specified in the court order. 

We believe the approach we are 

proposing would not be overly 

burdensome for hospitals as the 

proposed notice is standardized and 

requires very little customization by the 

hospital before delivery. The proposed 

notice is modeled after the existing 

hospital discharge appeals notice 

(Important Message from Medicare-IM), 

and like that notice, does not require 

extensive time for hospitals to prepare 

and deliver to beneficiaries. We believe 

that the number of beneficiaries that are 

eligible for this proposed appeal process 

would be significantly lower than the 

volume that receive the hospital 

discharge appeals notification. (Please 

see section IV.B. for more information 

on assumptions and estimates related to 

this proposed appeals process.) 

Additionally, the delivery of the MCSN 

notice to the beneficiary would mimic 

the process already in place for 

hospitals delivering the IM, so 

implementing this process should not 

be overly difficult or burdensome. 

One notable difference, as compared 

to that for inpatient hospital discharge 

appeals, is that beneficiaries would not 

have financial liability protection 

during this new appeals process. 

Section 1869(c)(3)(C)(iii)(III) of the Act, 

which provides beneficiaries with 

coverage during the inpatient hospital 

discharge appeal, only applies to 

beneficiaries being discharged from a 

Medicare covered inpatient hospital 

stay, and thus would not be applicable 

to beneficiaries pursuing an appeal 

regarding the change in status from 

inpatient to outpatient receiving 

observation services. 

We are proposing that the Quality 

Improvement Organizations (QIOs) 

perform these reviews. The nature of 

these reviews is consistent with the 

mission and functions of the QIO 

Program. QIOs have contracts with CMS 

under section 1862(g) of the Act and 

Part B of Title XI of the Act to perform 

certain statutorily required reviews of 

the services furnished to Medicare 

beneficiaries and to implement quality 

improvement initiatives involving 

Medicare beneficiaries, providers, and 

their communities. (See 42 CFR parts 

475 through 480.) Historically, QIOs 

have performed expedited discharge 

reviews for beneficiaries appealing 

inpatient discharges (42 CFR 405.1205 

through 405.1208, 422.620 and 422.622) 

as well as similar expedited reviews for 

termination of provider services in nonhospital settings (42 CFR 405.1202 

through 405.1204, 422.624, and 

422.626). Currently, these reviews, as 

well as other case reviews related to the 

quality of care received by Medicare 

beneficiaries, compliance with certain 

conditions of coverage for inpatient 

services, and reviews of the validity of 

certain diagnostic and procedural 

information supplied by hospitals 

among other types of care reviews, are 

performed by the Beneficiary and 

Family Centered Care QIOs (BFCC– 

QIOs), while quality improvement 

initiatives are performed by a different 

type of QIO. If our proposal is finalized, 

we intend to require the BFCC–QIOs to 

perform this new type of appeal because 

their scope of knowledge, expertise and 

experience with beneficiary appeals and 

Medicare coverage ensures an adequate 

and reliable review. 

Finally, the court order only requires 

that an expedited appeals process be 

made available to class members ‘‘who 

have stayed, or will have stayed, at the 

hospital for 3 or more consecutive 

days.’’ For class members who lacked 

Part B and did not stay in the hospital 

for 3 or more consecutive days, it would 

appear that a non-expedited appeals 

process might be sufficient. 

Nonetheless, we are proposing to use 

the expedited process for all prospective 

appeals, with minor differences 

depending on whether the expedited 

appeal request is made timely. In other 

words, an eligible beneficiary may 

request the QIO review at or around the 

time of receiving the notice in a 

hospital, or after a claim is filed, and in 

both instances, beneficiaries will be 

afforded a review and determination by 

the QIO. An appeal filed outside of the 

expedited timeframes may also be 

referred to herein as a standard appeal. 

2. Notifying Eligible Beneficiaries of 

Appeal Rights When a Beneficiary Is 

Reclassified From an Inpatient to an 

Outpatient Receiving Observation 

Services (§ 405.1210) 

To implement the changes we are 

proposing, we would revise Subpart J of 

42 CFR 405 to add new §§ 405.1210 

through 405.1212. These new proposed 

regulations are largely modeled after the 

existing regulations at §§ 405.1205 

through 405.1206 controlling notices to 

beneficiaries and the QIO review of 

hospital discharges. 

Proposed new § 405.1210(a) sets forth 

the applicability and scope of this new 

appeals process along with definitions 

of specific terms used in the proposed 

new regulations. Specifically, in 

§ 405.1210(a)(1) we propose to define a 

hospital as, for purposes of the new 

notice requirements and appeals 

process, any facility providing care at 

the inpatient hospital level, to include 

short term or long term, acute or nonacute, paid through a prospective 

payment system or other reimbursement 

basis, limited to specialty care or 

providing a broader spectrum of 

services and including critical access 

hospitals (CAHs). This broad definition 

tracks § 405.1205(a). 

Paragraphs (a)(2) and (a)(3) of 

proposed § 405.1210 address the 

circumstance and eligibility of 

beneficiaries for appeals in this new 

process. A change in status occurs when 

a hospital reclassifies a beneficiary from 

an inpatient to an outpatient receiving 

observation services. The phrase 

‘‘outpatient receiving observation 

services’’ used in §§ 405.1210 through 

405.1212 is used as defined in proposed 

§ 405.931(h) to mean when the hospital 

changes beneficiary’s status from 

inpatient to outpatient while the 

beneficiary is in the hospital and the 

beneficiary subsequently receives 

observation services following a valid 

order for such services. An eligible 

beneficiary, consistent with the court 

order, would be one who: (1) was 

formally admitted as a hospital 

inpatient; (2) while in the hospital was 

subsequently reclassified as an 

outpatient receiving observation 

services; and (3) either (A) was not 

enrolled in Part B coverage at the time 

of the beneficiary’s hospitalization, or 

(B) stayed at the hospital for 3 or more 

consecutive days but was classified as 

an inpatient for fewer than 3 days. We 

are also proposing to be explicit in new 

§ 405.1210(a)(iv)) that the period ‘‘3 or 

more consecutive days’’ is counted 


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using the existing rules for determining 

coverage of SNF services under section 

1861 of the Act and § 409.30 of this 

chapter. This means that the admission 

day is counted as a day, but the 

discharge day is not. For example, if a 

beneficiary is admitted to a Medicare 

covered inpatient hospital stay on a 

Monday and discharges on the 

following Wednesday, Monday and 

Tuesday are counted towards the ‘‘3 or 

more consecutive days’’, but Wednesday 

is not. 

The provisions of proposed 

§ 405.1210(b) are designed to track 

closely with the provisions of 

§ 405.1205 that require delivery of a 

notice to beneficiary about inpatient 

hospital discharges. We are proposing in 

§ 405.1210(b)(1) that hospitals would be 

required to deliver a standardized, 

largely generic, notice informing eligible 

beneficiaries about the availability of 

the new appeals process. 

We are proposing to require hospitals 

to deliver the notice to eligible 

beneficiaries as soon as possible after a 

beneficiary is eligible for this process 

per § 405.1210(a)(2) and (3) and no later 

than 4 hours prior to discharge. For 

beneficiaries with Part B, we propose 

that the notice must be delivered as 

soon as possible after the hospital 

reclassifies the beneficiary from 

inpatient to outpatient receiving 

observation services and the third day 

in the hospital is reached. For 

beneficiaries without Medicare Part B 

coverage, we propose that hospitals 

must deliver the notice as soon as 

possible after the change in status from 

inpatient to outpatient receiving 

observation services because a 3-day 

hospital stay is not required for these 

beneficiaries to be eligible for an appeal. 

Per proposed § 405.1210(b)(2), the 

new notice would include (1) the 

beneficiary’s right to request an 

expedited determination regarding the 

decision to change the beneficiary’s 

status from an inpatient to an outpatient 

receiving observation services, 

including a description of the process as 

specified in § 405.1211, and the 

availability of possible appeals 

procedures if the beneficiary’s request is 

untimely; (2) an explanation of the 

implications of the decision to change 

the status of the eligible beneficiary 

from an inpatient to an outpatient 

receiving observation services, the 

potential change in beneficiary hospital 

charges resulting from a favorable 

decision, and subsequent eligibility for 

Medicare coverage for SNF services; and 

(3) any other information required by 

CMS. As to category (2) (see 

§ 405.1210(b)(2)(ii) of this proposed 

rule) regarding the implications of the 

decision, this notice would describe for 

eligible beneficiaries the possible 

changes in the charges for their hospital 

stay as well as the potential for noncoverage if they enter a skilled nursing 

facility after the hospital stay. 

Proposed new § 405.1210(b)(3) and (4) 

provide that notice delivery would be 

valid when the notice is delivered as 

required in § 405.1210(a)(3) and the 

beneficiary signs and dates the notice to 

indicate receipt and that the beneficiary 

understands the notice. Further, if a 

beneficiary refuses to sign the notice to 

acknowledge receipt, the hospital may 

annotate its copy of the beneficiary’s 

notice to indicate the refusal. The date 

of refusal would be considered the date 

of receipt of the notice. The hospital 

would be required to maintain a copy of 

the signed or annotated notice as part of 

its records regarding the stay, per 

federal or state law. 

As with existing beneficiary notice 

requirements, hospitals generally would 

need to determine whether a patient is 

capable of comprehending and signing 

the notice. Hospitals would be required 

to comply with applicable State laws 

and CMS guidance regarding the use of 

representatives and have procedures in 

place to determine an appropriate 

representative. 

3. Expedited Determination Procedures 

When a Beneficiary Is Reclassified From 

an Inpatient to an Outpatient Receiving 

Observation Services (§ 405.1211) 

Proposed new § 405.1211 sets forth 

the procedures for the proposed new 

expedited QIO review leading up to 

issuance and effect of the QIO’s 

determination. Proposed § 405.1211 

would establish the responsibilities of 

the hospitals, QIOs, and beneficiaries 

relative to the process. 

Proposed § 405.1211(a) describes a 

beneficiary’s right to request an 

expedited determination by a QIO when 

they are reclassified by their hospital 

from an inpatient to an outpatient 

receiving observation services, and the 

beneficiary meets the criteria to be 

eligible for an appeal as established in 

§ 405.1210(a)(3). As previously 

discussed, QIOs are experienced in 

performing expedited appeals for 

beneficiaries in a hospital setting and 

thus, are well prepared to implement 

and execute this new appeals process in 

an effective and expeditious manner. 

Currently, Beneficiary and Family 

Centered QIOs (BFCC–QIOs) perform 

the case review functions that are 

similar to the reviews that would be 

required by §§ 405.1211 and 405.1212, 

so we intend to assign these new 

reviews to BFCC–QIOs under our 

contracts with them; in the event that 

CMS reconsiders in the future how QIO 

functions are assigned and the 

categorization of QIOs, we intend that 

the type of QIOs that perform case 

review functions (see 42 CFR 405.1200 

through 405.1208, 475.102, 476.1 et. 

seq.) would also perform these new 

reviews of changes in status. 

In new § 405.1211(b), we are 

proposing the process for eligible 

beneficiaries to request an expedited 

determination by the QIO. First, the 

eligible beneficiary’s request must be by 

telephone to the QIO, or in writing. We 

are not proposing any parameters of 

what a request in writing would 

constitute, but it could be an email or 

fax transmitted to the QIO. We are also 

proposing at § 405.1211(b)(1) the 

timeframe for requesting such an 

appeal: eligible beneficiaries would be 

required to request an appeal to the QIO 

prior to release from the hospital. The 

notice required under proposed 

§ 405.1210 would identify the BFCC– 

QIO that serves the geographic area that 

includes the hospital so that this 

information is available to the eligible 

beneficiary. 

Proposed sections 405.1211(b)(2) and 

(b)(3) would explain the responsibilities 

of beneficiaries to discuss the case, if 

requested by the QIO, and their right to 

submit written evidence to be 

considered by the QIO. Per proposed 

§ 405.1211(b)(4), if an eligible 

beneficiary requests an appeal timely, 

they would not be billed during the QIO 

appeals process. However, if the appeal 

is untimely, the hospital may bill a 

beneficiary before this QIO process is 

complete; proposed paragraphs (b)(4) 

and (e) make this clear. Finally, we are 

also proposing, in § 405.1211(b)(5), that 

an eligible beneficiary may file a request 

for review by the QIO regarding the 

change in status after the deadline 

established in proposed § 405.1211(b)(1) 

(that is, the beneficiary may file the 

request after release from the hospital) 

but that the QIO’s determination will be 

provided on a different timeframe and 

the eligible beneficiary will not be 

entitled to the billing protection 

proposed in paragraph (e). Keeping 

untimely appeals with the QIO will 

provide beneficiaries with a decision far 

sooner though (two calendar days), than 

if those beneficiaries were provided 

with the timeframes set forth in the 

standard claims appeals (60 days at the 

first level of the claims appeals process). 

We are proposing that these untimely 

requests may be made at any time in 

order to afford maximum opportunity 

for beneficiaries to exercise their appeal 

rights. Of most concern is those 

beneficiaries who may have had a SNF 

stay following their change in status 


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from an inpatient to an outpatient 

receiving observation services. These 

beneficiaries should have the maximum 

opportunity to appeal and potentially 

obtain coverage for what might have 

been a costly out-of-pocket outlay. 

Proposed § 405.1211(c)(1) through 

(c)(5) describe the procedures that the 

QIO would be required to follow in 

performing the expedited 

determination. We propose at 

§ 405.1211(c)(1) that the QIO must 

immediately notify the hospital that a 

request for an expedited appeal has 

been made. In addition, as proposed in 

§ 405.1211(c)(2) and (3), the QIO would 

be required to determine whether valid 

notice was delivered and examine 

medical and other relevant records that 

pertain to change in status. As proposed 

at § 405.1211(c)(4) and (5), the QIO 

would be required to solicit the views 

of the beneficiary and provide the 

hospital an opportunity to explain why 

the reclassification of the beneficiary 

from an inpatient to an outpatient 

receiving observations services is 

appropriate. The QIO will review the 

information submitted with the appeal 

request and any additional information 

it obtains to determine if the inpatient 

admission satisfied the relevant criteria 

for Part A coverage at the time the 

services were furnished. 

Proposed section 405.1211(c)(6) 

addresses the timing of the QIO’s 

determination. Per proposed paragraph 

(c)(6)(i), the QIO must render a decision 

and notify all relevant persons and 

entities within one calendar day of 

receiving all requested pertinent 

information if the eligible beneficiary 

requested the expedited determination 

as specified in proposed 

§ 405.1211(b)(1) (that is, no later than 

the day of release from the hospital). 

Based on current experience regarding 

documentation submitted by hospitals 

under other expedited beneficiary 

appeal timeframes, we do not anticipate 

that the QIO will encounter delays in 

receiving any information necessary 

from the hospital once the hospital is 

notified of the appeal (see proposed 

§ 405.1211(d)(1)). This timeframe is as 

rapid as possible to minimize potential 

liability for beneficiaries as well as to 

maximize their potential for coverage in 

a skilled nursing facility should they 

obtain a favorable decision by the QIO. 

A Medicare covered skilled nursing 

facility stay must begin within 30 days 

of a beneficiary’s discharge from a 

hospital. To that end, QIOs would make 

their decisions as quickly as possible so 

beneficiaries receiving favorable 

decisions will have time to plan for and 

begin a SNF stay within the 30-day 

parameter. 

Proposed § 405.1211(c)(6)(ii) provides 

that the 1 calendar day QIO decision 

deadline does not apply if a beneficiary 

makes an untimely request for an 

expedited appeal, but that the QIO 

would still accept the request and 

render a decision within two calendar 

days after the QIO receives all requested 

information that the hospital must 

provide per proposed § 405.1211(d)(1). 

This provides a beneficiary with the 

maximum ability to exercise their right 

to an expedited appeal, and the 

opportunity to obtain SNF coverage 

within the Medicare coverage limitation 

of 30 days after leaving a hospital, 

should their appeal to the QIO be 

favorable. Both proposed paragraphs 

(c)(6)(i) and (ii) require the QIO to 

provide notice of its expedited 

determination. 

In § 405.1211(c)(7) we propose that if 

the QIO does not receive the 

information needed to make its 

decision, the QIO may move forward 

and make a decision based on the 

information it has at the time. This is to 

protect the interests of the beneficiary 

by ensuring they receive their decision 

within the QIO’s required timeframes of 

1 calendar day for a timely request and 

two calendar days for an untimely 

request. 

The QIO decision, as required by 

proposed § 405.1211(c)(8), must be 

conveyed to the eligible beneficiary, the 

hospital, and SNF (if applicable) by 

telephone followed by a written notice. 

We are proposing that the QIO’s written 

notice of its determination must include 

the basis for the determination, a 

detailed rationale for the QIO decision, 

an explanation of the Medicare payment 

consequences of the determination, and 

information about the beneficiary’s right 

to an expedited reconsideration as set 

forth in § 405.1212, including how and 

in what time period a beneficiary may 

make that reconsideration request. The 

basis of a decision is a description of, 

and citations to, the Medicare coverage 

rule, instruction, or other policies 

applicable to the review. A detailed 

rationale is an explanation of why 

services do or do not meet the relevant 

criteria for Part A coverage based on the 

facts specific to the beneficiary’s 

situation and the QIO’s review of the 

pertinent information provided by the 

hospital (as with other expedited 

beneficiary appeals of hospital 

discharges and service terminations). 

Proposed § 405.1211(d) sets forth the 

responsibilities of hospitals in the 

expedited appeals process. Section 

405.1211(d)(1) provides that the 

hospital must supply all information 

that the QIO needs, no later than noon 

of the calendar day after the QIO 

notifies the hospital of the appeals 

request. We are also proposing that at 

the discretion of the QIO, the hospital 

must make the information available by 

phone or in writing (with a written 

record of any information not 

transmitted initially in writing). Section 

405.1211(d)(2) requires that hospitals, 

upon request, must provide the 

beneficiary any documentation, 

including written records of any 

information provided by telephone, it 

provides to the QIO. We are proposing 

that this obligation work the same way 

that it does under § 405.1206(d)(3), 

specifically that the hospital may charge 

a reasonable amount to cover the costs 

of duplicating and delivering the 

requested materials and must 

accommodate such a request by no later 

than close of business of the first day 

after the material is requested by the 

beneficiary or the beneficiary’s 

representative. 

In § 405.1211(e), we propose that a 

hospital may not bill a beneficiary who 

has appealed timely for any services at 

issue in the appeal until the expedited 

determination process (and 

reconsideration process) is complete. 

Although there is liability protection in 

the inpatient discharge expedited 

appeals process under section 

1869(c)(3)(C)(iii) of the Act 

(incorporating the financial liability 

protection in section 1154(e)(4) of the 

Act in effect prior to the enactment of 

section 1869(c)(3)(C)) of the Act, there is 

no statutory provision protecting the 

beneficiary from financial liability for 

the hospital stay and services furnished 

during the pendency of the QIO’s 

review proposed here. Therefore, we are 

proposing only that the hospital may 

not bill the beneficiary until after the 

QIO has issued its determination. This 

proposal mirrors existing procedures for 

the similar expedited appeals 

procedures the termination of nonhospital services found at § 405.1202(g). 

This process would not extend coverage 

available to beneficiaries during an 

appeal, which is consistent with 

§ 405.1202(g). 

Proposed § 405.1211(f) sets forth that 

a QIO determination is binding for 

payment purposes on the beneficiary, 

hospital, and MAC, unless the 

beneficiary pursues an expedited 

reconsideration per § 405.1212. The 

decision is binding for purposes of 

payment only, such that if the hospital 

submits a claim under Part A, CMS will 

make payment. 


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16Under section 1155 of the Act, for an appeal 

with an ALJ, the amount in controversy must be 

$200 or more, and for judicial review, the amount 

in controversy must be $2,000 or more. 

4. Expedited Reconsideration 

Procedures When a Beneficiary Is 

Reclassified From an Inpatient to an 

Outpatient Receiving Observation 

Services (§ 405.1212) 

In new § 405.1212 we propose to set 

forth the procedures for the new 

expedited reconsideration process. 

Proposed § 405.1212 contains the 

responsibilities of the hospitals, QIOs, 

and beneficiaries relative to the 

reconsideration process. 

Proposed § 405.1212(a) describes an 

eligible beneficiary’s right to request an 

expedited reconsideration by a QIO 

when they are dissatisfied with the 

expedited determination decision by the 

QIO. 

In § 405.1212(b) we are proposing a 

process for beneficiaries to request an 

expedited reconsideration by a QIO. 

Proposed paragraph (b)(1) provides that 

beneficiaries must request an appeal to 

the QIO no later than noon of the 

calendar day following the initial 

notification of the expedited 

determination by the QIO. Under this 

proposal, the earlier of the calendar day 

of the QIO’s notification of the 

beneficiary by telephone or in writing of 

its determination (under 

§ 405.1211(c)(8)) would start the 

timeframe for the beneficiary to request 

an expedited reconsideration. The 

beneficiary’s request for a 

reconsideration may be in writing or by 

telephone. 

Proposed §§ 405.1212(b)(2) and (b)(3) 

also explain the responsibilities of 

beneficiaries to discuss the case, if 

requested by the QIO, as well as 

beneficiaries’ right to submit written 

evidence to be considered by the QIO. 

Finally, proposed (b)(4) and (b)(5) state 

that if a beneficiary requests an appeal 

timely, they would not be billed until 

the QIO makes its reconsideration 

decision; however, if the beneficiary’s 

request for an expedited reconsideration 

is untimely, the hospital may bill a 

beneficiary before the reconsideration 

determination has been made. 

Proposed §§ 405.1212(c)(1) through 

405.1212(c)(4) describe the procedures 

that the QIO must follow in performing 

the expedited reconsideration. 

Specifically, we propose in 

§ 405.1212(c)(1) that the QIO must 

immediately notify a hospital that a 

request for an expedited reconsideration 

has been made; this means that the 

notice to the hospital must be the day 

the QIO receives the request for 

expedited reconsideration. Per proposed 

§ 405.1212(c)(2), the QIO would be 

required to offer both the beneficiary 

and the hospital an opportunity to 

provide further information. An 

example of further information from the 

hospital could include an explanation of 

why the beneficiary was reclassified 

from an inpatient to an outpatient 

receiving observation services. 

Similarly, an example of further 

information from the eligible beneficiary 

could include an explanation of why 

inpatient status should have been 

maintained. 

Proposed § 405.1212(c)(3)(i) provides 

that the QIO must render a decision and 

notify all relevant persons and entities 

within two calendar days of receiving 

all information necessary to complete 

the appeal if the beneficiary requested 

the reconsideration by noon of the day 

after receiving notice of the QIO’s 

determination under § 405.1211. This 

timeframe is as rapid as possible to 

minimize potential liability for 

beneficiaries as well as to maximize 

their potential for coverage in a SNF 

should they obtain a favorable 

reconsideration decision by the QIO. A 

Medicare covered skilled nursing 

facility stay must begin within 30 days 

of a beneficiary’s discharge from a 

hospital. To that end, we are proposing 

a review process for QIOs to make their 

decisions as quickly as possible so 

beneficiaries receiving favorable 

decisions will have time to plan for and 

begin a SNF stay within the 30-day limit 

for coverage. 

Proposed § 405.1212(c)(3)(ii) provides 

that if a beneficiary makes an untimely 

request for an expedited 

reconsideration, the QIO must still 

accept the request and render a decision 

within 3 calendar days. Under this 

proposal, the two-calendar day QIO 

decision deadline does not apply in the 

case of an untimely request for an 

expedited reconsideration. However, the 

expeditious 3-day untimely timeframe 

affords a beneficiary the ability to 

exercise their right to an expedited 

appeal and potentially be entitled to 

SNF coverage within the 30-calendar 

day time limit for SNF coverage 

following hospital release, should they 

receive a favorable expedited 

reconsideration determination from a 

QIO. 

The QIO decision, as required by 

proposed § 405.1212(c)(4)(i–iv), must 

include the basis and detailed rationale 

for the QIO decision. The basis of a 

decision is a description of, and 

citations to, the Medicare coverage rule, 

instruction, or other policies applicable 

to the review. A detailed rationale 

includes the facts specific to the 

beneficiary’s situation and a detailed 

explanation of why the inpatient 

admission did or did not satisfy the 

relevant criteria for Part A coverage at 

the time the services were furnished. 

The decision must also include the 

potential financial ramifications, such 

as deductibles or coinsurance for the 

beneficiary, the beneficiary’s right to a 

hearing by an ALJ, and how a 

beneficiary may make a request for an 

expedited reconsideration. 

Proposed § 405.1212(d) sets forth the 

responsibilities of hospitals in the 

expedited appeals process. As proposed, 

a hospital may, but is not required to, 

submit evidence to be considered by a 

QIO in making its reconsideration 

decision. If a hospital does not furnish 

a QIO with requested additional 

information, the QIO may proceed to 

make a decision based on the 

information used in the expedited 

determination. This is to protect the 

interests of the beneficiary by ensuring 

they receive their decision within the 

BFCC–QIO’s required timeframes of two 

calendar days for a timely request and 

3 calendar days for an untimely request. 

This proposed policy is consistent with 

obligations on hospitals in the second 

level expedited review of a hospital 

discharge and on providers of services 

in the second level expedited review of 

a termination of provider services 

(§ 422.1204(e)). 

In § 405.1212(e) we propose that a 

hospital may not bill a beneficiary who 

has appealed timely for any services at 

issue in the appeal until the expedited 

reconsideration process is complete. 

Proposed § 405.1212(f) sets forth that 

a QIO reconsideration is binding on the 

beneficiary, hospital, and MAC unless 

the beneficiary pursues an appeal with 

an ALJ in accordance with 42 CFR part 

478 subpart B. This concept is 

consistent with the existing claims 

appeals process currently established 

under §§ 405.1000 through 405.1140. 

The decision is binding for purposes of 

payment only, such that if the hospital 

submits a claim under Part A, CMS will 

make payment. 

Per section 1155 of the Act, a 

beneficiary who is dissatisfied by a 

QIO’s reconsideration of its initial 

decision may seek additional 

administrative review and, ultimately, 

judicial review, if the amount in 

controversy limits are met.16 Our 

proposal follows that process. 

5. Conforming Changes Beneficiary 

Notice of Discharge or Change in Status 

Rights (§ 489.27) 

In conjunction with the proposed 

notice provisions §§ 405.1210 through 

405.1212, we are proposing to make 


ddrumheller on DSK120RN23PROD with PROPOSALS2
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conforming changes to a related existing 

regulatory provision. We propose to 

amend the provider agreement 

requirements in § 489.27(b) to crossreference the proposed notice 

requirements. Thus, proposed 

§ 489.27(b) would specify that delivery 

of the proposed appeals notice is 

required as part of the Medicare 

provider agreement. Lastly, to account 

for this conforming change, we are 

proposing to change the title of § 489.27 

to include ‘‘change in status’’ to more 

accurately reflect the actions that would 

require the issuance of a notice. 

6. Conforming Changes to Quality 

Improvement Organization (QIO) 

Review Regulations 

We are also proposing to amend the 

QIO regulations at § 476.71(a) to 

conform with the proposed changes in 

review responsibilities at §§ 405.1210 

through 405.1212. The proposed 

amendment to the QIO regulations 

would add a new review type to the 

currently enumerated list of reviews 

performed by QIOs, specifically for 

beneficiary appeals of hospital 

reclassifications of a fee-for-service 

beneficiary’s inpatient status to that of 

outpatient receiving observation 

services. The beneficiary eligibility 

requirements for filing expedited 

appeals and the required processes for 

those appeals are proposed in sections 

III.B.1 through III.B.5 of this proposed 

rule. This proposed amendment to the 

QIO regulation would specify that QIO 

perform review functions for these 

beneficiary appeals in a manner that is 

consistent with other QIO review 

functions while ensuring alignment 

with the proposed beneficiary eligibility 

and process requirements for such 

appeals. 

The QIO regulations at 42 CFR 

476.1(a) define ‘‘QIO review’’ as a 

review performed in fulfillment of a 

contract with CMS, either by the QIO or 

its subcontractors. Under regulations at 

§ 476.71, the QIO’s review 

responsibilities currently include: (1) 

whether services are or were reasonable 

and medically necessary for diagnosis or 

treatment; (2) whether the quality of the 

services meets professionally recognized 

standards of health care, as determined 

through the resolution of oral 

beneficiary complaints; (3) whether care 

and services furnished or proposed on 

an inpatient basis could be effectively 

furnished more economically on an 

outpatient basis or in another inpatient 

setting; (4) diagnostic related group 

(DRG) validation of diagnosis and 

procedure information provided by 

hospitals; (5) the completeness, 

adequacy and quality of hospital care 

provided; (6) medical necessity, 

reasonableness and appropriateness of 

hospital admissions and discharges; (7) 

medical necessity, reasonableness and 

appropriateness of inpatient hospital 

care for which additional outlier 

payment is sought; and (8) whether a 

hospital has misrepresented admission 

or discharge information resulting in 

unnecessary or multiple admissions, or 

inappropriate billing. 

Our proposed amendment to 

§ 476.71(a) would add paragraph (9) to 

this list of QIO review responsibilities to 

include the new beneficiary-initiated 

appeals proposed here for when a 

hospital reclassifies certain fee-forservice beneficiaries’ admission status 

from inpatient to that of outpatient. 

In considering the existing hospital 

discharge appeals process, CMS 

determined that the circumstances for 

these new appeals, and the potential 

impact of such appeal decisions on Part 

A coverage for subsequent care in other 

settings, necessitated a new notification 

process and review timelines which 

differ from the processes that govern the 

existing hospital discharge appeals 

process. These new appeals are 

proposed in section III.B of this 

proposed rule and would be in new 

appeals regulations at §§ 405.1210 

through 405.1212. 

The proposed amendment to the QIO 

regulations, as previously discussed, 

applies to the processes and timeframes 

for the new appeals discussed in section 

III.B of this proposed rule, which have 

been designed to meet the needs of 

beneficiaries who have had their 

inpatient status reclassified to 

outpatient receiving observation 

services. 

We welcome public comment on the 

addition of these appeals. 

C. Severability 

Finally, we note that while the 

various provisions of this proposed rule 

are intended to implement the District 

Court order in Alexander v. Azar, 613 

F. Supp. 3d 559 (D. Conn. 2020), aff’d 

sub nom., Barrows v. Becerra, 24 F.4th 

116 (2d Cir. 2022), the proposals 

described previously for retrospective 

appeals and prospective appeals would 

be, if finalized, distinct provisions. We 

believe these distinct processes may 

function independent of each other. To 

the extent a court may enjoin any part 

of a final rule, the Department intends 

that other provisions or parts of 

provisions should remain in effect. 

Should they be finalized, we intend that 

any provision of the proposals described 

in this section or in another section held 

to be invalid or unenforceable by its 

terms, or as applied to any person or 

circumstance, would be construed so as 

to continue to give maximum effect to 

the provision permitted by law, unless 

such holding is one of utter invalidity 

or unenforceability, in which event we 

intend that the provision would be 

severable from the other finalized 

provisions described in this section and 

in other sections and would not affect 

the remainder thereof or the application 

of the provision to persons not similarly 

situated or to dissimilar circumstances. 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA) (44 U.S.C. 3501 et seq.) 

we are required to provide 30-day notice 

in the Federal Register and solicit 

public comment before a ‘‘collection of 

information’’ requirement is submitted 

to the Office of Management and Budget 

(OMB) for review and approval. For the 

purpose of the PRA and this section of 

the proposed rule, collection of 

information is defined under 5 CFR 

1320.3(c) of the PRA’s implementing 

regulations. 

To fairly evaluate whether an 

information collection should be 

approved by OMB, section 3506(c)(2)(A) 

of the PRA 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. 

We are soliciting public comment (see 

section IV.D of this proposed rule) on 

each of these issues for the following 

sections of this document that contain 

information collection requirements. 

Comments, if received, will be 

responded to within the subsequent 

final rule. 

A. Wage Estimates 

Private Sector: To derive average 

costs, we used wage data from the U.S. 

Bureau of Labor Statistics’ (BLS) May 

2022 National Occupational 

Employment and Wage Estimates 

(https://www.bls.gov/oes/2022/may/ 

oes_nat.htm). In this regard, Table 1 

presents BLS’ mean hourly wage, our 

estimated cost of fringe benefits and 

other indirect costs, and our adjusted 

hourly wage. 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 89525 

17https://aspe.hhs.gov/sites/default/files/ 

migrated_legacy_files//176806/VOT.pdf. 

18https://fred.stlouisfed.org/series/ 

LEU0252881500A. 

19The data used in this report came from the 

2022 CMS Part B institutional administrative claims 

data for 100 percent of Medicare beneficiaries 

enrolled in the fee-for-service (FFS) program, which 

are available from the Integrated Data Repository 

(IDR). The IDR contains a subset of data transmitted 

by the Common Working File (CWF), a 

computerized database maintained by CMS in 

connection with its processing and payment of 

Medicare claims. 

TABLE 1—NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES

Occupation title Occupation 

code 

Mean hourly 

wage 

($/hr) 

Fringe benefits 

and other 

indirect costs 

($/hr) 

Adjusted 

hourly wage 

($/hr) 

Registered Nurse ............................................................................................. 29–1141 39.78 39.78 79.56 

As indicated, we are adjusting our 

hourly wage estimate by a factor of 100 

percent. This is necessarily a rough 

adjustment, both because fringe benefits 

and other indirect costs vary 

significantly from employer to 

employer, and because methods of 

estimating these costs vary widely from 

study to study. Nonetheless, we believe 

that doubling the hourly wage to 

estimate the total cost is a reasonably 

accurate estimation method. 

Beneficiaries: We believe that the cost 

for beneficiaries undertaking 

administrative and other tasks on their 

own time is a post-tax wage of $21.98/ 

hr. 

The Valuing Time in U.S. Department 

of Health and Human Services 

Regulatory Impact Analyses: Conceptual 

Framework and Best Practices 17

identifies the approach for valuing time 

when individuals undertake activities 

on their own time. To derive the costs 

for beneficiaries, a measurement of the 

usual weekly earnings of wage and 

salary workers of $1,059 18 for 2022, 

divided by 40 hours to calculate an 

hourly pre-tax wage rate of $26.48/hr. 

This rate is adjusted downwards by an 

estimate of the effective tax rate for 

median income households of about 17 

percent or $4.50/hr ($26.48/hr × 0.17), 

resulting in the post-tax hourly wage 

rate of $21.98/hr ($26.48/hr¥$4.50/hr). 

Unlike our State and private sector wage 

adjustments, we are not adjusting 

beneficiary wages for fringe benefits and 

other indirect costs since the 

individuals’ activities, if any, would 

occur outside the scope of their 

employment. 

B. Proposed Information Collection 

Requirements (ICRs) 

This proposed rule sets forth new 

appeals procedures as required by the 

court order in the case Alexander v. 

Azar, 613 F. Supp. 3d 559 (D. Conn. 

2020)), aff’d sub nom., Barrows v. 

Becerra, 24 F.4th 116 (2d Cir. 2022). 

Certain beneficiaries in Original 

Medicare, who are initially admitted to 

a hospital as an inpatient by a physician 

but whose status during their stay was 

changed to outpatient receiving 

observation services by the hospital, 

thereby effectively denying Part A 

coverage for their hospital stay, may 

pursue an appeal under this proposed 

rule. In some cases, the status change 

also affects coverage of a beneficiary’s 

post-hospital extended care services 

furnished in a skilled nursing facility 

(SNF). The appeal is filed with 

Medicare to decide if the inpatient 

admission meets the relevant criteria for 

Part A coverage. 

1. ICRs Regarding Retrospective Appeals 

Requests (§ 405.932) 

The proposals in new § 405.932 will 

be submitted to OMB for review under 

control number 0938–TBD (CMS– 

10885). At this time, the control number 

has yet to be determined, but will be 

assigned by OMB upon their clearance 

of this proposed collection of 

information request. CMS will include 

that number in the subsequent CMS– 

4204–F final rule. OMB will issue the 

control number’s expiration date upon 

their approval of the final rule’s 

collection of information request. The 

issuance of that date can be monitored 

at www.Reginfo.gov. 

As discussed in section III.A.3, 

§ 405.932 proposes that eligible parties 

may file in writing an appeal related to 

a change in patient status which 

resulted in the denial of Part A 

coverage. A written appeal request must 

be received by the eligibility contractor 

no later than 365 days after the 

implementation date of the final rule. 

Details regarding the deadline to file an 

appeal and where such appeals should 

be filed would be posted to 

Medicare.gov once the retrospective 

appeals process is operational. The 

written request must include the 

following information: 

• Beneficiary name. 

• Beneficiary Medicare number (the 

number on the beneficiary’s Medicare 

card). 

• Name of the hospital and dates of 

hospitalization. 

• Name of the SNF and the dates of 

stay (as applicable). 

If the appeal includes SNF services 

not covered by Medicare, the written 

request must also include an attestation 

to the out-of-pocket payment(s) made by 

the beneficiary for such SNF services 

and must include documentation of 

payments made to the SNF for such 

services. 

We estimate that it would take an 

individual approximately 30 minutes 

(0.5 hr) to complete the appeal request 

including the attestation and 

documentation of out-of-pocket 

payments for SNF services and submit 

the completed information to the 

eligibility contractor. 

Because this is a new appeal right and 

associated process, CMS does not have 

precise data and cannot meaningfully 

estimate how many individuals may 

request an appeal under the new 

appeals process. However, we believe 

that the closest equivalent is using the 

rate of individuals who appeal denials 

of initial claim determinations under 

the claim appeals process at the first 

level of appeal to a MAC (which is 3 

percent), and aligning it with the appeal 

rates of higher levels of appeal (ranging 

from 21 percent to 27 percent) to arrive 

at an estimate of 20 percent. This 

estimate reflects our expectation that 

eligible parties in this process will be 

more motivated than in the claim 

appeals process to avail themselves of 

this unique opportunity for a 

retrospective appeal on potentially high 

dollar claims. 

Based on these data, we estimate that 

the total number of eligible beneficiaries 

is 32,894.19 Assuming that 20 percent of 

individuals (6,579 = 32,894 × 0.20) who 

are eligible to appeal will file a request, 

we estimate a one-time burden of 3,290 

hours (6,579 requests × 0.5 hr/request) 

at a cost of $72,314 (3,290 hr × $21.98/ 

hr). 


ddrumheller on DSK120RN23PROD with PROPOSALS2
89526 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 

20The data used in this report come from the 

2022 CMS Part B institutional administrative claims 

data for 100 percent of Medicare beneficiaries 

enrolled in the fee-for-service (FFS) program, which 

are available from the CMS Chronic Condition Data 

Warehouse (www2.ccwdata.org/web/guest/home), 

accessed August 2023. 

21The data used in this report come from the 

2022 CMC Part B institutional administrative claims 

data for 100 percent of Medicare beneficiaries 

enrolled in the fee-for-service (FFS) program, which 

are available from the CMS Chronic Condition Data 

Warehouse (www2.ccwdata.org/web/guest/home), 

accessed August 2023. 

2. ICRs Regarding Notifying 

Beneficiaries of Appeal Rights When 

Hospital Inpatient Coverage Is 

Reclassified to Coverage as an 

Outpatient Receiving Observation 

Services (§ 405.1210) 

The proposals in new § 405.1210 will 

be submitted to OMB for review under 

control number 0938–TBD (CMS– 

10868). At this time, the control number 

has yet to be determined, but will be 

assigned by OMB upon their clearance 

of this proposed collection of 

information request. CMS will include 

that number in the subsequent CMS– 

4204–F final rule. OMB will issue the 

control number’s expiration date upon 

their approval of the final rule’s 

collection of information request. The 

issuance of that date can be monitored 

at reginfo.gov. 

Section 405.1210 proposes to require 

hospitals to deliver, prior to discharge, 

a standardized notice informing eligible 

beneficiaries of the change in status 

from an inpatient to an outpatient 

receiving observation services, and their 

appeal rights if they wish to challenge 

that change. 

The proposed Medicare Change of 

Status Notice (MCSN) is new and is 

intended to be furnished only to those 

beneficiaries eligible for this specific 

proposed new appeal. The proposed 

MCSN notice contains only two fields 

that hospitals must complete: (1) the 

beneficiary’s name, and (2) the 

beneficiary’s identifier number. The 

remaining information (information on 

the change in coverage, a description of 

appeal rights and how to appeal, and 

the implications for skilled nursing 

facility coverage following the hospital 

stay) is standardized. 

For beneficiaries with Medicare Part B 

coverage, hospitals would be required to 

deliver the notice to eligible 

beneficiaries as soon as possible after 

hospital reclassifies the beneficiary from 

an inpatient to an outpatient and the 

beneficiary has stayed in the hospital for 

3 or more consecutive days but was an 

inpatient for fewer than 3 days. The 

notice must be delivered no later than 

4 hours before the beneficiary is 

released from the hospital. 

For beneficiaries without Medicare 

Part B coverage, hospitals would be 

required to deliver the notice to eligible 

beneficiaries as soon as possible after 

the change from inpatient to outpatient 

with observation services is made as a 

3-day hospital stay is not required for 

these beneficiaries. The notice must be 

delivered no later than 4 hours before 

the beneficiary is released from the 

hospital. 

We estimate it would take 10 minutes 

(0.1667 hr) at $79.56/hr for a Registered 

Nurse to complete the two data fields 

and deliver each notice to the applicable 

beneficiary. 

The 10-minute estimate is same as 

that for our Important Message from 

Medicare (CMS–10065/10066; OMB 

0938–1019), which the proposed MCSN 

notice is modeled after. 

In 2022 there were approximately 

15,655 instances where hospital stays 

met the criteria for an appeal.20 21 With 

regard to this proposed rule we estimate 

that hospitals would be required to give 

an estimated 15,655 MCSN notices to 

beneficiaries each year. In aggregate, we 

estimate an annual hospital burden of 

2,610 hours (15,655 notices × 0.1667 hr/ 

notice) at a cost of $207,652 (2,610 hr 

× $79.56/hr). 

Please note, our data does not permit 

us to determine whether the observation 

services occurred prior to the initial 

inpatient stay or followed the change in 

status from inpatient to outpatient, as 

required to qualify for an appeal. As a 

result, 15,655 MCSN notices likely 

overstates the number of beneficiaries 

eligible for an appeal. 

Please see section IV.D. of this 

proposed rule if you wish to view the 

draft standardized notice and 

supporting documentation. 

3. ICRs Regarding Applicable QIO 

Review Regulations (§ 476.71 and 

§ 476.78) 

In section III.B. of this proposed rule, 

we are proposing that the QIOs would 

review the prospective expedited 

appeals under their contracts with the 

Secretary. CMS expects to revise the 

BFCC–QIO’s contracts under the 13th 

Statement of Work to include the new 

prospective expedited appeals 

requirements after publication of the 

subsequent final rule. The additional 

costs to the government for the BFCC– 

QIOs to review the new appeals would 

include payment for the additional level 

of effort associated with communicating 

with beneficiaries and hospitals for the 

duration of the appeal, collecting and 

reviewing patient records, performing 

reconsiderations if requested, and 

providing case files requested for further 

levels of review if needed. It also would 

include the cost of reimbursing 

hospitals for the submission of patient 

records for prospective expedited 

appeals. Hospitals would submit patient 

records and request reimbursement from 

the QIO using the process established in 

the existing memorandums of agreement 

(MOAs) under § 476.78(a) between 

hospitals and the QIO having 

jurisdiction over the particular State in 

which the hospital stay occurred. 

As discussed in section III.B. of this 

proposed rule, hospitals would be 

required to submit patient records to the 

QIOs for prospective expedited appeals 

under proposed § 405.1211(d). Existing 

QIO regulations at § 476.78(b)(2) and (c) 

require providers and practitioners to 

electronically submit patient records to 

the QIOs for purposes of one or more 

QIO functions and allow for the 

reimbursement of providers and 

practitioners by the QIO for the 

electronic submission of patient records 

for one or more QIO functions at a rate 

of $3.00 per submission under 

§ 476.78(e)(2). Hospitals that have 

waivers for the required electronic 

submission of records under § 476.78(d) 

may be reimbursed by the QIO at a rate 

of $0.15 per page for submission of the 

patient records under § 476.78(e)(3). 

The estimation methodology used to 

determine the reimbursement rates for 

electronic and non-electronic 

submission of patient records for one or 

more QIO functions is discussed further 

in section IX.A. of the Fiscal Year (FY) 

2021 Hospital Inpatient Prospective 

Payment System (IPPS)/Long-Term Care 

Prospective Payment System (LTCH 

PPS) final rule (85 FR 58977 through 

58985). This estimation methodology is 

appropriate when applied to the 

proposed prospective expedited appeals 

due to the substantial similarity of its 

requirements and processes to those of 

other QIO functions upon which these 

rates were determined. 

In section III.B.6 of this proposed rule, 

we are proposing the addition of a QIO 

review type at § 476.71(a)(9) making the 

QIO’s review of the prospective 

expedited appeals under proposed 

§ 405.1211(d) a QIO function using our 

authority in section 1154(a)(18) of the 

Act. As established earlier in the ICR 

section, the proposed prospective 

appeals process would constitute a CMS 

administrative action toward a specific 

individual or entity. Thus, the 

preparation and submission of the 

appeal, supporting documentation 

needed for the appeal, and 

communications between the QIO and 

parties to the appeal are not subject to 


ddrumheller on DSK120RN23PROD with PROPOSALS2
Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 89527 

22The data used in this report came from the 

2022 CMS Part B institutional administrative claims 

data for 100 percent of Medicare beneficiaries 

enrolled in the fee-for-service (FFS) program, which 

are available from the Integrated Data Repository 

(IDR). The IDR contains a subset of data transmitted 

by the Common Working File (CWF), a 

computerized database maintained by CMS in 

connection with its processing and payment of 

Medicare claims. 

23The data used in this report come from the 

2022 CMS Part B institutional administrative claims 

data for 100 percent of Medicare beneficiaries 

enrolled in the fee-for-service (FFS) program, which 

are available from the CMS Chronic Condition Data 

Warehouse (www2.ccwdata.org/web/guest/home), 

accessed August 2023. 

the PRA as stipulated under 5 CFR 

1320.4(a)(2). 

C. Summary of Annual Burden

Estimates for Proposed Changes

TABLE 2—PROPOSED ANNUAL REQUIREMENTS AND BURDEN ESTIMATES

Regulation section(s) under Title 42 of the 

CFR 

OMB control 

No. 

(CMS ID 

No.) 

Respondents Total 

responses 

Time per 

response 

(hours) 

Total 

time 

(hours) 

Labor 

cost 

($/hr) 

Total 

cost 

($) 

§ 405.932 .................................................... 0938–TBD 

(CMS– 

10885).

32,894 beneficiaries 6,579 0.5 (30 min) 3,290 21.98 72,314 

§ 405.1210 .................................................. 0938–TBD 

(CMS– 

10868).

6,162 hospitals ......... 15,655 0.1667 (10 

min).

2,610 79.56 207,652 

Total .................................................... ..................... 39,056 ...................... 22,234 varies ........... 5,900 varies 279,966 

D. Submission of Comments

We have submitted a copy of this

proposed rule to OMB for its review of 

the rule’s information collection 

requirements. The requirements are not 

effective until they have been approved 

by OMB. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed collections discussed 

previously, please visit the CMS website 

at https://www.cms.gov/regulationsand-guidance/legislation/ 

paperworkreductionactof1995/pralisting, or call the Reports Clearance 

Office at 410–786–1326. 

We invite public comments on these 

potential information collection 

requirements. If you wish to comment, 

please submit your comments 

electronically as specified in the DATES

and ADDRESSES section of this proposed 

rule and identify the rule (CMS–4204– 

P), the ICR’s CFR citation, and OMB 

control number. 

V. Regulatory Impact Statement

We have examined the impact of this

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), Executive Order 14094 entitled 

‘‘Modernizing Regulatory Review’’ 

(April 6, 2023), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Act, section 202 of the Unfunded 

Mandates Reform Act of 1995 (March 

22, 1995; Pub. L. 104–4), Executive 

Order 13132 on Federalism (August 4, 

1999). 

Executive Orders 12866 and 13563 

direct 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). The Executive Order 14094 

entitled ‘‘Modernizing Regulatory 

Review’’ (hereinafter, the Modernizing 

E.O.) amended section 3(f) of Executive

Order 12866 (Regulatory Planning and

Review). The amended section 3(f)(1) of

Executive Order 12866 defines a

‘‘significant regulatory action’’ as an

action that is likely to result in a rule:

(1) having an annual effect on the

economy of $200 million or more in any

1 year. A regulatory impact analysis

(RIA) must be prepared for the rules

with significant regulatory action/s as

per section 3(f)(1) ($200 million or more

in any 1 year). This rule does not reach

the economic threshold and thus is not

considered a significant rule under

section 3(f)(1).

We are making the determination that 

the proposed new appeals process will 

not have a significant financial impact 

on the Medicare program or interested 

parties based on our assumption about 

the overall number of projected appeals. 

While it is difficult to project how many 

beneficiaries will pursue appeals under 

this new process, overall, we anticipate 

a relatively low volume of retrospective 

appeals. We estimate that the total 

number of eligible beneficiaries is 

32,894.22 We are projecting 

approximately 6,600 appeals at the first 

level of appeal (MAC level); 5,000 

appeals at the second level of appeal 

(QIC Level); 2,800 appeals at the third 

level of appeal (ALJ level); and 150 at 

the Medicare Appeals Council. There 

will be administrative costs associated 

with tasking a contractor to serve as a 

point of contact and clearinghouse for 

incoming retrospective appeals requests. 

We also anticipate a very low volume 

of prospective and standard appeals on 

an ongoing basis. We estimate that 

around 15,000 notices informing 

beneficiaries of their change in status 

and informing them of their right to 

appeal will be delivered annually.23 We 

are estimating an appeal rate of 50 

percent, which would result in about 

7,500 appeals per year. 

While our estimates reflect a 

relatively low number of appeals, we 

acknowledge that there will be 

administrative costs for hospitals to 

accommodate the new appeals process, 

as well as costs associated with 

modifying contracts for MACs, QICs, 

and the BFCC–QIOs to perform the 

retrospective, prospective and standard 

appeals. We welcome comment on these 

proposed estimates. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of less than $9.0 million to $47.0 

million in any 1 year. Individuals and 

states are not included in the definition 

of a small entity. We are not preparing 

an analysis for the RFA because we have 

determined, and the Secretary certifies, 

that this would not have a significant 

economic impact on a substantial 

number of small entities. In addition, 

section 1102(b) of the Act requires us to 


ddrumheller on DSK120RN23PROD with PROPOSALS2
89528 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 

prepare an RIA if a rule 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 

at 42 CFR 412.108 as a hospital that is 

located outside of a Metropolitan 

Statistical Area for Medicare payment 

regulations and has fewer than 100 

beds. We are not preparing an analysis 

for section 1102(b) of the Act because 

we have determined, and the Secretary 

certifies, that this proposed regulation 

would not have a significant impact on 

the operations of 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 whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

In 2023, that threshold is approximately 

$177 million. This rule will have no 

consequential effect on state, local, or 

tribal governments or on the private 

sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on state and local 

governments, preempts state law, or 

otherwise has Federalism implications. 

Since this regulation does not impose 

any costs on state or local governments, 

the requirements of Executive Order 

13132 are not applicable. 

In accordance with the provisions of 

Executive Order 12866, this proposed 

rule was reviewed by the Office of 

Management and Budget. 

VI. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

Chiquita Brooks-LaSure, 

Administrator of the Centers for 

Medicare & Medicaid Services, 

approved this document on December 

18, 2023. 

List of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Diseases, Health facilities, 

Health professions, Medical devices, 

Medicare, Reporting and recordkeeping 

requirements, Rural areas, X-rays. 

42 CFR Part 476 

Grant programs—health, Health care, 

Health facilities, Health professions, 

Health records, Peer Review 

Organization (PRO), Penalties, Privacy, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 489 

Health facilities, Medicare, Reporting 

and recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as set forth below: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

■ 1. The authority citation for part 405 

continues to read as follows: 

Authority: 42 U.S.C. 263a, 405(a), 1302, 

1320b-12, 1395x, 1395y(a), 1395ff, 1395hh, 

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

■ 2. Subpart I is amended by adding an 

undesignated center heading after 

§ 405.930 and §§ 405.931, 405.932, 

405.934, 405.936, and 405.938 to read as 

follows: 

Retrospective Appeals for Changes in 

Patient Status That Resulted in Denial of Part 

A Coverage for Hospital Services. 

Sec. 

405.931 Scope, basis, and definitions. 

405.932 Right to appeal a denial of Part A 

coverage resulting from a change in 

patient status. 

405.934 Reconsideration. 

405.936 Hearings before an ALJ and 

decisions by an ALJ or Attorney 

Adjudicator. 

405.938 Review by the Medicare Appeals 

Council and judicial review. 

§ 405.931 Scope, basis, and definitions. 

(a) Scope and basis. The provisions in 

§§ 405.931 through 405.938— 

(1) Implement a federal district court 

order requiring appeal rights for 

hospital stays on or after January 1, 

2009, for a specified class of 

beneficiaries under certain conditions 

(defined in § 405.931(b)(1)) who were 

admitted to a hospital as inpatients, but 

were subsequently reclassified by the 

hospital as outpatients receiving 

observation services; and 

(2) Apply to retrospective appeals, 

that is, appeals for hospital outpatient 

services, and as applicable, posthospital extended care services in a 

skilled nursing facility (SNF services), 

furnished to eligible parties as defined 

in paragraph (b) of this section before 

the implementation of the prospective 

appeal process set forth in §§ 405.1210 

through 405.1212. 

(b) Definitions. For the purposes of 

the appeals conducted under §§ 405.931 

through 405.938, the following 

definitions apply: 

Eligible party means a beneficiary 

who, on or after January 1, 2009, meets 

the following criteria, and is, thus, 

eligible to request an appeal under 

§§ 405.931 through 405.938: 

(i) Was formally admitted as a 

hospital inpatient. 

(ii) While in the hospital was 

subsequently reclassified as an 

outpatient receiving observation 

services (as defined in § 405.931(h)). 

(iii) Has received an initial 

determination (as defined in § 405.920) 

or a Medicare Outpatient Observation 

Notice (MOON) (as described in 

§ 489.20(y)) indicating that the 

observation services are not covered 

under Medicare Part A. 

(iv)(A) Was not enrolled in the 

Supplementary Medical Insurance 

program (that is, Medicare Part B 

coverage) at the time of beneficiary’s 

hospitalization; or 

(B) Stayed at the hospital for 3 or 

more consecutive days but was 

designated as an inpatient for fewer 

than 3 days, unless more than 30 

calendar days has passed after the 

hospital stay without the beneficiary’s 

having been admitted to a SNF. 

(v) Medicare beneficiaries who meet 

the requirements of the paragraph 

(iv)(A) or (B) of this definition but who 

pursued an administrative appeal and 

received a final decision of the Secretary 

before September 4, 2011, are excluded 

from the definition of an eligible party. 

Eligibility contractor means the 

contractor who meets all of the 

following: 

(i) Is identified on the Medicare.gov 

website for accepting appeal requests. 

(ii) Receives appeal requests and 

makes determinations regarding 

eligibility for the appeal under 

§§ 405.931 through 405.938. 

(iii) Issues notices of eligibility. 

(iv) Refers valid appeal requests to the 

processing contractor for a decision on 

the merits of the appeal. 

Processing contractor means the 

contractor responsible for conducting 

the first-level appeal and issuing a 

decision on the merits of the appeal. 

Appeals under § 405.932 are conducted 

by the MAC who, at the time of the 

referral of the request for appeal under 

§ 405.932(d)(2), has jurisdiction over 

claims submitted by the hospital where 

the eligible party received the services 

at issue. 

(c) Party to an appeal. For the 

purposes of the appeals conducted 


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under §§ 405.931 through 405.938, an 

eligible party is the only party to the 

appeal. The provisions of § 405.906 do 

not apply to appeals processed under 

these provisions, and the provider that 

furnished services to an eligible party 

may not file a request for an appeal and 

is not considered a party to any appeal 

decision or determination. 

(d) Authorized representatives, 

appointed representatives, or 

representatives of a deceased eligible 

party. For the purposes of appeals 

conducted under §§ 405.931 through 

405.938: 

(1) The provisions of § 405.910 apply 

to an eligible party appointing a 

representative to assist in such appeal, 

as appropriate, except as follows: 

(i) A provider of services who 

furnished items or services to a 

beneficiary whose claims are the subject 

of an appeal under the provisions of 

§§ 405.931 through 405.938 is 

prohibited from representing the 

beneficiary or eligible party in such 

appeal. 

(ii) [Reserved.] 

(2) An authorized representative (as 

defined in § 405.902) may act on behalf 

of an eligible party and has all of the 

same rights and responsibilities of an 

eligible party throughout the appeals 

process. 

(3) The provisions of § 405.906(a)(1) 

apply to a deceased eligible party in the 

same manner in which such provisions 

apply to a deceased beneficiary. 

(4) The provisions of § 405.906(c) do 

not apply. 

(5) A beneficiary who is an eligible 

party is considered unrepresented if the 

beneficiary meets any of the following: 

(i) Has not appointed a representative 

under § 405.910. 

(ii) Has an authorized representative 

as defined in § 405.902. 

(iii) Has appointed as its 

representative 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. 

(iv) Is deceased but met the 

conditions for an eligible party in 

paragraph (b)(1) of this section and the 

appeal is filed by an individual who 

meets the conditions set forth in 

§ 405.906(a)(1). 

(e) Prohibition on assignment of 

appeal rights. For the purposes of the 

appeals conducted under §§ 405.931 

through 405.938, an eligible party may 

not assign appeal rights to a provider 

under the provisions of § 405.912. 

(f) Date of receipt of a notice or 

decision. For the purposes of the 

appeals conducted under §§ 405.931 

through 405.938, the date of receipt of 

a notice or decision sent by the 

eligibility contractor, processing 

contractor or other appeals adjudicator 

is presumed to be 5 calendar days 

following the date on the notice unless 

there is evidence to the contrary. 

(g) Three or more consecutive days. 

For the purposes of the appeals 

conducted under §§ 405.931 through 

405.938, when determining if a 

beneficiary is an eligible party and for 

the purposes of determining coverage of 

SNF services under section 1861 of the 

Act, inpatient hospital days are counted 

in accordance with § 409.30, that is, a 

patient must have a qualifying inpatient 

stay of at least 3 consecutive calendar 

days starting with the admission day but 

not counting the discharge day. 

(h) Outpatient receiving observation 

services. For the purposes of appeals 

conducted under §§ 405.931 through 

405.938 when determining if a 

beneficiary is an eligible party, a 

beneficiary is considered an outpatient 

receiving observation services when the 

hospital changes beneficiary’s status 

from inpatient to outpatient while the 

beneficiary is in the hospital and the 

beneficiary subsequently receives 

observation services following a valid 

order for such services. 

§ 405.932 Right to appeal a denial of Part 

A coverage resulting from a change in 

patient status. 

(a) Filing an appeal request related to 

a change in patient status which 

resulted in the denial of Part A 

coverage. (1) Only an eligible party, the 

party’s appointed representative, or an 

authorized representative of an eligible 

party may request an appeal at any level 

of the appeals process under §§ 405.931 

through 405.938. 

(2) To initiate an appeal under 

§§ 405.931 through 405.938, an eligible 

party, the party’s appointed 

representative, or an authorized 

representative of an eligible party must 

meet the following requirements: 

(i) Submit a request for an appeal in 

writing to the eligibility contractor. 

(ii) The request must be received by 

the eligibility contractor no later than 

365 days after the implementation date 

of the final rule. The eligibility 

contractor denies the written request if 

it is not received by the applicable filing 

timeframe under § 405.932(d)(3), unless 

the eligible party established good cause 

for late submission as specified in 

§ 405.942(b)(2) and (3). 

(3) If an eligible party (or the party’s 

representative) misfiles a request for 

appeal with a contractor or government 

entity other than the eligibility 

contractor, then for the purpose of 

determining timeliness of the request for 

appeal, the date the misfiled request 

was received by the contractor or 

government agency is considered the 

date of receipt. The misfiled request and 

all documentation must be forwarded to 

the eligibility contractor within 30 

calendar days of receipt, or as soon as 

practicable. 

(b) Content of the appeal request. (1) 

The written request filed by an eligible 

party, the party’s appointed 

representative, or an authorized 

representative of an eligible party may 

be made on a model CMS form. If the 

model form is not used, to be valid, the 

written request must include all of the 

following identifying information: 

(i) Beneficiary name. 

(ii) Beneficiary Medicare number (the 

number on the beneficiary’s Medicare 

card). 

(iii) Name of the hospital and dates of 

hospitalization. 

(iv) Name of the SNF and the dates of 

stay (as applicable). 

(2) If the appeal includes SNF services 

not covered by Medicare, the written 

request must also include an attestation 

to the out-of-pocket payment(s) made by 

the beneficiary for such SNF services 

and must include documentation of 

payments made to the SNF for such 

services. 

(i) Payments for an eligible party’s 

SNF services made by a third-party 

payer do not constitute out-of-pocket 

expenses or payment for an eligible 

party. If a third-party payer made 

payment for the eligible party’s SNF 

services, then the services are excluded 

from consideration in the appeal. 

(ii) Payments made for cost sharing 

(including, but not limited to, 

coinsurance and deductible) for SNF 

services covered by a third-party payer 

are not considered an out-of-pocket 

payment for the purposes of this 

provision. 

(iii) Payments made by a family 

member for an eligible party’s SNF 

services are considered an out-of-pocket 

payment for the eligible party. 

(3) In the written request for an 

appeal, an eligible party (or their 

representative) may include an 

explanation of why the hospital 

admission satisfied the relevant criteria 

for Part A coverage and should have 

been covered under the Part A hospital 

insurance benefit instead of under the 

Part B supplementary medical insurance 

benefit. 

(c) Evidence and other information to 

be submitted with the appeal request. 

(1) Eligible parties (or their 

representatives) are encouraged to 

submit all available information and 

documentation, including medical 


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records related to the hospital stay and 

SNF services, as applicable, at issue in 

the appeal with the written request for 

an appeal. 

(2) If the eligibility contractor 

determines there is information missing 

from the request that is needed to 

establish the beneficiary’s eligibility as 

a party under § 405.931(b)(1) or satisfy 

other conditions for eligibility for an 

appeal, the eligibility contractor works 

with the appropriate MAC and attempts 

to obtain the information from the 

provider or the eligible party (or the 

party’s representative) or both, as 

applicable. The eligibility contractor 

allows up to 60 calendar days for 

submission of missing information. 

(3) If the necessary information 

cannot be obtained from either the 

provider or the eligible party (or the 

party’s representative), the eligibility 

contractor makes an eligibility 

determination based on the information 

available. 

(d) Determining eligibility for an 

appeal. (1)(i) The eligibility contractor 

reviews the information submitted with 

the appeal request and any additional 

information it obtains to determine if 

the individual submitting the appeal 

request is an eligible party and that the 

services previously furnished are 

eligible for an appeal under § 405.931. 

(ii) The eligibility contractor mails or 

otherwise transmits the notice of its 

determination to the eligible party (or 

the party’s representative) within 60 

calendar days of receipt of the appeal 

request. 

(iii) The time between the eligibility 

contractor’s request for missing 

information and receipt of such 

information (or in the case of 

information that is requested but is not 

received, the time allowed by the 

contractor to submit the information) 

does not count toward the timeframe for 

issuing a notice to the eligible party (or 

the party’s representative). 

(2) If the eligibility contractor 

determines that the individual is an 

eligible party and the services 

previously furnished are eligible for an 

appeal, the eligibility contractor— 

(i) Issues a notice of acceptance to the 

eligible party (or the party’s 

representative), explaining that the 

appeal has been accepted for processing; 

and 

(ii) Refers the appeal to the processing 

contractor for adjudication under 

§ 405.932(e). 

(3)(i) If the eligibility contractor 

determines that the request for appeal is 

untimely or incomplete, the individual 

does not satisfy the requirements for an 

eligible party, or the services previously 

furnished are not eligible for an appeal, 

the eligibility contractor issues a denial 

notice to the individual (or the party’s 

representative) in writing. 

(ii) The denial notice explains that the 

request is not eligible for an appeal, the 

reason(s) for the denial of the appeal 

request, and the process for requesting 

a review of the eligibility denial under 

§ 405.932(e). 

(4) Notices regarding eligibility for an 

appeal issued by the eligibility 

contractor are written in a manner to be 

understood by the eligible party or the 

party’s representative. 

(e) Review of an eligibility contractor’s 

denial of a request for an appeal. (1)(i) 

An individual (or their representative) 

may request a review of the eligibility 

contractor’s denial of a request for an 

appeal by filing a request in writing 

with the eligibility contractor. 

(ii) The request for review should 

explain the reason(s) the denial of the 

request for an appeal was incorrect, and 

should include additional information, 

as applicable, to support the validity of 

the original appeal request. 

(2) The request for review, with any 

additional information, must be 

received by the eligibility contractor no 

later than 60 calendar days from the 

date of receipt of the denial notice. If the 

request for review is received after this 

deadline, the individual (or the 

individual’s representative) must 

establish good cause for untimely filing. 

In determining whether good cause for 

untimely filing exists, the eligibility 

contractor applies the provisions in 

§ 405.942(b)(2) and (3). 

(3) The review by the eligibility 

contractor must be conducted by 

individuals not involved in the initial 

denial of the request for an appeal. 

(4) The eligibility contractor may 

issue a decision that affirms or reverses 

the denial of the request for an appeal 

or may dismiss the request for review. 

The notice of the eligibility contractor’s 

decision must meet both of the 

following requirements: 

(i) Be written in a manner to be 

understood by the individual or the 

individual’s representative. 

(ii) Be mailed or otherwise 

transmitted in writing within 60 

calendar days of the date of receipt of 

the request for review. 

(5) If the decision is to affirm the 

denial, or dismiss the request, the 

eligibility contractor must explain the 

rationale for the decision. 

(6) A denial notice under paragraph 

(d)(3) of this section issued due to 

receipt of an untimely appeal request 

must be reversed if the eligible party (or 

the party’s representative) establishes 

good cause for late filing under 

§ 405.942(b)(2) and (3). 

(7) If the eligibility contractor reverses 

the initial denial of the request for 

appeal, the eligibility contractor 

forwards the request for appeal to the 

processing contractor under 

§ 405.932(f). 

(8) The eligibility contractor’s 

decision that affirms the initial denial of 

a request for an appeal is binding and 

not subject to further review. 

(9) If the eligibility contractor 

determines that the request for review of 

the eligibility denial under paragraph 

(e)(2) of this section was not submitted 

timely, and the eligibility contractor did 

not find good cause for the untimely 

submission, then the eligibility 

contractor dismisses the request for 

review, and such dismissal is binding 

and not subject to further review. 

(f) Processing eligible requests for 

appeal. (1) If the processing contractor 

determines there is necessary 

information missing from the appeal 

case file, the processing contractor 

attempts to obtain the information from 

the provider or the eligible party (or the 

party’s representative), as applicable. 

(i) The processing contractor allows 

the provider or eligible party (or the 

party’s representative), or both, up to 60 

calendar days to submit missing 

information. 

(ii) If the provider or eligible party (or 

the party’s representative) does not 

submit the missing information within 

the allotted time, the processing 

contractor makes a decision on the 

request for appeal based on the 

information available. 

(iii) The time between the processing 

contractor’s request for information and 

receipt of such information (or in the 

case of information that is requested but 

is not received, the time allowed by the 

contractor to submit the information) 

does not count toward the timeframe for 

issuing the processing contractor’s 

decision. 

(2) The processing contractor reviews 

the information submitted with the 

appeal request and any additional 

information it obtains to determine if 

the inpatient admission satisfied the 

relevant criteria for Part A coverage at 

the time services were furnished. If the 

appeal request also includes a request to 

review denied SNF services that are 

eligible for an appeal, the processing 

contractor also determines if such 

eligible SNF services satisfied relevant 

criteria for Part A coverage at the time 

the services were furnished. 

(3) Subject to the provisions in 

paragraph (e)(1) of this section, the 

processing contractor mails or otherwise 

transmits its written decision on the 

request for appeal within 60 calendar 

days of receipt of the request. 


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(g) Notice and content of the decision. 

(1) If the processing contractor 

determines that the inpatient admission, 

and as applicable, SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the processing 

contractor issues notice of the favorable 

decision to the eligible party (or the 

party’s representative). The processing 

contractor also notifies the hospital and 

SNF, as applicable, in the case of a 

favorable determination for Part A 

coverage. 

(2)(i) If the processing contractor 

determines that the inpatient admission, 

or as applicable, SNF services, did not 

satisfy the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the processing 

contractor issues notice of the 

unfavorable or partially favorable 

decision to the eligible party (or the 

party’s representative). 

(ii) The processing contractor issues a 

notice of a partially favorable decision 

to the SNF if the inpatient admission 

satisfied the relevant criteria for Part A 

coverage, but the SNF services did not 

satisfy the relevant criteria for Part A 

coverage. 

(3) The notice issued to the eligible 

party (or the party’s representative) 

must be written in a manner calculated 

to be understood by the eligible party 

(or the party’s representative) and 

include all of the following: 

(i) A clear statement of the decision 

made by the processing contractor. 

(ii) The reason the hospital admission, 

and as applicable, the SNF services, 

satisfied or did not satisfy the relevant 

criteria for Part A coverage at the time 

the services were furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) If a favorable decision, the effect 

of such decision, including, as 

applicable, a statement about the 

obligation of the SNF to refund any 

amounts collected for the covered SNF 

services, and that the SNF may then 

submit a new claim(s) for services 

covered under Part A in order to 

determine the amounts of benefits due. 

(vi) If an unfavorable or partially 

favorable decision, a statement of any 

specific missing documentation that 

should be submitted with a request for 

reconsideration, if applicable. 

(vii) The procedures for obtaining 

additional information concerning the 

decision, such as specific provisions of 

the policy, manual, regulations, or other 

rules used in making the decision. 

(viii) If an unfavorable or partially 

favorable decision, information about 

the procedures for filing a request for 

reconsideration under § 405.934. 

(ix) Any other requirements specified 

by CMS. 

(4) As applicable, a notice of a 

favorable decision issued to the SNF 

(including a decision for a beneficiary 

not enrolled in the Supplementary 

Medical Insurance program (Medicare 

Part B) at the time of beneficiary’s 

hospitalization), includes all of the 

following: 

(i) A clear statement of the decision 

made by the processing contractor. 

(ii) The reason the SNF services 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the SNF must refund any payments 

collected from the beneficiary for the 

covered SNF services, and that the SNF 

may then submit a new claim(s) to 

determine the amount of benefits due 

for covered services. 

(vi) Any other requirements specified 

by CMS. 

(5) In the case of a favorable decision 

for a beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization, notice 

is issued to the hospital that includes all 

of the following: 

(i) A clear statement of the decision 

made by the processing contractor. 

(ii) The reason the hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the hospital must refund any payments 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new Part A inpatient claim in 

order to determine the amount of 

benefits due for covered services. 

(vi) Any other requirements specified 

by CMS. 

(6) In the case of a partially favorable 

decision issued to a SNF, the notice 

includes the following: 

(i) A clear statement of the decision 

made by the processing contractor. 

(ii) The reason the hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, and the reason the SNF 

services did not satisfy the relevant 

criteria for Part A coverage. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the decision is being sent for 

informational purposes only, and that 

only the eligible party may appeal the 

decision to a QIC under § 405.934. 

(vi) Any other requirements specified 

by CMS. 

(h) Effect of a favorable appeal 

decision. (1)(i) If the processing 

contractor issues a decision that the 

beneficiary’s inpatient admission 

satisfied the relevant criteria for Part A 

coverage and the hospital’s decision to 

change the inpatient admission to 

outpatient receiving observation 

services was therefore erroneous, the 

beneficiary’s reclassification as an 

outpatient is disregarded for the 

purposes of determining Part A benefits, 

including Part A SNF coverage, if 

applicable. 

(ii) For the purposes of effectuating a 

favorable decision by the processing 

contractor, any claims previously 

submitted for outpatient hospital 

services and payments made for such 

services (including any applicable 

deductible and coinsurance amounts) 

are not reopened or revised by the MAC, 

and payment, as applicable, for covered 

SNF services may be made by the MAC 

to the SNF without regard to the 

hospital claim. 

(2) In order to determine Part A 

benefits to be paid and to make payment 

for covered services as a result of a 

favorable decision, as applicable: 

(i) The SNF that furnished services to 

the beneficiary must refund payments 

previously collected from the 

beneficiary for the covered services and 

may then submit a Part A claim(s) for 

such services within 180 calendar days 

of receipt of the notice of a favorable 

decision. 

(ii) In the case of an appeal for a 

beneficiary not enrolled in the 


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Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization, the 

hospital that furnished services must 

refund any payments collected for the 

outpatient hospital services and may 

then submit a Part A inpatient claim for 

such services within 180 calendar days 

of receipt of the notice of a favorable 

decision. 

(3) The hospital, and as applicable, 

the SNF, must comply with all 

applicable provisions regarding charges 

to the beneficiary for covered services, 

including but not limited to relevant 

provisions in part 489 Subparts B 

through D of this chapter. 

(i) A favorable appeal decision is 

considered binding unless it is reopened 

and revised under the provisions of 

§§ 405.980 through 405.986. 

(ii) The provisions regarding 

reopening of a redetermination in 

§ 405.980(b) and (c) apply in the same 

manner to favorable decisions issued 

under this section. 

(4) The notice of a favorable decision 

issued to a hospital and, as applicable, 

a SNF does not convey party status to 

such provider. 

(i) Effect of an unfavorable or partially 

favorable decision. (1) An unfavorable 

or partially favorable appeal decision is 

considered binding unless— 

(A) It is reopened and revised under 

the provisions of §§ 405.980 through 

405.986; or 

(B) An eligible party (or the party’s 

representative) files a request for 

reconsideration under § 405.934. 

(2) The provisions regarding 

reopening of a redetermination in 

§§ 405.980(b) and (c) apply in the same 

manner to unfavorable or partially 

favorable decisions issued under this 

section. 

§ 405.934 Reconsideration. 

(a) Filing a request for 

reconsideration. An eligible party, the 

party’s appointed representative, or an 

authorized representative who is 

dissatisfied with the decision rendered 

by a processing contractor in 

§ 405.932(g)(2) may request a 

reconsideration with a QIC within 180 

calendar days of receipt of the 

processing contractor’s notice. The 

request for reconsideration must include 

the elements specified in the processing 

contractor’s notice. 

(b) Applicability of other provisions. 

The provisions in §§ 405.960 through 

405.978 that apply to reconsiderations 

of initial determinations apply to the 

extent they are appropriate/in the same 

manner to reconsiderations performed 

by a QIC under this section unless 

otherwise specified. 

(c) Notice and content of a 

reconsideration. (1) If the QIC 

determines that the inpatient admission, 

and as applicable, eligible SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the QIC issues notice of 

the favorable reconsideration to the 

eligible party (or the party’s 

representative). The QIC also notifies 

the hospital and SNF, as applicable, in 

the case of a favorable determination for 

Part A coverage. 

(2)(i) If the QIC determines that the 

inpatient admission, or as applicable, 

SNF services, did not satisfy the 

relevant criteria for Part A coverage at 

the time the services were furnished, 

then the QIC issues notice of the 

unfavorable or partially favorable 

reconsideration to the eligible party (or 

the party’s representative). 

(ii) The QIC issues a notice of a 

partially favorable reconsideration to 

the SNF if the inpatient admission 

satisfied the relevant criteria for Part A 

coverage, but the SNF services did not 

satisfy the relevant criteria for Part A 

coverage. 

(3) The notice of reconsideration must 

be mailed or otherwise transmitted 

within 60 calendar days of the QIC’s 

receipt of the request for 

reconsideration, subject to the 

exceptions specified in § 405.970. 

(4) The notice of reconsideration 

issued to the eligible party (or the 

party’s representative) must be written 

in a manner calculated to be understood 

by the eligible party (or the party’s 

representative) and include all of the 

following: 

(i) A clear statement of the decision 

made by the QIC. 

(ii) The reason the hospital admission, 

and as applicable, the SNF services, 

satisfied or did not satisfy the relevant 

criteria for Part A coverage at the time 

the services were furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) If a favorable decision, the effect 

of such decision, including a statement 

about the obligation of the SNF to 

refund any amounts collected for the 

covered SNF services, and that the SNF 

may then submit a new claim(s) for 

services covered under Part A in order 

to determine the amounts of benefits 

due. 

(vi) If the decision in § 405.932(f) 

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. 

(vii) The procedures for obtaining 

additional information concerning the 

decision, such as specific provisions of 

the policy, manual, regulations, or other 

rules used in making the decision. 

(viii) If an unfavorable or partially 

favorable decision, information 

concerning an eligible parties’ right to 

an ALJ hearing, including the applicable 

amount in controversy requirement and 

aggregation provisions and other 

procedures for filing a request for an 

ALJ hearing under § 405.936. 

(ix) Any other requirements specified 

by CMS. 

(5) As applicable, a notice of a 

favorable reconsideration issued to the 

SNF (including a decision for a 

beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization), 

includes all of the following: 

(i) A clear statement of the decision 

made by the QIC. 

(ii) The reason the SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining the 

SNF must refund any payments 

collected from the beneficiary for the 

covered SNF services, and that the SNF 

may then submit a new claim(s) to 

determine the amount of benefits due 

for the covered services. 

(vi) Any other requirements specified 

by CMS. 

(6) In the case of a favorable 

reconsideration for a beneficiary not 

enrolled in the Supplementary Medical 

Insurance program (Medicare Part B) at 

the time of the beneficiary’s 

hospitalization, notice is issued to the 

hospital that includes all the following: 

(i) A clear statement of the decision 

made by the QIC. 

(ii) The reason the hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 


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clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the hospital must refund any payments 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new Part A inpatient claim in 

order to determine the amount of 

benefits due for covered services. 

(vi) Any other requirements specified 

by CMS. 

(7) In the case of a partially favorable 

reconsideration issued to a SNF the 

notice includes the following: 

(i) A clear statement of the decision 

made by the QIC. 

(ii) The reason the hospital admission 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, and the reason the SNF 

services did not satisfy the relevant 

criteria for Part A coverage. 

(iii) A summary of the facts, including 

as appropriate, a summary of any 

clinical or scientific evidence used in 

making the determination. 

(iv) An explanation of how pertinent 

laws, regulations, coverage rules, and 

CMS policies apply to the facts of the 

case. 

(v) The effect of such decision, 

including a statement explaining that 

the decision is being sent for 

informational purposes only, and that 

only the eligible party may appeal the 

decision to an ALJ under § 405.936. 

(vi) Any other requirements specified 

by CMS. 

(d) Effect of a favorable 

reconsideration. (1)(i) If the QIC issues 

a reconsideration decision that the 

beneficiary’s inpatient admission 

satisfied the relevant criteria for Part A 

coverage and the hospital’s decision to 

change the inpatient admission to 

outpatient receiving observation 

services was therefore erroneous, the 

beneficiary’s reclassification as an 

outpatient is disregarded for the 

purposes of determining Part A benefits, 

including both Part A hospital coverage 

and Part A SNF coverage, if applicable. 

(ii) For the purposes of effectuating a 

favorable reconsideration, any claims 

previously submitted for outpatient 

hospital services and payments made 

for such services (including any 

applicable deductible and coinsurance 

amounts) are not reopened or revised by 

the MAC, and payment, as applicable, 

for covered SNF services may be made 

by the MAC to the SNF without regard 

to the hospital claim. 

(2) In order to determine Part A 

benefits to be paid and to make payment 

for covered services as a result of a 

favorable decision, as applicable: 

(i) The SNF that furnished services to 

the beneficiary must refund payments 

previously collected from the 

beneficiary for the covered services and 

may then submit a Part A claim(s) for 

such services within 180 calendar days 

of receipt of the notice of a favorable 

decision; 

(ii) In the case of an appeal for a 

beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization, the 

hospital that furnished services must 

refund any payments collected for the 

outpatient hospital services and may 

then submit a Part A inpatient claim for 

such services within 180 calendar days 

of receipt of the notice of a favorable 

decision. 

(3) The hospital, and as applicable, 

the SNF, must comply with all 

applicable provisions regarding charges 

to the beneficiary for covered services, 

including but not limited to relevant 

provisions in part 489 Subparts B 

through D of this chapter. 

(4) A favorable reconsideration is 

considered binding unless it is reopened 

and revised under the provisions of 

§§ 405.980 through 405.986. The 

provisions regarding reopening of a 

reconsideration in § 405.980(d) and (e) 

apply in the same manner to favorable 

reconsiderations issued under this 

section. 

(5) The notice of a favorable 

reconsideration sent to a hospital and, 

as applicable, a favorable or partially 

favorable reconsideration sent to a SNF 

does not convey party status. 

(e) Effect of an unfavorable or 

partially favorable reconsideration. (1) 

An unfavorable or partially favorable 

reconsideration is considered binding 

unless— 

(i) It is reopened and revised under 

the provisions of § 405.980(d) or (e); or 

(ii) An eligible party (or the party’s 

representative) files a request for a 

hearing by an ALJ under § 405.936. 

(2) The provisions regarding 

reopening of a reconsideration in 

§ 405.980(d) and (e) apply in the same 

manner to unfavorable and partially 

favorable decisions issued under this 

section. 

§ 405.936 Hearings before an ALJ and 

decisions by an ALJ or Attorney 

Adjudicator. 

(a) Filing a request for hearing. An 

eligible party, the party’s appointed 

representative, or an authorized 

representative who is dissatisfied with 

the reconsideration rendered by a QIC 

in § 405.934(c)(2), or a dismissal of a 

request for reconsideration, may request 

a hearing before an ALJ within 60 

calendar days of receipt of the 

reconsideration. The request for hearing 

must include the elements specified in 

the QIC’s reconsideration. 

(b) Applicability of other provisions. 

The provisions in §§ 405.1000 through 

405.1064 that apply to ALJ hearings and 

decisions by an ALJ or an attorney 

adjudicator apply to the extent they are 

appropriate/in the same manner to ALJ 

hearings and decisions by an ALJ or an 

attorney adjudicator under this section 

unless otherwise specified. 

(c) Calculating the amount remaining 

in controversy for an ALJ hearing or 

judicial review. (1)(i) A request for ALJ 

hearing for an appeal under the 

provisions of §§ 405.931 through 

405.938 must meet the amount in 

controversy requirement in 

§ 405.1006(b). 

(ii) A request for judicial review in 

federal district court for an appeal under 

the provisions of §§ 405.931 through 

405.938 must meet the amount in 

controversy requirement in 

§ 405.1006(c), subject to the calculation 

methodology set forth in this paragraph. 

(2) For appeals under the provisions 

of §§ 405.931 through 405.938, the 

amount remaining in controversy for an 

ALJ hearing or for judicial review in 

federal district court under § 405.1136 is 

determined by the sum of the billed 

charges on the Part B outpatient hospital 

claim and, as applicable, any billed 

charges for the SNF claim at issue, if 

such claims were submitted to 

Medicare. If no SNF claim was 

submitted for services furnished to the 

beneficiary, then the billed charges to 

the beneficiary as indicated on an 

itemized statement or evidence of 

payment made by the beneficiary for 

such services are used in calculating the 

amount remaining in controversy. 

(3) In the case of an appeal under the 

provisions of §§ 405.931 through 

405.938 filed by an eligible party who 

was not enrolled in Part B at the time 

of hospitalization, and no Part B 

outpatient hospital claim was billed to 

Medicare, the amount remaining in 

controversy is determined by the 

charges billed to the beneficiary by the 

hospital for the outpatient hospital stay 

and billed charges for SNF services, if 

applicable. An itemized statement from 

the provider such services, or evidence 

of the payment made by the beneficiary 

to the provider is acceptable for the 

purpose of calculating the amount 

remaining in controversy. 

(4) Any payments made, including 

coinsurance and deductible, for the Part 


ddrumheller on DSK120RN23PROD with PROPOSALS2
89534 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 

B outpatient hospital claim, and as 

applicable, the SNF claim must not 

reduce the calculation of the amount in 

controversy for the purposes of a 

hearing or judicial review under this 

paragraph. 

(d) Notice and content of an ALJ or 

attorney adjudicator decision. (1) If the 

ALJ or attorney adjudicator determines 

that the inpatient admission, and as 

applicable, eligible SNF services, 

satisfied the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the ALJ or attorney 

adjudicator issues notice of the 

favorable decision to the eligible party 

(or the party’s representative). 

(ii) The ALJ or attorney adjudicator 

also notifies the hospital and SNF, as 

applicable, in the case of a favorable 

determination for Part A coverage. 

(2)(i) If the ALJ or attorney adjudicator 

determines that the inpatient admission, 

or as applicable, SNF services, did not 

satisfy the relevant criteria for Part A 

coverage at the time the services were 

furnished, then the ALJ or attorney 

adjudicator issues notice of the 

unfavorable or partially favorable 

decision to the eligible party (or the 

party’s representative). 

(ii) The ALJ or attorney adjudicator 

issues a notice of a partially favorable 

decision to the SNF if the inpatient 

admission satisfied the relevant criteria 

for Part A coverage, but the SNF 

services did not satisfy the relevant 

criteria for Part A coverage. 

(3) The ALJ or attorney adjudicator 

decision issued to the eligible party (or 

the party’s representative) must be 

written in a manner calculated to be 

understood by the eligible party (or the 

party’s representative) and include all of 

the following: 

(i) A clear statement of the decision 

made by the ALJ or attorney adjudicator. 

(ii) The findings of fact. 

(iii) The conclusions of law. 

(iv) The reason for the determination 

that the hospital admission, and as 

applicable SNF services, satisfied or did 

not satisfy the relevant criteria for Part 

A coverage at the time the services were 

furnished, and, to the extent 

appropriate, a summary of any clinical 

or scientific evidence used in making 

the determination. 

(v) The procedures for obtaining 

additional information concerning the 

decision, such as specific provisions of 

the policy, manual, regulations, or other 

rules used in making the decision. 

(vi) If a favorable decision, the effect 

of such decision, including, as 

applicable, a statement about the 

obligation of the SNF to refund any 

amounts collected for the covered SNF 

services, and that the SNF may then 

submit a new claim(s) for services 

covered under Part A in order to 

determine the amount of benefits due. 

(vii) If an unfavorable decision or a 

partially favorable decision, information 

about the procedures for filing a request 

for review by the Appeals Council 

under § 405.938. 

(4) As applicable, a notice of a 

favorable ALJ or attorney adjudicator 

decision (including a decision for a 

beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization) issued 

to the SNF, includes the following: 

(i) A clear statement of the decision 

made by the ALJ or attorney adjudicator. 

(ii) The findings of fact. 

(iii) The conclusions of law. 

(iv) The reason for the determination 

that the SNF services, satisfied the 

relevant criteria for Part A coverage at 

the time the services were furnished, 

and to the extent appropriate, a 

summary of any clinical or scientific 

evidence used in making the 

determination. 

(v) The effect of such decision, 

including a statement explaining that 

the SNF must refund any payments 

collected from the beneficiary for the 

covered SNF services, and that the SNF 

may then submit a new claim(s) to 

determine the amount of benefits due 

for the covered services. 

(5) In the case of a favorable ALJ or 

attorney adjudicator decision for a 

beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

beneficiary’s hospitalization, notice is 

issued to the hospital that includes all 

of the following: 

(i) A clear statement of the decision 

made by the ALJ or attorney adjudicator. 

(ii) The findings of fact. 

(iii) The conclusions of law. 

(iv) The reason for the determination 

that the hospital admission satisfied the 

relevant criteria for Part A coverage at 

the time the services were furnished, 

and to the extent appropriate, a 

summary of any clinical or scientific 

evidence used in making the 

determination. 

(v) The effect of such decision, 

including a statement explaining that 

the hospital must refund any payments 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new Part A inpatient claim in 

order to determine the amount of 

benefits due for covered services. 

(6) In the case of a partially favorable 

decision issued to a SNF, the notice 

includes the following: 

(i) A clear statement of the decision 

made by the ALJ or attorney adjudicator. 

(ii) The findings of fact. 

(iii) The conclusions of law. 

(iv) The reason for the determination 

that the hospital admission satisfied the 

relevant criteria for Part A coverage at 

the time the services were furnished, 

and the reason the SNF services did not 

satisfy the relevant criteria for Part A 

coverage, and to the extent appropriate, 

a summary of any clinical or scientific 

evidence used in making the 

determination. 

(v) The effect of such decision, 

including a statement explaining that 

the decision is being sent for 

informational purposes only, and that 

only the eligible party may appeal the 

decision to the Medicare Appeals 

Council under § 405.938. 

(7) The timeframe within which 

notices must be issued under this 

paragraph are determined under the 

provisions in § 405.1016. 

(e) Effect of a favorable ALJ or 

attorney adjudicator decision. (1)(i) If 

the ALJ or attorney adjudicator issues a 

decision that the beneficiary’s inpatient 

admission satisfied the relevant criteria 

for Part A coverage and the hospital’s 

decision to change the inpatient 

admission to outpatient receiving 

observation services was therefore 

erroneous, the beneficiary’s 

reclassification as an outpatient is 

disregarded for the purposes of 

determining Part A benefits, including 

Part A SNF coverage, if applicable. 

(ii) For the purposes of effectuating a 

favorable decision by an ALJ or attorney 

adjudicator any claims previously 

submitted for outpatient hospital 

services and payments made for such 

services (including any applicable 

deductible and coinsurance amounts) 

are not reopened or revised by the MAC, 

and payment, as applicable, for covered 

SNF services may be made by the MAC 

to the SNF without regard to the 

hospital claim. 

(2) In order to determine Part A 

benefits to be paid and to make payment 

for covered services as a result of a 

favorable decision, as applicable: 

(i) The SNF that furnished services to 

the beneficiary must refund payments 

previously collected from the 

beneficiary for the covered services and 

may then submit a Part A claim(s) for 

such services within 180 calendar days 

of receipt of the notice of a favorable 

decision; 

(ii) In the case of an appeal for a 

beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization, the 

hospital that furnished services must 

refund any payments collected for the 

outpatient hospital services and may 


ddrumheller on DSK120RN23PROD with PROPOSALS2
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then submit a Part A inpatient claim for 

such services within 180 calendar days 

of receipt of the notice of a favorable 

decision. 

(3) The hospital, and as applicable, 

the SNF, must comply with all 

applicable provisions regarding charges 

to the beneficiary for covered services, 

including but not limited to relevant 

provisions in part 489 Subparts B 

through D of this chapter. 

(4) A favorable ALJ or attorney 

adjudicator decision is considered 

binding unless it is reopened and 

revised under the provisions of 

§§ 405.980 through 405.986. The 

provisions regarding reopening of an 

ALJ or attorney adjudicator decision in 

§ 405.980(d) and (e) apply in the same 

manner to favorable ALJ or attorney 

adjudicator decisions issued under this 

section. 

(5) The notice of a favorable decision 

issued to a hospital and, as applicable, 

notice of a favorable or partially 

favorable decision sent to a SNF does 

not convey party status to such 

provider. 

(f) Effect of an unfavorable or partially 

favorable ALJ or attorney adjudicator 

decision. (1) An unfavorable or partially 

favorable ALJ or attorney adjudicator 

decision is considered binding unless— 

(i) It is reopened and revised under 

the provisions of § 405.980(d) or (e); or 

(ii) An eligible party (or the party’s 

representative) files a request for 

Medicare Appeals Council review under 

§ 405.938. 

(2) The provisions regarding 

reopening of an ALJ or attorney 

adjudicator decision in § 405.980(d) and 

(e) apply in the same manner to 

unfavorable and partially favorable 

decisions issued under this section. 

§ 405.938 Review by the Medicare Appeals 

Council and judicial review. 

(a) Filing a request for Council review. 

An eligible party, the party’s appointed 

representative, or an authorized 

representative who is dissatisfied with 

the unfavorable decision of an ALJ or an 

attorney adjudicator in § 405.936(d)(2) 

may request the Council review the 

decision within 60 calendar days of 

receipt of the decision. The request for 

review must contain the elements 

specified in the ALJ or attorney 

adjudicator’s decision notice. 

(b) Applicability of other provisions. 

The provisions in §§ 405.1100 through 

405.1130 that apply to Council review 

apply to the extent they are appropriate/ 

in the same manner to Council review 

under this section unless otherwise 

specified. 

(c) Notice of the Council’s action. (1) 

After it has reviewed all the evidence in 

the administrative record and any 

additional evidence received, subject to 

the limitations on consideration of 

additional evidence in § 405.1122, the 

Council makes a decision or remands 

the case to an ALJ or attorney 

adjudicator. 

(2) The Council may adopt, modify, or 

reverse the ALJ’s or attorney 

adjudicator’s decision or recommended 

decision. 

(3) Notice of the Council’s decision or 

remand order is issued to the eligible 

party (or the party’s representative). 

(i) In the case of a modification or 

reversal of the ALJ’s or attorney 

adjudicator’s decision that is favorable 

to the eligible party, the Council’s 

decision includes information regarding 

the effect of such decision, including, as 

applicable, a statement about the 

obligation of the SNF to refund any 

amounts collected from the beneficiary 

for the covered SNF services, and that 

the SNF may then submit a new claim(s) 

for services covered under Part A in 

order to determine the amount of 

benefits due. 

(ii) If the appeal involves a beneficiary 

not enrolled in the Supplementary 

Medical Insurance program (Medicare 

Part B) at the time of the beneficiary’s 

hospitalization, a modification or 

reversal of the ALJ’s or attorney 

adjudicator’s decision that is favorable 

to the eligible party with respect to 

hospital services also includes a 

statement about the obligation of the 

hospital to refund any amounts 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new claim for covered 

inpatient hospital services in order to 

determine the amount of benefits due. 

(iii)(A) If the Council adopts or 

modifies an ALJ or attorney adjudicator 

decision that is unfavorable or partially 

favorable to the eligible party, the 

decision includes information about the 

procedures for filing a request for 

judicial review under § 405.1136, 

including information regarding the 

amount in controversy requirement in 

§ 405.936(c). 

(B) A partially favorable decision 

issued by the Council refers to a 

determination that the inpatient 

admission satisfied the relevant criteria 

for Part A coverage but the SNF services 

did not satisfy the relevant criteria for 

Part A coverage. 

(4) Notice of a Council decision, 

favorable or partially favorable to the 

eligible party, that modifies or reverses 

the decision or recommended decision 

by an ALJ or attorney adjudicator, or a 

remand order that is favorable to the 

eligible party, is issued to the SNF, as 

applicable, and to the hospital in the 

case of an appeal filed by, or on behalf 

of, a beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

hospitalization. 

(i)(A) Notice issued to the SNF 

includes information regarding the 

effect of such decision, including, as 

applicable, a statement explaining that 

the SNF must refund any payments 

collected from the beneficiary for the 

covered SNF services, and that the SNF 

may then submit a new claim(s) to 

determine the amount of benefits due 

for the covered services. 

(B) A decision that is partially 

favorable to the eligible party is sent to 

the SNF and explains the reason the 

hospital admission satisfied the relevant 

criteria for Part A coverage at the time 

the services were furnished, the reason 

the SNF services did not satisfy the 

relevant criteria for Part A coverage and 

explains that the decision is being sent 

for informational purposes only. 

(ii) Notice issued to a hospital (in the 

case of an appeal filed by, or on behalf 

of, a beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

hospitalization) includes information 

regarding the effect of such decision, 

including a statement explaining that 

the hospital must refund any payments 

collected for the outpatient hospital 

services, and that the hospital may then 

submit a new Part A inpatient claim in 

order to determine the amount of 

benefits due for covered services. 

(5) The timeframe within which 

notices must be sent under this 

paragraph are determined under the 

provisions in § 405.1100. 

(d) Effect of a favorable Council 

decision. (1)(i) If the Council issues a 

decision that the beneficiary’s inpatient 

admission satisfied the relevant criteria 

for Part A coverage and the hospital’s 

decision to change the inpatient 

admission to outpatient receiving 

observation services was therefore 

erroneous, the beneficiary’s 

reclassification as an outpatient is 

disregarded for the purposes of 

determining Part A benefits, including 

both Part A hospital coverage and Part 

A SNF coverage, if applicable. 

(ii) For the purposes of effectuating a 

favorable decision by the Council, any 

claims previously submitted for 

outpatient hospital services and 

payments made for such services 

(including any applicable deductible 

and coinsurance amounts) are not 

reopened or revised by the MAC, and 

payment, as applicable, for covered SNF 

services may be made by the MAC to the 

SNF without regard to the hospital 

claim. 


ddrumheller on DSK120RN23PROD with PROPOSALS2
89536 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 

(2) In order to determine Part A 

benefits to be paid and to make payment 

for covered services as a result of a 

favorable decision, as applicable— 

(i) The SNF, that furnished services to 

the beneficiary must refund payments 

previously collected from the 

beneficiary for the covered services and 

may then submit a Part A claim(s) for 

such services within 180 calendar days 

of receipt of the notice of a favorable 

decision; 

(ii) In the case of an appeal for a 

beneficiary not enrolled in the 

Supplementary Medical Insurance 

program (Medicare Part B) at the time of 

the beneficiary’s hospitalization, the 

hospital that furnished services must 

refund any payments collected for the 

outpatient hospital services and may 

then submit a Part A inpatient claim for 

such services within 180 calendar days 

of receipt of the notice of a favorable 

decision. 

(3) The hospital, and as applicable, 

the SNF, must comply with all 

applicable provisions regarding charges 

to the beneficiary for covered services, 

including but not limited to relevant 

provisions in part 489 Subparts B 

through D of this chapter. 

(4) A favorable Council decision is 

considered final and binding unless it is 

reopened and revised under the 

provisions of §§ 405.980 through 

405.986. The provisions regarding 

reopening of a Council decision in 

§ 405.980(d) and (e) apply in the same 

manner to favorable Council decisions 

issued under this section. 

(5) The notice of a favorable decision 

issued to a hospital and, as applicable, 

notice of a favorable or partially 

favorable decision issued to SNF does 

not convey party status to such 

provider. 

(e) Effect of an unfavorable or 

partially favorable Appeals Council 

decision. (1) An unfavorable or partially 

favorable Appeals Council decision is 

considered final and binding unless it is 

reopened and revised under the 

provisions of § 405.980(d) or (e), or a 

Federal district court issues a decision 

modifying the Council’s decision. 

(2) The provisions regarding 

reopening of an Appeals Council 

decision in § 405.980(d) and (e) apply in 

the same manner to unfavorable and 

partially favorable decisions issued 

under this section. 

(f) Judicial review. (1) An eligible 

party (or the party’s representative) 

dissatisfied with a final and binding 

decision under paragraph (e) of this 

section who satisfies the amount in 

controversy requirement in § 405.936(c) 

may request judicial review in Federal 

district court under the procedures set 

forth in § 405.1136. 

(2) An eligible party (or the party’s 

representative) who satisfies the amount 

in controversy requirement in 

§ 405.936(c) and the requirements to 

escalate a case from the Council in 

§ 405.1132 may request judicial review 

in Federal district court under the 

procedures set forth in § 405.1136. 

■ 3. The heading of subpart J is revised 

to read as follows: 

Subpart J—Procedures and 

Beneficiary Rights for Expedited 

Determinations and Reconsiderations 

When Coverage Is Changed or 

Terminated 

■ 4. Add §§ 405.1210, 404.1211, and 

405.1212 to read as follows: 

§ 405.1210 Notifying eligible beneficiaries 

of appeal rights when a beneficiary is 

reclassified from an inpatient to an 

outpatient receiving observation services. 

(a) Applicability and scope. (1) For 

purposes of §§ 405.1210 through 

405.1212, the term ‘‘hospital’’ is defined 

as any facility providing care at the 

inpatient hospital level, whether that 

care is short term or long term, acute or 

non-acute, paid through a prospective 

payment system or other reimbursement 

basis, limited to specialty care or 

providing a broader spectrum of 

services. This definition includes 

critical access hospitals (CAHs). 

(2) For purposes of §§ 405.1210 

through 405.1212, the change in status 

occurs when a beneficiary is reclassified 

from an inpatient to an outpatient 

receiving observation services (as 

defined in § 405.931(h)). 

(3) For purposes of §§ 405.1210 

through 405.1212, a beneficiary is 

eligible to pursue an appeal regarding a 

change in status when the beneficiary 

meets all the following: 

(i) Was formally admitted as a 

hospital inpatient in accordance with an 

order for inpatient admission by a 

physician or other qualified 

practitioner. 

(ii) Was subsequently reclassified by 

the hospital as an outpatient receiving 

observation services after the admission. 

(iii)(A) Was not enrolled in Part B 

coverage at the time of the beneficiary’s 

hospitalization; or 

(B) Stayed at the hospital for 3 or 

more consecutive days but was 

classified as an inpatient for fewer than 

3 days. 

(iv) The period ‘‘3 or more 

consecutive days’’ is counted using the 

rules for determining coverage of SNF 

services under section 1861 of the Act 

and § 409.30 of this chapter (that is, a 

beneficiary must have a qualifying 

inpatient stay of at least 3 consecutive 

calendar days starting with the 

admission day but not counting the 

discharge day). 

(b) Advance written notice of appeal 

rights. For all eligible beneficiaries, 

hospitals must deliver valid, written 

notice of an eligible beneficiary’s’ right 

to pursue an appeal regarding the 

decision to reclassify the beneficiary 

from an inpatient to an outpatient 

receiving observation services. The 

hospital must use a standardized notice 

specified by CMS in accordance with 

the following procedures: 

(1) Timing of notice. The hospital 

must provide the notice not later than 

4 hours before release from the hospital 

and as soon as possible after the earliest 

of either of the following: 

(i) The hospital reclassifies the 

beneficiary from an inpatient to an 

outpatient receiving observation 

services and the beneficiary is not 

enrolled in Part B. 

(ii) The hospital reclassifies the 

beneficiary from an inpatient to an 

outpatient receiving observation 

services and the beneficiary has stayed 

in the hospital for 3 or more consecutive 

days but was an inpatient for fewer than 

3 days. 

(2) Content of the notice. The notice 

must include the following information: 

(i) The eligible beneficiary’s’ change 

in status and the appeal rights under 

§ 405.1211 if the beneficiary wishes to 

pursue an appeal regarding that change. 

(ii) An explanation of the implications 

of the change in status, including the 

potential change in beneficiary hospital 

charges resulting from a favorable 

decision, and subsequent eligibility for 

Medicare coverage for SNF services. 

(iii) Any other information required 

by CMS. 

(3) When delivery of the notice is 

valid. Delivery of the written notice of 

appeal rights described in this section is 

valid if— 

(A) The eligible beneficiary (or the 

eligible beneficiary’s representative) has 

signed and dated the notice to indicate 

that he or she has received the notice 

and can comprehend its contents and 

except as provided in paragraph (b)(4) of 

this section; and 

(B) The notice is delivered in 

accordance with paragraph (b)(1) of this 

section and contains all the elements 

described in paragraph (b)(2) of this 

section. 

(4) If an eligible beneficiary refuses to 

sign the notice. The hospital may 

annotate its notice to indicate the 

refusal, and the date of refusal is 

considered the date of receipt of the 

notice. 


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§ 405.1211 Expedited determination 

procedures when a beneficiary is 

reclassified from an inpatient to an 

outpatient receiving observation services. 

(a) Beneficiary’s right to an expedited 

determination by the QIO. An eligible 

beneficiary has a right to request an 

expedited determination by the QIO 

when— 

(1) A hospital changes a beneficiary’s 

status from an inpatient to an outpatient 

receiving observation services; and 

(2) The beneficiary meets other 

eligibility criteria as specified in 

§ 405.1210(a)(3). 

(b) Requesting an expedited 

determination. (1) A eligible beneficiary 

who wishes to exercise the right to an 

expedited determination must submit a 

request to the QIO that has an agreement 

with the hospital as specified in 

§ 476.78 of this chapter. The request 

must be made in writing or by telephone 

before release from the hospital. 

(2) The eligible beneficiary, or his or 

her representative, upon request by the 

QIO, must be available to discuss the 

case. 

(3) The eligible beneficiary may, but 

is not required to, submit written 

evidence to be considered by the QIO in 

making its decision. 

(4) An eligible beneficiary who makes 

a timely request for an expedited QIO 

review in accordance with paragraph 

(b)(1) of this section is subject to the 

billing protection under paragraph (e) of 

this section, as applicable. 

(5) An eligible beneficiary who fails to 

make a timely request for an expedited 

determination by a QIO, as described in 

paragraph (b)(1) of this section, may still 

request an expedited QIO determination 

at any time. The QIO issues a decision 

in accordance with paragraph (c)(ii) of 

this section, but the coverage protection 

under paragraph (e) of this section does 

not apply. 

(c) Procedures the QIO must follow. 

(1) When the QIO receives the request 

for an expedited determination under 

paragraph (b)(1) of this section, it must 

immediately notify the hospital that a 

request for an expedited determination 

has been made. 

(2) The QIO determines whether the 

hospital delivered valid notice 

consistent with § 405.1210(b)(3). 

(3) The QIO examines the medical 

and other records that pertain to the 

change in status. 

(4) The QIO must solicit the views of 

the eligible beneficiary (or the eligible 

beneficiary’s representative) who 

requested the expedited determination. 

(5) The QIO must provide an 

opportunity for the hospital to explain 

why the reclassification of the 

beneficiary from an inpatient to an 

outpatient receiving observation 

services is appropriate. 

(6) The following timeframes apply 

for the QIO’s decision when an eligible 

beneficiary requests— 

(i) A timely expedited determination 

in accordance with paragraph (b)(1) of 

this section, the QIO must make a 

determination within 1 calendar day of 

receiving all requested pertinent 

information specified in paragraph 

(d)(1)(i) of this section; or 

(ii) An untimely request for a QIO 

expedited determination, the QIO must 

make a determination within 1 calendar 

day after the QIO receives all requested 

information specified in paragraph 

(d)(1)(i) of this section. 

(7) If the QIO does not receive the 

information needed to make its 

decision, it may make its determination 

based on the evidence at hand, or it may 

defer a decision until it receives the 

necessary information. 

(8) When the QIO issues an expedited 

determination, the QIO must notify the 

eligible beneficiary, the hospital, and 

SNF (if applicable) of its decision by 

telephone, followed by a written notice 

that must include the following 

information: 

(i) The basis for the determination. 

(ii) A detailed rationale for the 

determination. 

(iii) An explanation of the Medicare 

payment consequences of the 

determination. 

(iv) Information about the eligible 

beneficiary’s right to an expedited 

reconsideration of the QIO’s 

determination as set forth in § 405.1212, 

including how to request a 

reconsideration and the time period for 

doing so. 

(d) Responsibilities of hospitals. (1)(i) 

Upon notification by the QIO of the 

request for an expedited determination, 

the hospital must supply all information 

that the QIO needs to make its 

expedited determination, including a 

copy of the notice as required in 

§ 405.1210(b) of this section. 

(ii) The hospital must furnish this 

information as soon as possible, but no 

later than by noon of the calendar day 

after the QIO notifies the hospital of the 

request for an expedited determination. 

(iii) At the discretion of the QIO, the 

hospital must make the information 

available by phone or in writing (with 

a written record of any information not 

transmitted initially in writing). 

(2)(i) At an eligible beneficiary’s (or 

representative’s) request, the hospital 

must furnish the beneficiary with a copy 

of, or access to, any documentation that 

it sends to the QIO, including written 

records of any information provided by 

telephone. 

(ii) The hospital may charge the 

beneficiary a reasonable amount to 

cover the costs of duplicating the 

documentation or delivering or both it 

to the beneficiary. 

(iii) The hospital must accommodate 

such a request by no later than close of 

business of the first calendar day after 

the material is requested. 

(e) Billing during QIO expedited 

review. When an eligible beneficiary 

requests an expedited determination in 

accordance with paragraphs (b)(1) 

through (b)(4) of this section, the 

hospital may not bill the beneficiary for 

any disputed services until the 

expedited determination process (and 

reconsideration process, if applicable) 

has been completed. 

(f) Effect of an expedited QIO 

determination. The QIO determination 

is binding for payment purposes upon 

the eligible beneficiary, hospital, and 

MAC, except if the eligible beneficiary 

is dissatisfied with the determination, 

he or she may request a reconsideration 

according to the procedures described 

in § 405.1212. 

§ 405.1212 Expedited reconsideration 

procedures regarding Part A coverage 

when a beneficiary is reclassified from an 

inpatient to an outpatient receiving 

observation services. 

(a) Beneficiary’s right to an expedited 

reconsideration. An eligible beneficiary 

who is dissatisfied with a QIO’s 

expedited determination per 

§ 405.1211(c)(6) may request an 

expedited reconsideration by the QIO 

identified in the written notice specified 

in § 405.1211(c)(8)(iv). 

(b) Requesting an expedited 

reconsideration. (1) An eligible 

beneficiary who wishes to obtain an 

expedited reconsideration must submit 

a request for the reconsideration to the 

appropriate QIO, in writing or by 

telephone, by no later than noon of the 

calendar day following initial 

notification (whether by telephone or in 

writing) after receipt of the QIO’s 

determination. 

(2) The eligible beneficiary, or his or 

her representative, must be available to 

answer questions or supply information 

that the QIO may request to conduct its 

reconsideration. 

(3) The eligible beneficiary may, but 

is not required to, submit evidence to be 

considered by the QIO in making the 

reconsideration. 

(4) An eligible beneficiary who makes 

a timely request for an expedited 

reconsideration in accordance with 

paragraph (b)(1) of this section is subject 

to the billing protection under 

paragraph (e) of this section, as 

applicable. 


ddrumheller on DSK120RN23PROD with PROPOSALS2
89538 Federal Register / Vol. 88, No. 247 / Wednesday, December 27, 2023 / Proposed Rules 

(5) An eligible beneficiary who fails to 

make a timely request for an expedited 

reconsideration by a QIO, as described 

in paragraph (b)(1) of this section, may 

still request an expedited QIO 

reconsideration at any time. The QIO 

issues a reconsideration in accordance 

with paragraph (c)(3)(ii) of this section, 

but the billing protection under 

paragraph (e) of this section does not 

apply. 

(c) Procedures and responsibilities of 

the QIO. (1) On the day the QIO receives 

the request for an expedited 

reconsideration under paragraph (b) of 

this section, the QIO must immediately 

notify the hospital of the request for an 

expedited reconsideration. 

(2) The QIO must offer the eligible 

beneficiary and the hospital an 

opportunity to provide further 

information. 

(3) When the eligible beneficiary 

makes— 

(i) A timely request from in 

accordance with paragraph (b)(1) of this 

section, the QIO must make a 

reconsideration determination within 2 

calendar days of receiving all requested 

pertinent information; or 

(ii) An untimely request, the QIO 

must make a reconsideration 

determination within 3 calendar days of 

receiving all requested pertinent 

information. 

(4) When the QIO issues an 

reconsideration determination, the QIO 

must notify the eligible beneficiary, the 

hospital, and SNF, if applicable, of its 

decision by telephone, followed by a 

written notice that must include the 

following information: 

(i) The basis for the determination. 

(ii) A detailed rationale for the 

determination. 

(iii) An explanation of the Medicare 

payment consequences of the 

determination. 

(iv) Information about the eligible 

beneficiary’s right to appeal the QIO’s 

reconsideration decision to OMHA for 

an ALJ hearing in accordance with 

subpart I of this part, including how to 

request an appeal and the time period 

for doing so. 

(d) Responsibilities of the hospital. A 

hospital may, but is not required to, 

submit evidence to be considered by a 

QIO in making its reconsideration 

decision. If a hospital fails to comply 

with a QIO’s request for additional 

information beyond that furnished to 

the BFCC–QIO for purposes of the 

expedited determination, the QIO makes 

its reconsideration decision based on 

the information available. 

(e) Billing during QIO reconsideration. 

When an eligible beneficiary requests an 

expedited reconsideration in accordance 

with the deadline specified in paragraph 

(b)(1) of this section, the hospital may 

not bill the beneficiary for any disputed 

services until the QIO makes its 

reconsideration decision. 

(f) Effect of an expedited QIO 

reconsideration. The QIO expedited 

reconsideration is binding for payment 

purposes only, upon the eligible 

beneficiary, hospital, and MAC, except 

if a beneficiary elects to request a 

hearing by an ALJ in accordance with 42 

CFR part 478 subpart B if he or she is 

dissatisfied with the expedited 

reconsideration decision. 

PART 476—QUALITY IMPROVEMENT 

ORGANIZATION REVIEW 

■ 5. The authority citation for part 476 

continues to read as follows: 

Authority: 42 U.S.C. 1302 and 1395hh. 

■ 6. Section 476.71 is amended by 

adding paragraph (a)(9) to read as 

follows: 

§ 476.71 QIO review requirements. 

(a) * * * 

(9) Hospital reclassification of a 

beneficiary’s inpatient admission status 

to that of an outpatient receiving 

observation services when a beneficiary 

meets the eligibility criteria at 

§§ 405.1210 through 405.1212 of this 

chapter. Appeals of determinations are 

available as specified in § 405.1212(f) of 

this chapter. 

* * * * * 

PART 489—PROVIDER AGREEMENTS 

AND SUPPLIER APPROVAL 

■ 7. The authority citation for part 489 

continues to read as follows: 

Authority: 42 U.S.C. 1302, 1395i–3, 1395x, 

1395aa(m), 1395cc, 1395ff, and 1395hh. 

■ 8. Section 489.27 is amended by 

revising the section heading and 

paragraph (b) to read as follows: 

§ 489.27 Beneficiary notice of discharge or 

change in status rights. 

* * * * * 

(b) Notification by hospitals and other 

providers. Hospitals and other providers 

(as identified at § 489.2(b)) that 

participate in the Medicare program 

must furnish each Medicare beneficiary, 

or representative, applicable CMS 

notices in advance of discharge, 

termination of Medicare services, or of 

changes from inpatient to outpatient 

status, including the notices required 

under §§ 405.1200, 405.1202, 405.1206, 

405.1210, and 422.624 of this chapter. 

Dated: December 18, 2023. 

Xavier Becerra, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2023–28152 Filed 12–21–23; 11:15 am] 

BILLING CODE 4120–01–P 


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