Medicare Fee-For-Service: Opportunities Remain to Improve Appeals Process
Published: 2016-05-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In fiscal year 2014, Medicare processed 1.2 billion FFS claims submitted by providers on behalf of beneficiaries. When Medicare denies or reduces payment for a claim or a portion of a claim, providers, beneficiaries, and others may appeal these decisions through Medicare's appeals process.
In recent years there have been increases in the number of filed and backlogged appeals (i.e., pending appeals that remain undecided after statutory time frames). GAO was asked to examine Levels 1 through 4 of Medicare's appeals process. This report examines (1) trends in appeals for fiscal years 2010 through 2014, (2) data HHS uses to monitor the appeals process, and (3) HHS efforts to reduce the number of appeals filed and backlogged. GAO analyzed data from the three data systems used to monitor appeals, reviewed relevant HHS agency documentation and policies, federal internal control standards, and interviewed HHS agency officials and others.
section_title: What GAO Found
paragraphs: The appeals process for Medicare fee-for-service (FFS) claims consists of four administrative levels of review within the Department of Health and Human Services (HHS), and a fifth level in which appeals are reviewed by federal courts. Appeals are generally reviewed by each level sequentially, as appellants may appeal a decision to the next level depending on the prior outcome. Under the administrative process, separate appeals bodies review appeals and issue decisions under time limits established by law, which can vary by level. From fiscal years 2010 and 2014, the total number of filed appeals at Levels 1 through 4 of Medicare's FFS appeals process increased significantly but varied by level. Level 3 experienced the largest rate of increase in appeals—from 41,733 to 432,534 appeals (936 percent)—during this period. A significant portion of the increase was driven by appeals of hospital and other inpatient stays, which increased from 12,938 to 275,791 appeals (over 2,000 percent) at Level 3. HHS attributed the growth in appeals to its increased program integrity efforts and a greater propensity of providers to appeal claims, among other things. GAO also found that the number of appeal decisions issued after statutory time frames generally increased during this time, with the largest increase in and largest proportion of late decisions occurring at appeal Levels 3 and 4. For example, in fiscal year 2014, 96 percent of Level 3 decisions were issued after the general 90-day statutory time frame for Level 3.
The Centers for Medicare & Medicaid Services (CMS) and two other components within HHS that are part of the Medicare appeals process use data collected in three appeal data systems—such as the date when the appeal was filed, the type of service or claim appealed, and the length of time taken to issue appeal decisions—to monitor the Medicare appeals process. However, these systems do not collect other data that HHS agencies could use to monitor important appeal trends, such as information related to the reasons for Level 3 decisions and the actual amount of Medicare reimbursement at issue. GAO also found variation in how appeals bodies record decisions across the three systems, including the use of different categories to track the type of Medicare service at issue in the appeal. Absent more complete and consistent appeals data, HHS's ability to monitor emerging trends in appeals is limited and is inconsistent with federal internal control standards that require agencies to run and control agency operations using relevant, reliable, and timely information.
HHS agencies have taken several actions aimed at reducing the total number of Medicare appeals filed and the current appeals backlog. For example, in 2014, CMS agreed to pay a portion of the payable amount for certain denied hospital claims on the condition that pending appeals associated with those claims were withdrawn and rights to future appeals of them waived. However, despite this and other actions taken by HHS agencies, the Medicare appeals backlog continues to grow at a rate that outpaces the adjudication process and will likely persist. Further, HHS efforts do not address inefficiencies regarding the way appeals of certain repetitious claims—such as claims for monthly oxygen equipment rentals—are adjudicated, which is inconsistent with federal internal control standards. Under the current process, if the initial claim is reversed in favor of the appellant, the decision generally cannot be applied to the other related claims. As a result, more appeals must go through the appeals process.
section_title: What GAO Recommends
paragraphs: GAO recommends that HHS take four actions, including improving the completeness and consistency of the data used by HHS to monitor appeals and implementing a more efficient method of handling appeals associated with repetitious claims. HHS generally agreed with four of GAO's recommendations, and disagreed with a fifth recommendation, citing potential unintended consequences. GAO agrees and has dropped that recommendation.

section_title: Letter
paragraphs: In fiscal year 2014, Medicare processed 1.2 billion fee-for-service (FFS)  claims submitted by providers or suppliers on behalf of beneficiaries.  Medicare Administrative Contractors (MAC), on behalf of the Centers for  Medicare & Medicaid Services (CMS), an agency within the Department  of Health and Human Services (HHS), process and pay FFS claims for  health care items and services submitted by Medicare providers. MACs  and other CMS contractors also identify and deny for payment health care  claims that are invalid or otherwise improper as part of CMS’s  responsibility to ensure payments to Medicare providers are made  correctly. According to HHS, in fiscal year 2014, Medicare denied 128  million FFS claims, or 10.5 percent of claims submitted.
When Medicare denies or reduces payment for an item or service, health  care providers, beneficiaries, and state Medicaid agencies, or their  representatives, may appeal these coverage decisions through a  Medicare FFS appeals process. This process consists of five, in most  cases sequential, levels of review. Appellants typically appeal the  coverage decision at the first of the five levels, and, depending on the  outcome, may choose to appeal the decision at the next level. CMS  contractors and relevant HHS components decide appeals in the  administrative portion of the process—that is, Levels 1 through 4. HHS  components monitor these appeals, including appeal outcomes and the  extent to which the decisions are made within time limits established by  law. Level 5 appeals are reviewed by federal courts.
Recently, the administrative appeal levels (i.e., Levels 1 through 4) have  experienced pronounced increases in the number of Medicare FFS  appeals filed and some levels have also experienced increases in the  backlog of appeals, which are pending appeals that remain undecided  after statutory time frames. As a result, HHS and members of Congress  have considered ways to streamline the Medicare appeals process and  improve the timeliness with which appeals are decided.
You asked us to study the administrative portion of the Medicare FFS  appeals process to better understand the increase in appeals and efforts  being taken at HHS to address the growth in the number of appeals and  the appeal backlog. In this report, we examine  1.  trends in appeals for fiscal years 2010 through 2014;  2.  data HHS uses to monitor the Medicare appeals process; and  3.  HHS efforts to reduce the number of appeals and the appeal backlog.
To examine trends in appeals for fiscal years 2010 through 2014—the 5  most recent and complete fiscal years at the time we began our  analysis—we analyzed extracts of three data systems we obtained from  the HHS components responsible for the Medicare appeals process:  CMS; the Office of Medicare Hearings and Appeals (OMHA), an HHS  staff division; and the Medicare Appeals Council (the Council) within the  Departmental Appeals Board (DAB), which is also an HHS staff division.  The three appeals data systems are the Contractor Reporting of  Operational and Workload Data (CROWD) system, the Medicare Appeals  System (MAS), and the Medicare Operations Division Automated Case  Tracking System (MODACTS). Using extracts of CROWD, MAS, and  MODACTS, we generally determined the number of Medicare FFS  appeals filed for Levels 1 through 4 overall, by level, by the type of  appellant, by type of service, by subcategory of service, and by whether  the appeal resulted from a claim review conducted by a Recovery Auditor  (RA), a type of contractor tasked by CMS to identify improper payments  after they have been made. We also calculated the percentage of appeal  decisions issued after the statutory time frames. Finally, we analyzed  reversal rates, which are the percentage of appeal decisions that  reversed a prior decision. To assess the reliability of these data, we  performed manual and electronic testing to identify and correct for  missing data and other anomalies, interviewed HHS agency officials to  confirm our understanding of the data, and reviewed related  documentation. We determined that the data were sufficiently reliable for  our purposes. To better understand the effect of appeal decisions made  after statutory time frames on the amount of interest paid by CMS for  successful appeals at Level 3, we also asked CMS officials to estimate  the amount of interest the agency has paid as a result.
To examine data HHS uses to monitor the Medicare appeals process, we  reviewed documentation describing each appeals data system in use  during the time frame of our evaluation to understand the data that track  an appeal and appeal decision and how those data are collected and  used. In addition, we interviewed officials from HHS agencies about the  data systems and how they use the appeals data for monitoring.
To examine actions taken by HHS agencies aimed at reducing the  appeals backlog, we identified actions taken that may reduce the number  of filed appeals, actions to reduce the number of appeals reaching Levels  3 and 4, and actions to reduce the appeals backlog. To identify these  actions, we reviewed relevant regulations, HHS agencies’ reports and  guidance, and interviewed representatives from HHS agencies and  selected contractors that serve as appeals bodies at Levels 1 and 2.  When possible, we analyzed data from HHS agencies to determine how  some of these actions affected the number of filed appeals and the  appeals backlog, and the likelihood that the appeals backlog would  persist. Lastly, we examined what, if any, issues that affect the appeals  backlog have not been addressed by actions HHS agencies have taken  to date. To accomplish this, we interviewed representatives from HHS  agencies, contractors serving as Level 1 and 2 appeals bodies, and  seven provider associations that represent the service areas that  generated the greatest number of Medicare appeals in 2013.
For all three objectives, we reviewed HHS documentation, including a  June 2015 report to Congress describing the origins of the Medicare  appeals backlog and HHS’s plans for its resolution, and the HHS budget  justification materials accompanying the President’s budget request for  fiscal years 2016 and 2017. We also reviewed applicable federal  standards for internal control. See appendix I for a more detailed  description of our scope, methodology, and related limitations.
We conducted this performance audit from March 2015 to April 2016, in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Medicare Prepayment and Postpayment Claim Reviews
paragraphs: Medicare claims can be denied on a prepayment basis (i.e., before the  claim is paid) or on a postpayment basis (i.e., after the claim is paid and  the payment is identified as improper). Many appeals originate from  claims denied on a prepayment basis, but the same appeal rights exist for  either scenario. To conduct a prepayment claim review, CMS contractors  conduct several checks to determine whether a claim received from a  provider should be paid. These checks include verifying that the provider  is enrolled in Medicare, the beneficiary is eligible to receive Medicare  benefits, and the service is covered by Medicare. In limited cases, before  paying a claim, contractors review the supporting medical documentation  for a claim to ensure the service was medically necessary. As a result of  these checks or reviews, CMS’s contractors may deny Medicare payment  for the claim. Most prepayment reviews are conducted by MACs, which  are responsible for processing and paying FFS claims within 16  geographic jurisdictions. To conduct a postpayment review, contractors  generally select claims from among those that have already been  processed and paid, request and review documentation from providers to  support Medicare coverage of the services identified in those claims, and  apply Medicare coverage and coding requirements to determine if the  claims were paid properly, reviewing, for example, whether the service  was medically necessary or provided in the appropriate setting. The  majority of the postpayment reviews are conducted by RAs.
section_title: Medicare Administrative Appeals Process
paragraphs: The Medicare administrative appeals process allows appellants who are  dissatisfied with decisions at one level to appeal to the next level. The  entities tasked with resolving appeals are referred to as appeals bodies.  The statutory time frames for submitting and issuing appeal decisions can  vary by level. (See table 1.) When an appeals body cannot render a  decision within the applicable statutory time frame at levels 2 through 4,  the appellant has the opportunity to escalate the appeal to the next level  of appeal. CMS may also refer certain decisions made at Level 3 to  Level 4.
Each level of appeal follows similar steps. First, the appellant files an  appeal and submits supporting documentation. The appeals body then  assigns the appeal to an adjudicator who reviews the appeal, including  the relevant Medicare policies and documentation. Adjudicators at all four  levels generally conduct what are known as de novo reviews, meaning  they conduct an independent evaluation of the claim(s) at issue and are  not bound by the prior findings and decisions made by other adjudicators.  Next, the appeals body issues the appeal decision and notifies the  appellant. If the appellant files an appeal at the next appeal level, the  documentation associated with the prior appeal is sent to the next appeal  level.
Appeals must meet certain requirements in order to be reviewed. For  example, the appeal must be filed by an appropriate party, such as by the  provider who furnished the service to the beneficiary and submitted a  claim to Medicare for that service. In addition, the appeal must be filed  within the required time frame. To be reviewed at Level 3, an appeal must  meet or exceed a minimum dollar amount, known as the amount in  controversy. Under certain circumstances, appellants may combine  claims to meet the amount in controversy requirement, which is $150 in  calendar year 2016.
Some differences exist in the criteria appeals bodies use to make their  decisions.
While all levels are bound by statutes, regulations, national coverage  determinations, and CMS rulings, only Level 1 is subject to local  coverage determinations (LCD) and CMS program guidance, such as  program memoranda and manual instructions. In comparison,  Levels 2 through 4 are required to give substantial deference to LCDs  and other CMS program guidance if they are applicable to a particular  appeal. However, unlike Level 1, Levels 2 through 4 may exercise  discretion to decline to follow LCDs and CMS program guidance when  issuing an appeal decision, and must explain in the decision the basis  for doing so.
Levels 1 and 2 can also accept and consider new evidence submitted  by appellants to support their appeals. For example, to pay claims  related to certain durable medical equipment, prosthetics, orthotics,  and supplies (DMEPOS), CMS requires providers to submit a  certificate of medical necessity. If this document was not submitted  with the original claim, the provider may submit it as part of the  appeal. At Levels 3 and 4, new evidence can generally be accepted  only with “good cause.”
Unlike Levels 1, 2, and 4, which decide appeals generally by  reviewing the documentation upon which the initial denial was based  as well as any supporting documentation the appellant submitted with  the appeal, Level 3 Administrative Law Judges (ALJ) conduct  hearings during which appellants are permitted to explain their  positions, present evidence, and submit into the record a written  statement of the facts and law material to the issue.
All four appeals bodies may issue appeal decisions that do not address  the merits of the case:
Dismiss: The appellant withdraws the request for an appeal or the  appeals body determines that the appellant or appeal did not meet  certain procedural requirements; for example, the appellant did not file  the request within the required time frame.
Remand: An action that can be taken at Level 2, 3, or 4 which vacates  a lower level appeal decision, or a portion of the decision, and returns  the case, or a portion of the case, to that level for a new decision.
Appeal decisions for Levels 1 through 3 include the following categories  for decisions issued on the merits based upon a consideration of the facts  of the appeal:
Fully reverse: The appeals body fully reverses a prior decision  denying coverage and all of the claim(s) in dispute are paid.
Partially reverse: The appeals body partially reverses a prior decision  denying coverage, and those parts of the claim(s) in dispute are paid.
Not reverse: The appeals body upholds a prior decision denying  coverage, and payment of the claim(s) in dispute is denied.
Level 4 uses different categories for decisions issued on the merits. In  addition to dismissing or remanding a Level 3 decision, Level 4 appeal  decisions can affirm, reverse, or modify a Level 3 decision. Additional  information about Level 4 appeal categories is discussed in appendix I.
section_title: Medicare FFS Appeals Data Systems
paragraphs: To help manage the Medicare appeals process and track appeal  decisions, the appeals bodies use various data systems. (See table 2.) In  2005, CMS implemented MAS, which at the time was intended to support  Levels 1 through 4. However, currently, three data systems are used to  collect appeals data across the four levels of the Medicare appeals  process.
section_title: Medicare Appeals and Untimely Appeal Decisions Increased from Fiscal Years 2010 through 2014
paragraphs: The total number of Medicare appeals filed and the number of appeal  decisions that were issued after statutory time frames at Levels 1 through  4 increased from fiscal years 2010 through 2014, with the largest rate of  increase at Level 3. Reversal rates also decreased during this time for  most levels of appeals.
subsections: section_title: Total Number of Medicare Appeals Filed at All Levels Increased from Fiscal Years 2010 through 2014, with the Largest Rate of Increase at Level 3
paragraphs: Between fiscal years 2010 and 2014, the number of filed appeals at all  levels of Medicare’s appeals process increased significantly, with the rate  of increase varying across levels. For example, during this period, the  number of Level 1 appeals, which represented the vast majority of all  appeals, increased from 2.6 million to 4.2 million—an increase of 62  percent—which was the slowest rate of increase among the four levels.  While Level 3 handled fewer appeals overall, it experienced the largest  rate of increase in appeals from 41,733 to 432,534 appeals—936  percent—during this period. (See table 3.) For most levels, the largest  annual growth over the 5-year period occurred between fiscal years 2012  and 2013, and between fiscal years 2013 and 2014 the rate of growth  slowed at all levels.
For all appeal levels, appeals of claim denials for Medicare Part A (Part  A) services showed the most dramatic increase. Among the four levels,  Level 3 experienced both the largest increase in appeals overall, as well  as the largest increase in Part A appeals, which increased over 2,000  percent between fiscal years 2010 and 2014. (See fig. 1.) Appeals of  denied DMEPOS claims also grew substantially during this time at all  levels. For example, DMEPOS-related appeals increased the most at  Level 3 at over 1,000 percent.
HHS attributed the increases in appeals overall to several factors. For  example, HHS fiscal year 2016 budget justification materials noted that  CMS’s increased focus in recent years on expanding new program  integrity activities to ensure proper payment has resulted in more denied  claims and, therefore, more appeals. Specifically, appeals resulting from  RA claim denials began entering the appeals process in fiscal year 2011  after Congress enacted legislation that expanded the RA program from a  demonstration operating in six states to a permanent national program,  which CMS implemented in fiscal year 2009. In expanding nationally, the  RA program added a new set of contractors with the specific purpose of  reviewing postpayment claims to identify improper payments. In addition  to the large volume of postpayment reviews conducted by the RAs, there  was also an increase in overall claim denials from fiscal years 2011 to  2014, according to HHS’s June 2015 Process Improvement and Backlog  Reduction Plan. The number of overall claim denials during this time  period for Part A and B claims increased 12.5 and about 9 percent,  respectively. For all levels, we found that appeals related to RA denials  were a larger contributor to the increase in Part A appeals compared to  Part A appeals not related to RAs. For example, at Level 3, RA-related  appeals of Part A services grew from 1 percent (140 appeals) of filed Part  A appeals in fiscal year 2010 to 78 percent (216,271 appeals) in fiscal  year 2014.
HHS also attributed the increase in appeals to a greater propensity  among providers to appeal denied claims. From fiscal year 2010 to fiscal  year 2014, the proportion of appeals filed by providers increased at  Levels 2 through 4. The proportion of appeals filed by state Medicaid  agencies also increased at Levels 2 and 4, while the proportion of  appeals filed by beneficiaries at Levels 2 through 4 declined. According to  HHS agency officials, a small number of providers and state Medicaid  agencies were responsible for a large share of the appeals. For example,  at Level 2, CMS noted that three DMEPOS suppliers filed 12 percent of  DMEPOS appeals in calendar year 2012 and 33 percent of Level 2  DMEPOS appeals in calendar year 2014. Similarly, at Level 3, OMHA  reported that four DMEPOS providers and one state Medicaid agency  filed 51 percent of appeals in the first quarter of fiscal year 2015. In  addition, the number of appeals filed by state Medicaid agencies more  than doubled at Levels 2 through 4 from fiscal year 2010 to fiscal year  2014. At Level 3, state Medicaid agency appeals increased from 2,617 to  25,195 during that time period. According to HHS’s Process Improvement  and Backlog Reduction Plan, appeals filed by state Medicaid agencies  that relate to home health care services provided to beneficiaries eligible  for both Medicare and Medicaid services have contributed to the growth  in Level 3 appeals, and CMS officials told us that four state Medicaid  agencies (Connecticut, Massachusetts, New York, and Vermont)  generated the majority of these appeals. (For more information on  appeals by appellant type, see app. II.)
section_title: Appeal Decisions Exceeding Statutory Time Frames Generally Increased from Fiscal Years 2010 through 2014, with Most Frequent Delays Occurring for Levels 3 and 4
paragraphs: The number of appeal decisions that were issued after statutory time  frames generally increased from fiscal years 2010 through 2014. Among  the four appeal levels, Levels 1 and 2 had a smaller proportion of  decisions exceeding statutory time frames over the period. For example,  CMS data show that in fiscal years 2010 and 2011, MACs generally  issued less than 10 percent of their Level 1 appeal decisions after the  statutory time frame (see table 4). In fiscal year 2012, MACs issued a  greater percentage of decisions after statutory time frames and, notably,  CMS data show that in the fourth quarter of that year, MACs issued about  68.5 percent of their appeal decisions related to DMEPOS claims after  the statutory time frame. CMS officials told us that the delays resulted  from two factors: two MACs received a high volume of appeals filed by  seven suppliers and one of those MACs also experienced challenges  implementing a new tool used to generate correspondence with  appellants. In fiscal year 2014, MACs again issued less than 10 percent  of Part A and DMEPOS appeals after statutory time frames, though  nearly 21 percent of Medicare Part B (Part B) appeal decisions were  issued after statutory time frames in one quarter.
Like the MACs, the Qualified Independent Contractors (QIC) also  generally had a relatively small proportion of Level 2 decisions exceeding  the statutory time frame during this time. CMS data show that the QICs  began issuing appeal decisions after the statutory time frame in fiscal  year 2011, and the percentage of such appeal decisions increased to 44  percent (345,049 appeals) in fiscal year 2013. However, in fiscal 2014,  the QICs issued less than 5 percent of their appeal decisions after the  statutory time frame.
In contrast, the increase in appeal decisions issued after statutory time  frames and the proportion of those appeal decisions were greater at  Levels 3 and 4. For example, OMHA data show that in fiscal year 2014,  ALJs issued 96 percent of their Level 3 appeal decisions after the  statutory time frame. Similarly, Departmental Appeals Board (DAB) data  show that in fiscal year 2014 the Council issued 91 percent of its Level 4  appeal decisions after the statutory time frame. (See fig. 2.) In fiscal year  2014, Levels 3 and 4 issued decisions within the statutory time frames for  a greater percentage of beneficiary-filed appeals than appeals filed by  providers or state Medicaid agencies. Recognizing that delays in issuing  appeal decisions affects this population most acutely, both levels have  instituted processes to move beneficiary appeals to the front of their  queues. Between the two appeals bodies, Level 3 ALJs took longer to  issue decisions. In fiscal year 2014, ALJs issued 93 percent of their Level  3 appeal decisions in 180 days or more—the statutory time frame is  generally 90 days—while the Council issued 67 percent of Level 4 appeal  decisions in 180 days or more.
According to HHS’s Process Improvement and Backlog Reduction Plan,  the increase in late appeal decisions for Levels 3 and 4 from fiscal year  2010 through 2014 resulted from the increase in the number of appeals  filed, as well as the relatively flat budgets of OMHA and the Council,  which have prevented the hiring of sufficient staff to address the growing  workload. For example, as previously noted, the number of filed appeals  at Level 3 increased over 900 percent from fiscal year 2010 to fiscal year  2014, while OMHA’s budget during the same period increased from about  $71 million to about $82 million (16 percent). (See table 5.) In addition,  HHS noted that neither HHS agency receives funds from recoveries  made by the RA program, although they review appeals of claims denied  by RAs.
The increase in the number of decisions made after statutory time frames  at Levels 3 and 4 also increases the amount of interest paid by CMS to  providers whose postpayment claim denials are reversed upon appeal,  thus increasing Medicare’s costs. Currently, CMS is prohibited by statute  from collecting overpayments from providers who file appeals until after a  Level 2 decision is made. CMS is also required to pay providers interest  on the overpayments it initially collects after the Level 2 decision is made  and then returns when the appellant wins appeals at Level 3 or higher.  In 2014, the annual interest rate paid by CMS to these providers ranged  from 9.625 percent to 10.375 percent. As a result, CMS interest payments  have increased. Specifically, CMS officials estimate that from fiscal years  2010 through 2015, the agency paid $17.8 million in interest payments to  Part A and B providers that it would not have paid had Level 3 issued  appeal decisions within statutory time frames. Moreover, CMS  estimates that the agency paid about 75 percent of this interest ($13  million) in fiscal years 2014 and 2015, when delays in issuing decisions  have been the longest.
section_title: Reversal Rates at Levels 1 through 3 Decreased from Fiscal Year 2010 to 2014 and Appeals Reaching Level 3 Were Most Likely to Be Reversed
paragraphs: From fiscal years 2010 through 2014, fully favorable reversal rates  decreased for Levels 1 through 3, but varied across levels, with appeals  reaching Level 3 the most likely to be reversed. (See fig. 3.) For  example, in fiscal year 2014, ALJs fully reversed the prior decision in 54  percent of Level 3 appeal decisions issued on the merits. In contrast,  Level 1 and Level 2 adjudicators fully reversed prior decisions in 36 and  19 percent, respectively, of appeal decisions issued on the merits in fiscal  year 2014.
At different times, HHS has attributed the relatively high reversal rates at  Level 3, in part, to the opportunity for hearings and presentation of new  evidence at Level 3, and ALJs’ exercise of discretion in declining to follow  LCDs and CMS program guidance. More specifically, HHS has noted the  following:
ALJs conduct hearings, which provide an opportunity for appellants to  explain the rationale for the medical treatment.
ALJs may consider new evidence admitted for good cause—for  example, documentation required for the claim to be approved that  the appellant did not submit for consideration at Levels 1 or 2.
While neither CMS nor OMHA collect data in MAS that would allow us  to substantiate to what extent ALJs declining to follow LCDs or CMS  program guidance contribute to Level 3 reversals, HHS noted in its  Process Improvement and Backlog Reduction Plan that this is a  factor, and a 2012 HHS Office of Inspector General (OIG) report  reached similar conclusions. Furthermore, OMHA’s most recent  quality assurance evaluation, completed in 2013, identified  compliance with and understanding of the role of LCDs and other  program guidance as a key issue for improvement.
According to HHS’s Process Improvement and Backlog Reduction Plan,  the qualified decisional independence afforded ALJs may result in a more  favorable result for appellants at Level 3. Furthermore, as anticipated by  the federal law governing administrative procedures, qualified decisional  independence leaves substantial room for subjectivity in ALJs’ application  of policy to the facts of a given case, and consequently, two reasonable  reviewers can review the same facts and come to two legally defensible  conclusions. Similarly, OMHA’s 2013 quality assurance evaluation found  that of 60 reviewed cases that were decided after a hearing that involved  an LCD or other CMS program guidance, in 30 cases the policy was  applied differently than how it was applied at the lower level.
While reversal rates declined across Levels 1 through 3 from fiscal years  2010 through 2014, reversal rates varied by type of service, with Part B  appeals having the highest reversal rates. (See fig. 4.)
In addition, fully favorable reversal rates at Levels 1 and 3 during this time  generally varied depending upon whether the appeal was RA-related. At  Level 1, RA-related appeals often had lower fully favorable reversal rates  than did non-RA appeals, though differences exist when rates are  compared by type of service. In contrast, RA-related appeals at Level 3  generally had higher fully favorable reversal rates than did non-RA  appeals, both overall and for each of Part A and Part B services. (For  more information on reversal rates for Levels 1 through 3, see app. III.)
Our analysis of Level 4 appeals data shows that from fiscal years 2010  through 2014, the Council affirmed the Level 3 decision in about two- thirds of appeals, and reversed, dismissed, or remanded the remaining  one-third of the decisions. Level 4 decisions on appeals filed by providers,  beneficiaries, and state Medicaid agencies were more likely to affirm ALJ  decisions compared to decisions on appeals referred by CMS, meaning  that the Council’s decisions were more likely to uphold lower level  decisions to deny Medicare payment for those claims. Specifically, Level  4 decisions affirmed the Level 3 decision in 73 percent of appeals filed by  appellants and in only 15 percent of appeals filed by CMS. (For more  information on reversal rates for Level 4, see app. III.)
section_title: Data Systems Used by HHS to Monitor Appeals Process Do Not Capture Data to Identify Important Trends or Provide Consistent Data for Monitoring Appeals across Levels
paragraphs: HHS agencies use appeals data to monitor the Medicare appeals  process, but do not collect information on the reasons for Level 3 appeal  decisions or the amounts of allowed Medicare payments in dispute.  Further, we identified several instances of inconsistent data across the  three data systems used by HHS to monitor appeals.
subsections: section_title: HHS Agencies Use Data to Monitor Appeals but Do Not Collect Other Data on Reasons for Level 3 Appeal Decisions and Actual Amounts of Medicare Payments at Issue
paragraphs: HHS agencies use data collected in CROWD, MAS, and MODACTS to  monitor the Medicare appeals process for Levels 1 through 4. These data  systems collect information such as the date when the appeal was filed,  the type of service or claim appealed, and the length of time taken to  issue appeal decisions. Among other things, HHS agencies use these  data to identify emerging trends, such as increases in appeals among  certain service categories and changes in reversal rates; determine the  extent to which the agencies or their contractors decide appeals within  the statutory time frames; and help HHS estimate resource needs. For  example, CMS officials told us that using data collected in MAS the  agency observed that the largest increases in filed DMEPOS appeals  were related to oxygen supplies and diabetic glucose testing supplies. As  a result, the agency developed a strategy to help reduce the growth in  these types of appeals.
CMS and OMHA are also in the process of making changes to these  appeals data systems, and according to agency officials, these changes  will improve their monitoring activities. Specifically, CMS plans to  transition the collection of all Level 1 appeals data from CROWD into  MAS, a process that CMS officials expect could take a minimum of 27  months and is dependent on the receipt of additional funding. CROWD  currently collects the majority of Level 1 appeals data, which has less  specificity than MAS. For example, CROWD collects only aggregate  monthly totals of the number of appeals filed, which does not, for  example, enable the tracking of individual Level 1 appeal decisions.  Additionally, OMHA is developing the Electronic Case Adjudication and  Processing Environment (ECAPE) to help the agency transition from a  paper-based business process to a fully electronic one, enabling OMHA  officials to automate many aspects of the agency’s appeals processes,  such as generating appellant correspondence. ECAPE will exchange  Level 3 data with MAS and MAS will continue to be the data system of  record for Level 3 decisions in order to enable the sharing of common  appeals data across the first three levels. According to OMHA officials,  the new system will also provide the agency with additional data with  which to monitor appeals at Level 3. For example, officials told us that  ECAPE will allow the tracking of the time it takes to conduct discrete  processes in Level 3, such as the time between when an ALJ provides  written instructions to an attorney to when an attorney completes the  decision letter draft. Additionally, OMHA officials told us that the data from  ECAPE will also provide the agency with additional functionalities not  present in MAS that could improve the efficiency with which Level 3  appeals are decided, such as the ability to allow appellants to view on a  website the documentation included in their appeal file. Officials expect  such a website could reduce the amount of redundant documentation  from prior appeal levels submitted by appellants that must be reviewed by  OMHA staff.
However, MAS does not collect other information contained in ALJs’  appeal decisions issued at Level 3, which is one data source CMS uses  to monitor Level 3 appeal decisions. Level 3 decision letters generally  document the facts of the case and the rationale for an appeal decision,  but MAS does not collect detailed information related to the reasons for  the appeal decisions that could be useful to HHS. For example, MAS  does not contain information on whether LCDs or other CMS program  guidance were among the issues disputed as part of the appeal, whether  the ALJ declined to follow such guidance in issuing the decision, whether  the ALJ admitted new evidence, or whether other factors contributed to  the Level 3 decision. While some information on the reasons for Level 3  denials is collected by a CMS contractor, this information is not  maintained in MAS.
Of the three Medicare appeals systems, only MAS collects information on  the amount at stake in an appeal. In MAS, the amount is tied to the  amount billed by the provider, but this amount can vary substantially from  the Medicare allowed amount. According to HHS officials, CMS and  OMHA data analyses suggest that, on average, billed amounts are about  three times higher than the Medicare allowed amounts, but for some  types of service, such as DMEPOS, the billed amount can be as much as  eight times higher than the Medicare allowed amount. The Medicare  allowed amount is a better approximation of what Medicare will actually  pay if the item or service at issue in the appeal was covered. For  example, according to CMS data, we found that inpatient hospitals in the  United States billed Medicare an average of $6.3 billion for the top 100  diagnoses and procedures in fiscal year 2013, but the Medicare allowed  amount for these services averaged $1.4 billion. CMS officials told us  that MAS does not track the Medicare allowed amount for prepayment  claim denials because the MACs do not compute this amount for those  claims. CMS officials also indicated that tracking allowed amounts for all  appealed claims at Levels 1 and 2 would be extremely resource intensive  and the benefits would be minimal. However, several MACs told us that  they compute an estimate of the Medicare allowed amount to determine  the Medicare savings associated with their prepayment medical  reviews. Additionally, CMS officials told us that MAS currently collects  the data that would be used to calculate the Medicare allowed amount,  such as procedure codes.
The collection of these types of data, specifically reasons for ALJ  decisions and the Medicare allowed amount associated with an appeal,  could help HHS agencies strengthen their existing monitoring and data  collection activities. This would be consistent with the federal standards  for internal control that require agencies to conduct ongoing monitoring to  assess the quality of performance over time to ensure operational  effectiveness, and to run and control agency operations using relevant,  reliable, and timely information. If HHS agencies collected information  on the key characteristics that contributed to the Level 3 appeal decision  in the appeals data systems, they would have information that could help  identify appeal trends, which could help identify payment or claim review  policies in need of clarification or additional guidance for appeals bodies  or appellants.
Similarly, by not collecting the Medicare allowed amount for all pending  appeals, HHS agencies are lacking information that could be useful in  three ways.
OMHA officials told us that the agency would like to base the amount  in controversy on the Medicare allowed amount, as they believe that  doing so could help reduce the number of Level 3 appeals filed in two  ways. First, by using the Medicare allowed amount, some appeals  might fall below the amount in controversy, and, therefore, would not  be appealed. Second, appellants could choose to aggregate appeals  that individually fall below the amount in controversy, which could also  reduce the number of appeals filed. Currently, per regulation, the  amount in controversy is computed using the provider billed amount.
HHS agencies could use the Medicare allowed amount to calculate  reversal rates based upon the potential Medicare dollars payable.  Currently, HHS agencies calculate reversal rates based upon the  number of appeals or appealed claims. Such a methodology does not  account for differences in the dollar value of those appeals. Monthly  reports from 2014 prepared for CMS on the Medicare appeals  process state that the Level 3 reversal rate is higher when it is  calculated based upon the amount in controversy, which according to  monthly reports indicates that higher value claims are more likely to  be reversed on appeal.
Without the Medicare allowed amount or an approximation of it, HHS  agencies do not know the amount of money at issue in the Medicare  appeals process.
section_title: Inconsistencies across Appeals Data Systems Limit HHS Agencies’ Ability to Monitor Appeals
paragraphs: Our review found data inconsistencies across the three appeals data  systems and within the appeal levels that use MAS, such as variation in  how appeal decisions are recorded at the claim level and how HHS  agencies track appeal decisions. These data inconsistencies limit HHS  agencies’ ability to monitor emerging trends in appeals using consistent  and reliable data. Federal standards for internal control call for agencies  to establish and control operations using reliable information.
First, our review found variation in how appeal decisions at the claim level  are recorded across CROWD, MAS, and MODACTS. Specifically, MAS  has the capability to track appeal decisions by each claim, as well as by  each line item in a claim, while CROWD and MODACTS do not. A claim  for Medicare payment may identify a single procedure or item, or multiple  procedures or items. For example, a claim for a continuous positive  airway pressure device, a DMEPOS item, can have multiple line items  that represent the device, tubes, filters, and mask included on the claim.  Payment for some or all of these line items can be denied and then  appealed.
We also found variation within MAS in how the Level 1 through 3 appeals  bodies record appeal decision data at the claim level. The Level 1 and 2  adjudicators that report appeals data in MAS record an appeal decision  for each line item within a claim. MAS then derives a claim-level decision,  that reflects the totality of decisions made for each of the claim lines  included in the appeal. Using the claim-level decision, CMS can  calculate a claim-level reversal rate. For example, the fully favorable  reversal rate at the claim-level for an appeal composed of 10 claims,  where 4 are fully reversed, would be 40 percent. In contrast, OMHA  officials told us that ALJ teams vary in how they record claim-level  decisions in MAS. Specifically, OMHA officials told us that while some  ALJ teams record the actual decision for every claim included in the  appeal, others record the decision for the appeal overall as the decision  for each claim in the appeal. In such a circumstance, a comparable claim- level reversal rate cannot be calculated using the hypothetical example of  the 10-claim appeal referenced above because all claims would be coded  as partially reversed even though 4 claims were reversed and 6 claims  were not reversed. Additionally, claim-level reversal rates cannot be  compared across Levels 2 and 3. These differences in how data are  entered into MAS limit HHS’s ability to compare claim-level reversal rates  consistently across all appeal levels.
Secondly, we found inconsistencies in how appeals are tracked by appeal  level in the three data systems. Specifically, the three data systems use  different categories to track the type of Medicare service at issue in the  appeal, such as whether the appeal relates primarily to an inpatient  hospital claim or a transportation claim. For example, Levels 1 and 3  cannot identify appeals submitted by hospice providers because these  appeals at Level 1 are categorized as “other” and at Level 3 they are  combined with home health appeals, even though hospice is tracked as  its own category at Levels 2 and 4. Some efforts are being made to track  appeals across appeal levels more consistently at Levels 2 and 3 in MAS.  For example, according to an OMHA official, the agency plans to begin  using the same appeal categories to track appeals at Level 3 that are  used at Level 2, but has not determined when it will implement this  planned change. There are also differences in how each appeal level  assigns the appeal category to each appeal. For example, for Level 2  appeals, MAS assigns the appeal category using an algorithm based  principally upon the type of claim filed. In contrast, Level 4 staff manually  assign and enter the Level 4 appeal category in MODACTS, generally  based upon information provided by the appellant in filing the appeal or  from the Level 3 decision, according to Council officials. Such differences  in how appeal categories are assigned can contribute to differences in  how appeals are classified across appeal levels.
Finally, another inconsistency we identified across the appeals data  systems is the tracking of whether appeals are related to claims reviewed  by the different Medicare review contractors. This is information that CMS  can use to monitor the performance of its medical review contractors by  tracking their appeal reversal rates. Although CROWD, MAS, and  MODACTS track whether an appeal is RA-related, there are  inconsistencies in whether appeals related to other medical review  contractors are tracked in these systems. For example, only MAS tracks  appeals related to the contractor that investigates fraud, and none of the  three systems track whether the appeal was related to an improper  payment identified by a MAC or by another of CMS’s review contractors,  the Supplemental Medical Review Contractor.
CMS and OMHA officials told us that they agree that greater data  consistency across the Medicare appeals data systems and among the  appeal levels using MAS would be beneficial for monitoring purposes.  CMS officials told us that the agency awarded a contract in September  2015 to evaluate Levels 1 through 4 of the Medicare appeals process and  that the evaluation, which is due in spring 2016, could also identify ways  in which the appeals data could be improved. The specific objectives of  this evaluation are to identify any changes that could streamline the  Medicare appeals process, reduce the backlog of appeals, and reduce  the number of filed appeals or the number of appeals reaching Levels 3  and 4. CMS officials told us they also expect the evaluation to identify  additional appeals data that should be collected to improve the appeals  process; however, this activity was not identified as an objective in the  evaluation’s statement of work, and therefore, we do not know to what  extent the evaluation will focus on the data in the appeals systems. While  conducting such an evaluation is a good first step and may allow HHS to  make improvements to the data systems that collect appeal information, it  is unclear what findings the evaluator will recommend related to data  consistency as this topic appears to be a small component of the overall  evaluation.
section_title: Despite HHS Actions, the Appeals Backlog and Inefficiencies Related to Certain Repetitive Claims Remain
paragraphs: HHS agencies have taken several actions to reduce the total number of  Medicare appeals filed and the current appeals backlog. However, the  Medicare appeals backlog is likely to persist despite actions taken to  date, and HHS efforts thus far do not address inefficiencies with the way  certain repetitive claims are adjudicated.
subsections: section_title: HHS Agencies Took Actions to Reduce the Number of Medicare Appeals, the Number of Appeals Reaching Levels 3 and 4, and the Current Appeals Backlog
paragraphs: In order to provide more timely adjudication of appeals of Medicare claim  denials, HHS agencies have taken various actions, which can be grouped  into three categories:  1.  changes to Medicare prepayment and postpayment claims reviews,  which may reduce claim denials and, therefore, the number of filed  appeals;  2.  actions aimed at reducing the number of decisions at lower appeal  levels that lead to appeals at Levels 3 and 4; and  3.  actions aimed at resolving the current backlog of undecided appeals  at Levels 3 and 4.
subsections: section_title: Actions That May Reduce the Number of Filed Appeals
paragraphs: CMS has made some changes to Medicare prepayment claims reviews,  which may reduce the number of claim denials, and as a result, the  number of filed appeals. For example, due to concerns about improper  payments for certain services, CMS has established four prior  authorization models in which providers submit documentation to support  a claim for Medicare payment before rendering services, instead of  submitting that documentation after the service was provided at the time  the claim is submitted for payment. According to CMS officials, this  practice allows providers to work with MACs to address potential issues  with claims before the services are performed. Since 2012, CMS has  implemented three demonstrations that require providers in certain states  to obtain prior authorization for power wheelchairs and scooters,  repetitive scheduled non-emergent ambulance transports, and non- emergent hyperbaric oxygen therapy. In addition, CMS established a  prior authorization process for certain other DMEPOS items on February  29, 2016. In February 2016, a CMS official said that a recent decline in  the number of Level 1 and 2 appeals of denied DMEPOS claims is due, in  part, to the power mobility devices and non-emergent hyperbaric oxygen  therapy prior authorization demonstrations.
CMS also made changes to the inpatient hospital coverage policy and the  RA program, which have reduced the number of Part A filed appeals at  Levels 1 and 2. For example, on October 1, 2013, CMS implemented a  rule intended to clarify the circumstances under which Medicare would  cover short stays in inpatient hospitals in an effort to help reduce the  number of providers billing inappropriately for inpatient care instead of  outpatient services. As a result of these new coverage policies, CMS  prohibited the RAs from conducting reviews of short-stay inpatient  hospital claims with dates of admission after October 1, 2013. After  several extensions imposed by CMS and Congress, the prohibition ended  in January 2016, at which time CMS allowed the RAs to conduct a limited  number of short-stay inpatient admission reviews. The number of  appeals filed related to hospital and other inpatient claims at Levels 1 and  2 declined in 2014 and 2015 from a high in 2013. In addition, in 2015,  CMS limited the RA look-back period to 6 months from the date of service  for certain patient status reviews instead of 3 years, which reduces the  number of claims eligible for RA review and possible denial. RAs are also  required to allow for a discussion period, in which providers who receive  an improper payment determination can discuss the rationale for the  determination and submit additional information that may substantiate  payment of their claim prior to the claim adjustment process.
section_title: Actions to Reduce the Number of Appeals Reaching Levels 3 and 4
paragraphs: CMS has also taken actions aimed at reducing the number of appeals  filed at Levels 3 and 4. In a demonstration that began in January 2016,  the QIC responsible for processing DMEPOS appeals will engage in  formal discussions with certain providers that are appealing two items— oxygen supplies and diabetic glucose testing supplies—before issuing an  appeal decision. CMS officials predict that these discussions will enable  the QIC to reverse more claim denials at Level 2, thereby reducing the  number of appeals that reach Levels 3 and 4. In future years, CMS plans  to expand the demonstration to providers with appeals related to other  DMEPOS services.
In another change, effective August 2015, CMS instructed MACs and  QICs to focus their reviews of appeals of postpayment claim denials on  only the reason(s) for the denial at issue in the original appeal, without  introducing new reasons that appellants would need to address in further  appeals. Prior to this change, MACs and QICs reviewing appeals  involving prepayment and postpayment claim denials were able to identify  new claim denial reasons. CMS’s policy change will address stakeholder  concerns that when MACs and QICs conducted independent reviews of  claims, they often found new reasons to deny the claim, and as a result,  appellants would have to file an appeal and provide evidence to address  the new denial reason(s) at the next level of appeal. In February 2016, a  CMS official reported that the agency believes this policy change has  already resulted in an increase in the Level 2 reversal rate, which should  reduce the number of appeals reaching Levels 3 and 4.
section_title: Actions to Reduce the Appeal Backlog
paragraphs: CMS and OMHA have also taken steps to reduce the number of  undecided appeals at Level 3 and Level 4. Under the global settlement  CMS offered to hospitals from August to October 2014, CMS agreed to  pay 68 percent of the inpatient net payable amount on Part A claims  denied because the inpatient setting was determined to be medically  unnecessary. In exchange, the hospital withdrew its pending appeals and  waived its right to file a future appeal related to the claims. As of June 1,  2015, CMS paid approximately $1.3 billion to providers through the  settlement. We estimate that it reduced the number of undecided appeals  by 31 percent at Level 3 and 37 percent at Level 4. (See table 6.)
In addition, OMHA has implemented three pilot programs—the settlement  conference facilitation pilot, the statistical sampling pilot, and the senior  attorney pilot—which focus on resolving appeals at Level 3 more  efficiently. OMHA’s settlement conference facilitation pilot, which began in  June 2014, allows eligible appellants to have their appeals at Level 3  settled through an alternative dispute resolution process rather than an  ALJ hearing. OMHA offered the pilot to a limited number of providers  initially, and, according to OMHA officials, as of January 2016, had settled  with 10 appellants involving about 2,400 appeals. The agency expanded  the scope of appeals eligible for participation in the pilot to include  appeals of additional Part B claim denials in October 2015 and appeals of  certain Part A claim denials in February 2016. OMHA officials told us they  are also exploring expansion of the pilot in 2016 to appeals filed by state  Medicaid agencies that relate to home health services provided to dually  eligible beneficiaries. As noted earlier, appeals from these state Medicaid  agencies have increased. We identified approximately 47,000 pending  Level 3 appeals as of our June 2015 data extract that are related to this  issue, which could take over half of OMHA’s ALJs at least a year to  adjudicate through a traditional hearing process.
OMHA’s statistical sampling pilot began in July 2014 and aims to reduce  the appeal backlog by deciding multiple appeals filed by a single  appellant using statistical sampling and extrapolation. Under this pilot,  an ALJ reviews and issues decisions on a random sample of the  appellant’s eligible denied claims. The ALJ’s decision is then extrapolated  to the universe of the appellant’s claims in question. As of August 2015,  the pilot’s success has been limited—according to HHS, only one  appellant had elected to participate in this process that would resolve its  405 pending appeals, which equates to about 40 percent of the annual  workload of one ALJ. OMHA representatives said the office has  conducted outreach to encourage more providers to participate in the pilot  and plans to increase the number of claims eligible for the pilot, although  as of February 2016, OMHA had not announced any specific plans or  time frames to do so.
According to HHS officials, OMHA’s senior attorney pilot, which began in  July 2015, uses senior attorneys to conduct on-the-record reviews of  appeals if the appellant waived the right to an oral hearing. Under this  pilot, the senior attorney determines whether an on-the-record decision is  warranted, and if so, drafts the decision for an ALJ to review and issue.  HHS officials reported that as of March 2016, 671 appeals at Level 3  have been resolved through this initiative and that they plan to increase  the number of senior attorneys participating in this program.
section_title: Despite Actions Taken to Date, the Backlog of Undecided Medicare Appeals Will Likely Persist
paragraphs: Despite actions HHS agencies have taken, the Medicare appeals backlog  will likely persist. While it is too early to predict the ultimate effect many of  HHS’s current efforts will have on the Medicare appeals backlog, their  effect thus far, with the exception of the global settlement, has been  limited and the backlog continues to grow at a rate that outpaces the  adjudication capacities at Levels 3 and 4. According to OMHA  representatives, in fiscal year 2015, the number of incoming appeals at  Level 3 declined to 235,543 from a high of 432,534 in fiscal year 2014.  While this was a significant decrease, it was still three times the number  of appeals decided in fiscal year 2015. Further, HHS reported that it  expects the number of incoming appeals to increase again when new RA  contracts are awarded and the RA program resumes full operation. A  similar challenge exists at Level 4. The Council reported that it can  adjudicate almost 2,680 appeals each year, which includes both its FFS  and non-FFS workload; however, the Council’s pending appeals workload  as of February 2016 was more than six times that amount and, in fiscal  year 2015, it received more than three times the number of appeals it  adjudicated in the same year.
OMHA and Council representatives said that the fiscal year 2016  appropriations are unlikely to mitigate the growing appeals backlog at  Levels 3 and 4. OMHA received a 20 percent increase in funding in its  fiscal year 2016 appropriation, which HHS officials said will allow OMHA  to hire 15 additional ALJs as well as expand other efforts to improve the  appeals process. However, HHS representatives told us that even with  this increase, OMHA will not have the adjudication capacity to stem the  growing number of appeals at Level 3. The Council did not receive a  funding increase in the fiscal year 2016 appropriations, and Council  representatives said that at its present funding levels the Council is  unlikely to keep pace with any increases in decisional output at Level 3.
In the fiscal year 2017 HHS budget justification materials, several  budgetary and legislative changes were requested to improve the  Medicare appeals process and reduce the backlog. For example,  additional funding for OMHA and the Council was requested to increase  their adjudication capacity, as well as additional funding to CMS to  increase QIC participation in Level 3 hearings, which the agency expects  will reduce the reversal rate at Level 3. Legislative authority was also  requested to allow OMHA and the Council to use a portion of the  overpayments collected through the RA program to increase their  adjudication capacity. (See app. IV for a description of the legislative  proposals included in the President’s fiscal year 2017 budget related to  the Medicare appeals process.)
section_title: HHS Actions Do Not Address Inefficiencies Regarding the Adjudication of Certain Repetitive Claims
paragraphs: HHS’s efforts to reduce the number of filed Medicare appeals and the  appeals backlog have not addressed inefficiencies regarding the way  appeals of certain repetitive claims for ongoing services are decided,  although doing so could lead to fewer appeals. According to  representatives from one MAC that reviews DMEPOS appeals, under the  current process, once a provider submits an initial claim for a recurring  service—such as DMEPOS claims for monthly oxygen equipment  rentals—and it is denied, all subsequent claims for the service are also  denied, requiring providers to file multiple appeals for the recurring  service. A beneficiary’s one year supply of oxygen, for example, could  generate 12 claims, and therefore, 12 denials and possibly 12 appeals. If  the appeal for the initial claim is later reversed in favor of the appellant,  the appeals of the subsequent claims must continue to go through the  appeals process, awaiting separate decisions, because the favorable  appeal decision on the initial claim cannot generally be applied to the  other appeals of subsequently denied claims.
Representatives from some MACs, OMHA, and a provider group we  interviewed said that this process is inefficient and suggested approaches  to change the way these repetitive claims are adjudicated. In addition, two  of the MACs we spoke to had developed their own processes to  adjudicate some of these appeals more efficiently. For example,  representatives from one of the MACs said that if a decision on an initial  repetitive claim is reversed at Level 1, the MAC will apply that decision to  related appeals pending within its jurisdiction. Given that these claims are  for recurring services that are typically appealed individually, they could  contribute substantially to the number of appeals related to DMEPOS.  Furthermore, OMHA representatives told us that addressing this issue  would achieve major efficiencies for the Medicare appeals process. Doing  so is also consistent with internal controls that call for agencies to  establish control activities that are effective and efficient in accomplishing  the agency’s stated goals.
HHS officials told us that the department could address this issue if  granted certain statutory authority described in the HHS fiscal year 2017  budget justification materials. Specifically, HHS requested legislative  authority to consolidate appeals into a single administrative appeal. While  the authority is requested to allow appeals bodies to consolidate appeals  for the purposes of sampling and extrapolation, HHS officials said that  they could also use this authority to consolidate appeals of certain  repetitive claims and decide them jointly. It is unclear whether HHS will be  granted this authority. However, department officials acknowledged HHS  currently has the authority to promulgate regulations that could help  address this issue through the reopening process, although at the time  we discussed our findings with department officials, they told us that they  prefer to address this issue through the statutory change requested in the  President’s proposed fiscal year 2017 budget. The reopening process  could allow appeals bodies discretion to give deference to a decision  made at a higher appeal level upon determining that the beneficiary’s  condition or other facts and circumstances of the appeal had not  changed. For example, an appeals body could apply a decision of a  higher appeal level that the appellant met medical necessity  requirements, although it would still need to verify certain components of  the claim, such as verification of service delivery, in order to prevent fraud  and abuse. In doing so, the review of the claim or claims in question  could require a less intensive analysis than a de novo review.
section_title: Conclusions
paragraphs: Significant growth in the number of appeals at all administrative appeal  levels has posed several challenges to the Medicare appeals process.  These challenges are particularly pronounced at Levels 3 and 4, which  had the largest proportion of decisions issued after the statutory time  frames from fiscal year 2010 through fiscal year 2014 and the greatest  backlog of pending appeals. This backlog shows no signs of abating as  the number of incoming appeals continue to surpass the adjudication  capacity at Levels 3 and 4. The current situation whereby Levels 3 and 4  decide a substantial number of appeals after statutory time frames is  likely to persist without additional actions.
HHS could take more steps to improve its oversight of the appeals  process and its understanding of the characteristics of appeals  contributing to the increased volumes and the current appeals backlog.  As HHS takes action aimed at reducing the appeals backlog, HHS will  need reliable and consistent data to monitor the appeals system,  including the effect of any actions taken. Currently, HHS data systems are  not collecting additional information that would assist HHS agencies in  their monitoring efforts. HHS is awaiting results of an evaluation of the  Medicare appeals process that may address data inconsistencies within  the three appeals data systems and among levels using MAS. While the  evaluation is a good first step to identifying and modifying the data  systems, it is unclear how well the evaluation will address these issues  because it is not a specific objective of the evaluation. Without more  reliable and consistent information, HHS will continue to lack the ability to  identify issues and policies contributing to the appeals backlog, as well as  measure the funds tied up in the appeals process.
Finally, the manner in which appeals of certain repetitive claims are  adjudicated is inefficient, which leads to more appeals in the system than  necessary. With the appeals backlog as large as it is at Levels 3 and 4,  HHS would benefit from a change in the process that could consolidate  these appeals and reduce the number of appeals that require decisions.  HHS has requested legislative authority to achieve this. Department  officials acknowledged HHS currently has the authority to promulgate  regulations that could help address this issue through the reopening  process, although at the time we discussed our findings with them, we  were told that they prefer to address this issue through the statutory  change requested in the President’s proposed fiscal year 2017 budget.
section_title: Recommendations for Executive Action
paragraphs: To reduce the number of Medicare appeals and to strengthen oversight of  the Medicare FFS appeals process, we recommend that the Secretary of  Health and Human Services take the following four actions:  1.  Direct CMS, OMHA, or DAB to modify the various Medicare appeals  a.  collect information on the reasons for appeal decisions at Level 3;  b.  capture the amount, or an estimate, of Medicare allowed charges  at stake in appeals in MAS and MODACTS; and  c.  collect consistent data across systems, including appeal  categories and appeal decisions across MAS and MODACTS.  2.  Implement a more efficient way to adjudicate certain repetitive claims,  such as by permitting appeals bodies to reopen and resolve appeals.
section_title: Agency Comments and Our Evaluation
paragraphs: HHS provided written comments on a draft of this report, which are  reprinted in appendix V, and provided technical comments, which we  incorporated as appropriate. HHS generally agreed with four of the five  draft recommendations and outlined a number of initiatives it is taking to  improve the efficiency of the Medicare appeals process, reduce the  backlog of pending appeals, and mitigate the possibility of future  backlogs. HHS also expressed its willingness to modify the appeal data  systems in order to collect consistent data across the appeal data  systems and to implement a more efficient way to adjudicate certain  repetitive claims. In commenting, HHS provided further information for  two of the recommendations with which it generally agreed. Regarding  our recommendation to collect information on the reasons for appeal  decisions at Level 3, HHS indicated that collecting this information in the  planned ECAPE system instead of MAS, as we recommended, would be  more cost effective. We agree with the department’s rationale and  modified our recommendation to remove the language specifying that this  information be collected in MAS. Regarding our recommendation that  HHS capture the amount of Medicare allowed charges; in its technical  comments, the department indicated that it would not do this for all  appeals. Specifically, HHS indicated that it has no plans to collect the  Medicare allowed amount for Levels 1 and 2 because doing so would  require changes to the claims processing system or require manual  pricing of all appeals, which would require additional funding for the  MACs. We believe that there may be less resource intensive options for  implementing the recommendation, and we modified the language of the  recommendation to clarify that obtaining an estimate of the Medicare  allowed amount would be a way to fulfill the recommendation. In contrast,  HHS disagreed with a recommendation related to determining the costs  and benefits of delaying CMS’s collection of overpayments until after a  Level 3 decision is made, stating that such a change would increase the  number of appeals filed at Level 3. We agree that this change might  increase the number of filed appeals and, therefore, we did not include  the recommendation in the final report.
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section_title: Appendix I: Scope and Methodology
paragraphs: This appendix provides additional details regarding our analysis of (1)  trends in Medicare fee-for-service (FFS) appeals for fiscal years 2010  through 2014; (2) differences in claim-level and appeal-level reversal  rates; (3) appeals resolved by the Centers for Medicare & Medicaid  Services’ (CMS) global settlement; (4) CMS’s estimate of interest paid by  the agency to certain providers; and (5) data reliability.
subsections: section_title: Trends in Medicare Administrative Appeals for Fiscal Years 2010 through 2014
paragraphs: To examine trends in appeals for fiscal years 2010 through 2014, we  analyzed extracts of three data systems obtained from CMS, the Office of  Medicare Hearings and Appeals (OMHA), and the Departmental Appeals  Board (DAB). (See table 7.)
To determine the number of Medicare FFS appeals filed for each level  overall, by the type of appellant, by type of service, by subcategory of  service, and by whether the appeal resulted from a claim review  conducted by a Recovery Auditor (RA), we took a number of steps that  varied by level due to differences in the systems.
Level 1. While the Contractor Reporting of Operational and Workload  Data (CROWD) system extract contained data on most Level 1 appeals  filed during the period of our analysis, the Medicare Appeals System  (MAS) extract contained Level 1 appeals data for six of the seven  Medicare Administrative Contractor (MAC) jurisdictions that reported their  Medicare Part A (Part A) appeals data to MAS in fiscal year 2014. Using  the CROWD data, we determined the number of appeals filed by counting  the number of requests received less the number of misrouted requests.  CMS officials indicated that this approach will likely produce an  approximate number of filed appeals for our purposes. However, agency  officials also noted that CMS uses the number of requests cleared instead  of requests received when representing appeals workload, because the  requests received line could overestimate the number of filed appeals.  For example, it could count duplicate requests or requests for reopenings  as opposed to appeals. CMS officials noted that the agency has made  changes, effective in January 2016, to improve the quality of the requests  received data. Using MAS data for the Part A appeals data for the  remaining six MAC jurisdictions, we also counted appeals filed and  excluded misrouted and misfiled appeals. To determine the total number  of Level 1 appeals filed, we added counts derived from CROWD and  MAS. Our analysis excludes Level 1 appeals decided by Quality  Improvement Organizations because MACs are responsible for handling  Level 1 appeals of denials related to most claims.
Type of appellant: We did not determine the number of appeals filed  by the type of appellant because this information is not captured in the  CROWD system.
Type of service: To determine the number of appeals that were  related to durable medical equipment, prosthetics, orthotics, and  supplies (DMEPOS) items, using CROWD data we categorized all  appeals decided by the four MAC jurisdictions that decide DMEPOS  appeals as DMEPOS services. We categorized appeals of Part B  services and appeals of Medicare Part B (Part B) services whose  claims were decided by the Part A MACs (referred to as Part B of A)  as Part B services.
Subcategory of service: We report the number of appealed claims  decided by subcategory of service because CROWD does not track  filed appeals or filed appealed claims by subcategory of service.  Using the CROWD data, we determined the number of appealed  claims decided using the number of claims cleared. CROWD uses the  following subcategories: inpatient hospital, DMEPOS, home health,  laboratory, other, outpatient, physician, skilled nursing facility, and  ambulance, which we refer to as transportation. Using the MAS data,  we determined the number of appealed claims decided by counting  the number of claims. Primarily using a crosswalk provided by CMS,  we mapped MAS appeal categories to the CROWD subcategories.  (See table 8.)
RA-related: We report the number of RA-related appeals decided  using the number of RA redeterminations cleared because CROWD  does not have this information for filed appeals. In MAS, we  considered an appeal as RA-related if the field RA name was not  missing.
Level 2. In analyzing MAS data, we excluded combined, deleted, and  misrouted appeals, but included reopened appeals. Our analysis also  excludes Level 2 appeals decided by Quality Improvement Organizations  because Qualified Independent Contractors (QIC) are responsible for  handling Level 2 appeals of denials related to most claims.
Type of appellant: To determine the type of appellant that filed the  appeal, we used the field “appeal appellant type.”
Type of service: To determine whether the appeal was for Part A, Part  B, or DMEPOS, we used two MAS fields—“Medicare type” and the  name of the QIC. In general, we categorized appeals of Part B  services and appeals of Part B of A services as Part B services using  “Medicare type.”
Subcategory of service: To determine the subcategory of service, we  used the field “appeal category.” Using appeal category, we mapped  Level 3 appeal categories to Level 2 appeal categories generally  using a crosswalk provided by OMHA. Using that crosswalk, we  grouped services into 10 subcategories. (See table 9.)
RA-related: We considered an appeal as RA-related if the field “RAC  flag” was equal to “yes.”
Level 3. In analyzing MAS data, we excluded appeals that had been  combined or deleted, but included reopened appeals.
Type of appellant: To determine the type of appellant that filed the  appeal, we used the MAS field “requester type;” a field created by  OMHA for us that indicates that the MAS appeal record included a  beneficiary identification number, thus indicating the appeal was filed  by a beneficiary; and a file provided to us by OMHA that identified  appeals filed by a state Medicaid agency that could not be identified  using the field “requester type.”
Type of service: To determine whether the appeal was for a Part A,  Part B, or DMEPOS service, we used two MAS fields—“Medicare  type” and the name of the QIC. In general we categorized appeals of  Part B services and appeals of Part B of A services as Part B services  using “Medicare type.”
Subcategory of service and RA-related: We used the same approach  described for Level 2 above.
Level 4. In analyzing Medicare Operations Division Automated Case  Tracking System (MODACTS) data, we excluded appeals resulting from  CMS referrals, and appeals in which the record indicated a final action of  lost file or tape as Level 4 did not review the appeal. We counted as one  appeal any appeals in which the appellant filed one appeal but the  Medicare Appeals Council (the Council) issued separate appeal  decisions.
Type of appellant: To determine the type of appellant that filed the  appeal, we used the fields “appellant type” and the name of the  appellant, where the field “workload” indicated that CMS had not filed  the appeal.
Type of service: To determine whether the appeal was for a Part A or  Part B service, we used the field “claim type.” We used the field “type  of service”—specifically, values of durable medical equipment,  orthotic, prosthetic, or surgical dressing—to identify whether the  appeal was for a DMEPOS item. We did not take additional steps to  categorize appeals of Part B of A services as Part B services as  Council officials told us that those services are already categorized as  Part B claims.
Subcategory of service: To determine the subcategory of service, we  used the field “type of service.” We grouped type of service into 10  subcategories. (See table 10.)
RA-related: An appeal was RA-related if the field “overpayment” was  set to “RAC.”
For all appeal levels, we determined the percentage of appeal decisions  issued after the statutory time frames. This analysis is based on the fiscal  year that the appeal was decided. Thus, appeals in which no appeal  decision had been issued from fiscal year 2010 through fiscal year 2014  are excluded from our analyses.
Level 1. Our analysis for Level 1 is different from those for Levels 2, 3,  and 4. Specifically, the Level 1 analysis presents information on a  quarterly basis by type of service (i.e., Part A, Part B, and DMEPOS) and  the percentages of Part B of A services are included in totals for Part A  services. We derived this information from CMS’s “Appeals Fact Sheets,”  which contain the percentage of appealed claims decided on-time on a  quarterly basis by type of service. Using these data, which are  presented on a calendar year basis, we determined the percentage of  appealed claims on a fiscal year basis that were not issued on-time.
Level 2, Level 3, and Level 4. To determine the percentage of appeals  issued after the statutory time frame, we determined the number of  appeals issued after the deadline date overall and by type of appellant for  Levels 3 and 4. The deadline date is captured and adjusted in MAS  (Levels 2 and 3) and MODACTS (Level 4) to reflect any reasonable  changes to the deadline, such as if the appellant submitted additional  documentation after the appeal was filed. We found that the deadline date  was missing in MODACTS for over one-third of appeals that had been  decided during the time frame of our analysis. As a result, we set the  deadline date for these appeals to 90 days after the appeal start date.  DAB officials indicated this approach was generally appropriate. For  Levels 2 and 3, we limited this analysis to appeal decisions issued on the  merits. As a result, appeals with the following appeal decisions are  excluded from the calculation: dismissed or escalated at Level 2; and  dismissed, escalated, remanded, or in which no decision on the denied  claim was made at Level 3. For Level 4, we excluded appeals referred to  the Council by CMS, as well as appeals that were dismissed by the  Council under the circumstances set forth in 42 C.F.R. §405.1114 at  Level 4.
We also calculated the percentage of appeal decisions issued on the  merit that were issued after at least twice the statutory time frame, which  we report for Levels 3 and 4, by determining the number of appeals in  which decisions were issued 90 or more days after the deadline date.
We excluded from these calculations appeals that were put on hold  during CMS’s global settlement process. We estimated the number of  Levels 2, 3, and 4 appeals resolved through the global settlement based  on information as provided to us by CMS, OMHA, and DAB.  Specifically, for Levels 2 and 3 we used fields in MAS, and for Level 4 we  used a file provided to us by the Council within DAB on November 6,  2015. HHS officials noted that as of February 2016, OMHA and DAB  were still in the process of dismissing appeals included in CMS’s global  settlement. The dismissal process includes a review by OMHA and DAB  of each settlement agreement which could result in the identification of  appealed claims that were inadvertently included in the settlement.  Therefore, our estimates may differ from the number of appeals settled  once the dismissal process is complete.
subsections: section_title: Reversal Rates
paragraphs: For Levels 1 through 3, we determined the proportion of appeals in which  the appeals body reversed a coverage denial. For Level 4, we separated  appeal decisions into different categories to better understand how the  Level 4 appeal decision affected the Level 3 appeal decision.
Level 1, Level 2, and Level 3. We report the number of appeals in which  a decision was issued on the merits and the percentage of appeals that  fully reversed, partially reversed, or did not reverse the coverage denial.  In calculating those percentages, we do not reflect decisions based on  other grounds, such as dismissals. As noted above, for Levels 1 through  3, we categorized appeals of Part B of A services as Part B services. As a  result, the reversal rates we present may differ from reversal rates that  categorize appeals of Part B of A services as Part A services. We  calculated reversal rates overall, by type of service, and by whether or not  the appeal was RA-related. For comparison purposes, we also report the  total number of appeals in which a decision was issued, which is not  limited to decisions issued on the merit.
Level 4. We report the number of appeals that affirmed, reversed,  dismissed, or remanded Level 3 decisions as well as the percentage of  those appeals in each category. We calculated these percentages overall  and by whether an appellant filed an appeal or whether CMS referred the  appeal. For comparison purposes, we also report the total number of  appeals in which a decision was issued, which is not limited to the four  final action categories. Because the following Level 4 decisions do not  comment on the Level 3 decision, we excluded them from our analysis:  appeal decisions of other, special disposition, and dismiss request for  review. Similarly, we excluded appeals that were escalated from OMHA  because Level 3 did not issue a timely appeal decision and appeals in  which the Council was asked to reopen an appeal it already decided. Our  categorization of Level 4 decisions is as follows.
Affirmed the Level 3 decision: (a) a final action of affirm; (b) a final  action of modify; (c) if CMS did not refer the appeal, a final action of  denial of request for review; and (d) if CMS referred the appeal,  decline protest.
Reversed the Level 3 decision: a final action of reverse decision.
Dismissed the Level 3 decision: a final action of dismiss request for  hearing.
Remanded appeal to Level 3: a final action of remand to the  Administrative Law Judge (ALJ), which has the effect of vacating the  Level 3 decision and generating a new Level 3 appeal, according to  Council officials.
section_title: Estimate of Pending Medicare Administrative Appeals at Levels 3 and 4 Resolved by CMS’s Global Settlement
paragraphs: To report on the effect of CMS’s global settlement on the number of  appeals pending decisions at Levels 3 and 4, we determined the number  of appeals pending a decision as of the dates of our extract files. To  determine the number of those appeals pending after the global  settlement, we subtracted the number of appeals we estimated to be  included in the global settlement from the number of pending appeals.
section_title: CMS’s Estimate of Interest Paid by the Agency to Certain Providers
paragraphs: To better understand the effect of late appeal decisions on the amount of  interest paid by CMS to certain providers who have their postpayment  claim denials reversed upon appeal, we asked CMS for (a) the amount of  interest CMS paid to providers on the overpayments the agency initially  collected and then returned after the appellant won a Level 3 appeal; and  (b) the amount of interest that CMS would have paid to those providers if  Level 3 had adhered to the 90-day statutory time frame for issuing appeal  decisions. CMS officials told us that their data system did not enable them  to create similar estimates for appeals reversed at Levels 4 or 5. To  report on the amount of interest that CMS would not have paid if Level 3  had issued decisions within the statutory time frame, we subtracted  estimate (b) from (a).
To respond to our inquiry, CMS developed an estimate, which is based  on several assumptions and is subject to certain limitations. To report on  the amount of interest paid, CMS identified transactions in its Healthcare  Integrated General Ledger Accounting System (HIGLAS) that were  categorized as related to this type of interest payment. To report on the  amount of interest that CMS would have paid if Level 3 had adhered to a  90-day time frame for issuing appeal decisions, CMS created an  estimated date whereby the ALJ would have issued the appeal decision,  because this information is not calculated in HIGLAS. This date was set  equal to 180 days after HIGLAS indicated the overpayment collection was  initiated by the MAC, and accounts for the following: the time it would take  the MAC to collect the overpayment after the appellant lost the Level 2  appeal, the time it took for the appellant to file a Level 3 appeal, and the  90-day time frame for Level 3 to issue an appeal decision. Because  overpayments can be collected over multiple dates, CMS set the date of  the recoupment equal to the median date of all recoupment dates. CMS  officials acknowledged that their estimate has limitations. First, CMS  officials told us that the recording of overpayment adjustments, the  assignment of codes which categorize types of accounts receivable, and  the determination of interest payments is a manual process conducted by  the MACs and that MACs may not, for example, be using the appropriate  codes. Second, use of a median date to estimate the interest that would  have been payable results in different estimates than if CMS were able to  apply the interest rate separately for each recoupment made based on  the actual date the overpayment was recouped. Third, CMS’s estimate is  limited to Part A and Part B appeals and excludes any interest associated  with DMEPOS appeals because CMS officials told us they did not have  the necessary data in-house to conduct the analysis and obtaining access  to the necessary data would have been administratively burdensome.
section_title: Data Reliability
paragraphs: To assess the reliability of the data used in this report, we performed  manual and electronic testing to identify and correct for missing data and  other anomalies; interviewed or obtained written information from CMS,  OMHA, and DAB officials to confirm our understanding of the data; and  reviewed related documentation. We determined that the data were  sufficiently reliable for our purposes.
section_title: Appendix II: Medicare Fee-for-Service Appeals Filed and Decided, Fiscal Years 2010 to 2014
paragraphs: Tables 11 through 14 provide information on the number and  characteristics of appeals filed and decided at Levels 1 through 4 of the  Medicare fee-for-service appeals process from fiscal year 2010 to fiscal  year 2014.
section_title: Appendix III: Medicare Fee-for-Service Appeal Reversal Rates, Fiscal Years 2010 to 2014
paragraphs: Tables 15 through 18 provide information on appeal reversal rates by  type of service and whether the appeal was Recovery Auditor-related at  Levels 1 through 4 of the Medicare fee-for-service appeals process for  appeals decided from fiscal year 2010 to fiscal year 2014.
section_title: Appendix IV: Legislative Proposals Included in the President’s Fiscal Year 2017 Budget Related to the Medicare Fee-for-Service Administrative Appeals Process
paragraphs: This proposal would expand the authority of the Secretary of Health and Human Services to  retain a portion of RA recoveries for the purpose of administering the RA program and allows  RA program recoveries to fully fund RA‐related appeals at OMHA and DAB.
This proposal would institute a refundable filing fee for Medicare Parts A and B appeals for  providers, suppliers, and state Medicaid agencies, including those acting as a representative  of a beneficiary, and requires these entities to pay a per‐claim filing fee at each level of  appeal. According to the Department of Health and Human Services’ (HHS) budget  justification materials, this filing fee will allow HHS to invest in the appeals system to improve  responsiveness and efficiency. Fees will be returned to appellants who receive a fully  favorable appeal determination.
subsections: section_title: Other proposals that affect Medicare claim review contractors Allow prior authorization for Medicare
paragraphs: This proposal would extend the Centers for Medicare & Medicaid Services’ (CMS) prior  that are at the highest risk for improper payment. The proposal observes that CMS currently  and services.   authorization authority to all Medicare fee‐for‐service items and services, in particular those  has authority to require prior authorization for only specified Medicare fee‐for‐service items  This proposal would allow the Secretary to withhold payment to an RA if a provider has filed  an appeal at Level 2 and a decision is pending. According to HHS’s budget justification  materials, aligning the RA contingency fee payments with the outcome of the appeal will  ensure that CMS has assurance of the RA’s determination before making payment.
This proposal would allow the Secretary to adjudicate appeals through the use of sampling  and extrapolation techniques. Additionally, this proposal authorizes the Secretary to  consolidate appeals into a single administrative appeal at all levels of the appeals process.  Parties who are appealing claims included within an extrapolated overpayment or  consolidated previously will be required to file one appeal request for any such claims in  dispute.
This proposal would remand an appeal to Level 1 when new documentary evidence is  submitted into the administrative record at Level 2 or above. Exceptions may be made if  evidence was provided to the lower level adjudicator but erroneously omitted from the record,  or an adjudicator denies an appeal on a new and different basis than earlier determinations.  According to HHS’s budget justification materials, this proposal incentivizes appellants to  include all evidence early in the appeals process and ensures the same record is reviewed  and considered at subsequent levels of appeal.
This proposal would increase the minimum amount in controversy for ALJ adjudication to the  federal court (Level 5) amount in controversy requirement ($1,500 in calendar year 2016).  According to HHS’s budget justification materials, this will allow the amount at issue to better  align with the amount spent to adjudicate the claim.
This proposal would allow OMHA to use attorneys called Medicare magistrates to adjudicate  appealed claims of lower amounts in controversy—specifically, amounts that fall below the  federal district court amount in controversy threshold.
This proposal would allow OMHA to issue decisions without holding a hearing if there is no  material fact in dispute. These cases include appeals, for example, in which Medicare does  not cover the cost of a particular drug.
section_title: Appendix V: Comments from the Department of Health and Human Services
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Kathleen M. King, (202) 512-7114 or kingk@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Lori Achman, (Assistant  Director), Todd Anderson, Susan Anthony, Christine Davis, Julianne  Flowers, Krister Friday, Shannon Legeer, Amanda Pusey, Lisa Rogers,  Cherie’ Starck, and Jennifer Whitworth made key contributions to this  report.