Reed Smith Client Alerts

Authors: Rahul Narula Scot T. Hasselman

On January 17, 2017, CMS published the final rule titled “Medicare Program: Changes to the Medicare Claims and Entitlement, Medicare Advantage Organization Determination, and Medicare Prescription Drug Coverage Determination Appeals Procedures,” whereby CMS introduces the concept of precedential decisions to the Medicare appeals program, delegates certain administrative law judge tasks to “attorney adjudicators,” and clarifies various procedural aspects within the Medicare administrative appeal process in an effort to better streamline the current appeals process.

In the face of growing scrutiny and now judicial pressure, the Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) published a final rule1 effective March 20, 20172 (the “Effective Date”), implementing certain administrative and procedural actions in an effort to reduce the significant Medicare appeals backlog. The final rule comes on the heels of intense criticism from various branches of the federal government3 – including most recently a December 5, 2016, judicial order4 from the D.C. district court for HHS to achieve the reduction thresholds below from the current backlog of cases pending at the Administrative Law Judge (ALJ) level, and file status reports to the district court every 90 days:

  • 30% by December 31, 2017
  • 60% by December 31, 2018
  • 90% by December 31, 2019
  • 100% by December 31, 20205

While not specifically referencing the court order in the final rule, according to CMS, the Office of Medicare Hearings and Appeals (OMHA) had more than 650,000 pending appeals as of September 30, 2016, while it has only a maximum adjudication capacity of 92,000 appeals per year.6 Given the current backlog, the statutory 90-day limit7 for a decision at the ALJ level (the third level of the administrative appeal process) is routinely ignored by OMHA – the current average wait time is more than five times this congressionally mandated time limit.

CMS finalized a majority of the administrative and procedural modifications it outlined in its July 5, 2016, proposed rule.8 Specifically, the final rule:

  • Permits designation of certain Medicare Appeals Council Decisions as precedential
  • Expands OMHA’s available adjudicator pool by allowing attorney adjudicators
  • Simplifies proceedings when CMS or CMS contractors are involved by limiting participants
  • Clarifies areas of regulation, including when new evidence may be submitted, and rules for filing appeals related to challenging statistical sampling

According to the final rule, these revised appeal procedures, as further discussed herein, are operative as of the Effective Date for all appeals that were filed on or after the Effective Date of the final rule, and for appeals that were filed, but not decided, dismissed or remanded, before the Effective Date of the final rule.

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Client Alert 2017-037