[Congressional Record Volume 149, Number 77 (Thursday, May 22, 2003)]
[Senate]
[Pages S7016-S7018]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. STABENOW (for herself, Mr. Kennedy, Mr. Leahy, Mr. Dodd, 
        Mr. Corzine, Mr. Lautenberg, Mr. Harkin, Mr. Bingaman, Mr. 
        Durbin, and Mr. Rockefeller):
  S. 1127. A bill to establish administrative law judges involved in 
the appeals process provided for under the medicare program under title 
XVIII of the Social Security Act within the Department of Health and 
Human Services, to ensure the independence of, and preserve the role 
of, such administrative law judges, and for other purposes; to the 
Committee on Finance.
  Ms. STABENOW. Mr. President, today I rise to introduce the Fair and 
Impartial Rights, FAIR, for Medicare Act and bring attention to growing 
concerns I have heard about the possible politicization of the Medicare 
appeals process.
  The Administrator of the Centers for Medicare and Medicaid Services, 
CMS, has indicated that the Administration would like to alter the 
current practice of requiring that Medicare beneficiaries or Medicare 
providers be granted a hearing before an independent Administrative Law 
Judge, ALJ, when their initial claim is denied.
  Instead of taking the side of beneficiaries and providers, this 
proposed action would seek to inject political interference in the 
Medicare appeals process to try to deny benefits to claimants. When 
Medicare beneficiaries and Medicare providers are denied payment for 
services, the 2000 BIPA law allows them a five-step process for them to 
appeal this decision.
  Unfortunately, the first two steps of this appeals process has been 
working against beneficiaries and providers. In the last five years, 
ALJs have reversed 53 percent of these preliminary rulings. This means 
that 53 percent of all cases were decided incorrectly by the 
preliminary steps in the Medicare appeals process. It was only when 
beneficiaries or providers appealed to an independent ALJ that they 
received the proper ruling.
  ALJs serve an essential role in the claims review process because 
there is often conflicting and confusing information to guide 
beneficiaries and providers. In its 2001 report as part of its ongoing 
review of CMS communications, the General Accounting office described 
the information CMS's carriers gives to providers as ``often 
incomplete, confusing, out of date, or even incorrect.'' GAO found that 
``the norm'' for many carriers were documents over 50 pages that 
``often contained long articles, written in dense language and printed 
in small type.'' Documents ``were also poorly organized, making it 
difficult for a physician to identify relevant or new information.'' 
ALJs base their decisions on administrative rules, which have the 
benefit of being open to public comment and review, as well as case law 
and statutes.
  Unfortunately, the Administration is seeking to undermine the 
independent role of ALJs who hear Medicare cases and replace ALJs with 
Federal employees, perhaps even political appointees,

[[Page S7017]]

with closer ties to the Administration's policy goals. The 
Administration's plan is not just an abstract proposal. It would hurt 
Medicare beneficiaries and Medicare providers.
  The FAIR for Medicare Act would stop this political attempt to weaken 
the role of independent ALJs. Specifically, it would: Prohibit non-
ALJs, like political appointees, from performing the duties of ALJs. 
Transfer Medicare ALJs from the Social Security Administration to the 
Department of HHS, just like a bipartisan bill introduced in the House 
by Congresswoman Nancy Johnson. Ensure ALJs are organizationally and 
functionally separated from CMS and all other political appointees 
other than the Secretary of HHS.
  Similar legislation has been introduced in the House by 
Representative Nancy Johnson, and it received bipartisan support. I 
hope that my proposal will achieve the same result.
  I ask unanimous consent that the text of the bill and several 
articles be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1127

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair And Impartial Rights 
     (FAIR) for Medicare Act of 2003''.

     SEC. 2. ADMINISTRATIVE LAW JUDGES WITHIN HHS; ENSURING 
                   INDEPENDENCE OF ADMINISTRATIVE LAW JUDGES; 
                   PRESERVATION OF THE ROLE OF ADMINISTRATIVE LAW 
                   JUDGES.

       (a) ALJs Within HHS.--Any administrative law judge 
     performing the administrative law judge functions described 
     in section 1869 of the Social Security Act (42 U.S.C. 1395ff) 
     shall be within the Department of Health and Human Services.
       (b) Ensuring Independence of ALJs.--
       (1) In general.--The Secretary of Health and Human Services 
     shall ensure the independence of administrative law judges 
     described in subsection (a).
       (2) Independence described.--In order to ensure the 
     independence described in paragraph (1), each administrative 
     law judge described in subsection (a) shall--
       (A) be an impartial decisionmaker;
       (B) be bound only by applicable statutes, regulations, and 
     rulings issued in accordance with subchapter II of chapter 5, 
     and chapter 7, of title 5, United States Code (commonly known 
     as the ``Administrative Procedures Act'');
       (C) be placed by the Secretary in an administrative office 
     that is organizationally and functionally separate from the 
     Centers for Medicare & Medicaid Services; and
       (D) report to, and be under the general supervision of, the 
     Secretary, but shall not report to, or be subject to 
     supervision by, another officer of the Department of Health 
     and Human Services.
       (c) Preservation of the Role of ALJs.--An individual who is 
     not an administrative law judge appointed pursuant to section 
     3105 of title 5, United States Code, may not perform the 
     functions of an administrative law judge specified in section 
     1869 of the Social Security Act (42 U.S.C. 1395ff).
       (d) Conforming Amendment.--Section 1869(f)(2)(A)(i) of the 
     Social Security Act (42 U.S.C. 1395ff(f)(2)(A)(i)) is amended 
     by striking ``of the Social Security Administration''.
                                  ____


               [From The New York Times, March 16, 2003]

           Bush Pushes Plan To Curb Appeals in Medicare Cases

                            (By Robert Pear)

       Washington, March 15--The Bush administration says it is 
     planning major changes in the Medicare program that would 
     make it more difficult for beneficiaries to appeal the denial 
     of benefits like home health care and skilled nursing home 
     care.
       In thousands of recent cases, federal judges have ruled 
     that frail elderly people with severe illnesses were 
     improperly denied coverage for such services.
       In the last year, Medicare beneficiaries and the providers 
     who treated them won more than half the cases--39,796 of the 
     77,388 Medicare cases decided by administrative law judges. 
     In the last five years, claimants prevailed in 186,300 cases, 
     for a success rate of 53 percent.
       Under federal law, the judges are independent, impartial 
     adjudicators who hold hearings and make decisions based on 
     the facts. They must follow the Medicare law and rules, but 
     are insulated from political pressures and sudden shifts in 
     policy made by presidential appointees.
       President Bush is proposing both legislation and rules that 
     would limit the judges' independence and could replace them 
     in many cases.
       The administration's draft legislation says, ``The 
     secretary of health and human services may use alternate 
     mechanisms in lieu of administrative law judge review'' to 
     resolve disputes over Medicare coverage.
       Under the legislative proposal, cases could be decided by 
     arbitration or mediation or by lawyers or hearing officers at 
     the Department of Health and Human Services. The department 
     recently began testing the use of arbitration in Connecticut 
     under a law that permits demonstration projects.
       Tommy G. Thompson, the secretary of health and human 
     services, said the proposed legislative changes would give 
     his agency ``flexibility to reform the appeals system'' so 
     the government could decide cases in a more ``efficient and 
     effective manner.''
       The department said there was an ``urgent need for 
     improvements to the Medicare claim appeal system,'' in part 
     because the number of appeals was rising rapidly.
       Consumer groups, administrative law judges and lawyers 
     denounced the proposals. Judith A. Stein, Director of the 
     Center for Medicare Advocacy in Willimantic, Conn., said, 
     ``The president's proposals would compromise the independence 
     of administrative law judges, who have protected 
     beneficiaries in case after case, year after year.''
       Beneficiaries have a personal stake in the issue. When 
     claims are denied, a beneficiary is often required to pay 
     tens of thousands of dollars for services already received. 
     In a typical case, an administrative law judge ordered 
     Medicare to pay for 230 home care visits to a 67-year-old 
     woman with breast cancer, heart disease and arthritis. 
     Medicare officials had said the woman should pay the cost. 
     But the judge ordered Medicare to pay because the woman was 
     homebound and the services were ``reasonable and necessary.''
       When federal agencies issue rules or decide cases; they 
     generally must follow the Administrative Procedure Act, a 
     1946 law intended to guarantee the fairness of government 
     proceedings.
       Ronald G. Bernoski, president of the Association of 
     Administrative Law Judges, said: ``We see President Bush's 
     proposals as a serious assault on the Administrative 
     Procedure Act, a stealth attack on the rights of citizens to 
     fair, impartial hearings. These hearings guarantee due 
     process of law, as required by the Constitution.''
       The American Bar Association and the Federal Bar 
     Association, which represents lawyers who practice in federal 
     courts and before federal agencies, have expressed similar 
     concerns.
       Health care providers, which are involved in many of the 
     appeals, share those concerns.
       Robert L. Roth, a Washington lawyer who has represented 
     hospitals and suppliers of medical equipment, said: ``The 
     interests of providers and beneficiaries are aligned. Access 
     to an independent decision maker, an administrative law 
     judge, is quite valuable because it's often your first 
     opportunity to get a fair review of government action.''
       Medicare officials could adopt the proposed rules, 
     regardless of whether Congress accepts Mr. Bush's 
     recommendation for changes in the law.
       The proposed rules would require administrative law judges 
     to ``give deference'' to policies adopted by Medicare and its 
     contractors, which review and pay claims for the government. 
     Beneficiaries would have to show why such policies should be 
     disregarded,
       That would be a significant change. Administrative law 
     judges are now required to follow Medicare statutes and 
     regulations, but not the agency's policies. As a result, the 
     judges often grant benefits previously denied by the Medicare 
     agency or its contractors.
       In the Connecticut experiment, arbitration will be used to 
     resolve some claims disputes, and beneficiaries may opt out. 
     If this approach produces prompt, fair decisions with less 
     paperwork, it could be a model for Congress in changing the 
     appeals process.
       But Matthew L. Spitzer, dean of the University of Southern 
     California Law School, said that consumers ``should think 
     long and hard before they agree to binding arbitration.'' It 
     is, he said, extremely difficult for an individual to 
     overturn an arbitrator's decision.
       Ms. Stein, who has represented Medicare patients in 
     hundreds of cases, agreed. ``The president proposes replacing 
     administrative law judges with some form of dispute 
     resolution,'' Ms. Stein said. ``This puts beneficiaries at a 
     disadvantage, with unequal bargaining power and inadequate 
     expertise to do battle with the Medicare agency.''
       The judges are full-time government employees who typically 
     receive salaries of $95,000 to $140,000 a year.
       To ensure that federal agency hearings would be fair, 
     Congress in 1946 protected the decision makers, providing 
     that they could be dismissed or demoted ``only for good 
     cause.'' The judges who hear Medicare cases have extra 
     protection because they are employed by the Social Security 
     Administration, an independent agency.
       Congress revamped the appeals process in 2000, to enhance 
     the rights of beneficiaries and to expedite decisions. The 
     changes were supposed to take effect in October 2002. But 
     Medicare officials said that without more money, they could 
     not meet the new deadlines, so they have postponed many of 
     the changes.
       Medicare officials said they wanted to end the arrangement 
     under which Social Security judges decide Medicare cases. 
     They have announced plans to transfer responsibility for 
     hearing appeals to the Medicare agency from Social Security, 
     and they hope to do so by Oct. 1.
       A bipartisan bill introduced by Representative Nancy L. 
     Johnson, Republican of Connecticut, would make the transfer 
     in 2005. The bill requires the secretary of health and human 
     services to preserve the judge's role as independent decision 
     makers.
       The potential for conflict seems to be inherent in the 
     relationship between agency

[[Page S7018]]

     officials and administrative law judges, with tensions 
     flaring periodically. In 1983, the Association of 
     Administrative Law Judges filed a lawsuit, saying that Social 
     Security officials appointed by President Ronald Reagan had 
     put improper pressure on them to deny benefits to people with 
     disabilities.
       A Federal District Court found that Social Security had 
     engaged in practices ``of dubious legality,'' which tended to 
     encroach on the judges' independence. The agency halted the 
     practices after the lawsuit was filed.
                                  ____


            [From the Philadelphia Inquirer, March 20, 2003]

                                 Tilt!


           medicare looks to rig appeals system in its favor

       If the score's going against you, just change the rules of 
     the game.
       That is, if you're president.
       The Bush administration's plan to rework the appeals 
     process for Medicare recipients denied treatment appear to be 
     just that: a rules change that tilts the playing field.
       In losing thousands of these appeal annually, the federal 
     government is being ordered to pay millions of dollars for 
     health-care services.
       So administration officials start calling for ``flexibility 
     to reform the appeals system.'' Translation: We want to win 
     more cases and pay out less.
       It's not as though the appeals process is a runaway train; 
     in the last year, only a little more than half the cases were 
     won by Medicare recipients. But nearly 40,000 appeals were 
     upheld; put another way, that means 40,000 elderly citizens 
     had been improperly denied care.
       It wasn't for face lifts or tummy tucks, either. Rather, it 
     was for things that make all the difference to frail seniors, 
     things like home health assistance and skilled nursing care.
       Independent administrative judges handle these appeals now. 
     Under proposed new rules, the Department of Health and Human 
     Services could steer the cases into arbitration or 
     mediation--both of which experts view as less likely to favor 
     the citizens.
       The administration also wants to turn the independent 
     judges into Medicare employees--and to require them to ``give 
     deference'' to policies adopted under Medicare.
       At this rate, why not drop all pretense and just ban 
     appeals? That way every Medicare recipient--including those 
     much-coveted Florida voters--would know exactly where they 
     stand with this White House.
       Medicare's money troubles are real enough. But trimming 
     expenses by undercutting a fair appeals process is wrong. And 
     to pursue this policy while seeking huge tax cuts and 
     claiming to attend to seniors' health care needs is cynical.
                                  ____


                 [From The Seattle Times, May 7, 2003]

             Medicare Appeal Process Should not be Weakened

                         (By Kathleen O'Connor)

       With our focus riveted on Iraq and the state's dramatic 
     budget shortfalls, virtually no attention is being paid to 
     the proposed, ominous changes in Medicare. No, not the 
     Medicare prescription-drug benefit that hogs headlines. It's 
     something more dramatic, more important. The proposed changes 
     could essentially eliminate Medicare due process.
       How? By removing the independence of the administrative law 
     judges who now hear Medicare appeals and by axing most of the 
     current terms and conditions under which those appeals can be 
     made. The Bush administration wants to let the secretary of 
     the Department of Health and Human Services (HHS) use 
     arbitration or mediation and--get this--lawyers or hearing 
     officers inside the HHS to make decisions on Medicare 
     appeals. This means appeals would no longer be heard by 
     independent judges in a separate agency. Instead, appeals 
     would be heard in-house by Medicare employees.
       Nothing like letting the fox guard the hen house. Where is 
     due process or equal protection in this? How can inside 
     gatekeepers be fair? How do you hear an appeal when your job 
     is to guard the treasury? How long would these Medicare 
     employee-judges keep their jobs if they keep agreeing that 
     the beneficiaries are right, as they have been in over 50 
     percent of the appeals?
       Even as far back as 1996, the Office of the Inspector 
     General--the internal audit arm of HHS that manages 
     Medicare--found that Medicare was dead wrong in 55 percent of 
     the claims it processed. Recent data cited in The New York 
     Times revealed that over half the appeals in the past five 
     years eventually were found to be in the beneficiaries' 
     favor. In 2002 alone, Medicare beneficiaries and their 
     providers prevailed in almost 40,000 of the 77,000 appeals 
     that were filed, or 52 percent of the time.
       What's remarkable about this is that Medicare appeals had 
     to have been lost at two lower levels before the 
     beneficiaries even got to these judges. The 1946 
     Administrative Procedure Act was designed to assure we have 
     fair and just recourse when we have complaints against the 
     government.
       Since the creation of Medicare, appeals have been heard 
     before these administrative law judges and have been based on 
     Medicare laws and regulations rather than internal Medicare 
     policies that frequently change with each administration. If 
     the appeals function is brought in-house, independent appeals 
     would vanish and coverage decisions could be made by the whim 
     of an internal policy, whether written or not. Worse yet, the 
     administration says these changes don't really need 
     congressional approval and can simply be made by procedural 
     rules that would have the administrative law judges ``give 
     deference'' to Medicare's policies and those of Medicare 
     contractors.
       What this really means is the burden of proof would be 
     placed on the harmed beneficiaries and their providers, who 
     would have to show why these policies should be ignored. Why 
     does this matter? Follow the money. Let's take a look at what 
     Medicare covers. Part A pays for inpatient hospital care, 
     skilled nursing home care, home health care and hospice 
     stays. Part B basically covers all outpatient care (doctors) 
     and outpatient hospital services, cancer screening, lab tests 
     and medical equipment, such as wheel chairs.
       Take the case of Mrs. H in Brooklyn, N.Y. She sought 
     coverage for a prescribed transcutaneous electronic nerve 
     stimulator (TENS) to treat her fibromyalgia, a chronic 
     disorder characterized by widespread musculoskeletal pain and 
     fatigue. Medicare initially denied coverage for this device, 
     noting that the information provided did not support the need 
     for the item. Mrs. H appealed and was denied at what's called 
     the fair hearing level, based on internal coverage 
     guidelines. After that denial, the appeal went to an 
     administrative law judge for an independent ruling. The judge 
     found in Mrs. H's favor, deeming the device to be ``medically 
     necessary.''
       The finding provided on $646, but when you're poor and 
     living on Social Security, $600 is a lot of money. Other 
     findings are in the tens of thousands of dollars. How many 
     internal Medicare judge employees would be that independent? 
     Administrative law judges can be dismissed ``only for good 
     cause.'' If the appeals function is an in-house post, the 
     employee decision-maker can be transferred or reassigned. The 
     administration law judges can be dismissed ``only for good 
     cause.'' If the appeals function is an in-house post, the 
     employee decision-maker can be transferred or reassigned. The 
     administration will say it is only making ``procedural 
     changes''; that an appeals process still ``exists.'' Sure, 
     but it is one that harms rather than helps the beneficiary. 
     They may say there is still due process. But it will no 
     longer be an independent review. Not any real due process. 
     Which is the issue after all. As a friend is fond of saying: 
     ``Token due process is not due process at all.''
                                 ______