[Federal Register Volume 59, Number 51 (Wednesday, March 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5791]


[[Page Unknown]]

[Federal Register: March 16, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 405, 417, and 473

[BPD-694-F]
RIN 0938-AE93

 

Medicare Program; Aggregation of Medicare Claims for 
Administrative Appeals

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule.

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SUMMARY: Medicare beneficiaries and, under certain circumstances, 
providers, physicians and other entities furnishing health care 
services may appeal adverse determinations regarding certain claims for 
benefits payable under part A and part B of Medicare. For 
administrative appeals at the carrier or intermediary hearing level or 
administrative law judge (ALJ) level and for any subsequent judicial 
review, the amount remaining in dispute must meet or exceed threshold 
amounts set by statute. Section 1869(b)(2) of the Social Security Act 
permits claims to be aggregated to reach the ALJ hearing threshold 
amounts. This final rule establishes a system of aggregation under 
which individual appellants have one set of requirements for 
aggregating claims and two or more appellants have a different set of 
requirements for aggregating claims.

EFFECTIVE DATE: April 15, 1994.

FOR FURTHER INFORMATION CONTACT: Paul Olenick, (410) 966-4472.

SUPPLEMENTARY INFORMATION:

Background

Statutory Basis

    Section 1869(b) of the Social Security Act (the Act) grants 
Medicare beneficiaries who are dissatisfied with certain Medicare 
determinations the right to a hearing before an administrative law 
judge (ALJ) and the right to judicial review. The Social Security 
Administration (SSA) makes determinations concerning entitlement to 
Medicare. Other determinations concerning payment are made initially by 
Medicare contractors. Fiscal intermediaries make most part A and some 
part B determinations; carriers make most part B determinations. Our 
regulations generally address appeals of claims arising under part A at 
42 CFR part 405, subpart G, and appeals of claims under part B at 42 
CFR part 405, subpart H.
    Utilization and quality control peer review organizations (PROs) 
also make certain types of part A and part B determinations. Section 
1155 of the Act establishes beneficiary rights to hearings and judicial 
review of certain Medicare issues (mostly inpatient hospital service 
denials) adjudicated initially by PROs. Our regulations address this 
subject at 42 CFR part 473, subpart B.
    For enrollees of health maintenance organizations (HMOs), 
competitive medical plans (CMPs), and health care prepayment plans 
(HCPPs), the HMO, CMP or HCPP is responsible for making initial 
determinations. Section 1876(c)(5)(B) of the Act establishes 
beneficiary rights to ALJ hearings and judicial review of certain part 
A and part B claims submitted by or on behalf of enrollees of HMOs, 
CMPs or HCPPs. Our regulations address this subject at 42 CFR 417.600 
to 417.638.
    For the following discussion, the term ``provider'' refers to a 
hospital, skilled nursing facility, home health agency, hospice program 
or comprehensive outpatient rehabilitation facility that has in effect 
an agreement to participate in Medicare. See section 1861(u) of the Act 
and 42 CFR 400.202.
    The term ``supplier'' is defined in 42 CFR 400.202 and means a 
physician or other practitioner, or an entity other than a provider, 
who furnishes health care services under Medicare. Although 
``supplier'' encompasses physicians, our usual phraseology is 
``physician or supplier.''
    Under section 1879(d) of the Act, a physician or supplier who 
accepted assignment or a provider of services has the same appeal 
rights as that of an individual beneficiary under certain limited 
circumstances when the issue in dispute involves medical necessity, 
custodial care, or home health denials involving the failure to meet 
homebound or intermittent skilled nursing care requirements. Moreover, 
by regulation, we have provided that a physician or supplier that has 
taken assignment of a Medicare claim under part B has the same appeal 
rights as the beneficiary.
    Under section 1842(l) of the Act, a physician who does not accept 
assignment must refund to the beneficiary any amounts collected for 
services found to be not reasonable and necessary. A refund is not 
required if the physician did not know and could not reasonably have 
been expected to know that Medicare would not pay for the services, or 
if the beneficiary was appropriately informed in advance that Medicare 
would not pay for the services and agreed to pay for them. With respect 
to a physician who is subject to the refund requirement, our 
regulations at 42 CFR 411.408 provide that if payment is denied for 
unassigned claims because the services are found to be not reasonable 
and necessary, the physician who does not accept assignment has the 
same appeal rights as the physician who submits claims on an 
assignment-related basis, as detailed in subpart H of part 405 and 
subpart B of part 473. (See 55 FR 24561, June 18, 1990.)

Omnibus Budget Reconciliation Act of 1986

    Before the enactment of the Omnibus Budget Reconciliation Act of 
1986 (OBRA '86) (Public L. 99-509), section 1869 of the Act provided 
for ALJ hearings and judicial review of claims for entitlement to 
Medicare parts A and B and of disputes over claims for benefits under 
part A. There was no provision for ALJ hearings or judicial review for 
disputes over the amount of part B benefits, except under section 1876 
of the Act pertaining to HMO, CMP and HCPP denials, and concerning 
certain PRO matters as authorized by section 1155 of the Act. Instead, 
as specified in section 1842(b)(3)(C) of the Act, Medicare carriers 
(or, if appropriate, intermediaries) provided fair hearings on claims 
for part B benefits when the amount remaining in controversy was $100 
or more. (Before receiving a fair hearing, beneficiaries must receive 
an initial determination and review of their claims. Carriers perform 
initial determinations and reviews of claims for part B benefits in 
accordance with 42 CFR part 405, subpart H.)
    Section 9341 of OBRA '86 amended section 1869 of the Act to permit 
hearings before ALJs and judicial review of claims for benefits under 
part B. The law provided that, for a part B ALJ hearing, the amount in 
controversy must be at least $500 and, for judicial review, the amount 
in controversy must be at least $1000. It did not change the existing 
amount in controversy requirements ($100 and $1000, respectively, under 
the Medicare part A provisions and $200 and $2000, respectively, under 
the PRO provisions) for ALJ hearings and judicial review.
    Section 9341 of OBRA '86 further provided that in determining the 
amount in controversy, the Secretary, by regulations, must permit 
claims to be aggregated if the claims involve the delivery of similar 
or related services to the same individual or involve common issues of 
law and fact arising from services furnished to two or more 
individuals. This aggregation provision applies to requests for ALJ 
hearings of both part A and part B claims brought under section 1869 of 
the Act.
    Under OBRA '86, the right to an ALJ hearing and judicial review for 
part B claims as well as the right to aggregate under section 
1869(b)(2) of the Act apply to claims for items and services furnished 
on or after January 1, 1987.

The Omnibus Budget Reconciliation Act of 1990

    The Omnibus Budget Reconciliation Act of 1990 (OBRA '90) (Public L. 
101-508) provided that the Secretary would carry out a study of the 
effects of permitting the aggregation of claims that involve common 
issues of law and fact furnished in the same carrier area to two or 
more individuals by two or more physicians within the same 12-month 
period for purposes of appeals provided for under section 1869(b)(2). 
The study would be conducted in at least four carrier areas. The 
Secretary would report on the results of the study and any 
recommendations to the Senate Finance Committee and the Committees on 
Energy and Commerce and Ways and Means of the House of Representatives 
by December 31, 1992.

Aggregation Before OBRA '86

    Before OBRA '86, the statute was silent on the issue of aggregating 
claims to meet the threshold amounts to establish a right to part A or 
part B hearings. We had, however, provided for beneficiaries to 
aggregate certain part A claims in our regulations at 42 CFR 405.740 
and 405.745. Our regulations at 42 CFR 405.741 also provide that the 
presiding officer at the hearing (that is, the ALJ) determines whether 
the $100 threshold is met. The current regulations for part A claims do 
not allow a provider to aggregate claims involving more than one 
beneficiary.
    Before OBRA '86, we had also provided for the aggregation of part B 
claims to reach the amount in controversy required for a hearing before 
a carrier hearing officer. In 42 CFR 405.820(b) (redesignated as 
Sec. 405.817 in this rule), we permit a beneficiary to aggregate any 
and all part B claims for treatment or medical equipment or supplies 
(or both) furnished to him or her. A physician or supplier may 
aggregate any and all claims accepted on an assignment-related basis 
for services or supplies he or she provided to one or more 
beneficiaries. Each such claim must have completed all prior levels of 
appeal and the request for subsequent appeal of each such claim must be 
timely filed. The regulations do not address whether claims may be 
aggregated together by two or more appellants to meet the minimum 
amount in controversy needed for appeal.
Proposed Rule
    On June 20, 1991, we published a proposed rule that described how 
we would implement the OBRA '86 provision amending section 1869(b)(2) 
of the Act concerning aggregation of claims (56 FR 28353). In the 
absence of specific legislative history, we concluded at that time that 
the OBRA '86 aggregation provision did not provide a basis for 
permitting two or more appellants to aggregate their claims to meet the 
threshold amount in controversy for administrative or judicial appeal. 
We based our conclusion, in part, on our assessment that section 1869 
of the Act in all respects applies to claims filed by individuals. 
Because the OBRA '86 aggregation provision amended section 1869 of the 
Act, it was our view that individual appeals alone were affected. 
Therefore, we proposed that only an individual appellant could 
aggregate his or her own claims to reach the jurisdictional minimums 
for appeal. Moreover, in our view, the OBRA '90 provision, in which the 
Congress directed the Secretary to conduct a pilot study to investigate 
the effect of permitting aggregation of claims by two or more 
appellants, suggested that the Congress had not yet decided to provide 
for aggregation of claims by multiple appellants.
    The specific statutory language of the OBRA '86 aggregation 
provision directs the Secretary to issue regulations to permit 
aggregation under the limited circumstances specified (that is, if the 
claims involve the delivery of similar or related services to the same 
individual or involve common issues of law and fact arising from 
services furnished to two or more individuals) to reach the threshold 
amounts in controversy for ALJ hearings. Upon initial consideration of 
this provision, we believed it would be appropriate to have a uniform 
aggregation policy for all levels of administrative appeal. Therefore, 
we proposed to rescind our current regulations governing carrier 
hearings under part B to conform them with the more narrow aggregation 
rules contained in OBRA '86. We also proposed minor revisions to our 
current part A aggregation rules, to make them consistent with the OBRA 
'86 aggregation requirements. We devised procedural rules to be 
followed for determining the amount in controversy and we described 
what actions were required of individuals and providers to aggregate 
claims to meet the amount in controversy threshold. We also proposed 
definitions of: ``Delivery of similar or related services,'' 
``services,'' ``common issues of law and fact,'' ``common issues of 
law,'' ``common issues of fact,'' and ``mutually exclusive bases for 
appeal.''

Comments and Responses

    We received comments from 21 commenters on our proposed rule. The 
commenters included an intermediary/carrier association, a carrier, 
seven provider associations or their legal counsel, five medical 
associations or their legal counsel, five beneficiary advocacy 
organizations, one PRO and one provider. Below we discuss the comments 
and our responses.
    Comment: A number of commenters expressed direct opposition to our 
assertion that the Congress did not intend for more than one appellant 
to aggregate their claims. The commenters presented various reasons why 
they believed that the Congress intended to permit aggregation by 
groups of individuals and providers.
    Response: We reexamined our proposed aggregation policy in light of 
the public comments submitted in response to the proposed rule and are 
revising our position to take the comments into account. Our revised 
position also takes into account a February 5, 1992, district court 
decision in favor of a group of anesthesiologists who contended that 
they should be able to aggregate their claims on the basis of ``common 
issues of law and fact arising from services furnished to two or more 
individuals'' (Moore v. Sullivan, 785 F. Supp. 44 (S.D.N.Y. 1992)).
    Section 1869(b)(2) of the Act states, in pertinent part, that 
``(i)n determining the amount in controversy, the Secretary, under 
regulations, shall allow * * *'' claims to be aggregated under the 
criteria outlined in that section (emphasis added). Thus, although the 
plain wording of the statute makes it clear that the Secretary will 
provide for aggregation of claims in the situations provided in the 
statute, it does not limit the Secretary's authority to allow 
aggregation in additional, unspecified circumstances as well. Thus, we 
believe that the statute affords the Secretary considerable discretion 
in devising an aggregation policy, as long as she allows aggregation in 
the circumstances outlined in the statute.
    Consistent with this interpretation, we have concluded that in 
drafting section 1869(b)(2) of the Act, the Congress did not 
necessarily mean to overhaul the current aggregation system for appeals 
raised by individual beneficiaries and providers. Rather, we believe 
that the Congress intended to provide an additional avenue for reaching 
the amount in controversy to provide for group adjudication of issues 
arising from claims that, because they involve fairly small amounts, 
may never be adjudicated beyond the intermediary or carrier level. 
However, in providing for this additional access to the appeals process 
by two or more appellants, the Congress recognized that such appeals 
would only be an efficient use of the administrative and judicial 
appeals process if the underlying claims presented common issues that, 
if resolved, would be decisive for all the claims included in the 
appeal. Therefore, the Congress required that such appeals involve 
``similar or related services'' or ``common issues of law and fact.''
    As a result of our reexamination of this issue, we have decided to 
permit aggregation of claims by two or more appellants at the ALJ 
level. In order for two or more appellants to aggregate their claims, 
the claims must involve the delivery of similar or related services to 
the same individual or involve common issues of law and fact arising 
from services furnished to two or more individuals. Although the 
Congress expanded the part B appeals process to also include judicial 
review of part B claims, the statute does not require the courts to 
follow the administrative aggregation rules established by the 
Secretary for determining the amount in controversy. However, the 
courts may wish to use the administrative rules as a reference point 
for determining the amount in controversy at the judicial level. 
Therefore, we are providing in our regulations that, when a civil 
action is filed, the Secretary may assert that the aggregation 
provisions contained in 42 CFR part 405, subparts G and H, may be 
applied to determine the amount in controversy for judicial review.
    (We note that under our interpretation of section 1869(b)(2) of the 
Act, two or more beneficiaries will not be able to aggregate their 
claims under the criterion involving ``delivery of similar or related 
services to the same individual,'' because the provision describes 
services to only one individual. Moreover, two or more providers/
suppliers may avail themselves of this provision only if they are 
providing similar or related services to the same patient. However, 
this limitation is of little practical consequence, since, under the 
first prong of the bifurcated system of aggregation we are establishing 
with this regulation, an individual appellant (either a beneficiary or 
a provider/supplier) may aggregate all claims relating to the same 
patient without having to demonstrate that the services provided are 
either similar or related.)
    In order to effectuate this interpretation we are establishing one 
set of requirements for aggregating claims for individual appellants 
and another set of requirements for aggregating claims when two or more 
appellants together seek to aggregate their claims. The system will 
work as follows:

Individual Appellants

    Our approach for individual part A appellants (including individual 
HMO, CMP, HCPP or PRO appellants (hereafter, references to HMOs will 
include CMPs and HCPPs)) will permit an individual who files an appeal 
to aggregate two or more part A claims (in a specified time period), 
regardless of issue, to meet the requisite jurisdictional minimum for 
an ALJ hearing. Also, an individual who files a part B appeal will be 
permitted to aggregate two or more part B claims (in a specified time 
period), regardless of issue, to meet the jurisdictional minimums for a 
carrier hearing and ALJ hearing.
    This approach expands the existing aggregation policy currently 
applied to part A appellants. (Existing aggregation policy for 
individual part A appellants is limited to the following circumstances: 
Items or services furnished to a patient of a provider arising from a 
single continuous period of treatment and any series of posthospital 
home health visits.) It is also consistent with the aggregation policy 
currently existing for part B appellants in that it allows appellants 
to aggregate two or more claims regardless of issue. (However, 
consistent with the provision in the proposed rule dated June 20, 1991 
(56 FR 28355), we are requiring in the final rule that, for all claims 
to be aggregated, the request for appeal must be timely filed; see 
Secs. 405.740(a) and 405.817(a).)

Two or More Appellants

    Two or more part A appellants will be permitted to aggregate their 
part A claims together (in a specified time period) to meet the 
requisite jurisdictional minimum for an ALJ hearing. Similarly, two or 
more part B appellants will be permitted to aggregate their part B 
claims together (in a specified time period) to meet the jurisdictional 
minimum for an ALJ hearing. However, two or more appellants may 
aggregate their claims only if the claims involve the delivery of 
similar or related services to the same individual or common issues of 
law and fact arising from services furnished to two or more 
individuals.
    To reflect these changes, we are revising the text of 
Secs. 405.740, 405.742, 405.820 (redesignated as Sec. 405.815), and 
405.827 that we proposed in our June 20, 1991 rule. Sections 405.740 
and 405.817 contain our procedures for determining the amount in 
controversy and for aggregating claims. We are not making final 
Secs. 405.742 and 405.827 that we included in the proposed rule (the 
relevant contents have been incorporated elsewhere) and we are removing 
current Sec. 405.741.
    Comment: Because section 1869(b)(2) of the Act applies only to 
aggregation for ALJ hearings, the current liberal rules for individual 
appellants to aggregate claims at carrier fair hearings should be 
retained.
    Response: As stated in our previous response, we will permit 
individual part A or part B appellants to aggregate their claims 
regardless of issue to reach the minimum amounts in controversy needed 
for a carrier hearing or ALJ hearing. (However, consistent with the 
provision in the proposed rule dated June 20, 1991 (56 FR 28355), we 
are requiring in the final rule that, for all claims to be aggregated, 
the request for appeal must be timely filed; see Secs. 405.740(a) and 
405.817(a).)
    Although we are essentially retaining the current aggregation rules 
for individual part B appellants, we are not allowing two or more 
appellants to aggregate their claims together at the carrier hearing 
level. Rather, we are providing in the final rule that two or more 
appellants may aggregate their claims together beginning at the ALJ 
hearing level. We are adopting this approach because, as noted by the 
commenters, the statute does not require that proceedings conducted 
under section 1842(b)(3)(C) of the Act (carrier hearings) utilize the 
aggregation provisions in section 1869(b)(2) of the Act. For this 
reason, we are also not making final the provision in Sec. 405.832(d) 
of the proposed regulation text. That provision would have authorized 
an ALJ to review a carrier hearing officer's dismissal of a hearing 
request based on the section 1869(b)(2) aggregation criteria to 
determine whether those criteria had been properly applied.
    Comment: The definitions of ``common issues of law and fact'' and 
``delivery of similar or related services'' are inconsistent with the 
statute and unnecessarily restrictive and burdensome.
    Response: We have reevaluated the definitions of ``common issues of 
law and fact'' and ``delivery of similar or related services'' in light 
of the comments received and the general lack of practical experience 
in applying these criteria.
    Many of the public comments received on this issue persuasively 
demonstrated that the proposed definitions were too narrow to encompass 
many case scenarios that present common decisional issues. For example, 
one of the commenters noted that the requirement that similar services 
may only be those ``with the same procedural terminology and code'' is 
excessively strict. For instance, claims for echocardiography services 
such as standard echocardiography (CPT 93307), doppler echocardiography 
(CPT 93320) and doppler color-flow echocardiography (CPT 93321) may be 
``similar or related services'' that could be aggregated under the 
statute. This same commenter believed that ``common issues of law and 
fact'' should be defined to permit aggregation on the basis of broad 
categorical issues such as level of care, the type of action taken by 
the contractor (for example, downcoding), or the involvement of one or 
more physicians in the patient's care even though CPT codes, sites of 
service, and diagnoses may differ. While we agree that the definition 
of common issues of law and fact published in our proposed rule was 
overly restrictive, we do not agree with this suggestion.
    Aggregation on the basis of broad categorical issues would render 
the aggregation requirements virtually meaningless in many instances. 
We believe that the key concept in determining ``common issues of law 
and fact'' is the materiality of the alleged common facts. For example, 
a group of claims denied under section 1862(a)(1) of the Act as not 
medically reasonable and necessary because a certain procedure is 
considered experimental would present ``common issues of law and fact'' 
if the procedure had been performed for the same reason for each 
patient but not if it had been performed for different purposes. A 
procedure may be considered experimental for purposes of treating one 
particular condition or diagnosis but not for the treatment of a second 
condition or diagnosis. Facts establishing medical necessity in the 
first instance would not establish medical necessity in the second 
instance. Consequently, although the situation might present common 
issues of law, common issues of fact would not be present.
    In our view, both ``similar or related services'' and ``common 
issues of law and fact'' require that the appeal present common issues, 
which when resolved will have some decisional impact on the aggregated 
claims. In order to further this statutory goal and rather than attempt 
to anticipate every situation that would warrant aggregation, we have 
decided to provide more general definitions for these terms, which are 
as follows: ``Delivery of similar or related services,'' with respect 
to the aggregation of claims by two or more appellants to meet the 
minimum amount in controversy needed for an ALJ hearing, means like or 
coordinated services or items provided to the same beneficiary by the 
appellants. ``Common issues of law and fact,'' with respect to the 
aggregation of claims by two or more appellants to meet the minimum 
amount in controversy needed for an ALJ hearing, occur when the claims 
sought to be aggregated arise from a similar fact pattern material to 
the reason the claims are denied and the claims are denied or reduced 
for similar reasons.
    This approach will provide adjudicators with more flexibility and 
discretion to decide if the criteria for aggregation under section 
1869(b)(2) of the Act have been met in a particular case. (Some 
commenters suggested that the proposed regulations did not give 
adjudicators enough discretion in applying the statutory terms.) In any 
event, we intend to monitor in the future the application of these 
definitions by adjudicators and we will consider providing more precise 
definitions via rulemaking if experience shows this is warranted.
    Comment: The procedural rules for aggregating claims, requiring 
appellants to identify claims by type of item or service and to explain 
the basis for the aggregation, go beyond the capacity of the average 
appellant and represent an impediment to appeal.
    Response: We agree that the documentation requirements should be 
modified. Sections 405.742(a) and 405.827(a) of the proposed rule 
imposed strict documentation requirements on an appellant seeking to 
aggregate claims. For instance, we proposed to require an appellant to 
identify each claim by the type of item or service, the person or 
entity that furnished the item or service and the amount being 
contested. Also, we proposed to require the appellant to describe why 
claims are either ``similar or related'' or involve ``common issues of 
law and fact.'' In light of the comments received, we are not making 
final the stringent documentation requirements and are establishing the 
following standard procedural requirements:
     The appellant(s) must specify the claims that he or she 
seeks to aggregate. The burden is clearly on the appellant in this 
situation to identify the claims sought for aggregation. Otherwise, the 
appellant risks having his case dismissed for failure to meet the 
amount in controversy. In other words, in considering a request for 
hearing or review, carrier hearing officers, ALJs and the Appeals 
Council must consider claims identified by the appellant to determine 
whether the requisite amount in controversy is met, but they need not 
aggregate other pending cases not included in the appellant's request 
for hearing. In addition, although we are not requiring that appellants 
describe in their requests for hearing why the claims they seek to 
aggregate involve ``similar or related services'' or ``common issues of 
law and fact,'' we note that it is in the appellant's interest to 
address these issues in the appeal, as well as any other aspects of the 
case he or she believes were decided incorrectly.
     In order for all claims to be aggregated, the request for 
appeal must be timely filed with respect to all claims included in the 
appeal. For example, a carrier hearing officer issues an adverse 
hearing decision that is received by the beneficiary on June 5. As a 
result of this decision, $300 remains in controversy. On a separate 
matter, the hearing officer issues an adverse decision, which is 
received by a different beneficiary on July 10. As a result of the July 
decision, $400 remains in controversy. The beneficiaries believe that 
their decisions involve common issues and because, individually, 
neither of their cases meet the $500 minimum required for an ALJ 
hearing, they seek to aggregate their claims together ($300+$400=$700) 
to obtain jurisdiction before an ALJ. In this hypothetical situation, a 
request for an ALJ hearing that includes these two claims may be made 
no later than August 4. A request for ALJ hearing filed, for example, 
on September 1, would fail because the 60-day appeal period for the 
June 5 decision would have lapsed and there would only be $400 
remaining in controversy. Therefore, when individual appellants seek to 
aggregate their claims under Sec. 405.740(a) or Sec. 405.817(a), or 
when two or more appellants seek to aggregate their claims together 
under section 1869(b)(2) of the Act, they must be aware of the 
appropriate timeframe for appealing to an ALJ (60 days from the 
previous administrative determination) and proceed accordingly.
     In order for claims to be aggregated at a carrier hearing 
or an ALJ hearing, the claims must have completed all prior levels of 
appeal. For example, two beneficiaries seek to aggregate their part B 
claims in a request for ALJ hearing under section 1869(b)(2) of the 
Act. The ALJ may aggregate only those claims for which a beneficiary or 
other party has received an initial determination, a review 
determination and a carrier hearing decision. This requirement is 
consistent with the general rule contained throughout subparts G and H 
of part 405 that appellants must complete all prior steps in the 
appeals process before proceeding to the next level.
     In general, an appellant may not aggregate part A and part 
B claims together to meet the requisite amount in controversy for a 
carrier hearing or ALJ hearing. Section 1869(b)(2) of the Act 
recognizes a distinct appeals process for part A and for part B and 
provides different rules for each. Part A and part B claims are 
processed independently of one another and follow different appeals 
processes. As such, we think it is clearly impermissible for an 
appellant to aggregate part A and part B claims together.
    There is one notable exception to the general rule described above. 
HMO determinations may involve a combination of part A and part B 
services; the part A and part B claims involved in such determinations 
are not processed independently of one another. Therefore, an HMO 
appellant is permitted to aggregate part A and part B claims together. 
We are revising Sec. 417.630 of the regulations to provide that HMO 
appellants may combine both part A and part B services in their appeals 
to reach the amount in controversy. (This provision was previously 
codified at Sec. 417.260(b)(4), a regulation that was obsoleted on 
October 17, 1991 (56 FR 51985).)
    Comment: The proposed rule implements a statutory change to section 
1869 of the Act and, as such, should not apply to: (1) The separate and 
distinct appeals process for HMOs under section 1876 of the Act, or (2) 
the appeals process involving PRO determinations under section 1155 of 
the Act.
    Response: We agree with this comment to the extent that the 
aggregation criteria under section 1869(b)(2) of the Act should not 
apply to the HMO appeals process. For enrollees of HMOs, the HMO is 
responsible for making the initial determinations. Section 
1876(c)(5)(B) of the Act establishes beneficiary rights to ALJ hearings 
and judicial review of certain part A and part B claims submitted by or 
on behalf of HMO enrollees. HCFA regulations address this subject at 42 
CFR 417.600 to 417.638.
    The Congress specifically amended section 1869 of the Act to 
provide for the aggregation of claims by two or more appellants in very 
specific circumstances; that is, if the claims involve the delivery of 
similar or related services to the same individual or common issues of 
law and fact. The Congress did not similarly amend section 1876 of the 
Act to provide for such aggregation in the HMO setting. Accordingly, we 
do not believe that HMO appellants should be afforded the aggregation 
rights specified in section 1869 of the Act. We are modifying the 
regulation text in Sec. 417.630(b) to state specifically that the 
aggregation provisions contained in section 1869(b)(2) do not apply to 
HMO appeals.
    On the other hand, we believe that the aggregation criteria under 
section 1869(b)(2) of the Act should apply to the PRO appeals process. 
PROs issue determinations under title XI of the Act relating to quality 
of care, medical necessity and appropriateness of setting and the 
appeals process for these determinations is governed by section 1155 of 
the Act. The PROs also issue limitation of liability determinations 
under section 1879 of the Act and the appeals process for such 
determinations is governed by section 1869(b) of the Act. Given this 
policy, a case decided by a PRO may involve, in essence, two separate 
determinations, one for the substantive coverage issue under section 
1155 of the Act and the other for the limitation of liability issue 
under section 1869(b) of the Act. Having an adjudicator apply different 
aggregation rules to each issue in a case would make the situation 
unnecessarily complex. Therefore, we are revising the regulation to 
allow multiple appellants to aggregate claims decided by PROs under the 
criteria in section 1869(b)(2), regardless of whether the claim is 
decided under title XI or title XVIII. However, we also note that PRO 
appellants may only aggregate those claims under section 1869(b)(2) 
that they have standing to appeal under the rules provided in part 473.
    In the HMO regulations at 42 CFR 417.630 and in the PRO regulations 
at Sec. 473.44, we are also specifying in the final rule (by cross-
reference to the appropriate provisions in part 405, subparts G and H) 
that individual HMO and PRO appellants (as opposed to group appellants) 
are permitted to aggregate their claims in the same manner provided to 
individual appellants who appeal claims under section 1869 of the Act. 
Thus, an individual appellant challenging a determination by an HMO or 
a PRO may aggregate two or more claims regardless of the issues 
involved. We are making these changes to provide a consistent, across-
the-board procedure for an individual appellant seeking to aggregate 
his or her claims to reach the minimum amount in controversy needed for 
an ALJ hearing. Because this is a liberalization of the current rules, 
we do not anticipate any objections from any members of the 
beneficiary/provider community concerning this policy.
    Comment: Section 9341 of OBRA '86 does not provide that a carrier 
hearing must always precede an ALJ hearing. Section 1842(b)(3)(C) of 
the Act was amended to provide for carrier hearings when the amount in 
controversy is ``at least $100, but less than $500.'' Therefore, for 
amounts in controversy of $500 or more following a carrier's review 
determination, a claimant should be able to appeal directly to an ALJ.
    Response: As we announced in the preamble to the proposed rule (56 
FR 28354 (June 20, 1991)), this rule was intended to establish criteria 
for determining the amount in controversy thresholds for both Part A 
and B ALJ hearings. Although we captioned Sec. 405.820 (now 
redesignated Sec. 405.815) as ``Right to hearing,'' we did not intend 
for this regulation to provide all of the procedural requirements 
necessary to establish the right to an ALJ hearing. Those requirements 
will be addressed in a separate regulation document. In the meantime, 
to the extent not superseded by this or other regulations, Part B ALJ 
hearings and Appeals Council review are conducted pursuant to the 
procedures outlined in HCFA and SSA's Federal Register notice of June 
1, 1988 (53 FR 20023).
    In order to clarify the scope of Sec. 405.815, we have revised the 
caption to read ``Amount in controversy for carrier hearing, ALJ 
hearing and judicial review'' and have made other clarifying changes to 
the regulation text. However, because, under current procedures, we 
continue to require that appellants complete the carrier fair hearing 
process before proceeding to an ALJ hearing, we briefly address the 
commenters' concerns about the legality of this requirement.
    We disagree with the commenters' conclusion concerning the 
requirements of the statute. We believe that the Secretary has the 
authority under the Medicare statute to require that claimants whose 
claims exceed $500 complete all prior stages of the administrative 
appeals process, including a carrier fair hearing, before obtaining an 
ALJ hearing.
    We note that the Secretary's position on this point is supported by 
the decision of the U.S. Court of Appeals for the Second Circuit in 
Isaacs v. Bowen, 865 F.2d 468 (2nd Cir. 1989), which considered the 
effect of the statutory provision cited by the commenters. In 1987, 
HCFA amended its Medicare Carriers Manual to require that a carrier 
fair hearing must precede an ALJ hearing regardless of the amount in 
controversy. Following this revision, the Congress held hearings 
concerning the Medicare appeals process and enacted the Omnibus Budget 
Reconciliation Act of 1987 (OBRA '87), Public Law 100-203, which 
addressed the carrier fair hearing procedures in two respects. First, 
the language of section 1842(b)(3)(C) of the Act describing the 
monetary amounts for a carrier fair hearing was changed by substituting 
the phrase ``less than $500'' for the phrase ``not more than $500.'' 
Second, the Congress authorized the General Accounting Office to 
conduct a cost-effectiveness study of the Secretary's requirement for 
carrier hearings before proceeding to an ALJ hearing. In light of these 
provisions, which were enacted after the Congress had heard testimony 
concerning HCFA's decision to require carrier hearings in all 
circumstances, the Court of Appeals for the Second Circuit found that 
the Congress by its actions had ratified the manual provision.
    Comment: A single overpayment determination may involve a large 
number of claims and several different issues. The overpayment in its 
entirety should be considered as a ``common issue of law and fact'' and 
therefore all claims contained therein should be aggregable.
    Response: An overpayment determination made to an individual person 
or entity will fall under the first prong of our bifurcated approach. 
That is, an individual appellant may aggregate all appealable claims 
included in a single overpayment determination regardless of the issues 
involved. (However, the appellant may only aggregate those claims 
included in the overpayment determination that the appellant has 
standing to appeal under the rules provided in part 405, subparts G and 
H, part 417 or part 473, as applicable.) Thus, the section 1869(b)(2) 
criterion of ``common issues of law and fact,'' applicable to two or 
more appellants who seek to aggregate their claims together, does not 
apply in this situation.
    Comment: Physicians in a multi-specialty group practice would be 
prohibited from aggregating claims together. An exception to the 
proposed rule should be made for physicians in the same group practice 
whose claims are billed and paid in the name of the group.
    Response: In light of the approach we are taking in the final rule, 
we believe the concerns raised by the commenter no longer apply. 
Physicians in a multi-specialty group practice would not be prohibited 
from aggregating their claims together as long as those claims involve 
``similar or related services'' or ``common issues of law and fact.''
    As previously stated, the proposed rule did not permit two or more 
appellants to aggregate their claims together and limited the rights of 
individual appellants to aggregate their claims on the basis of 
``similar or related services'' or ``common issues of law and fact.'' 
The final rule establishes a bifurcated system of aggregation whereby: 
(1) Individual appellants may aggregate two or more claims regardless 
of issue and (2) two or more appellants may aggregate their claims 
together if the claims involve the delivery of similar or related 
services to the same individual or involve common issues of law and 
fact arising from services furnished to two or more individuals.
    If a multi-specialty group of physicians: (1) Has one billing 
number, (2) bills Medicare under that number, (3) uses a uniform charge 
structure and (4) typically appeals as a single entity (rather than 
having its physicians appeal individually), we believe that the 
aggregation rules pertaining to individual appellants should apply. 
Therefore, in this situation, the multi-specialty group would be able 
to submit claims from two or more of its physicians in a single appeal 
request (the filing time limit would have to be met for the particular 
level of appeal) without having to demonstrate that the claims involve 
common issues.
    Comment: A non-participating physician may accept or reject 
assignment on claims at his or her discretion. Because the proposed 
rule permits a non-participating physician under section 1842(l) of the 
Act to aggregate unassigned claims for appeal purposes, the non-
participating physician should be able to aggregate assigned claims 
with his or her unassigned claims if ``common issues of law and fact'' 
or ``delivery of similar or related services'' are involved.
    Response: We agree with this comment. The determining factor in the 
situation posed is not whether a non- participating physician's claims 
are assigned or unassigned, but whether the claims are appealable. 
Under the first prong of our bifurcated approach, an individual 
appellant may aggregate all appealable claims regardless of issue. 
Therefore, a non-participating physician may aggregate assigned claims 
with unassigned claims providing that he or she has standing to appeal 
the claims under the rules in part 405, subpart H, part 417 or part 
473, as applicable. The section 1869(b)(2) criteria of ``common issues 
of law and fact'' and ``delivery of similar or related services,'' 
applicable to two or more appellants who seek to aggregate their claims 
together, do not apply in this situation.
    Comment: One commenter suggested that the regulations should afford 
adjudicators more discretion to determine whether ``common issues of 
law and fact'' exist based upon evidence presented by the entity 
seeking a hearing.
    On the other hand, another commenter believed that giving the 
carrier hearing officer the power to determine the criteria for 
aggregation gives too much discretion to these officials.
    Response: As stated in a previous response, we have reevaluated the 
definition of ``common issues of law and fact'' in light of the 
comments received and the general lack of practical experience in 
applying this criterion. In our view, the statute requires commonality 
of law and fact so that the appeal will present common issues, which, 
when resolved, will have some decisional impact on aggregated claims. 
In order to further this statutory goal and rather than attempt to 
anticipate every situation that would warrant aggregation, we have 
decided to provide a more general definition for this term. This 
approach will provide adjudicators with more flexibility and discretion 
to determine if the criteria for aggregation under section 1869(b)(2) 
of the Act have been met in a particular case.
    The concern raised by the second commenter is no longer an issue 
because carrier hearing officers will not be applying the criteria in 
section 1869(b)(2) of the Act to determine whether the bases for 
aggregation have been met.
    Comment: If the hearing officer dismisses the request to aggregate 
claims to meet the $100 requirement, then certainly the $500 
requirement would not be met for a Part B ALJ appeal. A dismissal by a 
carrier hearing officer should not be subject to further appeal rights.
    Response: Under the proposed rule, the only issue in a carrier 
hearing officer dismissal that the ALJ could review was the 
applicability of the criteria in section 1869(b)(2) of the Act; that 
is, ``delivery of similar or related services'' and ``common issues of 
law and fact.'' In light of the approach to aggregation that we are 
taking in the final rule, carrier hearing officers will not be 
considering section 1869(b)(2) criteria. Therefore, we are not making 
final the proposed regulation text that would have allowed ALJ review 
of a carrier hearing officer's dismissal of a hearing request.
    Comment: One commenter believes the requirement that ``at each 
review level the filing time limit must be met for all claims to be 
aggregated'' creates a chilling effect on the ability of home health 
agencies (HHAs) to aggregate claims.
    Response: As stated in previous responses, the proposed rule 
provided for aggregation only by individual appellants and only under 
the circumstances described in section 1869(b)(2) of the Act, that is, 
if the claims involve the delivery of similar or related services to 
the same individual or common issues of law and fact arising from 
services furnished to two or more individuals. Accordingly, the 
proposed rule might have significantly limited an HHA's ability to 
aggregate claims. However, the final rule permits an individual 
appellant, such as an HHA, to aggregate two or more claims regardless 
of issue. (However, the HHA, like all appellants, may only aggregate 
those claims that it has standing to appeal under the rules provided in 
part 405, subparts G and H, part 417 or part 473, as applicable.) As a 
result, the effect of the new bifurcated approach should be to 
facilitate aggregation of claims by HHAs such that the time limits for 
appeal will not be significant barriers.
    Section 1869(b)(1) of the Act incorporates by reference the 
provisions of section 205(b) of the Act relating to hearings under the 
Medicare program. Section 205(b)(1) of the Act mandates that an 
individual must request an ALJ hearing within 60 days after receipt of 
the previous decision. Therefore, Part A and Part B Medicare appellants 
are obliged to appeal claims within this timeframe. We believe that 
allowing appellants to aggregate claims beyond this timeframe would 
dilute this requirement.
    Comment: Three commenters had concerns about our proposed 
requirement that claims with mutually exclusive bases for appeal could 
not be aggregated. One thought that this requirement could prohibit a 
supplier from aggregating claims denied or only partially paid because 
of carrier error; another thought that ``mutually exclusive'' means 
incompatible and that our examples do not show incompatibility. The 
latter commenter also thought the definition to be unclear, invalid and 
unnecessary because of our definition of ``common issues of law.'' The 
third commenter thought the requirement should be relaxed if not 
eliminated and that at the very least physicians should not be 
prohibited from appealing claims denied for more than one reason.
    Response: We agree with the commenters that the definition for 
``mutually exclusive bases for appeal'' is overly restrictive and 
difficult to apply. Upon further review, we have decided to eliminate 
this term to provide more flexibility to an ALJ in applying the 
criteria for multiple appellant aggregation under section 1869(b)(2) of 
the Act.
    Comment: The proposed rule sets forth a definition of ``delivery of 
similar or related services'' to mean, among other things, services 
provided to a single beneficiary during the same continuous course of 
treatment or continuous period of medical care. One commenter believes 
we should develop more precise definitions of ``continuous course of 
treatment'' and ``continuous period of medical care'' to avoid 
inconsistent carrier application of the aggregation rule.
    Response: In light of the comments received questioning the 
definition of ``delivery of similar or related services'' and our lack 
of practical experience in applying it (and other terms), we have 
decided to provide a more general definition for this term. This 
approach will provide adjudicators with more flexibility and discretion 
to decide if this criterion for aggregation by multiple appellants 
under section 1869(b)(2) of the Act has been met in a particular case. 
As stated previously, we intend to monitor in the future the 
application of this definition by adjudicators and we will consider 
providing more precise definitions via rulemaking if experience shows 
this is warranted.
    Comment: As recommended by the House Budget Committee in its Report 
accompanying OBRA '86 (H.R. Rep. No. 727, 99th Cong., 2nd Sess., 95-96 
(1986)), ALJs with specific knowledge of the Medicare program should be 
assigned to review carrier hearing decisions. Also, HCFA should issue a 
new set of aggregation rules to enhance physician access to appropriate 
due process through fair hearings and administrative appeals.
    Response: The portion of this comment that addresses who will hear 
Medicare cases is beyond the scope of this regulation. With respect to 
the second portion of the comment, the commenter believes that the 
proposed rule places undue burdens on physicians who want to appeal 
Medicare claims and suggests generally that physicians are being placed 
at a disadvantage under the aggregation rules. Although we disagree 
with the commenter's assessment of the proposed rule, in light of the 
bifurcated approach to aggregation that we are taking in the final 
rule, we believe the commenter no longer should have any concerns in 
this regard. An individual physician who accepts assignment has the 
same appeal rights as a beneficiary; he or she is able to aggregate two 
or more assigned claims from one or more beneficiaries without having 
to demonstrate that the claims involve common issues. Moreover, two or 
more physicians may aggregate their claims together to meet the minimum 
amount needed for appeal if the claims involve ``common issues of law 
and fact'' or, if the claims involve services to a single beneficiary, 
they involve ``similar or related services.''
    Comment: Section 4113 of OBRA '90 directed the Secretary to conduct 
a study of the ``effects of permitting the aggregation of claims that 
involve common issues of law and fact furnished * * * to two or more 
individuals by two or more physicians within the same 12-month 
period.'' The proposed rule stated that the study mandated by the 
Congress confirms, for the present, that the Congress did not require 
the Secretary to provide for aggregation by two or more appellants. One 
commenter believed that the Congress had already accepted the premise 
that two or more appellants could aggregate their claims together and 
the study was merely a response to a proposed House bill that would 
have extended the period in which claims could be aggregated from 60 
days to 12 months.
    Response: In the absence of specific legislative history, we took 
the position in the proposed rule that the OBRA '86 aggregation 
provision did not provide a basis for permitting two or more appellants 
to aggregate their claims together to meet the minimum amount in 
controversy needed for a particular level of appeal. It was our view 
that the OBRA '90 provision, in which the Congress directed the 
Secretary to conduct a pilot study to investigate the effect of 
permitting aggregation by two or more appellants, suggested that the 
OBRA '86 aggregation provision should apply only to individual 
appellants.
    As discussed previously, we have changed our position from the 
proposed rule to provide for aggregation by two or more appellants 
under the statutory criteria for aggregation specified in section 
1869(b)(2) of the Act. The study itself has been completed and a report 
is being prepared.
    Comment: The proposed rule provides that a single provider may 
combine claims from several different beneficiaries if common issues of 
law and fact are involved. The commenter, a PRO, is concerned that this 
could place an added and unnecessary burden on the PRO appeals system.
    Response: As we stated in a previous response, we are applying the 
section 1869(b)(2) aggregation provision to the PRO appeals process. 
Therefore, two or more PRO appellants will be permitted to aggregate 
their appealable claims together on the basis of ``similar or related 
services'' or ``common issues of law and fact.'' However, any 
aggregation under section 1869(b)(2) will take place in connection with 
a request for an ALJ hearing or judicial review and, consequently, 
should not result in any significant burden on PROs.
    In the final rule we are expanding the aggregation rights for 
individual appellants under part A. As a result, an individual provider 
appellant would be able to aggregate two or more claims of one or more 
beneficiaries. However, it has been our experience that the amount in 
controversy ($200) for an ALJ hearing has not been a particular 
obstacle in PRO appeals even when a single claim is being adjudicated.
    Comment: One commenter noted that the proposed rule did not address 
whether claims of several different beneficiaries, each meeting the 
minimum amount in controversy needed for appeal, could be consolidated 
into a single hearing for reasons of economy and efficiency.
    Response: This comment is beyond the announced scope of this 
regulation. In the second full paragraph on p. 28357 of the preamble to 
the proposed rule, we state that ``We emphasize that the purpose of 
these regulations is to provide criteria for aggregation of claims in 
order to meet the amount in controversy requirements (that is, the 
jurisdictional threshold) for appealing Medicare claims. These rules 
are not meant to address procedures (or alter existing provisions) 
concerning the conduct of hearings once the required amount in 
controversy is established or to address the discretion of the 
presiding officer to join claims in a single hearing for administrative 
purposes'' (emphasis supplied).

Summary of Revisions

    Below we describe changes we are making, as discussed above in the 
responses to comments, to both the regulations as they currently appear 
in the Code of Federal Regulations and to the rules we proposed on June 
20, 1991.

A. Definitions (Secs. 405.701 and 405.802)

    1. We are adding a definition of ``appellant'', to designate the 
beneficiary, provider or other person or entity appealing a 
determination of benefits under part A (Sec. 405.701) or part B 
(Sec. 405.802), to facilitate the implementation of our bifurcated 
system of aggregation by providing a single, consistent term 
identifying the person or entity that has filed the appeal in a part A 
or part B claim. The term merely identifies the individual that filed 
the appeal; designation as an ``appellant'' does not convey the right 
to appeal the issue in question.
    2. We are not making final the proposed definitions of ``common 
issues of * * * fact'' and ``common issues of law'' because they are 
overly restrictive and difficult to apply. We are revising the proposed 
definition of ``common issues of law and fact'' to provide a more 
general application of this term and to provide ALJs with more 
flexibility in applying this criterion for aggregation.
    3. We are revising the proposed definition of ``delivery of similar 
or related services'' to provide a more general application of this 
term and to provide ALJs with more flexibility in applying this 
criterion for aggregation.
    4. We are not making final the proposed definition of ``mutually 
exclusive bases of appeal'' because it is overly restrictive and 
difficult to apply.
    5. We are not making final the proposed definition of ``services'' 
because we believe that the definition of services in Sec. 400.202 is 
sufficient.

B. Principles for Determining the Amount in Controversy (Sec. 405.740)

    We are modifying the proposed principles for determining the amount 
in controversy and revising the current rules to say specifically that 
two or more appellants may aggregate their claims together to meet the 
amount in controversy requirements if the claims at issue are appealed 
on time and involve common issues of law and fact. Further, two or more 
providers may aggregate their claims together if the claims involve the 
delivery of similar or related services to the same individual. We are 
also providing that individual appellants may aggregate their claims 
without having to demonstrate that the claims involve common issues.

C. Determinations of Amount in Controversy (Sec. 405.741)

    We are not making final the proposed section. The proposed 
provisions are no longer relevant because of our revised policy, and we 
have incorporated the current provision--that the presiding officer 
will determine whether the amount in controversy is $100 or more--into 
Sec. 405.740.

D. Procedural Rules for Aggregating Claims (Proposed Sec. 405.742)

    This section is not included in the final rule as the now relevant 
portions are in Sec. 405.740. The provision at proposed 
Sec. 405.742(c), which would have required a reconsideration by the 
appropriate entity before a hearing, is not included because the 
concept is repeated elsewhere in the subpart.

E. Definitions (Sec. 405.802)

    1. We are adding the definition of ``appellant'' for the reasons 
explained above under the discussion of Sec. 405.701.
    2. The definition of ``carrier'' is revised to include 
intermediaries authorized to make determinations with respect to part B 
provider services, obviating our need to add the phrase 
``intermediaries where appropriate'' everywhere we proposed.

F. Notice of Review Determination and Effect of Review Determination 
(Secs. 405.811 and 405.812)

    We are revising these sections to update the cross-references. We 
are also specifying that the hearing referred to is a carrier hearing 
and changing the tense of the sentences to present tense in accordance 
with our current style.

G. Amount in Controversy for Carrier Hearing, ALJ Hearing and Judicial 
Review (Proposed Sec. 405.820)

    We are revising the proposed Sec. 405.820 by redesignating it as 
Sec. 405.815, changing its heading, and moving the contents of 
paragraphs (b) and (d) with appropriate changes to Secs. 405.820 and 
405.821, respectively. Paragraph (c) of the current Sec. 405.820 will 
be Sec. 405.821(b).

H. Principles for Determining the Amount in Controversy (Sec. 405.817)

    We are adding this new section. It contains, as does Sec. 405.740, 
our procedures and policies for determining the amount in controversy 
and for aggregating claims. Most of this section was derived from 
proposed Sec. 405.827, which is not included in this final rule.

I. Request for a Carrier Hearing (Sec. 405.821)

    We are revising the current contents of this section to include 
those portions of proposed Sec. 405.827 that remain relevant; that is, 
Sec. 405.827 (c) and (d).

J. Procedural Rules for Aggregating Claims (Proposed Sec. 405.827)

    We are not including this section in the final rule as we have 
revised our policy and placed that policy as well as unrevised 
procedures in other sections, as explained above. Paragraph (d), 
concerning exhaustion of administrative remedies, is covered elsewhere 
in the subpart.

K. Dismissal of Request for Carrier Hearing (Sec. 405.832)

    We are not revising paragraph (d) as proposed because carrier 
hearing officers will not be making determinations concerning 
aggregation on the basis of ``delivery of similar or related services 
or ``common issues of law and fact.''

L. Right to a Hearing (Sec. 417.630)

    We are revising the cross-references in this section because of 
changes in this final rule. We are also adding a provision that members 
of HMOs who are appellants may combine both part A and part B services 
in their appeals. We are also specifying in a new paragraph (b) that 
the criteria for aggregating claims under section 1869(b)(2) of the Act 
do not apply to appeals under part 417.

M. Determining the Amount in Controversy (Sec. 473.44)

    We are updating cross-references in this section. We are also 
specifying that the criteria for aggregating claims under section 
1869(b)(2) of the Act, as implemented at Secs. 405.740(b) and 
405.817(b), apply to appeals under part 473.

N. We Are Revising the Headings of the Following Sections To Include 
the Word ``Carrier''

    Secs. 405.822, 405.823, 405.824, 405.825, 405.830, 405.831, 
405.832, 405.833, 405.834, 405.835, 405.841 and 405.860.

Paperwork Burden

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

Regulatory Impact Statement

    We generally prepare a regulatory flexibility analysis that is 
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612) unless the Secretary certifies that a final rule will not 
have a significant economic impact on a substantial number of small 
entities. For purposes of the RFA, all physicians, providers, and 
suppliers are considered to be small entities. Individuals and States 
are not included in the definition of a small entity.
    Also, section 1102(b) of the Act requires the Secretary to prepare 
a regulatory impact analysis if a final rule may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. This analysis must conform to the provisions of section 604 
of the RFA. For purposes of section 1102(b) of the Act, we define a 
small rural hospital as a hospital that is located outside of a 
Metropolitan Statistical Area and has fewer than 50 beds.
    This final rule establishes in Medicare regulations an approach for 
aggregating Medicare claims by two or more appellants to obtain the 
right to an ALJ hearing. It also provides easier access to the appeals 
process for an individual part A appellant, by providing these 
individuals with essentially the same aggregation rights that an 
individual part B appellant now has.
    We believe that the system for aggregating claims by two or more 
appellants will provide for easier access to hearings but we do not 
expect it to be widely used. This is because an individual appellant 
(who is permitted to combine claims without having to demonstrate a 
basis for the aggregation) should usually be able to meet the 
appropriate jurisdictional thresholds on his or her own behalf without 
having to combine the claims of other appellants. We also believe that 
individuals concerned with privacy of their records or proceedings, or 
individuals not inclined to locate other potential appellants might 
choose not to avail themselves of this opportunity. For whatever 
reasons, only a few requests for hearing involving the aggregation of 
claims by multiple appellants have been submitted in response to the 
decision in Moore vs. Sullivan. Nor do we expect that the changes to 
the aggregation rules for individual part A appellants will 
significantly increase the volume of part A hearings. The Secretary 
certifies that this final rule will not result in a significant 
economic impact on a substantial number of small entities and will not 
have a significant impact on the operations of a substantial number of 
small rural hospitals. This regulation was reviewed by the Office of 
Management and Budget.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
maintenance organizations (HMO), Health professions, Kidney diseases, 
Laboratories, Medicare, Reporting and recordkeeping requirements, Rural 
areas, X-rays.

42 CFR Part 417

    Administrative practice and procedure, Grant programs--health, 
Health care, Health facilities, Health insurance, Health maintenance 
organizations (HMO), Loan programs--health, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 473

    Administrative practice and procedure, Health care, Health 
professions, Peer Review Organizations (PRO), Reporting and 
recordkeeping requirements.

    42 CFR chapter IV is amended as follows:
    A. Part 405 is amended as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

    1. Subpart G is amended as follows:

Subpart G--Reconsiderations and Appeals Under Medicare Part A

    a. The authority citation for subpart G is revised to read as 
follows:


    Authority: Secs. 1102, 1151, 1154, 1155, 1869(b), 1871, 1872, 
and 1879 of the Social Security Act (42 U.S.C. 1302, 1320c, 1320c-3, 
1320c-4, 1395ff(b), 1395hh, 1395ii and 1395pp).


    b. In Sec. 405.701, the section heading is revised and a new 
paragraph (d) is added to read as follows:


Sec. 405.701  Basis, purpose and definitions.

* * * * *
    (d) Definitions. As used in subpart G of this part, the term--
    Appellant designates the beneficiary, provider or other person or 
entity that has filed an appeal concerning a particular determination 
of benefits under Medicare part A. Designation as an appellant does not 
in itself convey standing to appeal the determination in question.
    Common issues of law and fact, with respect to the aggregation of 
claims by two or more appellants to meet the minimum amount in 
controversy needed for a hearing, occurs when the claims sought to be 
aggregated are denied or reduced for similar reasons and arise from a 
similar fact pattern material to the reason the claims are denied.
    Delivery of similar or related services, with respect to the 
aggregation of claims by two or more provider appellants to meet the 
minimum amount in controversy needed for a hearing, means like or 
coordinated services or items provided to the same beneficiary by the 
appellants.
    c. Section 405.740 is revised to read as follows:


Sec. 405.740  Principles for determining the amount in controversy.

    (a) Individual appellants. For the purpose of determining whether 
an individual appellant meets the minimum amount in controversy needed 
for a hearing ($100), the following rules apply:
    (1) The amount in controversy is computed as the actual amount 
charged the individual for the items and services in question, less any 
amount for which payment has been made by the intermediary and less any 
deductible and coinsurance amounts applicable in the particular case.
    (2) A single beneficiary may aggregate claims from two or more 
providers to meet the $100 hearing threshold and a single provider may 
aggregate claims for services provided to one or more beneficiaries to 
meet the $100 hearing threshold.
    (3) In either of the circumstances specified in paragraph (a)(2) of 
this section, two or more claims may be aggregated by an individual 
appellant only if the claims have previously been reconsidered and a 
request for hearing has been made within 60 days after receipt of the 
reconsideration determination(s).
    (4) When requesting a hearing, the appellant must specify in his or 
her appeal request the specific claims to be aggregated.
    (b) Two or more appellants. As specified below, under section 
1869(b)(2) of the Act, two or more appellants may aggregate their 
claims together to meet the minimum amount in controversy needed for a 
hearing ($100). The right to aggregate under this statutory provision 
applies to claims for items and services furnished on or after January 
1, 1987.
    (1) The aggregate amount in controversy is computed as the actual 
amount charged the individual(s) for the items and services in 
question, less any amount for which payment has been made by the 
intermediary and less any deductible and coinsurance amounts applicable 
in the particular case.
    (2) In determining the amount in controversy, two or more 
appellants may aggregate their claims together under the following 
circumstances:
    (i) Two or more beneficiaries may combine claims representing 
services from the same or different provider(s) if the claims involve 
common issues of law and fact;
    (ii) Two or more providers may combine their claims if the claims 
involve the delivery of similar or related services to the same 
beneficiary; or
    (iii) Two or more providers may combine their claims if the claims 
involve common issues of law and fact with respect to services 
furnished to two or more beneficiaries.
    (iv) In any of the circumstances specified in paragraphs (b)(2)(i) 
through (b)(2)(iii) of this section, the claims may be aggregated only 
if the claims have previously been reconsidered and a request for 
hearing has been made within 60 days after receipt of the 
reconsideration determination(s). Moreover, in the request for hearing, 
the appellants must specify the claims that they seek to aggregate.
    (c) The determination as to whether the amount in controversy is 
$100 or more is made by the administrative law judge (ALJ).
    (d) In determining the amount in controversy under paragraph (b) of 
this section, the ALJ also makes the determination as to what 
constitutes ``similar or related services'' or ``common issues of law 
and fact.''
    (e) When a civil action is filed by either an individual appellant 
or two or more appellants, the Secretary may assert that the 
aggregation principles contained in this subpart may be applied to 
determine the amount in controversy for judicial review ($1000).
    (f) Notwithstanding the provisions of paragraphs (a)(1) and (b)(1) 
of this section, when payment is made for certain excluded services 
under Sec. 411.400 of this chapter or the liability of the beneficiary 
for those services is limited under Sec. 411.402 of this chapter, the 
amount in controversy is computed as the amount that would have been 
charged the beneficiary for the items or services in question, less any 
deductible and coinsurance amounts applicable in the particular case, 
had such expenses not been paid pursuant to Sec. 411.400 of this 
chapter or had such liability not been limited pursuant to Sec. 411.402 
of this chapter.
    (g) Under this subpart, an appellant may not combine part A and 
part B claims together to meet the requisite amount in controversy for 
a hearing. HMO, CMP and HCPP appellants under part 417 of this chapter 
may combine part A and part B claims together to meet the requisite 
amounts in controversy for a hearing.


Sec. 405.741  [Removed]

    d. Section 405.741 is removed.
    2. Subpart H is amended as follows:

Subpart H--Appeals Under the Medicare Part B Program

    a. The authority citation for subpart H is revised to read as 
follows:

    Authority: Secs. 1102, 1842(b)(3)(C), and 1869(b) of the Social 
Security Act (42 U.S.C. 1302, 1395u(b)(3)(C), 1395ff(b)).


    b. The heading for subpart H is revised as set forth above.
    c. Section 405.802 is revised to read as follows:


Sec. 405.802  Definitions.

    As used in subpart H of this part, the term--
    Appellant designates the beneficiary, assignee or other person or 
entity that has filed an appeal concerning a particular determination 
of benefits under Medicare part B. Designation as an appellant does not 
in itself convey standing to appeal the determination in question.
    Assignee means a physician or supplier who furnishes services to a 
beneficiary under Medicare part B and who has accepted a valid 
assignment executed by the beneficiary.
    Assignment means the transfer by the assignor of his or her claim 
for payment to the assignee in return for the latter's promise not to 
charge more for his or her services than the carrier finds to be the 
reasonable charge or other approved amount.
    Assignor means a beneficiary under Medicare part B whose physician 
or supplier has taken assignment of a claim.
    Carrier means an organization which has entered into a contract 
with the Secretary pursuant to section 1842 of the Act and which is 
authorized to make determinations with respect to part B of title XVIII 
of the Act. For purposes of this subpart, the term carrier also refers 
to an intermediary that has entered into a contract with the Secretary 
under section 1816 of the Act and is authorized to make determinations 
with respect to part B provider services, as specified in Sec. 421.5(c) 
of this chapter.
    Common issues of law and fact, with respect to the aggregation of 
claims by two or more appellants to meet the minimum amount in 
controversy needed for an ALJ hearing, occurs when the claims sought to 
be aggregated are denied or reduced for similar reasons and arise from 
a similar fact pattern material to the reason the claims are denied.
    Delivery of similar or related services, with respect to the 
aggregation of claims by two or more physician/supplier appellants to 
meet the minimum amount in controversy needed for an ALJ hearing, means 
like or coordinated services or items provided to the same beneficiary 
by the appellants.
    Representative means an individual meeting the conditions described 
in Secs. 405.870 through 405.871.
    d. Section 405.811 is revised to read as follows:


Sec. 405.811  Notice of review determination.

    Written notice of the review determination is mailed to a party at 
his or her last known address. The review determination states the 
basis of the determination and advises the party of his or her right to 
a carrier hearing when the amount in controversy is $100 or more as 
determined in accordance with Sec. 405.817. The notice states the place 
and manner of requesting a carrier hearing as well as the time limit 
under which a hearing must be requested (see Sec. 405.821).
    e. Section 405.812 is revised to read as follows:


Sec. 405.812  Effect of review determination.

    The review determination is final and binding upon all parties to 
the review unless a carrier hearing decision is issued pursuant to a 
request for hearing made in accordance with Sec. 405.821 or is revised 
as a result of reopening in accordance with Sec. 405.841.
    f. Section 405.820 is redesignated as Sec. 405.815 and is revised 
to read as follows:


Sec. 405.815  Amount in controversy for carrier hearing, ALJ hearing 
and judicial review.

    Any party designated in Sec. 405.822 is entitled to a carrier 
hearing after a review determination has been made by the carrier if 
the amount remaining in controversy is $100 or more and the party meets 
the requirements of Sec. 405.821 of this subpart. To be entitled to a 
hearing before an ALJ following the carrier hearing, the amount 
remaining in controversy must be $500 or more, and for judicial review 
following the ALJ hearing and Appeals Council Review, the amount 
remaining in controversy must be $1000 or more.
    g. A new Sec. 405.817 is added as follows:


Sec. 405.817  Principles for determining amount in controversy.

    (a) Individual appellants. For the purpose of determining whether 
an individual appellant meets the minimum amount in controversy needed 
for a carrier hearing ($100) or ALJ hearing ($500), the following rules 
apply:
    (1) The amount in controversy is computed as the actual amount 
charged the individual for the items and services in question, less any 
amount for which payment has been made by the carrier and less any 
deductible and coinsurance amounts applicable in the particular case.
    (2) A single beneficiary may aggregate claims from two or more 
physicians/suppliers to meet the $100 or $500 thresholds. A single 
physician/supplier may aggregate claims from two or more beneficiaries 
to meet the $100 or $500 threshold levels of appeal.
    (3) In either of the circumstances specified in paragraph (a)(2) of 
this section, two or more claims may be aggregated by an individual 
appellant to meet the amount in controversy for a carrier hearing only 
if the claims have previously been reviewed and a request for hearing 
has been made within six months after the date of the review 
determination(s).
    (4) In either of the circumstances specified in paragraph (a)(2) of 
this section, two or more claims may be aggregated by an individual 
appellant to meet the amount in controversy for an ALJ hearing only if 
the claims have previously been decided by a carrier hearing officer 
and a request for an ALJ hearing has been made within 60 days after 
receipt of the carrier hearing officer decision(s).
    (5) When requesting a carrier hearing or an ALJ hearing, the 
appellant must specify in his or her appeal request the specific claims 
to be aggregated.
    (b) Two or more appellants. As specified in this paragraph, under 
section 1869(b)(2) of the Act, two or more appellants may aggregate 
their claims together to meet the minimum amount in controversy needed 
for an ALJ hearing ($500). The right to aggregate under this statutory 
provision applies to claims for items and services furnished on or 
after January 1, 1987.
    (1) The aggregate amount in controversy is computed as the actual 
amount charged the individual(s) for the items and services in 
question, less any amount for which payment has been made by the 
carrier and less any deductible and coinsurance amounts applicable in 
the particular case.
    (2) In determining the amount in controversy, two or more 
appellants may aggregate their claims together under the following 
circumstances:
    (i) Two or more beneficiaries may combine claims representing 
services from the same or different physician(s) or supplier(s) if the 
claims involve common issues of law and fact;
    (ii) Two or more physicians/suppliers may combine their claims if 
the claims involve the delivery of similar or related services to the 
same beneficiary;
    (iii) Two or more physicians/suppliers may combine their claims if 
the claims involve common issues of law and fact with respect to 
services furnished to two or more beneficiaries.
    (iv) In any of the circumstances specified in paragraphs (b)(2)(i) 
through (b)(2)(iii) of this section, the claims may be aggregated only 
if the claims have previously been decided by a carrier hearing 
officer(s) and a request for ALJ hearing has been made within 60 days 
after receipt of the carrier hearing officer decision(s). Moreover, in 
a request for ALJ hearing, the appellants must specify the claims that 
they seek to aggregate.
    (c) The determination as to whether the amount in controversy is 
$100 or more is made by the carrier hearing officer. The determination 
as to whether the amount in controversy is $500 or more is made by the 
ALJ.
    (d) In determining the amount in controversy under paragraph (b) of 
this section, the ALJ will also make the determination as to what 
constitutes ``similar or related services'' or ``common issues of law 
and fact.''
    (e) When a civil action is filed by either an individual appellant 
or two or more appellants, the Secretary may assert that the 
aggregation principles contained in this subpart may be applied to 
determine the amount in controversy for judicial review ($1000).
    (f) Notwithstanding the provisions of paragraphs (a)(1) and (b)(1) 
of this section, when payment is made for certain excluded services 
under Sec. 411.400 of this chapter or the liability of the beneficiary 
for those services is limited under Sec. 411.402 of this chapter, the 
amount in controversy is computed as the amount that would have been 
charged the beneficiary for the items or services in question, less any 
deductible and coinsurance amounts applicable in the particular case, 
had such expenses not been paid under Sec. 411.400 of this chapter or 
had such liability not been limited under Sec. 411.402 of this chapter.
    (g) Under this subpart, an appellant may not combine part A and 
part B claims together to meet the requisite amount in controversy for 
a carrier hearing or ALJ hearing. HMO, CMP and HCPP appellants under 
part 417 of this chapter may combine part A and part B claims together 
to meet the requisite amount in controversy for a hearing.
    h. Section 405.821 is revised to read as follows:


Sec. 405.821  Request for carrier hearing.

    (a) A request for a carrier hearing is any clear expression in 
writing by a claimant asking for a hearing to adjudicate a claim when 
not acted upon with reasonable promptness or by a party to a review 
determination who states, in effect, that he or she is dissatisfied 
with the carrier's review determination and wants further opportunity 
to appeal the matter to the carrier.
    (b) The hearing request must be filed at an office of the carrier 
or at an office of SSA or HCFA.
    (c) Except when a carrier hearing is held because the carrier did 
not act upon a claim with reasonable promptness (see Sec. 405.801), a 
party to the review determination may request a carrier hearing within 
six months after the date of the notice of the review determination. 
The carrier may, upon request by the party affected, extend the period 
for filing the request for hearing.


Secs. 405.822, 405.823, 405.824, 405.825, 405.826, 405.830, 405.832, 
405.833, 405.834, 405.835, 405.841, and 405.860  [Amended]

    i. The headings of Secs. 405.822, 405.823, 405.824, 405.825, 
405.826, 405.830, 405.832, 405.833, 405.834, 405.835, 405.841, and 
405.860 are amended by adding the word ``carrier'' before the word 
``hearing''.
    B. Part 417 is amended as set forth below:

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL 
PLANS, AND HEALTH CARE PREPAYMENT PLANS

    1. The authority citation for part 417 continues to read as 
follows:

    Authority: Secs. 1102, 1833(a)(1)(A), 1861(s)(2)(H), 1871, 1874 
and 1876 of the Social Security Act as amended (42 U.S.C. 1302, 
1395l(a)(1)(A), 1395x(s)(2)(H), 1395hh, 1395kk, and 1395mm); section 
114(c) of Public Law 97-248 (42 U.S.C. 1395mm note); section 9312(c) 
of Public Law 99-509 (42 U.S.C. 1395mm note); and section 1301 of 
the Public Health Service Act (42 U.S.C. 300e) and 31 U.S.C. 9701.

    2. Section 417.630 is revised to read as follows:


Sec. 417.630  Right to a hearing.

    (a) Any party to the reconsideration who is dissatisfied with the 
reconsidered determination has a right to a hearing if the amount in 
controversy is $100 or more. The amount in controversy for an 
individual claimant, which can include any combination of part A and 
part B services, is computed in accordance with Sec. 405.740(a) of this 
chapter for part A services and Sec. 405.817(a) of this chapter for 
part B services. When the basis for the appeal is the refusal of 
services, the projected value of those services must be used in 
computing the amount in controversy.
    (b) The criteria for aggregating claims available to two or more 
appellants under section 1869(b)(2) of the Act do not apply to appeals 
under this part.

PART 473--RECONSIDERATIONS AND APPEALS

    C. Part 473 is amended to read as follows:
    1. The authority citation for part 473 continues to read as 
follows:

    Authority: Secs. 1102, 1154, 1155, 1866, 1871, and 1879 of the 
Social Security Act (42 U.S.C. 1302, 1320c-3, 1320c-4, 1395cc, 
1395hh, and 1395pp).

    2. In Sec. 473.44, paragraph (a) is revised to read as follows:


Sec. 473.44   Determining the amount in controversy for a hearing.

    (a) After an individual appellant has submitted a request for a 
hearing, the ALJ determines the amount in controversy in accordance 
with Sec. 405.740(a) of this chapter for Part A services or 
Sec. 405.817(a) of this chapter for Part B services. When two or more 
appellants submit a request for hearing, the ALJ determines the amount 
in controversy in accordance with Sec. 405.740(b) of this chapter for 
Part A services and Sec. 405.817(b) of this chapter for Part B 
services.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: November 3, 1993.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.

    Dated: January 24, 1994.
Donna E. Shalala,
Secretary.
[FR Doc. 94-5791 Filed 3-15-94; 8:45 am]
BILLING CODE 4120-01-P