[Federal Register Volume 67, Number 194 (Monday, October 7, 2002)]
[Notices]
[Pages 62478-62482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25351]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-4050-NR]


Medicare Program; Changes in Medicare Appeals Procedures Based on 
Section 521 of the Medicare, Medicaid, and SCHIP Benefits Improvement 
and Protection Act of 2000

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice of CMS ruling.

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SUMMARY: This notice announces a CMS Ruling that sets forth our policy 
regarding implementation of the new appeals provisions in section 1869 
of the Social Security Act, as amended by section 521 of the Medicare, 
Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA), Public Law 106-554. The Ruling identifies changes that will 
take effect on October 1, 2002 and provides notice of the 
administrative procedures that CMS contractors, administrative law 
judges, and the Departmental Appeals Board are to follow in processing 
Medicare claims appeals.

FOR FURTHER INFORMATION CONTACT: Michele Edmondson (410) 786-6478.

SUPPLEMENTARY INFORMATION: The CMS Administrator signed Ruling CMSR-02-
01 on September 12, 2002. The text of the CMS Ruling is as follows:

Changes in Medicare Appeals Procedures Under Section 521 of BIPA

    Summary: Section 521 of BIPA states that ``the amendments made by 
[section 521] shall apply with respect to initial determinations made 
on or after October 1, 2002.'' BIPA Sec.  521(d), Pub. L. 106-554 
(2000). The statute includes a series of structural and procedural 
changes to the existing appeals process, including revised time limits 
for filing appeals, reduced decision-making time frames throughout all 
levels of the Medicare administrative appeals system, and the 
establishment of new entities known as qualified independent 
contractors (QICs) to conduct reconsiderations of contractors' initial 
determinations or redeterminations. However, CMS is unable to 
immediately implement many of these far-reaching changes. The primary 
purpose of this Ruling is to explain CMS' progress to date in 
implementing section 521 of BIPA and identify those provisions that 
will be implemented effective October 1, 2002. Additionally, the Ruling 
will clarify our policies with respect to the provisions that cannot be 
implemented by October 1, 2002, and provides notice of the 
administrative procedures that CMS contractors, administrative law 
judges (ALJs) and the Departmental Appeals Board (DAB) will follow in 
processing Medicare claim appeals until we are able to fully implement 
section 521 of BIPA.
    Citations: Sections 1154, 1869 and 1879 of the Social Security Act 
and section 521 of the Medicare, Medicaid and SCHIP Benefits 
Improvement and Protection Act of 2000, Public Law 106-554.

I. Background

    Section 1869 of the Act establishes a Medicare beneficiary's right 
to dispute initial determinations made by contractors that result in 
the denial of claims, in whole or in part, for services received under 
the Medicare Part A and Part B Programs. Section 1879(d) extends these 
appeal rights, under certain circumstances, to providers and suppliers 
who accept assignment.
    For initial determinations made before October 1, 2002, an appeal 
of an initial claim decision generally follows one of two distinct 
processes, depending on whether it is a Part A or a Part B claim. For 
Part A claims, ``reconsiderations'' under section 1816(f)(2)(A) of the 
Act are carried out by Medicare contractors, known as fiscal 
intermediaries (FIs), who issue the initial determination. If an 
initial determination is upheld at the reconsideration level, the 
appellant may request a hearing before an ALJ, if the amount in 
controversy is $100 or more. If the ALJ upholds the FI's 
reconsideration decision, the appellant may request a review by the 
DAB. An appellant's next level of appeal is to a Federal District 
Court. For Part B claims, reviews under section 1842(b)(2)(B)(i) of the 
Act are carried out by Medicare contractors known as carriers. If the 
amount in controversy is at least $100, carrier reviews are subject to 
``fair hearings'' under section 1841(b)(2)(B)(ii) of the Social 
Security Act, which are carried out by the same Medicare contractor 
that conducted the review. Subsequently, these appeals may proceed to 
the ALJ hearing level, provided that the amount in controversy is $500, 
after which the appeals process for Part B claims mirrors the Part A 
appeals process. In addition, Quality Improvement Organizations (QIOs--
formerly Peer Review Organizations) make initial determinations and 
reconsiderations with respect to certain hospital discharges under 
sections 1154 and 1155 of the Act. These decisions are also subject to 
ALJ hearings, if the amount in controversy is at least $200.
    Section 521 of BIPA amends section 1869 of the Act to revise the 
Medicare administrative appeals process. Section 521's structural and 
procedural changes include:
    [sbull] Establishing a uniform process for handling Medicare Part A 
and B appeals, including the introduction of a new level of contractor 
appeal.
    [sbull] Revising the time frames for filing a request for a Part A 
and Part B appeal.
    [sbull] Imposing a 30-day timeframe for certain 
``redeterminations'' made by the contractors who made the initial 
determination.
    [sbull] Requiring the establishment of a new appeals entity, the 
qualified independent contractor (QIC), to conduct ``reconsiderations'' 
of contractors' initial determinations or redeterminations, and 
allowing appellants to escalate the case to an ALJ hearing, if 
reconsiderations are not completed within 30 days.
    [sbull] Establishing a uniform amount in controversy threshold of 
$100 for appeals at the ALJ level.
    [sbull] Imposing 90-day time limits for conducting ALJ and DAB 
appeals of lower-level decisions and allowing appellants to escalate a 
case to the next level of appeal if ALJs or the DAB do not meet their 
deadlines.

[[Page 62479]]

    [sbull] Imposing ``de novo'' review when the DAB reviews an ALJ 
decision made after a hearing.
    Revised section 1869 also requires that the Secretary establish a 
process by which an individual may obtain an expedited determination if 
he/she receives a notice from a provider of services that the provider 
plans to terminate services or discharge the individual from the 
provider. Currently, this right to an expedited review only exists with 
respect to hospital discharges (under sections 1154 and 1155 of the 
Act).
    As discussed in detail below, CMS is unable to immediately 
implement some of these provisions for initial determinations made on 
or after October 1, 2002. The primary purpose of this Ruling is to 
discuss the progress we have made to date in implementing the various 
section 521 provisions, describe the criteria used to evaluate our 
ability to implement the provisions at this time, and explain which 
requirements will be implemented effective October 1, 2002. 
Additionally, it clarifies our policies with respect to the provisions 
that cannot be implemented by October 1, 2002, and provides notice of 
the administrative procedures that CMS contractors, ALJs and the 
Medicare Appeals Council (MAC) at the DAB will follow in processing 
Medicare claims appeals until we are able to fully implement the 
procedures set forth in section 521 of BIPA.

II. Implementation of the New Appeals Requirements

    CMS is fully committed to improving the administrative appeals 
process by implementing section 521 of BIPA and we have made 
significant progress toward full implementation of BIPA section 521. 
Consistent with the statute, we recently issued a Program Memorandum to 
our carriers and intermediaries instructing them to implement the 
revised filing deadlines for requesting an appeal of a reconsideration 
or review and the lower amount in controversy requirement for Part B 
ALJ hearings. We have completed development of the Requests for 
Proposals needed to solicit bids for the QIC contracts, including full 
statements of work (SOWs) for these contracts. We are releasing the 
draft SOWs for industry comment simultaneously with issuing this CMS 
ruling. We are also completing development of the notice of proposed 
rulemaking (NPRM) needed to establish implementing regulations for the 
provisions contained in section 521 of BIPA, and we expect to release 
the NPRM this fall for public display and comment. Additionally, CMS is 
near completion of the first phase of a contract to develop a central 
appeals case tracking system, and is working on revising the various 
appeals forms. Finally, we have taken steps within the agency to ensure 
that our denial messages from the initial determination phase through 
to reconsideration, review and fair hearing levels are more informative 
to potential appellants.
    Despite these efforts, however we believe it is in the public 
interest to implement only some of section 521's provisions beginning 
October 1, 2002. The primary reason is that the new appeals provisions 
require additional policy development that can be best accomplished 
through notice and comment rulemaking. Only with the issuance of final 
regulations can we achieve the uniformity and consistency needed for 
proper implementation of the BIPA 521 provisions. (See, for example, 
the Inspector General's January 2002 report: ``Medicare Administrative 
Appeals--The Potential Impact of BIPA'', OEI-04-01-00290, in which 
CMS'' auditors, the OIG, concur that immediate implementation of 
section 521 presents significant challenges due to large-scale 
structural changes and the lack of guidance or resources to ensure a 
smooth transition to the new system.) Among the key issues that have 
been identified by CMS and other observers as requiring additional 
policy guidance prior to implementation are:
    [sbull] How CMS can balance its responsibilities to reduce Medicare 
fraud and abuse with the need to comply with the shorter BIPA time 
frames and escalation provisions.
    [sbull] The proper amount-in-controversy threshold for QIC 
reconsiderations.
    [sbull] The rules that should apply during the transition period to 
the new appeals system and whether it is possible or prudent to operate 
dual appeals systems depending on the date of an initial claim 
determination.
    [sbull] Whether the existing availability of phone and in-person 
``fair hearings'' can be accommodated under the new QIC reconsideration 
process.
    [sbull] Whether and how CMS should be represented at the upper 
levels of the appeal process.
    [sbull] How will case docketing, record keeping, case file 
management and transmission, and case effectuation responsibilities be 
divided between the existing contractors and the QICs.
    [sbull] Who will conduct expedited determinations, how will the 
process work, and what if any financial protections will be involved.
    Each year, more than 5 million Medicare claim appeals are filed 
with 54 CMS contractors--the FIs and carriers--and upper level appeals 
may be heard by any one of an estimated 1,000 SSA ALJs or by the MAC. 
The introduction of QICs into this process adds a new level of 
complexity, as the questions above demonstrate. As we transition to the 
new appeals process envisioned by BIPA, it is crucial that 
implementation be carried out uniformly and that our implementation 
plans be clear to the key stakeholders who will be affected by these 
changes in the claim appeals process, including not only the entities 
that adjudicate appeals, but also Medicare beneficiaries, providers, 
and suppliers. Attempting to resolve these types of issues and develop 
final regulations without public comment will clearly produce piecemeal 
public policy development. More importantly, it is unlikely to achieve 
the more efficient, more accurate appeals system that is the goal of 
the BIPA 521 provisions.
    Thus, in view of the complex nature of the changes required by 
BIPA, we believe that it is essential to the public interest to carry 
out notice and comment rulemaking before implementing the new appeals 
provisions. This rulemaking effort is greatly complicated by the 
continuing uncertainty over resource availability and the possibility 
of further changes to the statutory appeals provisions. Moreover, we 
need to ensure that allocating scarce CMS resources to carry out this 
statutory mandate will not risk disruptions to other fundamental 
functions of the Medicare program, such as processing and payment of 
Medicare claims. Rather than risk disruptions to these core functions 
of the Medicare program, we believe that the more appropriate course is 
to continue to conduct appeals under the current system while 
simultaneously working toward effective BIPA implementation.

III. What Provisions Will Be Implemented on October 1, 2002?

    While we cannot ignore the risks of proceeding directly to final 
regulations without public comment, CMS recognizes the urgent need for 
improvements to the Medicare claim appeals system. Additionally, we 
understand the benefits that the new appeals provisions afford to 
beneficiaries, providers, physicians and other suppliers of service. 
Therefore, we sought to determine the feasibility of implementing 
individual sections of 521 by evaluating each of the key BIPA 
provisions in terms of the following criteria:
    [sbull] Do the new provisions fundamentally affect an individual's

[[Page 62480]]

right to appeal a denied claim, or do they primarily involve the 
applicable appeals procedures?
    [sbull] Are the provisions clear and self-explanatory?
    [sbull] Can the provisions be implemented by October 1, 2002, using 
existing CMS resources?
    [sbull] Can the provisions be implemented appropriately under the 
existing appeals structure, that is, without the introduction of QICs 
into the administrative appeals process?
    [sbull] In the short-term, will implementing a given provision on a 
stand-alone basis support, rather than undermine, Congress' statutory 
intent (and the Administration's shared goal) of producing more timely 
and accurate final decisions on Medicare claim appeals?
    Our examination revealed three instances where all of these key 
questions could be answered affirmatively. Therefore, CMS will 
implement the following provisions on October 1, 2002:
    We intend to implement the new 120-day deadline for filing requests 
for redeterminations, established under section 1869(a)(3)(C)(i). This 
change increases the existing 60-day deadline for requesting 
reconsiderations of Part A claims and decreases the 180-day deadline 
for requesting Part B reviews. This provision fundamentally affects an 
individual's right to appeal a denied claim, and its implementation is 
financially feasible. Therefore, CMS will implement these new filing 
deadlines for all initial determinations made on or after October 1, 
2002 (Note: These deadlines do not apply to QIO determinations.)
    We recognize that this change would establish a shorter deadline 
for Part B appeals, which could at least temporarily prove more 
difficult to meet for parties wishing to appeal Part B claims. We note 
though that it is generally in the best financial interest of an 
appellant to request an appeal and receive an appeal decision 
expeditiously. Also, particularly for beneficiary appellants, we 
believe that uniform appeals filing deadlines for Part A and B claims 
represents another positive aspect of this change. However, to 
alleviate any hardship associated with the possible need to gather 
documentation faster than in the past in order to comply with the new 
statutory filing deadlines, we are instructing CMS contractors, under 
these limited circumstances, to grant requests for extensions of up to 
60 days in the filing deadline for Part B claims that are based on an 
explanation from the patient, provider, or supplier that the time was 
needed to gather the necessary supporting records.
    Revised section 1869(b)(1)(E) specifies that the amount in 
controversy (AIC) threshold for requesting an ALJ hearing is $100, as 
opposed to the thresholds of $500 for Part B appeals and $200 for 
appeals of QIO determinations. It also stipulates the circumstances 
under which appellants may aggregate appeals to meet the AIC threshold. 
We believe that the reduced threshold is an unambiguous change that 
fundamentally affects an individual's right to appeal a denied claim. 
Therefore, CMS will implement the new amount in controversy 
requirements for Part B ALJ hearings and ALJ hearings for QIO initial 
determinations specified in section 521 of BIPA for initial 
determinations made on or after October 1, 2002. Contractors should 
continue to follow the existing instructions for aggregation of claims 
to meet the AIC threshold--thus the rules at 42 CFR 405.740 and 405.817 
governing aggregation continue to apply. We note that the new statute 
does not establish an amount in controversy threshold for QIC reviews; 
and section 1842(b)(3), which was not repealed by section 521, sets a 
$100 AIC threshold for fair hearings. Thus, we believe it is 
appropriate to continue a $100 AIC threshold for carrier fair hearings.
    Revised section 1869(a)(3) deals with redeterminations. 
Redeterminations under BIPA are to be conducted by the same CMS 
contractors that made the initial determinations. BIPA section 521 did 
not repeal either section 1816(f)(2)(A) or section 1842(b)(2)(B)(i), 
which currently set specific time frames for FI reconsiderations and 
carrier reviews, respectively. The general rules and limitations 
established under sections 1869(a)(3)(A) and (B) basically mirror 
current policy, for example, a contractor's review of the initial 
determination must precede a higher level appeal and that no 
redetermination may be made by an individual involved in the initial 
determination. Therefore, for initial determinations made on or after 
October 1, 2002, existing CMS contractors will continue to follow the 
provisions in sections 1816(f) and 1842(b) of the Social Security Act 
for both Part A reconsiderations and Part B reviews.
    The remaining provisions in section 521 of BIPA, when evaluated 
using the criteria mentioned above, resulted in negative responses to 
all or most of the questions posed. We will discuss each of these 
below, in the order in which they appear in the revised section 1869 of 
the Act.
    Section 1869(a)(2)(A) of the Act, as amended by BIPA, requires 
certain initial determinations to be concluded and notice provided no 
later than 45 days following receipt of the claim by the fiscal 
intermediary or carrier. Under the current process, providers are given 
45 days to produce additional medical documentation. Thus, the 
imposition of a 45-day decision-making time frame creates substantial 
financial pressure on the existing medical review structure. 
Additionally, since providers, physicians, and other suppliers will 
receive significantly less time to respond to document requests, we 
believe that these entities will want an opportunity to comment on how 
these decision-making deadlines are to be implemented. Therefore, we 
will address this issue in the forthcoming proposed rule.
    Section 1869(a)(3)(C)(ii) of the Act, as amended by BIPA, requires 
that all redeterminations of initial determinations made on or after 
October 1, 2002 be issued within 30 days. This reduction of the current 
timeframes established by sections 1816(f)(2) and 1842(b)(2) of the 
Act, creates a strain on the existing appeals structure and requires 
significant additional resources to implement. Given these 
considerations, we are unable to implement this requirement 
immediately. Instead, we will continue to hold contractors to the 
existing statutory standards in sections 1816(f)(2) and 1842(b)(2) of 
the Act, that is, 90 percent of Part A reconsideration decisions within 
90 days, and 95 percent of Part B review decisions within 45 days.
    Section 1869(b)(1) of the Act contains a series of new provisions 
concerning Medicare claim appeals, including the general rule under 
paragraph (b)(1)(A) that any individual who is dissatisfied with a 
redetermination decision can request a reconsideration of this decision 
by a QIC before proceeding to an ALJ hearing. As discussed in detail 
above, we do not believe it is feasible or consistent with other policy 
considerations to immediately implement this new level of appeal; thus 
we do not intend to introduce this change until QICs are in place to 
carry out these reconsiderations.
    Sections 1869(b)(1)(B) and (C) address provider and supplier 
representation and assignment issues. To the extent that these 
provisions represent departures from existing requirements, we do not 
view them as self-explanatory and instead believe that they warrant 
notice and comment rulemaking before they can be implemented. Thus, we 
do not intend to make any changes in

[[Page 62481]]

existing regulatory appeal procedures based on these provisions 
effective October 1, 2002. The existing regulations regarding 
representation (at 20 CFR Subpart R, and 42 CFR 405.870 and 405.872) 
will continue in effect until full BIPA implementation.
    Section 1869(b)(1)(D) addresses the time limits for filing upper 
level appeals. The statute charges the Secretary with establishing in 
regulations time limits for filing requests for ALJ hearings. We 
believe that the public, especially the beneficiary population, will 
want an opportunity to comment on the filing deadlines that will govern 
their ALJ hearing requests, and, therefore, we will address this issue 
in the forthcoming proposed rule.
    Section 1869(b)(1)(F) establishes a new requirement for expedited 
determinations in the cases of individuals who are dissatisfied with 
provider decisions to terminate their care. There are many significant 
issues related to these new provisions, including who should conduct 
these determinations, to whom should these provisions apply, and 
related financial liability and notice requirements. Although Quality 
Improvement Organizations have performed a comparable function for 
hospital discharges for many years, the new expedited determination 
process is much broader in scope and will require substantial 
additional resources and new contractual obligations. We also believe 
that the beneficiary population and other stakeholders will be 
interested in commenting on any rules governing expedited 
determinations. In view of these considerations, we are unable to 
implement these provisions effective October 1, 2002. We will discuss 
these complex issues in detail in our upcoming proposed rule.
    As the statute provides under section 1869(b)(1)(G), we also will 
establish through rulemaking guidelines with respect to the reopening 
and revision of initial determinations and reconsidered determinations.
    Section 1869(c) sets forth a series of requirements for conducting 
QIC reconsiderations. Until the Secretary enters into contracts with 
these new entities, we are unable to implement these provisions. As 
noted above, we believe it would be impractical to begin the formal 
procurement process until we have reasonable assurances that we can 
allocate adequate resources to commit to these contractual obligations. 
To the extent that we are unable to commit to future contractual 
obligations, we believe that it would be impractical at this time to 
begin the formal contract procurement process, and thus expect private-
sector entities to expend resources preparing their proposals. Thus, 
carriers will continue to conduct fair hearings in accordance with 
section 1869 of the Act, prior to its amendment by BIPA, and existing 
regulations.
    Section 1869(d) of the Act sets forth the remaining substantive 
changes to the Medicare administrative appeals procedures. These 
changes all involve the procedures and deadlines for upper level 
appeals, that is, hearings before SSA ALJs, reviews by the MAC at the 
DAB, and judicial review. Like the provisions set forth under new 
section 1869(c), we believe that these new requirements are clearly 
premised on, and build upon, the conduct of a previous reconsideration 
by the new QIC entities. In fact, section 1869(d)(1) which contains the 
deadlines for ALJ hearings specifically states that the deadlines apply 
for a ``hearing on a decision of a qualified independent contractor.'' 
Similarly, section 1869(d)(2), which contains the deadlines on DAB 
proceedings, puts those deadlines in the context of ``decisions on a 
hearing described in paragraph (1)''--that is, reviews of ALJ hearings 
on decisions made by QICs.
    Without QICs, there is no reasonable expectation that the new 90-
day deadlines for ALJ and DAB decisions can be met. With fully 
operational QICs, on the other hand, working in concert with other 
systemic improvements envisioned by the statute (such as, an appeal-
specific data base) there is reason to believe that the volume of 
Medicare claims decisions that will reach these upper levels of the 
appeals system can be significantly reduced--eventually making 
attainable the new deadlines established under section 1869(d).
    Much like section 1869(c)(3)(C)(ii) of the Act, section 1869(d)(3) 
contains provisions concerning the consequences of a failure by an ALJ 
or the DAB to meet the new 90-day deadlines for decision-making. In 
brief, the statute gives an appellant the option of escalating a case 
to the next level of appeal, and also to Federal district court, if a 
decision is not issued within the prescribed timeframe. These decision-
making deadlines are premised in statute on the sequential introduction 
of QICs, under section 1869(c). Without QICs, we do not believe that 
these deadlines can be met. Thus, as a practical reality, implementing 
these escalation provisions has the potential to result in cases 
escalating to Federal court without benefit of the record developed 
during an ALJ hearing. Under a worst case scenario, the prospect would 
exist of Federal courts being inundated by more than 10,000 cases that 
now are heard annually by the MAC, or of the introduction of an endless 
loop where cases are remanded from the courts to the MAC to the ALJs in 
search of a timely decision. We do not believe that these prospects are 
consistent with statutory intent or responsible government, and thus we 
do not believe that these escalation provisions can be implemented 
effective October 1, 2002. The next section of this ruling discusses 
how contractors will be expected to implement all aspects of this 
ruling, including how to deal with escalation requests.

IV. Responsibilities of Medicare Contractors Under This Ruling

    Until QICs are established and final regulations to implement 
section 521 of BIPA are issued, Medicare contractors (that is, FIs, 
carriers, and QIOs) generally should continue to follow current 
practices, consistent with section 1869 of the Act prior to its 
amendment by BIPA, and consistent with existing regulations, in making 
initial determinations and carrying out Medicare claim appeals and 
reviews of hospital discharges. As explained in Section III of this 
Ruling, the only substantive changes to these provisions involve the 
new 120-day deadline for filing for carrier reviews or FI 
reconsiderations and the reduction of the AIC threshold to $100 for an 
ALJ hearing for the Part B claim determinations or QIO determination 
appeals process. Contractors should not implement other provisions 
contained in section 521 of BIPA until further notice.
    If an FI receives a request for a QIC reconsideration of a Part A 
claim denial that has been upheld on the FI's reconsideration, the 
contractor should treat the request as a request for a hearing before 
an ALJ and process it accordingly. After following the appropriate 
processing requirements, contractors should retain a copy of the 
request onsite and mail a copy of the request to: BIPA Lead, CMS, Mail 
Stop S1-05-06, 7500 Security Boulevard, Baltimore, MD 21244. If a 
carrier or FI receives a request for a QIC reconsideration of a Part B 
claim denial that has been upheld on review, the contractor should 
treat the request as a request for a fair hearing, and process it 
accordingly. After following the appropriate processing requirements, 
contractors should retain a copy of the request onsite and mail a copy 
of the request to: BIPA Lead, CMS, Mail Stop

[[Page 62482]]

S1-05-06, 7500 Security Boulevard, Baltimore, MD 21244.
    If a contractor receives a request to escalate an appeal to the ALJ 
hearing level (or the MAC level) because the contractor (or the ALJ) 
has not issued a timely decision on the appeal, the contractor should 
inform the appellant of the delay in implementation of the BIPA 
provisions, referencing this Ruling, and explain that the appeal will 
be processed under the existing appeals procedures. The contractor 
should note that the contractor (or the ALJ) will notify the appellant 
of its decision on the case and of any subsequent right the appellant 
may have to an ALJ hearing (or MAC review) on the decision. If the 
appellant makes such an appeal, a copy of the contractor's 
correspondence with the appellant should be sent to the ALJ (or the 
MAC), including a copy of the appellant's request for escalation.
    If an ALJ or the MAC requests case files from a contractor in order 
to process a request to escalate an appeal, the contractor should 
notify the ALJ or the MAC, in writing, that the case file is currently 
being used to process a request for appeal at the review, 
reconsideration or fair hearing level, as appropriate. In that 
situation, contractors should indicate that the case file will be 
transmitted when the carrier, FI or hearing officer completes its 
review. Contractors should retain a copy of the request onsite and mail 
a copy of the request to: BIPA Lead, CMS, Mail Stop S1-05-06, 7500 
Security Boulevard, Baltimore, MD 21244.
    Finally, QIOs should continue to review hospital discharges in 
accordance with Sec. Sec.  1154(a) and 1154(e) of the Act, with respect 
to time frames and financial liability.

    Authority: Section 1154, 1869, and 1879 of the Social Security 
Act (42 U.S.C. 1395ff) and section 521 of the Medicare, Medicaid, 
and SCHIP Benefits Improvement and Protection Act of 2000, Pub. L. 
106-554.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program; No. 93.773 Medicare--Hospital Insurance Program; 
and No. 93.774, Medicare--Supplementary Medical Insurance Program)

    Dated: September 12, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 02-25351 Filed 10-1-02; 4:05 pm]
BILLING CODE 4120-01-P