[Federal Register Volume 67, Number 221 (Friday, November 15, 2002)]
[Proposed Rules]
[Pages 69312-69363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-28296]



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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Part 405



Medicare Program; Changes to the Medicare Claims Appeal Procedures; 
Proposed Rule

  Federal Register / Vol. 67, No. 221 / Friday, November 15, 2002 / 
Proposed Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 405

[CMS-4004-P]
RIN 0938-AL67


Medicare Program: Changes to the Medicare Claims Appeal 
Procedures

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

ACTION: Proposed rule.

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SUMMARY: Under sections 1869 and 1879 of the Social Security Act (the 
Act), Medicare beneficiaries and, under certain circumstances, 
providers and suppliers of health care services, may appeal adverse 
determinations regarding claims for benefits under Medicare Part A and 
Part B. Section 521 of the Medicare, Medicaid and SCHIP Benefits 
Improvement and Protection Act of 2000 amends section 1869 of the Act 
to substantially revise the Medicare claim appeals process. The statute 
mandates a series of structural and procedural changes to the existing 
appeals process, including: The establishment of a uniform process for 
handling all Medicare Part A and Part B appeals; revised time limits 
for filing appeals; reduced decision-making time frames throughout all 
levels of the Medicare administrative appeals system; the introduction 
of new entities known as qualified independent contractors (QICs) to 
conduct reconsiderations of contractors' initial determinations or 
redeterminations; and the establishment of the right to an expedited 
determination when an individual disagrees with a provider's decision 
to discharge the individual or terminate services.
    This proposed rule sets forth the regulations that would be needed 
to implement the new statutory provisions.

DATES: We will consider comments if we receive them at the appropriate 
address, as provided below, no later than 5 p.m. on January 14, 2003.

ADDRESSES: In commenting, please refer to file code CMS-4004-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission or e-mail. Mail written comments (one 
original and three copies) to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-4004-P, P.O. Box 8017, Baltimore, MD 21244-8017.
    Please allow sufficient time for mailed comments to be timely 
received in the event of delivery delays.
    If you prefer, you may deliver (by hand or courier) your written 
comments (one original and three copies) to one of the following 
addresses:

Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201, or
Room C5-16-03, 7500 Security Boulevard, Baltimore, MD 21244-1850.

(Because access to the interior of the HHH Building is not readily 
available to persons without Federal government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for commenters wishing to retain a proof of filing by 
stamping in and retaining an extra copy of the comments being filed.)

    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and could be considered late.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section below.

FOR FURTHER INFORMATION CONTACT: Michele Edmondson (410) 786-6478 (for 
issues relating to appeal rights). Jennifer Eichhorn (410) 786-9531 
(for issues relating to initial determinations and redeterminations). 
Arrah Tabe (410) 786-7129 (for issues relating to QIC 
reconsiderations). Jennifer Collins (410) 786-1404 (for issues relating 
to ALJ hearings and DAB reviews). Rhonda Greene-Bruce (410) 786-7579 
(for issues relating to expedited determinations).

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: Timely 
comments will be available for public inspection as they are received, 
generally beginning approximately 3 weeks after publication of a 
document, at the headquarters of the Centers for Medicare & Medicaid 
Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday 
through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an 
appointment to view public comments, phone (410) 786-7197.
    To order copies of the Federal Register containing this document, 
send your request to: New Orders, Superintendent of Documents, P.O. Box 
371954, Pittsburgh, PA 15250-7954. Specify the date of the issue 
requested and enclose a check or money order payable to the 
Superintendent of Documents, or enclose your Visa or Master Card number 
and expiration date. Credit card orders can also be placed by calling 
the order desk at (202) 512-1800 (or toll-free at 1-888-293-6498) or by 
faxing to (202) 512-2250. The cost for each copy is $9. As an 
alternative, you can view and photocopy the Federal Register document 
at most libraries designated as Federal Depository Libraries and at 
many other public and academic libraries throughout the country that 
receive the Federal Register.
    This Federal Register document is also available from the Federal 
Register online database through GPO Access, a service of the U.S. 
Government Printing Office. The Web site address is http://www.access.gpo.gov/nara/index.html.

    Note: The former name of the Centers for Medicare & Medicaid 
Services (CMS) was the Health Care Financing Administration (HCFA). 
The terms CMS and HCFA can be used interchangeably.

    Since the Social Security Administration (SSA) became an 
independent agency in 1995 pursuant to Public Law 103-296, it has 
continued to provide CMS with support for the administration of the 
Medicare Parts A and B programs pursuant to a Memorandum of 
Understanding between SSA and DHHS. That support has involved, among 
other duties, continuing to provide hearings and decisions in Medicare 
appeals using SSA administrative law judges (ALJs) as well as utilizing 
SSA offices to forward various Medicare-related paperwork to CMS. While 
CMS has greatly appreciated SSA's assistance over the years in these 
areas, at this time CMS is considering taking over these Medicare 
responsibilities. Our hope is to have this in place on or before 
October 1, 2003. Until such time as CMS may take over the function, SSA 
will continue to provide Medicare claimants with the valuable 
assistance that it has traditionally provided. Thereafter, CMS will 
assume such responsibilities. CMS will provide appropriate notice to 
the public as to when such responsibilities will be assumed and also as 
to the procedures Medicare claimants will follow in dealing with CMS 
rather than SSA. Therefore, references in this NPRM to SSA, including 
SSA, ALJs, and field offices, should be read as references to SSA 
assistance to CMS up to the point in time when CMS takes over the SSA 
responsibilities.

I. Background

A. Overview of Existing Medicare Program

    The original Medicare program consists of two parts. Part A, known 
as the hospital insurance program, covers

[[Page 69313]]

certain care provided to inpatients in hospitals, critical access 
hospitals, skilled nursing facilities (SNFs), as well as hospice care 
and some home health care. Part B, the supplementary medical insurance 
program, covers certain physicians' services, outpatient hospital care, 
and other medical services that are not covered under Part A. In 
addition to the original Medicare program, beneficiaries may elect to 
receive health care coverage under Part C of Medicare, the 
Medicare+Choice (M+C) program. Under the M+C program, an individual is 
entitled to those items and services (other than hospice care) for 
which benefits are available under Part A and Part B. An M+C plan may 
provide additional health care items and services that are not covered 
under the original Medicare program.
    Under the original Medicare program, a beneficiary may generally 
obtain health services from any institution, agency, or person 
qualified to participate in the Medicare program that undertakes to 
provide the service to the individual. After the care is provided, the 
provider or supplier (or, in some cases, a beneficiary) would submit a 
claim for benefits under the Medicare program to the appropriate 
government contractor, either a fiscal intermediary (for all Part A 
claims and certain Part B claims) or a carrier (for most claims under 
Part B). If the claim is for an item or service that falls within a 
Medicare benefit category, is reasonable and necessary for the 
individual, and is not otherwise excluded by statute or regulation, 
then the contractor would pay the claim. However, the Medicare program 
does not cover all health care expenses. If the Medicare contractor 
determines that the medical care is not covered under the Medicare 
program, it denies the claim. In fiscal year 2001, Medicare contractors 
adjudicated over 930 million initial claims and approximately 6.7 
million claim appeals.
    When a contractor denies a claim, it notifies the provider, 
supplier and/or beneficiary of the denial and offers the opportunity to 
appeal this decision. The existing appeals procedures for original 
Medicare are set forth in regulations at 42 CFR part 405, subparts G 
and H. Separate procedures for appealing determinations made under the 
M+C program are set forth at subpart M of part 422. After an appellant 
has exhausted the administrative appeals procedures offered under the 
Medicare program, the Medicare statute provides the opportunity for a 
dissatisfied individual to seek review in Federal court.
    The regulations in part 405 subpart G, beginning at Sec.  405.700, 
describe reconsiderations and appeals under Medicare Part A. When a 
Medicare contractor makes a determination with respect to a Part A 
claim, the beneficiary, or the provider, in some circumstances, may 
appeal the determination. (Consistent with section 1861(u) of the Act 
and 400.202, the term ``provider'' generally includes hospitals, SNFs, 
home health agencies (HHAs), comprehensive outpatient rehabilitation 
facilities (CORFs), and hospices.) The contractor then reconsiders the 
initial determination. If the contractor upholds the original 
determination, the appellant may request a hearing before an 
Administrative Law Judge (ALJ), provided that the amount in controversy 
is at least $100. (ALJs are employed by the Social Security 
Administration (SSA), but they adjudicate Medicare appeals under a 
Memorandum of Understanding between SSA and the Department of Health 
and Human Services (DHHS.) If the appellant is dissatisfied with the 
ALJ's decision, he or she may request review by the Departmental 
Appeals Board (DAB). The component within the DAB that is responsible 
for Medicare claim appeals is the Medicare Appeals Council (MAC). (Note 
that although the Medicare appeals regulations in part 405 contain some 
limited provisions regarding ALJ and MAC proceedings, these proceedings 
are generally governed by existing SSA regulations at 20 CFR part 404, 
subparts J.) MAC decisions constitute the final decision of the 
Secretary of DHHS (the Secretary) and may be appealed to Federal court. 
In each case, the lower level of appeal must be exhausted before the 
appeal can be elevated to the next level.
    Medicare Part B appeal procedures are set forth in part 405 subpart 
H (Sec.  405.800 et seq.). Under these regulations, beneficiaries and 
suppliers that accept assignment for Medicare claims may appeal to a 
Medicare contractor for a review of the contractor's initial 
determination that a claim should not be paid, either in full or in 
part. (The term ``supplier'' is also defined at Sec.  400.202 and means 
a physician or other practitioner, or an entity other than a 
``provider,'' that furnished health care services under Medicare.) If 
the contractor's review results in a continued denial of the claim, and 
the amount in controversy is at least $100, the appellant may request a 
2nd level appeal known as a ``fair hearing.'' If the hearing officer 
upholds the denial, the appellant may request a hearing before an ALJ, 
provided that the amount in controversy is at least $500. Subsequent 
aspects of the appeals process for a Part B claim are identical to 
those described above for a Part A claim.
    Quality improvement organizations (QIOs), formerly known as peer 
review organizations, also make certain types of Medicare 
determinations, mostly involving inpatient 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. Judicial 
review is also available if the amount in controversy is $2000. 
Regulations for these appeals are currently found at 42 CFR part 478. 
Finally, note that appeals under Medicare Part C are also subject to 
adjudication by ALJs and the MAC, although these appeals follow an 
entirely separate path before the ALJ level.

B. Changes to the Appeals Process Under BIPA 2000

    Section 521 of the Medicare, Medicaid and SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA), Public Law 106-554, 
amends section 1869 of the Act to require revisions to the Medicare 
appeals process. Among the major changes required by the BIPA 
amendments are--
    [sbull] Establishing a uniform process for handling Medicare Part A 
and B appeals, including the introduction of a new level of appeal for 
Part A claims.
    [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 (including redeterminations) and 
allowing appellants to escalate cases 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 MAC 
appeals and allowing appellants to escalate a case to the next level of 
appeal if ALJs or the MAC do not meet their deadlines.
    [sbull] Imposing ``de novo'' review when the MAC 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

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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).
    The statute specifies that the new appeals provisions are effective 
for initial determinations made on or after October 1, 2002. As this 
proposed rule demonstrates, we are making significant efforts to ensure 
that the public has an opportunity to comment on the procedures used to 
implement section 521 and to ensure that a rule is in place for 
implementing section 521. However, as noted in the CMS ruling published 
October 7, 2002 (67 FR 62478-62482) on this subject, this rulemaking 
effort is greatly complicated by the possibility of further changes to 
the statutory appeals provisions. We need to ensure that this statutory 
mandate will not risk disruptions to other fundamental functions of the 
Medicare program, such as processing and payment of Medicare claims. 
Thus, we seek comments on this proposed rule so that we can be in the 
best possible position for implementation.
    Rather than listing here all the detailed provisions of section 521 
of BIPA, we will discuss the individual provisions in detail below in 
the context of the proposed implementing regulations. However, for the 
convenience of the reader, we are providing below a detailed chart 
illustrating the current appeals procedures for both Part A and B 
claims and the new procedures that are required by BIPA:

BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TP15NO02.000

BILLING CODE 4120-01-P

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C. Codification of Regulations

    As noted above, the current regulations governing Medicare 
administrative appeals are set forth in 42 CFR part 405, subparts G and 
H. These regulations will continue to be needed for an indefinite 
transition period until all appeals resulting from initial 
determinations before the implementation of the new procedures required 
under BIPA are completed. We are considering what rules should apply 
during the transition period and whether it would be possible or 
prudent to operate dual appeals systems depending on the date of an 
initial claim determination. Clearly, the new BIPA provisions make 
possible a largely uniform set of appeals procedures that can be 
applied both for part A and B of Medicare. Therefore, this proposed 
rule would establish a new subpart I of part 405 that will set forth in 
one location the administrative appeals requirements for Medicare 
carriers, Fiscal Intermediaries (FIs) and QICs. We note that BIPA 
section 521 (see 1869(a)(1)(C)) also requires that certain 
determinations made by QIOs under section 1154(a)(2) be subject to the 
revised appeals process under section 1869, therefore, we anticipate 
publishing a separate proposed rule to accommodate needed changes to 
the existing regulations at 42 CFR parts 476 and 478 regarding QIO 
determinations and appeals. (In addition, we note that the changes set 
forth here do not apply for purposes of Part C of Medicare, that is, 
the Medicare+Choice program. We also intend to address necessary 
changes to 42 CFR part 422 in future rulemaking.)
    We are also proposing to include in new subpart I the provisions 
needed to govern Medicare claims appeals to ALJs and the MAC. The 
existing ALJ regulations are quite voluminous and are intended 
primarily to apply to appeals of SSA disability cases, rather than to 
Medicare appeals. The need for the Medicare program to establish its 
own regulations for these upper level appeals has been recognized by 
many parties, including, most recently, the Office of the Inspector 
General in its January 2002 report: ``Medicare Administrative Appeals--
The Potential Impact of BIPA,'' OEI-04-01-00290. Many of these 
provisions will effectively carry over the existing requirements with 
respect to appeals to the ALJ and the MAC, rather than implementing 
substantive changes. However, both the firm time frames for ALJ and DAB 
decisions and the opportunity for escalation of cases are provisions 
that apply only to Medicare claims, and not to SSA disability cases--
presenting another compelling argument to take this opportunity to 
codify the ALJ and MAC requirements for Medicare administrative appeals 
within the Medicare regulations at Title 42 of the Code of Federal 
Regulations. Thus, the new subpart I will codify in one location key 
regulations governing all aspects of Medicare claim appeals, beginning 
with the statutory requirements that apply to initial determinations 
and proceeding through all four levels of the administrative appeals 
process. For the convenience of the reader, regulations contained in 
existing subparts G and H of part 405 that have not been affected by 
the changes mandated in section 521 of BIPA generally will be repeated 
in the new subpart. However, we note that we are not carrying over 
regulations that deal with challenges to coverage policy (such as 
Sec. Sec.  405.732 or 405.860 concerning the review of national 
coverage decisions), which instead will be dealt with in the 
regulations implementing section 522 of BIPA concerning the new 
procedures for appealing coverage policies to ALJs and the DAB. Since 
we are not eliminating regulations contained in existing subparts G and 
H, we also will not reflect provisions in subpart I that deal with 
appeals of carrier decisions that supplier standards are not met, or 
appeals of a categorization of a device as experimental or 
investigational (see Sec. Sec.  405.874-75 and 405.753).

II. General Provisions of the Proposed Rule

A. Overview

    Clearly, the changes introduced by section 521 of BIPA are aimed at 
introducing greater efficiency and accuracy into the Medicare appeals 
system. The Secretary is equally committed to these goals. However, the 
introduction of QICs and the establishment of drastically reduced 
mandatory time frames for appeals decisions do not in themselves 
provide remedies to the longstanding problems that Congress intended to 
address in the new BIPA appeals provisions. To make these changes work, 
we need to examine carefully how the effects of changes at a given 
level of the appeals process may affect the entire appeals system, as 
well as to determine how to allocate the limited Medicare resources 
available to effectuate the changes to the appeals system.
    In developing the proposals below, we have carefully considered how 
best to achieve these goals within the BIPA construct, keeping in mind 
the limited resources likely available for appeals system changes. We 
are also acutely aware of the possibility that the volume of appeals 
could increase significantly with the implementation of BIPA. (The OIG 
pointed out three reasons that such increases are likely, including the 
attractiveness of a speedier system, with drastically reduced time 
frames, the increased control given to appellants through the new 
escalation provisions, and the reductions in the required amounts in 
controversy to appeal a denied claim.) We also needed to consider the 
fact that, although the existing appeals provisions were designed 
primarily for beneficiary appeals, the overwhelming majority of appeals 
are now filed by providers and suppliers. We have attempted to reflect 
this reality by proposing changes that will work efficiently for 
appellants with some knowledge and experience of the Medicare appeals 
procedures, while at times incorporating exceptions for beneficiary 
appellants.
    Outlined below are the proposed changes to the Medicare appeals 
regulations needed to implement section 521 of BIPA. Our general 
approach is to explain briefly the new statutory provisions, and to 
point out significant differences with the law or regulations that have 
been in effect prior to BIPA. For proposed regulations that are 
substantively unchanged from existing requirements, we have merely 
consolidated the current regulatory requirements into unified 
provisions that apply for both Medicare Part A and Part B appeals, 
consistent with the BIPA approach. In doing so, we have made some 
editorial changes to increase the clarity and simplicity of the 
regulations, to the extent that this is possible given the inherent 
complexity of appeals regulations. The discussion that follows touches 
only briefly, if at all, on sections of the proposed regulations that 
do not set forth substantive changes to the existing appeals 
procedures.

B. Statutory Basis, Definitions, and General Procedures (Sec. Sec.  
405.900-405.902)

    Proposed subpart I begins with a brief section (Sec.  405.900) that 
sets forth the general statutory authority for the ensuing provisions 
and establishes that the scope of the subpart is to establish the 
regulations needed to implement the provisions of section 1869 of the 
Act concerning initial determinations and appeals. Consistent with 
section 1869(a)(1) of the Act, Sec.  405.900 (b) specifies that the 
Secretary shall make initial determinations with respect to whether an 
individual is entitled to benefits under Medicare Part A or B and with 
respect to the amount of benefits

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available under those parts. Section 405.902 would set forth the 
definitions for terms used in subpart I that we believe may need 
clarification. These definitions provide the generally applied meaning 
for terms that are used throughout the subpart.
    For the most part, the definitions presented here are taken 
directly from the statute, or from existing subparts G or H of part 
405, or are essentially self-explanatory. We have not restated in 
subpart I definitions of terms that are already defined in part 400 of 
the Medicare regulations, such as ``provider'' or ``supplier'' (see 
Sec.  400.202) and that have the same meaning in the appeals context. 
Thus, the term ``supplier'' encompasses physicians, other 
practitioners, and various entities (such as laboratories or durable 
medical equipment (DME) suppliers) other than providers that furnish 
Medicare services. Discussed below are two terms that we believe may 
need further clarification.
1. Assignment of Appeal Rights
    Section 1869(b)(1)(C) provides that an individual's appeal rights 
may be assigned to the provider or supplier that furnishes the item or 
service in question. Our proposed definition states that ``assignment 
of appeal rights'' means the transfer by a beneficiary (the 
``assignor'') of his or her right to appeal an initial determination to 
a provider or supplier (the ``assignee''). Although this definition is 
relatively straightforward, it is important that this term not be 
confused with the term ``assignment,'' as defined under existing Sec.  
405.802. In that context, assignment refers to the transfer of a claim 
for payment under Part B of Medicare from a beneficiary to a physician 
or other supplier. For purposes of Subpart I, the terms ``assignment,'' 
``assignor,'' and assignee'' are used to refer only to the transfer of 
appeal rights, rather than in the more traditional context of payment 
on an assignment-related basis. A full discussion of our proposals 
regarding appeal rights is presented below.
2. Party
    The meaning of the term ``party'' also has important implications, 
mainly for purposes of appeal rights and notification requirements. We 
would simply define party as an individual or entity with standing to 
appeal an initial determination or subsequent administrative appeal 
determination. Then, we list in Sec.  405.906(a) who would be 
considered a party to an initial determination. Beneficiaries are 
considered parties. Also, in keeping with our previous regulations, 
physicians or suppliers who have accepted a valid assignment executed 
by a beneficiary to transfer his or her claim for payment to the 
physician or supplier, in return for the physician or supplier's 
promise not to charge more for his or her services than a carrier finds 
to be a reasonable charge or other approved amount, would also be 
considered a party. A party also includes a physician liable for refund 
under section 1842(l) of the Act, a supplier liable for refund under 
sections 1834(a)(18) and 1834(j)(4) of the Act, or a provider. 
Additionally, Sec.  405.906(b) identifies parties for purposes of an 
appeal. A provider or supplier taking assignment of appeal rights under 
section 1869(b)(1)(C) would be considered a party to an appeal. Also, 
in accordance with Sec.  405.908, we note that for dually entitled 
beneficiaries, States have the right to file appeals on behalf of the 
beneficiary pursuant to Title XIX of the Act.
    Proposed Sec.  405.904 provides a general description of the post-
BIPA appeals process, much as existing Sec.  405.801 does for the pre-
BIPA, part B process. In addition, Sec.  405.904(b) establishes the 
general rule that the same appeals procedures that are available to 
beneficiaries, and to individuals acting as representatives of 
beneficiaries, are also available to a provider and supplier that is a 
party to a given determination. This section also explains that in some 
circumstances, a provider's rights to judicial review are limited, 
unless the beneficiary has formally assigned his or her appeal rights 
to the provider. Note that although beneficiary appeals and provider 
and supplier appeals follow identical paths, we are proposing slightly 
more lenient evidentiary rules for unrepresented beneficiaries or 
beneficiaries represented by family or friends, given their likely lack 
of familiarity with Medicare coverage rules and appeals procedures. We 
would hold State agencies, providers, suppliers, and attorneys to a 
higher standard based on their presumed knowledge and experience with 
the Medicare program. We believe that these individuals and entities 
are essentially ``businesses'' and can be held to a reasonableness 
standard. These proposals are discussed in detail below.

C. Appeal Rights (Sec. Sec.  405.906-405.912)

    Historically, providers have had limited rights to appeal Medicare 
initial determinations. Consistent with section 1879(d) of the Act, 
providers may appeal Medicare determinations only when the 
determination involves a finding that (i) the item or service was not 
covered because it constituted custodial care, was not reasonable and 
necessary, or for certain other reasons; and (ii) the provider knew or 
could reasonably be expected to know that the service in question was 
not covered under Medicare (that is, a finding with respect to the 
limitation of liability provision under section 1879 of the Act). 
Despite these restrictions, providers have routinely accessed the 
appeals process in situations where they would otherwise not have 
appeal rights by acting as a beneficiary's appointed representative.
    Another underlying principle of BIPA was the establishment of 
uniform appeal procedures for providers and suppliers. In keeping with 
this approach we believe the interests of the appeals process would be 
best served by ensuring that providers are afforded an equal 
opportunity to be heard with regard to all Medicare initial 
determinations. In BIPA, we believe it was the intent of the Congress 
to ensure that Medicare providers, physicians, and other suppliers had 
easier access to the Medicare administrative appeals system. As 
discussed below, Congress expanded the appeal rights of providers, 
physicians and other suppliers with regard to Medicare appeals by 
authorizing the assignment of appeal rights.
    Therefore, in this rulemaking we are proposing to end the 
distinction limiting the appeal rights of providers to determinations 
involving the knowledge aspect of the limitation on liability 
provision. We propose to allow providers to file for administrative 
appeal of Medicare initial determinations to the same extent as 
beneficiaries. With this change, we would achieve consistency in our 
approach to appeals standing under Parts A and B.
    We also would continue to maintain current appeals policies with 
respect to non-participating providers, physicians and other suppliers. 
We considered extending appeal rights to non-participating physicians 
and other suppliers to the same extent as providers. However, we 
believe that such a change would result in a negative impact on 
Medicare participation rates and, potentially, a contraction of 
beneficiary access to care. Also, we note that non-participating 
physicians and other suppliers may attain party status by securing an 
assignment of appeal rights from beneficiaries as provided in new 
section 1869(b)(1)(C).
    In this proposed rule, we also clarify our policy with regard to 
the continuation of an appeal when a beneficiary-appellant dies while 
an appeal is in progress. Under our current

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rules, a substitute entity may be entitled to receive or obligated to 
make payment for Medicare claims. See 42 CFR part 424 subpart E. If a 
person becomes financially responsible for Medicare claims under our 
rules, we are proposing that such person or entity may be made a party 
to the initial determination and have the right to continue the appeal.
    We are proposing to implement these expanded appeal rights in 
proposed Sec.  405.906, which would clearly identify all individuals or 
entities that may be a party to an initial determination. This approach 
identifies parties explicitly and replaces current regulations where 
party status is conferred to ``* * * any other party whose rights with 
respect to the particular claim being reviewed may be affected by such 
review.'' See 42 CFR 405.808. This standard has occasionally led to 
questions being raised about who should be a party to appeal. In this 
proposed rule we have attempted to address this issue by generally 
listing as a party, the individual or entity listed in Sec.  405.906 
that has standing to appeal an initial determination and/or a 
subsequent administrative appeal determination. We believe the list of 
parties is exhaustive, but welcome comments to rectify any omissions.
    Proposed Sec.  405.908 pertains to the right of a Medicaid State 
agency, which acts as a subrogee, to pursue an appeal on behalf of a 
beneficiary entitled to benefits under both Medicare and Medicaid. We 
do not consider a Medicaid State agency to be a party, unless the 
agency actually pursues a redetermination on behalf of a dually 
eligible beneficiary. In other words, a Medicaid State agency will not 
automatically be sent notices on determinations made during the 
administrative appeals process, nor will the agency be permitted to 
request reconsiderations or hearings by ALJs or the MAC, unless the 
agency actually files a request for redetermination for a beneficiary. 
If a Medicaid State agency files a redetermination it retains party 
status for the claim throughout the rest of the appeals process. Also, 
a Medicaid State agency automatically has authorization to file an 
appeal of a denied claim without following the process prescribed at 
Sec.  405.910. Section 1912(a) of the Act provides that as a condition 
of eligibility for medical assistance, an individual must assign the 
State any rights to payment for medical care from any third party. 
Thus, to avoid confusion, we have drafted a separate provision 
acknowledging the right of a Medicaid State agency to pursue an appeal 
on behalf of a dually eligible individual.
    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 believe 
that they warrant notice and comment rulemaking before they can be 
implemented. As discussed below, the new statutory provisions include 
several changes in the existing appointment of representative 
procedures, which are currently set forth at 20 CFR part 404, subpart R 
(the provisions that govern SSA disability insurance claims).
    Proposed Sec.  405.910 incorporates and modifies several of the 
current provisions in 20 CFR part 404, subpart R, and 42 CFR part 405, 
subparts G and H, as they relate to the representation of parties. The 
proposed provisions would eliminate the need for incorporation of the 
existing SSA regulations as they apply to appeals. Note that under our 
existing regulations at Sec. Sec.  405.701 and 405.801, the appointment 
of representative provisions set forth in 20 CFR part 404 also apply 
for purposes of initial determinations. This proposed rule would not 
change the applicability of those provisions with respect to initial 
determinations; however, we are considering the extent to which the new 
provisions should also apply to initial determinations and welcome 
comments on whether we should apply these provisions uniformly.
    Since entities or individuals other than beneficiaries may wish to 
have someone represent their interests in the appeals process, we have 
defined a representative as an individual authorized by a party, or 
under State law, to act on the party's behalf in dealing with any 
levels of the appeals process. Representatives do not have independent 
party status and may only take action on behalf of the individual or 
entity they represent. We note that a party may not designate, as an 
authorized representative, any individual or entity that has been 
suspended, or otherwise prohibited by law, from participating in the 
Medicare program.
    We have received numerous requests for clarification on how 
individuals or entities must make out valid appointments consistent 
with the Privacy Act. An agency that maintains a system of records must 
``establish appropriate administrative * * * safeguards to ensure the * 
* * confidentiality of records and to protect against any anticipated 
threats or hazards to their security or integrity * * * which could 
result in substantial harm, embarrassment, inconvenience, or unfairness 
to any individual on whom the information is maintained.'' The Privacy 
Act of 1974, as amended, 5 U.S.C. 552a(e)(10). As is the case under 
existing procedures, we want to emphasize that in order to be valid, an 
appointment must be in writing, and signed by both the party making the 
appointment and the individual agreeing to accept such appointment. 
However, to ensure consistency in these proposed provisions, we also 
would make a change in the case of attorney representatives. Under 
current regulations, only the party making the appointment needs to 
sign a statement authorizing the representation. In the case of an 
attorney representative, the attorney does not have to sign a notice of 
appointment. Instead, in the absence of information to the contrary, an 
attorney's assertion that he or she has such authority is accepted as 
evidence of the attorney's authority to represent the party. In 
establishing procedures that comply with the Privacy Act, we would now 
require that attorneys also sign a statement to represent a party.
    We appreciate that the signature requirements might be perceived as 
burdensome; however, we believe that a representative's signature is 
important because it ensures that adjudicators are sharing and 
disseminating confidential medical information with the appropriate 
individuals. In addition, it indicates that the individual whom the 
party has appointed does in fact accept the role and responsibilities 
associated with being a representative.
    We propose to establish a time frame governing the duration of 
representation. Even under the BIPA time frames, we recognize that 
there may be substantial lapses in time between a party's request for 
an appeal at any given stage of this multi-tiered appeals process, and 
receipt of a final decision. Thus, we propose that under Sec.  
405.910(e) the appointment (1) shall be valid for the life of an 
individual appeal, and (2) for purposes of appeals of other initial 
determinations, the authorization shall be considered valid for one 
year from its original effectuation. For example, if a party makes a 
valid appointment on January 1, 2003, the representative would be 
authorized to request multiple appeals on the party's behalf until 
January 1, 2004. Suppose that a representative requests a 
redetermination of a denied claim on November 1, 2003 and the 
contractor affirms the denial on November 30, 2003. Since a party has 
up to 180 days to file a request for a reconsideration, if the 
representative files an appeal on March 15, 2004, the appointment of 
representation would still be valid for purposes of this individual 
appeal because the rights

[[Page 69319]]

associated with it have not expired. However, the representative would 
not be able to initiate any new appeals on other claims because the 
appointment would have been valid only through January 1, 2004.
    We believe that it would be too burdensome to require 
representatives to renew representation documentation once an appeal 
has been undertaken; however, we also believe that a representative's 
ability to file appeals of future claims should continue for an 
indefinite period of time. While we propose that representation 
documentation shall be renewed at least annually (for purposes of 
filing new appeals), we welcome comments on whether another time frame 
would be more appropriate.
    Prior to its amendment by BIPA, section 1869(b)(1)(D) required the 
Secretary to apply the provisions of section 206(a) governing the 
representation of beneficiaries. New section 1869(b)(1)(B)(iv) removes 
section 206(a)(4), which permits the award of attorney fees (not to 
exceed 25 percent) from a claimant's entitlement to past-due disability 
benefits. Therefore, in Sec.  405.910(f), we make explicit that no 
award of attorney fees may be made against the Medicare trust fund. We 
recognize that section 1869(b)(1)(B)(iv) requires CMS to apply Sec.  
205(j) and 206 provisions to the Medicare appeals process; therefore we 
welcome comments on those provisions. Specifically, we request comments 
on petitions to ALJs to review and approve attorney fees. We believe 
that we should not establish such a process since we do not have 
authority to award attorney fees. We also welcome comments on 
procedures to govern the conduct of representatives.
    Proposed Sec. Sec.  405.910(g)-(l) are self-explanatory provisions 
concerning the responsibilities and rights of a representative. For 
example, a representative must ensure that a party receives information 
about appeal decisions, and disclose to a beneficiary any financial 
risk or liability associated with a non-assigned claim. In the past, 
there has been some confusion about whether the representative or the 
party should receive information about the appeal, including the 
decision. We believe that a representative should have the right to 
obtain any information applicable to the claim at issue since the 
representative acts on behalf of the party. Section 405.910(i)-(j) 
would require adjudicators to send notices of their decisions and 
otherwise communicate with representatives rather than parties. We 
considered whether beneficiaries that are represented also should 
receive copies of decision letters, but decided to maintain the 
existing provision at 20 CFR Sec.  404.1715. Therefore, any 
communication with a representative would have the same force and 
effect as if it had been sent to the party.
    Proposed section Sec.  405.910(m) deals with the extent to which a 
representative may delegate responsibilities. A representative may not 
designate another individual to act as the representative unless the 
representative notifies the party of the name of the designee, and the 
designee's acceptance to comply with the requirements of authorized 
representation. Also, the represented party must evidence its 
acceptance of this arrangement by a signed, written consent. We believe 
that these provisions are necessary to protect the privacy and 
confidentiality of medical records. They would also provide 
adjudicators with an effective way to resolve any conflicting 
information as to who has authority to proceed in an appeal.
    The decision on whether to have a representative is left with the 
party, and we neither encourage nor discourage representation. 
Therefore, proposed Sec.  405.910(n) gives a party the ability to 
revoke an appointment for any reason, at any time. To ensure a seamless 
process, a revocation of an appointment is not effective until the 
entity processing the appeal receives a signed, written statement from 
the party. We also propose that the death of a party will terminate the 
authority of the representative. However, when a party dies, we do not 
intend to terminate an appeal that is in progress since another 
individual or entity may be entitled to receive or obligated to make 
payment for Medicare claims.
    In section 1869(b)(1)(C) of the Act, Congress added a new provision 
that permits Medicare beneficiaries to assign their appeal rights to a 
provider or supplier of services, pursuant to a written agreement using 
a form developed by the Secretary. This provision appears similar to 
the provisions that allow a party to an appeal to appoint a person, 
including the provider or supplier of services, as a representative for 
the appeal. Under our current rules, though, in acting as the 
representative, the provider or supplier does not achieve party status 
to the appeal; the representative simply acts on behalf of the party. 
With the new assignment provision, we believe the Congress intended the 
arrangement to differ from the provision enabling a party to appoint a 
representative.
    Proposed Sec.  405.912 creates new regulatory procedures for the 
assignment of appeal rights by a beneficiary to a supplier or provider 
of service. Provider/supplier representation rules impose certain 
limits'the provider/supplier cannot charge a representation fee for 
actions in connection with services it furnished, and the provider/
supplier must waive any right to payment from the beneficiary for the 
services at issue if the representation involves a claim where 
limitation of liability, under section 1879 of the Act, is an issue. 
Similarly, we believe that a provider or supplier wishing to take 
assignment of a beneficiary's appeal rights for a particular claim must 
waive any right to payment from the beneficiary in order to fully 
protect beneficiaries when their appeal rights are assigned. We do not 
intend, however, to prohibit the provider/supplier from recovery of any 
coinsurance or deductible, or where the beneficiary signed an advance 
beneficiary notice accepting responsibility for payment. The nature of 
assignment means that beneficiaries must relinquish their party status 
in an appeal, as well as any further rights to appeal on their own 
behalf. Additionally, BIPA expressly requires us to develop the form 
that will be used to make an assignment valid, thereby giving us the 
discretion to determine the requirements of a valid assignment. Thus, 
the proposed waiver provision is necessary to protect beneficiaries 
from potential liability in the event the supplier or provider is 
unsuccessful in the appeals process.
    As noted above, an appointment of representation would be valid for 
one year for any appeal by the individual, and for the duration of the 
administrative review process for an appeal related to specific items 
or services. Note that a different standard would apply for assignment 
purposes. Section 1869(b)(1)(c) clearly indicates that the assignment 
of appeal rights applies with ``respect to an item or service.'' 
Accordingly, we are proposing that an assignment would be valid for the 
duration of the appeals process, but only for the items or services 
listed on the assignment form. Thus, a supplier or provider of service 
would need to perfect a valid assignment for subsequent appeals of 
other items or services.
    Like in the representation provisions, we also are proposing rules 
for the revocation of an assignment. We are soliciting comments on 
whether an assignment should be irrevocable, particularly since it only 
applies on a per item or service basis, and thus does

[[Page 69320]]

not have any effect on other appeal rights. However, we are concerned 
about reinstating a beneficiary's appeal rights in the event of 
abandonment by a provider or supplier. We have proposed that if a 
beneficiary revokes an assignment, the appeal rights on the item or 
service at issue would revert to the beneficiary.

D. Initial Determinations (Sec. Sec.  405.920-405.926)

    As noted above, section 1869(a)(1) of the Act continues to provide 
that the Secretary shall make initial determinations with respect to 
whether an individual is entitled to benefits under part A or part B 
and to the amount of benefits available to an individual under those 
parts. However, section 1869(a)(2)(A) of the Act establishes that, on 
all claims other than clean claims, the initial determination shall be 
concluded and a notice of such determination must be mailed by no later 
than 45 days after receiving the claim, in contrast to the existing 60-
day deadline for such non-clean claims. Section 1869(a)(2)(B) currently 
requires that interest will accrue if clean claims are not processed 
within 30 days. This standard remains unchanged (as specified in 
sections 1816(c)(2) and 1842(c)(2) of the Act). Nothing in BIPA, 
however, requires that interest would accrue on non-clean claims, 
regardless of whether they are adjudicated within 45 days. The proposed 
regulations to implement these statutory provisions regarding the 
timing and notice requirements pursuant to an initial determination are 
contained in Sec. Sec.  405.920 and 405.922.
    In Sec.  405.920, we require that claims must be filed in the 
manner and form described in 42 CFR part 424 subpart C, which continues 
our current policies for filing claims. When a claim is filed with the 
appropriate carrier or FI, the carrier or FI will determine whether the 
items and/or services are covered under Part A or Part B of title 
XVIII. The contractor will then determine any amounts due and make 
payment accordingly. The parties to the initial determination, as 
specified in Sec.  405.906, will be notified of the initial 
determination in writing by the contractor. This notice will also 
contain the basis for the determination and information on how to 
request a redetermination. As with our current policy, the Remittance 
Advice and Medicare Summary Notice will be used as a notice of initial 
determination.
    In accordance with section 1869(a)(2) of the Act, proposed Sec.  
405.922 sets forth the time frames for initial Medicare claims 
determinations. That is, a contractor shall issue initial 
determinations on clean claims (as defined in Sec.  405.901) within 30 
days of receipt and, on all other claims, the contractor shall issue 
initial determinations within 45 days of receipt.
    Our proposed regulations at Sec.  405.922 currently state that all 
other claims, other than clean claims, must be processed within 45 days 
of receipt. While we plan to monitor contractors on their compliance 
with the 45-day standard, we also recognize that 45 days may not be 
achievable in every case. By definition, non-clean claims are often 
claims that require additional documentation, and therefore take time 
to process. Under the current process, providers or suppliers are given 
45 days to produce additional medical documentation. Thus, the 
imposition of a 45-day decision-making time frame on non-clean claims 
could jeopardize effective medical review. Currently, our plans are to 
monitor, on average, contractors' compliance with the 45-day standard. 
However, we do not propose escalation or other remedies when the 45-day 
deadline is missed.
    In existing section 1842(b)(3)(C) of the Act, the Congress provided 
a special appeals rule in cases where a Part B Medicare claim was not 
acted upon promptly, defined previously as 60 days following the 
submission of the claim. The rule provides for an appeal directly to a 
carrier-hearing officer, bypassing the first level of appeal, the 
review determination. In BIPA, Congress reduced the time period within 
which contractors must make initial determinations on claims to 45 
days. However, section 1842(b)(3)(C) of the statute was not amended to 
reflect the change in the appeals process, that is, that the carrier 
hearing officer appeal was eliminated and effectively replaced by an 
appeal to the QIC. Our opinion is that the Congress, by implication, 
repealed this provision as the remedy specified in the statute will no 
longer exist since the Congress eliminated the carrier fair hearing 
level of appeal. We considered providing for a reconsideration by the 
QIC when a claim is not acted upon with reasonable promptness (that is, 
an initial determination is not issued within 45 days following the 
date the claim was received by the contractor). However we believe that 
this is not an economically feasible approach since the QIC will, in 
essence, simply direct the contractor to process the claim. We also 
considered the fact that this rule only applies to Part B claims and 
concluded that it would be confusing and contrary to the general 
approach mandated by BIPA to have two separate processes. Therefore, we 
are not carrying over this rule.
    Proposed Sec. Sec.  405.924 and 405.926 list the types of actions 
that are, and are not, considered initial determinations. In these 
sections, we have generally maintained current policies concerning 
initial determinations, although we have unified the existing part A 
and part B rules. In Sec.  405.924(a) we maintain our longstanding 
policy that, through a memorandum of understanding with the Secretary, 
SSA makes initial Part A and Part B entitlement determinations and 
initial determinations on applications for entitlement. In Sec.  
405.924(b), we provide an extensive, but not necessarily exhaustive, 
list of actions that constitute initial determinations and thus are 
subject to the administrative appeals rules that follow.
    We are proposing to clarify the circumstances under which an appeal 
may be filed when a beneficiary disputes the computation of coinsurance 
amounts. Previously our rules stated that beneficiaries could appeal 
Medicare determinations regarding the ``application of the coinsurance 
feature.'' We are clarifying this provision to state that the 
contractor's ``computation of coinsurance'' is considered an initial 
determination and, thus, may be appealed. In making this proposal we 
considered that for most Part B services, beneficiaries are responsible 
for a 20 percent coinsurance payment and, since the 20 percent is 
calculated by the contractor, a beneficiary may appeal the contractor's 
computation of the coinsurance amount to be paid by the beneficiary. In 
instances where the coinsurance amount is not computed by the 
contractor, but rather it is an amount prescribed by regulation, for 
example, outpatient services, the issue of whether the coinsurance 
amount is appropriate is not appealable since it is not an amount 
computed by the contractor. Also, we are proposing clarifying language 
specifying that determinations regarding the timeliness of claims 
submission are initial determinations. We are also clarifying which 
Medicare secondary payer (MSP) determinations are initial 
determinations for purposes of this subpart. A determination regarding 
the applicability of the MSP provisions to a particular claim is an 
initial determination. A determination that Medicare has a recovery 
claim against a provider/supplier or beneficiary with respect to items 
or services that have already been paid by the Medicare program is also 
an initial determination except where the recovery claim against the 
provider/supplier is based upon a failure to file

[[Page 69321]]

a proper claim as defined in 42 CFR part 411. Finally, under proposed 
Sec.  405.924(c), we would state that expedited determinations by QIOs 
under new section 1869(b)(1)(F) are also considered initial 
determinations.
    In proposed Sec.  405.926, we list examples of determinations that 
are not initial determinations, and therefore not subject to the 
administrative appeal procedures of this subpart. Again, we continue 
our longstanding policies in this area, subject to several minor 
clarifications. First, for certain aspects of initial determinations, 
there are no administrative appeal rights available. For example, under 
section 1833(t) of the Social Security Act, administrative appeals are 
prohibited for issues involving the calculation of coinsurance amounts 
for outpatient services subject to prospective payment rules, and under 
1848(i) of the Act, the values used to calculate allowable amounts 
under the physician fee schedule may not be the subject of an 
administrative appeal. In addition, here, too, we have proposed new 
examples of MSP-related determinations that do not constitute initial 
determinations for purposes of section 1869 of the Act. We have also 
clarified that decisions by contractors or QICs with respect to 
reopenings are not considered initial determinations.
    Section 405.928 describes the effects of an initial determination. 
In proposed Sec.  405.928(a), we would clarify that initial 
determinations by SSA with respect to an individual's entitlement are 
binding upon the individual or the individual's estate unless revised 
or reconsidered under SSA's regulations at 20 CFR 404.907. Then, under 
Sec.  405.928(b), we would state the general rule that other initial 
determinations shall be binding upon all parties to the initial 
determination unless a redetermination is completed in accordance with 
Sec.  405.940 through Sec. Sec.  405-950 or the initial determination 
is revised as a result of a reopening in accordance with proposed Sec.  
405.980. Please refer to our discussions on the redetermination and 
reopenings process below.

E. Redeterminations (Sec. Sec.  405.940-405.958)

1. Overview of Statute
    Section 1869(a)(3) contains certain requirements for 
redeterminations that are specific to fiscal intermediaries and 
carriers, and do not apply to the initial determinations made by other 
entities, such as SSA or QIOs. Section 1869(a)(3) of the Act mandates 
that FIs and carriers make redeterminations, upon request, with respect 
to claims for benefits that are denied in whole or in part. Section 
1869(a)(3)(B) specifies that an initial determination may not be 
reconsidered or appealed unless the contractor has made a 
redetermination of that initial determination and that no 
redetermination may be made by an individual involved in the initial 
determination, two requirements that essentially mirror existing 
policy. The time frames for requesting and carrying out 
redeterminations are set forth under section 1869(a)(3)(C). A request 
for a redetermination must be made within 120 days from the date the 
individual receives the initial determination. The carrier or FI then 
must make a redetermination decision and notify the parties of the 
decision within 30 days of receiving the request for redetermination. 
Under section 1869(a)(3)(D), for purposes of subsequent appeals, a 
redetermination is considered part of the initial determination. For 
purposes of contractor performance evaluation, we plan to monitor how 
effectively fiscal intermediaries and carriers meet the 30-day 
deadline, on average, for redeterminations. However, we do not propose 
escalation or other remedies if the carrier or fiscal intermediary does 
not complete a redetermination within the 30-day time frame.
    A critical feature of the new statutory language with respect to 
redeterminations is that the same provisions apply for these first 
level appeals of both Part A and Part B claim determinations. Thus, 
parties wishing to appeal initial determinations will need to meet 
identical time frames for filing requests for redeterminations and the 
time frame for redetermination decisions is significantly shorter than 
the previous time frames for either Part B reviews or Part A 
reconsiderations. This means, for example, that CMS' contractors must 
complete all redeterminations within 30 days, even though the cases in 
need of redetermination may differ considerably in terms of complexity 
and dollar amounts. (Currently, under sections 1816(f)(2) and 
1842(b)(2) of the Act, respectively, contractors now must complete 75 
percent of part A reconsiderations within 60 days, and 90 percent 
within 90 days, while 95 percent of part B reviews must be completed 
within 45 days.) In developing the proposed regulations needed to 
implement the new system, we have attempted to construct procedural 
requirements that can work for all types of redeterminations, while 
still permitting contractors the flexibility needed to conduct 
redeterminations using methods that are both efficient and fair to 
appellants.
2. Redetermination Requests (Sec. Sec.  405.940-405.946)
    Proposed Sec.  405.940 establishes the general rule that any party 
to an initial determination that is dissatisfied with that 
determination may request a redetermination. Sections 405.942 and 
405.944 then set forth the proposed requirements concerning the time 
frames and procedures for filing a redetermination request. Consistent 
with section 1869(a)(3)(C) of the Act, a request for redetermination 
must be filed within 120 days from the date an individual receives the 
notice of initial determination. In Sec.  405.942(a)(1), we would 
establish that the date of receipt of the initial determination is 
presumed to be 5 days after the date of such notice, unless there is 
evidence to the contrary. This is consistent with our longstanding 
policy that we allow 5 days for the individual to receive the notice of 
initial determination.
    Under proposed Sec. Sec.  405.942(a)(2) and 405.944(a), we propose 
to continue the current policy of permitting parties to file their 
requests for a redetermination not only with the appropriate CMS 
contractor, as indicated on the notice of initial determination, but 
also at a local SSA or CMS office. In view of the requirement that a 
contractor must issue a written notice of the redetermination decision 
within 30 days of a request for redetermination, we strongly considered 
requiring that all redetermination requests be filed directly with the 
contractor indicated on the notice of initial determination. Clearly, 
such a policy would eliminate confusion about where to file appeal 
requests and promote efficiency--we have often experienced lengthy 
delays in receiving requests filed with SSA offices, for example. 
However, we recognize that local SSA offices provide a valuable service 
to individuals who would like assistance in filing requests for 
redeterminations. In maintaining this policy for filing requests, we 
thus propose that the date the redetermination request is considered to 
be filed means the date the contractor, SSA, or CMS receives the 
request. As discussed below, however, we also propose under Sec.  
405.950 that for purposes of issuing a redetermination decision, the 
date of timely filing will be considered as the date that the 
contractor responsible for the redetermination receives the 
redetermination request. This proposed policy would benefit appellants 
by promoting flexible access to the appeals system without unfairly 
reducing the

[[Page 69322]]

time a contractor would have to issue a redetermination decision.
    Section 405.942(b) contains the proposed rules concerning request 
for extensions to the time frames for redetermination requests. In 
general, a contractor may extend the time frame for requesting a 
redetermination if a party shows good cause for missing the 120-day 
deadline. In order to request an extension, the party must file a 
request for the extension with the contractor. The request for 
extension and request for redetermination must be in writing and state 
why the request for redetermination was not filed within the required 
time frame. In order to determine whether a party has shown good cause 
for missing the deadline, the contractor considers: The circumstances 
that kept the party from making the request on time; whether the 
contractor's actions misled the party; and whether the party had any 
physical, mental, educational, or language limitations that prevented 
the party from filing a timely request or from understanding or knowing 
about the need to file a timely request for redetermination. Proposed 
Sec.  405.942(b)(3) sets forth examples of ``good cause,'' including 
serious illness, death or serious illness in the party's immediate 
family, the destruction or damage of important records due to fire or 
other accidental cause, incomplete or incorrect information supplied to 
the party about how or when to request a redetermination from the 
contractor, lack of notice of initial determination, and evidence of 
requests made with another Government agency in good faith, within the 
time limit, where the request did not reach the contractor until after 
the time period to file a redetermination had expired.
    Proposed Sec.  405.944(b) specifies that the request for a 
redetermination must be in writing and describes the content of the 
redetermination request. Under our existing regulations, requests for 
reconsiderations of Part A initial claim determinations have been 
required to be made in writing (Sec.  405.711) but request for reviews 
of Part B initial determinations have been accepted both in writing and 
orally. However, even for Part B reviews, this policy has never been 
well understood and has proven very difficult to administer for a 
number of reasons. First, it is important to recognize that in 
practice, an oral request for a review generally implied that the 
review itself would take place over the telephone, usually at the same 
time as the request. Moreover, although some very simple reviews could 
be carried out orally, many reviews did not lend themselves to this 
approach, although the regulations did not limit the availability of 
oral requests for review. (For example, many cases, such as reviews of 
DME claims, frequently involve issues that are either too complex to 
handle in a brief telephone call or require the submission and review 
of medical documentation and records that are too voluminous to provide 
over facsimile.) Requests for oral reviews of more complex cases could 
result in repeated requests for documentation and extended delays in 
review decisions, even under the longer time frames that were in effect 
for appeals of Part B initial claim determinations before the 
implementation of new section 1869 of the Act.
    Therefore, in implementing the BIPA provisions, we would require 
that requests for redeterminations be accepted only in writing. We 
believe that the best method of accepting requests for redetermination 
is in writing because it provides a reliable record of the request and 
promotes the submission of evidence to support the request. (As 
discussed below, under Sec.  405.946, we propose that parties should 
present evidence related to the issue in dispute with the request for a 
redetermination.) This position is consistent with our general belief 
that an efficient and accurate appeals system will necessitate better 
notices from CMS concerning the reasons for denials of claims and their 
appeals and by subsequently encouraging parties to submit relevant 
evidence as early as possible in the appeals process. Although we 
recognize that it may be efficient to take some requests by telephone, 
it would be extremely difficult to offer such a process and still meet 
the 30-day redetermination decision deadline without severely 
restricting the types of redeterminations that can be requested over 
the telephone.
    We welcome comments on alternative approaches that are convenient 
and easy for appellants. We note that providers, suppliers, and 
beneficiaries can still make inquiries and some adjustments to a claim 
over the phone, using the telephone number indicated on the Remittance 
Advice or Medicare Summary Notice. In addition, we are continuing to 
work with contractors to identify the best methods for conducting 
redeterminations, such as permitting call back responses to requests 
for redeterminations. Again, our goals here are to improve the accuracy 
and efficiency of the appeals process, to make the procedures as 
accessible and user friendly as possible for appellants, and to avoid 
causing confusion and dissatisfaction as to the available procedures.
    Section 405.944(b) also specifies the required elements of a 
redetermination request. Requests are to be made on a standard CMS form 
and when not made on a CMS form must contain the beneficiary's name, 
the insurance claim (HIC) number, the specific date of service and 
identification of the item or service with which the party is 
requesting the redetermination, and the name and signature of the party 
or appointed representative filing the request. These required elements 
mirror the requirements contained on the current standard CMS forms to 
request a review or reconsideration and correspond to the requirements 
detailed on the Medicare Summary Notice (MSN) that beneficiaries 
receive. Thus, a beneficiary or beneficiary representative may continue 
to file a request for an appeal using the instructions on the MSN--that 
is, he or she could satisfy the requirements by circling an item on the 
MSN, signing the bottom of the MSN, and returning the MSN to the 
contractor.
    Under proposed Sec.  405.944(c), we would specify that if more than 
one party files a request for redetermination on the same initial 
determination, the contractor shall consolidate the separate requests 
into one proceeding. To the extent that two or more entities may have 
appeal rights on a single request for payment, there is potential for a 
duplicate administrative process and differing resolution of the 
appeal. To prevent this occurrence, we are codifying the longstanding 
practice that when multiple parties request a redetermination, the 
requests are to be joined into a single administrative action.
    As noted above, proposed Sec.  405.946 specifies that when filing a 
redetermination request, a party should explain why he or she disagrees 
with the contractor's initial determination and include any evidence 
that the party believes should be considered by the contractor in 
making its redetermination. Although we are not proposing to make 
presentation of evidence a prerequisite to filing an appeal, we believe 
that encouraging parties to present evidence to support the 
redetermination request will facilitate the correction of erroneous 
initial determinations at the earliest possible stage of the appeals 
system.
    Even when appellants are unable to submit relevant documentation 
along with the request for redetermination, we still wish to encourage 
appellants to submit documents and make their case at the earliest 
possible level. Therefore,

[[Page 69323]]

proposed Sec.  405.946(b) permits later submission of documentation to 
be considered as part of the redetermination. However, since it would 
be difficult to process redeterminations within 30 days when documents 
are submitted after the request, we propose an automatic 14-day 
extension of the redetermination decision time frame when an appellant 
submits evidence after the request.
3. Conduct of Redeterminations (Sec. Sec.  405.940-405.958)
    Section 1869 of the Act provides little or no guidance with respect 
to the conduct of redeterminations, with the exception of establishing 
the filing and decision making time frames as noted above. Thus, with 
few exceptions, we are not proposing major changes to the existing 
procedures for first level appeals of claim determinations. Proposed 
Sec.  405.948 simply specifies that in conducting a redetermination the 
contractor would examine the evidence and findings upon which the 
initial determination was based and any additional evidence submitted 
by the parties or obtained by the contractor on its own. As with our 
current process, the individual who makes the redetermination decision 
must not have been involved in making the initial determination.
    Consistent with section 1869 (a)(3)(C)(ii) of the Act, proposed 
Sec.  405.950(a) would require contractors to issue a written notice of 
the redetermination decision to the parties within 30 days of receiving 
a request for redetermination. In general, we will maintain our current 
policy in calculating the 30-day time frame for decision-making based 
on the date the request for redetermination is actually received at the 
contractor. As discussed above, however, if the request is made to an 
entity other than the contractor (such as an SSA office), we would use 
the date the request is actually received by the contractor as the date 
of the request for a redetermination for purposes of calculating the 
30-day decision making time frame.
    Proposed Sec.  405.952 contains provisions relating to the 
withdrawal or dismissal of a request for a redetermination. Under Sec.  
405.952(a), a party may withdraw a request for redetermination within 
14 days of the original request. The withdrawal request must be made in 
writing to the redetermination contractor. Currently, a withdrawal 
request may be made at any time before a contractor mails an appeals 
decision, but we are proposing the 14-day time frame in order to avoid 
the confusion and uncertainty that can result from decisions and 
withdrawal requests crossing in the mail. However, a contractor has the 
option of accepting a late withdrawal request if it has not issued a 
redetermination decision. For example, a contractor may accept a 
withdrawal request at any time when the withdrawal is based upon a 
party entering into an agreement with CMS to compromise the amount of a 
debt.
    Section 405.952(b) would set forth the reasons a contractor will 
dismiss a request for a redetermination, including:
    [sbull] If a person or entity who is not a party to an initial 
determination files a request for redetermination.
    [sbull] If a request for redetermination does not contain the 
minimum elements for a redetermination request set forth in proposed 
Sec.  405.944.
    [sbull] If a party to an initial determination files a request for 
a redetermination more than 120 days following receipt of the initial 
determination from the contractor and does not establish good cause for 
late filing in accordance with Sec.  405.942(c).
    [sbull] If the party filing the request dies and there is no 
information in the record to determine whether there is another party 
who may be prejudiced by the determination.
    [sbull] If the party filing the request submits a request for 
withdrawal.
    [sbull] If the contractor has not issued an initial determination 
on the claim for which a redetermination is requested.
    Section 405.942(c) specifies that when a request for 
redetermination is dismissed, the contractor will mail a written notice 
to the parties at their last known addresses. Under proposed Sec.  
405.952(d), a dismissal may be vacated at any time within 6 months from 
the date of the notice of dismissal if good and sufficient cause is 
shown. An appellant may request QIC reconsideration of a 
redetermination dismissal. The request for a QIC reconsideration of the 
decision must be made within 180 days of the redetermination dismissal 
notice. A dismissal is binding unless it is vacated in accordance with 
Sec.  405.952(d), or is subject to a reconsideration by a QIC.
    Proposed Sec. Sec.  405.954 and 405.956 address redetermination 
decisions and notification rules. When the contractor concludes its 
redetermination, it is responsible for issuing a decision that affirms 
or reverses, in whole or in part, the initial determination in 
question. When a decision fully reverses the initial determination, we 
propose to maintain our current policy that proper notification is 
achieved through the MSN or the remittance advice notices that are sent 
to beneficiaries, and providers and suppliers, respectively. We welcome 
comments on maintaining this policy for decisions that are fully 
favorable to the appellant.
    Under proposed Sec.  405.956(b), for decisions that affirm the 
initial determination either in whole or in part, a redetermination 
decision notice must contain: (1) A clear statement indicating the 
extent to which the redetermination is favorable or unfavorable; (2) a 
summary of the facts; (3) an explanation of how the pertinent laws, 
regulations, coverage rules, and CMS policies apply to the facts of the 
case; (4) a summary of the rationale for the decision; (5) notification 
to the parties of their right to a reconsideration, the procedures that 
a party must follow in order to request a reconsideration, and the time 
limit for requesting a reconsideration; (6) a statement of the specific 
supporting documentation that must be submitted with a request for a 
reconsideration; (7) an explanation that if the specific supporting 
documentation indicated in the notice is not submitted with the request 
for a reconsideration, this evidence will not be considered at an ALJ 
hearing, unless the appellant demonstrates good cause as to why the 
evidence was not provided previously; and (8) any other requirements 
specified by CMS.
    To a large extent, these requirements are similar to the current 
instructions concerning the content of contractor appeals decision (for 
example, Medicare Carriers Manual, section 12002). However, these 
policies add more detail to the required elements. They also include 
one major substantive addition--the requirement that notifications 
identify any specific supporting documentation that must be submitted 
with a request for a reconsideration. By setting forth clear, detailed 
requirements for redetermination notices in the regulations, in concert 
with the proposed requirement for more information about specific 
supporting documentation that resulted in an unfavorable determination 
and redetermination, we believe we are setting the stage for the most 
accurate and efficient reconsideration process possible. In concert 
with these changes, we believe that placing a requirement for full and 
early presentation of evidence at the QIC level is fair to appellants 
and can stem the volume of cases that are now appealed to ALJs and the 
MAC. As discussed in further detail below, if available supporting 
documentation that is identified as needed in the redetermination 
denial notice is not submitted at the QIC level, an appellant who is 
dissatisfied with a QIC reconsideration decision and

[[Page 69324]]

desires an ALJ hearing generally would not be able to introduce such 
evidence at an ALJ hearing, absent good cause for not submitting the 
evidence to the QIC.
    The proposed redetermination provisions end with the 
straightforward requirement under Sec.  405.958 that the 
redetermination decision is binding on all parties unless there is a 
subsequent QIC reconsideration or a reopening by the contractor 
consistent with Sec.  405.980.

F. QIC Reconsiderations (Sec. Sec.  405.960-978)

1. Introduction
    Section 1869(b)(1) of the Act entitles any individual dissatisfied 
with an initial determination of a Part A or Part B claim denial, to 
file a request, within 180 days, for reconsideration of the initial 
determination, including the redetermination. In accordance with Sec.  
1869(c), reconsiderations are to be processed, generally within 30 
days, by entities called qualified independent contractors (QICs). 
Section 1869(c)(4) requires CMS to contract with no fewer than twelve 
QICs. The introduction of QICs creates an additional appeals level for 
Part A claim determinations and replaces the Part B carrier hearing 
level of appeal. We believe that the QIC process, which will entail 
reviews of medical necessity determinations by health care 
professionals, routine participation in ALJ hearings, and mandatory 
development of an appeals-specific database, can result in significant 
improvements in the Medicare fee-for-service appeals system. The 
statute gives CMS a great deal of latitude in designing the 
reconsideration component of the Medicare appeals process, and we have 
attempted to use this discretion to design a process that will prove to 
be impartial, efficient, and accurate.
2. Reconsideration Requests (Sec. Sec.  405.960-405.966)
    Section 1869(a)(3)(B)(i) states that initial determinations made by 
fiscal intermediaries and carriers may be reconsidered only after the 
fiscal intermediary or carrier has performed a redetermination of the 
initial determination. Thus, proposed Sec.  405.960 states that any 
person or entity who is a party to a redetermination, and is 
dissatisfied with the determination, may file a request for 
reconsideration of the redetermination in accordance with the 
requirements set out in Sec. Sec.  405.962-966.
    Consistent with section 1869(b)(1)(D) of the Act, Sec.  405.962(a) 
specifies that appellants who wish to file a request for 
reconsideration must do so within 180 days of the date on which they 
receive the notice of the redetermination, or within such additional 
time as CMS may allow. For good cause, the QIC may extend the time 
frame for filing a reconsideration request. Section 405.942(b)(2) 
describes the process QICs are to use in determining if good cause for 
late filing exists. Examples of good cause, as provided in Sec.  
405.942(b)(3), would include: Circumstances beyond the appellant's 
control, including mental or physical impairment that prevented timely 
filing of the reconsideration request; significant communication 
difficulties; receipt of incorrect or incomplete information about the 
subject reconsideration from official sources (for example, CMS, the 
contractor, QIC or SSA); delay in filing caused by destruction of or 
damage to the appellant's records; and unusual or unavoidable 
circumstances, the nature of which demonstrate that the appellant could 
not reasonably be expected to have been able to file timely. The 
request for an extension of the reconsideration filing deadline must be 
in writing, signed by the party requesting the appeal, and state the 
reason(s) why the appellant did not file the request within 180 days. 
In addition, the appellant's request for reconsideration must accompany 
the request for an extension, so that if the QIC grants the extension, 
it may begin a substantive review of the appeal without further delay.
    The QICs' 30-day decision-making deadline, to a large extent, 
dictates the procedural parameters that need to apply to the 
reconsideration process. Because of the equally challenging time frames 
for concluding ALJ and DAB appeals (combined with the provision that 
unresolved appeals can be escalated to the next level of administrative 
review, including Federal court), it is essential that the QIC 
procedures be designed to facilitate timely, accurate decision-making 
by these new administrative review bodies. As we developed the proposed 
QIC procedures, we have been careful to balance these efficiency 
concerns with the need to ensure a consistent, fair process for 
appellants.
    We set forth the place and method for filing a request for 
reconsideration in Sec.  405.964(a). Existing regulations give 
appellants wide discretion in terms of where an appeal may be filed. 
For example, under Sec.  405.964, requests for carrier fair hearings 
may be filed with not only the carrier, but also at any CMS or SSA 
office. We recognize that some appellants, especially beneficiaries, 
rely on SSA offices to assist them in filing an appeal request. While 
we do not want to create a process that might make it difficult for 
appellants to file appeals, we cannot ignore the stringent decision-
making time frames imposed by the statute. Thus, as an accommodation to 
appellants, we propose in Sec.  405.964 that in addition to filing 
reconsideration requests with the QICs, parties be permitted to file 
their requests with the CMS and SSA offices as well (just as they may 
now for carrier fair hearings). For purposes of establishing whether an 
appellant has timely filed a request for reconsideration, a request 
will be considered filed on the date it is received by the QIC, SSA, or 
CMS. However, to ensure that QICs have adequate time to adjudicate 
reconsiderations that they do not receive directly, we subsequently 
propose under Sec.  405.970(b)(1) that for reconsideration requests 
submitted to CMS or SSA offices, the QIC's 30-day decision-making 
period would begin on the date such request is received by the QIC. 
This policy will allow appellants to continue receiving assistance in 
filing reconsideration requests, without shortening the QIC's decision-
making time frame.
    Since multiple parties may request reconsideration of the same 
claim (for example, a beneficiary and a physician, or a beneficiary and 
a provider), we propose in Sec. Sec.  405.964(c) and 405.970(b)(3) that 
QICs consolidate multiple requests for reconsideration into a single 
proceeding and issue one reconsideration determination to all parties 
within 30 days of the latest reconsideration request.
    Under our existing regulations, a party's request for a Part A 
reconsideration or Part B fair hearing must be in writing (see 
Sec. Sec.  405.711 and 405.821), but we do not require use of a 
standard form for making the appeal request. In practice, appellants 
now use a CMS form, a contractor's form, or submit written requests of 
their own design. In implementing the BIPA provisions, CMS will develop 
and make available a standard filing form for reconsideration requests 
and we considered making use of this form mandatory. However, in Sec.  
405.964, we are proposing that reconsideration requests either be made 
on the standard CMS form, or must contain the key elements captured by 
that form (for example, name, HIC number, date(s) of service and 
service(s) at issue). We believe that these requirements are not 
onerous, as they are the same as those listed on existing forms (Form 
HCFA-2649 and Form HCFA-1965) used to request Part A reconsiderations 
and Part B hearings. If the reconsideration request does not contain 
any one of

[[Page 69325]]

these essential elements referenced above, we propose that the QIC 
dismiss the reconsideration on the basis that the party failed to make 
out a valid request.
    In addition to the basic information required by Sec.  405.964(a), 
we believe that it is in the appellant's best interest for a 
reconsideration request to include additional information, including a 
statement of evidence and allegations of fact or law related to the 
issue(s) in dispute and an explanation of why the contractor's 
determination should be reversed. Therefore, proposed Sec.  405.966(a) 
describes the type of evidence that should accompany reconsideration 
requests. Although such documentation is not mandatory, we note that 
proposed Sec.  405.966(a)(2) specifies that failure to submit 
documentation that was specified as necessary in a redetermination 
notice generally would preclude the introduction of such evidence for 
consideration at subsequent appeal levels. We strongly believe that 
this requirement for the full and early presentation of relevant 
evidence is critical for accurate QIC decisions and for avoiding 
backlogs of appeals at the ALJ level that could have been 
satisfactorily resolved by QICs. Submission of such evidence should not 
only lead to a more efficient appeal system, but should also facilitate 
QIC decisions that pertain directly to the concerns of appellants, as 
opposed to decisions on reconsideration requests that simply state ``I 
appeal,'' without elaboration.
    In the current appeals process, appellants may continually 
supplement their initial appeal request with additional evidence. 
Although we agree that appellants should have an opportunity to provide 
supplementary evidence to support their initial filing of 
reconsideration requests, allowing appellants multiple opportunities to 
submit documentation would make it impossible to adjudicate a case 
within the 30-day decision-making period. In general, we believe that 
the 180-day reconsideration filing time frame provides parties with 
sufficient opportunity to gather the information that they need to 
complete their requests. However, if appellants need to submit 
additional documentation after their request for reconsideration has 
been filed we are proposing under Sec.  405.966(b) that such late 
submission of evidence would result in an automatic 14-day extension of 
the QIC's 30-day decision-making time frame.
3. Reconsideration Process (Sec. Sec.  405.968-405.970)
    For existing second level appeals of Part B determinations (the 
fair hearing level), appellants may request one of three types of 
hearings: In-person, telephone, or on-the-record. We considered 
applying this concept to QIC proceedings. However, we concluded that 
such a system was both impractical and unnecessary under the 
requirements of new section 1869 of the Act. Instead, we believe that 
only through on-the-record proceedings could QICs be expected to meet 
the requirements, under section 1869(c)(3)(C), that reconsideration 
decisions be issued within 30 days of receipt of a timely filed 
reconsideration request. In addition, nothing in section 1869 requires 
a hearing at the QIC level. Also, we note that the requirement for a 
panel of physicians or other qualified health care professionals to 
conduct reconsiderations of Sec.  1862(a)(1)(A) denials, makes QIC 
reconsiderations less like the traditional fee-for-service fair 
hearings, and more like the independent review process that now applies 
to Medicare+Choice (M+C) appeals. M+C appeals primarily involve reviews 
by a physician or other qualified health care professional and are 
currently conducted within 30 days. Therefore, we elected to apply the 
existing M+C model to QIC reconsiderations and propose making 
reconsiderations on-the-record reviews. Thus in Sec.  405.968, we 
define a reconsideration as ``an independent, on-the-record review of 
an initial determination, including the redetermination, performed by a 
QIC.'' In conducting reconsiderations, QICs would be required to review 
the evidence and findings upon which the initial determination was 
based and any other evidence the parties submit, or the QIC obtains. 
The QIC then must make an independent determination affirming or 
reversing, in whole or in part the initial determination in question. 
We also specify that if an initial determination involves a finding on 
whether an item or service is reasonable and necessary for the 
diagnosis or treatment of illness or injury (under section 
1862(a)(1)(A)), a QIC's reconsideration must be based on clinical 
experience and medical, technical, and scientific evidence, to the 
extent applicable.
    Section 405.968 would also reflect the statutory requirements 
regarding the relevance of national and local coverage determinations, 
and who conducts reconsiderations. Section 1869(c)(3)(B)(ii)(I) of the 
Act states that national coverage determinations (NCDs) shall bind the 
QIC with respect to issuing reconsiderations. However, unlike 
intermediaries and carriers (including carrier fair hearing officers) 
QICs would not be required to follow local coverage determinations 
(LCDs) in making their determinations. Instead, QICs, like ALJs, would 
be bound only by law, regulations, CMS Rulings, and NCDs. This 
constitutes an important change from the current appeals system, which 
has been marked by high reversal rates at the ALJ level. Often these 
reversals stem from the different criteria applied by Medicare 
contractors and ALJs in ruling on Medicare payment and coverage issues. 
Section 1869(c)(3)(B)(ii)(II) does require that QICs ``shall consider'' 
LCDs in issuing reconsideration decisions, but it provides no guidance 
on the extent to which QICs are bound by CMS manuals or other 
instructions. Under Sec.  405.968(b)(3), we propose that QICs be 
required to ``give deference'' to LCDs, local medical review policies 
(LMRPs), and CMS program guidance, including manual instructions (for 
example, the Medicare Coverage Issues Manual, the Medicare Intermediary 
Manual, the Medicare Carriers Manual). A QIC's decision must explain 
why it agrees or disagrees with the appellant's reasoning. Although 
QICs would not be bound by these types of policies, we would require 
that QIC reconsiderations follow these policies unless the appellant 
questions the policy and provides a reason that the QIC finds 
persuasive as to why the policy should not be followed. (See 66 FR 
54536 for a detailed explanation of the distinction between LCDs and 
LMRPs.) We believe that the use of consistent review criteria and the 
establishment of strong standards to ensure sufficiency of a QIC's 
rationale for its decisions will serve several important purposes, 
including better explaining QIC decisions, identifying recurrent 
problems with CMS policies, and potentially reducing both ALJ appeals 
volume and the ALJ reversal rate.
    Consistent with section 1869(c)(3)(D) of the Act, no physician or 
health care professional employed by a QIC may review a determination 
regarding the health care services furnished to a beneficiary if the 
physician or health care professional was directly responsible for 
furnishing such services or items. Also, a physician or health care 
professional may not review a redetermination if the physician or 
health care professional or a family member of the physician or health 
care professional has a significant financial

[[Page 69326]]

interest in the institution, organization, or agency that provided the 
health care services. Family is defined in section 1869(c)(1)(ii) as 
the spouse (other than a spouse who is legally separated from the 
physician or health care professional under a decree of divorce or 
separate maintenance), children (including stepchildren and legally 
adopted children), grandchildren, parents, and grandparents of the 
physician or health care professional. Section 405.968(c) would also 
implement the statutory requirement that reconsiderations involving a 
determination as to whether an item or service is reasonable and 
necessary under section 1862(a)(1)(A) of the Act, shall include 
consideration by a panel of physicians or other appropriate health care 
professionals. Under proposed Sec.  405.968(c)(2), a QIC would be 
required to designate a panel to consider the facts and circumstances 
of any case involving a ``reasonable and necessary determination.'' We 
note that the estimated workload for QICs is expected to be close to 1 
million cases per year, the majority of which we believe will involve 
medical necessity determinations. Given the prohibitively expensive 
nature of requiring a sitting panel to review each of these million 
cases, we plan to define what will constitute a panel. One option we 
are considering is that, rather than requiring that a panel be made up 
of at least two physicians or health care professionals simultaneously 
reviewing the issue, we would allow the physicians or health care 
professionals to review the issue sequentially. This would allow one 
professional to propose a determination on the matter and a second 
professional to then review the proposed reconsideration determination.
    Section 405.970 sets forth the general requirement that QICs 
complete their reconsiderations within 30 days of receiving a timely 
filed request. Proposed Sec.  405.970(c) specifies that, by no later 
than the close of the 30-day decision-making period, a QIC must issue 
the parties either a reconsideration decision or a notice stating that 
the QIC will not be able to complete its review by the decision-making 
deadline. This notice must also advise the appellant of the right, 
pursuant to Sec.  1869(c) of the Act, to request escalation of his or 
her appeal to an ALJ. Under Sec.  405.970(d), appellants must submit a 
written request directing the QIC to escalate their appeal. Appellants 
who are anxious to have their cases escalated clearly could make this 
request before receiving notice of a delay, that is, on their own, 
rather than in response to a QIC notice. In all instances, while 
awaiting the appellant's response, the QIC must continue processing the 
reconsideration ``unless and until it receives a written request from 
the appellant to escalate the case to an ALJ.'' Section 
1869(c)(3)(C)(ii) makes clear that when a QIC fails to meet its 
reconsideration deadline, an appellant may request an ALJ hearing. 
Under any system where escalation is at the appellant's option, we 
believe it is possible that in some instances, the QIC will complete 
its reconsideration before receiving an escalation request from an 
appellant. To avoid confusion and establish an efficient system for 
processing reconsiderations, we propose that whenever a QIC receives an 
escalation request, the QIC must take one of two actions within 5 days: 
(1) Complete its reconsideration and notify the parties of its 
decision; or (2) acknowledge the escalation request in writing and 
forward the case file to the ALJ. This provision should lend 
administrative finality to the QIC process and avoid any uncertainty in 
the inevitable situations where escalation requests and QIC 
reconsideration decisions cross in the mail. In cases where such QIC 
decisions are favorable to appellants, this process will eliminate 
unnecessary additional delays and administrative burden that appellants 
would face in ALJ hearings. See the ALJ and DAB portions of this 
preamble for further discussion of the escalation provisions.
4. Withdrawal or Dismissal of Reconsideration Requests (Sec.  405.972)
    Section 405.972 sets forth provisions for withdrawing and 
dismissing requests for reconsideration. We are proposing that 
appellants be able to withdraw their reconsideration request by filing 
a written request for withdrawal with the QIC within 14 calendar days 
of filing the reconsideration request. A QIC, however, may accept a 
withdrawal request at any time when the withdrawal is based upon a 
party entering into an agreement with CMS to compromise the amount of a 
debt. A QIC will dismiss a reconsideration request, either entirely or 
as to any stated issue, pursuant to a timely filed request for 
withdrawal, or on its own motion. For example, if the person or entity 
filing for reconsideration does not meet the proper definition of a 
party, or does not otherwise have a right to reconsideration under 
Sec.  1869(b) of the Act, the QIC will dismiss the request. The QIC 
also may dismiss a request for reconsideration where the party fails to 
file the reconsideration request within 180 days of receipt of the 
redetermination notice, or if the party fails to make out a valid 
request consistent with the essential reconsideration requirements 
identified in Sec.  405.964. In addition, if the party who filed the 
request dies before the adjudicator renders a decision, and the record 
does not reflect that some other party may be prejudiced by the 
redetermination, the QIC will dismiss the reconsideration.
    An appellant may request ALJ review of a QIC's dismissal of a 
request for reconsideration. The request for ALJ review must be filed 
with an ALJ within 60 days of the date of the QIC's notice of 
dismissal. Additionally, at any time within 6 months of the date of the 
QIC's dismissal notice, the QIC may vacate its dismissal of a request 
for reconsideration if good and sufficient cause is shown.
5. Content and Effect of the Reconsideration Decision (Sec. Sec.  
405.976-978)
    With regard to the content of the reconsideration decision notice, 
we propose in Sec.  405.976 that these decisions be in writing and 
contain several substantive elements, including: (1) A clear statement 
as to whether the reconsideration decision is favorable or unfavorable; 
(2) a summary of the facts; (3) an application of the pertinent laws, 
regulations, coverage rules, and CMS policies to the facts; (4) an 
explanation of the medical and scientific rationale for the decision, 
when the case involves determining whether an item or service is 
reasonable or necessary for the diagnosis or treatment of an illness or 
injury; and (5) a clear statement of the QIC's rationale for its 
decision. Consistent with proposed Sec.  405.968(b)(3), as discussed 
above, if the QIC's decision conflicts with an LCD, LMRP, or with 
program guidance, such as a CMS manual instruction, the notice must 
include the QIC's rationale for doing so. Similarly, consistent with 
the proposed Sec.  405.976(b)(5), the reconsideration notice must 
address how any missing documentation affected the reconsideration 
decision and the evidence limitations at the ALJ hearing level. The 
notice must also contain key procedural information such as advice to 
the parties of the right to an ALJ hearing; if appropriate, advice 
regarding the requirements for use of the expedited appeals process; 
and a description of the procedure that a party must follow in order to 
obtain an ALJ hearing or expedited appeal.
    Finally, Sec.  405.678 establishes that reconsiderations are final 
and binding on all parties unless a timely appeal is filed and a higher 
adjudicative body

[[Page 69327]]

overturns the reconsideration decision, or unless the reconsideration 
is reopened and revised by the QIC.

G. Reopenings of Initial Determinations, Redeterminations, 
Reconsiderations, Hearings and Reviews (Sec. Sec.  405.980-405.986)

    Section 1869(b)(1)(G) of the Act provides for the reopening and 
revision of any initial determination or reconsidered determination 
according to guidelines prescribed by the Secretary. These provisions 
are needed not only for BIPA purposes but to deal with longstanding 
concerns over the reopening rules for Medicare claim determinations. 
Over the years these provisions (existing Sec. Sec.  405.750(b), 
405.841, 405.842, and 405.850) have concerned providers, suppliers, 
physicians, and contractors. Providers have been vocal about the need 
for reopening for purposes of recovering underpayments at any point 
beyond 60 days or the initial timely billing period of 15-27 months.
    Some providers have commented that some contractors do not grant 
requests to reopen claims for underpayments and clerical errors. We 
believe that the goal of the Medicare payment system should be to pay 
the correct amount. Thus, we believe that the purpose for conducting a 
reopening should be to change the determinations or decisions that 
result in either overpayments or underpayments. The proposed provisions 
below are intended to establish clear and concise rules to enable 
contractors to reopen claims and appeals in a fair and consistent 
manner.
    Proposed Sec.  405.980(a) establishes that a reopening is a 
remedial action taken by a carrier, intermediary, QIC, ALJ, or MAC to 
change a final determination or decision made with respect to an 
initial determination, redetermination, reconsideration, hearing, or 
review, even though the determination or decision may have been correct 
based upon the evidence of record. (Note that in this section of the 
proposed rule, we use the term ``contractors'' to signify carriers, 
intermediaries, and program safeguard contractors.)
    Reopenings often have been misconstrued as a level of the appeals 
process, so we clarify the conditions for when to use the reopening 
process instead of the appeals process. We believe that in order to 
give meaning to the reopening process, we should identify well-defined 
parameters for how parties must proceed, and how contractors, QICs, 
ALJs, and the MAC will conduct reopenings. First, unlike the appeals 
process, a party must establish that good cause exists in order for an 
adjudicator to grant a request for a reopening. We discuss in detail 
below the ways that good cause may be established. Because some of the 
same types of issues may be raised in either process, we believe that a 
party's appeal rights must be exhausted, or the time limit for 
appealing must have expired, in order for an adjudicator to grant a 
request for a reopening and take jurisdiction. A decision on whether to 
grant a request for reopening is at the sole discretion of the 
adjudicator and is not subject to appeal.
    We also draw the distinction that requests for adjustments to 
claims resulting from clerical errors must be handled through the 
reopening process. Therefore, when a contractor makes an adjustment to 
a claim, the contractor is not processing an appeal, but instead, 
conducting a reopening. Nevertheless, the revised initial determination 
that results from the adjustment may be appealed. Finally, some 
providers argue that contractors will only initiate a reopening for 
clerical errors when the error can be attributed to the contractor, but 
not the provider. We make clear in this proposed rule that the clerical 
error may be that of the contractor or party. We also define clerical 
error as human and mechanical mistakes such as mathematical, 
computational, or inaccurate data entry. We welcome comments on other 
types of mistakes that would warrant reopenings on the basis of 
clerical errors.
    Proposed Sec.  405.980(b)-(e) sets forth the time frames and 
requirements for reopening initial determinations, redeterminations, 
reconsiderations, hearing decisions, and reviews, both for those 
initiated by contractors, QICs, ALJs, the MAC, and those requested by 
parties. An adjudicator's notice of intent to reopen preserves the time 
frame by which it is required to initiate a reopening. Either a party 
may request a reopening, or a contractor may reopen on its own motion, 
within one year from the date of the notice of the initial 
determination or redetermination for any reason. We believe that one 
year is a reasonable time frame for a party to bring issues to the 
contractor's attention, considering that it is the party's 
responsibility and obligation to bill and code correctly, discover 
errors timely, and respond to documentation requests in order to 
facilitate appropriate payment determinations by the contractors.
    A party and a contractor have the same 4-year time frame for 
initiating reopenings for good cause, but although a party may request 
a reopening, the contractor may find that there is not adequate reason 
to reopen the case. A contractor's decision on whether good cause 
exists is final.
    A contractor may reopen within 5 years from the date of the initial 
determination or redetermination if the contractor discovers a pattern 
of billing errors or identifies an overpayment. In protecting the 
Medicare Trust Fund, CMS grants contractors the authority to reopen and 
revise initial determinations on claims that have been procured through 
similar fault and/or are believed to have been procured through fraud. 
Under proposed Sec.  405.980, we are proposing significant revisions to 
existing rules concerning reopening initial determinations procured 
through similar fault or fraud.
    We are proposing a definition for the term similar fault and 
outline its evidentiary requirements. Similar fault is intended to 
cover instances where Medicare payment is obtained by those with no 
legal rights to the funds, but falls short of outright fraud. In order 
for the initial determination to be procured by similar fault, Medicare 
funds must have been obtained, retained, converted, or received by a 
person who knows, or reasonably should be expected to know, that the 
person has no legal entitlement to those funds. This covers instances 
where a provider has been paid twice for the same claim (such as 
through different payors); where the contractor erroneously pays for 
codes that should not be paid, and the provider does not refund the 
money; or manipulation of legitimate codes contrary to Medicare policy 
to obtain a higher reimbursement. Examples of how knowledge can be 
shown include: Provider bulletins and educational efforts, standard 
practices in the community, and previous errors that have been brought 
to the provider's attention.
    A contractor may reopen at any time if reliable evidence shows 
fraud or similar fault. Evidence is reliable if it is relevant, 
credible, and material. Since a reopening of an initial determination 
is an administrative action to correct erroneous payments, there is no 
requirement for a burden of proof. The contractor only must show that 
its evidence is reliable. If the reopening results in a revised 
determination that is unfavorable, the affected party has the right to 
use the administrative appeals process to rebut the contractor's 
evidence. In the appeals process, however, the contractor's evidence 
must satisfy the burden of proof placed upon it.
    Proposed Sec. Sec.  405.980(d)(1) and (e)(3) provide 180 days from 
the date of a reconsideration decision for either a party to request, 
or a QIC to initiate, a

[[Page 69328]]

reopening. Similarly, both the parties and adjudicators at the ALJ and 
MAC levels also would have 180 days from the date of a hearing or 
review decision to request or initiate a reopening. The party, QIC, 
ALJ, or the MAC must establish good cause for a reopening. We 
considered whether a QIC, ALJ, or the MAC should have to establish good 
cause like parties in order to reopen matters that did not pertain to 
overpayments, investigations, or fraud. However, in an effort to 
propose a more equitable process, we believe that a QIC, ALJ, or the 
MAC should be held to the same standards as a party and should not be 
able to arbitrarily reopen its decision. We believe that a party should 
be able to rely on the finality of an appeal decision without undue 
concern that an adjudicator may reopen and revise its decision.
    Proposed Sec.  405.982-.984 would require contractors, QICs, ALJs, 
or the MAC to mail notices of revisions based on reopened 
determinations, reconsiderations, or decisions to the appropriate 
parties at their last known addresses. The notice must state the 
rationale and basis for the revision, and the parties' right to appeal. 
The revision of an initial determination, redetermination, or 
reconsideration shall be binding upon all parties unless a party files 
a written request for a subsequent appeal. Where a contractor reopens 
an initial determination, we considered whether it might be more 
efficient to allow a party to request a reconsideration by a QIC. 
However, since a redetermination is the first level of the appeals 
process, we have proposed that a revised initial determination is final 
unless a party files a written request for a redetermination.
    Proposed Sec.  405.986 creates a section on how a party, 
contractor, QIC, ALJ, or the MAC must establish good cause for a 
reopening. We modified and incorporated some of the provisions at 
Sec. Sec.  405.750(b) and 405.841 of 42 CFR, and Sec.  404.989 of 20 
CFR to establish guidelines on what constitutes good cause for a 
reopening, such as ``new and material evidence'' and ``error on the 
face of the evidence.'' The existing provisions have been viewed by 
some to be ambiguous as to the meaning or context of these terms.
    New and material evidence means information that was not available 
or known at the time the determination or decision was furnished, 
which, had it been available or known, may have resulted in a different 
conclusion. Error on the face of the evidence means an obvious mistake 
in the determination or decision.
    We believe that we have exhausted the full range of circumstances 
that should give rise to good cause, but welcome comments on whether 
other provisions should be added to apply to good cause. Finally, we 
would also incorporate the longstanding rule that a change resulting 
from a judicial decision, legal interpretation, or administrative 
ruling upon which a determination or decision was made should not 
constitute a good cause for reopening.

H. Expedited Appeals Process (Sec.  405.990 Through Sec.  405.992)

    We are incorporating the current regulations governing expedited 
review at Sec. Sec.  405.718 and 405.853 with only two changes. First, 
since under BIPA the appeals process is the same for both Part A and B 
claims, there will be one regulation governing expedited review of 
cases involving those claims. Second, under BIPA, ALJs are bound by all 
NCDs rather than only by NCDs based on section 1862(a)(1) of the Act. 
Therefore, the regulations will no longer limit expedited review to 
cases involving NCDs based on section 1862(a)(1)(A) of the Act.
    In addition, we would establish under proposed Sec.  405.992 the 
standards that would apply to ALJs and the MAC for policies that are 
not subject to the expedited appeals process. We are proposing that in 
general ALJs and the MAC should consider and give deference to an LCD, 
LMRP, or CMS manual instruction. An ALJ or the MAC may disregard such a 
policy at a party's request, if the ALJ or the MAC finds the party's 
explanation of why the policy should be disregarded to be persuasive, 
finds that the policy has been applied incorrectly, or finds for other 
reason that the policy is invalid for purposes of the party's appeal. A 
decision of the ALJ or the MAC would include its rationale for 
disregarding such a policy. We believe that these provisions will not 
only lend greater consistency to the appeal decisions, but also ensure 
that CMS is aware of policies that are being repeatedly overturned by 
adjudicators.

I. ALJ Hearings

1. Introduction
    Consistent with new section 1869 of the Act, this proposed rule 
contains a series of changes to the existing procedures for ALJ 
hearings and DAB reviews. In addition, as discussed above, we are 
proposing in this rule to codify in the Medicare regulations at 42 CFR 
part 405, subpart I, all the requirements that apply to these 
proceedings. Most of these regulations have previously been set forth 
in 20 CFR part 404 of SSA's regulations, which focuses on SSA's 
disability procedures. These voluminous regulations contain many 
provisions that are not applicable for Medicare purposes. For the most 
part, the proposed regulations that are being carried over from part 
404 simply incorporate relevant provisions of those rules and do not 
involve substantive changes. To the extent that the new regulations do 
make substantive changes, the changes are discussed below.
    One of the changes required under section 521 of BIPA is the 
introduction of an appellant's right to escalate a case to an ALJ if a 
QIC fails to make a timely reconsideration, or to the DAB if an ALJ 
hearing does not produce a timely decision on an appeal of a QIC 
reconsideration. How escalation is implemented will affect all aspects 
of the ALJ and MAC proceedings discussed below. Therefore, before 
presenting a detailed discussion of our proposals with respect to ALJ 
and MAC procedures, we believe it is important to first discuss the 
issues associated with the new escalation requirements.
2. Escalation

a. General Principles

    Section 1869(a)(3)(B)(I) provides that ``[n]o initial determination 
may be reconsidered or appealed under subsection (b) unless the fiscal 
intermediary or carrier has made a redetermination of that initial 
determination under [section 1869(a)(3)].'' Section 1869(a)(3)(D) 
provides that for purposes of pursuing appeals beyond the fiscal 
intermediary or carrier levels, the redetermination is considered an 
initial determination. Given the above provisions, it is clear that an 
appellant may not proceed beyond the initial contractor level until he 
or she has received a redetermination from that contractor, even if the 
contractor does not issue the initial determination or redetermination 
within the statutory time frames. This is consistent with the current 
regulations, which require an appellant to complete all steps of the 
appeals process in sequence, except when an appellant invokes the 
expedited review process described at Sec. Sec.  405.718 [Part A 
appeals] and 405.853 [Part B appeals].
    After the initial contractor has made its redetermination, however, 
a case may be advanced to the next level of appeal if an adjudicator 
does not act on the appeal within the statutory deadline. We call this 
movement of a case to the next level of appeal ``escalation.'' In this 
section, we

[[Page 69329]]

describe how escalation will affect the procedures the adjudicator will 
conduct at the next level of appeal.
    Sections 1869(c) and (d) provide deadlines for QICs, ALJs, and the 
MAC within the DAB to issue their decisions. If the adjudicator does 
not meet the specified deadline, the party requesting the appeal (the 
appellant) ``may request'' an appeal at the next level without 
completing the appeal level below. Specifically, the statute allows an 
appellant to escalate an appeal by (1) requesting an ALJ hearing if the 
QIC does not decide the appeal within 30 or 44 days (depending on 
whether the appellant requested additional time to submit evidence to 
the QIC); (2) requesting a review by the MAC if the ALJ does not decide 
the appeal within 90 days; and; (3) requesting judicial review in 
federal district court if the MAC does not complete its review within 
90 days. (At the ALJ and MAC levels, the statutory time period for 
completing the action begins on the date the appeal is timely filed.)
    If an appellant does not request escalation to the next level, the 
case will remain with the current adjudicator until a final action is 
issued. Because there are different procedures at each of the appeals 
steps, appellants must carefully consider the type of review that is 
best to resolve their case before deciding to escalate an appeal. For 
example, appellants who escalate a case from the QIC level to an ALJ 
will not have the benefit of a review by health care professionals that 
the QIC provides before they proceed to a hearing. Similarly, when a 
case is escalated from the ALJ level to the MAC, an appellant will lose 
the right to present his or her case during an oral hearing; rather, in 
most circumstances the MAC will issue its action after reviewing the 
written record. Therefore, appellants who consider escalating their 
appeals must carefully weigh whether their case will be better served 
by completing a particular level of appeal or proceeding to the next 
level.
    In addition, appellants who escalate their appeals will, in 
essence, be waiving their right to obtain a decision within the 
statutory deadline at the next level. For example, section 
1869(d)(1)(A) provides that unless the appellant waives the statutory 
adjudication deadline, the ALJ ``shall conduct and conclude a hearing 
on a decision of a [QIC]'' and issue a decision by the 90th day from 
the date a request for hearing is timely filed. (Emphasis added.) We 
interpret this as requiring an ALJ to decide a case within 90 days when 
the QIC has issued a final action in a case, but not when the appellant 
has escalated the case to the ALJ level before the QIC issues a 
decision. A similar distinction is found in the provisions governing 
MAC review, which provide that the MAC must complete its ``review of a 
decision'' within 90 days. Therefore, when an appellant escalates an 
appeal from the QIC to the ALJ level or from the ALJ level to the MAC, 
the proceedings before the ALJ or MAC are not subject to the 90-day 
limit.
    We believe this interpretation is not only consistent with the 
statute, but highlights other factors appellants will have to consider 
when deciding whether escalation is to their advantage. In our 
experience, ALJs and the MAC are able to decide cases more quickly and 
completely when the record below has been fully developed and the 
determination or decision issued below fully addresses the issues that 
were considered during the appeal. Because appeals that are escalated 
to the next level will not include a written determination or decision 
by the adjudicator below, the ALJ, the MAC, and the courts, as 
applicable, will require more time to determine what issues are 
properly before them and how they should be resolved.
    As we discuss later in this preamble, we are proposing that CMS or 
its contractors may enter a case as a party at the ALJ level and be 
accorded the same rights as any other party to an ALJ decision. 
However, since we do not believe that the 90-day deadlines for the ALJ 
or the MAC to adjudicate appeals would apply to CMS, we have 
specifically noted in the regulation text that CMS would not be 
permitted to escalate a case, for example, from the ALJ to the MAC 
level, if the ALJ did not meet its adjudication deadline.
    As noted above, section 1869(d)(1)(A) of the statute indicates that 
the 90-day deadline for an ALJ decision is premised on the existence of 
a QIC decision, and section 1869(d)(2)(A) specifies that the DAB has 90 
days to ``conduct and conclude a review of the decision on the 
hearing'' by an ALJ. Neither the statute nor the legislative history 
provides any guidance with respect to the appropriate processing time 
frames for ALJ decisions on cases that have not been reconsidered by a 
QIC, or for DAB decisions on cases that have not been heard by an ALJ. 
Although the statute is silent in this respect, we recognize that 
appellants should not have to wait indefinitely for decisions on their 
appeals in these situations. We have proposed procedures that we 
believe will enable adjudicators to meet the statutory decision-making 
time frames in the vast majority of cases, thus minimizing the 
likelihood that an appellant would have the option of escalation. 
However, to the extent that such situations do arise, we believe that 
it may be appropriate to establish in the final rule specific decision-
making time frames for both ALJ hearings and DAB reviews for those 
cases where there was no previous QIC reconsideration decision, or ALJ 
hearing decision, respectively. We encourage comments on whether the 
final rule should include such time frames and, if so, the most 
appropriate adjudication time frames for these cases.

b. Specific Provisions Affected by Escalation--From the QIC to the ALJ 
Level

    Section 1869(c) provides that a QIC must complete its 
reconsideration within 30 days or 44 days if the appellant requests an 
extension. The statute also provides that an appellant may escalate the 
appeal to the ALJ level if the QIC does not complete the 
reconsideration within the requisite period. The statute does not 
specify, however, that appeals will automatically be referred from the 
QIC to the ALJ level once the 30 or 44-day period expires. Rather, the 
statute leaves it to the appellant to request escalation to the next 
level. The statute is silent concerning when the appellant must make 
this request or the precise effect the request will have on any case 
development or other adjudication efforts that the QIC may be 
conducting on the appeal when the escalation request is received.
    We considered various options for effectuating this provision, 
including requiring that the QIC immediately cease its consideration of 
the appeal as soon as the request for escalation is received. As 
discussed above, we concluded that this option would be 
counterproductive for both the appellant requesting escalation and for 
the appeals system as a whole, including appellants whose claims remain 
at the QIC level and those whose appeals are already pending at the ALJ 
level. Specifically, because we expect that QICs will make every effort 
to issue determinations within the 30 or 44-day time frame, we would 
expect that many of the cases that are not decided by those deadlines 
will nonetheless be very close to completion. It would not benefit 
either the appellant who is requesting escalation or those appellants 
whose appeals are pending at the ALJ level if we require the QIC to 
cease deciding a case as soon as a request for escalation is received, 
particularly if the QIC is close to issuing a determination that will 
be fully favorable to the appellant.

[[Page 69330]]

    Therefore, we are proposing that when a QIC receives a request for 
escalation, the QIC will defer sending the case to the ALJ level for 5 
days. If possible, the QIC will complete its adjudication of the case, 
including issuing a written reconsideration, within the 5-day period. 
If the determination is fully favorable to all parties, the case will 
be forwarded to the initial contractor for effectuation. If not, the 
appellant or another party to the appeal may file a request for ALJ 
hearing within the 60-day period provided in these regulations. If the 
QIC is not able to decide the case within the 5-day period, it will 
notify the appellant and forward the case record to the hearing office 
that has jurisdiction of the case. The appeal will then be processed 
according to the rules described in proposed sections 405.1000 et. seq.

c. Specific Provisions Affected by Escalation--Escalation at the ALJ 
and MAC Levels

    We are proposing similar procedures when an appellant requests 
escalation from the ALJ to the MAC level and from the MAC level to 
federal district court described below.

ALJ Level to the MAC (Sec.  405.1104)

    The appellant must file the request for escalation directly with 
the ALJ/hearing office assigned to the appeal as well as with the MAC. 
(The notice that the hearing office issues acknowledging the request 
for hearing will provide sufficient information for the appellant to 
direct the escalation request to the appropriate office or ALJ.) Upon 
receipt of the request for escalation, the ALJ may, if feasible, issue 
a decision, dismissal or remand if it can be issued within 5 days of 
the receipt of the request for escalation. (Note: a request for 
escalation to the MAC will be deemed as a waiver of any oral hearing an 
appellant has requested but not yet received.) If the ALJ's action is 
fully favorable to all parties to the appeal, the ALJ will forward the 
case record to the appropriate contractor for effectuation. If the 
ALJ's action is not fully favorable to all parties, the appellant or 
another party to the appeal may file a request for MAC review within 60 
days of receipt of the ALJ's action.
    If the ALJ does not issue an action within the 5-day period, the 
case record, including the recording of the oral hearing, if any, will 
be sent to the MAC.

MAC to Federal District Court (Sec.  405.1132)

    Finally, if the MAC does not issue a final action or remand the 
case to an ALJ for further proceedings within the 90-day adjudication 
period, the appellant may request that the case be escalated to federal 
district court if the amount in controversy is $1,000 or more. Similar 
to the above procedures, the MAC may, if feasible, issue a final 
action, if it can be issued within 5 days of the request for 
escalation.

d. Calculating the 90-Day Adjudication Period

    Historically, Medicare appeals were conducted using the ALJ and 
Appeals Council procedures that were devised for appeals of Social 
Security claims. Those procedures do not mandate any time frames within 
which either an ALJ or SSA's Appeals Council must complete their 
actions on an appeal. However, they also provide generous time periods 
(or none at all) for scheduling or rescheduling hearings at the 
convenience of the appellant and the adjudicator, opportunities for 
both prehearing and posthearing conferences, and no limitations on when 
additional evidence may be submitted to the ALJ, as long as it is 
received before the decision is issued.
    Congress, through BIPA, has now directed us to complete 
adjudication within specified time frames and, when such time frames 
are not met, give appellants the option to escalate their cases to the 
next level of appeal. To provide this level of service to all 
appellants, we are proposing the following changes to our appeals 
procedures. First, we are establishing time limits for submission of 
evidence. Appellants who submit evidence within these limits and comply 
with other deadlines described elsewhere in this document, will have 
the right to have their case adjudicated within the specified time 
period or to escalate it if the time limit is not met. Conversely, we 
propose to toll the 90-day adjudication period if appellants submit 
evidence after those specified time periods. For example, the 
regulations provide that an appellant must submit any additional 
evidence within 10 days of receiving the notice of hearing. If an 
appellant submits the evidence on the 20th day, the ALJ may still 
accept the evidence, but will have an additional 10 days to decide the 
case. (See Sec.  405.1018)
    We believe that this proposal is consistent with the statute and 
Congressional intent. Congress has clearly indicated that adjudicators 
must devise procedures compatible with meeting the statutory deadlines. 
Moreover, we do not believe that Congress meant to allow appellants to 
escalate appeals if it is the appellant who has delayed the 
administrative process. We note that such delays, in particular 
requests for postponement of scheduled hearings, affect the timely 
resolution of not only the appellant's own case, but our ability to 
provide timely hearings and decisions for other appellants as well. We 
believe that by tolling the 90-day adjudication period in those 
instances in which the appellant causes the delay, we will provide an 
incentive for more appellants to appear at scheduled hearings and 
otherwise comply with hearing procedures.
    For the same reason, the proposed regulations contain changes to 
the current process that we anticipate will streamline the hearings and 
appeals process, thus providing quicker and more focused adjudication. 
For example, we are proposing to offer appellants at the ALJ level not 
only in-person hearings, but hearings via telephone and 
videoconferencing, where available. We are also restricting submission 
of additional evidence after an oral hearing to the following:
    (1) With the permission of the ALJ, provided that the request is 
made before or during the hearing.
    (2) On the ALJ's own motion, if he or she concludes that the 
evidence is necessary to resolve a material issue in the case.
    We are also continuing the current requirement that the notice of 
hearing must identify the issues to be decided in the case. Although we 
are requiring appellants to file any objections to the issues within 5 
days of the hearing, we encourage parties to alert ALJs as soon as 
possible if the notice of hearing does not accurately describe the 
issue to be decided or does not include an issue material to the 
resolution of the case (see Sec.  405.1024). Similarly, as explained in 
more detail elsewhere in this preamble, we are proposing to require 
appellants seeking MAC review to identify those aspects of the ALJ's 
decision with which they disagree. (We are not proposing this 
requirement for beneficiaries who are proceeding pro se.) We believe 
that this requirement will enable the MAC to resolve requests for 
review more expeditiously. In addition, the MAC will issue final 
actions after considering the request for review, rather than first 
advising appellants of a proposed action and providing a comment 
period. We do not consider it feasible to provide both a proposed and 
final action within the designated time frame. In addition, because the 
MAC will now be conducting a de novo review, appellants are on notice 
that the MAC may alter the ALJ's decision even if it would have been 
sustained under the pre-BIPA substantial evidence standard (see Sec.  
405.1112).

[[Page 69331]]

3. Conduct of ALJ Hearing--General Rules ( Sec.  405.1000)
    Section 1869(b)(1)(A) of the Social Security Act as amended by BIPA 
provides that any individual dissatisfied with any initial 
determination shall be entitled to a reconsideration and, assuming the 
request for hearing is timely filed and the amount in controversy 
requirements are met, a hearing to the same extent as is provided in 
section 205(b) of the Act. Traditionally, the Secretary has granted 
individuals entitled to a 205(b) hearing an in-person hearing. In 
addition, current regulations allow an appellant to waive an in-person 
hearing and request a decision based on the written record. We would 
continue that policy in this proposed rule. However, given recent 
technological advances, we will also offer appellants an opportunity 
for a hearing via telephone or videoconference, as available. 
(Currently, videoconferencing is only available at selected hearing 
sites throughout the country. 66 FR 61310 (January 5, 2001)). Recent 
experience shows that hearings conducted via telephone and 
videoconferencing advantage both the adjudicator and the appellant, 
particularly beneficiaries who have difficulty traveling even short 
distances or providers and suppliers for whom a telephone hearing or a 
videoconference may be more convenient than a hearing scheduled at a 
more distant hearing office. We believe that offering these options, 
where available, will also enable ALJs to complete more cases within 
the 90-day adjudication period. It may also afford some appellants an 
opportunity to present their case orally who currently request on-the-
record hearings because of transportation or scheduling difficulties.
4. What Actions Are Reviewable by an ALJ? (Sec.  405.1004)
    We have interpreted the current regulations governing the Part A 
and Part B appeals process as affording a party the right to an ALJ 
hearing only if the intermediary or carrier hearing officer (CHO), as 
applicable, has issued a determination or decision on the merits. 
Consistent with this interpretation, ALJs have dismissed requests for 
an ALJ hearing when the contractor or CHO has dismissed a request for a 
reconsideration or carrier hearing.
    We propose to revise this policy for appeals filed under BIPA. 
Specifically, we would give ALJs the authority to decide or review all 
final actions issued by a QIC including dismissals for untimely filing, 
failure to exhaust administrative remedies, or res judicata. (We expect 
that res judicata will most often occur when a party asks for another 
adjudication of a claim for the same service, that is, the same 
instance of receiving a service.) However, the proposed regulations 
also specify that if an ALJ decides that a QIC's dismissal was 
improper, the ALJ will remand to the QIC for a substantive decision.
5. What Authorities Are Binding on an ALJ?
    In our May 12, 1997 final rule, we stated that ALJs are bound by 
the Medicare statute, CMS regulations, CMS Rulings and NCDs based on 
section 1862(a)(1) of the Act. Under BIPA, all NCDs, based on section 
1862(a)(1) or other grounds, are binding on ALJs. We are revising our 
regulations, including those governing the expedited appeals process, 
accordingly.
6. Aggregating Claims To Meet the Amount in Controversy (Sec.  
405.1006)
    Prior to the enactment of section 521 of BIPA, the statute and 
regulations provided different amounts in controversy for Part A and 
Part B hearings and appeals. Under Part A, an appellant could receive a 
reconsideration of the initial determination regardless of the monetary 
value of the claim, but had to meet a $100 threshold to receive a 
hearing before an ALJ. Similarly, an appellant contesting an initial 
determination issued on a Part B claim could receive a review 
determination regardless of the amount in controversy. However, there 
was a $100 amount in controversy requirement for a Part B carrier 
hearing and a $500 threshold for an ALJ hearing with respect to a Part 
B claim determination.
    The pre-BIPA aggregations provisions found at former section 
1869(b)(2) directed the Secretary to devise a system for allowing 
appellants to combine claims to meet the amount in controversy as 
follows: In determining the amount in controversy, the Secretary, under 
regulations, shall allow two or more 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. The Secretary 
implemented the above provision in a final regulation published March 
16, 1994. The regulation established two methods of aggregation, one 
for individual appellants and one for multiple appellants. Individual 
appellants appealing either Part A and Part B claims were allowed to 
aggregate two or more claims (within a specified time period), 
regardless of issue, to meet the jurisdictional minimums for a carrier 
hearing and ALJ hearing. (Prior to OBRA 1986, this method for 
aggregating claims had been available to appellants requesting a Part B 
hearing before a carrier hearing officer.) Multiple appellants, 
however, were allowed to aggregate their claims only under the 
statutory requirements, that is, if the claims involved 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.
    BIPA 521 changed the amount in controversy requirements. Section 
1869(b)(1)(E) provides that the amount in controversy for an ALJ 
hearing will be $100 for appeals of both Part A and Part B claims. In 
addition, the aggregation provisions have been altered as follows:
    (ii) Aggregation of claims. In determining the amount in 
controversy, the Secretary, under regulations, shall allow two or more 
appeals to be aggregated if the appeals involve--
    (I) the delivery of similar or related services to the same 
individual by one or more providers of services or suppliers, or
    (II) common issues of law and fact arising from services furnished 
to two or more individuals by one or more providers of services or 
suppliers.
    We are proposing to limit aggregation of claims under BIPA to those 
that meet the statutory requirements for aggregation, that is, those 
that involve the delivery of similar or related services to the same 
individual or common issues of law and fact. Accordingly, we would no 
longer allow appellants to aggregate all timely filed claims regardless 
of issue. We are proposing this change for several reasons. Under the 
current system, appellants can only appeal beyond the intermediary or 
carrier levels if their appeal meets the minimum amount in controversy 
requirements described above. With the creation of the QICs, however, 
appellants will have access to a review by an independent contractor 
regardless of a claim's monetary value. We believe that this will 
provide sufficient due process for those claims that are below the $100 
threshold.
    Moreover, BIPA has reduced the amount in controversy for a Part B 
ALJ hearing from $500 to $100. Our experience suggests that the 
majority of Part A and B appeals that are decided by the QICs will 
equal or exceed the $100 amount in controversy requirement. Thus, we do 
not believe that eliminating the more liberal rules

[[Page 69332]]

that individual appellants have used to aggregate claims will alter 
significantly an appellant's access to an ALJ hearing. We believe that 
continuing to apply the current aggregation rules would hinder ALJs and 
the MAC from meeting BIPA's 90-day deadlines for completing appeals. 
The current system, which allows aggregation of claims regardless of 
issue, has led to cumbersome and lengthy proceedings at both the ALJ 
and MAC levels. Adjudication is often delayed when an appellant seeks 
to aggregate a claim with another previously filed appeal; continuing 
this practice will impair our ability to meet the statutory deadline 
for the earlier appeal. Moreover, some of the current inefficiencies in 
the appeals system are caused by cases in which appellants seek to 
aggregate numerous claims that concern a variety of unrelated services 
or supplies, each of which has been denied for a different reason. 
Based on this experience, we believe that allowing appellants to 
aggregate claims regardless of issue will make it extremely difficult 
to provide a meaningful review of each issue within the statutory 
deadlines.
    Therefore, we are proposing to limit aggregation for both 
individual and multiple appellants to the clear language of the 
statutory provisions. In order to allow individual beneficiaries, 
providers and suppliers, as well as multiple appellants to aggregate 
claims, we will allow appellants to aggregate claims to meet the amount 
in controversy if the claims involve common issues of law and fact or 
delivery of similar or related services, regardless of whether the 
services pertain to just one beneficiary or a number of beneficiaries 
and regardless of how many providers or suppliers provided the 
services. We will continue our policy, however, of restricting the 
claims that may be aggregated to those that are appealed within a 
limited period; to do otherwise would in essence extend the time to 
file a request for hearing beyond the 60-day time limit. We are also 
proposing separate rules for claims that are escalated from the QIC to 
the ALJ level to ensure that only appeals that clearly meet the amount 
in controversy requirements are escalated to the ALJ level. Finally, 
given the reduced amount in controversy threshold and the new 
adjudication deadlines, which will require adjudicators to resolve 
issues more quickly, we believe it is reasonable to require appellants 
to explain in their request for aggregation why they believe the claims 
involve common issues of law and fact or delivery of similar or related 
services.
7. When CMS or Its Contractors May Participate in an ALJ hearing 
(Sec. Sec.  405.1010 and 405.1012)
    Existing regulations do not address whether CMS and its contractors 
could participate in ALJ hearings. Occasions have arisen, however, in 
which a contractor or an ALJ has determined that an issue in a case 
could not be resolved without some input from CMS or the contractor. In 
some cases, ALJs have requested position papers, testimony, or other 
evidence from CMS or a contractor, but such proceedings have been 
cumbersome, because the regulations did not provide specific procedures 
for such input. After reviewing the outcome of other cases, CMS has 
concluded that the case might have been more appropriately resolved if 
CMS or the contractor had been parties to the appeal.
    New section 1869(c)(3)(J) provides that the QIC will not only 
prepare the record of the reconsideration when a hearing before an ALJ 
is requested, but also will ``participate in such hearings as required 
by the Secretary.'' Consistent with this provision, we are proposing to 
revise our regulations concerning the conduct of an ALJ hearing to 
allow participation of a representative of CMS, or another CMS 
contractor, either at the request of an ALJ or upon the request of the 
QIC or CMS. Such participation may include filing position papers or 
providing testimony to clarify factual or policy issues in a case, but 
will not include those aspects of full party status such as the right 
to call witnesses or cross-examine the witnesses of another party. 
Because the role of a participant is non-adversarial, we would allow 
participation of the QIC, CMS, or CMS's contractors in cases brought by 
all appellants, including beneficiaries.
    An ALJ will not have the authority to require CMS or a contractor 
to participate in a case. Nor may the ALJ draw any adverse inferences 
if CMS or a contractor decides not to participate. For example, an ALJ 
could not consider a party's allegations as accepted as true if CMS or 
a contractor decides not to participate and counter such allegations. 
We anticipate, however, that there will be other cases in which CMS or 
its contractor will want and need to be a full party in a case in order 
to ensure that the record before the ALJ is fully developed. 
Accordingly, we are also revising the current regulations to allow CMS 
or its contractor to enter an appeal at the ALJ level as a party, 
unless the appeal is brought by an unrepresented beneficiary. When CMS 
or its contractor enters the case as a party, it will have all the 
rights of a party, including the right to call witnesses or cross-
examine the witnesses of other parties, as well as the right to seek 
MAC review of an adverse decision. CMS and the contractor, when acting 
as parties, may also submit additional evidence to the ALJ. An ALJ 
would not have the authority to require CMS or a contractor to enter a 
case as a party, nor would an ALJ be able to draw any inferences if CMS 
does not participate in the case. We believe that these proposed 
changes will enable adjudicators at the ALJ and, thereafter, the MAC 
level to resolve issues of fact and law more quickly and reduce the 
need for remands for additional development.
8. Filing Requests for ALJ Hearing and MAC Review--Time and Place 
(Sec. Sec.  405.1014, 405.1016, 405.1106)
    Section 1869(b)(1)(D)(ii) provides that ``the Secretary shall 
establish in regulations time limits for the filing of a request for 
hearing by the Secretary in accordance with provisions in sections 205 
and 206.'' In addition, section 1869(d)(1)(A) provides that ``except as 
provided in subparagraph (B), an administrative law judge shall conduct 
and conclude a hearing on a decision of a qualified independent 
contractor under subsection (c) and render a decision on such hearing 
by not later than the end of the 90-day period beginning on the date a 
request for hearing has been timely filed.'' (Emphasis added.) 
Similarly, section 1869(d)(2)(A) of the Act provides that the MAC 
``shall conduct and conclude a review of [an ALJ decision] and make a 
decision or remand the case to the administrative law judge for 
reconsideration by not later than the end of the 90-day period 
beginning on the date a request for review has been timely filed.''
    Section 205 of the Act gives an appellant 60 days to request a 
hearing. The current regulations governing appeals of Medicare claims 
provide the same 60-day period for appealing Medicare cases from the 
contractor's determination or decision to an ALJ and, thereafter, from 
the ALJ level to the MAC. We are proposing to continue to require 
parties to file their appeals to the ALJ level and the MAC within 60 
days. As discussed above, for purposes of determining an appellant's 
right to appeal, we will also continue to use the general principles 
currently found in 20 CFR 404.933 and 42 CFR 405.722. These regulations 
provide that an appeal is considered filed on the day it is received by 
a Social Security office,

[[Page 69333]]

CMS, including its contractors, an ALJ, or, in the case of a request 
for MAC review, the MAC. We will also continue to calculate the 60-day 
period based on the date the appeal is actually received by one of the 
above offices.
    As noted above, ALJs and the MAC must issue their decisions no 
later than the end of the 90-day period beginning on the date the 
appeal has been timely filed. Therefore we must determine not only 
whether an appeal has been timely filed to establish the party 
requesting review's right to an ALJ hearing or MAC review, but also 
when the appeal is considered timely filed in order to calculate the 
90-day adjudication period. Given these deadlines, we considered 
requiring all requests for ALJ hearing to be filed directly with the 
hearing office, and all requests for review to be filed directly with 
the MAC. This requirement would advantage most parties, since we have 
experienced significant delays in receiving appeals filed with Social 
Security and other offices. Again, we recognize that local Social 
Security offices provide a valuable service to many individuals who 
want or require assistance in filing their appeals. Similarly, 
providers and suppliers are accustomed to filing requests for an ALJ 
hearing or, more rarely, MAC review with CMS's contractors.
    Therefore, as with requests for redeterminations and 
reconsiderations, we are proposing to allow parties to file their 
appeals with these offices. For purposes of establishing whether the 
party has filed a timely request, the appeal will be considered filed 
on the date it is received in one of these offices. However, for 
purposes of establishing the start date for the 90-day adjudication 
period, we will define the date that an appeal is timely filed as the 
date the appeal is received by the ALJ or MAC, as applicable. We 
believe that this policy will give the parties requesting review access 
to assistance if needed while not reducing the time the ALJ or MAC will 
have to decide the case.
    In addition, both ALJs and the MAC often receive appeals that have 
not been filed within the 60-day limit. The current regulations allow 
parties to ask for an extension of time to file their appeal for ``good 
cause.'' The regulations further provide examples of circumstances that 
may establish good cause for late filing, such as a serious illness or 
death of an immediate family member. In our experience, some parties do 
not acknowledge that they have filed an appeal after the 60-day period 
has expired or explain why the appeal is late. In the event that the 
party requesting review subsequently provides information that 
establishes good cause for late filing, we will calculate the date the 
appeal is ``timely filed'' for purposes of beginning the 90-day 
adjudication period as the date the ALJ or MAC, as applicable, receives 
the good cause explanation, assuming the ALJ or MAC determines that the 
explanation provides good cause for filing the appeal late.
9. Adjudication Deadlines--ALJ Level (Sec.  405.1016)
    Section 1869(d)(1)(A) provides that unless the appellant waives the 
statutory adjudication deadline, the ALJ ``shall conduct and conclude a 
hearing on a decision of a [QIC]'' and issue a decision within 90 days 
from the date a request for hearing is timely filed. (Emphasis added.) 
We interpret this as requiring an ALJ to decide a case within 90 days 
only when the QIC has issued a final action in a case. Therefore, when 
an appellant escalates an appeal from the QIC to the ALJ level, the 
proceedings before the ALJ are not subject to the 90-day limit.
    We are also proposing to toll the 90-day adjudication deadline when 
an appellant's actions, including delays in submitting evidence or 
requests for postponement of a hearing, rather than the ALJ's actions, 
extend the length of the proceedings.
10. Remand Authority (Sec.  405.1034)
    Currently, the regulations governing Medicare appeals do not 
provide clear guidance concerning if and when an ALJ may remand a case 
to a contractor for further proceedings. We are proposing including 
regulations that would require or allow ALJs to remand to the QIC under 
certain circumstances. First, the regulations would allow an ALJ to 
review whether or not the QIC erred in dismissing a request for 
reconsideration and to remand the case to the QIC for a reconsideration 
determination if the dismissal was improper. The regulations would also 
require an ALJ to remand a case to the QIC for a new decision if the 
appellant submits new evidence to the ALJ without providing a good 
reason for not providing it at the QIC level. (If the ALJ determines 
that there is good cause for submitting the evidence to the ALJ, the 
ALJ will include the evidence in the administrative record and decide 
the case on that record.) As discussed previously, we believe that this 
requirement will encourage appellants to resolve appeals, if possible, 
at earlier and less costly steps of the appeals process. Moreover, 
since most Part A and B appeals pertain to services that have already 
been provided, most medical and other records relevant to the case 
should be available during the initial stages in the appeals process. 
Requiring earlier submission of evidence will also assist ALJs and the 
MAC to meet their adjudication deadlines, since it will reduce time 
consuming development of the record. However, because we recognize that 
the reason for denying a claim may be different at various steps of the 
appeals process, we would not require an ALJ to remand a case when an 
appellant submits evidence relevant to an issue that is first 
identified in the QIC's reconsideration determination.
    We would also permit an ALJ to remand the case to a QIC when the 
record lacks technical information material to resolution of the case 
that only the contractor, rather than a party, can provide. For 
example, it may be necessary to examine a contractor's payment history 
records in order to determine whether a supplier has filed a claim for 
durable medical equipment that has already been billed for by another 
supplier. Since such records would not ordinarily be in the possession 
of a party to the appeal, it may be necessary for the ALJ to remand the 
case to the QIC, if the initial contractor or the QIC has not included 
this information in the record submitted to the ALJ.
11. When May an ALJ Consolidate a Hearing? (Sec.  405.1044)
    This proposed rule does not alter the ALJ's ability to consolidate 
a hearing. However, we have added a provision requiring an ALJ to 
notify CMS of his or her intent to consolidate hearings (see Sec.  
405.1044(c)). We believe that that the consolidation of hearings may 
affect our decision on whether to participate or invoke party status.
12. When May an ALJ Dismiss a Request for Hearing? (Sec.  405.1052)
    CMS's current regulations do not address this issue; rather, ALJs 
follow the regulations at 20 CFR 404.957. These regulations were 
designed to resolve appeals filed by applicants for Social Security 
retirement and disability benefits. We are proposing new regulations 
that will address the specific procedural issues that arise in Medicare 
claims appeals.

a. Effect of the Death of the Beneficiary

    The current regulations do not give specific guidance to appellants 
or adjudicators concerning the effect of the death of a beneficiary on 
an appeal. We believe that the regulations should provide notice to 
appellants concerning what will happen to an appeal if the

[[Page 69334]]

beneficiary dies either before it is filed or while it is pending. The 
proposed provisions would identify those circumstances in which the 
appeal will continue to be adjudicated on the merits versus those that 
will be dismissed because there is no longer an interested party who 
may obtain relief.
    We are proposing to continue deciding appeals on the merits under 
the following circumstances.
    The appeal involves a claim for benefits under Part A or B in which 
the beneficiary obtained the service at issue and the beneficiary 
either paid for the service or has a spouse or estate who continues to 
be financially liable for the service. In this circumstance, the 
beneficiary's spouse or estate may continue to pursue the appeal.
    The appeal is filed by another party, including a provider of 
services or supplier, who continues to have a financial interest in the 
outcome of the appeal.
    The appeal involved a service (such as a skilled nursing facility 
stay) for which payment was made under waiver of liability, but for 
which the determination was construed as a notice of noncoverage to 
deny payment to the beneficiary for subsequent dates of service.
    The ALJ would dismiss, upon the beneficiary's death, other requests 
for hearing that do not meet the above criteria. For example, the ALJ 
could dismiss if the beneficiary or the beneficiary's representative 
filed the request for hearing but the beneficiary died before the 
hearing was held, and the beneficiary was not held liable for the 
services at issue in the QIC's reconsideration. The ALJ would not be 
required to inquire whether other potentially affected parties wish to 
continue the appeal unless they participated in the QIC review below. 
Similarly, a dismissal would occur if the supplier filed the request 
for hearing as the representative of the beneficiary, but did not have 
appeal rights on its own (because, for example, it did not take 
assignment) and the beneficiary died before the request for hearing was 
filed.

b. Requests for Withdrawal of a Request for Hearing

    SSA's regulations at 20 CFR 404.957 now provide that an ALJ may 
dismiss a request for hearing if the party that requested the hearing 
asks to withdraw the request. The request may be submitted in writing 
or made orally at the hearing. Guidelines issued by SSA's Office of 
Hearings and Appeals further instruct ALJs that the request must 
indicate that the party withdrawing the request for hearing is aware of 
the consequences of the withdrawal. Experience shows that some 
appellants are in fact unaware of the consequences; for example they 
may equate a request for withdrawal with a request for postponement of 
the case. In order to avoid unnecessary remands of these cases, we are 
adding a requirement that the request for withdrawal must contain a 
clear statement that the appellant is withdrawing the appeal and does 
not intend to further proceed with the appeal. If the request for 
withdrawal is filed by an attorney, or other legal professional on 
behalf of a beneficiary or other appellant, the ALJ may presume that 
the representative has advised the appellant of the consequences of the 
withdrawal and dismissal. (We note that most local rules governing the 
professional responsibility of attorneys would require that an attorney 
advise a client of the effects of withdrawing an appeal.)

c. Res Judicata

    SSA regulations at 20 CFR 404.957(c)(1) provide that an ALJ may 
dismiss a request for hearing based on the doctrine of res judicata. We 
are including this provision in our new regulations but clarifying that 
in the Medicare context the issue will most often occur when a party 
asks for another adjudication of a claim for the same date of service 
based on the same facts and evidence and the previous decision on the 
claim is either administratively or judicially final.

d. Abandonment

    Currently, an ALJ may dismiss a request for hearing if the 
appellant does not have a good reason for failing to appear at a 
scheduled hearing. We will continue to allow ALJs to dismiss a request 
for hearing for this reason. In addition, if the hearing is rescheduled 
because the ALJ finds that the appellant had a good reason for failing 
to appear, the number of days that expire between the first and second 
scheduled hearing will not be counted toward the 90-day time limit for 
deciding the case.

J. Review by the Medicare Appeals Council and Judicial Review 
(Sec. Sec.  405.1100-405.1140)

1. Introduction
    The component of the DAB that decides cases brought under section 
521 of BIPA is called the Medicare Appeals Council (MAC). Prior to this 
rulemaking, the MAC has considered requests for review of Medicare 
cases under the procedures used by the SSA's Appeals Council. Those 
regulations are found at 20 CFR 404.966 through 404.982. As with the 
ALJ regulations discussed above, we are now proposing to incorporate 
these procedures into 42 CFR of the Medicare regulations. These 
proposed regulations will incorporate the BIPA provisions governing MAC 
review and establish procedures that will meet the particular needs of 
the Medicare appeals process.
2. MAC Review of an ALJ's Action/De Novo Review (Sec.  405.1100)
    Under the current regulations, the MAC may deny or dismiss a 
request for review, or it may grant the request for review and either 
issue a decision or remand the case to an ALJ. The MAC may also review 
an ALJ's action in order to dismiss a request for hearing for any 
reason for which it could have been dismissed by the ALJ. (See Social 
Security Ruling 95-2c, 60 FR 31753 (June 16, 1985)).
    The MAC also has the authority to review an ALJ's action on its own 
motion, provided that it takes review of the case within 60 days after 
the date of the hearing decision or dismissal.
    In deciding whether to grant a request for review, the MAC 
considers whether: (1) There appears to be an abuse of discretion by 
the ALJ; (2) there is an error of law; (3) the actions, findings or 
conclusions of the ALJ are not supported by substantial evidence; or 
(4) there is a broad policy or procedural issue that may affect the 
general public interest. In addition, if new and material evidence is 
submitted that relates to the period on or before the date of the 
administrative law judge hearing decision the MAC will review the case 
if it finds that the administrative law judge's action, findings, or 
conclusion is contrary to the weight of the evidence currently of 
record. If the MAC denies review of an ALJ's decision, the ALJ's 
action, not the denial of review, is the final decision of the 
Secretary and is reviewable in federal district court on a substantial 
evidence standard.
    BIPA directs the MAC to apply a different standard when reviewing 
an ALJ's action. Section 1869(d)(2)(B) directs the MAC to conduct a de 
novo review of an ALJ's decision on a hearing. In addition, section 
1869(d)(3)(A) allows parties to request review by the MAC if an ALJ 
does not issue a decision within the 90-day adjudication period 
``notwithstanding any requirements for a hearing for purposes of the 
party's right to such a review.''
    We are proposing to effectuate the MAC's new review process as 
follows. The MAC may no longer consider ALJ decisions under a 
substantial evidence standard nor may it ``deny'' review.

[[Page 69335]]

Rather, it will review the ALJ's decision de novo. If a case requires 
additional development or proceedings at the ALJ level, the MAC will 
remand the case to the ALJ for further action. Otherwise, the MAC will 
communicate its final action on the case by issuing a final decision or 
order that adopts, modifies or reverses the ALJ's action, as 
appropriate.
    In addition to requiring any MAC review of an ALJ decision to be de 
novo, BIPA requires the MAC to complete its action on an ALJ decision 
within 90 days from the date the request for review is timely filed. In 
a previous section of this preamble, we have discussed the effect of 
these provisions on such questions as where and when a request for MAC 
review may be filed. We believe that the changes in the standard of 
review and the adjudication deadlines will require the following 
additional changes to the MAC's current procedures as well.
3. Escalation of an Appeal From the ALJ Level to the MAC (Sec. Sec.  
405.1104, 405.1106, and 405.1108)
    Section 1869(d)(3)(A) of the Act, as amended by BIPA, provides that 
if an ALJ does not issue a decision within the 90-day adjudication 
period, ``the party requesting the hearing may request a review by [the 
MAC], notwithstanding any requirements for a hearing for purposes of 
the [appellant's] right to such review.'' As we have explained 
elsewhere in this preamble, the MAC's consideration of an appeal when 
it is escalated from the ALJ to the MAC level is not subject to the 90-
day adjudication deadline. In addition, we interpret section 
1869(d)(3)(A) to mean that only the person or entity who requested the 
ALJ hearing may escalate the appeal to the MAC if the ALJ does not meet 
the 90-day adjudication deadline. Where CMS has entered into the case 
as a party, it may not seek escalation.
    Because the statute allows escalation for a MAC review 
``notwithstanding any requirements for a hearing,'' the MAC is not 
required to hold a hearing if the case is escalated to its level. The 
statute does not describe the type of review that the MAC will conduct 
when an appeal is escalated before an ALJ action is issued, or what 
actions the MAC may take upon its review in such circumstances. Because 
it is possible that the MAC will receive cases escalated both before 
and after an ALJ hearing has been scheduled or conducted, we believe 
that the MAC will need the same options for disposing of a case that it 
would have if in reviewing an ALJ's decision or dismissal order. 
Therefore, we are proposing that when the MAC reviews a case that is 
escalated from the ALJ level it may issue a decision, dismiss either 
the request for hearing or request for review on procedural grounds, 
or, if the administrative record is insufficient to take any of the 
above actions, remand the case to the ALJ for specific development and 
a decision. (We will also continue to allow the MAC to hold a hearing, 
if warranted.)
4. Own Motion Provisions (Sec.  405.1110)
    Under the current regulations, neither CMS nor its contractors are 
parties to appeals brought under 42 CFR 405, Subparts G and H. However, 
the regulations provide that in addition to deciding a case appealed by 
a beneficiary or other party, the MAC may decide on its own motion to 
review an ALJ's decision or dismissal anytime within 60 days after the 
date of the action (20 CFR 404.969). We refer to this as the MAC's own 
motion authority. The cases that the MAC reviews on its own motion are 
generally referred to it by CMS and its contractors.
    We believe that the MAC's own motion authority should be revised to 
better accommodate the other changes to the appeals process required by 
BIPA. Moreover, as discussed above, CMS and its contractors, including 
the QICs, will now have an opportunity to participate in the hearings 
and appeals process either as parties or not as parties. In keeping 
with our proposed policy, that when CMS acts as a party it has the same 
rights as any other party, CMS would have the right to MAC review, 
using the same procedures that any other party would use. However, we 
recognize that the statute's adjudication deadlines could impose 
significant challenges to the MAC to complete all of the cases appealed 
to them by beneficiaries, providers, suppliers, and other affected 
third parties in a timely manner. Therefore, we are proposing that when 
CMS is not acting as a party to the case, the MAC's own motion 
authority would be limited as follows.
    CMS and its contractors (hereafter: CMS) may refer ALJ decisions 
and dismissals to the MAC for own motion review when they participated 
(but did not act as a party) in the ALJ proceedings. When a case is 
referred in this circumstance, the MAC will accept the case for review 
if there is an error of law, an abuse of discretion, the decision is 
not consistent with the preponderance of the evidence or record, or 
there is a broad policy or procedural issue that may affect the general 
public interest. In deciding whether to accept review, the MAC will 
limit its consideration of the ALJ's action to those exceptions raised 
by CMS.
    CMS may also refer ALJ decisions and dismissals to the MAC for own 
motion review when it did not participate and did not act as a party in 
the proceedings below. When a case is referred in this circumstance, 
the MAC will accept the case for review if the decision or dismissal 
contains a clear error of law or presents a broad policy or procedural 
issue that may affect the general public interest. In deciding whether 
to accept review, the MAC will limit its consideration of the ALJ's 
action to those exceptions raised by CMS.
    Cases reviewed under the own motion authority would also be subject 
to the 90-day adjudication deadline. The deadline will begin when the 
MAC receives the referral from CMS or its contractors, unless the party 
who requested the ALJ hearing or another party to the hearing asks for 
an extension of time to respond to CMS's referral. The regulations will 
require that CMS send a copy of its own motion referral to all parties 
to the ALJ's action, as well as the ALJ.
5. New Requirement for Review Requests (Sec.  405.1112)
    The current regulations do not require appellants to include in 
their requests for review the specific reasons that they disagree with 
an ALJ's decision or dismissal. As a result, many of the requests for 
review state only general reasons for appealing, such as ``I disagree 
with the ALJ's decision'' or ``The decision is not supported by the 
evidence and is inconsistent with the law.'' Because these appeals do 
not identify any specific flaw in the decision, the MAC's consideration 
of the case is very time and labor intensive, including examination of 
aspects of the decision with which the party may not actually disagree. 
For example, if an ALJ's decision rules unfavorably on five claims, the 
party may only believe that the decision is wrong with respect to one 
claim rather than all five. However, because the current regulations do 
not require the party to state the reasons for appealing all claims 
that it believes were incorrectly decided, the MAC is obligated to 
consider whether all five claims were property decided.
    We believe that the MAC will not be able to conduct a de novo 
review of an ALJ's action within 90 days of the date the request for 
review is received unless parties requesting review provide more 
specific reasons for their disagreement with the ALJ's action. Because 
many beneficiaries have limited experience with the rules governing 
Medicare

[[Page 69336]]

coverage and payment policies, we do not propose requiring them to file 
specific exceptions with their requests for review unless they are 
represented by an attorney or other legal professional. Providers, 
suppliers, and CMS (when it has entered the case as a party) however, 
must not only be aware of Medicare coverage and payment policies in 
order to support their claims, but, by regulation, are presumed to have 
constructive notice of CMS notices, including manual issuances, 
bulletins, or other written guides and directives from Medicare 
contractors, as well as Federal Register publications containing notice 
of NCDs. See 42 CFR 411.406(e)(1) and (2). Therefore, we believe it is 
reasonable to require providers, suppliers, and CMS, as well as third-
party appellants such as Medicaid State agencies, to include in their 
request for review the specific reasons they disagree with an ALJ's 
action. In addition, we believe it is appropriate to extend this 
requirement to requests for review filed by attorneys or other legal 
professionals on behalf of a beneficiary or when a provider, supplier 
or third party files a request for review as the beneficiary's 
representative.
    In proposing this requirement, we wish to reassure parties that the 
purpose of requiring the exceptions is to enable the MAC to provide an 
efficient and focused review of those aspects of an ALJ's action with 
which the party disagrees. Because the MAC is concerned with the 
content rather than the form of the appeal, we would not require 
parties to file formal briefs or other pleadings. However, given the 
statutory limits, we believe that it is reasonable to require parties 
to state the basis for their disagreement with an ALJ's action and for 
the MAC to review de novo only those aspects of an ALJ's action with 
which the party disagrees. If a party other than an unrepresented 
beneficiary does not file any exceptions, the MAC will adopt the ALJ's 
action without comment, unless the ALJ's decision or dismissal contains 
on its face a clear error of law.
6. Discontinuation of Notice to Parties (Sec.  405.1128)
    The current regulations at 20 CFR 404.973 require that when the MAC 
decides to review a case, it sends a notice to all parties stating the 
reasons for review and the issues to be considered. In the context of 
Social Security appeals this regulation has been interpreted as 
requiring SSA's Appeals Council to give appellants advance notice and 
opportunity to comment on any proposed action that is not fully 
favorable to all appellants. The MAC presently follows this regulation 
as well.
    We do not believe, however, that it is possible or necessary to 
continue this practice under BIPA. When a party requests the MAC to 
review a case under BIPA, it is requesting the MAC to review the ALJ's 
action de novo; therefore, parties are on notice that the MAC's action, 
whether favorable or unfavorable, may differ considerably from the 
action being appealed. Since this regulation will also require CMS and 
its contractors to send a copy of own motion referrals to all parties, 
the parties to an own motion review will also be on notice that the MAC 
will be reviewing de novo those aspects of the case challenged by CMS, 
where CMS in not acting as a party, as applicable and will have the 
opportunity to file a reply with the MAC. We believe these procedures 
will satisfy due process while maintaining the MAC's ability to 
adjudicate appeals within 90 days. Therefore, the proposed regulations 
allow the MAC to adopt, modify, or reverse an ALJ's action without 
first providing notice and opportunity to comment on its proposed 
action (see Sec.  405.1128).
7. Judicial Review (Sec. Sec.  405.1136-405.1140)
    These actions of the proposed rule consolidate and generally mirror 
the existing regulations with respect to judicial review, now found in 
42 CFR 405.857, 20 CFR 404.983-404.984, and 20 CFR 422.210. The only 
substantive change is to provide that an appellant may request 
escalation to Federal district court if the MAC does not complete its 
review of an ALJ decision within the 90-day adjudication period, 
consistent with section 1869(d)(3)(B) of the Act.

J. Expedited Proceedings (Sec. Sec.  405.1200-405.1206)

1. Overview of the Statute
    Section 1869(b)(1)(F) provides for an expedited appeals process 
when a beneficiary receives notice from a provider of services that 
such provider plans to: (1) Terminate services provided to an 
individual and a physician certifies that failure to continue services 
is likely to place the beneficiary's health at risk; or (2) plans to 
discharge the individual from the provider of services. The statute 
mandates that the beneficiary who receives such notice may request an 
expedited determination. If he or she is dissatisfied with that 
determination, that beneficiary may request an expedited 
reconsideration determination by a QIC. Pursuant to sections 
1869(c)(3)(C)(iii) and 1869(c)(3)(C)(iv), the QIC must render a 
decision within 72 hours unless a beneficiary requests an extension. 
Section 1869(c)(3)(C)(iii)(III) also mandates that a reconsideration of 
a discharge from a hospital be conducted in accordance with section 
1154(e)(2)-(4).
    Historically, Medicare beneficiaries have had a right to an 
expedited review by a Quality Improvement Organization (QIO, formerly a 
Peer Review Organization) in situations where they disagreed with a 
hospital's decision to discharge them. However, in the other provider 
settings, in order for a beneficiary to access the Medicare appeals 
process, the individual must: (1) Continue to receive the services up 
to the date in which he or she believed his or her services should be 
covered; (2) request the provider of such disputed services to file the 
claim for payment; and (3) have that claim adjudicated by the Medicare 
contractor, that is, have the Medicare contractor issue its initial 
determination. Upon receipt, a beneficiary who was dissatisfied with 
the contractor's determination then could access the appeals process by 
requesting a ``Reconsideration'' within 60 days.
    Thus, the new BIPA provisions represent a significant change in the 
existing procedures available to beneficiaries to contest provider 
decisions to terminate care. Our proposals for implementing these 
changes are discussed below.
2. Expedited QIO Reviews (Sec. Sec.  405.1200(a)-(g))
    In Sec.  405.1200(a)(1), consistent with the traditional definition 
of provider at section 1861 of the Act, we propose that the term 
``providers'' used in Sec. Sec.  405.1200 and 405.1202 applies to the 
following: hospitals, critical access hospitals, home health agencies 
(HHAs), skilled nursing facilities (SNFs), and comprehensive outpatient 
rehabilitation facilities (CORFs). In proposed Sec.  405.1200(a)(2), we 
would establish that the scope of these provisions includes 
terminations of services furnished by a non-residential provider and 
the discharge of a beneficiary from a residential provider of services. 
This definition would not include reductions in an ongoing course of 
services.
    Consistent with the statute, proposed Sec.  405.1200(b) stipulates 
that in order for a beneficiary to request an expedited review: the 
beneficiary must have received notice that a provider intends to 
terminate services and a physician

[[Page 69337]]

must certify that termination of services is likely to place the 
beneficiary's health at significant risk; or the provider intends to 
discharge the beneficiary from a provider setting.
    We reviewed current notices provided to beneficiaries upon 
termination of services to determine if existing notices would serve 
the purposes of this section. We determined that the Advance 
Beneficiary Notice (ABNs) would meet this need. Before a provider may 
charge a beneficiary for services that could be covered under Medicare 
but are not covered in the beneficiary's instant case, CMS regulations 
implementing section 1879 of the Act require that a provider issue an 
advance written notice to the beneficiary that the provider does not 
expect Medicare to pay for those services (see Sec.  411.406). Such an 
advanced written notice explains that the provider does not expect that 
Medicare will pay and the provider's reason for that expectation. To 
comply with this existing section 1879 requirement, HHAs are issuing 
the HHABN (Home Health Advance Beneficiary Notice, form CMS-R-296); 
CORFs and hospices are issuing the ABN (Advance Beneficiary Notice, 
form CMS-R-131); and SNFs are using the SNF NONC (Skilled Nursing 
Facility Notice Of Non-Coverage). There is a similar notice requirement 
for inpatient hospitals.
    We believe that these existing ABNs are the appropriate vehicles to 
trigger expedited determination under section 1869 of the Act, because 
the provider may not charge the beneficiary for services for which 
Medicare does not pay unless an ABN was provided in advance of 
furnishing those services, and because an ABN, in the case of an 
impending termination of provider services, must include a termination 
date. We will revisit the content of these existing notices to conform 
with the requirements of this proposed rule and submit such notices for 
clearance to the Office of Management and Budget through the Paperwork 
Reduction Act process.
    We are not proposing any change in the timing of delivery of these 
existing notices. Although the inpatient hospital notice of noncoverage 
is already provided in a way that supports the unique beneficiary 
liability protections included in the current QIO process, the statute 
provides no parallel liability protections in the other provider 
settings. Therefore, we believe that the provision of the current 
advance beneficiary notices prior to termination will fulfill the 
intent of the statute. Note, however, that a provider's failure to 
issue an ABN does not eliminate a beneficiary's right to access the 
expedited appeals process. If, for example, a beneficiary files a 
request for an expedited determination following a verbal notification 
from a provider, the QIO must conduct its review as if a written notice 
had been given. In such a case, the beneficiary would not be 
responsible for the cost of care provided prior to the delivery of a 
valid advance beneficiary notice.
    Section 405.1200(b)(2) provides that if a beneficiary does not file 
a timely request for an expedited determination, the beneficiary may 
not later access this expedited review process. (Note that the 
regulations assume that QIOs would likely conduct these determinations. 
We believe QIOs are the appropriate entity to conduct these expedited 
reviews of provider terminations, given that they already have the 
professional medical capabilities to review such medical necessity 
cases and they are located in every State.) Proposed Sec.  405.1200(c) 
then establishes the procedures a beneficiary must follow in order to 
make a valid request for an expedited determination. In this section we 
give beneficiaries the option of making their request either in writing 
or by telephone no later than noon of the next day after receipt of the 
provider's notice. To be consistent with the deadline that QIOs are 
already familiar with, in regards to the current QIO review of 
inpatient hospital determinations (beneficiaries must request review of 
the hospital's decision no later than noon of the next working day), we 
have established that beneficiaries in these provider settings must 
request a review by noon. In order to facilitate a quick, accurate 
determination, we propose under Sec.  405.1200(c) that the requesting 
beneficiary or representative must be available to answer questions by 
the QIO, upon request.
    Section 405.1200(d) sets forth the procedures that the QIO must 
follow when it receives a beneficiary's request for an expedited 
review. Under this section, the QIOs must: notify the provider of the 
disputed services that a expedited review request has been made; 
request information such as medical records from the provider; examine 
the requested necessary medical information; solicit the views of the 
provider and the beneficiary; and make a decision within 72 hours after 
receipt of the request for the QIO expedited review and of the 
information requested from the provider. We would require that the 
provider submit the information requested by the QIO, no later than 
close of business on the day after the beneficiary request an expedited 
determination. Proposed Sec.  405.1200(e) then sets forth the 
notification requirements when a QIO has made its expedited 
determination. We are proposing that the QIO immediately notify the 
beneficiary, physician and provider of its expedited determination, 
first by telephone and then following up with a written notice that 
would explain the decision and inform the beneficiary of his or her 
appeal rights.
    Proposed Sec.  405.1200(f) provides that the QIO's expedited 
determination is binding upon the beneficiary and the provider of the 
disputed services or stay, absent a beneficiary's request for a QIC 
reconsideration. If a beneficiary misses the deadline for filing a 
request for an expedited QIC reconsideration, the beneficiary may 
request a QIC reconsideration under the general QIC Reconsideration 
process at Sec.  405.960 et. seq.
    Section 405.1200(g) discusses the financial liability aspects of 
the QIO expedited review process. In the inpatient hospital setting, 
when a beneficiary files for an immediate QIO review by noon of the 
next working day following receipt of the notice of termination, that 
beneficiary is not responsible for the additional costs of his or her 
stay while the review takes place. (See section 1154(e) of the Act.) 
This financial protection does not exist under the expedited review 
process for other providers. However, proposed Sec.  405.1200(g) 
provides that a provider cannot bill a beneficiary for the disputed 
stay or services until the beneficiary has received an expedited QIO 
determination; or if an expedited QIC reconsideration determination, if 
requested. In such situation, if the QIO determines that the services 
or stay in dispute were medically necessary, the beneficiary is not 
responsible for the services or stay, as stipulated by the QIO. 
However, if the QIO determines that the services or stay in dispute 
were not medically necessary, the beneficiary is responsible for 
services that extend beyond the appropriate covered services or stay, 
or as otherwise stated by the QIO.
3. Expedited QIC Reconsiderations (Sec.  405.1202)
    Proposed Sec.  405.1202(a) describes the appeals process for an 
expedited determination--the expedited QIC reconsideration. Under this 
section, we propose that, upon receipt of a QIO decision, if the 
beneficiary is dissatisfied and wants to appeal and receive a decision 
rendered expeditiously, that beneficiary may request an expedited QIC 
reconsideration. Section 405.1202(b)

[[Page 69338]]

provides that a beneficiary who desires an expedited QIC 
reconsideration must make that request no later than noon of the next 
calendar day following receipt of the QIO expedited determination. 
Consistent with the statute, this section also provides that a 
beneficiary or representative must be available to talk with the QIC 
about his or her case when the QIC calls to solicit the beneficiary's 
views.
    Section 405.1202(c) would set forth the procedures that the QIC 
must follow when conducting its expedited reconsideration. The steps 
that the QIC must follow are identical to those followed by the QIO 
except as noted below. Consistent with section 1869(c)(3)(iii), we have 
established that the QIC render a decision within 72 hours from receipt 
of the request for an expedited reconsideration and the requested 
information. In conjunction with this time frame, we would require that 
if a QIC does not render its decision 72 hours from receipt of the 
request and information, the QIC must inform the beneficiary of his or 
her right to have their case escalated to an ALJ; and we set forth the 
procedures that the beneficiary must follow. In such case, the QIC must 
immediately notify the provider that such action has been taken. At 
this point that provider may bill the beneficiary for the services or 
stay in dispute.
    Section 405.1202(d) proposes that the QIC issues a notice of its 
expedited reconsideration determination after it has notified the 
beneficiary, provider, and physician responsible for the beneficiary's 
care of its decision via telephone. The telephone notification must be 
followed by a written notice that includes the detailed rationale for 
the decision, a statement that explains the beneficiary's subsequent 
appeal rights (an ALJ Hearing), and the timeframe for filing for the 
ALJ hearing request. Section 405.1202(e) would establish that the QIC's 
reconsideration determination is binding in the beneficiary, subject to 
an ALJ hearing if the beneficiary is dissatisfied with the QIC's 
decision. There is no expedited ALJ Hearing. Therefore, such 
dissatisfied beneficiary will have to request an appeal in accordance 
with the normal ALJ hearing procedures.
    Proposed Sec.  405.1202(f) sets forth the coverage rules for 
beneficiaries during this review. The beneficiary may not be billed for 
the disputed services or stay until that beneficiary receives an 
expedited determination by the QIC. However, if the QIC does not render 
a decision within 72 hours of receipt of the information and the 
request, the provider may bill the beneficiary for the services or stay 
in dispute.
4. Special Rules for Inpatient Hospital Discharges (Sec. Sec.  405.1204 
and 405.1206)
    The proposed regulations for these sections are identical to the 
existing inpatient hospital rules for appealing inpatient hospital 
determinations with one exception. Upon receipt of a QIO determination, 
the next level of the appeals process would now be the expedited QIC 
reconsideration, if the beneficiary makes a timely request for 
expedited reconsideration and remains in the hospital. If the 
beneficiary is no longer an inpatient in the hospital, or fails to make 
a timely request for an expedited reconsideration, but is still 
dissatisfied with the QIO's determination, he or she retains the right 
to subsequently appeal that determination under the general QIC 
reconsideration rules.

III. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the DATES 
section of this preamble, and, if we proceed with a subsequent 
document, we will respond to the major comments in the preamble to that 
document.

IV. Information Collection Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
    [sbull] The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    [sbull] The accuracy of our estimate of the information collection 
burden.
    [sbull] The quality, utility, and clarity of the information to be 
collected.
    [sbull] Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    The PRA exempts the majority of the information collection 
activities referenced in this proposed rule. In particular, 5 CFR 
1320.4 excludes collection activities during the conduct of 
administrative actions such as redeterminations, reconsiderations, and/
or appeals. However, the information collection requirement associated 
with the initial request to seek a redetermination is subject to the 
PRA. Current supporting regulations set forth at Sec. Sec.  405.711 and 
405.807 outlining a request for redetermination are currently approved 
under the PRA. However, due to the revision/consolidation of the 
current redetermination regulations, we are requesting comment on the 
proposed requirement referenced below.

Section 405.940 Right to a Redetermination

    A person or entity that is a party to an initial determination as 
described under Sec.  405.920 et seq. and is dissatisfied with that 
determination may request a redetermination in accordance with Sec.  
405.942 through Sec.  405.946.
    The burden associated with this requirement is the time and effort 
necessary to request a redetermination that is in accordance with the 
requirements referenced in Sec.  405.942 through Sec.  405.946. Based 
upon current data, we estimate that contractors will process 6,800,000 
requests for Part B redeterminations and 60,000 for Part A on an annual 
basis and that it will require an average of 15 minutes to submit a 
request for a total burden of 1,715,000 annual burden hours.
    If you comment on these information collection and recordkeeping 
requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Attn.: John Burke, Attn: CMS-4004-P, 
Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn: Brenda Aguilar, CMS Desk Officer Attn: CMS-4004-P.

V. Regulatory Impact Analysis

A. Introduction

    We have examined the impact of this rule under the criteria of 
Executive Order 12866 (September 1993, Regulatory Planning and Review), 
section 1102(b) of the Social Security Act, the Regulatory Flexibility 
Act (RFA), Public Law 96-354, the Unfunded Mandates Reform Act of 1995, 
Public Law 104-4, and Executive Order 13132. Executive Order 12866

[[Page 69339]]

directs agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). A regulatory impact analysis (RIA) must be 
prepared for major rules with economically significant effects ($100 
million or more annually). Because Federal costs to implement this rule 
would exceed the $100 million threshold, this is a major rule. In 
compliance with Executive Order 12866, we have prepared the RIA below. 
In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.
    The RFA requires agencies, in issuing certain proposed rules, to 
analyze options for regulatory relief of small businesses. For purposes 
of the RFA, small entities include small businesses, nonprofit 
organizations and government agencies. Most hospitals and most other 
providers and suppliers are small entities, either by nonprofit status 
or by having revenues of $25 million or less annually. For purposes of 
the RFA, all providers and suppliers affected by this regulation are 
considered to be small entities. Individuals and States are not 
included in the definition of a small entity.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis for a proposed rule that may, if adopted, 
have a significant impact on the operations of a substantial number of 
small rural hospitals. This analysis must conform to the provisions of 
section 603 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 100 beds.
    We are not preparing analyses for either the RFA or section 1102(b) 
of the Act. We are uncertain how many small entities will be affected 
by this rule. The design and purpose of the proposed rule is to improve 
the accuracy and efficiency of the claims review and appeals process, 
we are confident that it will reduce rather than add burden on small 
entities. The impact on small rural hospitals is likely to be 
negligible or slightly positive. Therefore, we are certifying that the 
proposed rule will not have a significant impact on a substantial 
number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any proposed rule that would include any Federal mandate that 
may result in expenditure in any one year by State, local, or tribal 
governments, in the aggregate, or by the private sector, of $110 
million. This rule would not have such an effect on State, local, or 
tribal governments, or on the private sector.

B. Scope of the Proposed Changes

    As discussed in detail above in section II of this preamble, this 
proposed rule would establish new regulations concerning appeals 
procedures for Medicare claims determinations, consistent with section 
1869 of the Act as amended by section 521 of BIPA 2000. Among the 
significant changes required by the BIPA amendments are:
    [sbull] Establishing a uniform process for handling Medicare Part A 
and B appeals, including the introduction of a new level of appeal for 
Part A claims.
    [sbull] Revising the time frames for filing a request for a Part A 
and Part B appeal.
    [sbull] Imposing a 30-day time frame for redeterminations made by 
fiscal intermediaries and carriers.
    [sbull] Requiring the establishment of a new appeals entity, the 
qualified independent contractor (QIC), to conduct ``reconsiderations'' 
of contractors' initial determination 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 and allowing appellants to escalate a case to the next level of 
appeal if ALJs or the MAC do not meet their deadlines.
    [sbull] Imposing ``de novo'' review when the MAC reviews an ALJ 
decision made after a hearing.
    [sbull] Requiring 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.
    The proposed rule would not establish new rules, or alter existing 
rules, with respect to the substantive standards for determining 
whether a Medicare claim is payable. Claims that enter the 
administrative appeals process represent an extremely small portion of 
the total number of claims that Medicare processes each year. In FY 
2001, for example, Medicare contractors processed almost 932 million 
claims; of these only about 6 million were appealed. Thus, the number 
of Medicare claims that enter the administrative appeals system 
represents only about 0.6 percent of the total number of claims filed 
with Medicare. Moreover, the 6 million figure represents the total 
number of claims appealed, not the number of appellants. From our 
experience, the vast majority of appeal requests are filed by a 
relatively limited group of appellants. Therefore, the number of 
providers, physicians and other suppliers, as well as beneficiaries who 
enter the appeals process is far fewer than the 6 million claims that 
are appealed. Given the small percentage of claims and appellants 
involved in the administrative appeals process, we believe that this 
proposed rule would have little or no effect on most Medicare providers 
and suppliers. The changes set forth are even less likely to affect 
beneficiaries, whose appeals are estimated to constitute no more than 3 
to 5 percent of total appeals. As discussed in detail below, however, 
for those providers, suppliers, and beneficiaries who do file appeals 
of Medicare claim determinations, the effects of this proposed rule 
should be overwhelmingly positive.

C. Anticipated Effects on Providers, Physicians and Other Suppliers, 
and Beneficiaries

    We expect that the changes set forth in this proposed rule would 
produce substantial improvements in the accuracy and efficiency of the 
claims appeal process. For the most part, the anticipated positive 
impact of the proposed rule on providers, physicians and other 
suppliers would be similar to the anticipated effects on beneficiary 
appellants, although again the impact on the provider and supplier 
communities would be more pronounced due to their much greater 
likelihood to appeal a claim determination. We include a brief 
discussion of the anticipated impact of major changes below.
    In general, we do not anticipate that the introduction of these new 
appeals procedures would have a substantive impact on the actual 
results of claims appeals. That is, there is no reason to believe that 
the use of QICs, or other changes required by BIPA, would result in any 
change in the proportion of appeals that result in favorable decisions 
for providers, suppliers, or beneficiaries. We do believe though that 
the implementation of requirements that ensure appellants of both the 
fairness of the decision-making process and the accuracy and 
consistency of the decisions reached can eventually lead to

[[Page 69340]]

major reductions in the need for the elevation of appeals to the 
slower, more costly levels of the appeals system, such as ALJ hearings 
and DAB or Federal court review. We welcome comments on all aspects of 
this impact analysis.
    Most of the major changes set forth in this rule, such as the new 
time frames for appeals decisions, are mandated by the statute and thus 
not subject to the Secretary's discretion. To the extent that we have 
exercised discretion, such as in establishing procedures for conducting 
appeals, we have attempted to balance the need for accurate, 
expeditious appeals decisions with our responsibilities to implement 
these changes in a cost-effective manner.
    A discussion of the anticipated impacts of key provisions follows.
1. Decision Making Time Frames and Escalation
    Perhaps the most significant change set forth here is the reduction 
in mandatory time frames for issuing a decision on appeals at all 
levels. In general, this would mean faster receipt of decisions and, 
for favorable decisions, faster payment. For example, a provider who 
appealed a Part A claim determination in FY 2001 waited an average of 
64 days for an intermediary to make a decision on a reconsideration 
request, where under the proposed rule a decision on a Part A 
redetermination request must be made within 30 days of receipt of the 
request. If the decision is favorable (that is, the appeal results in a 
reversal of an initial determination that a claim could not be paid), 
effectuation of the favorable decision would be initiated as soon as a 
decision is reached. Given the reduced decision-making time frames, 
payments would be received substantially sooner than under the current 
system. Similarly, the time frame for a Part B fair hearing decision 
would be reduced from 120 days to 30 days, with concomitant fiscal 
advantages to successful appellants. These benefits to appellants would 
extend to all levels of the Medicare administrative appeals process.
    In addition to the new time frames for making decisions, the 
proposed rule would allow appellants the option of escalating an appeal 
to an ALJ if the QIC fails to make a decision timely. Escalation also 
would be available at the appellants' option from the ALJ level to the 
DAB if an ALJ fails to issue a hearing decision on a QIC decision 
within 90 days of a request for an appeal of a QIC reconsideration (or 
similarly from the DAB to Federal court). Clearly, these options would 
be a positive change for appellants, who have greater control of their 
appeals and a viable recourse during the appeals process if, during one 
stage of the appeals process, their appeal is not decided timely.

2. Review of Claims by a Panel of Health Care Professionals

    Another important change included in this proposed rule is the 
requirement that a QIC panel of physicians or other qualified health 
care professionals conduct reconsiderations when the initial 
determination being appealed involved a medical necessity issue. BIPA 
mandates that when an initial determination involves a finding on 
whether an item or service is reasonable and necessary for the 
diagnosis or treatment of an illness or injury, a QIC's reconsideration 
must be based on clinical experience and medical, technical, and 
scientific evidence to the extent applicable. We believe that this 
change would give appellants more confidence that a fair decision has 
been reached, potentially reducing their need to pursue subsequent 
appeals. We believe the introduction of physicians and other health 
care professionals into the appeals process would produce 
administrative finality at an earlier level of the process and benefit 
both appellants and the Medicare program.
3. Decision Letters and Documentation Requirements
    An important discretionary aspect of the proposed rule concerns the 
content of the notices sent to parties when a contractor upholds its 
initial determination. These requirements include a written summary of 
the rationale for the redetermination decision and the identification 
of any specific missing documentation that contributed to the decision 
to deny the claim in question. (Note that the statute establishes 
specific requirements for notices following QIC reconsiderations, but 
does not address the content of redetermination notices.) We believe 
that the proposed policies for more detailed decision notices would 
provide appellants with the information they need to build their case 
early in the appeals process. We believe the impact of this requirement 
would result in more accurate decisions at the QIC reconsideration 
level, based on all the appropriate medical information, rather than 
appeals often needing to be raised to an ALJ before needed 
documentation is produced. This will give beneficiaries, providers, and 
suppliers more detail about why their claim was denied and allow them 
to fashion their appeal accordingly.
    Since the appellant would be informed about specific documentation 
that is necessary to make a decision, the proposed rule also requires 
that such identified information be submitted with the next level 
appeal request. If the information is not submitted to the QIC, but 
instead surfaces later in the appeals process, the appellant would need 
to demonstrate good cause why the information was not submitted to the 
QIC. We believe the end result of these provisions would be that 
appeals are resolved at the earliest possible administrative level, 
which is a positive result for all appellants. As discussed in detail 
in section II.I.10 of the preamble, ALJs would have the authority to 
remand cases to a QIC when available evidence is not submitted timely.
4. Party Status
    In the current regulations, providers may appeal only in limited 
circumstances. In order to appeal in other circumstances, providers 
must act as an appointed representative of a beneficiary.
    In the proposed rule, we would permit participating providers to 
appeal to the same extent as beneficiaries or suppliers who take 
assignment. We believe this change would have several positive impacts 
on appellants. For example, it would eliminate any confusion providers 
may have in determining whether they have standing to appeal an initial 
determination, and it would remove the burden for the provider of 
obtaining an appointment of representative from a beneficiary. This 
should also eliminate confusion beneficiaries had in the past about why 
providers have sought to represent beneficiaries.

D. Effects on the Medicare Program

    In the final analysis, the primary financial impact of implementing 
these changes falls upon the government agencies responsible for 
conducting appeals, that is, CMS, SSA, and DHHS. Deciding appeals 
within shorter time frames and establishing new independent review 
entities to conduct these appeals entail significant new costs, as does 
the development of an appeals-specific data system to track the results 
of these appeals. Section 521 of BIPA not only mandated shorter 
decision-making time frames and other costly improvements to the 
already taxed Medicare appeals system, it also created additional 
opportunities and incentives for providers, suppliers, and 
beneficiaries to request appeals. Most significantly, the statute no 
longer provides for any minimum amount in controversy (AIC) below the 
ALJ level, and lowers the AIC from $500 to $100 for appealing a Part B 
claim determination to an ALJ. In addition, we

[[Page 69341]]

anticipate that the new decision-making time frames could make the 
appeals process more attractive to potential appellants who previously 
may have been dissuaded from appealing by the potential delays involved 
in obtaining a decision on their appeal. Thus, in order to forestall 
large increases in appeals volume at the higher levels of appeal, we 
have attempted to craft appeals rules that would ensure not only that 
appellants receive consistent and accurate decisions at the lowest 
possible appeals level, but also that appellants are made aware of the 
reasons for these decisions.
    Finally, we note that although the impact of these changes would be 
positive for the provider, physician, supplier, and beneficiary 
communities, implementing these procedures would generate substantial 
costs to the Medicare program. Our most recent estimate is that the 
changes required at the contractor and QIC level would cost at least 
$100 million, with additional costs to implement the necessary changes 
at the ALJ and DAB appeals level.

E. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. This rule would not have a substantial effect on State or 
local governments.
    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR chapter IV, part 405 as 
set forth below:

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

    1. The authority citation for part 405 continues to read as 
follows:

    Authority: Secs. 1102, 1861, 1862(a), 1869, 1871, 1874, 1881, 
and 1886(k) of the Social Security Act (42 U.S.C. 1302, 1395x, 
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 1395ww(k)), and sec. 
353 of the Public Health Service Act (42 U.S.C. 263a).

    2. Add a new subpart I, consisting of Sec.  405.900 through Sec.  
405.1206, to part 405 to read as follows:
Subpart I--Determinations, Redeterminations, Reconsiderations, and 
Appeals Under Original Medicare (Parts A and B)
Sec.
405.900 Basis and scope.
405.902 Definitions.
405.904 Medicare initial determinations, redeterminations and 
appeals: General description.
405.906 Parties to the initial determinations, redeterminations, and 
reconsiderations.
405.908 Medicaid State Agencies.
405.910 Appointed representatives.
405.912 Assignment of appeal rights.

Initial Determinations

405.920 Initial determinations and notice of initial determination.
405.922 Time frame for processing initial determinations.
405.924 Actions that are initial determinations.
405.926 Actions that are not initial determinations.
405.928 Effect of the initial determination.

Redeterminations

405.940 Right to a redetermination.
405.942 Time frame for filing a request for a redetermination.
405.944 Place and method of filing a request for a redetermination.
405.946 Evidence to be submitted with the redetermination request.
405.948 Conduct of a redetermination.
405.950 Time frame for making a redetermination decision.
405.952 Withdrawal or dismissal of a request for a redetermination.
405.954 Redetermination decision.
405.956 Notice of a redetermination decision.
405.958 Effect of a redetermination decision.

Reconsiderations

405.960 Right to a reconsideration.
405.962 Time frame for filing a request for a reconsideration.
405.964 Place and method of filing a request for a reconsideration.
405.966 Evidence to be submitted with the reconsideration request.
405.968 Conduct of a reconsideration.
405.970 Time frame for making a reconsideration decision.
405.972 Withdrawal or dismissal of a request for a reconsideration.
405.974 Reconsideration decision.
405.976 Notice of a reconsideration decision.
405.978 Effect of a reconsideration decision.

Reopenings

405.980 Reopenings of initial determinations, redeterminations, and 
reconsiderations, hearings and reviews.
405.982 Notice of a revised determination or decision.
405.984 Effect of a revised determination or decision.
405.986 Good cause for reopening.

Expedited Appeals Process

405.990 Expedited appeals process.
405.992 ALJ and MAC deference to policies not subject to the 
expedited appeals process.

ALJ Hearings

405.1000 Hearing before an ALJ: General rule.
405.1002 Right to ALJ hearing.
405.1004 Right to ALJ review of QIC dismissal.
405.1006 Amount in controversy required to request an ALJ hearing 
and judicial review.
405.1008 Parties to an ALJ hearing.
405.1010 When CMS or its contractors may participate in an ALJ 
hearing.
405.1012 When CMS or its contractors may be a party to a hearing.
405.1014 Request for an ALJ hearing.
405.1016 Requirement to decide appeal in 90 days.
405.1018 Submitting evidence before the ALJ hearing.
405.1020 Time and place for a hearing before an ALJ.
405.1022 Notice of a hearing before an ALJ.
405.1024 Objections to the issues.
405.1026 Disqualification of the ALJ.
405.1028 Prehearing case review of evidence submitted to the ALJ by 
the appellant.
405.1030 ALJ hearing procedures--General.
405.1032 Issues before an ALJ.
405.1034 When ALJ will remand to the QIC.
405.1036 Description of ALJ hearing process.
405.1038 Deciding a case without an oral hearing before an ALJ.
405.1040 Prehearing and posthearing conferences.
405.1042 When a record of a hearing before an ALJ is made.
405.1044 Consolidated hearing before an ALJ.
405.1046 The decision of an ALJ.
405.1048 The effect of an ALJ's decision.
405.1050 Removal of a hearing request from an ALJ to the MAC.
405.1052 Dismissal of a request for a hearing before an ALJ.
405.1054 Effect of dismissal of a request for a hearing before an 
ALJ.

Medicare Appeals Council Review

405.1100 Medicare Appeals Council review: General rule.
405.1102 Right to MAC review when ALJ issues decision.
405.1104 Right to MAC review when an ALJ does not issue a decision 
timely.
405.1106 Where a request for review or escalation may be filed.
405.1108 MAC actions when request for review or escalation is filed.
405.1110 MAC reviews on its own motion.
405.1112 Content of request for review.
405.1114 Dismissal of request for review.
405.1116 Effect of dismissal of request for MAC review or request 
for hearing.
405.1118 Obtaining evidence from MAC.
405.1120 Filing briefs with the MAC.
405.1122 What evidence may be submitted to the MAC.
405.1124 Oral argument.
405.1126 Case remanded by the MAC.
405.1128 Decision of the MAC.
405.1130 Effect of the MAC's decision.
405.1132 Request for escalation to Federal court.
405.1134 Extension of time to file action in Federal district court.
405.1136 Judicial review.
405.1138 Case remanded by a Federal court.

[[Page 69342]]

405.1140 MAC review of ALJ decision in a case remanded by a Federal 
court.

Expedited Determinations and Reconsiderations

405.1200 A beneficiary's right to an expedited determination.
405.1202 Right to an expedited reconsideration by a QIC.
405.1204 Expedited appeals of inpatient hospital discharges.
405.1206 Hospital requests expedited QIO review.

Subpart I--Determinations, Redeterminations, Reconsiderations, and 
Appeals Under Original Medicare (Parts A and B)


Sec.  405.900  Basis and scope.

    (a) Statutory basis. This subpart is based on the provisions of 
sections 1869(a) through (e) of the Act.
    (b) Scope. This subpart establishes the requirements for appeals of 
initial determinations with respect to benefits under Part A or Part B 
of Medicare, including the following:
    (1) The initial determination of whether an individual is entitled 
to benefits under Part A or Part B. (Regulations governing appeals of 
these initial determinations are found at 20 CFR part 404, subparts J 
and R).
    (2) The initial determination of the amount of benefits available 
to an individual under Part A or Part B.
    (3) Any other initial determination with respect to a claim for 
benefits under Part A or Part B, including an initial determination 
made by a qualified improvement organization under section 1154(a)(2) 
of the Act or by an entity under contract with the Secretary (other 
than a contract under section 1852 of the Act) to administer provisions 
of titles XVIII or XI.


Sec.  405.902  Definitions.

    For the purposes of this subpart, the term--
    ALJ stands for an Administrative Law Judge.
    Appellant means the beneficiary, assignee or other person or entity 
that has filed an appeal concerning a particular initial determination. 
Designation as an appellant does not in itself convey standing to 
appeal the determination in question.
    Assignee means a provider, physician, or other supplier who 
furnishes items or services to a beneficiary and who has accepted a 
valid assignment of appeal rights executed by the beneficiary.
    Assignment of appeal rights means the transfer by the assignor of 
his or her right to appeal an initial determination to the assignee.
    Assignor means a beneficiary whose provider of services, physician, 
or supplier has taken assignment of the right to appeal a claim.
    Clean claim means a claim that has no defect or impropriety 
(including any lack of required substantiating documentation) or 
particular circumstance requiring special treatment that prevents 
payment from being made on the claim under title XVIII of the Act.
    MAC stands for the Medicare Appeals Council within the Departmental 
Appeals Board of the Department of Health and Human Services.
    Party means an individual or entity listed in Sec.  405.906 that 
has standing to appeal an initial determination and/or a subsequent 
administrative appeal determination.
    Qualified Improvement Organization (QIO) means an entity that 
contracts with the Secretary in accordance with sections 1152 and 1153 
of the Act and 42 CFR chapter IV, subchapter F, to perform the 
functions described in section 1154 of the Act and 42 CFR chapter IV, 
subchapter F, including expedited determinations as described in Sec.  
405.1200 through Sec.  405.1206.
    Qualified Independent Contractor (QIC) means an entity that 
contracts with the Secretary in accordance with section 1869 of the Act 
to perform reconsiderations under Sec.  405.960 through Sec.  405.978.
    Remand means to vacate a lower level appeal decision and return the 
case to that level for a new decision.
    Vacate means to set aside a previous action.


Sec.  405.904  Medicare initial determinations, redeterminations and 
appeals: General description.

    (a) General overview. The Medicare contractor makes an initial 
determination when a claim for Medicare benefits under Part A or Part B 
is submitted. A beneficiary who is dissatisfied with the initial 
determination may request, and the contractor will perform, a 
redetermination of the claim. Following the contractor's 
redetermination, the beneficiary may obtain a reconsideration from the 
Qualified Independent Contractor (QIC). Following the reconsideration, 
the beneficiary may obtain a hearing before an Administrative Law Judge 
(ALJ) if the amount remaining in controversy is at least $100. If the 
beneficiary is dissatisfied with the decision of the ALJ, he or she may 
request the Medicare Appeals Council (MAC) to review the case. 
Following the action of the MAC, the beneficiary may file suit in 
Federal district court if the amount remaining in controversy is at 
least $1,000.
    (b) Non-beneficiary appellants. In general, the procedures 
described in paragraph (a) of this section are also available to an 
individual representing beneficiaries and to parties other than 
beneficiaries or their representatives, consistent with the 
requirements of this subpart I. However, a provider generally has the 
right to judicial review only as provided under section 1879(d) of the 
Act, that is, when a determination involves a finding that services are 
not covered because--
    (1) They were custodial care (Sec.  411.15(g) of this chapter); 
they were not reasonable and necessary (Sec.  411.14(k) of this 
chapter); they did not qualify as covered home health services because 
the beneficiary was not confined to the home or did not need skilled 
nursing care on an intermittent basis (Sec.  409.42(a) and (c)(1) of 
this chapter); or they were hospice services provided to a non-
terminally ill individual (Sec.  418.22 of this chapter); and
    (2) Either the provider or the beneficiary, or both, knew or could 
reasonably have been expected to know that those services were not 
covered under Medicare.


Sec.  405.906  Parties to the initial determinations, redeterminations, 
and reconsiderations.

    (a) The parties to the initial determination are the following 
individuals and entities:
    (1) A beneficiary who has filed a claim for payment or has had a 
claim for payment filed on his or her behalf, or in the case of a 
deceased beneficiary, or when there is no estate, any person obligated 
to make or entitled to receive payment in accordance with part 424, 
subpart E of this chapter. However, payment by a third party payer does 
not entitle that entity to party status.
    (2) A participating physician or other supplier who has filed a 
claim for items or services furnished to a beneficiary.
    (3) A provider of services who has filed a claim for items or 
services furnished to a beneficiary.
    (b) The parties to the redetermination, reconsideration, hearing, 
and MAC review are'
    (1) The parties to the initial determination in accordance with 
paragraph (a) of this section;
    (2) A Medicaid State Agency in accordance with Sec.  405.908; and
    (3) An assignee who has accepted an assignment of appeal rights 
from the beneficiary according to Sec.  405.912.
    (4) A non-participating physician or other supplier who has 
accepted assignment in accordance with Sec.  424.55 of this chapter.

[[Page 69343]]

    (5) A non-participating physician not billing on an assigned basis 
who, in accordance with section 1842(l) of the Act, is liable to refund 
monies collected for services furnished to the beneficiary because 
those services were denied on the basis of section 1862(a)(1) of the 
Act; and
    (6) A non-participating supplier not billing on an assigned basis 
who, in accordance with sections 1834(a)(18) and 1834(j)(4) of the Act, 
is liable to refund monies collected for items furnished to the 
beneficiary.


Sec.  405.908  Medicaid State Agencies.

    When a beneficiary is dually eligible for Medicare and Medicaid, 
the Medicaid State Agency may file a request for an appeal on behalf of 
the beneficiary. A Medicaid State Agency will only be considered a 
party when it files a timely redetermination request on behalf of a 
beneficiary in accordance with 42 CFR parts 940 through 958. If a 
Medicaid State Agency files a redetermination, it retains party status 
at the QIC, ALJ, MAC, and judicial review levels.


Sec.  405.910  Appointed representatives.

    The requirements of this section apply for purposes of all 
administrative actions described in this subpart, subsequent to an 
initial determination.
    (a) Representative defined. A representative means an individual 
authorized by a party, or under State law, to act on the party's behalf 
in dealing with any of the levels of the appeals process under this 
subpart. Representatives do not have party status and may only take 
action on behalf of the individual or entity they represent.
    (b) Persons authorized by a party. A party to an initial 
determination, redetermination, reconsideration, or hearing may appoint 
another individual to act on the party's behalf in exercising the right 
to appeal. A representative may be any individual, or individual 
associated with an entity, that is competent to act on behalf of the 
party.
    (c) Persons unauthorized. A party may not name as a representative 
an individual or entity that has been disqualified, suspended, or 
otherwise prohibited by law, from participating in the Medicare 
program.
    (d) Making out a valid appointment. For purposes of this subpart, 
an appointment of representation must--
    (1) Be in writing and signed by both the party and individual 
agreeing to the representation.
    (2) Provide a statement authorizing the representative to act on 
behalf of the party;
    (3) Include a written explanation of the purpose and scope of the 
representation;
    (4) Contain both the party's and representative's name, phone 
number, and address;
    (5) Identify the beneficiary's health insurance claim number;
    (6) Include the representative's professional status or 
relationship to the party; and
    (7) Be filed with the entity processing the party's appeal.
    (e) Duration of appointment. (1) Unless revoked, an appointment is 
valid for the life of an individual's appeal of an initial 
determination.
    (2) For purposes of initiation of appeals of other initial 
determinations, the authorization will be considered valid for 1 year 
from its original effectuation.
    (f) Representative fees.
    (1) Attorneys. No award of attorney fees may be made against the 
Medicare trust fund.
    (2) Providers and suppliers. A provider or supplier that furnished 
items or services to a beneficiary may represent that beneficiary in an 
appeal under this subpart. That provider or supplier may not charge the 
beneficiary any fee associated with the representation. In addition, 
where a provider or supplier furnishes services or items to a 
beneficiary, the provider or supplier may not represent the beneficiary 
with respect to the issue described in section 1879(a)(2) of the Act 
(that is, whether the beneficiary or the provider or supplier, or both, 
knew or could reasonably have been expected to know that payment would 
not be made for the items or services), unless the provider or supplier 
waives the right to payment from the beneficiary with respect to` the 
services or items involved in the appeal.
    (g) Responsibilities of a representative. (1) A representative has 
an affirmative duty to--
    (i) Inform the party of how the duty is served;
    (ii) Inform the party of the status of the appeal and the results 
of actions taken on behalf of the party, including, but not limited to, 
notification of appeal determinations, decisions, and further appeal 
rights;
    (iii) Disclose any beneficiary financial risk and liability of a 
non-assigned claim;
    (iv) Not act contrary to the interest of the party; and
    (v) Comply with all CMS regulations, rules, and instructions.
    (2) An appeal request filed by a provider or supplier acting as a 
representative of a beneficiary will also include a statement signed by 
the provider or supplier stating that no financial liability will be 
imposed on the beneficiary in connection with that representation.
    (h) Authority of a representative. A representative may, on behalf 
of the party--
    (1) Obtain information about the claim to the same extent as the 
party;
    (2) Submit evidence;
    (3) Make statements about facts and law; and
    (4) Make any request, or give, or receive, any notice about the 
appeal proceedings.
    (i) Notice or request to a representative. A contractor, QIC, ALJ, 
or the MAC will send the representative--
    (i) Notice and a copy of any administrative action, determination, 
or decision; and
    (ii) Requests for information or evidence.
    (j) Effect of notice or request to a representative. A notice or 
request sent to the representative will have the same force and effect 
as if it had been sent to the party.
    (k) Representative payee. An appointed representative may not serve 
as a representative payee unless the appointed representative has 
satisfied the requirements under title II of the Act.
    (l) Information available to the representative. The appointed 
representative may obtain any and all information that is available to 
the party, applicable to the claim at issue. The representative may not 
disclose to any one unaffiliated with the appeals process any 
information about a claim without the party's written consent, except 
as may be required by law, ordered by a court, or other such authority.
    (m) Delegation of appointment by representative. An appointed 
representative may not designate another individual to act as the 
representative of the party unless--
    (1) The representative provides written notice to the party of the 
representative's intent to delegate to another individual. The notice 
must include--
    (i) The name of the designee; and
    (ii) The designee's acceptance to be obligated and comply with the 
requirements of authorized representation.
    (2) The beneficiary accepts the designation as evidenced by a 
signed, written statement.
    (n) Revoking the appointment of representative. (1) A party may 
revoke an appointment of representative without cause at any time.

[[Page 69344]]

    (2) Revocation is not effective until the entity processing the 
appeal receives a signed, written statement from the party.
    (3) The death of the party will terminate the authority of the 
representative. A party's death does not terminate an appeal that is in 
progress where another individual or entity may be entitled to receive 
or obligated to make payment for Medicare claims.


Sec.  405.912  Assignment of appeal rights.

    (a) Assignment of appeal rights defined. Assignment of appeal 
rights means the transfer by a beneficiary of his or her right to 
appeal an initial determination to a provider or supplier.
    (b) Who may be an assignee. A provider of service, physician, or 
other supplier who is not considered a party to the initial 
determination as defined in Sec.  405.906 and who furnished an item or 
service to a beneficiary may seek assignment from the beneficiary for 
that item or service.
    (c) Who may not be an assignee. An individual or entity who is not 
a provider of service, physician, or other supplier may not be an 
assignee. A provider of service, physician, or other supplier who 
furnishes an item or service to a beneficiary may not seek assignment 
for that item or service when considered a party to the initial 
determination as defined in Sec.  405.906.
    (d) Requirements for a valid assignment of appeal right. The 
assignment of appeal rights must--
    (1) Be executed using a CMS standard form;
    (2) Be in writing and signed by both the beneficiary assigning his 
or her appeal rights and by the assignee;
    (3) Indicate the item or service for which the assignment of appeal 
rights is authorized;
    (4) Contain a waiver of the assignee's right to collect payment 
from the assignor; and
    (5) Be submitted at the same time the request for redetermination 
or appeal is filed.
    (e) Waiver of right to collect payment. (1) The assignee must waive 
the right to collect payment for the item or service for which the 
assignment is made. If the assignment is revoked under paragraph (h)(2) 
of this section, then the waiver of the right to collect payment 
remains valid.
    (2) The assignee is not prohibited from recovering payment 
associated with coinsurance or deductibles or when an advance 
beneficiary notice has been properly executed.
    (f) Duration of a valid assignment of appeal rights. The assignment 
of appeal rights is valid for all administrative and judicial review 
associated with the item or service as indicated on the standard CMS 
form, unless the assignment is revoked.
    (g) Rights of the assignee. When a valid assignment of appeal 
rights is executed, the assignor transfers all appeal rights to the 
assignee. These include, but are not limited to--
    (1) Obtaining information about the claim to the same extent as the 
assignor;
    (2) Submitting evidence;
    (3) Making statements about facts or law; and
    (4) Making any request, or giving, or receiving any notice about 
appeal proceedings.
    (h) Revocation of assignment. When an assignment of appeal rights 
is revoked, the rights to appeal revert to the beneficiary. An 
assignment of appeal rights may be revoked in any of the following 
ways:
    (1) In writing by the assignor.
    (2) By abandonment if the assignee does not file an appeal of an 
unfavorable decision.
    (3) By act or omission that is determined by an adjudicator to be 
contrary to the financial interests of the beneficiary.

Initial Determinations


Sec.  405.920  Initial determinations and notice of initial 
determination.

    After a claim is filed with the appropriate contractor in the 
manner and form described in part 424, subpart C of this chapter, the 
contractor--
    (a) Determines whether the items and services furnished are covered 
under title XVIII of the Act;
    (b) Determines any amounts payable and makes payment accordingly; 
and
    (c) Notifies the parties to the initial determination of the 
determination.
    (1) The notice must be in writing and sent to the last known 
address of all parties.
    (2) The notice will state the basis for the determination and 
inform the parties of their right to a redetermination if they are 
dissatisfied with the outcome of the initial determination.


Sec.  405.922  Time frame for processing initial determinations.

    The contractor will issue initial determinations on clean claims 
within 30 days of receipt if they are submitted by or on behalf of the 
individual who received the items and/or services; otherwise, interest 
must be paid at the rate used for purposes of 31 U.S.C. 3902(a) 
(relating to interest penalties for failure to make prompt payments) 
for the period beginning on the day after the required payment date and 
ending on the date payment is made. The contractor will issue initial 
determinations on all other claims within 45 days of receipt.


Sec.  405.924  Actions that are initial determinations.

    (a) Applications and entitlement of individuals. The SSA makes an 
initial determination with respect to an individual on the following:
    (1) A determination with respect to entitlement to hospital 
insurance or supplementary medical insurance under Medicare.
    (2) A disallowance of an individual's application for entitlement 
to hospital or supplementary medical insurance, if the individual fails 
to submit evidence requested by SSA to support the application. (SSA 
will specify in the initial determination the conditions of entitlement 
that the applicant failed to establish by not submitting the requested 
evidence).
    (3) A denial of a request for withdrawal of an application for 
hospital or supplementary medical insurance.
    (4) A denial of a request for cancellation of a ``request for 
withdrawal.''
    (5) A determination as to whether an individual, previously 
determined to be entitled to hospital or supplementary medical 
insurance, is no longer entitled to those benefits, including a 
determination based on nonpayment of premiums.
    (b) Claims made by beneficiaries by or on behalf of beneficiaries. 
The contractor makes an initial determination regarding claims for 
benefits under Medicare Part A and Part B. The contractor does not make 
an initial determination on requests for payment that do not meet the 
requirements of a claim. An initial determination for purposes of this 
subpart includes, but is not limited to, determinations with respect 
to--
    (1) Whether the items and/or services furnished are covered under 
title XVIII of the Act;
    (2) In the case of determinations on the basis of section 1879(b) 
or (c) of the Act, whether the beneficiary, provider, physician, or 
supplier who accepts assignment under Sec.  424.55 of this chapter 
knew, or could reasonably have been expected to know at the time the 
services were furnished, that the services were not covered;
    (3) In the case of determinations on the basis of section 
1842(l)(1) of the Act, whether the beneficiary or physician knew, or 
could reasonably have been expected to know at the time the

[[Page 69345]]

services were furnished, that the services were not covered;
    (4) Whether the deductible has been met;
    (5) The computation of the coinsurance amount;
    (6) The number of days used for inpatient hospital, psychiatric 
hospital, or post-hospital extended care;
    (7) The number of home health visits used;
    (8) Periods of hospice care used;
    (9) Requirements for certification and plan of treatment for 
physician services, durable medical equipment, therapies, inpatient 
hospitalization, skilled nursing care, home health, hospice, and 
partial hospitalization services;
    (10) The beginning and ending of a spell of illness, including a 
determination made under the presumptions established under Sec.  
409.60(c)(2) of this chapter, and as specified in Sec.  409.60(c)(4) of 
this chapter;
    (11) Determinations regarding the medical necessity of services, or 
the reasonableness or appropriateness of placement of an individual at 
an acute level of patient care made by the Qualified Improvement 
Organization (QIO) on behalf of the contractor in accordance with Sec.  
476.86(c)(1) of this chapter;
    (12) Determinations regarding whether a claim was timely filed;
    (13) Any other issues having a present or potential effect on the 
amount of benefits to be paid under Part A or Part B of Medicare, 
including a determination as to whether there has been an overpayment 
or underpayment of benefits paid under Part A or Part B, and if so, the 
amount thereof;
    (14) Whether a waiver of adjustment or recovery under sections 
1870(b) and (c) of the Act is appropriate when an overpayment of 
hospital insurance benefits or supplementary medical insurance benefits 
(including a payment under section 1814(e) of the Act) has been made 
with respect to an individual.
    (15) Determinations that a particular claim is not payable by 
Medicare based upon the application of the Medicare Secondary Payer 
provisions of section 1862(b) of the Act.
    (16) Determinations under the Medicare Secondary Payer provisions 
of sections 1862(b) of the Act that Medicare has a recovery claim 
against a provider, physician, supplier, or beneficiary with respect to 
services or items that have already been paid by the Medicare program 
except when the recovery claim against the provider, physician, or 
supplier is based upon its failure to file a proper claim as defined in 
part 411 of this chapter.
    (c) Determinations by QIOs. An initial determination for purposes 
of this subpart also includes a determination made by a QIO that:
    (1) A provider can terminate services provided to an individual 
when a physician certified that failure to continue the provision of 
those services is likely to place the individual's health at 
significant risk; or
    (2) A provider can discharge an individual from the provider of 
services.


Sec.  405.926  Actions that are not initial determinations.

    Actions that are not initial determinations and are not appealable 
under this subpart include, but are not limited to--
    (a) Any determination for which CMS has sole responsibility, for 
example, whether an entity meets the conditions for participation in 
the program, whether an independent laboratory meets the conditions for 
coverage of services;
    (b) The coinsurance amounts prescribed by regulation for outpatient 
services under the prospective payment system;
    (c) Any issue regarding amount of program reimbursement or cost 
report settlement process under Part A of Medicare;
    (d) Whether an individual's appeal meets the qualifications for an 
expedited appeal provided in Sec.  405.990;
    (e) Any determination regarding whether a Medicare overpayment 
claim should be compromised, or collection action terminated or 
suspended under the Federal Claims Collection Act of 1966;
    (f) Determinations regarding the transfer or discharge of residents 
of skilled nursing facilities in accordance with Sec.  483.12 of this 
chapter;
    (g) Determinations regarding the readmission screening and annual 
resident review processes required by part 483, subparts C and E of 
this chapter;
    (h) Determinations with respect to a waiver of Medicare Secondary 
Payer recovery under section 1862(b) of the Act, because that recovery 
would defeat the purposes of the Act, or would be against equity and 
good conscience under section 1870(c) of the Act.
    (i) Determinations with respect to a waiver of interest;
    (j) Determinations with respect to a finding regarding Medicare 
Secondary Payer applicability other than with respect to a specific 
claim when the initial determination on that claim for beneficiary or 
Medicare's recovery claim is being appealed;
    (k) Determinations under the Medicare Secondary Payer provisions of 
section 1862(b) of the Act that Medicare has a recovery claim against a 
third party payer with respect to services or items that have already 
been paid by the Medicare program; and
    (l) A contractor's, QIC's, ALJ's, or MAC's decision not to reopen 
an initial determination, redetermination, reconsideration hearing 
decision, or review decision.
    (m) Determinations that CMS or its contractors may participate in 
or act as parties in an ALJ hearing or MAC review.


Sec.  405.928  Effect of the initial determination.

    (a) An initial determination under Sec.  405.924(a) involving 
applications and entitlement of individuals to supplementary medical 
insurance under Part B or hospital insurance under Part A will be 
binding upon the individual (or the representative of the estate of a 
deceased beneficiary) unless it is revised or reconsidered in 
accordance with 20 CFR 404.907.
    (b) The initial determination under Sec.  405.924(b) will be 
binding upon all parties to the initial determination unless--
    (1) A redetermination is completed in accordance with Sec.  405.940 
through Sec.  405.958; or
    (2) The initial determination is revised as a result of a reopening 
in accordance with Sec.  405.980.

Redeterminations


Sec.  405.940  Right to a redetermination.

    A person or entity that is a party to an initial determination made 
by a contractor as described under Sec.  405.920 through Sec.  405.928 
and is dissatisfied with that determination may request a 
redetermination by a contractor in accordance with Sec.  405.940 
through Sec.  405.958, regardless of the amount in controversy.


Sec.  405.942  Time frame for filing a request for a redetermination.

    (a) Time frame for filing a request. Except as provided in 
paragraph (b) of this section, a party to an initial determination must 
file a request for redetermination that meets the requirements of Sec.  
405.944 within 120 calendar days from the date the party receives the 
notice of the initial determination.
    (1) For the purposes of this section, the date of receipt of the 
initial determination will be presumed to be 5 days after the date of 
the notice of initial determination, unless there is evidence to the 
contrary.

[[Page 69346]]

    (2) The request is considered as filed on the date it is received 
by the contractor, SSA office, or CMS.
    (b) Extending the time frame for filing a request: General rule. If 
the 120-day period in which to file a request for a redetermination has 
expired and a party shows good cause, the contractor may extend the 
time frame for filing a request for redetermination.
    (1) How to request an extension. A party to the initial 
determination may file a request for an extension of time for filing 
the redetermination with the contractor. The request for 
redetermination extension must--
    (i) Be in writing;
    (ii) State why the request for redetermination was not filed within 
the required time frame; and
    (iii) Meet the requirements of Sec.  405.944.
    (2) How the contractor determines whether good cause exists. In 
determining whether a party has good cause for missing a deadline to 
request a redetermination or reconsideration the contractor considers--
    (i) What circumstances kept the party from making the request on 
time;
    (ii) Whether the contractor's action(s) misled the party; and
    (iii) Whether the party had any physical, mental, educational, or 
linguistic limitations, including any lack of facility with the English 
language, that prevented the party from filing a timely request or from 
understanding or knowing about the need to file a timely request for 
redetermination.
    (3) Examples of good cause. Examples of circumstances when good 
cause may be found to exist include, but are not limited to, the 
following situations:
    (i) The party was prevented by serious illness from contacting the 
contractor in person, in writing, or through a friend, relative, or 
other person; or
    (ii) The party had a death or serious illness in his or her 
immediate family; or
    (iii) Important records of the party were destroyed or damaged by 
fire or other accidental cause; or
    (iv) The contractor gave the party incorrect or incomplete 
information about when and how to request a redetermination; or
    (v) The party did not receive notice of the determination or 
decision; or
    (vi) The party sent the request to another Government agency in 
good faith within the time limit, and the request did not reach the 
appropriate contractor until after the time period to file a 
redetermination expired.


Sec.  405.944  Place and method of filing a request for a 
redetermination.

    (a) Filing location. The request for redetermination must be filed 
with the contractor indicated on the notice of initial determination. 
Appellants may also file requests for redetermination with SSA offices 
or CMS.
    (b) Content of redetermination request. The request for 
redetermination must be in writing on a standard CMS form. A written 
request that is not made on a standard CMS form will be accepted if it 
contains the same required elements as follows:
    (1) The beneficiary's name;
    (2) The health insurance claim number;
    (3) The specific service(s) and/or item(s) for which the 
redetermination is being requested and the specific date(s) of the 
service; and
    (4) The name and signature of the party or the appointed 
representative of the party.
    (c) Requests for redetermination by more than one party. If more 
than one party timely files a request for redetermination on the same 
claim, the contractor will consolidate the separate requests into one 
proceeding and issue one redetermination decision.


Sec.  405.946  Evidence to be submitted with the redetermination 
request.

    (a) Evidence submitted with the request. When filing the request 
for redetermination, a party must explain why it disagrees with the 
contractor's determination and include any evidence that the party 
believes should be considered by the contractor in making its 
redetermination.
    (b) Evidence submitted after the request. When a party submits 
additional evidence after filing the request for redetermination, the 
contractor's 30-day decision-making time frame will automatically be 
extended for 14 calendar days.


Sec.  405.948  Conduct of a redetermination.

    A redetermination consists of an independent review of an initial 
determination. In conducting a redetermination, the contractor will 
review the evidence and findings upon which the initial determination 
was based, and any additional evidence the parties submit or the 
contractor obtains on its own. A redetermination must be made by an 
individual who was not involved in making the initial determination.


Sec.  405.950  Time frame for making a redetermination decision.

    (a) General rule. The contractor will mail, or otherwise transmit, 
written notice of the redetermination decision or dismissal to the 
parties at their last known addresses within 30 calendar days of the 
date the contractor receives a timely filed request for 
redetermination.
    (b) Exceptions. (1) If a timely request for redetermination is 
filed with an entity other than the contractor, then the 30-day 
decision-making time frame begins on the date that request is received 
by the contractor.
    (2) If a contractor grants an appellant's request for an extension 
of the 120-day filing deadline made in accordance with Sec.  
405.942(b), the 30-day decision-making time frame begins on the date 
the contractor receives the late-filed request for redetermination, or 
the extension, whichever is later
    (3) If a contractor receives from multiple parties timely requests 
for redetermination of a claim determination, consistent with Sec.  
405.944(c), the contractor must issue a redetermination decision or 
dismissal within 30 days of the latest filed request.
    (4) If a party submits additional evidence after the request for 
redetermination has been filed, the contractor's 30-day decision-making 
time frame will be extended for 14 days, consistent with Sec.  
405.946(b).


Sec.  405.952  Withdrawal or dismissal of a request for a 
redetermination.

    (a) Withdrawing a request. A party that files a request for 
redetermination may withdraw his or her request by filing a written and 
signed request for withdrawal. The request must be filed with the 
contractor, within 14 calendar days of the filing of the 
redetermination request.
    (b) Dismissing a request. A contractor will dismiss a 
redetermination request, either entirely or as to any stated issue, 
under any of the following circumstances:
    (1) When the person or entity requesting a redetermination is not a 
proper party under Sec.  405.906 or does not otherwise have a right to 
a redetermination under section 1869(a) of the Act;
    (2) When the contractor determines the party failed to make out a 
valid request for redetermination that substantially complies with 
Sec.  405.944;
    (3) When the party fails to file the redetermination request within 
the proper filing timeframe in accordance with Sec.  405.942;
    (4) When the party that filed the request for redetermination dies 
and there is no information in the record to determine whether there is 
another

[[Page 69347]]

party that may be prejudiced by the determination;
    (5) When the party filing for the redetermination submits a timely 
written request of withdrawal with the contractor; or
    (6) When the contractor has not issued an initial determination on 
the claim for which a redetermination is sought.
    (c) Notice of dismissal. A contractor will mail or otherwise 
transmit a written notice of the dismissal of the redetermination 
request to the parties at their last known addresses.
    (d) Vacating a dismissal. If good and sufficient cause is 
established, a contractor may vacate a dismissal of a request for 
redetermination within 6 months from the date of the notice of 
dismissal.
    (e) Effect of dismissal. The dismissal of a request for 
redetermination is binding, unless it is appealed to a QIC under Sec.  
405.974(b) or vacated under paragraph (d) of this section.


Sec.  405.954  Redetermination decision.

    Upon the basis of the evidence of record, the contractor will make 
a decision on the claim(s), and/or issue(s), in dispute and, issue a 
redetermination decision affirming or reversing, in whole or in part, 
the initial determination in question.


Sec.  405.956  Notice of a redetermination decision.

    (a) Notification to parties. Written notice of the redetermination 
decision must be mailed or otherwise transmitted to all parties at 
their last known addresses in accordance with the timeframes 
established in Sec.  405.950.
    (b) Content of the notice. For decisions that are affirmations, in 
whole or in part, of the initial determination, the redetermination 
must be in writing and contain--
    (1) A clear statement indicating the extent to which the 
redetermination decision is favorable or unfavorable;
    (2) A summary of the facts;
    (3) An explanation of how pertinent laws, regulations, coverage 
rules, and CMS policies apply to the facts of the case;
    (4) A summary of the rationale for the redetermination decision in 
clear, understandable language;
    (5) Notification to the parties of their right to a reconsideration 
and a description of the procedures that a party must follow in order 
to request a reconsideration, including the time frame within which a 
reconsideration must be requested;
    (6) A statement of any specific missing documentation that must be 
submitted with a request for a reconsideration, if applicable;
    (7) A statement that if the specific documentation indicated under 
paragraph (b)(6) of this section is not submitted with the request for 
a reconsideration, this evidence will not be considered at an ALJ 
hearing, unless the appellant demonstrates good cause as to why that 
evidence was not provided previously; and
    (8) Any other requirements specified by CMS.


Sec.  405.958  Effect of a redetermination decision.

    Once a redetermination decision is issued, it becomes part of the 
initial determination. The redetermination decision is final and 
binding upon all parties unless--
    (a) A reconsideration decision is issued under a request for 
reconsideration in accordance with Sec.  405.962 and Sec.  405.964; or
    (b) The redetermination decision is revised as a result of a 
reopening in accordance with Sec.  405.980.

Reconsiderations


Sec.  405.960  Right to a reconsideration.

    A person or entity that is a party to a redetermination made by a 
contractor as described under Sec.  405.940 through Sec.  405.958 and 
is dissatisfied with that determination may request a reconsideration 
by a QIC in accordance with Sec.  405.962 through Sec.  405.966, 
regardless of the amount in controversy.


Sec.  405.962  Time frame for filing a request for a reconsideration.

    (a) Time frame for filing a request. Except as provided in 
paragraph (b) of this section, a party to a redetermination must file a 
request for a reconsideration that meets the requirements of Sec.  
405.964 within 180 calendar days from the date the party receives the 
notice of the redetermination decision.
    (1) For the purposes of this section, the date of receipt of the 
notice of the redetermination decision will be presumed to be 5 days 
after the date of the notice of redetermination, unless there is 
evidence to the contrary.
    (2) The request is considered as filed on the date it is received 
by the QIC, or by an SSA office, or CMS.
    (b) Extending the time for filing a request.--General rule. If the 
180-day period in which to file a request for a reconsideration has 
expired and a party shows good cause, the QIC may extend the time frame 
for filing a request for reconsideration.
    (1) How to request an extension. A party to the redetermination may 
file a request for an extension of the time for filing the 
reconsideration with the QIC. The request for reconsideration and 
request for extension must--
    (i) Be in writing;
    (ii) State why the request for reconsideration was not filed within 
the required time frame; and
    (iii) Meet the requirements of Sec.  405.964.
    (2) How the QIC determines whether good cause exists. In 
determining whether a party has good cause for missing a deadline to 
request a reconsideration, the QIC will apply the good cause provisions 
contained in Sec.  405.942(b)(2) and (b)(3).


Sec.  405.964  Place and method of filing a request for a 
reconsideration.

    (a) Filing location. The request for reconsideration must be filed 
with the QIC indicated on the notice of redetermination. Appellants may 
also file requests for reconsideration with SSA offices or CMS.
    (b) Content of reconsideration request. The request for 
reconsideration must be in writing on a standard CMS form. A request 
that is not made on a standard CMS form will be accepted if it contains 
the same required elements, as follows:
    (1) The beneficiary's name;
    (2) Health insurance claim number;
    (3) The specific service(s) and/or item(s) for which the 
reconsideration is being requested and the specific date(s) of service; 
and
    (4) The name and signature of the party or the appointed 
representative of the party.
    (c) Requests for reconsideration by more than one party. If more 
than one party timely files a request for reconsideration on the same 
claim, the QIC will consolidate the separate requests into one 
proceeding and issue one reconsideration decision.


Sec.  405.966  Evidence to be submitted with the reconsideration 
request.

    (a) Evidence submitted with the request. When filing a request for 
reconsideration, a party should present evidence and allegations of 
fact or law related to the issue in dispute and explain why it 
disagrees with the redetermination decision.
    (1) This evidence must include any missing documentation identified 
in the notice of redetermination, consistent with Sec.  405.956(b)(6).
    (2) Absent good cause, failure to submit documentation requested in 
the notice of the redetermination precludes consideration of that 
evidence at the subsequent appeal level.
    (b) Evidence submitted after the request. When a party submits 
additional evidence after filing the

[[Page 69348]]

request for reconsideration, the QIC's 30-day decision-making time 
frame will automatically be extended for 14 calendar days.


Sec.  405.968  Conduct of a reconsideration.

    (a) General rule. A reconsideration consists of an independent, on-
the-record review of an initial determination, including the 
redetermination. In conducting a reconsideration, the QIC will review 
the evidence and findings upon which the initial determination, 
including the redetermination, was based, and any additional evidence 
the parties submit, or the QIC obtains on its own. If the initial 
determination involves a finding on whether an item or service is 
reasonable and necessary for the diagnosis or treatment of illness or 
injury (under section 1862(a)(1)(A) of the Act), a QIC's 
reconsideration must be based on the clinical experience, and medical, 
technical, and scientific evidence of record to the extent applicable.
    (b) Authority of the QIC. (1) National coverage determinations 
(NCDs) will bind the QIC with respect to issuing reconsiderations.
    (2) Local coverage determinations (LCDs) and local medical review 
policies (LMRPs) will not bind the QIC with respect to issuing 
reconsiderations.
    (3) A QIC must follow LCDs, LMRPs, and CMS program guidance, such 
as program memoranda and manual instructions unless the appellant 
questions the policy and provides a reason why the policy should not be 
followed that the QIC finds persuasive. A QIC's decision must explain 
why it agrees or disagrees with the appellant's rationale for not 
following the policy in question.
    (c) Qualifications of the QIC's reviewers. (1) Members of a QIC's 
panel who conduct reconsiderations must have sufficient training and 
expertise in medical science and/or legal matters.
    (2) When a redetermination is made with respect to whether an item 
or service is reasonable and necessary for the diagnosis or treatment 
of an illness or injury (section 1862(a)(1)(A) of the Act), the QIC 
designates a panel of physicians or other appropriate health care 
professionals to consider the facts and circumstances of the 
redetermination.
    (d) Disqualification of a QIC reviewer. No physician or health care 
professional employed by a QIC may review determinations regarding--
    (1) Health care services furnished to a patient if the physician or 
health care professional was directly responsible for furnishing those 
services; or
    (2) Health care services provided in or by an institution, 
organization, or agency, if the physician or health care professional 
or any member of the physician's family or health care professional's 
family has, directly, or indirectly, a significant financial interest 
in that institution, organization, or agency. Family means the spouse 
(other than a spouse who is legally separated from the physician or 
health care professional under a decree of divorce or separate 
maintenance), children (including stepchildren and legally adopted 
children), grandchildren, parents, and grandparents of the physician or 
health care professional.


Sec.  405.970  Time frame for making a reconsideration decision.

    (a) General rule. Within 30 calendar days of the date the QIC 
receives a timely filed request for reconsideration, the QIC will mail 
to the parties at their last know addresses, or otherwise transmit, 
written notice of--
    (1) The reconsideration decision;
    (2) Its inability to complete its review within 30 days in 
accordance with paragraphs (c) through (e) of this section; or
    (3) Dismissal.
    (b) Exceptions. (1) If a timely request for reconsideration is 
filed with an entity other than the QIC, then the 30-day decision-
making time frame begins on the date the request is received by the 
QIC.
    (2) If a QIC grants an appellant's request for an extension of the 
180-day filing deadline made in accordance with Sec.  405.962(b), the 
QIC's 30-day decision-making time frame begins on the date the QIC 
receives the request for an extension.
    (3) If a QIC receives timely requests from multiple parties for a 
reconsideration, consistent with Sec.  405.964(c), the QIC must issue a 
reconsideration decision, dismissal, or notice that it cannot complete 
its review within 30 days of the latest filed request.
    (4) If a party submits additional evidence after the request for 
reconsideration has been filed, the QIC's 30-day decision-making time 
frame will be extended for 14 days, consistent with Sec.  405.966(b).
    (c) Responsibilities of the QIC. (1) Within 30 days of receiving a 
request for a reconsideration, or any additional time provided for 
under paragraph (b) of this section, a QIC must take one of the 
following actions:
    (i) Notify all parties of the QIC's reconsideration decision, 
consistent with Sec.  405.976.
    (ii) Notify all parties that it cannot complete the reconsideration 
within 30 days and offer the appellant the opportunity to escalate the 
appeal to an ALJ. The QIC continues to process the reconsideration 
unless it receives a written request from the appellant to escalate the 
case to an ALJ.
    (iii) Notify all parties that it has dismissed the request for 
reconsideration.
    (d) Responsibilities of the appellant. If an appellant wishes to 
exercise the option of escalating the case to an ALJ, the appellant 
must notify the QIC in writing.
    (e) Actions following appellant's notice. (1) If the appellant 
fails to notify the QIC, or notifies the QIC that the appellant does 
not choose to escalate the case, the QIC completes its reconsideration 
and notifies the appellant of its action consistent with Sec.  405.976.
    (2) If the appellant notifies the QIC that the appellant wishes to 
escalate the case, the QIC must take one of the following actions 
within 5 days of receipt of the request:
    (i) Complete its reconsideration and notify all parties of its 
decision consistent with Sec.  405.976.
    (ii) Acknowledge the escalation request in writing to all parties 
and forward the case file to the ALJ.


Sec.  405.972  Withdrawal or dismissal of a request for a 
reconsideration.

    (a) Withdrawing a request. A party that files a request for 
reconsideration may withdraw its request by filing a written and signed 
request for withdrawal. The request must be filed with the QIC within 
14 calendar days of the filing of the reconsideration request.
    (b) Dismissing a request. A QIC will dismiss a reconsideration 
request, either entirely or as to any stated issue, under any of the 
following circumstances:
    (1) When the person or entity requesting a reconsideration is not a 
proper party under Sec.  405.906 or does not otherwise have a right to 
a reconsideration under section 1869(b) of the Act;
    (2) When the QIC determines that the party fails to make out a 
valid request for reconsideration that substantially complies with 
Sec.  405.964(a);
    (3) When the party fails to file the reconsideration request within 
the proper filing time frame in accordance with Sec.  405.970(a);
    (4) When the party that filed the request for reconsideration 
request dies and there is no information in the record to determine 
whether there is another party that may be prejudiced by the 
reconsideration;

[[Page 69349]]

    (5) When the party filing for the reconsideration submits a written 
request of withdrawal to the QIC; or
    (6) When the contractor has not issued a redetermination decision 
on the claim for which a reconsideration is sought.
    (c) Notice of dismissal. A contractor will mail or otherwise 
transmit written notice of the dismissal of the reconsideration request 
to the parties at their last known addresses.
    (d) Vacating a dismissal. If good and sufficient cause is 
established, a QIC may vacate a dismissal of a request for 
reconsideration within 6 months of the date of the notice of dismissal.
    (e) Effect of dismissal. The dismissal of a request for 
reconsideration is binding, unless it is appealed to an ALJ under Sec.  
405.1004 or vacated under paragraph (d) of this section.


Sec.  405.974  Reconsideration decision.

    (a) Reconsideration of a contractor determination. Upon the basis 
of the evidence of record, the QIC shall make a decision on the claims 
and/or issues in dispute and issue a reconsideration decision affirming 
or reversing, in whole or in part, the initial determination in 
question.
    (b) Reconsideration of contractor's dismissal of a redetermination 
request. (1) A party to a contractor's dismissal of a request for 
redetermination has a right to have the dismissal reviewed by a QIC, if 
the party files a written request for review of the dismissal with the 
QIC within 60 days after receipt of the contractor's notice of 
dismissal.
    (2) If the QIC determines that the contractor's dismissal was in 
error, it will remand the case to the contractor for a redetermination 
decision.
    (3) A QIC's decision with respect to a contractor's dismissal of a 
redetermination request is final and not appealable to an ALJ.


Sec.  405.976  Notice of a reconsideration decision.

    (a) Notification to parties. Written notice of the reconsideration 
decision must be mailed or otherwise transmitted to all parties at 
their last known addresses, in accordance with the time frames 
established in Sec.  405.970(a). The QIC also must promptly notify the 
entity responsible for payment of claims under Part A or Part B of its 
reconsideration decision.
    (b) Content of the notice. The reconsideration decision must be in 
writing and contain--
    (1) A clear statement indicating whether the reconsideration 
decision is favorable or unfavorable;
    (2) A summary of the facts;
    (3) An explanation of how pertinent laws, regulations, coverage 
rules, and CMS policies, apply to the facts of the case, including the 
rationale for any conflict with an LCD, LMRP, or CMS program guidance;
    (4) In the case of a determination on whether an item or service is 
reasonable or necessary for the diagnosis or treatment of an illness or 
injury, an explanation of the medical and scientific rationale for the 
decision;
    (5) A clear statement of the QIC's rationale for its 
reconsideration decision. If the notice of redetermination indicates 
that specific documentation be submitted with the reconsideration 
request, and this documentation was not submitted with the request for 
reconsideration the statement must--
    (i) Indicate how the missing documentation affected the 
reconsideration decision; and
    (ii) Specify that consistent with Sec.  405.956(b)(7), if the 
documentation requested in the notice of redetermination decision was 
not submitted with the reconsideration request, this evidence will not 
be considered at an ALJ hearing, or made part of the administrative 
record, unless the appellant demonstrates good cause as to why the 
documentation was not provided with the reconsideration request;
    (6) Advice to the parties of their right to an ALJ hearing, 
including the applicable amount in controversy requirement and 
aggregation provision;
    (7) If appropriate, advice as to the requirements for use of the 
expedited appeals process set forth in Sec.  405.990;
    (8) A description of the procedures that a party must follow in 
order to obtain an ALJ hearing or an expedited appeal, including the 
time frames under which a request for an ALJ hearing or expedited 
appeal must be filed; and
    (9) Any other requirements specified by CMS.


Sec.  405.978  Effect of a reconsideration decision.

    A reconsidered determination is final and binding on all parties, 
unless--
    (a) An ALJ decision is issued under either a request for an ALJ 
hearing made in accordance with Sec.  405.1014 or a request for an 
expedited appeal under Sec.  405.990; or
    (b) The reconsideration decision is revised as a result of a 
reopening in accordance with Sec.  405.980.

Reopenings


Sec.  405.980  Reopenings of initial determinations, redeterminations, 
and reconsiderations, hearings and reviews.

    (a) General rules. (1) A reopening is a remedial action taken to 
change a final determination or decision even though the determination 
or decision may have been correct based on the evidence of record. That 
action may be taken by--
    (i) A contractor to revise the initial determination or 
redetermination;
    (ii) A QIC to revise the reconsideration;
    (iii) An ALJ to revise the hearing decision; or
    (iv) The MAC to revise the review decision.
    (2) A reopening of an initial determination or redetermination may 
be granted when the following conditions are met:
    (i) When good cause is shown as defined in Sec.  405.896; and
    (ii) If the time limit to file an appeal has expired; or
    (iii) If the issue does not involve a clerical error and appeal 
rights have been exhausted.
    (3) If a contractor issues a denial because it did not receive 
requested documentation during medical review and the party 
subsequently requests a redetermination, the contractor must process 
the request as a reopening.
    (4) Notwithstanding paragraph (a)(5) of this section, a contractor 
must process clerical errors as reopenings, instead of redeterminations 
as defined in Sec.  405.940. For purposes of this section, ``clerical 
error'' includes human and mechanical errors on the part of the party 
or the contractor such as--
    (i) Mathematical or computational mistakes; or
    (ii) Inaccurate data entry.
    (5) When a party has filed a request for an appeal of an initial 
determination, redetermination, reconsideration, or hearing, the 
contractor, QIC, or ALJ no longer has jurisdiction over the claim or 
appeal and may not reopen it.
    (6) The contractor's, QIC's, ALJ's, or MAC's decision on whether to 
reopen is final and not subject to appeal.
    (7) A Medicare secondary payer recovery claim based upon a 
provider's or supplier's failure to demonstrate that it filed a proper 
claim as defined in part 411 of this chapter is a reopening.
    (b) Time frames and requirements for reopening initial 
determinations and redeterminations initiated by a contractor. A 
contractor may reopen and revise its initial determination or 
redetermination decision on its own motion--

[[Page 69350]]

    (1) Within 1 year from the date of the initial determination or 
redetermination for any reason.
    (2) Within 4 years from the date of its initial determination or 
redetermination for good cause as defined in Sec.  405.986.
    (3) Within 5 years from the date of the initial determination or 
redetermination on the claim if--
    (i) The contractor discovers a pattern of billing errors; or
    (ii) The contractor identifies an overpayment extrapolated from a 
statistical sample.
    (4) At any time if there exists reliable evidence that an initial 
determination was procured by fraud or similar fault. For the purposes 
of this section:
    (i) ``Reliable evidence'' means evidence that is relevant, 
credible, and material.
    (ii) ``Similar fault'' means to obtain, retain, convert, seek, or 
receive Medicare funds to which a person knows or should reasonably be 
expected to know that he or she or another for whose benefit Medicare 
funds are obtained, retained, converted, sought, or received is not 
legally entitled. This includes, but is not limited to, a failure to 
demonstrate that it filed a proper claim as defined in part 411 of this 
chapter.
    (c) Time frame and requirements for reopening initial 
determinations and redeterminations requested by a party. (1) A party 
may request that a contractor reopen its initial determination or 
redetermination within 1 year from the date of the initial 
determination or redetermination for any reason.
    (2) A party may request that a contractor reopen its initial 
determination or redetermination within 4 years from the date of the 
initial determination or redetermination for good cause in accordance 
with Sec.  405.986.
    (d) Time frame and requirements for reopening reconsiderations, 
hearing decisions and reviews initiated by a QIC, ALJ, or the MAC. (1) 
A QIC may reopen its reconsideration decision on its own motion within 
180 days from the date of the reconsideration decision for good cause 
in accordance with Sec.  405.986.
    (2) An ALJ may reopen its reconsideration decision on its own 
motion within 180 days from the date of the reconsideration decision 
for good cause in accordance with Sec.  405.986.
    (3) The MAC may reopen its review decision on its own motion within 
180 days from the date of the review decision for good cause in 
accordance with Sec.  405.986.
    (e) Time frames and requirements for reopening reconsiderations, 
hearing decisions, and reviews requested by a party. (1) A party to a 
reconsideration may request that a QIC reopen its reconsideration 
within 180 days from the date of the reconsideration decision for good 
cause in accordance with Sec.  405.986.
    (2) A party to a hearing may request that an ALJ reopen its 
decision within 180 days from the date of the hearing decision for good 
cause in accordance with Sec.  405.986.
    (3) A party to a review may request that the MAC reopen its 
decision within 180 days from the date of the review decision for good 
cause in accordance with Sec.  405.986.


Sec.  405.982  Notice of a revised determination or decision.

    When any determination or decision is reopened and revised as 
provided in Sec.  405.980, the contractor, QIC, ALJ, or the MAC must 
mail its revised determination or decision to the parties to that 
determination or decision at their last known address. The revised 
determination or decision must state the rationale and basis for the 
revision and any right to appeal.


Sec.  405.984  Effect of a revised determination or decision.

    (a) Initial determinations. The revision of an initial 
determination will be binding upon all parties unless a party files a 
written request for a redetermination in accordance with Sec.  405.942 
through Sec.  405.946.
    (b) Redeterminations. The revision of a redetermination will be 
binding upon all parties unless a party files a written request for a 
QIC reconsideration in accordance with Sec.  405.962 through Sec.  
405.966.
    (c) Reconsiderations. The revision of a reconsideration decision 
will be binding upon all parties unless a party files a written request 
for an ALJ hearing in accordance with Sec.  405.1014.
    (d) ALJ Hearing decisions. The revision of a hearing decision will 
be binding upon all parties unless a party files a written request for 
a MAC review and the request is accepted in accordance with Sec.  
405.1110.
    (e) MAC review. The revision of a MAC review will be binding upon 
all parties unless a party files an action in Federal district court.
    (f) Appeal of only the portion of the determination modified by the 
reopening. Only the portion of the initial determination, 
redetermination, reconsideration, or hearing decision modified by the 
reopening may be subsequently appealed.


Sec.  405.986  Good cause for reopening.

    (a) Establishing good cause. A party, contractor, QIC, ALJ, or MAC 
must establish good cause for a reopening. Good cause may be 
established when--
    (1) There is new and material evidence that--
    (i) Was not available or known at the time of the determination or 
decision; and
    (ii) May result in a different conclusion; or
    (2) The evidence that was considered in making the determination or 
decision clearly shows on its face that an obvious error existed at the 
time the determination or decision was made.
    (b) Change in substantive law or interpretative policy. A 
contractor or QIC will not find good cause to reopen a claim or appeal 
if the only reason for reopening is a change resulting from a judicial 
decision, legal interpretation, or administrative ruling upon which the 
determination or decision was made.

Expedited Appeals Process


Sec.  405.990  Expedited appeals process.

    (a) Conditions for use of expedited appeals process (EAP). A party 
may use the EAP to request court review in place of an ALJ hearing or 
Medicare Appeals Council (MAC) review if the following conditions are 
met:
    (1) A QIC has made a reconsideration determination; an ALJ has made 
a hearing decision; or MAC review has been requested, but a final 
decision of the MAC has not been issued.
    (2) The requestor is a party, as defined in paragraph (d) of this 
section.
    (3) The party has filed a request for an ALJ hearing in accordance 
with Sec.  405.1002, or MAC review in accordance with Sec.  405.1102.
    (4) The amount remaining in controversy is $1,000 or more.
    (5) If there is more than one party to the reconsideration 
determination, hearing decision, or MAC review, each party concurs, in 
writing, with the request for the EAP.
    (b) Content of the request for EAP. The request for the EAP must--
    (1) Allege that there are no material issues of fact in dispute; 
and
    (2) Assert that the only factor precluding a decision favorable to 
the requestor is a statutory provision that is unconstitutional or a 
regulation, national coverage determination, or a CMS Ruling that is 
invalid.
    (c) Place and time for requesting an EAP. (1) Method and place for 
filing request. The requestor may include an EAP request in his or her 
request for an ALJ hearing or MAC review, as applicable, or, if an 
appeal is already

[[Page 69351]]

pending with an ALJ or the MAC, file a written EAP request with the 
hearing or MAC office where the appeal is being considered.
    (2) Time of filing request. The party may file a request for the 
EAP--
    (i) If the party has requested a hearing, at any time before 
receipt of the notice of the ALJ's decision; or
    (ii) If the party has requested MAC review, at any time before 
receipt of notice of the MAC's decision.
    (d) Parties to the EAP. The parties to the EAP are the persons or 
entities who were parties to the QIC's reconsideration determination 
and, if applicable, to the ALJ hearing.
    (e) Determination on request for EAP. (1) For EAP requests 
initiated at the ALJ level, an ALJ determines whether all conditions of 
paragraphs (a) and (b) of this section are met.
    (2) If a hearing decision has been issued, the MAC determines 
whether all conditions of paragraphs (a) and (b) of this section are 
met.
    (f) Certification for the EAP. If the party meets the requirements 
for the EAP, the ALJ or the MAC, as appropriate, certifies in writing 
that--
    (1) The facts involved in the claim are not in dispute;
    (2) Except as indicated in paragraph (f)(3) of this section, CMS's 
interpretation of the law is not in dispute;
    (3) The sole issue(s) in dispute is the constitutionality of a 
statutory provision or the validity of a regulation, CMS Ruling, or 
national coverage determination;
    (4) Except for the provision challenged, the right(s) of the 
requestor is established; and
    (5) The decision made by the ALJ or MAC is final for purposes of 
seeking judicial review.
    (g) Effect of ALJ or MAC certification. (1) Following the issuance 
of the certification described in paragraph (f) of this section, the 
party waives completion of the remaining steps of the administrative 
appeals process.
    (2) The 60-day period for filing a civil suit in a Federal district 
court begins on the date of receipt of the ALJ or MAC certification.
    (h) Effect of a request for EAP that does not result in 
certification. If a request for the EAP does not meet all the 
conditions for use of the process, the ALJ or MAC so advises the party 
and treats the request as a request for hearing or MAC review, as 
appropriate.


Sec.  405.992  ALJ and MAC deference to policies not subject to the 
expedited appeals process.

    (a) In general, an ALJ or the MAC gives deference to an LCD, LMRP, 
or CMS program guidance, such as program memoranda and manual 
instructions.
    (b) A party may request that an ALJ or the MAC disregard an LCD, 
LMRP, or CMS program guidance. The party's request should explain why 
the policy should not be followed.
    (c) The ALJ or MAC may disregard the policy in question if it finds 
the party's rationale for why the policy should not be followed to be 
persuasive, finds that the policy has been applied incorrectly, or 
finds for other reason that the policy is invalid for purposes of the 
party's appeal.

ALJ Hearings


Sec.  405.1000  Hearing before an ALJ: General rule.

    If a party is dissatisfied with a QIC's reconsideration or if the 
adjudication period for the QIC to complete its reconsideration has 
elapsed, the party may request a hearing. A hearing may be conducted 
in-person, by videoconference, or by telephone. At the hearing the 
parties may submit new evidence (subject to the restrictions in Sec.  
405.1018 and Sec.  405.1028), examine the evidence used in making the 
determination under review, and present and question witnesses. In some 
circumstances, a representative of CMS or its contractor, including the 
QIC, fiscal intermediary or carrier, hereafter in these regulations 
``CMS or its contractor,'' may be present. See Sec.  405.1010 and Sec.  
405.1012. The ALJ will issue a decision based on the hearing record. If 
all parties to the hearing waive their right to appear at the hearing 
in person or by telephone or videoconference, the ALJ will make a 
decision based on the evidence that is in the file and any new evidence 
that may have been submitted for consideration. If the ALJ determines 
that it is necessary to obtain testimony from a non-party, he or she 
may hold a hearing to obtain that testimony, even if all of the parties 
have waived the right to appear. In that event, however, the ALJ will 
notify the parties that he is holding the hearing in their absence.


Sec.  405.1002  Right to ALJ hearing.

    (a) A party to a QIC reconsideration may request a hearing before 
an ALJ if--
    (1) The party files a written request for an ALJ hearing within 60 
days after receipt of the notice of the QIC's reconsideration; and
    (2) The amount remaining in controversy after the QIC's 
reconsideration is $100 or more; or
    (b) A party who files a timely appeal before a QIC and whose appeal 
continues to be pending before a QIC at the end of the period described 
in Sec.  405.970 has a right to a hearing before an ALJ if--
    (1) The party files a written request with the QIC to escalate the 
appeal to the ALJ level after the period described in Sec.  405.970 has 
expired and the party files the request within the time frame included 
in Sec.  405.970(d);
    (2) The QIC does not issue a final action within 5 days of 
receiving the request for escalation; and
    (3) The amount remaining in controversy after the redetermination 
was $100 or more.


Sec.  405.1004  Right to ALJ review of QIC dismissal.

    (a) A party to a QIC's dismissal of the request for reconsideration 
has a right to have the dismissal reviewed by an ALJ if--
    (1) The party files a written request for an ALJ review within 60 
days after receipt of the notice of the QIC's dismissal; and
    (2) The amount in controversy is $100 or more.
    (b) If the ALJ determines that the QIC's dismissal was in error, he 
or she will remand the case to the QIC for a reconsideration 
determination.


Sec.  405.1006  Amount in controversy required to request an ALJ 
hearing and judicial review.

    To be entitled to a hearing before an ALJ following a 
reconsideration by a QIC, the amount remaining in controversy must be 
$100 or more, and for judicial review, following the ALJ hearing and 
MAC review, the amount remaining in controversy must be $1,000 or more.
    (a) The following rules describe how the amount in controversy is 
calculated and how individual and multiple appellants may combine 
claims to meet the minimum amount in controversy needed for an ALJ 
hearing ($100).
    (b) Calculating the amount in controversy. (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 initial contractor or ordered by the QIC and less 
any deductible and coinsurance amounts applicable in the particular 
case.
    (2) Notwithstanding the above, when payment is made for certain 
excluded services under section 1879 of the Act or 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

[[Page 69352]]

the items or services in question, less any deductible and coinsurance 
amounts applicable in the particular case, had those expenses not been 
paid under Sec.  411.400 of this chapter or had that liability not been 
limited under Sec.  411.402 of this chapter.
    (c) Aggregating claims to meet the amount in controversy--(1) 
Appealing QIC reconsideration determinations to the ALJ level. Two or 
more claims may be aggregated by either an individual appellant or 
multiple appellants to meet the amount in controversy for an ALJ 
hearing if--
    (i) The claims have previously been reconsidered by a QIC; and
    (ii) The request for ALJ hearing lists all of the claims to be 
aggregated and is filed within 60 days after receipt of all of the 
reconsideration determinations being appealed; and
    (iii) The ALJ determines that the claims the appellant(s) seeks to 
aggregate involve the delivery of similar or related services or common 
issues of law and fact. An appellant may combine Part A and Part B 
claims together to meet the amount in controversy requirements.
    (2) Aggregating claims that are escalated from the QIC level to the 
ALJ level. Two or more claims may be aggregated by either an individual 
appellant or multiple appellants to meet the amount in controversy for 
an ALJ hearing if--
    (i) The claims were pending before the QIC in conjunction with the 
same request for reconsideration; and
    (ii) The appellant requests aggregation of the claims to the ALJ 
level in the same request for escalation; and
    (iii) The ALJ determines that the claims the appellant(s) seeks to 
aggregate involve the delivery of similar or related services or common 
issues of law and fact. Part A and Part B claims may be combined 
together to meet the amount in controversy requirements.
    (d) Definitions. For the purposes of aggregating claims to meet the 
amount in controversy for an ALJ hearing:
    (1) ``Common issues of law and fact'' means that 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.
    (2) ``Delivery of similar or related services'' means like or 
coordinated services or items provided to one or more beneficiaries.
    (e) Content of request for aggregation. When an appellant(s) seeks 
to aggregate claims in a request for an ALJ hearing, the appellant 
must--
    (1) Specify all of the claims the appellant(s) seeks to aggregate; 
and
    (2) State why the appellant(s) believe that the claims involve 
common issues of law and fact or delivery of similar or related 
services.


Sec.  405.1008  Parties to an ALJ hearing.

    (a) Who may request a hearing. Any party to the QIC's 
reconsideration may request a hearing before an ALJ. However, only the 
appellant (that is, the party that filed the request for 
reconsideration by a QIC) may request that the appeal be escalated to 
the ALJ level if the QIC does not complete its action within the 
deadline described in Sec.  405.970.
    (b) Who are parties to the ALJ hearing. The party who filed the 
request for hearing and all other parties to the QIC's reconsideration 
determination are parties to the ALJ hearing. In addition, a 
representative of CMS or its contractor may be made a party under the 
circumstances described in Sec.  405.1012.


Sec.  405.1010  When CMS or its contractors may participate in an ALJ 
hearing.

    An ALJ may request, but may not require, CMS or one of its 
contractors, to participate in any proceedings before the ALJ, 
including the oral hearing, if any. CMS and its contractors, including 
a QIC, may also elect to participate in the hearing process. 
Participation may include filing position papers or providing testimony 
to clarify factual or policy issues in a case, but does not include 
calling witnesses or cross-examining the witnesses of a party to the 
hearing.


Sec.  405.1012  When CMS or its contractors may be a party to a 
hearing.

    CMS or its contractors, including a QIC, may be a party to an ALJ 
hearing unless the request for hearing is filed by an unrepresented 
beneficiary. CMS or the contractor will advise the ALJ that it intends 
to participate as a party no later than 10 days after receiving the 
notice of hearing. When CMS or its contractor participates in a hearing 
as a party, it may file position papers, provide testimony to clarify 
factual or policy issues, call witnesses or cross-examine the witnesses 
of other parties. CMS and the contractor, when acting as parties, may 
also submit additional evidence to the ALJ. The ALJ may not require CMS 
or a contractor to enter a case as a party.


Sec.  405.1014  Request for an ALJ hearing.

    (a) Content of the request. The request for a hearing must be made 
in writing. The request should include all of the following--
    (1) The name, address, and health insurance claim number of the 
beneficiary whose claim is being appealed;
    (2) The name and address of the appellant, when the appellant is 
not the beneficiary.
    (3) The name and address of any designated representative.
    (4) The document control number assigned to the appeal by the QIC, 
if any.
    (5) The dates of service.
    (6) The reasons the appellant disagrees with the QIC's 
reconsideration or other determination being appealed.
    (7) A statement of any additional evidence to be submitted and the 
date it will be submitted.
    (b) When and where to file. The request for an ALJ hearing after a 
QIC reconsideration must be filed--
    (1) Within 60 days from the date the party receives notice of the 
QIC's reconsideration;
    (2) With the hearing office, the QIC that issued the 
reconsideration, CMS, or a local Social Security office. If the request 
for hearing is timely filed with the QIC, CMS or a Social Security 
office rather than the hearing office, the 90-day deadline for deciding 
the appeal begins on the date the request for hearing is received by 
the hearing office.
    (c) Filing request for escalation. If an appellant files a request 
to escalate an appeal to the ALJ level because the QIC has not 
completed its action within the deadline described in Sec.  405.970, 
the request for escalation must be filed with both the QIC and the 
hearing office. A case escalated from the QIC to the ALJ level is not 
subject to the 90-day adjudication deadline.
    (d) Extension of time to request a hearing. If the request for 
hearing is not filed within 60 days of receipt of the QIC's 
reconsideration determination, an appellant may request an extension. 
The request for an extension of time must be in writing, and it must 
give the reasons why the request for a hearing was not filed within the 
stated time period. If a request for hearing is not timely filed, the 
90-day adjudication period does not begin until the hearing office 
receives this explanation in addition to the request for hearing.


Sec.  405.1016  Requirement to decide appeal in 90 days.

    (a) When a request for an ALJ hearing is filed after a QIC has 
issued a reconsideration, the ALJ must issue a decision, dismissal 
order, or remand to the QIC, as appropriate, no later than the end of 
the 90-day period beginning on the date the request for hearing has 
been timely filed, unless the 90-day period has been extended as 
provided in this subpart.

[[Page 69353]]

    (b) The 90-day adjudication period begins on the date that a timely 
filed request for hearing is received by the hearing office, or, if it 
is not timely filed, the date that the hearing office receives a 
written explanation from the appellant that the ALJ accepts as a good 
reason for the late filing. If the written explanation is received by 
the hearing office after the request for hearing is received, the 90-
day adjudication period begins when the written explanation is 
received. See Sec.  405.942(b)(2).
    (c) The 90-day adjudication period does not apply when an appellant 
requests escalation of an appeal to the ALJ level because the QIC has 
not issued a reconsideration determination within the period specified 
in Sec.  405.970.


Sec.  405.1018  Submitting evidence before the ALJ hearing.

    Parties must submit with the request for hearing (or within 10 days 
of receiving the notice of hearing) all written evidence they wish to 
have considered at the hearing. If an appellant submits written 
evidence later than 10 days after receiving the notice of hearing, the 
period between the time the evidence was required to have been 
submitted and the time received will not be counted toward the 90-day 
adjudication deadline. Any submission of new evidence that was not 
considered by the QIC during its reconsideration must be accompanied by 
a statement explaining why the evidence was not previously submitted to 
the QIC. The above requirements do not apply to oral testimony given at 
a hearing, including expert testimony.


Sec.  405.1020  Time and place for a hearing before an ALJ.

    (a) The ALJ sets the time and place for the hearing, and may change 
the time and place, if necessary. The ALJ will send a notice of hearing 
to all parties and the QIC that issued the reconsideration 
determination advising them of the proposed time and place of the 
hearing. The notice of hearing will require all parties to the ALJ 
hearing to reply to the notice as follows:
    (1) Acknowledge that the party will attend the hearing at the time 
and place proposed in the notice of hearing; or
    (2) Object to the proposed time and place of the hearing. The party 
must state the reason for the objection and state the time and place he 
or she wants the hearing to be held. If at all possible, the request 
should be in writing. The ALJ will change the time or place of the 
hearing if the party has good cause, as determined under paragraphs (b) 
and (c) of this section (section 405.1052(a)(2) provides procedures the 
ALJ will follow when a party does not respond to a notice of hearing); 
or
    (3) Waive the right to an oral hearing and request that the ALJ 
issue a decision based on the written evidence in the record. As 
provided in Sec.  405.1000, if the ALJ determines that it is necessary 
to obtain testimony from a non-party, he or she may still hold a 
hearing to obtain that testimony, even if all of the parties have 
waived the right to appear. In those cases, the ALJ will give the 
parties the opportunity to appear when the testimony is given but may 
hold the hearing even if none of the parties decide to appear.
    (b) The ALJ will find good cause for changing the time or place of 
the scheduled hearing and will reschedule the hearing if the 
information available to the ALJ supports the party's contention that--
    (1) The party or his or her representative is unable to attend or 
to travel to the scheduled hearing because of a serious physical or 
mental condition, incapacitating injury, or death in the family; or
    (2) Severe weather conditions make it impossible to travel to the 
hearing.
    (c) In determining whether good cause exists in circumstances other 
than those set out in paragraph (b) of this section, the ALJ will 
consider the party's reason for requesting the change, the facts 
supporting it, and the impact of the proposed change on the efficient 
administration of the hearing process. Factors affecting the impact of 
the change include, but are not limited to, the effect on the 
processing of other scheduled hearings, delays that might occur in 
rescheduling the hearing, and whether any prior changes were granted 
the party. Examples of such other circumstances, which a party might 
give for requesting a change in the time or place of the hearing, 
include, but are not limited to, the following:
    (1) The party has attempted to obtain a representative but needs 
additional time.
    (2) The party's representative was appointed within 10 days of the 
scheduled hearing and needs additional time to prepare for the hearing.
    (3) The party's representative has a prior commitment to be in 
court or at another administrative hearing on the date scheduled for 
the hearing.
    (4) A witness who will testify to facts material to a party's case 
would be unavailable to attend the scheduled hearing and the evidence 
cannot be otherwise obtained.
    (5) Transportation is not readily available for a party to travel 
to the hearing.
    (6) The appellant lives or has his or her principal place of 
business closer to another hearing site.
    (7) The party is unrepresented, and is unable to respond to the 
notice of hearing because of any physical, mental, educational, or 
linguistic limitations (including any lack of facility with the English 
language) that he or she has.
    (d) Effect of rescheduling hearing. If a hearing is postponed at 
the request of the appellant for any of the above reasons, the time 
between the originally scheduled hearing date and the new hearing date 
will not be counted toward the 90-day adjudication deadline.


Sec.  405.1022  Notice of a hearing before an ALJ.

    After the ALJ sets the time and place of the hearing, notice of the 
hearing will be mailed to the parties at their last known addresses, or 
given by personal service, unless the parties have indicated in writing 
that they do not wish to receive this notice. The notice will be mailed 
or served at least 20 days before the hearing. The notice of hearing 
will contain a statement of the specific issues to be decided and tell 
the parties that they may designate a person to represent them during 
the proceedings. The notice will also contain an explanation of the 
procedures for requesting a change in the time or place of the hearing, 
a reminder that if the appellant fails to appear at the scheduled 
hearing without good cause the ALJ may dismiss the hearing request, and 
other information about the scheduling and conduct of the hearing. If a 
party or his or her representative does not acknowledge receipt of the 
notice of hearing, the hearing office will attempt to contact the party 
for an explanation. If the party states that he or she did not receive 
the notice of hearing, an amended notice will be sent to him or her by 
certified mail or e-mail, if available. See Sec.  405.1020 and Sec.  
405.1052 for the procedures we will follow in deciding whether the time 
or place of a scheduled hearing will be changed if a party does not 
respond to the notice of hearing.


Sec.  405.1024  Objections to the issues.

    If a party objects to the issues described in the notice of 
hearing, he or she must notify the ALJ in writing at the earliest 
possible opportunity before the time set for the hearing, and no later 
than 5 days before the hearing. The party must state the reasons for 
his or her objections and send a copy of the objections to all other 
parties to the appeal. The ALJ will make a decision on the objections 
either in writing or at the hearing.

[[Page 69354]]

Sec.  405.1026  Disqualification of the ALJ.

    An ALJ will not conduct a hearing if he or she is prejudiced or 
partial with respect to any party or has any interest in the matter 
pending for decision. If a party objects to the ALJ who will conduct 
the hearing, the party must notify the ALJ within 10 days of the notice 
of hearing. The ALJ will consider the party's objections and will 
decide whether to proceed with the hearing or withdraw. If he or she 
withdraws, another ALJ will be appointed to conduct the hearing. If the 
ALJ does not withdraw, the party may, after the ALJ has issued an 
action in the case, present his or her objections to the MAC. The MAC 
will then consider whether the hearing decision should be revised or a 
new hearing held before another ALJ. If the case is escalated to the 
MAC after a hearing is held but before the ALJ issues a decision, the 
MAC will consider the reasons the party objected to the ALJ during its 
review of the case and, if the MAC deems it necessary, may remand the 
case to another ALJ for a hearing and decision.


Sec.  405.1028  Prehearing case review of evidence submitted to the ALJ 
by the appellant.

    After a hearing is requested but before it is held, the ALJ will 
examine any new evidence submitted with the request for hearing 
according to Sec.  405.1018 to determine whether the appellant had good 
cause for submitting the evidence for the first time at the ALJ level. 
If the ALJ determines that there was not good cause for submitting the 
evidence first at the ALJ level, and the evidence is of such probative 
value that it may have a material outcome on the case, the ALJ will 
remand the case to the QIC for a revised reconsideration. If the 
revised reconsideration issued on remand is not fully favorable to all 
parties, any party to that determination may file a new request for an 
ALJ hearing.


Sec.  405.1030  ALJ hearing procedures--General.

    A hearing is open to the parties and to other persons the ALJ 
considers necessary and proper. At the hearing, the ALJ looks fully 
into the issues, questions the parties and other witnesses, and may 
accept documents that are material to the issues, if the ALJ determines 
that the party has shown good cause for not submitting the evidence 
within the period specified in Sec.  405.1018 and Sec.  405.1028. The 
ALJ may also stop the hearing temporarily and continue it at a later 
date if he or she believes that there is material evidence missing at 
the hearing. If the missing material is in the possession of the 
appellant, the ALJ will determine whether the appellant had good cause 
for not producing the evidence earlier. If good cause exists, the ALJ 
will consider the evidence in deciding the case and the 90-day 
adjudication period will be tolled from the date of the hearing to the 
date the evidence is submitted. If the ALJ determines that there was 
not good cause for submitting the evidence sooner, he may remand the 
case to the QIC, as provided in Sec.  405.1034. The ALJ may also reopen 
the hearing at any time before he or she mails a notice of the decision 
in order to receive new and material evidence. The ALJ may decide when 
the evidence will be presented and when the issues will be discussed.


Sec.  405.1032  Issues before an ALJ.

    (a) General. The issues before the ALJ include all the issues 
brought out in the initial determination, redetermination, or 
reconsideration that were not decided entirely in a party's favor. (For 
purposes of this section, the term ``party'' does not include a 
representative of CMS or the QIC who may be participating in the 
hearing.) However, if evidence presented before the hearing causes the 
ALJ to question a favorable portion of the determination, he or she 
will notify the parties before the hearing and may consider it an issue 
at the hearing.
    (b) New issues--(1) General. The ALJ may consider a new issue at 
the hearing if he or she notifies all of the parties about the new 
issue any time between receiving the hearing request and issuing the 
notice of hearing. The ALJ or any party may raise a new issue; however, 
the ALJ may only consider a new issue if its resolution--
    (i) Will have a material impact on the claim or claims that are the 
subject of the request for hearing; and
    (ii) Is permissible under the rules governing reopening of 
determinations and decisions.
    (2) Notice of a new issue. The ALJ will notify all of the parties 
in the notice of hearing if he or she intends to consider a new issue.


Sec.  405.1034  When ALJ will remand to the QIC.

    (a) The ALJ will remand a case to the QIC that issued the 
reconsideration in the following circumstances:
    (1) The appellant submits new evidence to the ALJ that was not 
provided to either the contractor or the QIC during their consideration 
of the appeal, and the appellant does not provide a good reason for 
first submitting the evidence at the ALJ level. An ALJ will find good 
cause when the appellant submits new evidence at the ALJ level, the 
evidence relates to an issue that was the basis for the QIC's 
unfavorable reconsideration and that issue was not identified as a 
material issue before the QIC's determination, and the ALJ finds that 
the appellant had a good reason for submitting the evidence for the 
first time at the ALJ level, the ALJ will decide the appeal.
    (2) The appellant submits new evidence to the ALJ that was not 
provided to either the contractor or the QIC during its consideration 
of the appeal, and the appellant acknowledges that he or she does not 
have a good reason for first submitting the evidence at the ALJ level. 
In this instance, the appellant may request the ALJ to remand the case 
to the QIC for further proceedings so that the new evidence may be 
considered.
    (b) An ALJ may also remand a case to the QIC if the written record 
of the proceedings before the initial contractor or the QIC does not 
contain information that is essential to resolving the issues on appeal 
and is information that can only be provided by CMS or its contractors. 
Examples of that information include claim payment histories or 
information from the common working file concerning such issues as the 
number of days remaining in a benefit period.


Sec.  405.1036  Description of ALJ hearing process.

    (a) The right to appear and present evidence. Any party to a 
hearing has the right to appear before the ALJ, either personally or by 
means of a designated representative, to present evidence and to state 
his or her position.
    (b) Waiver of the right to appear. A party may send the ALJ a 
waiver or a written statement indicating that he or she does not wish 
to appear at the hearing. The appellant may subsequently withdraw the 
waiver at any time before the notice of the hearing decision is issued, 
provided that the appellant agrees to an extension of the 90-day 
adjudication period that may be necessary to schedule and hold the 
hearing. Other parties may withdraw the waiver up to the date of the 
scheduled hearing, if any. Even if all of the parties waive their right 
to appear at a hearing, the ALJ may require them to attend an oral 
hearing, if he or she believes that a personal appearance and testimony 
by the appellant or any other party is necessary to decide the case.
    (c) Presenting written statements and oral arguments. A party or a 
person designated to act as a party's representative may appear before 
the ALJ to state the party's case, to present a written summary of the 
case, or to

[[Page 69355]]

enter written statements about the facts and law material to the case 
in the record. A copy of any written statements should be provided to 
the other parties to hearing, if any, at the same time they are 
submitted to the ALJ.
    (d) Waiver of 90-day adjudication period. At any time during the 
hearing process, the appellant may waive the 90-day adjudication 
deadline for issuing a hearing decision.
    (e) What evidence is admissible at a hearing. The ALJ may receive 
evidence at the hearing even though the evidence would not be 
admissible in court under the rules of evidence used by the court.
    (f) Subpoenas. (1) When it is reasonably necessary for the full 
presentation of a case, an ALJ may, on his or her own initiative or at 
the request of a party, issue subpoenas for the appearance and 
testimony of witnesses and for the production of books, records, 
correspondence, papers, or other documents that are material to an 
issue at the hearing.
    (2) Parties to a hearing who wish to subpoena documents or 
witnesses must file a written request for the issuance of a subpoena 
with the ALJ within 10 days of the notice of hearing. The written 
request must give the names of the witnesses or documents to be 
produced; describe the address or location of the witnesses or 
documents with sufficient detail to find them; state the important 
facts that the witness or document is expected to prove; and indicate 
why these facts could not be proven without issuing a subpoena.
    (3) The hearing office will pay the cost of issuing the subpoena.
    (4) The hearing office will pay subpoenaed witnesses the same fees 
and mileage they would receive if they had been subpoenaed by a Federal 
district court.
    (g) Witnesses at a hearing. Witnesses may appear at a hearing. They 
will testify under oath or affirmation, unless the ALJ finds an 
important reason to excuse them from taking an oath or affirmation. The 
ALJ may ask the witnesses any questions material to the issues and will 
allow the parties or their designated representatives to do so.


Sec.  405.1038  Deciding a case without an oral hearing before an ALJ.

    (a) Decision wholly favorable. If the evidence in the hearing 
record supports a finding in favor of all the parties on every issue, 
and neither the QIC nor CMS has given notice of its intention to 
participate in the hearing, the ALJ may issue a hearing decision 
without giving the parties prior notice and without holding an oral 
hearing. However, the notice of the decision will inform the parties 
that they have the right to an oral hearing and a right to examine the 
evidence on which the decision is based.
    (b) Parties do not wish to appear in-person. (1) The ALJ may decide 
a case on the record and not conduct an oral hearing if--
    (i) All the parties indicate in writing that they do not wish to 
appear before the ALJ at an oral hearing, including a hearing conducted 
by telephone or videoconferencing, if available; or
    (ii) The appellant lives outside the United States and does not 
inform the ALJ that he or she wants to appear, and there are no other 
parties who wish to appear.
    (2) When an oral hearing is not held, the ALJ will make a record of 
the evidence. The record will include the claims, written statements, 
certificates, reports, affidavits, and other documents that were used 
in making the determination under review and any additional evidence 
the parties to the hearing present in writing. The decision of the ALJ 
must be based on this record.


Sec.  405.1040  Prehearing and posthearing conferences.

    The ALJ may decide on his or her own, or at the request of any 
party to the hearing, to hold a prehearing or posthearing conference to 
facilitate the hearing or the hearing decision. The ALJ will tell the 
parties of the time, place, and purpose of the conference at least 7 
days before the conference date, unless the parties have indicated in 
writing that they do not wish to receive a written notice of the 
conference. At the conference, the ALJ may consider matters in addition 
to those stated in the notice of hearing, if the parties consent in 
writing. A record of the conference will be made. The ALJ will issue an 
order stating all agreements and actions resulting from the conference. 
If the parties do not object, the agreements and actions become part of 
the hearing record and are binding on all parties.


Sec.  405.1042  When a record of a hearing before an ALJ is made.

    The ALJ will make a complete record of the hearing proceedings. The 
tape, other recording, or written transcript, as applicable, will be 
maintained in the case file, and forwarded with the file to the MAC if 
a request for MAC review is filed or the case is escalated from the ALJ 
level to the MAC. The record of the hearing will be prepared as a typed 
copy of the proceedings if a party seeks judicial review of the case in 
a Federal district court within the stated time period and all other 
jurisdictional criteria are met, unless the Secretary requests the 
court to remand the case.


Sec.  405.1044  Consolidated hearing before an ALJ.

    (a) A consolidated hearing may be held if one or more of the issues 
to be considered at the hearing are the same issues that are involved 
in another request for hearing or hearings pending before the same ALJ. 
It is within the discretion of the ALJ to grant or deny an appellant's 
request for consolidation. In considering an appellant's request, the 
ALJ may consider such factors as whether the claims at issue may be 
more efficiently decided if the requests for hearing are combined. In 
considering the appellant's request for consolidation, the ALJ will 
take into account the adjudication deadlines for each case and may 
require an appellant to waive the 90-day adjudication deadline if 
consolidation would otherwise prevent the ALJ from deciding all of the 
appeals at issue within their respective deadlines.
    (b) The ALJ may also propose on his or her own motion to 
consolidate two or more cases in one hearing for administrative 
efficiency, but may not require an appellant to waive the 90-day 
adjudication deadline for any of the consolidated cases.
    (c) Before consolidating a hearing, the ALJ must notify CMS of his 
or her intention to do so, and CMS may then elect to participate in the 
consolidated hearing, as a party, by sending written notice to the ALJ 
within 10 days after receipt of the ALJ's notice.
    (d) If the ALJ decides to hold a consolidated hearing, he or she 
may make either a consolidated decision and record or a separate 
decision and record on each claim. The ALJ will ensure that any 
evidence that is common to all claims and material to the common issue 
to be decided is included in the consolidated record or each individual 
record, as applicable.


Sec.  405.1046  The decision of an ALJ.

    (a) General rule. The ALJ will issue a written decision that gives 
the findings of fact, conclusions of law, and the reasons for the 
decision. The decision must be based on evidence offered at the hearing 
or otherwise included in the record. The ALJ will mail a copy of the 
decision to all the parties at their last known address and to the QIC 
that issued the reconsideration determination.
    (b) Timing of decision. The ALJ will issue a decision by the end of 
the 90-day period beginning on the date when the request for hearing is 
received in the hearing office, unless the 90-day period

[[Page 69356]]

has been extended as provided in this subpart.
    (c) Recommended decision. An ALJ will issue a recommended decision 
if he or she is directed to do so in the MAC's remand order. An ALJ may 
not issue a recommended decision on his or her own motion. The ALJ will 
mail a copy of the recommended decision to all the parties at their 
last known address.


Sec.  405.1048  The effect of an ALJ's decision.

    The decision of the ALJ is binding on all parties to the hearing 
unless--
    (a) A party to the hearing requests a review of the decision by the 
MAC within the stated time period and the MAC either issues a final 
action in response to the request for review or the appeal is escalated 
to Federal district court under the provisions at Sec.  405.1132;
    (b) The decision is revised by an ALJ or the MAC under the 
procedures explained in Sec.  405.980;
    (c) The expedited appeals process is used;
    (d) The ALJ's decision is a recommended decision directed to the 
MAC; or
    (e) In a case remanded by a Federal court, the MAC assumes 
jurisdiction under the procedures Sec.  405.1138.


Sec.  405.1050  Removal of a hearing request from an ALJ to the MAC.

    If a request for hearing is pending before an ALJ, the MAC may 
assume responsibility for holding a hearing by requesting that the ALJ 
send the hearing request to it. If the MAC holds a hearing, it will 
conduct the hearing according to the rules for hearings before an ALJ. 
Notice will be mailed to all parties at their last known address 
informing them that the MAC has assumed responsibility for the case.


Sec.  405.1052  Dismissal of a request for a hearing before an ALJ.

    Dismissal of request for hearings will be in accordance with the 
following:
    (a) An ALJ will dismiss a request for a hearing under any of the 
following conditions:
    (1) At any time before notice of the hearing decision is mailed, 
the party that requested the hearing asks to withdraw the request. This 
request may be submitted in writing to the ALJ or made orally at the 
hearing. The request for withdrawal must contain a clear statement that 
the appellant is withdrawing the request for hearing and does not 
intend to further proceed with the appeal. If the request for 
withdrawal is filed by an attorney, or other legal professional on 
behalf of a beneficiary or other appellant, the ALJ may presume that 
the representative has advised the appellant of the consequences of the 
withdrawal and dismissal.
    (2) Neither the party that requested the hearing nor the party's 
representative appears at the time and place set for the hearing, if--
    (i) The party was notified before the time set for the hearing that 
the request for hearing might be dismissed without further notice;
    (ii) The party did not appear at the time and place of hearing and 
does not thereafter contact the hearing office and provide a good 
reason for not appearing;
    (iii) The ALJ sends a notice to the party asking why the party did 
not appear; and
    (iv) The party does not respond to the ALJ's notice within 10 days 
or does not give a good reason for the failure to appear. In 
determining good cause, the ALJ will consider any physical, mental, 
educational, or linguistic limitations (including any lack of facility 
with the English language), which the party may have.
    (3) The person or entity requesting a hearing has no right to it 
under Sec.  405.1002.
    (4) The party did not request a hearing within the stated time 
period and has not provided a good reason for extending the time for 
requesting a hearing, as provided in Sec.  405.942(b)(2).
    (5) The beneficiary whose claim is being appealed died either 
before the request for hearing was filed or while the request for 
hearing is pending and both of the following criteria apply:
    (i) The request for hearing was filed by the beneficiary or the 
beneficiary's representative, and the beneficiary's surviving spouse or 
estate has no remaining financial interest in the case. In deciding 
this issue, the ALJ will consider whether the surviving spouse or 
estate remains liable for the services that were denied or a Medicare 
contractor held the beneficiary liable for subsequent similar services 
under the limitation of liability provisions based on the denial of the 
services at issue.
    (ii) No other parties to the QIC reconsideration determination 
participated in the proceedings before the QIC. For purposes of 
applying this provision, participation means that the party either 
filed the request for QIC reconsideration or submitted evidence or 
comments to the QIC during its consideration of the case.
    (6) The ALJ decides that there is cause to dismiss a hearing 
request entirely or to refuse to consider any one or more of the issues 
because the doctrine of res judicata applies in that a Medicare 
contractor, a QIC, an ALJ or the MAC has made a previous determination 
or decision under this subpart about the appellant's rights on the same 
facts and on the same issue or issues, and this previous determination 
or decision has become final by either administrative or judicial 
action.
    (7) The appellant abandons the request for hearing. An ALJ may 
conclude that an appellant has abandoned a request for hearing when the 
hearing office attempts to schedule a hearing and is unable to locate 
the appellant after making reasonable efforts to do so.
    (b) Notice of dismissal. The ALJ will mail a written notice of the 
dismissal of the hearing request to all parties at their last known 
address. The notice will state that there is a right to request that 
the MAC vacate the dismissal action.


Sec.  405.1054  Effect of dismissal of a request for a hearing before 
an ALJ.

    The dismissal of a request for a hearing is binding, unless it is 
vacated by the MAC.

Medicare Appeals Council Review


Sec.  405.1100  Medicare Appeals Council review: General.

    The party who requested an ALJ hearing (the appellant) or any other 
party to the hearing may request that the Medicare Appeals Council 
(MAC) review an ALJ's decision or dismissal. Under certain 
circumstances, the appellant may request that a case be escalated to 
the MAC for a decision even if the ALJ has not issued a decision or 
dismissal in his or her case. The MAC reviews an ALJ's decision de 
novo. When reviewing an ALJ's decision, the MAC issues a final action 
or remands a case to the ALJ within 90 days of receipt of the 
appellant's request for review, unless the 90-day period has been 
extended as provided in this subpart.


Sec.  405.1102  Request for MAC review when ALJ issues decision.

    (a) A party to the ALJ hearing may request a MAC review if the 
party files a written request for a MAC review within 60 days after 
receipt of the ALJ's decision or dismissal. A party requesting a review 
may ask that the time for filing a request for MAC review be extended 
if--
    (1) The request for an extension of time is in writing;
    (2) It is filed with the MAC; and
    (3) It explains why the request for review was not filed within the 
stated time period. If the appellant shows that he or she had good 
cause for missing the deadline, the time period will be extended. To 
determine whether good cause exists, the MAC uses the standards 
explained in Sec.  405.942(b)(2).

[[Page 69357]]

    (b) A party does not have the right to seek MAC review of an ALJ's 
remand to a QIC.
    (c) For purposes of requesting MAC review (Sec.  405.1102 through 
Sec.  405.1138), unless specifically excepted, the term, ``party,'' 
includes CMS where CMS has entered into a case as a party according to 
Sec.  405.1012. The term, ``appellant,'' does not include CMS, where 
CMS has entered into a case as a party according to Sec.  405.1012.


Sec.  405.1104  Request for MAC review when an ALJ does not issue a 
decision timely.

    An appellant who files a timely request for hearing before an ALJ 
and whose appeal continues to be pending before the ALJ at the end of 
the 90-day adjudication period described in Sec.  405.1016 may request 
a MAC review if--
    (a) The appellant files a written request with the ALJ and the MAC 
to escalate the appeal to the MAC after the 90-day adjudication period 
has expired; and
    (b) The ALJ does not issue a final action or remand the case to the 
QIC within 5 days of receiving the request for escalation.


Sec.  405.1106  Where a request for review or escalation may be filed.

    (a) When a request for a MAC review is filed after an ALJ has 
issued a decision or dismissal, the request for review may be filed 
with the MAC, the hearing office that issued the ALJ's decision or 
dismissal or a Social Security office. If the request for hearing is 
timely filed with the hearing office or a Social Security office rather 
than the MAC, the MAC's 90-day period to conduct a review begins on the 
date the request for review is received by the MAC.
    (b) If an appellant files a request to escalate an appeal to the 
MAC level because the ALJ has not completed his or her action on the 
request for hearing within the 90-day adjudication deadline, the 
request for escalation must be filed with both the ALJ and the MAC. 
Appeals that are escalated from the ALJ level to the MAC are not 
subject to the 90-day MAC adjudication deadline.


Sec.  405.1108  MAC actions when request for review or escalation is 
filed.

    (a) When a party requests that the MAC review an ALJ's decision, 
the MAC will review the ALJ's decision de novo. The party requesting 
review does not have a right to a hearing before the MAC. The MAC will 
consider all of the evidence in the administrative record. Upon 
completion of its review, the MAC may adopt, modify, or reverse the 
ALJ's decision or remand the case to an ALJ for further proceedings.
    (b) When a party requests that the MAC review an ALJ's dismissal, 
the MAC may deny review or remand the case to the ALJ for further 
proceedings.
    (c) The MAC will dismiss a request for review when the party 
requesting review does not have a right to a review by the MAC or 
dismiss the request for an ALJ hearing for any reason that the ALJ 
could have dismissed the request for hearing.
    (d) When an appellant requests escalation of a case from the ALJ 
level to the MAC, the MAC may take any of the following actions:
    (1) Issue a decision based on the record constructed at the QIC and 
any additional evidence, including oral testimony, entered in the 
record by the ALJ before the case was escalated.
    (2) Conduct any additional proceedings, including a hearing, that 
the MAC determines are necessary to issue a decision.
    (3) Remand the case to an ALJ for further proceedings, including a 
hearing.
    (4) Dismiss the request for MAC review because the appellant does 
not have the right to escalate the appeal.
    (5) Dismiss the request for ALJ hearing for any reason that the ALJ 
could have dismissed the request.


Sec.  405.1110  MAC reviews on its own motion.

    (a) General rule. The MAC may decide on its own motion to review a 
decision or dismissal issued by an ALJ. CMS or its contractors may 
refer a case to the MAC for it to consider reviewing under this 
authority anytime within 60 days after the date of an ALJ's decision or 
dismissal.
    (b) Referral of cases. (1) CMS or its contractors (hereafter: CMS) 
may refer a case to the MAC if, in their view, the decision or 
dismissal contains an error of law material to the outcome of the claim 
or presents a broad policy or procedural issue that may affect the 
public interest. CMS may also request that the MAC take own motion 
review of a case if--
    (i) CMS or its contractor participated in the appeal at the ALJ 
level; and
    (ii) In its view, the ALJ's decision or dismissal is not supported 
by the preponderance of evidence in the record or the ALJ abused his or 
her discretion.
    (2) CMS's referral to the MAC will be made in writing and must be 
filed with the MAC no later than 60 days after the ALJ's decision or 
dismissal is issued. The written referral will state the reasons why 
CMS believes that the MAC should review the case on its own motion. CMS 
will send a copy of its referral to all parties to the ALJ action and 
to the ALJ. Parties to the ALJ's action may file exceptions to the 
referral by submitting written comments to the MAC within 20 days of 
the referral notice. Copies of any comments submitted to the MAC must 
be sent to CMS and all other parties to the ALJ's decision.
    (c) Standard of review--(1) Referral by CMS after participation at 
ALJ level. If CMS or its contractor participated in an appeal at the 
ALJ level, the MAC will exercise its own motion authority if there is 
an error of law material to the outcome of the case, an abuse of 
discretion by the ALJ, the decision is not consistent with the 
preponderance of the evidence of record, or there is a broad policy or 
procedural issue that may affect the general public interest. In 
deciding whether to accept review under this standard, the MAC will 
limit its consideration of the ALJ's action to those exceptions raised 
by CMS.
    (2) Referral by CMS when CMS did not participate in the ALJ 
proceedings or appear as a party. The MAC will accept review if the 
decision or dismissal contains an error of law material to the outcome 
of the case or presents a broad policy or procedural issue that may 
affect the general public interest. In deciding whether to accept 
review, the MAC will limit its consideration of the ALJ's action to 
those exceptions raised by CMS.
    (d) MAC's action. If the MAC decides to review a decision or 
dismissal on its own motion, it will mail the results of its action to 
all the parties to the hearing and to CMS. The MAC may adopt, modify, 
or reverse the decision or dismissal or may remand the case to an ALJ 
for further proceedings. The MAC must issue its action no later than 90 
days after receipt of the CMS referral, unless the 90-day period has 
been extended as provided in this subpart. The MAC may not, however, 
issue its action before the 20-day comment period has expired, unless 
it determines that the agency's referral does not provide a basis for 
reviewing the case. If the MAC does not act within the 90-day deadline, 
the ALJ's decision or dismissal remains the final action in the case.


Sec.  405.1112  Content of request for review.

    (a) The request for review should identify the parts of the ALJ 
action with which the party requesting review disagrees and explain why 
he or she believes that the ALJ's findings and conclusions are wrong. 
For example, if the party requesting review believes that the ALJ's 
action is inconsistent with a

[[Page 69358]]

statute, regulation, ruling, or other authority, the request for review 
should explain why the appellant believes the action is inconsistent 
with that authority.
    (b) The MAC will limit its review of an ALJ's actions to those 
exceptions raised by the party in the request for review, unless the 
appellant is an unrepresented beneficiary. For purposes of this section 
only, we define a representative as anyone who has accepted an 
appointment as the beneficiary's representative, except a member of the 
beneficiary's family, a legal guardian, or an individual who routinely 
acts on behalf of the beneficiary, such as a family member or friend 
who has a power of attorney.


Sec.  405.1114  Dismissal of request for review.

    The MAC will dismiss a request for review if the party requesting 
review did not file the request within the stated period of time and 
the time for filing has not been extended. The MAC will also dismiss 
the request for review if--
    (a) The party asks to withdraw the request for review;
    (b) The party does not have a right to request MAC review; or
    (c) The beneficiary whose claim is being appealed died either 
before the request for review was filed or while the request for review 
is pending and both of the following criteria apply:
    (1) The request for review was filed by the beneficiary or the 
beneficiary's representative, and the beneficiary's surviving spouse or 
estate has no remaining financial interest in the case, and, in 
considering this issue, the MAC will consider whether the surviving 
spouse or estate remains liable for the services that were denied or a 
Medicare contractor held the beneficiary liable for subsequent similar 
services under the limitation of liability provisions based on the 
denial of the services at issue.
    (2) No other parties to the ALJ decision participated in the 
proceedings before the ALJ. For purposes of applying this provision, 
participation means that the party either filed the request for an ALJ 
hearing, submitted evidence or written statements to the ALJ, or 
appeared at the hearing.


Sec.  405.1116  Effect of dismissal of request for MAC review or 
request for hearing.

    The dismissal of a request for MAC review or denial of a request 
for review of a dismissal issued by an ALJ is binding and not subject 
to further review. The dismissal of a request for hearing by the MAC is 
also binding and not subject to judicial review.


Sec.  405.1118  Obtaining evidence from MAC.

    A party may request and receive copies or a statement of the 
documents or other written evidence upon which the hearing decision or 
dismissal was based and a copy of the transcript of oral evidence. 
However, the party will be asked to pay the costs of providing these 
copies unless there is a good reason they should not pay. If a party 
requests evidence from the MAC and an opportunity to comment on that 
evidence, the time beginning with the MAC's receipt of the request for 
evidence through the expiration of the comment period will not count 
toward the 90-day adjudication deadline.


Sec.  405.1120  Filing briefs with the MAC.

    Upon request, the MAC will give the party requesting review, as 
well as all other parties a reasonable opportunity to file briefs or 
other written statements about the facts and law relevant to the case. 
Any party who submits a brief or statement must send a copy to each of 
the other parties. Unless the party requesting review files the brief 
or other statement with the request for review, the time beginning with 
the receipt of the request to submit the brief and ending with the date 
the brief is received by the MAC will not count toward the 90-day 
adjudication deadline. The MAC may also request, but not require, CMS 
or its contractor to file a brief or position paper if the MAC 
determines that it is necessary to resolve the issues in the case.


Sec.  405.1122  What evidence may be submitted to the MAC.

    (a) Appeal before the MAC on request for review of ALJ's decision. 
(1) If the MAC is reviewing an ALJ's decision, the MAC will limit its 
review of the evidence to the evidence contained in the record of the 
proceedings before the ALJ. However, if the hearing decision decides a 
new issue that the parties were not afforded an opportunity to address 
at the ALJ level, the MAC will consider any evidence related to that 
issue that is submitted with the request for review.
    (2) If the MAC determines that additional evidence is needed to 
resolve the issues in the case and the hearing record indicates that 
the parties or previous decision-makers have not attempted to obtain 
the evidence, the MAC may remand the case to an ALJ to obtain the 
evidence and issue a new decision.
    (b) Appeal before MAC as a result of appellant's request for 
escalation. (1) If the MAC is reviewing a case that has been escalated 
from the ALJ level to the MAC, the MAC will decide the case based on 
the record constructed at the QIC and any additional evidence, 
including oral testimony, entered in the record by the ALJ before the 
case was escalated.
    (2) If the MAC receives additional evidence with the request for 
escalation that is material to the question to be decided, or 
determines that additional evidence is needed to resolve the issues in 
the case, and the record provided to the MAC indicates that the parties 
or previous decision-makers did not attempt to obtain the evidence 
before escalation, the MAC may remand the case to an ALJ to consider or 
obtain the evidence and issue a new decision.


Sec.  405.1124  Oral argument.

    A party may request to appear before the MAC to present oral 
argument. The MAC will grant a request for oral argument if it decides 
that the case raises an important question of law, policy, or fact that 
cannot be readily decided based on written submissions alone. In 
addition, the MAC may decide on its own that oral argument is necessary 
to decide the issues in the case. If the MAC decides to hear oral 
argument, it will tell the parties of the time and place of the oral 
argument at least 10 days before the scheduled date. The MAC may also 
request, but not require, CMS or its contractor to appear before it if 
the MAC determines that it would be helpful in resolving the issues in 
the case.


Sec.  405.1126  Case remanded by the MAC.

    (a) When the MAC may remand a case. The MAC may remand a case in 
which additional evidence is needed or additional action by the ALJ is 
required. The MAC will designate in its remand order whether the ALJ 
will issue a final decision or a recommended decision on remand.
    (b) Action by ALJ on remand. The ALJ will take any action that is 
ordered by the MAC and may take any additional action that is not 
inconsistent with the MAC's remand order.
    (c) Notice when case is returned with a recommended decision. When 
the ALJ sends a case to the MAC with a recommended decision, a notice 
is mailed to the parties at their last known address. The notice tells 
them that the case has been sent to the MAC, explains the rules for 
filing briefs or other written statements with the MAC, and includes a 
copy of the recommended decision.
    (d) Filing briefs with the MAC when ALJ issues recommended 
decision. (1) Any party to the recommended decision may file briefs or 
other written statements about the facts and law relevant to the case 
with the MAC

[[Page 69359]]

within 20 days of the date that the recommended decision is mailed. Any 
party may ask the MAC for additional time to file briefs or statements. 
The MAC will extend this period, as appropriate, if the party shows 
that they had good cause for missing the deadline.
    (2) All other rules for filing briefs with and obtaining evidence 
from the MAC follow the procedures explained in this subpart.
    (e) Procedures before the MAC. (1) The MAC, after receiving a 
recommended decision, will conduct its proceedings and issue its 
decision according to the procedures explained in this subpart.
    (2) If the MAC believes that more evidence is required, it may 
again remand the case to an ALJ for further inquiry into the issues, 
rehearing, receipt of evidence, and another decision or recommended 
decision. However, if the MAC decides that it can get the additional 
evidence more quickly, it will take appropriate action.


Sec.  405.1128  Decision of the MAC.

    After it has reviewed all the evidence in the administrative record 
and any additional evidence received, subject to the limitations on MAC 
consideration of additional evidence in Sec.  405.1122, the MAC will 
make a decision or remand the case to an ALJ. The MAC may adopt, modify 
or reverse the ALJ hearing decision or recommended decision. A copy of 
the MAC's decision will be mailed to the parties at their last known 
address.


Sec.  405.1130  Effect of the MAC's decision.

    The MAC's decision is binding on all parties unless the party files 
an action in Federal district court, or the decision is revised. A 
party may file an action in a Federal district court within 60 days 
after the date it receives notice of the MAC's decision.


Sec.  405.1132  Request for escalation to Federal court.

    If the MAC does not issue a final action or remand the case to an 
ALJ within the 90-day adjudication period as extended as provided in 
this subpart, the appellant may request that the appeal be escalated to 
Federal district court. Upon receipt of a request for escalation, the 
MAC may--
    (a) Issue a final action or remand the case to an ALJ, if that 
action is issued within 5 days of receipt of the request for 
escalation; or
    (b) If the MAC is not able to issue a final action or remand within 
5 days of receipt of the request for escalation, it will send a notice 
to the appellant acknowledging receipt of the request for escalation. A 
party may file an action in a Federal district court within 60 days 
after the date it receives notice of the MAC's decision.


Sec.  405.1134  Extension of time to file action in Federal district 
court.

    Any party to the MAC's decision or to an expedited appeals process 
certification may request that the time for filing an action in a 
Federal district court be extended. The request must be in writing, and 
it must give the reasons why the action was not filed within the stated 
time period. The request must be filed with the MAC, or if it concerns 
an expedited appeals process agreement certified by an ALJ, with the 
ALJ. If the party shows that he or she had good cause for missing the 
deadline, the time period will be extended. To determine whether good 
cause exists, we use the standards explained in Sec.  405.942(b)(2).


Sec.  405.1136  Judicial review.

    (a) General rule. To the extent authorized by sections 1869, 
1876(c)(5)(B), and 1879(d) of the Act, a party to a MAC decision, or an 
appellant who requests escalation to Federal district court if the MAC 
does not complete its review of the ALJ's decision within the 90-day 
adjudication period, may obtain a court review if the amount remaining 
in controversy is $1,000 or more. The party, including an appellant who 
requests escalation to Federal district court if the MAC does not 
complete its review of the ALJ's decision within the 90-day 
adjudication period, may obtain court review by filing a civil action 
in a district court of the United States in accordance with the 
provisions of section 205(g) of the Act.
    (b) Court in which to file civil action. Any civil action described 
in paragraph (a) of this section must be filed in the district court of 
the United States for the judicial district in which the party resides 
or where such individual, institution, or agency has its principal 
place of business. If the party does not reside within any such 
judicial district, or if such individual, institution, or agency does 
not have its principal place of business within any such judicial 
district, the civil action must be filed in the District Court of the 
United States for the District of Columbia.
    (c) Time for filing civil action. Any civil action described in 
paragraph (a) of this section must be filed within the time periods 
specified in Sec.  405.1130, Sec.  405.1132, or Sec.  405.1134, as 
applicable. For purposes of these sections, the date of receipt of the 
notice of the MAC's decision or notice of the MAC's receipt of the 
appellant's request for escalation shall be presumed to be 5 days after 
the date of such notice, unless there is a reasonable showing to the 
contrary. Where a case is certified for judicial review pursuant to the 
expedited appeals process in Sec.  405.990, the civil action must be 
filed within 60 days after receipt of the ALJ or MAC certification, 
except where the time has been extended by the ALJ or MAC, as 
applicable, upon a showing of good cause.
    (d) Proper defendant. Where any civil action described in paragraph 
(a) of this section is filed, the Secretary of HHS, shall, in his or 
her official capacity, be the proper defendant. Any such civil action 
properly filed shall survive notwithstanding any change of the person 
holding the office of Secretary of HHS or any vacancy in such office. 
If the complaint is erroneously filed against the United States or 
against any agency, officer, or employee of the United States other 
than the Secretary, the plaintiff will be notified that he has named an 
incorrect defendant and will be granted 60 days from the date of 
receipt of the notice in which to commence the action against the 
correct defendant, the Secretary.
    (e) Prohibition against judicial review of certain Part B 
regulations or instructions. Under section 1869(e)(1) of the Act, a 
court may not review a regulation or instruction that relates to a 
method of payment under Part B if the regulation was promulgated, or 
the instructions issued, before January 1, 1991.
    (f) Standard of review. Under section 205(g) of the Act, the 
findings of the Secretary of HHS as to any fact, if supported by 
substantial evidence, are conclusive. In addition, when the Secretary's 
decision is adverse to a party due to a party's failure to submit proof 
in conformity with a regulation prescribed under section 205(a) of the 
Act (pertaining to the type of proof a party must offer to establish 
entitlement to payment), the court will review only whether the proof 
conforms with the regulation and the validity of the regulation.


Sec.  405.1138  Case remanded by a Federal court.

    When a Federal court remands a case to the Secretary for further 
consideration, the MAC, acting on behalf of the Secretary, may make a 
decision, or it may remand the case to an ALJ with instructions to take 
action and issue a decision or return the case to the MAC with a 
recommended decision. If the case is remanded by the MAC, the 
procedures explained in Sec.  405.1140 will be followed.

[[Page 69360]]

Sec.  405.1140  MAC review of ALJ decision in a case remanded by a 
Federal court.

    (a) General rule. In accordance with Sec.  405.1138, when a case is 
remanded by a Federal court for further consideration, the decision of 
the ALJ will become the final decision of the Secretary after remand on 
that case unless the MAC assumes jurisdiction of the case. The MAC may 
assume jurisdiction based on written exceptions to the decision of the 
ALJ that the party files with the MAC or based on its authority under 
paragraph (c) of this section. The MAC will either make a new, 
independent decision based on the entire record that will be the final 
decision of the Secretary after remand, or remand the case to an ALJ 
for further proceedings.
    (b) A party files exceptions disagreeing with the decision of the 
ALJ. (1) If a party disagrees with the decision of the ALJ, in whole or 
in part, he or she may file exceptions to the decision with the MAC. 
Exceptions may be filed by submitting a written statement to the MAC 
setting forth the reasons for disagreeing with the decision of the ALJ. 
The exceptions must be filed within 30 days of the date the party 
receives the decision of the ALJ or an extension of time in which to 
submit exceptions must be requested in writing within the 30-day 
period. A timely request for a 30-day extension will be granted by the 
MAC. A request for an extension of more than 30 days must include a 
statement of reasons as to why the party needs the additional time.
    (2) If written exceptions are timely filed, the MAC will consider 
the party's reasons for disagreeing with the decision of the ALJ. If 
the MAC concludes that there is no reason to change the decision of the 
ALJ, it will issue a notice addressing the exceptions and explaining 
why no change in the decision of the ALJ is warranted. In this 
instance, the decision of the ALJ is the final decision of the 
Secretary after remand.
    (3) When a party files written exceptions to the decision of the 
ALJ, the MAC may assume jurisdiction at any time, even after the 60-day 
time period which applies when a party does not file exceptions. If the 
MAC assumes jurisdiction, it will make a new, independent decision 
based on its consideration of the entire record adopting, modifying, or 
reversing the decision of the ALJ or remand the case to an ALJ for 
further proceedings, including a new decision. The new decision of the 
MAC is the final decision of the Secretary after remand.
    (c) MAC assumes jurisdiction without exceptions being filed. Any 
time within 60 days after the date of the decision of the ALJ, the MAC 
may decide to assume jurisdiction of the case even though no written 
exceptions have been filed. Notice of this action will be mailed to all 
parties at their last known address. The parties will be provided with 
the opportunity to file briefs or other written statements with the MAC 
about the facts and law relevant to the case. After the briefs or other 
written statements have been received or the time allowed (usually 30 
days) for submitting them has expired, the MAC will either issue a 
final decision of the Secretary affirming, modifying, or reversing the 
decision of the ALJ, or remand the case to an ALJ for further 
proceedings, including a new decision.
    (d) Exceptions are not filed and the MAC does not otherwise assume 
jurisdiction. If no exceptions are filed and the MAC does not assume 
jurisdiction of the case, the decision of the ALJ becomes the final 
decision of the Secretary after remand.

Expedited Determinations and Reconsiderations


Sec.  405.1200  A beneficiary's right to an expedited determination.

    (a) Applicability. (1) For purposes of Sec. Sec.  405.1200 through 
405.1206, provider of services is defined, in accordance with section 
1861(u) of the Act, as a hospital, critical access hospital, home 
health agency (HHA), skilled nursing facility (SNF), hospice program, 
or comprehensive outpatient rehabilitation facility (CORF).
    (2) Scope. The expedited determination and reconsideration 
provisions contained in Sec. Sec.  405.1200 through 405.1206 apply to 
terminations of services furnished by a non-residential provider and 
the discharge of a beneficiary from a residential provider of services.
    (b) Beneficiary's right to an expedited determination by the QIO. 
(1) A beneficiary who has received notice that a nonresidential 
provider plans to terminate their services, or that a residential 
provider plans to discharge the beneficiary, is entitled to an 
expedited determination by the QIO in the State in which the 
beneficiary is receiving provider services when--
    (i) The beneficiary disagrees with the nonresidential provider of 
those services that services being furnished should be terminated and a 
physician who is treating the beneficiary in relation to the services 
the beneficiary is receiving in the provider certifies that failure to 
continue the provision of that service(s) may place the beneficiary's 
health at significant risk; or
    (ii) The residential provider notifies the beneficiary of its plans 
to discharge the beneficiary from that provider of services.
    (2) If a beneficiary does not contest the termination decision in a 
timely manner, that beneficiary may not later assert the expedited 
review process under this section.
    (c) Procedures the beneficiary must follow. (1) A beneficiary must 
submit the request for an expedited determination to the QIO in the 
State in which the beneficiary is receiving those provider services, in 
writing or by telephone no later than noon of the next calendar day 
following receipt of the provider's notice of termination.
    (2) The beneficiary or his or her representative must be prepared 
to answer questions and/or supply information that the QIO may request 
in order to conduct its review.
    (d) Procedures the QIO must follow. (1) On the date that the QIO 
receives the request for an expedited determination under paragraph (c) 
of this section, it must immediately notify the provider of those 
services that a request for an expedited determination has been made.
    (2) The provider of those services must supply any information the 
QIO requires to conduct its review and must make it available by phone 
or in writing, by close of business of the day after the QIO notifies 
the provider of the request for an expedited determination. This 
information includes, but is not limited to, medical records and a copy 
of the provider's written notice of termination if one was issued to 
the beneficiary.
    (3) The QIO must examine the medical records that pertain to the 
services in dispute.
    (4) The QIO must solicit the views of the beneficiary that 
requested the expedited determination.
    (5) The QIO must provide an opportunity for the provider/
practitioner to explain why the termination or discharge is 
appropriate.
    (6) The QIO must make its determination no later than 72 hours 
after receipt of the request for an expedited determination and the 
requested information.
    (e) Notice of an expedited initial determination. (1) The QIO must 
immediately notify the beneficiary, beneficiary's physician, and the 
provider of services, of its determination. The QIO's initial 
notification shall be done by telephone and subsequently with a written 
notice.
    (2) A written notice of the expedited determination must contain 
the following:
    (i) The basis for the determination.

[[Page 69361]]

    (ii) A detailed rationale for the reconsidered determination.
    (iii) A statement explaining the Medicare payment consequences of 
the determination and the beneficiary's date of liability.
    (iv) A statement informing the beneficiary of his or her appeal 
rights including the name and phone number of the qualified independent 
contractor that he or she must appeal to.
    (v) The time period for filing the subsequent appeal.
    (f) Effect of an expedited determination. The expedited 
determination is binding upon the beneficiary and provider of those 
disputed services, absent reconsideration by a QIC in accordance with 
Sec.  405.1202. A beneficiary who does not file a timely request for an 
expedited QIC reconsideration subsequently may request a QIC 
reconsideration under Sec.  405.960 of this subpart, but the coverage 
protections described in paragraph (g) of this section would not extend 
through those reconsiderations.
    (g) Coverage during QIO review. When a beneficiary files an appeal 
in accordance with paragraph (c) of this section, the beneficiary may 
not be billed for any disputed services. The QIO decision may result in 
beneficiary liability, however.


Sec.  405.1202  Right to an expedited reconsideration by a QIC.

    (a) Beneficiary's right to an expedited QIC reconsideration. A 
beneficiary that has received an expedited determination from a QIO as 
specified in Sec.  405.1200, and is dissatisfied with that 
determination, may request an expedited reconsideration by the 
designated QIC.
    (b) Procedures the beneficiary must follow. (1) A beneficiary must 
submit the request for an expedited reconsideration to the QIC no later 
than noon of the next calendar day following receipt of the QIO's 
written determination notice. This request may be made in writing or by 
telephone.
    (2) The beneficiary or his or her representative must be available 
to answer questions and/or supply information that the QIO may request 
to conduct its review.
    (c) Procedures the QIC must follow. (1) On the date that the QIC 
receives the request for an expedited reconsideration in accordance 
with paragraph (b) of this section, it must immediately notify the 
provider of those disputed services that a request has been made. The 
QIC must conduct a review regardless of whether the beneficiary will be 
liable for the services or stay in dispute.
    (2) The QIC must request and review any information that it needs 
to make an expedited reconsideration determination. This information 
includes, but is not limited to, the beneficiary's medical records.
    (3) The QIO and the provider of the disputed services must supply 
any information that the QIC requires to conduct its review, and must 
make it available, by telephone or in writing, by the close of business 
of the day after the beneficiary received the QIO expedited 
determination notice.
    (4) The QIC must solicit the views of the beneficiary that 
requested the expedited determination.
    (5) The QIC must render its reconsideration determination no later 
than 72 hours from receipt of the request for an expedited 
reconsideration and the information requested to make its decision.
    (6) If the QIC does not render a decision within 72 hours of 
receipt of the request and the information, the QIC must notify the 
beneficiary and inform that beneficiary of his or her right to have 
this case escalated to the ALJ hearing level if--
    (i) The beneficiary filed a timely expedited appeal before the QIC; 
and
    (ii) The amount remaining in controversy after the QIO 
determination is $100 or more.
    (7) The QIC must notify the beneficiary, in writing, of the rules 
for escalation under Sec.  405.1002 (Right to ALJ hearing when QIC does 
not issue reconsideration determination timely).
    (d) Notice of an expedited reconsideration determination. The QIC 
must render its expedited reconsideration determination and notify the 
beneficiary, the physician of the beneficiary who requested the 
expedited reconsideration determination, and the provider of those 
services no later than 72 hours from receipt of the request for review.
    (1) The QIC's initial notification shall be done by telephone and 
followed by a written notice.
    (2) A written notice of the expedited reconsideration determination 
must contain the following:
    (i) The basis for the reconsidered determination.
    (ii) Detailed rationale for the reconsidered determination.
    (iii) A statement explaining the Medicare payment consequences of 
the reconsidered determination and the beneficiary's date of liability.
    (iv) A statement informing the beneficiary of his or her subsequent 
appeal rights in accordance with Sec.  405.1000 (Right to ALJ hearing 
when QIC issues reconsideration determination) and the time period for 
filing that appeal.
    (v) The amount in controversy in accordance with the rules at Sec.  
405.1004 (Amount in controversy for ALJ hearing and judicial review).
    (e) Effect of an expedited reconsideration. The reconsidered 
determination is binding upon the beneficiary and provider of those 
disputed services and is subject to review in accordance with Sec.  
405.1000 (Right to ALJ hearing when QIC issues reconsideration 
determination).
    (f) Coverage during QIC review. When a beneficiary files an appeal 
in accordance with paragraph (b)(1) of this section, the beneficiary 
may not be billed for any disputed services until a QIC reconsidered 
determination has been rendered. The QIC decision may result in 
beneficiary liability, however.


Sec.  405.1204  Expedited appeals of inpatient hospital discharges.

    (a) Beneficiary's right to an expedited initial determination with 
respect to an inpatient hospital discharge. (1) A beneficiary who has 
received a notice of noncoverage may request an expedited determination 
by the QIO when a hospital (acting directly or through its utilization 
review committee) with physician concurrence, determines that inpatient 
care is no longer necessary. A beneficiary who requests an expedited 
QIO review may remain in the hospital with no additional financial 
liability as specified in paragraph (e)(2) of this section.
    (2) A beneficiary who fails to request an expedited initial 
determination in accordance with paragraph (c) of this section and 
remains in the hospital may still request an expedited initial 
determination, but the financial liability rules of paragraph (e)(2) of 
this section do not apply.
    (b) Beneficiary's right to other review. (1) A beneficiary who 
fails to request an expedited determination in accordance with 
paragraph (c)(1)(iii) of this section and remains in the hospital may 
still request an expedited review at any time during the course of his 
or her inpatient hospital stay. The QIO will render a decision in 
accordance with paragraph (d)(5)(ii) of this section and the financial 
liability rules of paragraph (e)(2) of this section do not apply.
    (2) A beneficiary who fails to request an expedited initial 
determination in accordance with paragraph (c)(1)(iii) of this section, 
and is no longer an inpatient in the hospital, may still request QIO 
review within 30 calendar days after receipt of the hospital's written 
termination notice or at any time for good cause. The QIO will

[[Page 69362]]

render a decision in accordance with paragraph (d)(5)(iii) of this 
section and the financial liability rules of paragraph (e)(1) of this 
section do not apply.
    (c) Procedures the beneficiary must follow. For the expedited 
appeal process, the following rules apply:
    (1) The beneficiary must submit the request for an expedited 
determination--
    (i) To the QIO that has an agreement with the hospital under part 
475 of this chapter;
    (ii) In writing or by telephone; and
    (iii) By noon of the first working day after he or she receives 
written notice that the hospital has determined that the hospital stay 
is no longer necessary.
    (2) The beneficiary (or his or her representative), upon request by 
the QIO, must be prepared to discuss his or her case with the QIO.
    (d) Procedures the QIO must follow. On the date that the QIO 
receives the beneficiary's request:
    (1) The QIO must notify the hospital that the beneficiary has filed 
a request for immediate review.
    (2) The hospital must supply any information, including medical 
records, that the QIO requires to conduct its review and must make it 
available, by phone or in writing, by the close of business of the 
first full working day after the day the beneficiary receives notice of 
the proposed discharge.
    (3) The QIO must examine the pertinent records pertaining to the 
services.
    (4) The QIO must solicit the views of the beneficiary who requested 
the expedited determination.
    (5)(i) The QIO must make a determination and notify the 
beneficiary, the hospital, and physician of its determination by close 
of business of the first working day after it receives all requested 
pertinent information.
    (ii) When the beneficiary did not request an expedited initial 
determination in accordance with paragraph (c)(1)(iii) of this section 
and remains an inpatient in the hospital, the QIO will make a 
determination and notify the beneficiary, the hospital, and physician 
of its determination within 2 working days following receipt of the 
request and pertinent information.
    (iii) When the beneficiary did not request an expedited initial 
determination in accordance with paragraph (c)(1)(iii) of this section 
and is no longer an inpatient in the hospital, the QIO will make a 
determination and notify the beneficiary, the hospital, and physician 
of its determination within 30 calendar days after receipt of the 
request.
    (e) Coverage during QIO expedited review. (1) In general, if the 
beneficiary remains in the hospital after receiving the advanced 
written notice of termination, and the hospital, the physician who 
concurred in the hospital's determination on which the advanced written 
notice of termination was based, or the QIO subsequently finds that the 
beneficiary requires an acute level of inpatient hospital care, the 
beneficiary is not financially responsible for continued care until the 
hospital once again determines that the beneficiary no longer requires 
inpatient care, secures concurrence from the physician responsible for 
the beneficiary's care or the QIO and notifies the beneficiary.
    (2) Timely filing. If a beneficiary files a request for an 
expedited determination by the QIO in accordance with paragraph 
(c)(1)(iii) of this section, the beneficiary is not financially 
responsible beneficiary for inpatient hospital services furnished 
before noon of the calendar day after the date the beneficiary (or his 
or her representative) receives a written expedited determination by 
the QIO.
    (3) Untimely filing. (i) When a beneficiary does not file a request 
for an expedited determination by the QIO in accordance with paragraph 
(c)(1)(iii) of this section and remains an inpatient in the hospital, 
that beneficiary may be responsible for charges that extend beyond the 
date specified on the hospital's advance written notice of termination 
or as otherwise stated by the QIO.
    (4) Hospital requests expedited review. When the hospital requests 
review in accordance with Sec.  405.1206, and the QIO concurs with the 
hospital's decision, a hospital may not charge a beneficiary until the 
date specified by the QIO.
    (f) Notice of an expedited determination. (1) When a QIO renders an 
expedited determination in accordance with paragraph (d)(5) of this 
section, it must notify the beneficiary, physician, and hospital of its 
decision, by telephone and in writing. The QIO's initial notification 
must be done telephonically and subsequently with a written notice.
    (2) A written notice of the expedited initial determination must 
contain the following:
    (i) The basis for the determination.
    (ii) A detailed rationale for the determination.
    (iii) A statement explaining the Medicare payment consequences of 
the expedited determination and date of liability, if any.
    (iv) A statement informing the beneficiary of his or her appeal 
rights including the name and phone number of the QIC that he or she 
must appeal to if he or she disagrees with this decision.
    (v) The time period for filing reconsideration review by the QIC.
    (g) Effect of an expedited QIO determination. The QIO determination 
is binding upon the beneficiary, physician, and hospital.
    (1) When beneficiary remains in hospital. If the beneficiary is 
still an inpatient in the hospital and is dissatisfied with this 
determination, he or she must request an appeal subject to Sec.  
405.1202.
    (2) When beneficiary is no longer an inpatient in the hospital. If 
the beneficiary is no longer an inpatient in the hospital and is 
dissatisfied with this determination, this determination is subject to 
the general QIC reconsideration rules set forth in Sec. Sec.  405.960 
through 405.978 of this subpart.


Sec.  405.1206  Hospital requests expedited QIO review.

    (a) If the hospital (acting directly or through its utilization 
review committee) believes that the beneficiary does not require 
further inpatient hospital care but is unable to obtain the agreement 
of the physician, it may request an expedited determination by the QIO.
    (b) Procedures hospital must follow. (1) The hospital must (acting 
directly or through its utilization review committee) notify the 
beneficiary (or his or her representative) that it has requested that 
review.
    (2) The hospital must supply any pertinent information the QIO 
requires to conduct its review and must make it available by phone or 
in writing, by close of business of the first full working day 
immediately following the day the hospital submits the request for 
review.
    (c) Procedures the QIO must follow. (1) On the date that the QIO 
receives the request for review by the hospital, it must review any 
pertinent information submitted by the hospital.
    (2) The QIO must examine the pertinent records pertaining to the 
services.
    (3) The QIO must solicit the views of the beneficiary in question.
    (4) The QIO must make a determination and notify the beneficiary, 
the hospital, and physician within 2 working days of either the 
hospital's request or receipt of any pertinent information submitted by 
the hospital.
    (d) Notice of an expedited determination. (1) When a QIO renders

[[Page 69363]]

an expedited determination as stated in paragraph (c)(4) of this 
section, it must notify the beneficiary, physician, and hospital of its 
decision, by telephone and in writing. The QIO's initial notification 
must be done telephonically and subsequently with a written notice.
    (2) A written notice of the expedited initial determination must 
contain the following:
    (i) The basis for the determination.
    (ii) A detailed rationale for the determination.
    (iii) A statement explaining the Medicare payment consequences of 
the expedited determination and date of liability, if any.
    (iv) A statement informing the beneficiary of his or her appeal 
rights including the name and phone number of the qualified independent 
contractor (QIC) that he or she must appeal to if that beneficiary is 
dissatisfied with the QIO's determination.
    (v) The time period for filing the subsequent appeal.
    (e) Effect of an expedited initial determination. The initial 
determination is binding upon the beneficiary, physician, and hospital.
    (1) When beneficiary remains in hospital. If the beneficiary is 
still an inpatient in the hospital and is dissatisfied with this 
determination, he or she must request an appeal in accordance with 
Sec.  405.1204 (QIC expedited reconsideration).
    (2) When beneficiary has been discharged. When the beneficiary is 
no longer an inpatient in the hospital and subsequently chooses to 
appeal this decision, he or she must file an appeal in accordance with 
Sec. Sec.  405.960 through 405.978.

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

    Dated: September 25, 2002.
Thomas A Scully,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: September 25, 2002.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-28296 Filed 11-14-02; 8:45 am]
BILLING CODE 4120-01-P