[Federal Register Volume 71, Number 9 (Friday, January 13, 2006)]
[Notices]
[Pages 2247-2248]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-346]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES


Medicare Program; Medicare Appeals; Adjustment to the Amount in 
Controversy Threshold Amounts for Calendar Year 2006

ACTION: Notice.

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SUMMARY: This notice announces the annual adjustment in the amount in 
controversy (AIC) threshold amounts for administrative law judge (ALJ) 
hearings and judicial review under the Medicare appeals process. The 
adjustments to the AIC threshold amounts will be effective for requests 
for ALJ hearings and judicial review filed on or after January 1, 2006. 
The 2006 AIC threshold amounts are $110 for ALJ hearings and $1090 for 
judicial review.

DATES: Effective Date: January 1, 2006.

FOR FURTHER INFORMATION CONTACT: Michael L. Lipinski, Office of 
Medicare Hearings and Appeals, Office of the Secretary; (216) 615-4084.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 1869(b)(1)(E) of the Social Security Act, as amended by 
section 521 of the Medicare, Medicaid and SCHIP Benefits Improvement 
and Protection Act of 2000 (BIPA), established the AIC threshold 
amounts for ALJ hearing requests and judicial review at $100 and $1000, 
respectively, for Medicare Part A and Part B appeals. Section 940 of 
the Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 (Medicare Modernization Act ``MMA''), amended section 
1869(b)(1)(E) to require the AIC threshold amounts for ALJ hearings and 
judicial review be adjusted annually. The AIC threshold amounts are to 
be adjusted, as of January 2005, by the percentage increase in the 
medical care component of the consumer price index for all urban 
consumers (U.S. city average) for July 2003 to the July of the 
preceding year involved and rounded to the nearest multiple of $10. 
Section 940(b)(2) of the MMA provided conforming amendments to apply 
the AIC adjustment requirement to Medicare Part C (Medicare Advantage 
``MA'') appeals and certain health maintenance organization and 
competitive health plan appeals. Health care prepayment plans are also 
subject to MA appeals rules, including the AIC adjustment requirement. 
Section 101 of the MMA provides for the application of the AIC 
adjustment requirement to Medicare Part D appeals.

A. Medicare Part A and Part B Appeals

    The statutory formula for the annual adjustment to the AIC 
threshold amounts for ALJ hearings and judicial review of Medicare Part 
A and Part B appeals, set forth at section 1869(b)(1)(E) of the Social 
Security Act [42 U.S.C. 1395ff(b)(1)(E)], is included in the applicable 
implementing regulations, 42 CFR part 405, subpart I, at section 
405.1006(b). The regulations require the Secretary of the Department of 
Health and Human Services (the Secretary) to publish changes to the AIC 
threshold amounts in the Federal Register. 42 CFR 405.1006(b)(2). In 
order to be entitled to a hearing before an ALJ, a party must meet the 
AIC requirement. 42 CFR 405.1006(c). Similarly, a party must meet the 
AIC requirement at the time judicial review is requested for the court 
to have jurisdiction over the appeal. 42 CFR 405.1136(a).

B. Medicare Part C (Medicare Advantage) Appeals

    Section 940(b)(2) of the MMA applies the AIC adjustment requirement 
to Part C (MA) appeals by amending section 1852(g)(5) of the Social 
Security Act [42 U.S.C. 1395w-22(g)(5)]. The implementing regulations 
for Medicare Part C appeals are found at 42 CFR part 422, subpart M. 
Specifically, sections 422.600 and 422.612 discuss the AIC threshold 
amounts for ALJ hearings and judicial review. Section 422.600 grants 
any party, except the MA organization, a right to an ALJ hearing as 
long as the amount remaining in controversy after reconsideration meets 
the threshold requirement established annually by the Secretary. 
Section 422.612 states that any party, including the MA organization, 
may request judicial review if the amount in controversy meets the 
threshold requirement established annually by the Secretary.

C. Health Maintenance Organizations, Competitive Medical Plans, and 
Health Care Prepayment Plans

    Section 940(b)(2) of the MMA also amended section 1876(c)(5)(B) of 
the Social Security Act [42 U.S.C. 1395ff(c)(5)(B)] to make section 
1869(b)(1)(E) applicable to certain beneficiary appeals within the 
context of health maintenance organizations and competitive medical 
plans. The applicable implementing regulations for Medicare Part C 
appeals set forth in Subpart M of 42 CFR part 422 and discussed above, 
apply to these appeals. The Medicare Part C appeals rules also apply to 
health care prepayment plan appeals.

D. Medicare Part D (Prescription Drug Plan) Appeals

    The annually adjusted AIC threshold amounts for ALJ hearings and 
judicial review that apply to Medicare Parts A, B, and C appeals also 
apply to Medicare Part D appeals. Section 101 of the MMA added section 
1860D-4(h)(1) regarding Part D appeals to the Social Security Act [42 
U.S.C. 1395w-104(h)(1)]. This statutory provision requires a 
prescription drug plan sponsor to meet the requirements set forth in 
sections 1852(g)(4) and (g)(5) of the Social Security Act [42 U.S.C. 
1395w-22(g)(4), (g)(5)] in a similar manner as MA organizations. As 
noted above, the annually adjusted AIC threshold requirement was added 
to section 1852(g)(5) by section 940(b)(2)(A) of the MMA. The 
implementing regulations for Medicare Part D appeals can be found at 42 
CFR part 423, subpart M. The regulations impart at section 423.562(c) 
that unless the Part D appeals rules provide otherwise, the Part C 
appeals rules (including the annually adjusted AIC threshold amount) 
apply to Part D appeals. More specifically, sections 423.610 and 
423.630 of the Part D appeals rules discuss the AIC threshold amounts 
for ALJ hearings and judicial review. Section 423.610(a) grants a Part 
D enrollee, who is dissatisfied with the Independent Review Entity 
(IRE) reconsideration determination, a right to an ALJ hearing if the 
amount remaining in controversy after the IRE reconsideration meets the 
threshold amount established annually by the Secretary. Section 
423.630(a) allows a Part D enrollee to request judicial review if the 
AIC meets the threshold amount established annually by the Secretary.

II. AIC Adjustment Formula and the 2005 and 2006 AIC Adjustments

    As previously noted, section 940 of the MMA requires that the AIC 
threshold amounts be adjusted annually, beginning in January of 2005, 
by the percentage increase in the medical care component of the 
consumer price index (CPI) for all urban consumers (U.S. city average) 
for July 2003 to the July of the preceding year involved and rounded to 
the nearest multiple of $10.

A. Calendar Year 2005

    The AIC threshold amount for ALJ hearing requests remained at $100 
and the AIC threshold amount for judicial review rose to $1,050 for the 
2005 calendar year. The amounts were based on the 4.5 percent increase 
in the medical care component of the CPI from

[[Page 2248]]

July of 2003 to July of 2004 as published by the Bureau of Labor 
Statistics, Department of Labor. The CPI level was at 297.6 in July of 
2003 and rose to 311 in July of 2004. This change accounted for the 4.5 
percent increase. The increase in the AIC threshold for ALJ hearing 
requests would have changed to $104.50 based on the 4.5 percent 
increase. Section 940 of the MMA requires, however, that the increase 
be rounded to the nearest $10 if the increase is not a multiple of $10. 
Therefore, after rounding, the 2005 AIC threshold amount for ALJ 
hearings remained at $100. The AIC threshold amount for judicial review 
changed to $1,045 based on the 4.5 percent increase. This amount was 
rounded to the nearest multiple of $10, resulting in a 2005 AIC 
threshold amount of $1,050.
    The 2005 AIC threshold amounts were published in the preamble to 
the Interim Final Rule, 70 FR 11423 (March 8, 2005), regarding 
``Changes to the Medicare Claims Appeal Procedures.'' In addition, this 
information was previously made available to the public through a 
change to the Medicare Claims Processing Manual. CMS Change Request 
3127, Revisions and Corrections to Chapter 29 of the IOM, Claims 
Processing Manual--Appeals Sec.  30.8 (Nov. 26, 2004).

B. Calendar Year 2006

    The AIC threshold amount for ALJ hearing requests has risen to $110 
and the AIC threshold amount for judicial review has risen to $1,090 
for the 2006 calendar year. These new amounts are based on the 8.9 
percent increase in the medical care component of the CPI from July of 
2003 to July of 2005. The CPI level was at 297.6 in July of 2003 and 
rose to 324.1 in July of 2005. This change accounted for the 8.9 
percent increase. The increase in the AIC threshold amount for ALJ 
hearing requests changes to $108.90 based on the 8.9 percent increase. 
In accordance with section 940 of the MMA, this amount is rounded to 
the nearest multiple of $10. Therefore, the 2006 AIC threshold amount 
for ALJ hearings is $110. The AIC threshold amount for judicial review 
changes to $1,089 based on the 8.9 percent increase. This amount was 
rounded to the nearest multiple of $10, resulting in a 2006 AIC 
threshold amount of $1,090.

C. Summary Table of Adjustments in the AIC Threshold Amounts

            Table 1.--Amount-in-Controversy Threshold Amounts
------------------------------------------------------------------------
                                             CY 2004   CY 2005   CY 2006
------------------------------------------------------------------------
ALJ Hearing...............................      $100      $100      $110
Judicial Review...........................      1000      1050     1090
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* CY--Calendar Year.


    Dated: January 9, 2006.
Ann C. Agnew,
Executive Secretary to the Department.
[FR Doc. 06-346 Filed 1-10-06; 2:43 pm]
BILLING CODE 4150-24-P