[Federal Register Volume 72, Number 56 (Friday, March 23, 2007)]
[Notices]
[Pages 13801-13803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-5304]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-4083-NR]


Medicare Program; Applicability of Part 405 Medicare Appeals 
Council Own Motion Review Provisions to the Part 423 Medicare 
Prescription Drug (Part D) Appeals Process

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

ACTION: Notice of CMS Ruling.

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SUMMARY: This notice announces a CMS Ruling that establishes a process 
for own motion review of Medicare Prescription Drug Program (Part D) 
cases by the Medicare Appeals Council.

FOR FURTHER INFORMATION CONTACT: Arrah Tabe-Bedward, (410) 786-7129 or 
Kathryn McCann Smith, (410) 786-7623.

SUPPLEMENTARY INFORMATION: The CMS Acting Administrator signed Ruling 
CMS-4083-NR on March 15, 2007. The text of the CMS Ruling is as 
follows:

Implementation of a Process for Own Motion Review of Part D Cases by 
the Medicare Appeals Council

    Summary: This Ruling establishes a process, consistent with the 
current Medicare fee-for-service (FFS) appeals rules in title 42 of the 
Code of Federal Regulations, part 405, subpart I, for own motion review 
of Part D cases by the Medicare Appeals Council. This Ruling is 
effective on the date the Acting Administrator signs the Ruling.
    Citations: Sections 1852(g), 1860D-4(g)-(h), and 1869 of the Social 
Security Act (42 U.S.C. 1395w-22, 1395w-104 and 1395ff).

I. Background on Part D Appeals

    Sections 1860D-4(g) and (h) of the Social Security Act (the Act) 
and the implementing regulations at 42 CFR part 423, subpart M, 
establish a Part D enrollee's right to appeal an adverse coverage 
determination made by a Part D plan sponsor (``plan sponsor''), as 
defined at 42 CFR 423.4, that results in the denial of prescription 
drug coverage the enrollee believes he or she is entitled to receive 
under the Part D program. This includes a plan sponsor's decision not 
to provide or pay for a Part D drug, failure to provide a coverage 
determination in a timely manner when a delay would adversely affect 
the enrollee's health, a decision concerning a tiering or non-formulary 
exceptions request, and a decision on the amount

[[Page 13802]]

of cost sharing for a drug. The appeals process establishes that 
enrollees who are dissatisfied with a coverage determination have the 
right to request that the plan sponsor conduct a redetermination of its 
coverage determination. The enrollee then has the right to request a 
reconsideration by the Part D independent review entity (IRE) if the 
enrollee is dissatisfied with the plan sponsor's redetermination. If 
the enrollee is dissatisfied with the Part D IRE's decision, and the 
amount in controversy (AIC) requirement is satisfied, the enrollee has 
the right to request an administrative law judge (ALJ) hearing. An 
enrollee who is dissatisfied with the ALJ's decision has the right to 
file a request for review with the Medicare Appeals Council (MAC). If 
the enrollee is dissatisfied with the MAC's decision and the AIC 
requirement is satisfied, the enrollee has the right to file a civil 
action in Federal district court.

II. Background on MAC Own Motion Review Authority

    Section 1860D-4(h) of the Act provides that plan sponsors follow 
appeals procedures in Sec.  1852(g)(5) of the Act that are similar to 
those applicable to Medicare Advantage (MA) organizations for Part C 
appeals. Section 1860D-4(h) is silent with respect to own motion review 
by the MAC. Section 1852(g)(5) provides that enrollees in MA plans who 
are dissatisfied with determinations regarding their Part C benefits 
are entitled, if they meet the amount in controversy requirement, to a 
hearing before the Secretary to the same extent as is provided in Sec.  
205(b) of the Act and judicial review of the Secretary's final decision 
as provided in Sec.  205(g) of the Act. Section 1869(b)(1)(A) of the 
Act, which sets forth the requirements for FFS appeals, contains 
similar language to that set forth in Sec.  1852(g)(5) and also refers 
to Sec.  205(b) and (g). Again, these sections of the Act do not 
discuss own motion review by the MAC.
    These statutory concepts are reflected in the Part D regulations at 
42 CFR part 423, subpart M and the Part C regulations at 42 CFR part 
422, subpart M. The Part D regulations state that, unless otherwise 
provided, the Part C regulations regarding appeals will apply to Part D 
appeals ``to the extent they are appropriate.'' 42 CFR 423.562(c). The 
Part D regulations regarding MAC review do not provide any guidance on 
own motion review and, instead, at Sec.  423.620, explicitly state that 
the regulations in part 422, subpart M, regarding MAC review apply to 
Part D appeals ``to the extent applicable.'' The Part C regulations 
governing appeals at the ALJ and MAC levels provide that adjudicators 
apply the FFS appeals procedures in 42 CFR part 405 ``to the extent 
that they are appropriate.'' 42 CFR 422.562(d). Like the Part D 
regulations, the Part C regulations governing MAC review are silent on 
own motion review and state that the FFS regulations ``regarding MAC 
review apply to matters addressed by this subpart to the extent that 
they are appropriate.'' 42 CFR 422.608.
    Therefore, because there is no guidance on own motion review by the 
MAC in the existing Part C and Part D statutory and regulatory 
frameworks, we look to the FFS regulations. This Ruling is intended to 
establish the process for own motion review of Part D cases by the MAC 
using the process established under the FFS regulations, as 
appropriate. This Ruling does not limit the authority of the Secretary 
to issue future rulemaking or guidance documents addressing Part D 
appeals issues, including the MAC's own motion review authority.

III. MAC Own Motion Review Under Part 405 and Under This Ruling

    We believe that it is appropriate to provide a process for making 
own motion referrals to the MAC for Part D appeals so that there is a 
means for seeking MAC review of ALJ decisions that may warrant review. 
Based on the existing statutory and regulatory frameworks, and for the 
limited purpose of this Ruling, we look to the FFS appeals process for 
MAC own motion review set out in 42 CFR part 405, subpart I to assist 
in developing this process and determining (1) who may refer cases to 
the MAC, (2) the standards of referral and review, and (3) other 
procedural requirements.

A. Who May Refer Part D Cases to the MAC for Own Motion Review

    Under 42 CFR 405.1110(a), the MAC may decide on its own motion to 
review a decision or dismissal by an ALJ. In addition, CMS or its 
contractors may refer a case to the MAC for consideration under this 
own motion authority if the referral is made anytime within 60 days 
after the date of an ALJ's decision or dismissal.
    Section 1860D-4(h)(1) of the Act establishes that only a ``Part D 
eligible individual shall be entitled to bring such an appeal.'' 
Moreover, existing regulations do not provide plan sponsors with the 
ability to bring an appeal or afford plan sponsors party status to an 
appeal. Thus, plan sponsors do not have a direct right of appeal to the 
MAC. Similarly, the existing Part D statute and regulations do not 
explicitly allow either CMS or its contractors to participate in or be 
parties to ALJ hearings.
    For purposes of this Ruling, we believe it is appropriate for the 
MAC to decide on its own motion to review a decision or dismissal by an 
ALJ. In addition, we believe that it is appropriate that only CMS or 
the Part D IRE make referrals to the MAC for own motion review. As a 
procedural matter and for efficiency, we expect that most of the 
referrals will be made through the Part D IRE, because it is the entity 
responsible for monitoring plan effectuation of favorable decisions and 
serves as a repository for all completed Part D ALJ cases and 
associated files. The Part D IRE has neither a business nor a financial 
interest in the outcome of a case. As such, the Part D IRE is generally 
in the best position to objectively examine whether a particular case 
meets the standard for referral. While the process established by this 
Ruling does not permit a plan sponsor to refer a Part D case to the MAC 
for own motion review, plan sponsors will continue to have the 
opportunity to communicate with the Part D IRE about cases that may 
warrant such a referral. Thus, we consider it appropriate, and 
consistent with part 405, subpart I, to allow the MAC to review an ALJ 
decision or dismissal on its own motion, and to allow only CMS or the 
Part D IRE to refer cases to the MAC to consider review under its own 
motion authority.

B. Standards for Referral and Review of Part D Cases for Own Motion 
Review by the MAC

    With respect to the standards for referral of cases, the 
regulations at Sec.  405.1110 distinguish between cases in which CMS or 
its contractor participated or appeared as a party in the appeal at the 
ALJ level and cases in which CMS or its contractor did not participate. 
Where CMS or its contractor did not participate or appear as a party, 
Sec.  405.1110(b)(1) and (c)(2) establish that CMS or any of its 
contractors may refer a case to the MAC if the ALJ 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. In addition to the referral standards that apply when 
CMS or its contractor did not participate or appear as a party, for 
cases in which CMS or its contractor participated or was a party at the 
ALJ level, Sec.  405.1110(b)(1)(ii) and (c)(1) provide that CMS or its 
contractor may also refer cases for own motion review by the MAC if, in 
CMS' view, the ALJ

[[Page 13803]]

decision or dismissal is not supported by the preponderance of evidence 
in the record or the ALJ abused his or her discretion. Since CMS and 
its contractor do not have explicit authority under the existing 
statutes and regulations to participate in or be parties to ALJ 
hearings in Part D cases, we believe it is appropriate and consistent 
with part 405, subpart I, to allow CMS or the Part D IRE to refer Part 
D cases to the MAC to consider review under its own motion authority 
based on the standards for referral that apply when CMS or its 
contractor did not participate in the ALJ proceedings or appear as a 
party.
    Similar to how Sec.  405.1110 sets forth different referral 
standards depending on whether or not CMS or its contractor participate 
in the ALJ hearing, the regulations provide differing standards for 
review. Section 405.1110(c)(1) provides that when a referral is made in 
instances where CMS or its contractor participated or appeared as a 
party, the MAC exercises 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 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.
    Section 405.1110(c)(2) provides that when referral is made in 
instances where CMS or its contractor did not participate 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 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.
    As previously noted, since neither the Part D statute nor the 
current Part D regulations explicitly allow a Part D plan sponsor, CMS, 
or a CMS contractor to participate in or be parties to appeals at the 
ALJ level, we consider it appropriate to implement the standard of 
referral and review in Sec.  405.1110 that applies when CMS and its 
contractor do not participate in or are not parties to the ALJ hearing. 
Accordingly, under this Ruling, CMS or the Part D IRE may refer a Part 
D case to the MAC and the MAC will accept review of a Part D case if 
the ALJ's 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 or the Part D IRE.

C. Other Issues Regarding MAC Own Motion Review of Part D Cases

    For the most part, the other provisions set forth under Sec.  
405.1110 apply appropriately to Part D cases. The requirements related 
to the 60-day time frame for filing the written referral and for 
providing notice to other interested parties set forth in Sec.  
405.1110(b)(2) are processes that are appropriate to apply to Part D 
cases. See also 42 CFR 405.1110(a). Written referrals must state the 
reasons why CMS or its contractors believe the MAC must review the case 
on its own motion. CMS or its contractors will send a copy of its 
referral to all parties to the ALJ's action and to the ALJ. Similarly, 
the requirements in Sec.  405.1110(b)(2) regarding the filing of 
exceptions to the referral by submitting written comments to the MAC 
within 20 days of the referral notice, and sending such comments to 
CMS, appropriately apply to Part D cases.
    We also believe it is appropriate to apply to Part D cases those 
requirements in Sec.  405.1110(d) regarding the MAC's action. This 
provision states that 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 if it is not already a party 
to the hearing. The notice of the referral in Sec.  405.1110(b)(2) 
requires that the enrollee will be notified that the ALJ's decision may 
not be the final action in the case. If the MAC accepts review, it may 
adopt, modify, or reverse the decision or dismissal, may remand the 
case to an ALJ for further proceedings or may dismiss a hearing 
request. 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 405 CFR subpart I. 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 applicable 
adjudication deadline, the ALJ's decision or dismissal remains the 
final action in the case. We believe it is appropriate to apply these 
procedures to Part D cases that the MAC reviews on its own motion.
    As described in this section, the provisions in Sec.  405.1110 are 
procedural rules that apply appropriately to Part D appeals. Further, 
applying these regulatory processes to Part D appeals does not conflict 
with existing Part D requirements.

    Authority: Sections 1852, 1860D-4(g)-(h), and 1869 of the Social 
Security Act (42 U.S.C. 1395w-22, 1395w-104 and 1395ff).

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

    Dated: March 15, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. E7-5304 Filed 3-22-07; 8:45 am]
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