[Federal Register Volume 89, Number 199 (Tuesday, October 15, 2024)]
[Rules and Regulations]
[Pages 83240-83294]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-23195]
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Vol. 89
Tuesday,
No. 199
October 15, 2024
Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 476, and 489
Medicare Program: Appeal Rights for Certain Changes in Patient Status;
Final Rule
Federal Register / Vol. 89, No. 199 / Tuesday, October 15, 2024 /
Rules and Regulations
[[Page 83240]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 476, and 489
[CMS-4204-F]
RIN 0938-AV16
Medicare Program: Appeal Rights for Certain Changes in Patient
Status
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule implements an order from the Federal district
court for the District of Connecticut in Alexander v. Azar that
requires HHS to establish appeals processes for certain Medicare
beneficiaries who are initially admitted as hospital inpatients but are
subsequently reclassified as outpatients receiving observation services
during their hospital stay and meet other eligibility criteria.
DATES: These regulations are effective on October 11, 2024.
FOR FURTHER INFORMATION CONTACT:
David Danek, [email protected], for issues related to the
retrospective process.
Janet Miller, [email protected], for issues related to the
prospective process.
Shaheen Halim, [email protected] for issues related to
Quality Improvement Organization review.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
The purpose of this final rule is to establish appeals processes to
comply with a court order issued in the case Alexander v. Azar, 613 F.
Supp. 3d 559 (D. Conn. 2020), aff'd sub nom., Barrows v. Becerra, 24
F.4th 116 (2d Cir. 2022). The processes will apply to certain Medicare
beneficiaries who are initially admitted as hospital inpatients but are
subsequently reclassified as outpatients receiving observation services
during their hospital stay and meet other eligibility criteria.
The processes consist of the following:
Expedited appeals: We are establishing an
expedited appeals process for certain beneficiaries who disagree with
the hospital's decision to reclassify their status from inpatient to
outpatient receiving observation services (resulting in a denial of
coverage for the hospital stay under Part A). Eligible beneficiaries
will be entitled to request an expedited appeal regarding that decision
prior to release from the hospital. Appeals will be conducted by a
Beneficiary & Family Centered Care--Quality Improvement Organization
(BFCC-QIO).
Standard appeals: Beneficiaries who do not file
an expedited appeal will have the opportunity to file a standard appeal
(that is, an appeal requested by a beneficiary eligible for an
expedited appeal, but filed outside of the expedited timeframes)
regarding the hospital's decision to reclassify their status from
inpatient to outpatient receiving observation services (resulting in a
denial of coverage for the hospital stay under Part A). These standard
appeals will follow similar procedures to the expedited appeals process
but without the expedited timeframes to file and for the QIO to make
decisions.
Retrospective appeals: We are establishing a
retrospective review process for certain beneficiaries to appeal
denials of Part A coverage of hospital services (and certain SNF
services, as applicable), for specified inpatient admissions involving
status changes that occurred prior to the implementation of the
prospective appeals process, dating back to January 1, 2009. Consistent
with existing claims appeals processes, Medicare Administrative
Contractors (MACs) will perform the first level of appeal, followed by
Qualified Independent Contractor (QIC) reconsiderations, Administrative
Law Judge (ALJ) hearings, review by the Medicare Appeals Council, and
judicial review. Eligible beneficiaries will have 365 calendar days
from the implementation date of this rule to file a request for a
retrospective appeal. We will announce the implementation date on
CMS.gov and/or Medicare.gov.
In general, as explained in this final rule, we are finalizing the
procedures for these appeals as proposed. However, we are making some
editorial/technical corrections to the regulations text, as well as
several revisions and clarifications to the retrospective appeal
procedures based on the public comments we received. These revisions
include:
Extending the timeframe for providers to submit a claim
following a favorable decision from 180 calendar days to 365 calendar
days.
Extending the timeframe for providers to submit records as
requested by a contractor from 60 calendar days to 120 calendar days.
Clarifying the effect of a favorable appeal decision to
explain that if a hospital chooses to submit a Part A inpatient claim,
the hospital must refund any payments received for the Part B
outpatient claim before submitting the Part A inpatient claim to
Medicare. If a Part A claim is submitted, the previous Part B
outpatient claim will be reopened and canceled, and any Medicare
payments will be recouped to prevent duplicate payment.
Clarifying the effect of a favorable decision for a
beneficiary who was not enrolled in Medicare Part B at the time of
hospitalization to explain that the hospital must refund any payments
collected for the outpatient services even if the hospital chooses not
to submit a Part A claim for payment to the program.
Clarifying the effect of favorable appeals involving
beneficiaries who were enrolled in Medicare Part B at the time of
hospitalization to explain that hospitals must refund any payments
collected for the outpatient hospital services only if the hospital
chooses to submit a Part A inpatient claim for such services.
Clarifying that out-of-pocket payments made by a family
member on behalf of a beneficiary for SNF services (for the purpose of
determining whether those SNF services are eligible for inclusion in an
appeal under these procedures), may include out-of-pocket payments made
by individuals who are not biologically related to the beneficiary (for
example, a close family friend, roommate, or a former spouse).
II. Background
This rule finalizes a proposal issued in December 2023 \1\ and sets
forth new appeals procedures to implement the court order in Alexander
v. Azar, 613 F. Supp. 3d 559 (D. Conn. 2020), aff'd sub nom., Barrows
v. Becerra, 24 F.4th 116 (2d Cir. 2022). In this order, the court
directed the Department of Health and Human Services (HHS) to ``permit
all members of the . . . class to appeal the denial of their Part A
coverage'' and to establish appeal procedures for certain beneficiaries
in Medicare Part A and B (``Original Medicare'') who are initially
admitted to a hospital as an inpatient by a physician or otherwise
qualified practitioner \2\ but whose status during
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their stay is changed to outpatient by the hospital, thereby
effectively denying Part A coverage for their hospital stay.\3\ In some
cases, the status change also affects the availability of Part A
coverage for a beneficiary's post-hospital extended care services
furnished in a skilled nursing facility (SNF). The court imposed
additional conditions on the right to appeal as described in detail in
this final rule.
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\1\ 88 FR 89506.
\2\ As discussed in section III.A.1. of this final rule in
response to a public comment, we acknowledge that under existing
policies, for purposes of payment under Medicare Part A, an
individual is considered an inpatient of a hospital if formally
admitted as an inpatient pursuant to an order for hospital inpatient
admission by a physician or certain qualified practitioners as
defined in 42 CFR 412.3. We inadvertently omitted other qualified
practitioners when describing the inpatient admission process and
have revised our language in this final rule accordingly, when
referencing persons ordering hospital inpatient admissions.
\3\ The terms of the court order refer to denials of Part A
coverage. Consistent with the court order, the appeals processes in
this rule do not extend to enrollees in MA plans. MA plan enrollees
have existing rights that afford enrollees the right to appeal a
plan organization determination where the plan refuses to provide or
pay for services, in whole or in part, including the type or level
of services, that the enrollee believes should be furnished or
arranged for by the MA organization (42 CFR 422.560 through
422.634). For example, if an MA plan has refused to authorize an
inpatient admission, the enrollee may request a standard or
expedited plan reconsideration of that organization determination
(42 CFR 422.566(b), 422.580 through 422.596, and 422.633).
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The court's order requires new appeal procedures be afforded to the
following class: Medicare beneficiaries who, on or after January 1,
2009--
Have been or will have been formally admitted as a
hospital inpatient;
Have been or will have been subsequently reclassified by
the hospital as an outpatient receiving ``observation services''; \4\
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\4\ For the purposes of these procedures, a beneficiary is
considered an outpatient receiving observation services when the
hospital changes a beneficiary's status from inpatient to outpatient
while the beneficiary is in the hospital and the beneficiary
subsequently receives observation services following a valid order
for such services (see 42 CFR 405.931(h)).
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Have received or will have received an initial
determination or Medicare Outpatient Observation Notice (MOON) \5\
indicating that the observation services are not covered under Medicare
Part A; and
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\5\ As explained in 42 CFR 489.21(y), the Medicare Outpatient
Observation Notice (MOON) is a written notice furnished by a
hospital to Medicare beneficiaries who receive observation services
as an outpatient for more than 24 hours. The notice explains why the
beneficiary is not an inpatient and also explains the consequences
of being an outpatient rather than an inpatient. A copy of the
notice is available to download at https://www.cms.gov//medicare/forms-notices/beneficiary-notices-initiative/ffs-ma-moon.
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Either--(1) were not enrolled in Part B coverage at the
time of their hospitalization; or (2) stayed at the hospital for 3 or
more consecutive days but were designated as inpatients for fewer than
3 days, unless more than 30 days has passed after the hospital stay
without the beneficiary's having been admitted to a SNF. Medicare
beneficiaries who meet the requirements of the foregoing sentence but
who pursued an administrative appeal and received a final decision of
the Secretary before September 4, 2011, are excluded from the class.
The court determined that beneficiaries who are members of the
class described previously have been deprived of due process and
ordered the following:
Class members shall have an opportunity to appeal the
denial of their Part A coverage.
Class members who have stayed, or will have stayed, at a
hospital for 3 or more consecutive days, but who were designated as
inpatients for fewer than 3 days, shall have the right to an appeal
through an expedited appeals process substantially similar to the
existing expedited process for challenging hospital discharges.
Class members shall be permitted to argue that their
inpatient admission satisfied the relevant criteria for Part A
coverage--for example, that the medical record supported a reasonable
expectation of a medically necessary two-midnight stay at the time of
the physician's or otherwise qualified practitioner's initial inpatient
order, in the case of a post-Two Midnight Rule hospital stay--and that
the hospital utilization review committee's (URC) determination to the
contrary was therefore erroneous. If a class member prevails, then for
the purposes of determining Part A benefits, including both Part A
hospital coverage and Part A SNF coverage, the beneficiary's
reclassification as an outpatient that resulted from the URC's
erroneous determination shall be disregarded.
For class members whose due process rights were violated,
or will have been violated, prior to the availability of the procedural
protections as previously set forth, such beneficiaries shall be
afforded a meaningful opportunity to appeal the denial of their Part A
coverage, as well as effective notice of this right.
In addition, on December 9, 2022, the district court issued an
``Order Clarifying Judgment'' with respect to the claims for outpatient
hospital services received by beneficiaries who were enrolled in Part B
of the program at the time such services were furnished. In this
clarifying order, the court stated that it intended to provide a
meaningful opportunity for class members whose due process rights were
violated to appeal the denial of Part A coverage, but it also stressed
the need to provide a remedy for class members who endured
undercompensated stays at skilled nursing facilities. It further stated
that, since class members with Part B coverage had much of their past
hospital stays paid for by such coverage, it did not intend to require
the unwinding of previously approved Part B outpatient hospital claims
so they could be reprocessed as Part A claims. The clarification states
that if a class member enrolled in Part B coverage at the time of their
hospitalization prevails in an appeal of a claim, then an adjustment of
payment for the underlying hospital services (including any applicable
deductible and coinsurance amounts) is not required, and Part A payment
for covered SNF services may be made without any adjustment to the
payment for the underlying hospital services.
In section III.A. of this final rule, we describe the procedures
that will be available to members of the class described previously
(hereinafter, eligible beneficiaries) to appeal denials of Part A
coverage of hospital services (and certain SNF services, as
applicable), for specified inpatient admissions involving status
changes that occurred prior to the implementation of the prospective
appeals process, dating back to January 1, 2009. We refer to this as
the retrospective appeals process. In section III.B. of this final
rule, we describe the expedited and standard appeals procedures that
will be available prospectively (meaning to beneficiaries whose status
is changed after the effective date of this rule and after the
implementation and availability of the procedures established by the
rule) to eligible beneficiaries who, among other things, are admitted
as hospital inpatients and are reclassified by hospitals as outpatients
receiving observation services (the ``prospective appeals process'').
Eligible beneficiaries who are hospitalized and entitled to an
appeal under these procedures prior to the implementation date of the
prospective appeals process will be able to utilize the retrospective
appeals process, subject to the filing limitation proposed in Sec.
405.932(a)(2)(i)(B).
The flowcharts below depict the overall appeals processes being
finalized in this regulation. With the exception of some editorial
revisions and updating the amount in controversy requirements for
calendar year 2025 ($190 for an Administrative Law Judge hearing and
$1,900 for judicial review), the flowcharts are the same as what was
outlined in the proposed rule (88 FR 59509).
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In the sections that follow, we provide an overview of the
different appeal processes and describe the proposed provisions, the
comments received on those provisions, and our response to those
comments. We then indicate whether we are finalizing the provisions as
proposed or with modifications.
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III. Provisions of the Proposed Rule and Analysis of and Responses to
Public Comments
A. Retrospective Appeals
1. Overview
The retrospective appeals required by the court order constitute a
new process under the Medicare program, as the appeals would be based
on alleged entitlement to coverage for services that were not actually
billed to the program on a claim. That is, under existing claims
appeals processes for the Original Medicare program, a beneficiary is
asking for a determination on whether specific items and services
billed on a claim for payment should have been covered and paid, not
whether items and services should have been billed or whether there
should have been coverage when there is no claim. Sections 205(a),
1871, and 1872 of the Social Security Act (the Act) provide the
Secretary authority to establish regulations to carry out the
administration of the insurance programs under Title XVIII of the
Act.\6\ The new retrospective appeals procedures required under the
court order do not fit into the existing claims appeals process for
Original Medicare claims established under section 1869 of the Act.
However, in our view, these new procedures would have similarities to
the longstanding claims appeals procedures with which Medicare
beneficiaries are familiar. Accordingly, we proposed new procedures to
govern the retrospective appeals process in proposed 42 CFR 405.931
through 405.938 that would be based, in large part and to the extent
appropriate, on the existing claims appeals procedures in the existing
provisions in 42 CFR part 405 Subpart I (as authorized under section
1869 of the Act).
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\6\ Section 205(a) of the Act, incorporated into Title XVIII by
section 1872 of the Act, provides that the Secretary ``shall have
full power and authority to make rules and regulations and to
establish procedures, not inconsistent with the provisions of this
title, which are necessary or appropriate to carry out such
provisions[.]'' Section 1871 of the Act states that the Secretary
shall prescribe such regulations as may be necessary to carry out
the administration of the insurance programs under this title.
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In Sec. 405.931(b), we proposed to define the term ``eligibility
contractor'' to mean the contractor that would serve as a single point
of contact for incoming retrospective appeal requests. As proposed in
Sec. 405.932(a) through (e), the eligibility contractor would
determine if the request for appeal is valid, including whether the
request is timely and contains the required elements for an appeal. In
addition, we proposed that the eligibility contractor would determine
whether the individual submitting the request (or the individual for
whom a request is submitted, in the case of a request filed by a
representative) meets the definition of a class member as defined by
the court, and is, thus, an eligible party entitled to an appeal under
the terms of the court order. The eligibility contractor would then
either deny or approve each appeal request received and notify the
individual (or their representative) of the determination. For those
requests that are denied (that is, the beneficiary has not demonstrated
they meet the definition of a class member and is not eligible for an
appeal, or the appeal request is not otherwise valid), we proposed in
Sec. 405.932(e) that the individual filing the request (or their
representative) would have an opportunity to correct any errors and/or
demonstrate why the appeal request should be approved. An individual's
request to review a denial must be received by the eligibility
contractor within 60 calendar days of the individual's receipt of the
denial notice under proposed Sec. 405.932(e)(2). For appeal requests
that are approved (that is, the beneficiary satisfies the requirements
for class membership--and thus, is determined to be an eligible party--
and the request is valid), the eligibility contractor would forward
those requests to the processing contractor to conduct the first level
appeal.
In Sec. 405.931(b), we proposed that the processing contractor
would perform the first level of appeal. The processing contractor
would be the MAC that currently has jurisdiction over Part A claims for
the hospital at which the beneficiary was initially admitted prior to
being subject to a status change. As proposed in Sec. 405.932(f)
through (i), processing contractors would generally follow existing
procedures that govern redeterminations (42 CFR 405.940 through
405.958), as appropriate, except as we otherwise proposed in Sec.
405.932.
In Sec. 405.934, we proposed that eligible parties (or their
representatives) who are dissatisfied with the processing contractor's
appeal decision would have the opportunity to request a reconsideration
to be performed by a QIC. We proposed that the QICs would generally
utilize existing procedures that govern reconsiderations (42 CFR
405.960 through 405.978), as appropriate, except as we otherwise
proposed in Sec. 405.934.
Following a reconsideration, in Sec. 405.936 we proposed that
eligible parties (or their representatives) who are dissatisfied with
the reconsideration would be able to request a hearing before an
Administrative Law Judge (ALJ) (or review by an attorney adjudicator)
if the claims under appeal meet the amount in controversy
requirement.\7\ In Sec. 405.936(c), we proposed a new method of
calculating the amount in controversy that reflects the differences
between these new appeals and typical claims appeals under existing
procedures. In addition, under proposed Sec. 405.938, eligible parties
(or their representatives), would be able to request review by the
Medicare Appeals Council (hereinafter, Council). As with the first two
levels of appeal, we proposed that these new appeals before an ALJ (or
attorney adjudicator) and the Council would generally follow existing
procedures in 42 CFR 405.1000 through 1140, as appropriate, except as
we have otherwise proposed in Sec. Sec. 405.936 through 405.938.
Eligible parties would also be able to request judicial review under
the existing provisions in 42 CFR 405.1136.
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\7\ The amount in controversy requirement for CY 2025 is $190
for a hearing before an Administrative Law Judge, and $1,900 for
judicial review. Notice of the updated minimum amounts for each
calendar year is published in the Federal Register and is available
on https://www.cms.gov/medicare/appeals-grievances/fee-for-service/third-level-appeal.
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In Sec. 405.932(a)(2), we proposed to limit the time to file a
request for a retrospective appeal to 365 calendar days following the
implementation date of the final rule. We have provided notice of the
pending appeals process for class members since July 2022 on both
Medicare.gov and CMS.gov and we will continue to update those websites
with information as this rulemaking proceeds and as we begin to
implement the final rule. Thus, when this rulemaking is concluded and
procedures are finalized, effective, and operational, we believe we
would have afforded eligible beneficiaries ample time to gather
necessary documentation in anticipation of filing appeal requests.
We received many comments in support of the overall process we
proposed for retrospective appeals. In addition, we received several
general comments on the scope and proposed procedures for the
retrospective appeals process and several comments on the outreach
efforts we proposed.
Comment: A commenter expressed concern that due to the length of
the entire retrospective appeal process, eligible parties could
experience delays in receiving coverage decisions for up to a year or
more.
Response: We appreciate the concerns raised by the commenter. We
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understand that beneficiaries and their families, in some cases, have
waited for many years to access an appeals process for the issues
addressed in these procedures. As we explained in the proposed rule,
the new appeals procedures ordered by the court do not fit neatly into
existing processes, but to the extent possible, we are mirroring
existing appeals processes for these new appeals. This relative
consistency in the processes will benefit individuals filing appeals as
well as our contractors who process appeals. In some cases, decisions
can be made in less time than the deadlines prescribed in the
regulations. We believe these timeframes, which have been in place for
existing appeals for 15 years, are reasonable and balance the need to
resolve complex issues with the interests of appellants in receiving
timely decisions.
Comment: A commenter requested that CMS clarify whether these new
appeals procedures apply to persons enrolled in Medicare Advantage (MA)
plans and consider extending these rights to the MA program.
Response: The retrospective appeals process (addressed in section
III.A. of this final rule) and the prospective appeals process
(addressed in section III.B. of this final rule) do not apply to the MA
program and will not be available for MA enrollees. As we explained in
the proposed rule, the terms of the court order refer to denials of
Part A coverage. Consistent with the court order, we are creating a new
appeals process for beneficiaries enrolled in Original Medicare. We
further explained that the appeals processes proposed in this rule do
not extend to enrollees in MA plans because we have determined that the
considerations underlying the protections ordered by the court for
beneficiaries enrolled in Original Medicare do not apply to MA plan
enrollees. MA enrollees have rights and protections as set forth in 42
CFR part 422 Subpart M. Under the MA regulations at 42 CFR
422.566(b)(3), an MA plan's refusal to provide or pay for services, in
whole or in part, including the type or level of services, that the
enrollee believes should be furnished or arranged for by the MA plan is
an organization determination. If an MA plan enrollee disagrees with a
plan's organization determination, the enrollee has the right to
request a reconsideration of that decision under the rules at Sec.
422.578. In the event an MA plan refuses to authorize an inpatient
admission, this is an adverse organization determination and the
enrollee may request a standard or expedited plan reconsideration
(Sec. Sec. 422.580 through 422.590, 422.633). If an MA plan upholds an
adverse decision at the reconsideration level, the case is
automatically sent to the Part C IRE for review (Sec. Sec. 422.592 and
422.594). Additional levels of appeal that may be available to an MA
enrollee include ALJ and Council review and judicial review (Sec. Sec.
422.600 through 422.612). Because of these existing rights and
protections afforded to MA enrollees, we did not propose any new
procedures applicable to MA enrollees. To the extent we identify
additional processes that may be necessary for the MA program, any such
proposals would be subject to full public discussion through notice and
comment rulemaking.
Comment: A commenter requested that we use ``provider-neutral
language'' throughout the rule, for example, instead of using
physician, we should consider using physician or otherwise qualified
practitioner.
Response: We appreciate the suggestion from this commenter. We have
reviewed the language in the proposed rule and found several instances
where it would be more appropriate to use the phrase ``physician or
other qualified practitioner'' consistent with the regulatory
provisions regarding inpatient admissions in 42 CFR 412.3(a). We will
use this terminology going forward.
Comment: A commenter requested that we amend the text of several
sections of the proposed codified regulations text to include the word
``shall'' to strengthen and emphasize required actions.
Response: We appreciate the suggestion by the commenter. We drafted
the regulation text for these new procedures to be consistent with
existing regulation text in 42 CFR part 405 Subpart I. Those provisions
also include required actions for contractors, but generally use
``must'' rather than ``shall'' to indicate a requirement. We reviewed
the proposed regulation text and did not identify language that was
vague or did not clearly indicate a requirement where we intended a
requirement. Thus, we are not adopting the recommendations made by the
commenter.
Comment: Many commenters expressed their support for the outreach
and education that we plan to conduct following the issuance of the
final rule as we implement these procedures. Commenters suggested
additional means of educating beneficiaries and their representatives
on the new appeal rights offered in this rule. For example, commenters
recommended we include information in the Medicare & You handbook and
with Medicare Summary Notices (MSNs) while the filing period is open
and create new materials available to beneficiaries and advocates such
as social workers and State Health Insurance Assistance Program (SHIP)
counselors. Commenters also suggested that we provide translations of
these materials into various languages.
Response: We appreciate the support of these commenters on our
general approach to conducting education and outreach related to these
new appeals procedures. We are committed to providing educational and
training materials on our website for advocates to reference and
provide to beneficiaries. We are also committed to creating new
documents and publications, as well as updating current publications
such as Medicare & You, that may be downloaded from Medicare.gov and/or
CMS.gov. This includes the translation of materials into different
languages as needed. We intend to train and provide information to
customer service representatives at 1-800-MEDICARE to assist and inform
beneficiaries with questions about these procedures. We also intend to
provide information to SHIP counselors and other advocacy groups in
providing updates on new and emerging programs in Medicare, such as
these new appeal rights.
In addition, we will include a message regarding this new appeal
right on beneficiary MSNs. This message will refer beneficiaries to the
detailed information that will be included on Medicare.gov and/or
CMS.gov.
Comment: A commenter suggested that we extend the date of receipt
of notices or decisions sent by the eligibility contractor, processing
contractor or other appeals adjudicators, to 30 calendar days following
receipt of the notice.
Response: We appreciate the comment. Our longstanding policy
presumes receipt of a notice in the appeals process is 5 calendar days
after the date of the notice. We adopted this policy for these new
retrospective appeals as we intended the process for these new appeals
to mirror existing processes as much as possible. This presumption is
rebuttable if the appellant can establish receipt outside of the 5-day
window. The reason for this longstanding presumption is to account for
the time between the printing and mailing of the notice receipt by the
appellant and because filing timeframes at subsequent levels of appeal
begin upon receipt of the decision at the previous level. Our
longstanding experience is that this 5-day window for
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receipt is generally consistent with postal delivery timeframes. We do
not believe the time between mailing the notice and receipt would be as
long as 30 calendar days. Thus, we are not adopting the recommendation
made by the commenter.
2. Party Status, Authorized Representatives, and Appointed
Representatives
The court order instructs HHS to establish new appeals procedures
for certain beneficiaries, specifically, beneficiaries who are members
of the defined class, as previously described in the overview and in
proposed Sec. 405.931(b). The court's decision noted that some class
members suffered financial or other consequences as a result of the
change in their status from inpatient to outpatient receiving
observation services, including having to pay for the costs of post-
hospital extended care services in a SNF out of pocket because they did
not satisfy the statutory requirement for SNF coverage of having a 3
consecutive day qualifying inpatient stay (see section 1861(i) of the
Act). In addition, other class members had to pay for their hospital
services themselves because they lacked Medicare Part B coverage. The
court directed HHS to afford class members a right to appeal certain
denials of Part A coverage which are defined later is this section. The
court ordered an appeal process be made available to those class
members who did not have such a process available if their hospital
stays, dating back to January 1, 2009, met the conditions of the order.
Accordingly, in Sec. 405.931(b) we proposed to define an eligible
party as an individual who meets the definition of a class member in
Alexander v. Azar. In that case, the court adopted the following class
definition: a Medicare beneficiary who, on or after January 1, 2009--
Was formally admitted as a hospital inpatient;
While in the hospital was subsequently reclassified as an
outpatient receiving observation services (as defined in Sec.
405.931(h));
Has received an initial determination (as defined in Sec.
405.920) or a Medicare Outpatient Observation Notice (MOON) (as
described in Sec. 489.20(y)) indicating that the observation services
are not covered under Medicare Part A; and
Either--
++ Was not enrolled in the Supplementary Medical Insurance program
(that is, Medicare Part B coverage) at the time of beneficiary's
hospitalization; or
++ Stayed at the hospital for 3 or more consecutive days but was
designated as an inpatient for fewer than 3 days, unless more than 30
calendar days has passed after the hospital stay without the
beneficiary's having been admitted to a SNF.
An eligible party would be entitled to request an appeal under the
proposed retrospective process.
In contrast, the court's decision did not include providers as
class members entitled to additional appeals procedures and did not
require HHS to afford new appeal rights to providers in these new
appeals proceedings. Accordingly, in Sec. 405.931(b) and (c), we
proposed to limit party status in these new appeals to beneficiaries
who meet the definition of a class member as specified in the court
order.
As we believe some beneficiaries who are members of the class may
require assistance with their appeal requests, we proposed to apply
existing rules regarding appointed representatives and authorized
representatives (see Sec. Sec. 405.902 and 405.910) to these new
appeals.\8\ There may also be some situations in which a class member
has died since their hospitalization and, as applicable, admission to a
SNF. Our existing rules in Sec. 405.906(a)(1) permit certain
successors in interest to file appeals on behalf of a deceased
beneficiary. Thus, in Sec. 405.931(d)(3) we proposed to apply those
rules to deceased class members who would have been eligible to request
an appeal under the proposed procedures for retrospective appeals.
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\8\ Appointed representative means an individual appointed by a
party to represent the party in a Medicare claim or claim appeal.
Authorized representative means an individual authorized under State
or other applicable law to act on behalf of a beneficiary involved
in the appeal (for example, a beneficiary's legal guardian,
surrogate decision-maker for an incapacitated beneficiary, or an
SSA-appointed representative payee). The authorized representative
will have all of the rights and responsibilities of a beneficiary or
party, as applicable, throughout the appeals process and does not
need a further appointment.
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However, contrary to existing claims appeals procedures, in Sec.
405.931(d)(1)(i) we proposed to exclude providers from representing
beneficiaries in these new appeals, and we proposed to prohibit the
assignment of appeal rights to providers as well. Since the decision to
change a patient's status is made by the hospital, we had concerns that
the interests of a class member could conflict with the interests of a
hospital or SNF, and we were concerned that a class member's challenge
to their denial of Part A coverage resulting from a change in status
from inpatient to outpatient receiving observation services may not be
appropriately represented by the hospital that initiated that change,
determined that outpatient services were appropriate for the
beneficiary, and in most cases, previously received payment for
outpatient services. We had similar concerns regarding representation
by SNFs that already received payment for the SNF services at issue.
Unlike most existing claims appeals, where the primary issue under
review is the denied coverage and payment for items and/or services
billed on a claim, the issue on appeal under these procedures is
whether services meet the relevant criteria for coverage and payment
under the inpatient hospital benefit under Part A of the program rather
than under the Part B outpatient benefit where payment was, in most
cases,\9\ previously made to the hospital, and the consequences of that
decision on coverage of SNF services. Moreover, as we are implementing
procedures required under the court's order under the Secretary's
rulemaking authority in sections 205(a), 1871, and 1872 of the Act, we
believed the provisions of section 1869 of the Act guide, but do not
explicitly govern, the appeals procedures for the new retrospective
appeals ordered by the court.
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\9\ We acknowledge that payment by Medicare would not have been
made in appeals brought by a beneficiary who was not enrolled in
Part B at the time of hospitalization. In those situations, the
beneficiary would have been responsible for payment for outpatient
services furnished by the hospital.
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We proposed to include a definition of ``unrepresented
beneficiary'' applicable to appeals under proposed Sec. Sec. 405.931
through 405.938. In the existing claims appeals process in 42 CFR part
405 subpart I, certain procedural requirements do not apply to an
unrepresented beneficiary. However, that term is not defined in
existing regulations. Therefore, in Sec. 405.931(d)(5), we proposed to
define an unrepresented beneficiary as a beneficiary who is an eligible
party and: (1) has not appointed a representative under Sec. 405.910;
or (2) has an authorized representative as defined in Sec. 405.902;
\10\ or (3) has appointed as its representative, a member of the
beneficiary's family, a legal guardian, or
[[Page 83247]]
an individual who routinely acts on behalf of the beneficiary, such as
a family member or friend who has a power of attorney; or (4) in the
case of a deceased beneficiary, the appeal request is filed by an
eligible party who meets the conditions set forth in Sec.
405.906(a)(1).
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\10\ Typically, an authorized representative will be a legal
guardian, representative payee or someone acting under state law on
behalf of a beneficiary (for example, a family member with a durable
power of attorney). Often these authorized representatives are
family members or other individuals who are unfamiliar with the
technical requirements of the existing claim appeals process. We
believed it was reasonable to treat appeals filed by authorized
representatives, like other existing claim appeals filed by family
members (that is, as if the appeal was filed by an unrepresented
beneficiary).
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We also proposed to incorporate certain existing policies that
would apply in the new appeals procedures for the convenience of
appellants and adjudicators. For example, in Sec. 405.931(f), we
proposed that the date of receipt of a notice or decision sent by the
eligibility contractor, processing contractor or other appeals
adjudicator is presumed to be 5 calendar days following the date on the
notice unless there is evidence to the contrary. In addition, in Sec.
405.931(g) we proposed that for the purposes of determining whether a
beneficiary has a qualifying inpatient stay for SNF eligibility and for
eligibility as a class member, days are counted consistent with
existing policy in Sec. 409.30 (that is, 3 consecutive calendar days
starting with the admission day but not counting the discharge day).
In proposed Sec. 405.931(h), we explained that for the purposes of
determining eligibility for an appeal under these procedures, a
beneficiary would be considered an outpatient receiving observation
services when the hospital changes a beneficiary's status from
inpatient to outpatient while the beneficiary is in the hospital and
the beneficiary subsequently receives observation services following a
valid order for such services.
We received several comments regarding eligibility requirements for
an appeal under these procedures and several comments regarding the
limitation on provider representation of eligible parties.
Comment: A few commenters questioned the MOON being a determining
factor for eligibility for an appeal under the new procedures. A
commenter noted that the MOON was established in August 2015, but
retroactive appeals are available to eligible beneficiaries with
hospital admissions starting on January 1, 2009. Another commenter
suggested that the proposed regulation in Sec. 405.931(b) defining an
eligible party requires the delivery of the MOON as a condition of
eligibility for a retrospective appeal.
Response: We appreciate the commenter's observations regarding the
implementation date of the MOON and the eligibility criteria under
these appeal procedures. The federal district court order and our
definition of an eligible party states that receipt of either an
initial determination or a MOON would serve to meet one condition of
eligibility for an appeal under these new procedures. For
hospitalizations that predate the effective date of the MOON, a
beneficiary's receipt of an initial determination for their hospital
and/or SNF claim (that is, a Medicare Summary Notice resulting from
processing a claim submitted by a provider) would serve to meet the
requirement.
Comment: A commenter sought clarification on whether a beneficiary
must receive observation services after the change in status from
inpatient to outpatient in order to be eligible for an appeal under
these new procedures.
Response: We appreciate the opportunity to provide this
clarification. A beneficiary must receive observation services after
the change in status from inpatient to outpatient in order to be
eligible for an appeal under these new procedures. As explained in the
proposed rule, consistent with the court order, the class members who
are to be afforded an opportunity to appeal the denial of their Part A
coverage include Medicare beneficiaries who, on or after January 1,
2009, have been or will have been subsequently reclassified by the
hospital as an outpatient receiving observation services, and meet the
other conditions specified in the order (88 FR 89506 (December 27,
2023)). We further stated in the proposed rule that, for the purposes
of these proposed procedures, a beneficiary is considered an outpatient
receiving observation services when the hospital changes a
beneficiary's status from inpatient to outpatient while the beneficiary
is in the hospital and the beneficiary subsequently receives
observation services following a valid order for such services (88 FR
89506).
Comment: Several commenters stated that the proposed rule does not
address how beneficiaries who are eligible for a retrospective appeal
will be identified and receive notice of the new appeal procedures that
are available. A commenter suggested that CMS utilize claims data,
hospital records, or beneficiary reports to identify eligible parties.
Response: We appreciate the commenter's suggestions. We considered
this issue as we assessed how to implement the court order and
determined that it would not be feasible to proactively identify
eligible parties. Unfortunately, the claims data available to us do not
align precisely with the eligibility criteria for these new appeals
procedures. For example, the outpatient claim submitted by a hospital
would not provide any indication of when observation services were
furnished to a beneficiary. Thus, we could not discern between a
beneficiary who received observation services prior to the inpatient
admission (who would not meet eligibility criteria) and a beneficiary
who received observation services after the change in status from
inpatient to outpatient simply based on claims information. This aspect
of eligibility for an appeal would only be available after a review of
medical records, and we believe it would be inefficient and ineffective
to request and review medical records for all potentially eligible
beneficiaries (estimated to be over 32,000) in order to identify those
beneficiaries who are, in fact, eligible for an appeal. Such attempts
would cause undue burden on the program and would delay appeals due to
the volume of records requests and resources needed to review every
medical record. Instead, we will rely on education and outreach to
alert beneficiaries to the availability of these new appeal procedures
and the eligibility requirements to access these appeals established in
this final rule.
Comment: A commenter questioned whether beneficiaries who were not
enrolled in Medicare Part B at the time of their hospitalization but
had other insurance coverage to cover outpatient services (such as a
group health plan) would be eligible for an appeal.
Response: A beneficiary not enrolled in Medicare Part B who meets
all stated eligibility criteria would be eligible for an appeal under
these new procedures, even if the beneficiary had other insurance
coverage that covered Part B outpatient hospital services. We would
expect such appeals would be rare and would likely focus on noncovered
SNF services that resulted in out-of-pocket expenditures by the
beneficiary.
Comment: A few commenters disagreed with our limitation on provider
representation for these new appeals as proposed in Sec. 405.931.
Generally, these commenters were concerned about the lack of support
for beneficiaries to work through these appeals. A commenter stated
that beneficiaries sometimes rely on provider staff to understand
benefits and available coverage and requested clarification regarding
whether provider staff may provide information and assistance to
beneficiaries filing appeals. A commenter stated that SNFs should be
able to file appeals on behalf of beneficiaries since SNFs have the
motivation to ensure that they receive proper payment for the services
they provide. A commenter expressed support for the definition of an
unrepresented beneficiary and the rights it will extend to
beneficiaries under 42 CFR part 405 subpart I.
[[Page 83248]]
Response: We appreciate the concerns raised by these commenters.
While we generally agree that providers may provide valuable assistance
to beneficiaries seeking appeals of denied services under existing
procedures, we believe that in these new appeals, the circumstances
warrant a different approach to appointed representatives. We note that
beneficiaries entitled to an appeal under these new rules still have
many options for obtaining assistance in their appeal. For example,
friends and family members are eligible to be appointed as a
representative. In each state, state health insurance assistance
programs (SHIPs) are available to explain coverage and benefits and to
represent and assist beneficiaries in appeals. Private advocacy groups
are also available to assist and represent beneficiaries in Medicare
appeals. Staff employed by providers may also assist beneficiaries by
providing them with information and support in their appeals. These are
just a few illustrative examples of persons and groups that may be
available to assist beneficiaries, and we do not believe that
precluding providers from representing beneficiaries for services, in
some cases, furnished many years ago, will have a negative impact on
beneficiary access or representation in these new appeals.
As explained in the proposed rule, we are concerned about a
provider acting as the appointed representative of a beneficiary in
these new appeals. Appointed representatives play a significant role in
a beneficiary's appeal. The representative is responsible for
submitting forms, receiving and submitting information on behalf of the
beneficiary, and making arguments on behalf of the beneficiary. While
an appointed representative is acting on behalf of a beneficiary, the
representative exercises control over most aspects of the appeal. In
many of the appeals we expect under these new procedures, beneficiaries
or family members reimbursed SNFs for the care that was furnished to
the beneficiary. In some of these cases, we believe a SNF's interests
could be at odds with the interest of the beneficiary. For example, a
SNF could be motivated by maintaining the status quo with respect to
payment already received for services in light of the burden associated
with refunding payments and billing the Medicare program for payment
for services furnished as many as 15 years earlier. We believe
restricting formal provider representation in the appeals process,
given the broad availability of other resources, affords beneficiaries
the best opportunity for independent and unbiased assistance, if
needed. While a provider may not act as an appointed representative for
a beneficiary under these procedures, we believe it would be entirely
appropriate for providers to lend assistance to beneficiaries in
providing records, information, and advice about the appeal and the
appeal process. Thus, we are not adopting the recommendation to allow
providers to be appointed as a representative for an eligible party.
We would also like to clarify the scope of our proposal in adding a
definition to the term unrepresented beneficiary in Sec. 405.931(d)(5)
for these new appeal procedures. As proposed in Sec. 405.931(d)(5), a
beneficiary who is an eligible party is considered unrepresented if the
beneficiary meets one of several criteria specified in that section. As
we explained in the introductory paragraph of Sec. 405.931(d), the
policies established in that section are for the limited purposes of
these new appeal procedures, that is, appeals conducted under
Sec. Sec. 405.931 through 405.938. We did not intend to apply the
definition of unrepresented beneficiary in Sec. 405.931(d)(5) to claim
appeals conducted under existing 42 CFR part 405 subpart I. The purpose
in adding this definition is to help eligible parties who are
considered unrepresented understand how certain existing procedural
requirements, adopted for these new procedures, will apply. For
example, in Sec. 405.1018, there are specific requirements regarding
the submission of evidence at an ALJ hearing that do not apply to an
unrepresented beneficiary. For the purposes of appeals conducted under
Sec. Sec. 405.931 through 405.938, those requirements will not apply
to an unrepresented beneficiary as defined in Sec. 405.931(d)(5).
We appreciate the feedback that we received from commenters on
eligibility requirements and policies regarding appointed
representatives. Based on analysis of the public comments, we will be
finalizing the proposals related to such procedures as proposed.
3. Appeal Requests and Determinations of Eligibility by the Eligibility
Contractor
In Sec. 405.932, we proposed to channel all retrospective appeal
requests from eligible parties through a single point of contact, the
eligibility contractor. We proposed, in Sec. 405.932(a)(2) for a
retrospective appeal, that the appeal request filed by an eligible
party (or their representative) must be received by the eligibility
contractor within 365 calendar days from the implementation date of
these provisions which would be specified when this rule is finalized.
We proposed that details regarding the filing of appeal requests would
be posted to Medicare.gov and/or CMS.gov once the retrospective appeals
process is operational. A single point of contact will relieve
beneficiaries of the burden of determining which contractor is
currently responsible for claims processed many years ago in order to
file their appeal request. In addition, due to the complexity of the
requirements for determining eligibility as a class member for an
appeal, we believed having a single point of contact would promote
consistency in such determinations and would provide a better overall
experience for eligible beneficiaries pursuing their appeal rights.
We anticipated eligible parties (or their representatives) would
provide relevant information to demonstrate their eligibility as a
member of the class afforded appeal rights in the court order as
proposed in Sec. 405.932(a) through (c), including medical records
that may serve to document certain conditions of eligibility under the
court order. Medical records would also assist in determining whether
the beneficiary received observation services following the
reclassification from inpatient to outpatient receiving observation
services. However, we understood the challenges beneficiaries and their
representatives may face in obtaining and producing such information in
situations where significant time may have passed since a beneficiary
was hospitalized. Therefore, we proposed in Sec. 405.932(c)(2) that
the eligibility contractor would work with MACs, eligible parties, and
providers, whenever necessary, to attempt to obtain the information
needed to make such determinations. In our existing claims appeals
process, contractors routinely seek records from providers to assist
beneficiaries filing appeals when the beneficiary is unable to provide
records needed to adjudicate the appeal.
In Sec. 405.932(b), we proposed that eligible parties (or their
representatives) provide, in writing, certain minimum basic information
in their appeal request, so the eligibility and processing contractors
may identify the prior claims filed for the hospital stay and SNF
services, as applicable, that serve as the basis for the retrospective
appeal. These required elements for an appeal request (which are
similar to existing requirements for requesting a redetermination under
Sec. 405.944) include the beneficiary's name, Medicare number (the
number on the beneficiary's Medicare card), name of the hospital and
the dates of
[[Page 83249]]
hospitalization, and the name of the SNF and the dates of stay (as
applicable). If the appeal includes SNF services not covered by
Medicare, the written request must also include an attestation to the
out-of-pocket payment(s) made by the beneficiary for such SNF services
and must include documentation of payments made to the SNF for such
services. CMS would prepare a model form that appellants may use to
file requests for a retrospective appeal under these provisions. Once
the appeal process is operational, this notice would be available
online at Medicare.gov to download and complete and would be available
to request in printed or accessible form by calling 1-800-MEDICARE.
We also proposed in Sec. 405.932(b)(2) that eligible parties
attest to their out-of-pocket costs (other than customary cost sharing
paid to a third-party payer or insurer) paid for SNF services not
covered by Medicare because the statutory requisite, 3-consecutive
calendar day inpatient hospital stay, was not met. (We note that for
the purposes of determining coverage of SNF services under section 1861
of the Act, inpatient hospital days are counted in accordance with
longstanding, existing policy in Sec. 409.30, that is, a patient must
have a qualifying inpatient stay of at least 3 consecutive calendar
days starting with the admission day but not counting the discharge day
(see Sec. 405.931(g)).
In cases where a third-party payer or insurer covered all of the
cost of SNF services of an eligible party, we proposed that such
services be excluded from consideration in the retrospective appeals
process. (Payments for SNF services made by a family member would not
be considered payment by a third-party payer but would be considered
out-of-pocket payment for the eligible party.) In light of the
clarification to the court order indicating that the new appeal
processes are intended to provide a remedy for class members who
already endured uncompensated or undercompensated stays at skilled
nursing facilities, we did not believe the court order requires the
readjudication of such paid services under a Medicare appeal process if
payment for that care is provided by another insurer.\11\ Moreover,
readjudicating these claims potentially puts Medicare trust fund
dollars at risk for making duplicate payments to providers for
previously compensated care, as Medicare does not have authority to
compel refunds with respect to payments made by third-party payers to
providers. In addition, focusing our efforts on situations involving
payments for denied services made by beneficiaries (or their families)
focuses resources for appeals for beneficiaries (or their families)
that paid out of pocket for the cost of care.
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\11\ However, if an eligible party paid out of pocket for some
or all of the SNF services, including situations where a denial by a
third-party insurer resulted in the beneficiary making out of pocket
payments for some or all of the SNF services, then those SNF
services that resulted in out of pocket payments would be eligible
for an appeal.
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We proposed in Sec. 405.932(d) that the eligibility contractor
would be responsible for determining the validity of requests for
appeal under these provisions, that is, whether the request is filed by
an eligible party, is timely filed, and contains the required elements
for a valid request specified in Sec. 405.932(b)(1) and (2). The
eligibility contractor would issue a decision to approve or deny such
requests. In proposed Sec. 405.932(d)(1)(ii), we would require the
eligibility contractor to issue a written decision within 60 calendar
days of receipt of a valid appeal request from the eligible party (or
their representative). We proposed in Sec. 405.932(d)(2) that approved
requests (meaning those meeting both eligibility and filing
requirements), would be forwarded to the processing contractor (the MAC
with jurisdiction over the hospital claim), and the processing
contractor would perform the appeal. Under proposed Sec.
405.932(d)(3), requests that are not eligible for an appeal or do not
meet the requirements under proposed in Sec. Sec. 405.931 and 405.932
would be denied. However, we proposed that individuals receiving a
notice of denial of an appeal request would have an opportunity to
request a review of the denial by the eligibility contractor in order
to provide additional clarification, or correct any deficiencies in the
filing, under the provisions proposed in Sec. 405.932(e). Our proposed
approach to handling requests that are ineligible for an appeal
differed slightly from how similar appeal requests are handled under
existing claims appeals procedures in Sec. 405.952. Under existing
rules, such requests are dismissed, and dismissals may be reviewed and
vacated by the adjudicator who issued the dismissal or appealed to the
next level adjudicator to determine if the dismissal was appropriate.
However, given the complexity of the eligibility requirements, the age
of the service in question and in many cases, the lack of a claim to
review, in our view the most effective and efficient approach to
resolving eligibility concerns was to keep these disputes with the
eligibility contractor, requiring review by an individual not involved
with the initial denial determination.
We received several comments regarding the proposed filing
timeframes and procedures for retrospective appeals, the procedures for
eligibility determinations, and the submission of medical records in
support of an eligible party's appeal.
Comment: Several commenters recommended CMS extend the filing
timeframes for retrospective appeals beyond the period of 1 year
following the implementation of the final rule proposed by CMS, citing
that beneficiaries may have trouble locating such dated medical records
and that the process to determine eligibility could prove to be
complex. Commenters varied in their recommendations, some suggested 2
years while another suggested 4 years. Commenters also recommended that
CMS apply existing good cause rules that allow for exceptions to appeal
filing deadlines.
Response: We believe the 1-year (that is, 365 calendar day) filing
timeframe from the implementation date of the final rule affords
eligible parties adequate time to submit appeal requests under these
new procedures. The 1-year timeframe is twice as long as any other
existing timeframe to file an appeal. Moreover, we note that general
information regarding the forthcoming right to appeal has been posted
on Medicare.gov and CMS.gov since 2021.\12\ We also anticipate
providing more detailed information regarding the appeals process
online and in Medicare publications, including MSNs, in the time
between publication of the final rule and the actual implementation of
the provisions. Thus, we believe the time between publication of the
final rule and the implementation date, and the 1-year timeframe to
file from the implementation date will give eligible parties a
reasonable amount of time to compile information necessary for their
case, and to file an appeal (and as we explain in this final rule,
Medicare contractors will assist in obtaining medical records if the
records cannot be submitted with the appeal request). Accordingly, we
are not adopting the recommendations made by the commenters to lengthen
the filing timeframe for retrospective appeals. (We note that the
procedures in Sec. 405.932(a)(2)(ii) include an exception that allows
the eligibility contractor to accept an untimely filed appeal request
[[Page 83250]]
if the eligible party establishes good cause under the existing appeal
provisions in Sec. 405.942(b)(2) and (3).)
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\12\ See https://www.medicare.gov/providers-services/claims-appeals-complaints/appeals/original-medicare and https://www.cms.gov/medicare/appeals-grievances/fee-for-service.
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Finally, we are making an editorial revision in Sec.
405.932(a)(2)(ii) to insert the word calendar after the number 365 for
clarity and to be consistent with existing language regarding
timeframes being measured in calendar days, both in these procedures
and in our existing appeals procedures.
Comment: A commenter recommended that CMS create an online portal
for the submission of appeal requests and supporting documentation.
Response: We appreciate the recommendation submitted by commenter
to create an online portal for the submission of appeal requests and
supporting documentation. We considered this option as we began to plan
for implementation of this new appeals process, but ultimately found
this approach to be impracticable due to a variety of time, cost, and
security considerations. The length of development time, testing, and
sheer level of effort required to implement a secured beneficiary-
facing portal is at odds with the complex security environment and the
need to implement these new procedures as quickly as possible.
Moreover, we are committed to mirroring existing appeal procedures as
much as possible for these new appeals. Therefore, we are not adopting
the recommendation made by the commenters. We believe it is appropriate
for beneficiary appeal requests to continue to be submitted via mail.
CMS will provide clear instructions to beneficiaries on where to mail
their requests.
Comment: A commenter suggested that we consider having
beneficiaries file appeals with the health plan and have the plan
conduct the initial eligibility determination in addition to the
appeal. Other commenters supported our proposal to use a single point
of contact for receiving appeals and making eligibility determinations.
Response: We appreciate the comments and support for our use of an
eligibility contractor. We considered having MACs conduct the appeal
intake and make eligibility determinations. However, as we explained in
the proposed rule, we are establishing a single point of contact, the
eligibility contractor, to receive these new appeals and to make
eligibility determinations. We believe a single point of contact will
relieve beneficiaries of the burden of determining which MAC would be
responsible for performing an appeal under these new procedures. In
addition, we believe a single contractor making eligibility
determinations will promote consistency in such determinations.
Following the determination of eligibility, the processing contractor
(the MAC) will conduct the appeal. We also note that, as explained in
the proposed rule, these new appeals are limited to beneficiaries in
Medicare Part A and B (``Original Medicare''). Claims processing and
first level appeals in Original Medicare are conducted by MACs and not
health plans. Thus, we are not adopting the recommendation to use a
health plan or the MACs to make eligibility determinations.
Comment: Many commenters supported the availability of a model form
that could be used to file an appeal request. Commenters suggested that
we make the form available in multiple languages, including an ASL
interpretation of the form.
Response: We appreciate the support of the commenters regarding our
proposal for a model form that beneficiaries may use to submit an
appeal request. We plan to translate the form into different languages
as needed.
Comment: Several commenters requested that we provide more
information about the submission of medical records as part of the
retrospective appeal request and what types of records and information
would be needed as part of the appeal. Commenters also suggested that
we provide eligible parties with instruction about how to seek
assistance from the eligibility contractor in obtaining records and
suggested other information that we should consider including in our
instructions for filing appeal requests (for example, the types of
records that would be helpful, the dates spent in the hospital, orders
regarding admission and care, etc.).
Response: We appreciate the recommendations submitted by commenters
for the content of instructions related to filing appeal requests. We
intend to carefully consider these recommendations for the online
educational materials we intend to publish prior to implementation of
the new procedures. We agree that as part of our educational efforts,
it will be helpful to provide beneficiaries with information about the
types of records needed for these new appeals and suggestions for how
to get access to them.
We would like to emphasize, as we did in the proposed rule, that we
strongly encourage beneficiaries or their representatives to submit
with their appeal request all available medical records related to the
hospitalization and, as applicable, SNF services, and documentation of
amounts paid out of pocket for care that was not covered under Part A.
However, in these new appeals, we understand the difficulty some
beneficiaries may have in obtaining records for services furnished many
years ago. For that reason, we will require the eligibility contractor
to work with the appropriate MAC to request all relevant records that
are needed to establish eligibility for an appeal from the appropriate
providers if some, or all, of those records are not submitted with the
appeal request. In addition, as necessary, the eligibility contractor
and MAC will request missing records related to the hospital, and as
applicable, SNF services furnished to the beneficiary to determine
whether coverage under Part A is warranted. Such records should be
comprehensive with respect to the treatment and services received and
would include, but are not limited to, hospital records that document
admission as an inpatient, orders for observation services, diagnosis
and treatment notes, orders and results of testing, discharge planning
notes, as well as records from services furnished by the SNF (as
applicable). In addition, beneficiaries should submit information
related to the out of pocket payments that were made for the services
at issue in the appeal, particularly SNF services for which a provider
refund is sought. Such information could include provider bills and/or
invoices, proof of payment in the form of a copy of a cashed check,
credit card statement, etc.
Comment: A commenter requested clarification on how contractors
will request additional information from providers related to an appeal
request, and who within the provider's organization would be authorized
to share patient information with the contractor.
Response: Providers have a longstanding obligation to provide
requested information related to services furnished to a beneficiary
under section 1815(a) of the Act. MACs will utilize existing methods
for requesting additional documentation and records, that is, the
Additional Documentation Request (ADR) process, where a letter
outlining the requested records and dates of service is mailed to the
provider. Providers that have registered to receive ADRs and submit
records in response electronically may use the existing system (for
example, the Electronic Submission of Medical Documentation (esMD)
system). Providers should follow existing privacy protocols for the
submission of records requested by the MAC for these appeals in the
same manner as they would for
[[Page 83251]]
other records requests by a MAC or other contractor.
Comment: Several commenters recommended that we give individuals
and providers additional time to submit records requested for an
appeal. The commenters stated that the 60-day timeframe in the proposed
rule is inadequate and suggested we allow 120 calendar days for the
submission of missing information. A commenter expressed concern about
the impact of records requests on providers. Some commenters also
recommended that we also allow extensions of the timeframe for good
cause. Commenters also expressed concern about whether providers would
be penalized for being unable to locate records that are older than
existing record retention requirements and urged CMS to ensure
contractors are aware of record retention requirements.
Response: We understand and appreciate the concerns of the
commenters regarding the potential issue some individuals or providers
may have in locating and producing records for services furnished many
years ago, and the burden of these requests on providers. While we are
concerned that extended timeframes to respond to records requests may
cause delays in establishing eligibility of the beneficiary in order to
adjudicate valid appeals, we agree with the commenters that affording
up to 120 calendar days to submit records to the eligibility contractor
is reasonable. Accordingly, we are revising Sec. 405.932(c)(2) to
provide that the eligibility contractor will allow up to 120 calendar
days for submission of missing information.
However, in light of the 365-calendar day filing timeframe to
request an appeal under these procedures and the additional 60 calendar
days we are granting to submit records, we believe it is also
reasonable not to include extensions to the 120-calendar day timeframe
in which records must be submitted to the eligibility contractor. It is
important to balance the interests in affording individuals adequate
time to obtain records with the interests in avoiding extended delays
in processing appeals. We believe the 365-calendar day filing timeframe
to request an appeal provides individuals with adequate time to obtain
the necessary documentation to support their appeal. Should the
eligibility contractor still need additional information, we believe
allowing up to another 120 calendar days is reasonable. If an
individual or provider cannot meet the deadline, the eligibility
contractor will make a decision based on the information in the record.
If the information in the record does not establish the individual's
eligibility, then the eligibility contractor will issue a denial
notice. The individual (or their representative) may request a review
of the eligibility contractor's denial in accordance with the
procedures outlined in Sec. 405.932(e) and may submit any records
subsequently obtained that serve to establish eligibility and/or
coverage of services.
We acknowledge the concerns raised by commenters about the extended
lookback period for retrospective appeals and the ability of providers
to locate medical records for services that were furnished on dates
that are not covered by existing record retention requirements.
Medicare requires records be retained by providers for 7 years from the
date of service (42 CFR 424.516(f)). While providers are not required
to maintain records beyond the 7-year timeframe specified in
regulations, we encourage providers to make reasonable efforts to
search for and furnish any records in their possession, including those
outside the record retention requirements. However, contractors are
aware of existing record retention requirements, and we will not
penalize providers who cannot locate records for dates of service that
are beyond the record retention timeframe.
Comment: Several commenters stated that we should advise
beneficiaries in our instructions for these new appeals that they may
still submit retrospective appeal requests even if their medical
records are unavailable. The commenters also requested that we specify
that in the absence of medical records, acceptable evidence for the
determination of Part A coverage would include written statements from
beneficiaries, family members and providers who are familiar with the
facts giving rise to the appeal.
Response: We agree with these commenters that beneficiaries may
submit a retrospective appeal request without medical records.
Consistent with the proposed rule, under this final rule we will
require the eligibility contractor and the appropriate MAC to
coordinate with providers to obtain necessary medical records to
determine eligibility and to process the appeal regarding the denial of
Part A coverage. Written statements from a beneficiary or family member
regarding hospital services and, as applicable, SNF services furnished
to a beneficiary may be submitted as evidence in the appeal. However,
we believe an adjudicator will need some form of documentary evidence,
such as medical records, to determine whether specific aspects of
eligibility are met (for example, whether the hospital in fact admitted
a patient as an inpatient and subsequently changed their status, or
whether observation services were furnished after such change in status
to outpatient). The adjudicator will also need to determine whether
services meet Part A coverage requirements (for example, with hospital
admissions subject to the original two-midnight rule from 2013, whether
the patient is reasonably expected to require a stay of at least two
midnights, and where the medical record includes information to support
the physician's or otherwise qualified practitioner's expectation that
the patient would require a stay of at least two midnights). Thus,
testimonial evidence, such as statements from a beneficiary or provider
regarding the care or treatment received will be accepted and
considered in an appeal. However, without corresponding medical
documentation, such statements by themselves may be insufficient to
establish eligibility and/or determine if Part A coverage requirements
were met. Thus, we decline to adopt the recommendation made by the
commenters.
Comment: Several commenters recommended that our instructions for
filing appeals and other guidance regarding the new appeals procedures
explain the relevant standard for coverage that beneficiaries will have
to meet in order to demonstrate that their hospital stay met the
relevant Part A coverage criteria for inpatient hospital services.
Response: We appreciate this recommendation, and we agree that
guidance regarding the coverage standards for inpatient admissions will
be important information for beneficiaries eligible for an appeal. We
intend to provide information regarding the relevant standards for
inpatient hospital coverage and the applicable timeframes in materials
we will publish on our websites.
Comment: A few commenters contended that the regulatory text in the
proposed rule did not provide sufficient detail regarding the
information contained in the notice related to a denial of eligibility
for an appeal. The commenters suggested that the eligibility denial
notice should contain specific information to assist beneficiaries in
understanding the reason for the denial as well as what information is
necessary to cure the denial.
Response: We appreciate the suggestions made by the commenters. We
believe the regulatory language regarding the content of the denial
notice in Sec. 405.932(d)(3)(ii) is sufficient
[[Page 83252]]
with respect to specifying the reason for denial of the appeal request
(``The denial notice explains that the request is not eligible for an
appeal, the reason(s) for the denial of the appeal request, and the
process for requesting a review of the eligibility denial under Sec.
405.932(e).''). However, we agree that it would be appropriate to
specify that the denial notice include a statement about the
information needed to cure the appeal request to establish eligibility.
We view this as implied in providing the reason(s) for the denial but
also see the value of including this additional requirement in the
denial notice prepared by the eligibility contractor. Therefore, we are
revising Sec. 405.932(d)(3)(ii) to state that the denial notice
explains that the request is not eligible for an appeal, the reason(s)
for the denial of the appeal request, the information needed to cure
the denial, and the process for requesting a review of the eligibility
denial under Sec. 405.932(e). We appreciate the feedback that we
received from commenters on eligibility determinations and filing
appeals under these new procedures. Based on analysis of the public
comments, we will be finalizing the proposals related to such
procedures as proposed with the exception of the amendments to
Sec. Sec. 405.932(c)(2) and 405.932(d)(3)(ii), described previously.
4. Conduct of Appeals by Processing Contractors
Currently, MACs perform the first level of administrative appeal
for Medicare claims (see 42 CFR 405.940 through 405.958). We proposed a
similar process for these new appeals, utilizing existing procedures,
as appropriate, with MACs performing the first level of retrospective
appeals under this rule. Specifically, we proposed that the MAC that
currently has jurisdiction over Part A claims from the relevant
hospital would be responsible for conducting the retrospective appeal
as the processing contractor. Where we believed the procedures for the
new retrospective appeals would need to differ from existing claims
appeals procedures, we proposed new processes. For example, in Sec.
405.931(b) and (c), we proposed that party status for these appeals be
limited to the eligible class members (or their authorized
representatives).
In Sec. 405.932(f)(1), we proposed that if the processing
contractor determines there is necessary information missing from the
appeal case file, the processing contractor would attempt to obtain the
information from the provider and/or the eligible party (or their
representative), as applicable. We proposed that the processing
contractor afford entities up to 60 calendar days to submit requested
information. If the requested information is not submitted in the
specified timeframe, we proposed that the processing contractor would
make a decision based on the information available.
In proposed Sec. 405.932(f)(3), we required processing contractors
to issue a written decision within 60 calendar days of receipt of a
valid appeal request from the eligibility contractor. However, in cases
where the processing contractor needs additional information to conduct
the appeal from the eligible party (or their representative) or a
provider, in Sec. 405.932(f)(1), we proposed that the time between the
request for such information and when it is received (up to 60 calendar
days) would not count towards the 60-calendar day adjudication
timeframe. If the requested information is not sent to the processing
contractor, then we proposed that the time afforded by the contractor
for submission of the information would not count towards the
adjudication timeframe. In effect, the 60-calendar day timeline on
which the processing contractor must make its decision will be tolled
during the period between the date the processing contractor requests
information from the provider and/or the eligible party and the later
of the date that information is received or the deadline by which the
information is requested has passed.
Under proposed Sec. 405.932(f) and (g), based on the information
available, the processing contractors would determine whether the
hospital admission, and as applicable, SNF services, satisfied the
relevant criteria for Part A coverage at the time of the admission,
notwithstanding subsequent reclassification by the hospital, and
whether the hospital services, and as applicable, SNF services, should
have been covered under Part A. If the processing contractor determines
that the hospital admission and, as applicable, SNF services satisfied
the relevant criteria for Part A coverage at the time services were
furnished, it would render a favorable decision and would send written
notice to the eligible party (or their representative). The notice
would explain the rationale for, and effect of, the decision, similar
to existing notices for redeterminations.
In Sec. 405.932(g)(4), when applicable, we proposed that
processing contractors would send notice of a favorable decision to the
SNF that furnished services to the beneficiary in order to inform the
SNF of the reason for the decision and the effect of the decision. In
addition, under Sec. 405.932(g)(2) and (6), processing contractors
would send SNFs notice of a partially favorable decision where the
beneficiary's hospital inpatient admission would have met the criteria
for Part A coverage, but the SNF services subsequently received by the
beneficiary do not meet the relevant criteria for Part A coverage (for
example, if the services are determined not medically reasonable and
necessary under section 1862(a)(1)(A) of the Act). The notice of a
partially favorable decision sent to a SNF informs the SNF of the
reason the hospital services were determined to meet the relevant
criteria for Part A coverage, and the reasons the SNF services were
determined not to be covered under Part A. We proposed that the
processing contractor also explain that the notice is being sent to the
SNF for informational purposes only, and that only the eligible party
(or the eligible party's representative) may appeal the decision to the
QIC under proposed Sec. 405.934. An eligible party may appeal a
partially favorable decision with respect to coverage of SNF services
to the QIC under proposed Sec. 405.934 in the same manner as
unfavorable decisions with respect to Part A coverage of the hospital
services. In addition, in Sec. 405.932(g)(5), with respect to an
appeal filed by a beneficiary not enrolled in Medicare Part B at the
time of hospitalization, we proposed that processing contractors would
send notice of a favorable decision to the hospital to inform the
hospital of the reason for the decision and the effect of the decision.
Providers are reminded that under sections 1814 and 1866 of the
Act, Sec. Sec. 489.20 and 489.21 of the regulations, and the terms of
the provider agreement, providers may not collect any amounts for
covered services other than applicable coinsurance and deductible.
Accordingly, in the case of a favorable appeal decision that involves
SNF services paid for by the beneficiary, we proposed in Sec.
405.932(g)(4) and (h)(2)(i) that SNFs would be required to refund any
payments collected from the beneficiary for the covered SNF services
(see 42 CFR part 489 Subpart D regarding the requirements for handling
of incorrect collections). Similarly, in the case of a favorable appeal
decision rendered for a beneficiary who was not enrolled in Medicare
Part B at the time of hospitalization, we proposed in Sec.
405.932(g)(5) and (h)(2)(ii) that hospitals would be required to refund
any payments collected for the outpatient hospital services.
Furthermore, we believed that the Medicare statute requires a
provider of services to submit new claims in order
[[Page 83253]]
to determine the amount of benefits due for covered services and to
receive payment under Part A of the program. Under section 1814(a)(1)
of the Act, and 42 CFR 424.33, and 42 CFR 424.51, payment for Part A
services furnished to an individual may be made only to a provider of
services eligible to receive payment under section 1866 of the Act
after a request for payment (a claim) is filed with Medicare by the
provider. The clarifying order issued by the court stated that the
program is not required to unwind previously filed Part B outpatient
hospital claims in order to make payment for covered SNF services in
the case of a favorable decision (meaning for the purposes of
effectuating a favorable decision, any existing Part B outpatient
hospital claim will not be reopened or revised by the MAC to reflect an
appeal decision that the class member's hospital admission satisfied
the relevant criteria for Part A coverage at the time of the admission,
and the hospital will not be required to submit a claim for inpatient
services under Medicare Part A \13\). However, the clarification only
applies to beneficiary class members who were enrolled in Medicare Part
B at the time of hospitalization. Thus, in the case of a beneficiary
class member who was not enrolled in Medicare Part B at the time of
hospitalization, we proposed in Sec. 405.932(h)(2)(ii) that following
a favorable appeal decision and making any required refund for payments
received for covered services, the hospital may submit a new Part A
inpatient claim to Medicare in order to determine the appropriate
amount of benefits and for Medicare to make payment for inpatient
hospital services under Part A. We also proposed in Sec.
405.932(h)(2)(ii) that the claim must be submitted by the hospital
within 180 calendar days after the hospital receives its notice of a
favorable appeal decision for the eligible party.
---------------------------------------------------------------------------
\13\ We note that a previously paid claim is still subject to
reopening under Sec. 405.980 for other reasons unrelated to the
appeal decision (for example, if payment for the claim was procured
by fraud or similar fault).
---------------------------------------------------------------------------
In addition, if a favorable appeal decision includes eligible SNF
services that are covered, in Sec. 405.932(h)(2)(i), we proposed that
following a refund of amounts collected from the beneficiary, the SNF
may then submit a claim (or claims) for such services to Medicare in
order to determine the appropriate amount of benefits, and for Medicare
to make payment for the covered SNF services. The SNF claim, following
a favorable appeal decision (that is, the hospital admission satisfied
the relevant criteria for Part A coverage as an inpatient at the time
of admission and the SNF services met relevant Part A coverage
criteria), would be processed without regard to the hospital's
erroneous reclassification of the beneficiary as an outpatient
receiving observation services. We also proposed in Sec.
405.932(h)(2)(i) that the SNF submit the claim within 180 calendar days
after receiving the notice of a favorable appeal decision for the
eligible party.
If the processing contractor determines that the hospitalization
did not meet applicable Part A inpatient coverage requirements, we
proposed in Sec. 405.932(g)(3) the MAC would send notice of its
unfavorable decision to the eligible party (or their representative).
If the processing contractor determines that the hospital admission
meets applicable Part A inpatient coverage requirements, but the SNF
services eligible for the appeal do not meet applicable coverage
requirements, we also proposed in Sec. 405.932(g)(2) that the
processing contractor would send notice of its partially favorable
decision to the eligible party (or their representative). The notice of
an unfavorable or partially favorable decision would inform the
eligible party (or their representative) of the right to request a
reconsideration with a QIC under proposed Sec. 405.934 and would
provide detailed information about the requirements for filing the
request and where the request must be filed.
We received several comments regarding the processing of
retrospective appeals and the effectuation of favorable or partially
favorable appeals.
Comment: A commenter requested clarification regarding coordination
among MACs if a hospital claim and SNF claim are processed by different
MACs. The commenter questioned how the MAC processing the appeal would
get information about the SNF. The commenter also inquired about the
process for handling requests from the eligibility contractor that are
sent to the wrong MAC.
Response: We appreciate the commenter's questions about how
contractors will coordinate activities to ensure appropriate
information is available to the eligibility and processing contractors.
We considered the concerns raised by the commenter as we were
developing the procedures in the proposed rule and we intend to include
a process for contractors to coordinate with each other and with CMS in
the rare case of different contractors having responsibility for the
SNF claim and the hospital claim. This will ensure information needed
to request documentation will be made available to the appropriate
contractor. We will also instruct contractors to work with CMS in the
event that the eligibility contractor sends requests to the incorrect
MAC. In turn, CMS will assist the eligibility contractor, as needed, to
determine the appropriate processing contractor so the appeal will be
handled in a timely manner.
Comment: A commenter expressed concern about estate recovery under
the Medicaid program in situations under these new procedures where a
beneficiary could not obtain Medicare coverage of SNF services, but
ultimately received coverage of SNF services from Medicaid. The
commenter suggested that CMS encourage states to use hardship waiver
authority to relieve individuals of estate recovery for portions of SNF
stays that Medicare should have covered.
Response: We appreciate the concerns raised by the commenter. If a
State Medicaid agency determines that a deceased beneficiary may be
subject to estate recovery, it may only make recoveries from the
beneficiary's estate under certain circumstances, including when
recovery would not create an undue hardship for survivors. States are
required by section 1917(b)(3) of the Act to have procedures to waive
estate recovery where it would create an undue hardship for the
deceased Medicaid recipient's heirs. States have flexibility and
discretion to design reasonable criteria for determining what
constitutes an undue hardship and who may be afforded protection from
estate recovery in such instances. The State plan needs only specify
the criteria for waiver of estate recovery claims due to undue
hardship. Individuals will need to work directly with their State
Medicaid Agency to file an undue hardship claim.
Comment: Several commenters suggested CMS clarify that due to the
COVID-19 public health emergency (PHE) and the waivers implemented by
CMS with respect to the 3 consecutive day qualifying hospital stay
(QHS) eligibility requirement for SNF benefits, that there should be no
appealable SNF stays for the period in which the PHE waivers were in
effect.
Response: We appreciate the commenters' suggestions on this issue.
Under the terms of the court order and the proposed rule establishing
eligibility for retrospective appeals (Sec. Sec. 405.931 through
405.938), an eligible party may appeal the denial of Part A coverage.
We anticipate an overwhelming majority of appeals filed under these new
provisions will focus on denials of Part A SNF coverage due to
financial liability for the denied SNF services. We
[[Page 83254]]
agree with the commenter that appeals under these new provisions should
not include SNF services that were paid by Medicare as the result of a
SNF invoking the COVID-19 PHE waiver authority for a QHS (or services
paid by a third-party payer as noted in Sec. 405.932(b)(2)).
Nevertheless, we would like to clarify that we are not restricting an
eligible party's right to appeal the denial of Part A coverage for
hospital services under these procedures even if the SNF services were
covered by Medicare or a third-party payer; we do not believe that such
a restriction is consistent with the court order in Alexander. However,
following the clarifying order by the court which does not require the
unwinding or adjustment of the Part B outpatient hospital claim
following a favorable appeal decision, we do not expect many appeals to
be filed if the beneficiary's SNF services were covered.
Comment: A few commenters suggested that we clarify how the new
appeals process will interact with existing claims appeals processes. A
commenter requested that we address situations where a hospital is
pursuing a claim appeal under the existing claims appeals process and
then an eligible party initiates a retrospective appeal under these new
procedures. The commenter acknowledged there would likely be few such
cases.
Response: We agree with the commenter that we expect very few, if
any, situations where a claim for hospital outpatient services is
pending in the claims appeal process and then an eligible party files
an appeal for Part A coverage under the new process. However, in that
unlikely situation, the determination of coverage under Part A for the
hospital claim would be conclusive with respect to the hospital
services and would be binding for purposes of the beneficiary's
hospitalization.
To illustrate, under existing procedures in Sec. 405.940, et seq.,
if the hospital appealed a denial of coverage of outpatient hospital
services for not being medically reasonable and necessary under section
1862(a)(1)(A) of the Act, that appeal would only address the coverage
and payment of the outpatient services on the hospital's Part B claim
submitted to Medicare. An appeal filed by a hospital under existing
procedures would not address whether coverage under Part A would have
been appropriate. However, if an eligible party filed an appeal for the
denial of Part A coverage under the provisions in Sec. Sec. 405.931
through 405.938, then that determination would be conclusive for the
purposes of coverage for the hospital services. Adjudicators deciding
an appeal of the Part B outpatient claim would be bound by the
determination with respect to Part A coverage as a result of an appeal
under Sec. Sec. 405.931 through 405.938. Similarly, if the appeal
under Sec. Sec. 405.931 through 405.938 involves coverage of SNF
services, the determination would be binding on any pending claims
appeal under existing procedures.
In order to address the issue raised by the commenter, we are
revising Sec. 405.931 to add new paragraph (i) to explain that the
determination of Part A coverage made in an appeal decision under these
procedures is conclusive and binding with respect to coverage of such
services under Part A for any other appeal under Part 405 Subpart I.
Specifically, Sec. 405.931(i) would be added to state that, for the
purposes of appeals under Sec. Sec. 405.931 through 405.938, the
determination with respect to coverage under Part A is conclusive and
binding with respect to the services furnished and shall be applied to
any existing appeals with respect to coverage and payment for hospital
services under Part B and SNF services (as applicable).
Comment: Several commenters expressed support for the process
outlined in the proposed rule regarding applicable refunds to
beneficiaries for out-of-pocket payments made following a favorable or
partially favorable appeal decision. A commenter suggested that CMS
clarify that ``family member'' in the context of out-of-pocket payments
include individuals who are not biologically related to the eligible
party. A commenter requested that CMS state that the application of 42
CFR part 489 Subpart D with respect to handling incorrect collections
means that providers must issue refunds promptly (generally within 60
days of a binding favorable appeal decision) and must comply with
existing legal protections. A commenter also suggested that CMS provide
additional explanation for situations where a provider has changed
ownership or has closed, and a refund is owed to a beneficiary. A
commenter also indicated that CMS should consider how refunds will get
to the appropriate individual, particularly with respect to appeals
filed on behalf of deceased beneficiaries.
Response: We appreciate the commenters' support and suggestions on
this issue. Our goal in creating this new retrospective appeals process
is to implement the court order in a way that provides class members
with a meaningful opportunity to appeal the denial of Part A coverage
that is similar to the existing claim appeal process and provide a
remedy for those class members who endured uncompensated or
undercompensated care at SNFs. At the same time, there are limits on
our authority to fashion remedies in effectuating favorable appeal
decisions. For example, payment for hospital and SNF services may only
be made to providers following submission of a claim by the provider.
Section 1814(a)(1) of the Act; 42 CFR 424.33 and 42 CFR 424.51. In
addition, existing policies for handling incorrect collections of funds
from a beneficiary (42 CFR part 489 Subpart D) do not authorize the
program to reimburse beneficiaries directly except in very limited
circumstances (see Sec. 489.42(a)). For this reason, we must rely on
providers and the terms of their provider agreement to issue refunds to
beneficiaries where applicable.
In the proposed rule, we explained that we are limiting our review
of SNF services in these new appeals to situations where the
beneficiary or a family member paid out-of-pocket for the SNF services
(42 CFR 405.932(b)(2)). We explained that payments, including cost
sharing payments, made by a third-party payer do not constitute out-of-
pocket payments made on behalf of the eligible party. We agree with the
commenter who suggested that for the purposes of determining whether
there were out-of-pocket payments made for SNF services, we consider
payments made by individuals who are not biologically related but who
paid out-of-pocket expenses on behalf of a beneficiary to be considered
as out-of-pocket payments made by a family member. This could include,
for example, close family friends, a former spouse, a roommate, or
other individuals who would not have a legal or contractual obligation
to pay for a beneficiary's care. We are revising Sec.
405.932(b)(2)(iii) to state that payments made by a family member
(including payments made by an individual not biologically related to
the beneficiary) for an eligible party's SNF services are considered an
out-of-pocket payment for the eligible party.
With respect to the comments received about the timing of refunds
that may be required following a favorable or partially favorable
appeal decision, we reiterate our position as explained in the proposed
rule that providers have an obligation to comply with applicable
statutory and regulatory requirements with respect to charging for
covered services. In the proposed rule (88 FR 89514), we stated that
providers are reminded that under sections 1814 and 1866 of the Act, 42
CFR 489.20 and 489.21, and the terms
[[Page 83255]]
of the provider agreement, providers may not collect any amounts for
covered services other than applicable coinsurance and deductible.
Refunding amounts previously paid for services determined to be covered
following an appeal is the responsibility of the provider, and must be
made consistent with the provisions in part 489 Subpart D. We expect
that the provider will promptly refund amounts incorrectly collected,
meaning the refund should be issued within 60 days of receipt of the
decision letter to avoid the set aside requirements in 42 CFR
489.41(b).
With respect to concerns about refunds getting to the appropriate
individual in the case of deceased beneficiaries, we note that an
appellant would need to establish authority to file on behalf of a
deceased beneficiary as they do under existing appeals procedures (see
42 CFR 405.906(a)(1)). Coordination of any refund owed by a provider
following a favorable appeal decision is a private matter between the
provider and the individual entitled to a refund, and state law would
govern in the case of a refund owed to a deceased beneficiary or their
estate, or refunds owed by a provider that is no longer operating. CMS
has limited authority under the statute to intervene. CMS may only make
payment to an individual in situations where the provider invokes the
set aside provision in Sec. 489.41 and fails to issue a refund. CMS
would then determine whether payment of an amount equal to the
incorrect collection should be made under Sec. 489.42. However,
failure to issue a refund and retain funds from sources other than
Medicare for covered services would constitute a violation of section
1866(a)(1)(A) of the Act and the terms of the entity's provider
agreement.
Finally, in situations where there is change of ownership for a
provider, obligations of the previous entity are generally transferred
to the new owners. In rare situations where the new owners do not
accept assignment of the provider agreement, including prior
obligations, or in cases where the provider is no longer in operation,
state law would apply with respect to the entity's obligations to
remedy a debt.
Comment: A commenter indicated that the proposed rule did not
consider the implications for the Medicare Secondary Payer (MSP)
program and the impact on other insurers or payers involved in the
beneficiary's insurance coverage.
Response: We appreciate the concern raised by the commenter. In the
retrospective appeals process, we explained that following a favorable
decision, to prevent duplicate payment, a provider who wishes to submit
a claim for Part A payment would be obligated to refund amounts
previously collected for Part B services determined, on appeal, to be
covered under Part A. Providers would follow existing procedures for
making refunds of amounts previously collected for such Part B services
prior to submitting a Part A claim for payment as the services are
considered non-covered under Part B. Then providers could collect
payment for the covered Part A services based on the beneficiary's
insurance coverage at the time the services were furnished. However,
consistent with the court's clarifying order issued on December 9,
2022, with respect to appeals involving beneficiaries enrolled in both
Medicare Part A and B at the time of hospitalization, we remind
hospitals that they are not required to submit a claim for Part A
hospital services. Absent a Part A claim, we will not reopen or unwind
previous Part B outpatient hospital payments in order to make payment
for any SNF services determined to be covered under Part A.
Comment: A few commenters requested that CMS allow providers up to
1 year, as well as extensions for good cause or hardships, to file a
claim following a favorable appeal decision. Commenters also requested
that CMS consider all options to facilitate the submission of claims
for Part A services following a favorable retrospective appeal
decision. A commenter suggested that the decision itself could be
sufficient to adjudicate a Part A claim for payment. A commenter
questioned whether hospitals could collect the Part A hospital
inpatient deductible following refund of any Part B payments collected
and submission of a Part A claim.
Response: We appreciate the concerns raised by commenters about
billing for services following a favorable or partially favorable
appeal decision. We acknowledge that submitting a claim may be
complicated in situations where services were furnished many years ago,
and in developing the procedures to implement the court order, we
considered options with respect to claims for newly covered Part A
services. As we stated in the proposed rule, under section 1814(a)(1)
of the Act, and Sec. Sec. 424.33 and 424.51, payment for Part A
services furnished to an individual may be made only to a provider of
services eligible to receive payment under section 1866 of the Act
after a request for payment (a claim) is filed with Medicare by the
provider. In addition, under section 1815(a) of the Act, providers must
furnish information as requested in order to determine the amounts due
for Part A services. Thus, while the coverage determination with
respect to the Part A services is conclusive based on the appeal
decision, we would not make payment for covered Part A services solely
based on a favorable or partially favorable appeal decision without a
Part A claim for payment from the provider, in light of section
1814(a)(1) of the Act. Moreover, an existing Part B outpatient claim
cannot be ``adjusted'' into a Part A inpatient claim due to the
different characteristics and requirements of inpatient and outpatient
claims. (See 78 FR 50917, 50926 (August 19, 2013) where we explained
that we could not ``adjust'' a Part A inpatient claim into a Part B
claim for the purposes of Part B inpatient billing.) We are currently
developing instructions for submission of these claims and will have a
process approved and finalized shortly after this final rule is
published.
However, we agree that extending the timeframe for providers to
submit claims in response to a favorable or partially favorable
decision is warranted in light of the complexities that may surround
such submissions. Thus, we are adopting the commenters' suggestion to
extend the deadline for providers to file a claim(s) from 180 calendar
days to 365 calendar days from the date of receipt of the notice of a
favorable or partially favorable appeal decision. Specifically, we are
revising Sec. Sec. 405.932(h)(2)(i), 405.932(h)(2)(ii),
405.934(d)(2)(i), 405.934(d)(2)(ii), 405.936(e)(2)(i),
405.936(e)(2)(ii), 405.938(d)(2)(i), and 405.938(d)(2)(ii) to replace
``180 calendar days'' with ``365 calendar days''. We note that this
365-calendar day timeframe to submit a claim is established solely in
furtherance of implementing operational aspects of the court order in
the Alexander case and is unrelated to existing rules for timely filing
of claims in section 1814(a)(1) of the Act and 42 CFR 424.44. As
suggested by commenters, we will also permit extensions to the claims
filing deadline upon establishment of good cause. In determining
whether a provider has established good cause when requesting an
extension for filing a claim following a favorable or partially
favorable appeal decision under these procedures, we will apply the
provisions in Sec. 405.942(b) and (c) to the provider's request.
We also remind hospitals that submission of a claim for Part A
payment of inpatient hospital services is not required under these
procedures, nor is submission of a claim prohibited. Hospitals may have
received payment for Part B outpatient services at the time these
services were furnished. As a
[[Page 83256]]
result of the clarifying order issued by the court, for beneficiaries
who were enrolled in both Part A and Part B at the time of
hospitalization, Medicare will not immediately unwind previously paid
Part B outpatient claims in the case of a favorable or partially
favorable appeal decision for Part A coverage of the hospital services.
However, if a hospital chooses to submit a Part A inpatient claim for
payment following a favorable or partially favorable decision, in order
to prevent duplicate payment for services, we will unwind the Part B
claim (by canceling the claim) before processing the Part A claim, and
recover any monies paid to the hospital. The hospital would also need
to refund any other payments collected for the outpatient services,
including payments collected from any source related to coinsurance and
deductibles for the outpatient services prior to submitting the Part A
inpatient claim. Hospitals may then collect applicable cost sharing
based on the beneficiary's insurance coverage at the time of
hospitalization in accordance with the processed Part A claim.
In order to clarify these points, we are amending Sec. Sec.
405.932(h)(1)(ii), 405.934(d)(1)(ii), 405.936(e)(1)(ii) and
405.938(d)(1)(ii) to state that following a favorable appeal decision,
a prior Part B outpatient hospital claim will not be reopened and
revised (that is, unwound) unless a hospital submits a Part A claim for
inpatient services. These sections will be revised to read as follows:
For the purposes of effectuating a favorable [decision type], unless a
Part A claim is submitted by a hospital, any claims previously
submitted for outpatient hospital services and payments made for such
services (including any applicable deductible and coinsurance amounts)
are not reopened or revised by the MAC, and payment, as applicable, for
covered SNF services may be made by the MAC to the SNF without regard
to the hospital claim.
We are amending Sec. Sec. 405.932(h)(2)(ii), 405.934(d)(2)(ii),
405.936(e)(2)(ii) and 405.938(d)(2)(ii) and we are adding Sec. Sec.
405.932(h)(2)(iii), 405.934(d)(2)(iii), 405.936(e)(2)(iii) and
405.938(d)(2)(iii) to clarify that if a hospital chooses to submit a
Part A inpatient claim following a favorable appeal decision for any
eligible party, the hospital must refund any payments collected for the
outpatient hospital services prior to submitting a Part A inpatient
claim in order to prevent receipt of duplicate payment, and to clarify
that a refund of payments collected for the outpatient hospital
services is required if the favorable or partially favorable appeal
decision involves a beneficiary who was not enrolled in Medicare Part B
at the time of hospitalization even if the hospital does not submit a
Part A inpatient claim for payment. While we do not anticipate
hospitals will submit Part A claims in situations where they previously
received Part B payment for an outpatient claim, a refund would be
required before the submission of a Part A inpatient claim submitted
for any eligible party, and not limited to situations where a
beneficiary was not enrolled in Part B at the time of hospitalization.
Accordingly, these sections are being revised to state that a
hospital that furnished services to any eligible party (including those
enrolled in both Medicare Part A and Part B at the time of
hospitalization) must refund any payments collected for the outpatient
hospital services prior to submitting a Part A inpatient claim for such
services, and that the claim must be submitted within 365 calendar days
of receipt of the notice of a favorable decision. These revisions also
clarify that if a favorable or partially favorable decision is issued
to a beneficiary who was not enrolled in Medicare Part B at the time of
hospitalization, a refund is required for any amounts collected for the
outpatient hospital services even if a Part A inpatient claim for
payment is not submitted to the program.
Finally, we are adding Sec. Sec. 405.932(h)(2)(iii),
405.934(d)(2)(iii), 405.936(e)(2)(iii) and 405.938(d)(2)(iii) to
differentiate appeals involving beneficiaries who were enrolled in
Medicare Part B at the time of hospitalization in order to clarify that
hospitals must refund any payments collected for the outpatient
hospital services only if the hospital chooses to submit a Part A
inpatient claim for such services following a favorable or partially
favorable decision for these beneficiaries, and the timeframe to submit
such claims (365 calendar days).
Comment: Several commenters raised questions about billing for
services following a favorable or partially favorable appeal decision.
A commenter questioned how a favorable decision with respect to Part A
coverage for both the hospital and SNF services would be effectuated
with respect to the SNF if the SNF had previously submitted and
received payment for Part B services, and now decides to submit a claim
for covered Part A services. Commenters also raised questions about
specific condition codes to be used in billing for services, how Common
Working File (CWF) edits would be implemented to accommodate these new
claims, and how these new claims would be identified by the MAC. The
commenters requested that CMS acknowledge the complexity of billing for
SNF services furnished prior to FY 2020 and that CMS address how this
will be resolved in the final rule.
Response: Following a favorable appeal decision and after issuing a
refund to the beneficiary for any out of pocket payments made for SNF
services, if a SNF decides to submit a claim for covered Part A
services, then in order to avoid duplicate payment, Medicare would
recover the funds paid to the SNF for the Part B services to the extent
such Part B services are included in the payment made for Part A
services. Medicare would then process the Part A claim and make the
appropriate payment to the SNF for covered services.
We appreciate the comments about the complexity of this billing
process and understand the complexity involved not only in billing, but
also in processing these claims manually. We anticipate that each
situation will involve subtle differences that will need to be
addressed on a case-by-case basis. We are currently working to make the
necessary system changes to accommodate these claims and to create
billing instructions that will be approved and finalized shortly after
publication of this final rule. That will give providers some advance
time to work internally and/or with billing agents to be able to submit
claims following a favorable appeal. We will be working to implement
condition codes and remarks codes to be used on claims submitted
following a favorable decision so those claims may be identified by the
MAC. We anticipate the process will be similar to the Part B inpatient
rebilling process (https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/MM8185.pdf) implemented in response to CMS
Ruling CMS-1455-R and the provisions in the Fiscal Year 2014 Hospital
Inpatient Prospective Payment System final rule (CMS-1599-F, https://www.govinfo.gov/content/pkg/FR-2013-08-19/pdf/2013-18956.pdf). But we
are unable to incorporate this operational guidance into this
rulemaking.
Finally, we note that we agree with commenters who expressed
similar concerns about the complexity of this process. As explained
earlier, we are extending the time period to submit claims in response
to a favorable or partially favorable decision to 365 calendar days
from the date of receipt of the appeal decision and MACs will provide
support, as needed, to providers who wish to submit Part A claims.
We appreciate the feedback that we received from commenters on the
[[Page 83257]]
procedures for appeals conducted by processing contractors. Based on
analysis of the public comments, we will be finalizing the proposals
related to such procedures as proposed except for the addition of
Sec. Sec. 405.931(i) and 405.932(h)(2)(iii), and the amendments to
Sec. Sec. 405.932(b)(2)(iii), 405.932(h)(1)(ii) and 405.932(h)(2)(i)
and (ii), described previously.
5. Conduct of Reconsiderations by Qualified Independent Contractors
In Sec. 405.934(a), we proposed that the second level of
retrospective appeals be performed by QICs. As with the first level of
appeal, we proposed that the second level of retrospective appeal
generally follow existing procedures for reconsiderations outlined in
Sec. Sec. 405.960 through 405.978, as appropriate, except as specified
in the provisions proposed in this rule. Under proposed Sec.
405.934(a), eligible parties (or their representative) who are
dissatisfied with a MAC's unfavorable decision in proposed Sec.
405.932(g)(2) may file a request for reconsideration with the QIC
within 180 calendar days of receipt of the MAC's notice. The MAC's
decision would specify the elements required for the request for
reconsideration, and we proposed that those elements would be the same
as the existing requirements for a reconsideration set forth in Sec.
405.964. Requests for reconsideration under Sec. 405.934 that are
untimely or incomplete would be handled consistent with existing
procedures for dismissals in Sec. 405.972.
Consistent with the conduct of reconsiderations under existing
procedures in Sec. 405.968, the QICs shall review all evidence
furnished during the first level of appeal and any additional evidence
submitted with the request for reconsideration. Under proposed Sec.
405.934(c), the QIC determines if the inpatient admission, and as
applicable, SNF services, satisfied the relevant criteria for Part A
coverage at the time the services were furnished, then the QIC issues
notice of its decision to the eligible party (or their representative).
We proposed in Sec. 405.934(c)(3) that the QIC mail or otherwise
transmit notice of its decision within 60 calendar days of receipt of
the request for reconsideration. We also proposed to apply existing
procedures in Sec. 405.970 regarding the calculation of decision-
making timeframes, and the provisions regarding the escalation of cases
for a QIC's failure to meet such timeframes, as appropriate, to these
new appeals. In proposed Sec. 405.934(c)(4), the notice of a favorable
decision sent by the QIC to the eligible party (or their
representative) would include an explanation of the decision and
information regarding the effect of the decision, as well as other
information similar to that found in existing reconsideration notices
under Sec. 405.974.
In Sec. 405.934(c)(5), when applicable, we proposed that QICs
would send notice of a favorable reconsideration to the SNF that
furnished services to the beneficiary in order to inform the SNF of the
reason for its decision and the effect of the decision. In addition, in
Sec. 405.934(c)(6), with respect to an appeal filed by a beneficiary
not enrolled in Medicare Part B at the time of hospitalization, we
proposed that the QIC would send notice of a favorable decision to the
hospital to inform the hospital of the reason for its decision and the
effect of the decision. In addition, we proposed that the QIC would
send the SNF notice of a partially favorable decision where the
inpatient admission meets the criteria for Part A coverage, but the SNF
services do not meet the relevant criteria for Part A coverage (for
example, if the services are determined not medically reasonable and
necessary under section 1862(a)(1)(A) of the Act). The notice of a
partially favorable decision sent to a SNF would inform the SNF of the
reason the hospital services were determined to meet the relevant
criteria for Part A coverage, and the reason the SNF services were
determined not to be covered under Part A. We proposed that the QIC
also explain that the notice is being sent to the SNF for informational
purposes only, and that only the eligible party may appeal the decision
to an ALJ under Sec. 405.936. An eligible party would have the right
to appeal such a partially favorable decision with respect to the
coverage of SNF services under proposed Sec. 405.936 in the same
manner as unfavorable decisions with respect to Part A coverage of the
hospital services.
Consistent with the processes following a favorable first level of
appeal decision, as previously described, in the case of a beneficiary
who was not enrolled in Medicare Part B at the time of hospitalization,
we proposed in Sec. 405.934(d)(2)(ii) that following a favorable
appeal decision and making any required refund for payments received
for covered services, the hospital may submit a new Part A inpatient
claim to Medicare in order to determine the appropriate amount of
benefits, and for Medicare to make payment for inpatient hospital
services. We also proposed in Sec. 405.934(d)(2)(ii) that the claim
must be submitted by the hospital within 180 calendar days after the
hospital receives its notice of favorable reconsideration for the
eligible party.
In addition, if a favorable appeal decision includes eligible SNF
services that are covered, in Sec. 405.934(d)(2)(i), we proposed that
following a refund of amounts collected from the beneficiary, the SNF
may then submit a claim (or claims) for such services in order to
determine the appropriate amount of benefits, and that Medicare would
make payment for the covered SNF services. We also proposed in Sec.
405.934(d)(2)(ii) that the SNF submit the claim within 180 calendar
days after receiving the notice of a favorable appeal decision for the
eligible party.
If the QIC determines that the hospitalization did not meet
applicable Part A inpatient coverage requirements, we proposed in Sec.
405.934(c)(2) that the QIC would send notice of its unfavorable
decision to the eligible party (or their representative). If the QIC
determines that the hospital admission meets applicable Part A
inpatient coverage requirements, but the SNF services eligible for the
appeal do not meet applicable coverage requirements, we also proposed
in Sec. 405.934(c)(2) that the QIC would send notice of its partially
favorable decision to the eligible party (or their representative). The
notice of an unfavorable or partially favorable decision would inform
the eligible party (or their representative) of the right to request a
hearing before an ALJ (or review by an attorney adjudicator) under
proposed Sec. 405.936 and would provide detailed information about the
requirements for filing the request and where the request must be
filed.
We did not receive any comments on the proposed policies related to
QIC reconsiderations. We are finalizing our policies as proposed with
the exception of the following modifications, described in section
III.A.4. of this final rule:
Amending Sec. 405.934(d)(1)(ii) to clarify that existing
outpatient claims will not be unwound unless the hospital files a Part
A inpatient claim following a favorable appeal decision.
Amending Sec. Sec. 405.934(d)(2)(i) and (ii) to extend
the time for providers to file claims following a favorable decision to
365 calendar days.
Adding Sec. 405.934(d)(2)(iii) to clarify that hospitals
must refund any payments collected for the outpatient hospital services
only if the hospital chooses to submit a Part A inpatient claim for
such services following a favorable or partially favorable appeal
decision for beneficiaries who were enrolled in Medicare Part B at the
time of hospitalization.
[[Page 83258]]
6. Conduct of Hearings Before Administrative Law Judges and Decisions
by Administrative Law Judges or Attorney Adjudicators
Currently, the third level of claims appeals are performed by ALJs
and attorney adjudicators within the HHS Office of Medicare Hearings
and Appeals (OMHA). As with the first two levels of appeal, we proposed
in Sec. 405.936(b) that the third level of retrospective appeal
generally follow existing procedures for claims appeals in Sec. Sec.
405.1000 through 405.1063, as appropriate, except as specified in the
provisions proposed in this rule. Under proposed Sec. 405.936(a),
eligible parties (or their representative) who are dissatisfied with
either a QIC's dismissal of a request for reconsideration, or an
unfavorable reconsideration in proposed Sec. 405.934(c)(2), may file a
request in writing with the OMHA within 60 calendar days of receipt of
the QIC's notice. The reconsideration notice would specify the elements
required for the request for hearing, and we proposed that these
elements would mirror existing requirements for appeal requests in
Sec. 405.1014(a)(1). We also proposed that untimely or incomplete
requests would be handled under existing procedures for dismissals in
Sec. 405.1014(e) and Sec. 405.1052.
As we previously noted, in some respects, the nature of the appeals
required by the court order dictate a new implementation approach that
cannot utilize existing procedures. For example, ordinarily under
current claims appeals procedures, adjudicators review claims that
contain denied items or services to determine whether items and/or
services billed on a Medicare claim are covered and whether payment may
be made. In addition, under Sec. 405.1006, billed charges on claims
submitted to Medicare serve as the basis for determining the amount in
controversy required for an appeal at the third level of appeal and for
judicial review in federal district court. However, under the proposed
process, with respect to the relevant hospital stay, there is no
inpatient hospital claim and no denial of billed services.
For retrospective appeals, we proposed to incorporate the existing
amount in controversy requirement required for a hearing before an ALJ
or judicial review in federal court consistent with section
1869(b)(1)(E) of the Act and Sec. 405.1006.\14\ However, with respect
to the methodology for calculating the amount in controversy, we cannot
utilize the existing method for claims appeals in Sec. 405.1006(d)(1)
to calculate such amount. The procedures in existing regulations
require the use of actual charges from the disputed claim(s) billed to
Medicare, and in the scenario giving rise to appeal rights in the court
order, no Part A inpatient claim will have been filed. Without a Part A
inpatient claim, there are no billed charges for the denied Part A
coverage to serve as the basis for calculating the amount in
controversy. Other methods in Sec. 405.1006(d) for calculating the
amount in controversy are designed for appeals that are factually
different than these new appeals, and thus, we did not believe it would
be appropriate to adopt other existing calculation methods to apply
them here.
---------------------------------------------------------------------------
\14\ For calendar year 2025, the minimum amount in controversy
for a hearing at the OMHA level is $190, and for judicial review the
minimum amount in controversy is $1,900. These amounts are
calculated annually in accordance with section1869(b)(1)(E) of the
Act and notice of the updated minimum amounts for each calendar year
is published in the Federal Register and is available on https://www.cms.gov/medicare/appeals-grievances/fee-for-service/third-level-appeal.
---------------------------------------------------------------------------
In the case of a beneficiary who was enrolled in Medicare Part B at
the time of hospitalization, we believe it would be appropriate to
utilize the billed charges on a claim filed by the hospital for Part B
outpatient hospital services as the basis for calculating the amount in
controversy for these new appeals. Since we do not have a Part A
inpatient claim for the hospital services furnished to the beneficiary,
we do not have available to us the costs of the denied Part A services
that are at issue in the appeal to serve as the basis for the amount in
controversy. While the billed charges for outpatient services will
differ from those that would have been billed on an inpatient claim, we
believed it was reasonable to use the billed charges on the approved
outpatient claim for the purposes of determining the amount in
controversy, and in Sec. 405.936(c)(2) we proposed including those
charges in calculating the amount in controversy for a hearing before
an ALJ and for judicial review in federal district court. We emphasized
that, as explained in section III.A.4. of this rule, for beneficiaries
enrolled in Part B at the time of hospitalization, we will not make an
adjustment of payment related to the previously submitted Part B
outpatient hospital claim (including any deductible and coinsurance
amounts) when effectuating a favorable appeal decision. Nevertheless,
we proposed that the billed charges for the outpatient hospital
services would be included in determining whether the amount in
controversy requirement is met because we do not have available to us
the costs of the denied Part A hospital services at issue in the appeal
and because we believe that for purposes of determining the amount in
controversy it is appropriate to attribute a dollar amount to the
hospital services at issue, even if ultimately we would not adjust the
payment for the hospital services.
For any billed SNF services that are included in the appeal, the
billed charges on a claim submitted by the SNF would be utilized in
calculating the amount in controversy. However, in cases where a claim
was not submitted by the SNF because the services were not covered, the
amount the beneficiary was charged for SNF services, as reflected in an
itemized statement received by the beneficiary or evidence of payments
made by the beneficiary to the SNF, would be used in determining the
amount in controversy.
Thus, we proposed in Sec. 405.936(c)(2) that the billed charges on
the Part B outpatient claim and the billed charges for any SNF claim at
issue in the appeal, or the billed charges paid by the beneficiary in
the absence of a claim, would serve as the amount in controversy for
hearings before an ALJ and for judicial review in federal district
court. Furthermore, as the cost sharing for a Part A inpatient claim
will be different than the cost sharing for the Part B outpatient
claim, we did not reduce the amount in controversy by any applicable
cost sharing, or other payments made for the Part B outpatient hospital
claim as we do for existing calculation methods. Nor did we factor in
any cost sharing or payments made related to the SNF claim, as
applicable, to reduce the amount in controversy.
For beneficiaries who are eligible parties because they were not
enrolled in Medicare Part B at the time of their hospitalization, in
most situations, we did not believe hospitals would have submitted a
claim to the program for Part B outpatient services. Therefore, for
beneficiaries who were not enrolled in Part B at the time of
hospitalization and did not have a claim submitted to Medicare on their
behalf for hospital outpatient services, we proposed in Sec.
405.936(c)(3) to calculate the amount in controversy by using the
hospital's billed charges to the beneficiary for such outpatient
services. We believed the hospital's charges to the beneficiary, as
reflected in an itemized statement received by the beneficiary, or
evidence of payments made to the hospital, were a reasonable estimation
of the financial impact of the denial of Part A coverage to the
beneficiary and the amount at issue in the appeal. In addition, the
[[Page 83259]]
billed charges for SNF services, if any, paid by the beneficiary would
also be used in computing the amount in controversy for appeals
involving beneficiaries not enrolled in Medicare Part B at the time of
hospitalization.
Consistent with the conduct of appeals before ALJs and attorney
adjudicators under existing procedures in Sec. Sec. 405.1028 through
405.1030, we proposed that ALJs and attorney adjudicators review all
evidence furnished during the first two levels of appeal and any
additional evidence submitted by the beneficiary with the request for
hearing or request for review of a dismissal. Under proposed Sec.
405.936(d), the ALJ or attorney adjudicator determines if the inpatient
admission, and as applicable, SNF services, satisfied the relevant
criteria for Part A coverage at the time the services were furnished,
and then issues notice of the decision to the eligible party (or their
representative). In proposed Sec. 405.936(d)(2), we explained that the
notice of an unfavorable decision or partially favorable decision (that
is, a decision where Part A coverage is approved for the hospital
admission, but Part A coverage is not approved for applicable SNF
services that are at issue in the appeal) would be sent to the eligible
party (or their representative). In proposed Sec. 405.936(d)(3), the
notice of a favorable decision sent to the eligible party (or their
representative) would include an explanation of the decision and
information regarding the effect of the decision, as well as other
information similar to that found in existing notices under Sec.
405.1046.
In Sec. 405.936(d)(4), when applicable, we proposed that the ALJ
or attorney adjudicator would send notice of a favorable
reconsideration to the SNF that furnished services to the beneficiary
in order to inform the SNF of the reason for the decision and the
effect of the decision. In addition, in Sec. 405.936(d)(5), with
respect to an appeal filed by a beneficiary not enrolled in Medicare
Part B at the time of hospitalization, we proposed that the ALJ or
attorney adjudicator would send notice of a favorable decision to the
hospital to inform the hospital of the reason for the decision and the
effect of the decision. In the case of a partially favorable decision,
we proposed in Sec. 405.936(d)(2) that notice would be sent to the SNF
as an informational copy, and in proposed Sec. 405.936(d)(6) we
specified the elements included in the notice sent to the SNF. The
notice of a partially favorable decision sent to a SNF would inform the
SNF of the reason the hospital services were determined to meet the
relevant criteria for Part A coverage, and the reason the SNF services
were determined not to be covered under Part A. We proposed that the
ALJ or attorney adjudicator also explain that the notice is being sent
to the SNF for informational purposes only, and that only the eligible
party may appeal the decision to the Council under Sec. 405.938.
In Sec. 405.936(d)(7), we proposed to utilize the existing
procedures in Sec. 405.1016 regarding the calculation of timeframes
within which ALJs and attorney adjudicators must issue decisions,
including applicable waivers and extensions to the adjudication
timeframe, and the option for an eligible party (or their
representative) to escalate an appeal for failure to issue a decision
in the applicable timeframe.
Consistent with the processes at the first two levels of appeal, as
previously described, in the case of a beneficiary who was not enrolled
in Medicare Part B at the time of hospitalization, we proposed in Sec.
405.936(e)(2)(ii) that following a favorable appeal decision and making
any required refund for payments received for covered services, the
hospital may submit a new Part A inpatient claim to Medicare in order
to determine the appropriate amount of benefits, and for Medicare to
make payment for inpatient hospital services. We also proposed in Sec.
405.936(e)(2)(ii) that the claim must be submitted by the hospital
within 180 calendar days after the hospital receives its notice of
favorable decision for the eligible party.
In addition, if a favorable appeal decision includes eligible SNF
services that are covered, in Sec. 405.936(e)(2)(i), we proposed that
following a refund of amounts collected from the beneficiary, the SNF
may then submit a claim (or claims) for such services in order to
determine the appropriate amount of benefits, and for Medicare to make
payment for the covered SNF services. We also proposed in Sec.
405.936(e)(2)(i) that the SNF submit the claim within 180 calendar days
after receiving the notice of a favorable appeal decision for the
eligible party.
If the ALJ or attorney adjudicator determines that the hospital
admission did not meet applicable Part A inpatient coverage
requirements, we proposed in Sec. 405.936(d)(2) and (d)(3)(vii) the
ALJ or attorney adjudicator would send notice of the unfavorable
decision to the eligible party (or their representative). If the ALJ or
attorney adjudicator determines that the hospital admission meets
applicable Part A inpatient coverage requirements, but the SNF services
eligible for the appeal do not meet applicable coverage requirements,
we also proposed in Sec. 405.936(d)(2) that the ALJ or attorney
adjudicator would send notice of its partially favorable decision to
the eligible party (or their representative). The notice of an
unfavorable or partially favorable decision would inform the eligible
party (or their representative) of the right to request review by the
Council under proposed Sec. 405.938 and would provide detailed
information about the requirements for filing the request and where the
request must be filed.
In proposed Sec. 405.936(e) and (f), we explain the effect of an
ALJ or attorney adjudicator decision as binding on the eligible party
unless it is further appealed or reopened. The reopening of an ALJ or
attorney adjudicator decision would be processed under existing
procedures in Sec. 405.980(d) and (e). The effect of an ALJ or
attorney adjudicator decision is consistent with the effect of
decisions at other levels in the appeals process, as previously
described. We proposed that an eligible party (or their representative)
who is dissatisfied with an unfavorable decision by an ALJ or attorney
adjudicator may request review by the Council under proposed Sec.
405.938(a), and the ALJ or attorney adjudicator decision notice would
provide detailed information about the process for filing such a
request.
We did not receive any comments on the proposed policies related to
ALJ hearings and decisions by ALJs or Attorney Adjudicators. We are
finalizing our policies as proposed with the exception of the following
modifications, described in section III.A.4. of this final rule:
Amending Sec. 405.936(e)(1)(ii) to clarify that existing
outpatient claims will not be unwound unless the hospital files a Part
A inpatient claim following a favorable appeal decision.
Amending Sec. 405.936(e)(2)(i) and (ii) to extend the
time for providers to file claims following a favorable decision to 365
calendar days.
Adding Sec. 405.936(e)(2)(iii) to clarify that hospitals
must refund any payments collected for the outpatient hospital services
only if the hospital chooses to submit a Part A inpatient claim for
such services following a favorable or partially favorable appeal
decision for beneficiaries who were enrolled in Medicare Part B at the
time of hospitalization.
7. Conduct of Review by the Medicare Appeals Council
Under Sec. 405.938, we proposed that retrospective reviews at the
fourth level of appeal would be conducted by the Council and would
generally follow existing procedures for claims appeals
[[Page 83260]]
in Sec. Sec. 405.1100 through 405.1130, except as specified in the
provisions proposed in this rule. Under proposed Sec. 405.938(a),
eligible parties (or their representative) who are dissatisfied with
either a dismissal of a request for hearing by an ALJ or attorney
adjudicator, or an unfavorable ALJ or attorney adjudicator decision in
proposed Sec. 405.936(d)(2) may file a request in writing with the
Council within 60 calendar days of receipt of the notice from the ALJ
or attorney adjudicator. The request must include the elements
specified in the notice issued by the ALJ or attorney adjudicator, and
we proposed to use the existing requirements for requests for Council
review in Sec. 405.1112. We proposed that untimely or incomplete
requests would be handled under existing procedures in Sec. Sec.
405.1100 through 405.1116.
We proposed that the Council would review appeal requests and
requests for review of dismissal actions under existing procedures in
Sec. Sec. 405.1100 through 405.1132, as applicable. Under proposed
Sec. 405.938(c)(1), the Council makes a decision or remands the case
to an ALJ or attorney adjudicator. We proposed in Sec. 405.938(c)(2)
that the Council may adopt, modify, or reverse the decision of an ALJ
or attorney adjudicator, consistent with existing Council procedures.
In Sec. 405.938(c)(3), we proposed the Council would send notice of
its decision, or its remand to an ALJ or attorney adjudicator, to the
eligible party (or their representative), and we proposed that a
decision would contain information regarding the effect of a favorable
decision. In the case of an unfavorable or partially favorable
decision, we proposed that the Council include information about filing
a request for judicial review under existing procedures in 405.1136. We
also explained in proposed Sec. 405.938(c)(3) that a partially
favorable decision issued by the Council refers to a determination that
the inpatient admission satisfied the relevant criteria for Part A
coverage, but the SNF services did not satisfy the relevant criteria
for Part A coverage. Notice of a partially favorable decision is sent
to the eligible party (or their representative), and to the SNF that
furnished services under appeal, but for informational purposes only.
In addition, we proposed in Sec. 405.938(c)(4), when applicable,
the Council would send notice of a decision favorable to an eligible
party to the hospital and the SNF that furnished services. The notice
would explain the effect of the decision as specified in proposed Sec.
405.938(d), including the provider's obligation to refund payments
collected for services determined to be covered following the appeal.
The notice would also explain, as applicable, the process for a SNF or
a hospital to submit a claim for the covered services to determine the
amount of benefits due following the refund of payments previously
collected.
In Sec. 405.938(c)(5), we proposed to utilize the existing
procedures in Sec. 405.1100 regarding the calculation of timeframes
within which the Council must issue decisions, including applicable
waivers and extensions to the adjudication timeframe,\15\ and the
option for an eligible party (or their representative) to escalate an
appeal for failure to issue a decision in the applicable timeframe.
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\15\ For example, under Sec. 405.1106(a), if a party submits a
timely filed request for Council review with an entity other than
the entity specified in the notice of the ALJ's or attorney
adjudicator's action, the Council's adjudication period to conduct a
review begins on the date the request for review is received by the
entity specified in the notice of the ALJ's or attorney
adjudicator's action. In other words, if an ALJ decision specifies
that a party must submit a request for Council review with the
Council, and the party mistakenly files their request with, for
example, OMHA, then the Council's adjudication time period does not
begin until the Council receives the request for review from OMHA.
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In proposed Sec. 405.938(e) and (f), we explained that a Council
decision is considered final and binding on the eligible party unless
it is reopened and revised, or in the case of an unfavorable decision,
a Federal district court issues a decision modifying the Council
decision. The reopening of a Council decision would be processed under
existing procedures in Sec. 405.980(d) and (e). The effect of a
favorable Council decision is consistent with the effect of decisions
at other levels in the appeals process, as previously described. We
proposed in Sec. 405.938(e)(1) that an eligible party (or their
representative) who meets the requirements to escalate a case under
Sec. 405.1132 or is dissatisfied with an unfavorable decision by the
Council, may request judicial review consistent with existing
procedures in Sec. Sec. 405.1132 through 405.1136. Based on its
existing procedures, the Council's decision notice would provide
detailed information about the process for filing such a request.
We did not receive any comments on the proposed policies related to
Appeals Council review. We are finalizing our policies as proposed with
the exception of the following modifications, described in section
III.A.4. of this final rule:
Amending Sec. 405.938(d)(1)(ii) to clarify that existing
outpatient claims will not be unwound unless the hospital files a Part
A inpatient claim following a favorable appeal decision.
Amending Sec. 405.938(d)(2)(i) and (ii) to extend the
time for providers to file claims following a favorable decision to 365
calendar days.
Adding Sec. 405.938(d)(2)(iii) to clarify that hospitals
must refund any payments collected for the outpatient hospital services
only if the hospital chooses to submit a Part A inpatient claim for
such services following a favorable or partially favorable appeal
decision for beneficiaries who were enrolled in Medicare Part B at the
time of hospitalization.
8. Judicial Review
We proposed in Sec. 405.938(f)(1) that eligible parties
dissatisfied with a final decision of the Council whose claims meet the
amount in controversy requirement in proposed Sec. 405.936(c) may
request judicial review in Federal district court under the existing
procedures in Sec. 405.1136. In addition, under proposed Sec.
405.938(f)(2), an eligible party (or their representative) who
satisfies the amount in controversy requirement in proposed Sec.
405.936(c) and is entitled to escalate a case from the Council to
Federal district court upon satisfying the criteria set forth in Sec.
405.1132, may request judicial review under the existing procedures in
Sec. 405.1136.
We did not receive any comments on the proposed policies related to
judicial review. We are finalizing our policies as proposed.
We appreciate the support and feedback we have received from the
commenters on our proposals related to the retrospective appeals
process. After review and consideration of all comments, we are
finalizing the regulations for the retrospective appeal procedures as
proposed with the following modifications:
We are adding Sec. 405.931(i) to clarify that the
coverage decision for a retrospective Part A patient status appeal is
conclusive for any pending claim appeal.
At Sec. 405.932(b)(2)(iii) we are clarifying that a
family member may include individuals who are not biologically related
to the beneficiary (solely for the purpose of determining whether out
of pocket payments were made for SNF services, making those services
eligible for an appeal).
At Sec. 405.932(c)(2) we are extending the timeframe for
providers to respond to a request for medical records to aid in
establishing a beneficiary's eligibility for an appeal from 60 calendar
days to 120 calendar days.
[[Page 83261]]
At Sec. 405.932(d)(3)(ii) we are requiring that the
eligibility contractor's notice of denial of eligibility will also
include an explanation of the information needed to cure the denial.
At Sec. Sec. 405.932(h)(1)(ii), 405.932(h)(2)(ii),
405.934(d)(1)(ii), 405.934(d)(2)(ii), 405.936(e)(1)(ii),
405.936(e)(2)(ii), 405.938(d)(1)(ii) and 405.938(d)(2)(ii) we are
revising the regulation text to clarify that in the case of a favorable
appeal decision, a hospital who chooses to submit a Part A inpatient
claim must refund any payments received for the Part B outpatient claim
before submitting the Part A inpatient claim. If a Part A claim is
submitted, the previous Part B outpatient claim will be reopened and
canceled, and any Medicare payments will be recouped to prevent
duplicate payment. In addition, we are revising the regulation text to
clarify that in the case of a favorable decision for a beneficiary who
was not enrolled in Medicare Part B at the time of hospitalization, the
hospital must refund any payments collected for the outpatient services
even if the hospital chooses not to submit a Part A claim for payment
to the program.
At Sec. Sec. 405.932(h)(2)(i) and (ii), 405.934(d)(2)(i)
and (ii), 405.936(e)(2)(i) and (ii) and 405.938(d)(2)(i) and (ii) we
are amending the content of decision letters to specify that a
provider's claim filing timeframe will be 365 calendar days following a
favorable or partially favorable decision under the retrospective
appeals process.
We are adding Sec. Sec. 405.932(h)(2)(iii),
405.934(d)(2)(iii), 405.936(e)(2)(iii) and 405.938(d)(2)(iii) to
clarify the effect of favorable appeals involving beneficiaries who
were enrolled in Medicare Part B at the time of hospitalization to
explain that hospitals must refund any payments collected for the
outpatient hospital services only if the hospital chooses to submit a
Part A inpatient claim for such services.
In addition, in drafting this final regulation we identified
several erroneous cross-references in the proposed regulations text
that we will be correcting. Specifically--
In proposed Sec. 405.931(a)(1), the reference to Sec.
405.931(b)(1) is revised to read Sec. 405.931(b);
In proposed Sec. 405.932(c)(2), the reference to Sec.
405.931(b)(1) is revised to read Sec. 405.931(b);
In proposed Sec. 405.932(d)(2)(ii), the reference to
Sec. 405.932(e) is revised to read Sec. 405.932(f); and
In proposed Sec. 405.932(f)(3), the reference to
paragraph (e)(1) is revised to read (f)(1).
After publication of this final rule regarding the procedures for
these new appeals, we intend to specify the implementation date for
filing appeal requests for retrospective and prospective appeals. When
the prospective process is fully implemented, eligible beneficiaries
who are hospitalized and receive notice of their appeal rights and wish
to pursue an appeal will be expected to utilize the prospective
procedures (proposed Sec. Sec. 405.1210 through 405.1212). We will
announce the implementation dates on cms.gov and/or Medicare.gov.
B. Prospective Appeal Rights
1. Overview
This final rule also establishes and implements a new notice
requirement and an expedited appeals process, on a prospective basis,
for certain beneficiaries whose status was changed from inpatient to
outpatient receiving observation services while they were still in the
hospital. The expedited appeals process parallels the process in effect
for inpatient hospital discharge appeals set forth at Sec. Sec.
405.1205 and 405.1206, with some differences. In its order dated March
26, 2020, the court indicated that HHS should use a process for the
expedited appeals that is ``substantially similar'' to the existing
process for expedited hospital discharge appeals at Sec. Sec. 405.1205
through 405.1208; under that hospital discharge appeals process,
beneficiaries receive a notice of their rights and may request an
expedited determination by a Quality Improvement Organization (QIO)
about the hospital's decision to discharge the beneficiary. While the
processes are largely similar, a notable difference is that the issue
under appeal in this process relates to the change of status from an
inpatient to an outpatient receiving observation services. This change
of status may affect cost sharing for the hospital stay as well as
whether any post hospital care in a skilled nursing facility would be
covered by Medicare.
CMS contracts with QIOs, pursuant to Title XI, Part B of the Act
and section 1862(g) of the Act, to perform certain statutorily required
functions and contractual quality improvement and other activities for
the purposes of improving the quality of care furnished to Medicare
beneficiaries with respect to Medicare covered items and services. The
QIO Program is part of the HHS' national quality strategy for providing
quality and patient centered care to Medicare beneficiaries. Section
1154(a)(1) of the Act establishes certain review functions of QIOs,
including that QIOs review the services furnished to Medicare
beneficiaries by physicians, other healthcare practitioners, and
institutional and non-institutional providers of services (as defined
in section 1861(u) of the Act and including hospitals). In addition,
under section 1154(a)(18) of the Act, QIOs must also provide, subject
to the terms of their contract with CMS, such other activities as the
Secretary determines may be necessary for the purposes of improving the
quality of care furnished to individuals with respect to items and
services for which payment may be made under Medicare. This flexibility
allows CMS to establish and further define the types of reviews
performed by the QIOs in order to meet evolving needs and issues
pertaining to healthcare delivered under the Medicare program.
As discussed in sections II. and III.A. of this rule, a recent
court decision requires the Secretary to implement an appeal process
for certain Medicare beneficiaries that is substantially similar to the
existing hospital discharge appeals conducted by QIOs under Sec. Sec.
405.1205 through 405.1208. See Alexander v. Azar, 613 F. Supp. 3d 559
(D. Conn. 2020)), aff'd sub nom., Barrows v. Becerra, 24 F.4th 116 (2d
Cir. 2022). These new review and appeals activities are within the
scope of the Secretary's authority under section 1154(a)(18) of the Act
to contract with QIOs to perform additional activities that are not
already specified in section 1154 of the Act or other provisions.
Section 1155 of the Act governs appeals of QIO determinations that are
made under Title XI, subpart B, which includes section 1154 of the Act.
Therefore, the proposed new QIO determinations, performed under section
1154(a)(18) of the Act, are subject to the appeal process specified in
section 1155 of the Act.\16\ Based on the QIOs' expertise and
longstanding performance of similar functions, CMS has determined that
the QIOs are the most appropriate entity to perform beneficiary-
initiated appeals regarding hospital reclassifications of inpatients to
outpatients receiving observation
[[Page 83262]]
services proposed in Sec. Sec. 405.1211 through 405.1212.
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\16\ Under section 1155 of the Act, a beneficiary who is
entitled to benefits under title XVIII (that is, a Medicare
beneficiary) and who is dissatisfied with a determination made by a
QIO in conducting its review responsibilities shall be entitled to a
reconsideration of such determination by the reviewing organization
(that is, the QIO). For the purposes of these appeals, section 1155
of the Act authorizes the QIO to conduct a reconsideration of its
expedited determination regarding the hospital reclassification
under Sec. 405.1211 to determine if an eligible beneficiary is
entitled to coverage under Part A of the program.
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We proposed an expedited appeals process that would be available to
beneficiaries \17\ who, after formally being admitted as an inpatient,
have subsequently been reclassified by the hospital as an outpatient
while the beneficiary is still in the hospital, received observation
services following the reclassification, and met one of the following
two criteria:
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\17\ Since the court order specifically requires the provision
of appeal rights to a defined set of class members, and that
definition does not include the provider of services (that is,
hospitals and SNFs), we are limiting party status for these new
appeals to the defined class members. We note that this limitation
currently exists for hospital discharge appeals procedures in
Sec. Sec. 405.1205 and 405.1206, where a provider of services does
not have party status.
---------------------------------------------------------------------------
Their stay in the hospital was at least 3 days but they
were an inpatient for fewer than 3 days.
They did not have Medicare Part B coverage (these eligible
beneficiaries would not need to remain in the hospital for at least 3
days to be eligible for an appeal).
We proposed in new Sec. 405.1210(a)(3) the criteria that must be
met for a beneficiary to be eligible for the new prospective appeal
rights. We proposed to require hospitals to deliver, as soon as
possible after certain conditions are met and prior to release from the
hospital, a new standardized beneficiary notice, informing eligible
beneficiaries of the change in their status, the resulting effect on
Medicare coverage of their stay, and their appeal rights if they wish
to challenge that change. This new notice will be called the Medicare
Change of Status Notice (MCSN).\18\ This new notice follows the format
and structure of the Important Message from Medicare (IM), which is the
notice hospitals are required, by Sec. 405.1205, to provide to
beneficiaries to inform them of their right to appeal an inpatient
hospital discharge. See section IV.D. of this final rule for details on
how to obtain a copy of the MCSN.\19\
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\18\ OMB control number 0938-1467.
\19\ Section IV.D. of this final rule states that to obtain
copies of the supporting statement and any related forms,
individuals should visit the CMS website at https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing.
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We considered alternatives to creating a new notice for this
process. One consideration was standardizing and adding appeals
information to the required written Condition Code 44 notification used
by hospitals to inform beneficiaries when their status is changed from
inpatient to outpatient after review by a hospital utilization review
committee and the entire episode will be billed as outpatient. However,
those eligible for this new process would be a small subset of the
population receiving the existing Condition Code 44 notification.
Specifically, individuals would not only require a change of status
from inpatient to outpatient, they must also meet the criteria set
forth in proposed Sec. 405.1210 (a)(2) and (3) to pursue an appeal
regarding a change in status. The vast majority of beneficiaries
receiving the existing notification of inpatient to outpatient change
will not be eligible for this new appeals process and would likely find
the inclusion of information about an appeals process for which they
are not eligible confusing. We also considered adding appeals
information to the Medicare Outpatient Observation Notice (MOON). The
MOON (42 CFR 489.20(y)) is used to inform beneficiaries who receive
observation services for a certain amount of time that they are not
hospital inpatients, but rather outpatients receiving observation
services. However, like the change in status notice mentioned earlier,
the MOON would be overbroad and the vast majority of beneficiaries
receiving it would not be eligible for an appeal in this new process.
Further, per section 1866(a)(1)(Y) of the Act, the MOON is only
required for beneficiaries who have been outpatients receiving
observation services for more than 24 hours, yet we proposed that, for
prospective appeals, beneficiaries reclassified from inpatients to
outpatients receiving observation services be eligible for an appeal if
any amount of time is spent in observation following the status change
(in this respect, we are expanding the population of beneficiaries
eligible for an appeal beyond the class as defined by the court, and
not limiting eligibility to those beneficiaries who have received a
MOON). Because the MOON is not required for observation stays shorter
than 24 hours, using the MOON would likely result in not all eligible
beneficiaries receiving notification of their appeal rights under the
proposed new process. We concluded that a targeted appeals notice,
delivered only to those beneficiaries eligible for this specific
appeal, would be the most effective and efficient means of informing
eligible beneficiaries of their appeal rights.
The proposed MCSN contains a similar layout and language to the IM
and includes information on the change in coverage, a description of
appeal rights and how to appeal, and the implications for SNF coverage
following the hospital stay. We believed that by proposing the delivery
of this largely generic notice, the notice delivery burden on hospitals
would be as minimal as possible, without any adverse effect on patient
rights.
We reviewed the notice delivery procedures for the IM notice
related to inpatient hospital discharges and have mirrored that process
in this new process, wherever possible. In proposing this approach, our
goal was to design notice procedures that balance a beneficiary's need
to be informed about his or her appeal rights in an appropriate and
timely manner, without imposing unnecessary burdens on hospitals.
We proposed to require hospitals to deliver the notice to eligible
beneficiaries as soon as possible after a beneficiary is eligible for
this process per Sec. 405.1210(a)(2) and (3), but no later than 4
hours prior to release from the hospital. For beneficiaries with Part
B, we proposed that the notice must be delivered as soon as possible
after the hospital reclassifies the beneficiary from inpatient to
outpatient receiving observation services and the third day in the
hospital is reached. Beneficiaries will likely not reach this required
third day in the hospital until very close to release from the
hospital. This is because these will be beneficiaries that hospitals
have determined do not need an inpatient level of care and thus, the
overall length of the hospital stay is not expected to exceed a few
days. For beneficiaries without Medicare Part B coverage, we proposed
that hospitals must deliver the notice as soon as possible after the
change in status from inpatient to outpatient receiving observation
services because a 3-day hospital stay is not required for these
beneficiaries to be part of the class specified in the court order.
We believed the approach we proposed would not be overly burdensome
for hospitals as the proposed notice is standardized and requires very
little customization by the hospital before delivery. The proposed
notice was modeled after the existing hospital discharge appeals notice
(IM), and like that notice, does not require extensive time for
hospitals to prepare and deliver to beneficiaries. We believed that the
number of beneficiaries that are eligible for this proposed appeal
process would be significantly lower than the volume that receive the
hospital discharge appeals notification. (Please see section IV.B. for
more information on assumptions and estimates related to this proposed
appeals process.) Additionally, the delivery of the MCSN notice to the
beneficiary would mimic the process already in place for hospitals
delivering
[[Page 83263]]
the IM, so implementing this process should not be overly difficult or
burdensome.
One notable difference, as compared to that for inpatient hospital
discharge appeals, is that under this new appeals process beneficiaries
will not have financial liability protection for hospital services
received while their appeal is adjudicated. Section
1869(c)(3)(C)(iii)(III) of the Act, which provides beneficiaries with
coverage during the inpatient hospital discharge appeal, only applies
to beneficiaries being discharged from a Medicare covered inpatient
hospital stay, and thus would not be applicable to beneficiaries
pursuing an appeal regarding the change in status from inpatient to
outpatient receiving observation services.
We proposed that the QIOs perform these reviews. The nature of
these reviews is consistent with the mission and functions of the QIO
Program. QIOs have contracts with CMS under section 1862(g) of the Act
and Part B of Title XI of the Act to perform certain statutorily
required reviews of the services furnished to Medicare beneficiaries
and to implement quality improvement initiatives involving Medicare
beneficiaries, providers, and their communities. (See 42 CFR parts 475
through 480.) Historically, QIOs have performed expedited discharge
reviews for beneficiaries appealing inpatient discharges (42 CFR
405.1205 through 405.1208, 422.620 and 422.622) as well as similar
expedited reviews for termination of provider services in non-hospital
settings (42 CFR 405.1202 through 405.1204, 422.624, and 422.626).
Currently, these reviews, as well as other case reviews related to the
quality of care received by Medicare beneficiaries, compliance with
certain conditions of coverage for inpatient services, and reviews of
the validity of certain diagnostic and procedural information supplied
by hospitals among other types of care reviews, are performed by the
Beneficiary and Family Centered Care QIOs (BFCC-QIOs), while quality
improvement initiatives are performed by a different type of QIO. We
stated that if the proposed rule was finalized, we would require the
BFCC-QIOs to perform this new type of appeal because their scope of
knowledge, expertise and experience with beneficiary appeals and
Medicare coverage ensures an adequate and reliable review.
Finally, the court order only requires that an expedited appeals
process be made available to class members ``who have stayed, or will
have stayed, at the hospital for 3 or more consecutive days.'' For
class members who lacked Part B and did not stay in the hospital for 3
or more consecutive days, it would appear that a non-expedited appeals
process might be sufficient. Nonetheless, we proposed to use the
expedited process for all prospective appeals, with minor differences
depending on whether the expedited appeal request is made timely. In
other words, an eligible beneficiary may request the QIO review at or
around the time of receiving the notice in a hospital, or after a claim
is filed, and in both instances, beneficiaries will be afforded a
review and determination by the QIO. An appeal filed outside of the
expedited timeframes may be referred to herein as a standard or
untimely appeal.
Comment: The vast majority of commenters supported the proposed
prospective appeals process that would provide eligible beneficiaries
with the right to pursue an appeal regarding a hospital
reclassification from inpatient to outpatient receiving observation
services. Many commenters stated the policy would protect beneficiary
access to medically necessary post-acute care services, specifically
skilled nursing and occupational therapy services. Several commenters
noted appreciation that the prospective appeals process would protect
beneficiaries from the potentially detrimental effects of hospital
status changes. A few commenters believed the appeals process would
increase transparency for beneficiaries receiving hospital care.
Response: We appreciate the commenters' support for the proposed
prospective appeals process.
Comment: Multiple commenters strongly recommended CMS finalize and
implement the proposed prospective appeals process as soon as possible,
with a commenter suggesting beneficiaries have lacked recourse to
hospital reclassifications for too long already. Conversely, several
commenters requested CMS delay implementation of the prospective
appeals process for at least 1 year to allow hospitals to better
understand their responsibilities and have time to integrate the
appeals processes into existing workflows, with a commenter urging CMS
to not finalize the proposed rule without addressing commenters'
concerns and reducing the potential administrative burden the process
would place on hospitals. Lastly, a commenter sought clarification on
the implementation timeline and whether the prospective appeals process
would be permanent.
Response: We appreciate the commenters' perspectives on the
policy's implementation schedule. When considering the implementation
timeline, we are balancing the need to provide beneficiaries access to
the prospective appeals process as soon as possible with the time
needed for finalizing guidance and notices and educating the industry
on the new requirements, as well as the time needed by hospitals to
integrate the new process into their existing workflows. We believe
scheduling implementation as soon as operationally feasible not only
meets the Court's order but strikes the proper balance between ensuring
beneficiaries are adequately protected and providing hospitals
sufficient lead time to prepare for and comply with the new
requirements.
Comment: Multiple commenters strongly recommended CMS monitor
hospital compliance with the prospective appeals process after
implementation and to identify unintended consequences and make updates
to the appeals process as necessary. A commenter suggested specifically
monitoring the impact the prospective appeals process may have on SNF
intake and hospital length of stay statistics. Another commenter
suggested CMS monitor the impact the prospective appeals process may
have on quality improvement reporting programs.
Another commenter suggested CMS coordinate and align the proposed
appeals process with the Medicare Secondary Payer (MSP) program and
ensure beneficiaries rights and benefits are not adversely affected.
Another commenter predicted hospital inpatient admissions would
decrease as a result of the proposed prospective appeals process
because hospitals would want to avoid having their reclassifications
effectively overturned.
Response: We appreciate the input from commenters and the suggested
areas for increased monitoring as we implement the new prospective
appeals process. While we did not propose to establish any oversight
programs specific to the new appeals process, we plan to utilize
existing program oversight authorities related to Medicare provider
agreements to ensure industry compliance. We note, however, as
explained in the proposed rule, the class of beneficiaries eligible to
appeal a denial of Part A coverage relating to a hospital
reclassification from inpatient to outpatient receiving observation
services in any given year is relatively small (we estimated hospitals
will deliver 15,655 beneficiary notices and the QIOs will process
approximately 8,000 appeals, per year). Because of the relative few
numbers of appeals, and proportionally fewer anticipated appeal
[[Page 83264]]
overturns, we do not believe this new appeals process will have a
disruptive effect on other areas of the Medicare program, including the
MSP program operations. Similarly, we do not believe approximately
8,000 annual appeals will meaningfully affect the regimented decision-
making currently used by hospitals when determining the medical
necessity of inpatient admissions for millions of beneficiaries
annually. Nevertheless, if in our monitoring, we identify the new
appeal process having unintended adverse consequences on the Medicare
program, beneficiaries, or the hospital industry, we will respond with
additional rulemaking or guidance, as we deem appropriate.
Comment: Multiple commenters urged CMS to conduct education and
outreach to ensure impacted beneficiaries and their representatives are
aware of the new prospective appeals process. A commenter suggested
outreach efforts should specifically focus on culturally diverse
populations, beneficiaries with limited English-speaking, and
beneficiaries with visual or hearing impairments. The commenter also
suggested CMS educate SHIPs and other beneficiary-assistance programs
on the finalized prospective appeal procedures. In addition, several
commenters suggested CMS also ensure the hospital industry is properly
educated on the requirements of the new appeals process. Lastly, a
commenter suggested CMS provide beneficiaries with educational material
on Medicare inpatient coverage criteria and the reasons hospitals
decide to reclassify them from inpatient to outpatient receiving
observation services.
Response: We appreciate the commenters' suggestions for ensuring
beneficiaries, associated assistance programs, and the hospital
industry are properly informed of their respective rights and
requirements of the prospective appeals process. As we finalize the
prospective appeals requirements, we plan to add information on the
appeals process to Medicare publications, manuals, and websites, as
necessary and appropriate. Through this process we can explore whether
providing information related to criteria for Medicare Part A coverage
of inpatient admissions and common rationales for hospitals
reclassifying certain beneficiaries from inpatient to outpatient
receiving observation services will help beneficiaries understand the
new prospective appeals process. Beneficiaries do not need prior
knowledge of their appeal rights in order to avail themselves of the
prospective appeals process, as relevant appeal submission information
will be included in the Medicare Change of Status Notice (MCSN).
Comment: A commenter sought clarification whether the prospective
appeals process requirements apply to MA enrollees with several
commenters recommending that CMS expand the prospective appeals process
to the MA program.
Response: The retrospective appeals process (addressed in section
III.A. of this final rule) and the prospective appeals process
(addressed in section III.B. of this final rule) do not apply to the MA
program and will not be available for MA plans for MA enrollees. We did
not propose extending application of the prospective appeals
requirements to the MA program. We explained in the proposed rule that
the terms of the court order refer to denials of Part A coverage.
Consistent with the court order, the appeals processes in this rule do
not extend to enrollees in MA plans. MA plan enrollees have existing
rights that afford enrollees the ability to appeal a plan organization
determination where the plan refuses to provide or pay for services, in
whole or in part, including the type or level of services, that the
enrollee believes should be furnished or arranged for by the MA
organization (see 42 CFR 422.562(b)(4)). For example, if an MA plan
refuses to authorize an inpatient admission, the enrollee may request a
standard or expedited plan reconsideration of that organization
determination pursuant to Sec. Sec. 422.578 through 422.590, and
422.633. As such, we are declining commenters' suggestions to extend
the prospective appeals processes in this rule to MA enrollees. To the
extent we identify additional processes that may be necessary for the
MA program, any such proposals would be subject to notice and comment
rulemaking. We note that MA enrollees do have access to QIO reviews of
quality of care concerns, hospital discharges, and terminations of
services furnished by home health agencies (HHAs), skilled nursing
facilities (SNFs), and comprehensive outpatient rehabilitation
facilities (CORFs) that is similar to the QIO reviews available for
Original Medicare beneficiaries. See Sec. Sec. 422.562(a)(2)(ii),
422.564(c) and (e)(3), 422.622 through 422.626.\20\
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\20\ The Independent Review Entity (IRE) referenced in
Sec. Sec. 422.624 and 422.626 is the BFCC-QIO.
---------------------------------------------------------------------------
Comment: A few commenters requested that CMS define certain terms
related to the prospective appeals process. A commenter requested that
CMS explain ``what is considered a change in patient status'' and how
such a change must be documented. Another commenter requested that CMS
define a ``formal admission.'' The same commenter also requested that
CMS clarify when a beneficiary is considered discharged or released
from the hospital.
Response: We proposed at Sec. 405.1210(a)(2) that, for purposes of
the prospective appeals process, a change of status occurs when a
beneficiary is reclassified from an inpatient to an outpatient
receiving observation services (as defined in Sec. 405.931(h)). As we
discussed in the proposed rule, hospitals are already required to
deliver the written Condition Code 44 notification to enrollees whose
status is changed from inpatient to outpatient after review by a
hospital utilization review committee and the entire episode will be
billed as outpatient. As this process is already in place, we did not
propose any new documentation requirements related to a beneficiary's
change in status and will not be making any modifications in this final
rule.
We did not propose specific definitions for the terms ``formal
admission'' or ``discharge'' since these terms are frequently used in
the healthcare industry and, as used in the preamble of the proposed
rule and at proposed Sec. Sec. 405.1210(a)(3)(i) (for ``formally
admitted'') and 405.1210(a)(3)(iv) (for ``discharge''), their meaning
should be ascribed to their common usage and parlance in the healthcare
context. Therefore, we decline the commenter's suggestion to establish
these definitions in this final rule.
Comment: A commenter disagreed with CMS's proposal to allow
hospitals to bill beneficiaries for reasonable costs associated with
duplicating and delivering documentation provided to the QIO, when
requested by the beneficiary, believing it was extremely burdensome on
the beneficiary.
Response: We proposed at Sec. 405.1211(d)(2) a requirement for
hospitals, upon request, to provide a beneficiary with any
documentation, including written records of any information provided by
telephone, it provides to the QIO. We explained in the proposed rule
that we intended for Sec. 405.1211(d)(2) to operate the same way as
the existing regulation at Sec. 405.1206(e)(3), specifically that the
hospital may charge the beneficiary a reasonable amount to cover the
costs of duplicating and delivering the requested materials. We note
that the proposal mirrors an existing policy that has been in effect
for many years, and from our
[[Page 83265]]
programmatic experience, it has not shown to be burdensome on
beneficiaries. Thus, we do not agree with the commenter that the
proposed regulation is unduly burdensome and are finalizing Sec.
405.1211(d)(2) as proposed.
Comment: A commenter requested the QIOs publish detailed annual
reports on the new appeals process, including data on the number of
appeals, the appeal dispositions, the general geographic location area
of appeal requests, and information confirming whether beneficiaries
are being reimbursed upon a successful appeal. Another commenter
recommended CMS publish statistics on the number of times the ALJ
overturns a QIO decision under the new appeals process. The commenter
suggested to apply the data as a quality measure when considering
renewing the QIO contracts.
Response: We did not propose and are not finalizing a process to
publicly disclose any data related to the new prospective appeals
process. CMS routinely tracks the timeliness of resolving beneficiary
appeals for internal monitoring and evaluation purposes, and will do so
for these new prospective appeals. We appreciate the commenters'
interest in program transparency and may consider requiring such data
disclosures at a later time.
We appreciate the comments received on the general structure of the
proposed prospective appeals process. After consideration of the
comments, we are finalizing these provisions as proposed.
2. Notifying Eligible Beneficiaries of Appeal Rights When a Beneficiary
Is Reclassified From an Inpatient to an Outpatient Receiving
Observation Services (Sec. 405.1210)
To implement the changes discussed previously, we proposed to
revise Subpart J of 42 CFR 405 to add new Sec. Sec. 405.1210 through
405.1212. These new proposed regulations were largely modeled after the
existing regulations at Sec. Sec. 405.1205 through 405.1206
controlling notices to beneficiaries and the QIO review of hospital
discharges.
Proposed new Sec. 405.1210(a) set forth the applicability and
scope of this new appeals process along with definitions of specific
terms used in the proposed new regulations. Specifically, in Sec.
405.1210(a)(1) we proposed to define a hospital as, for purposes of the
new notice requirements and appeals process, any facility providing
care at the inpatient hospital level, to include short term or long
term, acute or non-acute, paid through a prospective payment system or
other reimbursement basis, limited to specialty care or providing a
broader spectrum of services and including critical access hospitals
(CAHs). This broad definition tracks Sec. 405.1205(a).
Paragraphs (a)(2) and (a)(3) of proposed Sec. 405.1210 addressed
the circumstance and eligibility of beneficiaries for appeals in this
new process. A change in status occurs when a hospital reclassifies a
beneficiary from an inpatient to an outpatient receiving observation
services. The phrase ``outpatient receiving observation services'' used
in Sec. Sec. 405.1210 through 405.1212 was used as defined in proposed
Sec. 405.931(h) to mean when the hospital changes beneficiary's status
from inpatient to outpatient while the beneficiary is in the hospital
and the beneficiary subsequently receives observation services
following a valid order for such services. An eligible beneficiary,
consistent with the court order, would be one who: (1) was formally
admitted as a hospital inpatient; (2) while in the hospital was
subsequently reclassified as an outpatient receiving observation
services; and (3) either (A) was not enrolled in Part B coverage at the
time of the beneficiary's hospitalization, or (B) stayed at the
hospital for 3 or more consecutive days but was classified as an
inpatient for fewer than 3 days. We also proposed to be explicit in new
Sec. 405.1210(a)(iv)) that the period ``3 or more consecutive days''
is counted using the existing rules for determining coverage of SNF
services under section 1861 of the Act and Sec. 409.30 of this
chapter. This meant that the admission day is counted as a day, but the
discharge day is not. For example, if a beneficiary is admitted to a
Medicare covered inpatient hospital stay on a Monday and discharges on
the following Wednesday, Monday, and Tuesday are counted towards the
``3 or more consecutive days'', but Wednesday is not.
The provisions of proposed Sec. 405.1210(b) are designed to track
closely with the provisions of Sec. 405.1205 that require delivery of
a notice to beneficiaries about inpatient hospital discharges. We
proposed in Sec. 405.1210(b)(1) that hospitals would be required to
deliver a standardized, largely generic, notice informing eligible
beneficiaries about the availability of the new appeals process.
We proposed to require hospitals to deliver the notice to eligible
beneficiaries as soon as possible after a beneficiary is eligible for
this process per Sec. 405.1210(a)(2) and (3) and no later than 4 hours
prior to release from the hospital. For beneficiaries with Part B, we
proposed that the notice must be delivered as soon as possible after
the hospital reclassifies the beneficiary from inpatient to outpatient
receiving observation services and the third day in the hospital is
reached. For beneficiaries without Medicare Part B coverage, we
proposed that hospitals must deliver the notice as soon as possible
after the change in status from inpatient to outpatient receiving
observation services because a 3-day hospital stay is not required for
these beneficiaries to be eligible for an appeal.
Per proposed Sec. 405.1210(b)(2), the new notice would include (1)
the beneficiary's right to request an expedited determination regarding
the decision to change the beneficiary's status from an inpatient to an
outpatient receiving observation services, including a description of
the process as specified in Sec. 405.1211, and the availability of
possible appeals procedures if the beneficiary's request is untimely;
(2) an explanation of the implications of the decision to change the
status of the eligible beneficiary from an inpatient to an outpatient
receiving observation services, the potential change in beneficiary
hospital charges resulting from a favorable decision, and subsequent
eligibility for Medicare coverage for SNF services; and (3) any other
information required by CMS. As to category 2 (see Sec.
405.1210(b)(2)(ii)) regarding the implications of the decision, this
notice would describe for eligible beneficiaries the possible changes
in the charges for their hospital stay as well as the potential for
non-coverage if they enter a SNF after the hospital stay.
Proposed new Sec. 405.1210(b)(3) and (4) provided that notice
delivery would be valid when the notice is delivered as required in
Sec. 405.1210(a)(3) and the beneficiary signs and dates the notice to
indicate receipt and that the beneficiary understands the notice.
Further, if a beneficiary refuses to sign the notice to acknowledge
receipt, the hospital may annotate its copy of the beneficiary's notice
to indicate the refusal. The date of refusal would be considered the
date of receipt of the notice. The hospital would be required to
maintain a copy of the signed or annotated notice as part of its
records regarding the stay, per federal or state law.
As with existing beneficiary notice requirements, hospitals
generally would need to determine whether a patient is capable of
comprehending and signing the notice. Hospitals would be required to
comply with applicable State laws and CMS guidance regarding the use of
representatives and have procedures in
[[Page 83266]]
place to determine an appropriate representative.
We received the following comments regarding our proposed
requirements related to notification of appeals rights.
Comment: Multiple commenters were supportive of our proposal to
require hospitals to deliver a standardized notice to eligible
beneficiaries, informing them of the change in their hospital status,
the resulting effect on Medicare coverage of their stay, and their
appeal rights.
Several commenters approved of the proposed requirement for
hospitals to deliver the standardized notice as soon as possible after
a beneficiary becomes eligible for the appeal process. A commenter
agreed that timely notice will provide beneficiaries with an
opportunity to properly evaluate whether they want to pursue an appeal
relating to their status change before leaving the hospital, consider
whether to enter a SNF for post-acute care, and resolve questions about
liability for their hospital stay. Lastly, another commenter agreed
that a targeted appeals notice, delivered only to those eligible to
appeal, would be the most effective and efficient means of informing
eligible beneficiaries of their appeal rights.
Response: We appreciate the commenters' support and agree that it
is imperative eligible beneficiaries receive notice of the change in
their hospital status, the resulting effect on Medicare coverage of
their stay, and information on their appeal rights in a format and
manner that is readily understandable.
Comment: Many commenters urged CMS to apply specific revisions to
the proposed MCSN. A few commenters suggested we ensure the final MCSN
clearly describes, using plain language, the fact that the beneficiary
was reclassified from inpatient to outpatient receiving observation
services and the availability of appeal rights. Other commenters
requested CMS ensure the finalized MCSN accurately describes the
benefits and risks of the proposed appeal process.
A commenter suggested we incorporate check boxes to the list of
ramifications for hospitals to use when completing the MCSN. The
commenter believes the check boxes will assist beneficiaries in
identifying the information that is relevant to them and may reduce
hospital burden when delivering the MCSN by reducing the number of
beneficiary questions. The same commenter suggested we add a new
section explaining that beneficiaries without Part B may be charged for
the full cost of their stay. Another commenter felt the MCSN is
directed to a broader class of beneficiaries than set forth at Sec.
405.1210(a) and suggested all the elements from Sec. 405.1210(a) be
listed on the MCSN.
Several commenters suggested we remove from the beneficiary
acknowledgement and signature block the statement ``I also understand
if I win my appeal, my hospital charges will be different and possibly
higher.'' The commenters found the tone of this language alarming and
believe the statement may act to deter beneficiaries from appealing
their reclassification when, in many cases, the beneficiary's risk of
higher hospital charges is relatively low.
Other commenters recommended we add a disclaimer to the proposed
MCSN explaining beneficiaries do not have financial liability
protection while their appeal is pending. Several commenters requested
we add a statement to the proposed MCSN advising beneficiaries that
leaving the hospital will not impact a pending appeal and they will
still receive notice of the appeal decision. Similarly, a commenter
predicted beneficiaries would be concerned about the impact leaving the
hospital would have on a pending appeal.
A commenter suggested we reorder the list of potential
ramifications from a status reclassification, found in the introductory
paragraph, to have information related to SNF coverage precede, rather
than follow, information related to changes to the beneficiary's
hospital bill. The commenter reasoned SNF eligibility is relevant to
all beneficiaries that receive the MCSN, has a greater financial
impact, and has a more immediate impact on a beneficiary's health than
potential changes to a beneficiary's hospital charges.
Response: We appreciate the commenters' support and wide range of
suggested modifications for the proposed MCSN \21\ and we will be
incorporating several commenters' suggested edits to the proposed MCSN
that we believe will increase beneficiary understanding of the status
change and the potential ramifications.
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\21\ Section IV.D. of this final rule states that to obtain
copies of the supporting statement and any related forms,
individuals should visit the CMS website at https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing.
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We added check boxes to the list of potential ramifications for the
hospital staff to indicate which items apply to the beneficiary
receiving the notice. We also added an explanation that eligible
beneficiaries without Part B may be charged for the full cost of the
outpatient stay, due to the hospital status change. Further, we
simplified and streamlined language throughout the notice, including in
the list of potential ramifications, to increase readability.
We also revised the MCSN to confirm that a beneficiary may initiate
a standard appeal after leaving the hospital and to clarify that a
beneficiary who requested a timely expedited determination will receive
notice of the QIO decision even if they leave the hospital before the
decision is made. We agree with commenters on the importance of
including these clarifications on the MCSN to enhance beneficiaries
understanding and comfortability with the new appeals process.
In addition, we added text to the MCSN to explain if the
beneficiary remains in the hospital during the appeals process and they
receive an unfavorable appeal decision, the beneficiary could be
responsible for the cost of the Part B coinsurance and applicable
deductible for any covered services and the full cost of any non-
covered services received during the appeals process. We agree with
commenters on the importance of beneficiaries understanding that the
appeals process does not provide the same liability protections
afforded when being discharged from a covered inpatient stay. However,
we did not add an explanation that a hospital could release a
beneficiary during an appeal, as suggested by some commenters, because
hospital decisions related to safely releasing patients following
treatment falls outside the scope of this appeals process. Hospitals
must continue to assess the appropriateness of release by applying the
beneficiary's particular medical circumstances, using their usual
operating procedures, and in accordance with all applicable laws.
We have removed from the beneficiary acknowledgement and signature
block text stating beneficiaries may face higher hospital charges upon
a successful appeal. We agree with commenters that some beneficiaries
could be alarmed by such a warning and potentially not proceed with an
appeal they otherwise would want to pursue.
We did not believe it necessary or prudent to add details on the
criteria necessary for a beneficiary to receive the MCSN and pursue an
appeal relating to their hospital status reclassification. We believe
including such detailed information about the appeals criteria would
likely be confusing to beneficiaries and is unnecessary for them to
decide whether to appeal. Importantly, the MCSN will only be
[[Page 83267]]
delivered to those beneficiaries eligible to appeal.
Finally, while we agree that Medicare not covering a SNF stay
following a status change from inpatient to outpatient receiving
observation services is an important ramification for beneficiaries, we
did not reorder the list in the notice to reflect this. Through the
course of consumer testing of the MCSN after reordering the notice to
list SNF coverage information before information on potential hospital
coverage, it was apparent that discussing SNF coverage after discussing
the hospital coverage was confusing to beneficiaries.\22\
---------------------------------------------------------------------------
\22\ This testing methodology is set forth and approved in OMB
collection 0938-1382 Gen IC #11.
---------------------------------------------------------------------------
Comment: A commenter suggested the proposed MCSN be further
developed with beneficiary input to ensure that the information
conveyed by the notice is accessible and understandable to
beneficiaries.
Response: We agree seeking beneficiary input is vital when
developing new notices and that it is essential for the MCSN to clearly
inform the beneficiary of their change in status and related financial
implications as well as how they may appeal this change. To that end,
we edited the proposed MCSN to use research-based plain language that
should be more understandable to beneficiaries. In addition, before
distribution, the MCSN will have undergone consumer testing. We will
also continue to refine the notice for future revisions.
Comment: A commenter recommended we require hospitals specify the
exact appeal timeframes and deadlines for each beneficiary that
receives the MCSN.
Response: We appreciate the commenter's intent to have
beneficiaries receive as personalized a notice as possible. We proposed
for the MCSN to contain a statement that, if a beneficiary wishes to
pursue an appeal, the beneficiary should request an appeal as soon as
possible and before leaving the hospital, which is the proposed
deadline for an expedited determination. We believe such a statement is
preferable to a customized notice as it sufficiently advises
beneficiaries of their appeal timeframes while not further increasing
the burden that would come from hospitals having to customize each
notice before delivery. We also are hesitant to create a notice with a
glut of dates and information that could inadvertently lead to
beneficiary confusion and may detract from other important and
actionable material on the MCSN. We note this level of information is
consistent with similar appeals notices, such as the IM, that have not
elicited complaints related to uncertainty of when to appeal.
Comment: A few commenters asserted that hospitals only change a
beneficiary's status from inpatient to outpatient when they are certain
the change is appropriate and that the guidelines for inpatient versus
outpatient coverage and payment are complicated. The commenters
suggested the MCSN include specific information on the criteria for
Medicare inpatient coverage and medical review for inpatient admissions
to inform beneficiaries. One of the commenters also suggested such
information and additions to the MCSN would assist preventing potential
overuse of the proposed appeals process.
Response: We appreciate the commenters' perspective on the
appropriateness of hospital decisions to change a beneficiary's status
from inpatient to outpatient receiving observation services. However,
the purpose of the proposed prospective appeal process is not to
validate the hospital change of status decision, but to provide
beneficiaries with the ability to pursue an appeal relating to a change
in a beneficiary's status, when certain criteria are met, because of
the substantial impact these decisions may have on beneficiaries. We
believe a core component of creating an effective appeals process is to
ensure ease of access and understanding for Medicare beneficiaries. We
do not believe including detailed coverage criteria in the MCSN would
promote beneficiary understanding on the effect of their change in
status or their right to appeal such change. Indeed, considering the
commenters' acknowledgement that coverage and medical review criteria
are complicated, we believe including this information on the MCSN
would only risk confusing beneficiaries and possibly dissuading them
from requesting appeals.
Lastly, we are unclear of the commenter's meaning when they
expressed concern of potential overuse of the appeals process. In
accordance with the Court's order, access to the prospective appeals
process is limited to eligible beneficiaries. Once the appeal process
is established, we strongly believe all eligible enrollees who wish to
pursue a valid appeal should have the ability to do so with reasonable
ease. We believe including complex coverage criteria on the notice,
with a stated purpose to dissuade otherwise valid appeals, would be
antithetical to the Court's order and our proposed goals. Therefore, we
decline the commenter's suggestion to include material in the MCSN when
the inclusion is intended to reduce otherwise valid appeals.
Comment: Multiple commenters provided feedback on the proposed
requirements related to the timing of delivery of the notice. A few
commenters were uncertain when the MCSN must be delivered, some
commenters requested that hospitals be given more time for delivery,
and another commenter requested a flexible delivery timeframe.
Commenters based their feedback on wanting to minimize the risk of
confusion on the part of the beneficiary, reduce provider burden, and
not wanting to delay hospital releases (and affecting beneficiary
options for SNF placement).
Response: We proposed a requirement at Sec. 405.1210(b) that
hospitals would be required to deliver a standardized notice informing
eligible beneficiaries of their right to appeal a denial of Part A
coverage relating to a hospital's decision to reclassify them from
inpatient to outpatient receiving observation services. We proposed at
Sec. 405.1210(b)(1) to require hospitals to deliver the notice to
eligible beneficiaries as soon as possible after the beneficiary is
eligible for this process per Sec. 405.1210(a)(2) and (3) and no later
than 4 hours prior to release from the hospital. This means, for
beneficiaries with Part B, the notice must be delivered as soon as
possible after the hospital reclassifies the beneficiary from inpatient
to outpatient receiving observation services and after the beneficiary
has been in the hospital for 3 consecutive days. For beneficiaries
without Part B, hospitals must deliver the notice as soon as possible
after the change in status from inpatient to outpatient receiving
observation services because a 3-day hospital stay is not required for
these beneficiaries to be eligible to appeal.
We believe the MCSN delivery timeframes, as with other beneficiary
notices, appropriately balance the interests of beneficiaries with the
necessary burden placed upon hospitals. As we explained in the proposed
rule, we reviewed the notice delivery procedures for other beneficiary
notices, specifically the IM notice related to inpatient hospital
discharges, and have mirrored those processes for delivery of the MCSN,
wherever possible. Accordingly, the timeframe to deliver the MCSN is 4
hours prior to a beneficiary's scheduled release time from the
hospital, as is existing practice for the IM. We believe it impractical
to expect a beneficiary to understand the ramifications of their status
change and have time to fully
[[Page 83268]]
consider whether they wish to file an appeal before leaving the
hospital if the notice were to be given closer to the beneficiary's
release.
Comment: Several commenters questioned the hospital's role in
delivering the MCSN. A commenter requested that CMS provide clear
directives for hospitals to operationalize the delivery of the MCSN and
integrate the notice into existing hospital workflows.
Commenters also requested clarification in the following areas:
Is a hospital required to verbally explain the MCSN to
beneficiaries and, if so, specify how detailed the explanation must be?
When must a hospital deliver the MCSN in circumstances
where a beneficiary's hospital status is reclassified shortly after
their formal inpatient admission and then remains in outpatient
receiving observation for 3 days?
Must a beneficiary receive 4 hours of observation services
after receiving the standardized notice?
Should hospitals document when a beneficiary voluntarily
leaves the hospital less than 4 hours from receiving the MCSN?
To what extent are hospitals required to document delivery
of the MCSN when a beneficiary refuses to sign the notice?
A few commenters suggested that CMS prohibit hospitals from filling
in the date and time in the beneficiary signature block because it may
result in inaccurate information. Another commenter supported CMS'
proposal for hospitals to annotate the MCSN if a beneficiary refuses to
sign or acknowledge receipt.
Response: We proposed at Sec. 405.1210(b)(3) that a hospital's
delivery of the notice is considered valid when the hospital issues the
notice timely, in accordance with Sec. 405.1210(b)(1), the notice
contains all required elements, in accordance with Sec.
405.1210(b)(2), and the eligible beneficiary or their representative
signs and dates the notice to indicate receipt and comprehension of its
contents.
We did not propose to require hospital staff to orally convey the
information on the MCSN to eligible beneficiaries. Instead, the
hospital is only required to complete and timely deliver the MCSN while
ensuring the beneficiary can comprehend its contents. As we explained
in the proposed rule, as with existing beneficiary notice requirements,
hospitals generally would need to determine whether a patient is
capable of comprehending and signing the MCSN. We continue to believe
that the clinicians treating a beneficiary are in the best position to
determine whether their patients are capable of receiving and
comprehending a notice, and whether a representative should be
contacted. It would not be practicable to establish specific criteria
to ascertain whether a hospital properly assessed beneficiary
`understanding' for the purposes of receiving the MCSN. The
determination should fall within the practiced day-to-day assessments a
hospital is making when communicating with, and providing care to,
beneficiaries.
We note, the proposed requirement at Sec. 405.1210(b)(1) only
governs the timeframes in which hospitals must deliver the MCSN to
eligible beneficiaries. We did not propose to require hospitals to
render observation services during that timeframe nor did we propose to
restrict beneficiaries from choosing to leave the hospital earlier than
their scheduled release time. Instead, we expect for hospitals to build
this relatively brief 4-hour window into their standard patient release
planning processes, as appropriate, for beneficiaries receiving the
MCSN, and for delivery to occur, no later than, 4 hours from the
anticipated end of medically necessary services. Hospitals are already
adept at timing the issuance of other beneficiary notices to correspond
with the end of medically necessary services. In the event a
beneficiary voluntarily leaves the hospital prior to the hospital's
schedule time of release, the hospital may document the time of and
circumstances surrounding the beneficiary's departure on their copy of
the MCSN.
If the beneficiary or their representative refuses to sign the
notice, we proposed at Sec. 405.1210(b)(4) to permit a hospital to
annotate its copy of the notice of the beneficiary's refusal to sign.
The hospital would be required to maintain a copy of the signed or
annotated notice as part of its records regarding the stay, pursuant to
federal and state law. In the December 2023 proposed rule (88 FR
89521), we further explained that a hospital would need to determine
whether the beneficiary is capable of comprehending and signing the
notice in the same manner as existing beneficiary notice requirements.
As suggested by some commenters, the proposed delivery requirements
do not permit hospital staff to prefill the date and time elements of
the beneficiary receipt acknowledgement section before delivery of the
MCSN. Proposed Sec. 405.1210(b)(3)(A) states valid delivery of the
MCSN only occurs when, among other criteria, an ``eligible beneficiary
(or the eligible beneficiary's representative) has signed and dated the
notice to indicate that he or she has received the notice and can
comprehend its contents [or when annotated if the beneficiary refuses
to sign the notice].'' Because a beneficiary's acknowledgement of
receipt and comprehension is recorded through their (or their
representative's) signing and dating the document, hospital staff must
not prefill these sections before delivery. Our proposed rules do not
prevent hospital staff from assisting beneficiaries with completing the
necessary elements after delivery.
We agree with commenters that the hospital responsibilities for
delivering the MCSN should be delineated as clearly as possible and
appreciate the interest in appropriately implementing the MCSN into
hospital workflows. Following finalization of this rule, we plan to
issue sub-regulatory guidance to further explain specific operational
practices as we have for other beneficiary notices.
Comment: A commenter sought clarification on the consequences
hospitals would face for failing to deliver the MCSN in accordance with
the proposed requirements.
Response: We did not propose and are not finalizing new
consequences or penalties for hospitals that specifically fail to
comply with the prospective appeal requirements. Hospitals will
continue to be subject to existing enforcement actions related to non-
compliance with Medicare conditions of participation. As always, we
would determine the degree and manner of any potential enforcement
action on a case-by-case basis.
Comment: Multiple commenters suggested the proposed MCSN should not
be finalized because the notice was too confusing for beneficiaries and
hospitals. Several commenters worried the proposed MCSN would confuse
beneficiaries by unnecessarily adding to the amount of documentation
beneficiaries already receive.
A few commenters suggested the proposed MCSN might confuse
beneficiaries in situations where the beneficiary receives notice of
their right to appeal, through the proposed MCSN, before they receive
notice of their reclassification. (The commenters incorrectly inferred
the purpose of the MOON is to notify beneficiaries that they have been
reclassified from inpatient to outpatient receiving observations
services.)
Some commenters expressed concern that the MCSN could be confused
with other existing standardized notices,
[[Page 83269]]
such as the MOON and other commenters suggested CMS not create a new
standardized notice but, instead, incorporate language on hospital
status reclassifications into the MOON or, in the alternative, require
delivery of the new notice at the same time as the MOON.
Response: We appreciate and share the commenters' mindfulness for
avoiding beneficiary and hospital confusion related to the proposed
MCSN. We explained in the proposed rule that after determining the need
for beneficiaries to receive notice of their right to appeal, we
considered several options and, ultimately, decided the creation of a
new standardized notice that would only be provided to eligible
beneficiaries would be the least confusing and burdensome option
available. In addition, we mirrored the notice delivery procedures to
the IM notice procedures, a beneficiary notice with which hospitals are
already familiar. We believe this approach balances a beneficiary's
need to be informed of their appeal rights in an appropriate and timely
manner, without imposing unnecessary burdens on hospitals.
We do not agree with commenters that merely creating a new
beneficiary notice will inevitably lead to beneficiary confusion. While
CMS has several beneficiary notices that must be delivered by
hospitals, each has a discrete purpose and not all are provided at one
time. As we have explained, the MCSN is a dedicated notice that will
only be provided to the relatively few eligible beneficiaries who have
the right to appeal based on a hospital reclassification from inpatient
to outpatient receiving observation services. This means most
beneficiaries will not receive the notice, drastically reducing the
risk of beneficiary confusion. In addition, to enhance comprehension,
we derived much of the verbiage used on the MCSN from other consumer-
tested CMS beneficiary notices. Because of the narrow scope of the
MCSN, the limited audience that will receive the notice, and our focus
to use clear and concise language to convey the purpose of the notice,
we believe we have taken all necessary steps to limit beneficiary and
hospital confusion.
We explained in the proposed rule that we considered alternatives
to creating a new notice for this process, including adding appeals
information to the MOON or other existing beneficiary notifications.
However, as discussed in the proposed rule, the vast majority of
beneficiaries receiving the MOON will not be eligible for an appeal
under this new process. Therefore, we believe using the MOON instead
of, or in addition to, the MCSN, would be confusing to the nearly
600,000 beneficiaries receiving the MOON per year who would not be
eligible for this appeal process.
Further, the MOON is only required for beneficiaries who have been
outpatients receiving observation services for more than 24 hours. We
proposed, however, the prospective appeals process would be available
to eligible beneficiaries that received observation services for any
amount of time after their reclassification from inpatient to
outpatient. Therefore, because the MOON is not required for observation
stays shorter than 24 hours, using the MOON, or attaching delivery of
the MCSN to delivery of the MOON, would result in eligible
beneficiaries not receiving notification of their right to appeal
regarding a hospital status reclassification.
We also do not agree that beneficiaries will be confused if they
receive the MCSN before the MOON. The MOON does not indicate whether
the hospital has changed the beneficiary's status from inpatient to
outpatient receiving observation services and, importantly, would not
be required to be delivered to beneficiaries that have had their status
changed and receive less than 24 hours of observation services. Instead
of the MOON, hospitals are currently required to provide a written
Condition Code 44 notification to inform beneficiaries when their
status is changed from inpatient to outpatient after review by a
hospital utilization review committee and the entire episode will be
billed as outpatient.
We decided against adding information on the prospective appeals
process to the Condition Code 44 notice, however, because the number of
beneficiaries eligible for this new appeals process would only be a
small subset of the population receiving the existing Condition Code 44
notification. Therefore, we believe the MCSN and Condition Code 44
notification have distinct roles that will also provide complementary
information to beneficiaries eligible for this appeals process.
Comment: Multiple commenters generally asserted the requirement for
hospitals to deliver a new standardized notice specific to
beneficiaries reclassified from inpatient to outpatient receiving
observation services is too burdensome for hospitals and recommended
against finalizing the policy. A commenter suggested the new delivery
requirement, combined with existing workforce issues, would create an
undue burden for hospitals and would be logistically almost impossible
for hospitals to comply. Another commenter suggested hospitals already
struggle with the timely delivery of the MOON and IM and adding another
notice with a shorter deadline would compound an already
administratively burdensome process. A commenter asserted the notice
requirement would be an enormous burden on hospitals for what is
estimated to be a small volume of appeals.
A commenter predicted the notice requirement would exacerbate
hospital nursing shortages because the QIOs will need to hire new
staff, thereby decreasing the pool of hirable nurses. A few commenters
recommended CMS minimize the role of providers in delivering the
proposed MCSN to protect the providers' patient care time. However,
another commenter recommended CMS require hospitals use clinical staff
to deliver the notice.
Response: We estimated in the proposed rule that hospitals would be
required to give 15,655 MCSNs to beneficiaries each year, which we
acknowledged is likely an overestimation based on limitations to our
data collection. The current number of Medicare-certified hospitals in
the country is approximately 6,162. Therefore, we estimate a single
Medicare-certified hospital would deliver on average fewer than 3
notices, per year. While we understand the act of delivering new
notices, even in a low volume, is an appreciable increase in
responsibilities for hospitals, we do not believe the new appeals
process will significantly affect operations or staffing within
hospitals.
As we explained in the proposed rule, when considering developing
the MCSN we needed to balance hospital burden with the need to
appropriately notify beneficiaries of their appeal rights. We strongly
believe the use of a dedicated, standardized notice, delivered by
hospital staff to patients while still in the hospital is the most
efficient and effective manner by which to inform beneficiaries of
their appeal rights. We considered but ruled out adding the appeals
language to existing beneficiary notices because, primarily, the
appeals information would not be applicable to most beneficiaries
receiving those notices. In addition, we are wary of adding too much
information onto a single notice as consumer research consistently
demonstrates that beneficiaries are not adept at self-selecting
information. We, therefore, believe using a notice exclusively for
those beneficiaries eligible to pursue an appeal relating to a hospital
status
[[Page 83270]]
reclassification will ensure beneficiaries understand their appeal
rights and how to exercise them.
The proposed delivery requirements for the MCSN were derived from
the existing procedures hospitals must follow when delivering the IM.
Our intention for mirroring the delivery processes was to leverage the
familiarity that existing hospital processes and staff have with the IM
procedures to more easily incorporate the new MCSN delivery
requirements. Further, we developed the new MCSN to be a largely
generic notice that would only require hospital staff to complete a few
fields before delivering to the beneficiary. We strongly believe that
considering the limited estimated volume of MCSNs hospitals would need
to deliver annually, the similarity between the IM and new MCSN
delivery procedures, and the familiarity existing hospital processes
and staff have with the IM, will allow for hospital compliance with
very limited increase in burden.
Finally, while we used a registered nurse's hourly rate to compute
our burden calculation, we would like to clarify that there is no
requirement for hospitals to use clinical personal to deliver the MCSN.
As with similar notices, such as the IM and MOON, we do not feel it
appropriate or necessary to regulate which hospital staff are capable
of delivering the MCSN. Such decisions are best left to hospitals to
make based on their internal protocols and staffing requirements. In
regard to the impact the new appeals process will have on QIO-hiring
demands, we estimated that the QIO will receive an estimated 8,000
appeals per year. While we do anticipate the QIO will need to hire
additional clinical staff to review the increasing appeal volume, we do
not anticipate an impact on hospital hiring practices on a national
level. Thus, we do not foresee this new appeals process having a
significant impact on clinical care resources or the demand for nurse
labor.
We appreciate the feedback we received from commenters on the
notification requirements. We will be finalizing the proposals at Sec.
405.1210 as proposed. (We note that changes to the MCSN will be
reflected in OMB control number 0938-1467 which is discussed in section
IV.B.2. of the final rule.)
3. Expedited Determination Procedures When a Beneficiary Is
Reclassified From an Inpatient to an Outpatient Receiving Observation
Services (Sec. 405.1211)
Proposed new Sec. 405.1211 sets forth the procedures for the new
expedited QIO review leading up to issuance and effect of the QIO's
determination. We stated in the proposed rule that proposed Sec.
405.1211 would establish the responsibilities of the hospitals, QIOs,
and beneficiaries relative to the process.
Proposed Sec. 405.1211(a) described a beneficiary's right to
request an expedited determination by a QIO when they are reclassified
by their hospital from an inpatient to an outpatient receiving
observation services, and the beneficiary meets the criteria to be
eligible for an appeal as established in Sec. 405.1210(a)(3). As
previously discussed, QIOs are experienced in performing expedited
appeals for beneficiaries in a hospital setting and thus, are well
prepared to implement and execute this new appeals process in an
effective and expeditious manner. Currently, Beneficiary and Family
Centered QIOs (BFCC-QIOs) perform the case review functions that are
similar to the reviews that would be required by Sec. Sec. 405.1211
and 405.1212, so we proposed to assign these new reviews to BFCC-QIOs
under our contracts with them; in the event that CMS reconsiders in the
future how QIO functions are assigned and the categorization of QIOs,
we stated that we intended that the type of QIOs that perform case
review functions (see 42 CFR 405.1200 through 405.1208, 475.102, 476.1
et seq.) would also perform these new reviews of changes in status.
In new Sec. 405.1211(b), we proposed the process for eligible
beneficiaries to request an expedited determination by the QIO. First,
the eligible beneficiary's request must be by telephone to the QIO, or
in writing. We did not propose any parameters of what a request in
writing would constitute, but it could be an email or fax transmitted
to the QIO. We also proposed at Sec. 405.1211(b)(1) the timeframe for
requesting such an appeal: eligible beneficiaries would be required to
request an appeal to the QIO prior to release from the hospital. The
notice required under proposed Sec. 405.1210 would identify the BFCC-
QIO that serves the geographic area that includes the hospital so that
this information is available to the eligible beneficiary.
Proposed sections 405.1211(b)(2) and (b)(3) explained the
responsibilities of beneficiaries to discuss the case, if requested by
the QIO, and their right to submit written evidence to be considered by
the QIO. Per proposed Sec. 405.1211(b)(4), if an eligible beneficiary
requests an appeal timely, they would not be billed during the QIO
appeals process. However, if the appeal is untimely, the hospital may
bill a beneficiary before this QIO process is complete; proposed
paragraphs (b)(4) and (e) make this clear. Finally, we also proposed,
in Sec. 405.1211(b)(5), that an eligible beneficiary may file a
request for review by the QIO regarding the change in status after the
deadline established in proposed Sec. 405.1211(b)(1) (that is, the
beneficiary may file the request after release from the hospital) but
that the QIO's determination will be provided on a different timeframe
and the eligible beneficiary will not be entitled to the billing
protection proposed in paragraph (e). Keeping untimely appeals with the
QIO will provide beneficiaries with a decision far sooner though (2
calendar days), than if those beneficiaries were provided with the
timeframes set forth in the standard claims appeals (60 days at the
first level of the claims appeals process). We proposed that these
untimely requests may be made at any time in order to afford maximum
opportunity for beneficiaries to exercise their appeal rights. Of most
concern are those beneficiaries who may have had a SNF stay following
their change in status from an inpatient to an outpatient receiving
observation services. These beneficiaries should have the maximum
opportunity to appeal and potentially obtain coverage for what might
have been a costly out-of-pocket outlay.
Proposed Sec. 405.1211(c)(1) through (c)(5) described the
procedures that the QIO would be required to follow in performing the
expedited determination. We proposed at Sec. 405.1211(c)(1) that the
QIO must immediately notify the hospital that a request for an
expedited appeal has been made. In addition, as proposed in Sec.
405.1211(c)(2) and (3), the QIO would be required to determine whether
valid notice was delivered and examine medical and other relevant
records that pertain to change in status. As proposed at Sec.
405.1211(c)(4) and (5), the QIO would be required to solicit the views
of the beneficiary and provide the hospital an opportunity to explain
why the reclassification of the beneficiary from an inpatient to an
outpatient receiving observations services is appropriate. The QIO will
review the information submitted with the appeal request and any
additional information it obtains to determine if the inpatient
admission satisfied the relevant criteria for Part A coverage at the
time the services were furnished.
Proposed section 405.1211(c)(6) addressed the timing of the QIO's
determination. Per proposed paragraph (c)(6)(i), the QIO must render a
decision and notify all relevant persons and entities within 1 calendar
day of receiving all requested pertinent
[[Page 83271]]
information if the eligible beneficiary requested the expedited
determination as specified in proposed Sec. 405.1211(b)(1) (that is,
no later than the day of release from the hospital). Based on current
experience regarding documentation submitted by hospitals under other
expedited beneficiary appeal timeframes, we did not anticipate that the
QIO will encounter delays in receiving any information necessary from
the hospital once the hospital is notified of the appeal (see proposed
Sec. 405.1211(d)(1)). This timeframe is as rapid as possible to
minimize potential liability for beneficiaries as well as to maximize
their potential for coverage in a SNF should they obtain a favorable
decision by the QIO. A Medicare covered SNF stay must begin within 30
days of a beneficiary's discharge from a hospital. To that end, QIOs
would make their decisions as quickly as possible so beneficiaries
receiving favorable decisions will have time to plan for and begin a
SNF stay within the 30-day parameter.
Proposed Sec. 405.1211(c)(6)(ii) provided that the 1 calendar day
QIO decision deadline does not apply if a beneficiary makes an untimely
request for an expedited appeal, but that the QIO would still accept
the request and render a decision within 2 calendar days after the QIO
receives all requested information that the hospital must provide per
proposed Sec. 405.1211(d)(1).\23\ This provides a beneficiary with the
maximum ability to exercise their right to an expedited appeal, and the
opportunity to obtain SNF coverage within the Medicare coverage
limitation of 30 days after leaving a hospital, should their appeal to
the QIO be favorable.
---------------------------------------------------------------------------
\23\ The proposed regulations text at Sec. 405.1211(c)(6)(ii)
contained a typographical error that stated that the QIO must render
a decision for untimely requests within 1 day. This was an error
that will be corrected in this final rule.
---------------------------------------------------------------------------
In Sec. 405.1211(c)(7) we proposed that if the QIO does not
receive the information needed to make its decision, the QIO may move
forward and make a decision based on the information it has at the
time. This is to protect the interests of the beneficiary by ensuring
they receive their decision within the QIO's required timeframes of 1
calendar day for a timely request and 2 calendar days for an untimely
request.
The QIO decision, as required by proposed Sec. 405.1211(c)(8),
must be conveyed to the eligible beneficiary, the hospital, and SNF (if
applicable) by telephone followed by a written notice. We proposed that
the QIO's written notice of its determination must include the basis
for the determination, a detailed rationale for the QIO decision, an
explanation of the Medicare payment consequences of the determination,
and information about the beneficiary's right to an expedited
reconsideration as set forth in Sec. 405.1212, including how and in
what time period a beneficiary may make that reconsideration request.
The basis of a decision is a description of, and citations to, the
Medicare coverage rule, instruction, or other policies applicable to
the review. A detailed rationale is an explanation of why services do
or do not meet the relevant criteria for Part A coverage based on the
facts specific to the beneficiary's situation and the QIO's review of
the pertinent information provided by the hospital (as with other
expedited beneficiary appeals of hospital discharges and service
terminations).
Proposed Sec. 405.1211(d) set forth the responsibilities of
hospitals in the expedited appeals process. Section 405.1211(d)(1)
provided that the hospital must supply all information that the QIO
needs, no later than noon of the calendar day after the QIO notifies
the hospital of the appeals request. We also proposed that at the
discretion of the QIO, the hospital must make the information available
by phone or in writing (with a written record of any information not
transmitted initially in writing). Section 405.1211(d)(2) required that
hospitals, upon request, must provide the beneficiary any
documentation, including written records of any information provided by
telephone, it provides to the QIO. We proposed that this obligation
work the same way that it does under Sec. 405.1206(e)(3), specifically
that the hospital may charge a reasonable amount to cover the costs of
duplicating and delivering the requested materials and must accommodate
such a request by no later than close of business of the first day
after the material is requested by the beneficiary or the beneficiary's
representative.
In Sec. 405.1211(e), we proposed that a hospital may not bill a
beneficiary who has appealed timely for any services at issue in the
appeal until the expedited determination process (and reconsideration
process) is complete. Although there is liability protection in the
inpatient discharge expedited appeals process under section
1869(c)(3)(C)(iii) of the Act (incorporating the financial liability
protection in section 1154(e)(4) of the Act in effect prior to the
enactment of section 1869(c)(3)(C) of the Act), there is no statutory
provision protecting the beneficiary from financial liability for the
hospital stay and services furnished during the pendency of the QIO's
review proposed here. Therefore, we proposed only that the hospital may
not bill the beneficiary until after the QIO has issued its
determination. This proposal mirrored existing procedures for the
similar expedited appeals procedures the termination of non-hospital
services found at Sec. 405.1202(g). This process would not extend
coverage available to beneficiaries during an appeal, which is
consistent with Sec. 405.1202(g).
Proposed Sec. 405.1211(f) set forth that a QIO determination is
binding for payment purposes on the beneficiary, hospital, and MAC,
unless the beneficiary pursues an expedited reconsideration per Sec.
405.1212. The decision is binding for purposes of payment only, such
that if the hospital submits a claim under Part A, CMS will make
payment.
We received the following comments regarding our proposed
requirements related to the prospective appeal determination
procedures.
Comment: Many commenters expressed approval that the proposed
prospective appeals process would be available to all beneficiaries who
have been reclassified by a hospital from an inpatient to an outpatient
receiving observation services, rather than limiting the class of
eligible beneficiaries to those who receive a MOON, which is only
required to be delivered when outpatient services reach 24 hours in
duration. Multiple commenters strongly supported that beneficiaries
with Part A but not Part B would not need to remain in the hospital for
at least 3 days in order to be eligible for an appeal.
Response: We thank the commenters for their support of the proposed
prospective appeals policy and our expansion of the population of
beneficiaries eligible for an appeal.
Comment: Multiple commenters sought clarification on the criteria
required for beneficiaries to access the proposed prospective appeals
process. A few commenters questioned whether a beneficiary who is
reclassified from inpatient to outpatient but does not receive
observation services may appeal the reclassification. A few commenters
questioned whether it was CMS's intent to require a beneficiary to
receive the MOON in order to be eligible to appeal regarding a hospital
status reclassification.
A commenter questioned whether a beneficiary may use the proposed
appeals process when they have been reclassified from inpatient to
outpatient receiving observation services, do not
[[Page 83272]]
have Medicare Part B, but have other insurance coverage for outpatient
observation services. A few commenters questioned whether a beneficiary
must specify they are seeking SNF care in order to request an appeal. A
commenter questioned how the proposed appeals process would be affected
if a beneficiary exhausts their Medicare inpatient coverage and whether
beneficiaries, in those circumstances, could pursue an appeal under the
proposed prospective appeals process.
Response: We proposed at Sec. 405.1211(a) that a beneficiary has
the right to request an appeal by a QIO when they are reclassified by
their hospital from an inpatient to an outpatient receiving observation
services, and the beneficiary meets the eligibility criteria
established in Sec. 405.1210(a)(3). Pursuant to proposed Sec.
405.1210(a)(3), an eligible beneficiary would be one who was formally
admitted as a hospital inpatient, was subsequently reclassified as an
outpatient receiving observation services, and either was not enrolled
in Medicare Part B at the time of the beneficiary's hospitalization or
stayed in the hospital for 3 or more consecutive days but was
classified as an inpatient for fewer than 3 days.
We explained in the proposed rule the provisions of the prospective
appeals process are intended to implement the District Court order in
Alexander v. Azar, 613 F. Supp. 3d 559 (D. Conn. 2020), aff'd sub nom.,
Barrows v. Becerra, 24 F.4th 116 (2d Cir. 2022). The Court's order
required new appeal procedures be afforded to a specific class of
Medicare beneficiaries who, among other criteria, have or will have
been subsequently reclassified by the hospital as an outpatient
receiving observation services. In accordance with the court order, we
established the beneficiary eligibility criteria for this new appeal
process at Sec. 405.1210(a)(3), which requires eligible beneficiaries
to have been reclassified by their hospital to an outpatient receiving
observation services, among other criteria. We defined the phrase
``outpatient receiving observation services'' at proposed Sec.
405.931(h) to mean when the hospital changes the beneficiary's status
from inpatient to outpatient while the beneficiary is in the hospital
and the beneficiary subsequently receives observation services
following a valid order for such services. Thus, we believe it to be
explicitly clear that a beneficiary must have received at least some
observation services after being reclassified from an inpatient to
outpatient in order to be eligible for the proposed appeals process.
As discussed in the proposed rule, a beneficiary does not need to
receive the MOON in order to be eligible to request a prospective
appeal. The MOON is a beneficiary notice furnished by a hospital to
beneficiaries who receive observation services as an outpatient for
more than 24 hours. However, in accordance with the proposed Sec.
405.1210(a)(3) beneficiaries are eligible for the prospective appeals
process after being reclassified from inpatient to outpatient receiving
observation services if any time is spent in observation following the
reclassification. Thus, the MOON is not required to be received by, and
likely would not be received by many, beneficiaries in order to be
eligible to appeal regarding a hospital status change under the new
process. We acknowledge, as we did in the proposed rule, that this
policy expands the population of beneficiaries eligible for an appeal
beyond the class defined by the court in Alexander.
As we have previously explained, eligible beneficiaries include
those whose hospital status was changed from inpatient to outpatient
receiving observation services and were not enrolled in Medicare Part B
at the time. We did not propose to include consideration of non-
Medicare insurance among the required elements for appeal eligibility
and do not believe it is prudent to do so now for several reasons.
First, we do not believe verifying non-Medicare insurance in real-time
during a fast-moving expedited process would be practical without
risking delays to the appeal decisions if the QIO must first confirm a
beneficiary does not have other outpatient insurance coverage. In
addition, a beneficiary's possession of non-Medicare outpatient
insurance does not actually guarantee coverage in all circumstances.
Such decisions would be made on a case-by-case basis by the other
insurer. Lastly, the Medicare program does not limit a beneficiary's
appeal eligibility based on having outside insurance in other
circumstances. Thus, we do not believe it reasonable to limit a
beneficiary's right to appeal under the prospective appeals process
merely because they may possess outpatient insurance coverage from
another source.
Similarly, we did not propose at Sec. 405.1210 (a), establishing
the scope of prospective appeals process, a requirement for
beneficiaries to request SNF services to be eligible to pursue an
appeal regarding a hospital reclassification from inpatient to
outpatient receiving observation services. While we expect SNF coverage
to be a driving factor for many beneficiaries considering whether to
pursue a prospective appeal, this is not the only reason an appeal
might be warranted. For example, a beneficiary may want to appeal
because they expect that their out-of-pocket costs would be lower as an
inpatient or, in another case, the beneficiary may not have Part B and
would want to appeal in order to not be liable for the full cost of the
hospital stay. More importantly, some beneficiaries may not want to
enter post-acute SNF care and, in those cases, we do not feel it would
be just to condition a beneficiary's ability to pursue an appeal
regarding a hospital reclassification on the requirement that they seek
SNF care. Thus, while eligibility for a covered SNF stay is an
important consideration for many beneficiaries considering an appeal,
we believe it would be improper to significantly limit the class of
eligible beneficiaries by requiring a beneficiary to seek SNF care as a
prerequisite for appealing based on a hospital reclassification.
Finally, an implicit requirement for beneficiaries seeking
inpatient coverage through the prospective appeals process is having
available Medicare Part A benefits. The proposed appeals process, as
with other similar appeals processes, does not override statutory
benefit limits, such as the availability of inpatient hospital days.
Should a beneficiary begin an appeal and it becomes evident that
inpatient days are exhausted, the appeal decision will be unfavorable.
Even if the QIO is unaware that the beneficiary had exhausted their
inpatient days, the usual claim edits would trigger, and coverage would
not be available to the beneficiary upon the submission of a claim.
This appeals process does not confer benefits in excess of Medicare
statutory limits.
Comment: A commenter recommended CMS permit SNF staff to file
appeals under the prospective appeals process on behalf of eligible
beneficiaries. The commenter asserted beneficiaries often lack the
necessary support to work through appeals processes on their own and
SNFs would be motivated to ensure they receive proper payment for
services they render. Another commenter questioned whether hospital
staff may assist a beneficiary in the proposed appeals process by
answering questions and guiding the beneficiary through the appeals
process.
Response: We appreciate the commenter's suggestion to permit a SNF
to file an appeal on behalf of an enrollee; however, we do not agree
that
[[Page 83273]]
party status should be extended to providers for the new appeals
process. The prospective appeals process, proposed at Sec. Sec.
405.1210 through 405.1212, is available to eligible beneficiaries who,
after formally being admitted as an inpatient, have subsequently been
reclassified by the hospital as an outpatient receiving observation
services. We explained in the proposed rule that the court order
specifically required the provision of appeal rights to a defined set
of class members, and that definition did not include the provider of
services (that is, hospitals and SNFs). Accordingly, we proposed
limiting party status for these new appeals to the defined class
members. The same limitation currently exists for hospital discharge
appeals procedures in Sec. Sec. 405.1205 and 405.1206, where a
provider of services does not have party status.
While we are not extending party status to SNFs or other provider
types, we are not modifying existing rules related to appointed
representatives who may act on behalf of a beneficiary, nor have we
restricted hospital or provider staff from assisting beneficiaries as
they navigate their status reclassification and appeals process. We
believe hospital and other provider staff already routinely engage in
support activities for beneficiaries in their care and we endorse
providers extending such support to eligible beneficiaries appealing
based on a hospital reclassification. We do not believe it is necessary
to strictly define or limit the type of support that may be provided to
an eligible beneficiary but believe such support could include
answering questions, providing explanations on the reclassification and
appeals process, or assisting the beneficiary or their representative
in contacting a State Health Insurance Program, 1-800-MEDICARE, or the
QIO. We note that we do not believe support includes hospital staff
completing the beneficiary specific portions of the MCSN that document
the beneficiary's comprehension of the notice and the date/time of
receipt before delivery to the beneficiary.
Comment: Multiple commenters commended CMS for not placing a
deadline on when an eligible beneficiary may submit an appeal request
to the QIO after leaving the hospital. A few commenters sought
clarification on whether there is a deadline for eligible beneficiaries
to submit an appeal to the QIO after leaving the hospital.
Response: We thank commenters for their support on the proposed
appeal submission timeframes and for recognizing our intent to afford
beneficiaries maximum flexibility when considering whether to request
an appeal under the prospective appeals process. We proposed in Sec.
405.1211(b)(5) that an eligible beneficiary may file a request for
review by the QIO regarding their change in hospital status after the
deadline established for expedited determinations, at proposed Sec.
405.1211(b)(1). More specifically, the beneficiary may file an appeal
request after they are released from the hospital. In addition, we
proposed that these untimely appeal requests, which we also referred to
as ``standard'' appeal requests, may be made ``at any time.'' We did
not propose a deadline for these appeal requests in order to afford
beneficiaries flexibility when exercising their appeal rights,
especially those who may have had a SNF stay following their change in
status from inpatient to outpatient receiving observation services. We
continue to believe beneficiaries should have the maximum opportunity
to pursue an appeal regarding their status change and potentially
obtain coverage for SNF services which they may have paid out-of-
pocket.
Comment: A commenter suggested CMS extend the timeframe for
eligible beneficiaries to request an expedited determination to 48
hours after leaving the hospital. The commenter explained that an
extended submission timeframe would better protect a beneficiary's
rights by affording the shortest appeal decision timeframe available.
Response: We understand and appreciate the commenter's intent to
provide beneficiaries with as long as possible to request and receive
an expedited determination from the QIO. When proposing the expedited
appeal submission timeframe, we weighed the benefit of providing
beneficiaries ample time to submit an appeal request with ensuring
beneficiaries submit the appeal request as soon as possible. Because
there is no liability coverage during the proposed appeals process, we
believe it is in beneficiaries' best interest to receive an appeal
decision as soon as possible. In addition, we believe rapid decisions
will provide beneficiaries with a more accurate picture of their
inpatient coverage status and better inform their future financial and
health care decisions, such as electing post-acute care services. If a
beneficiary obtains a favorable decision from the QIO, a rapid decision
will also maximize their potential for coverage in a SNF or other post-
acute care facility.
We believe the proposed policy requiring beneficiaries to submit an
expedited appeal before leaving the hospital strikes an effective
balance that incentivizes beneficiaries to submit appeals quickly, so
to receive a faster appeal decision, with ensuring untimely appeals are
still processed expeditiously. An expedited appeal timely submitted to
the QIO will be decided within 1 calendar day of receiving all relevant
requested information. An untimely expedited appeal submission to the
QIO will be decided within 2 calendar days of receiving all relevant
requested information. This policy, while slightly slower than the
expedited determination timeframes, still provides beneficiaries with a
decision far sooner than if they had to request an appeal under the
standard claims appeal timeframes (60 days at the first level of the
claims appeals process).
Comment: Multiple commenters sought clarification from CMS on
whether the proposed regulations require hospitals to retain
beneficiaries for the duration of an expedited QIO review. A few
commenters suggested CMS clarify that the QIO must continue to process
an expedited determination request whether the beneficiary is present
in the hospital or not. Several commenters recommended CMS permit
hospitals to discharge or release beneficiaries from the hospital, as
reasonable and necessary, during the pendency of an expedited
determination. Other commenters warned the proposed policy will
needlessly delay beneficiaries' safe release from hospitals and warned
that requiring hospitals to keep beneficiaries in the facilities would
increase the risk of beneficiaries contracting hospital infections and
may lead to increased mortalities.
Response: We did not propose and are not finalizing a requirement
that would restrict hospitals from safely releasing eligible
beneficiaries that are awaiting a decision from the QIO on an expedited
determination request. We explained in the proposed rule that the court
in Alexander indicated that HHS should use a process for expedited
appeals regarding hospital status changes that is ``substantially
similar'' to the existing process for expedited hospital discharge
appeals at Sec. Sec. 405.1205 through 405.1208. While we believe we
have appropriately followed the direction of the court, we noted in the
proposed rule that there are certain differences between the proposed
expedited determination process and the existing hospital discharge
appeals process. Most notably, we explained that the proposed expedited
determination process does not afford beneficiaries
[[Page 83274]]
protection from financial liability for services furnished during the
pendency of the QIO's review. Instead, we proposed that the hospital
may not bill the beneficiary until after the QIO has issued its
expedited determination or issued a decision in response to a timely
reconsideration request, as applicable. We noted that this billing
protection does not extend coverage to beneficiaries during the appeal,
which is consistent with Sec. 405.1202(g).
Although we believed the policy was clearly described in the
proposed rule, as several commenters had similar misunderstandings, we
explicitly state here that the new appeals process does not direct
hospitals to house or treat a beneficiary with medically unnecessary
care during the pendency of their appeal. Hospitals should continue to
follow all existing federal, state, and local rules and internal
standard operating procedures when considering the release of a
beneficiary who no longer requires hospital services. The only
interaction this appeals process has with an eligible beneficiary's
release from the hospital is the proposed requirement for hospitals to
deliver the MCSN no later than 4 hours before the beneficiary's release
from the hospital. We continue to believe that hospitals are equipped
to accurately estimate, to within 4 hours, when an enrollee will cease
to need medical care and should be able to comply with the MCSN
delivery requirement.
Because we did not propose and are not finalizing a requirement
that restricts hospitals from releasing eligible beneficiaries during
an appeal, we do not believe we need to address the comments related to
unnecessarily housing patients that do not need hospital-level care in
hospitals.
Comment: Multiple commenters requested CMS clarify whether
enrollees receive financial liability protection for services received
while their appeal is pending. Several commenters urged CMS to hold
beneficiaries harmless for the costs of services received while an
expedited appeal is pending. These commenters suggested CMS will
violate the court's direction that CMS should use a process for the
expedited appeals that is ``substantially similar'' to the inpatient
hospital discharge appeals process if beneficiaries are not held
financially harmless while an expedited appeal is pending.
Several commenters requested guidance on how to code and bill
beneficiaries for time spent in the hospital during their appeal. These
commenters incorrectly believed the hospital could not release patients
during the appeals process and suggested the hospital would need to
bill for custodial care. Similarly, other commenters questioned how to
properly inform a beneficiary that they will be financially liable for
services received during their appeal.
Response: We appreciate the commenters' concerns and interests in
protecting beneficiaries' financial liability during the expedited
appeals process. As we previously explained, we believe the proposed
structure of the expedited appeals process complies with the court
order indicating we should use a process for expedited appeals
regarding hospital status changes that is ``substantially similar'' to
the existing process for expedited hospital discharge appeals at
Sec. Sec. 405.1205 through 405.1208. Nevertheless, there are certain
important differences between the two appeals processes. Most notably,
the proposed expedited determination process does not afford
beneficiaries protection from financial liability for services
furnished during the pendency of the QIO's review. As discussed in the
proposed rule, Section 1869(c)(3)(C)(iii)(III) of the Act (by
incorporating the financial liability protection in section 1154(e)(4)
of the Act in effect prior to the enactment of section 1869(c)(3)(C))
provides beneficiaries with coverage during the inpatient hospital
discharge appeal process. However, this statute only applies to
beneficiaries being discharged from a Medicare covered inpatient
hospital stay. Under the proposed appeals process, beneficiaries are
eligible to appeal based on a hospital's reclassification of their
inpatient status to outpatient receiving observation services. Because
the new appeals process is not an appeal of a covered inpatient
hospital discharge, section 1869(c)(3)(C)(iii)(III) is inapplicable to
the new appeals process. Thus, we did not propose and are not
finalizing financial liability protections for eligible beneficiaries
that appeal regarding a hospital reclassification from inpatient to
outpatient receiving observation services.
We note that most of the commenters requesting guidance on
notification and coding related to billing beneficiaries during the
appeals process seem to misinterpret our proposed regulations to
require hospitals to retain beneficiaries during the appeals process
even if they no longer meet the requirements for medically necessary
care. As we addressed in a previous comment, the proposed appeals
procedures do not prevent hospitals from safely releasing beneficiaries
based on their particular medical circumstances. Therefore, hospitals
should continue to follow all existing federal, state, and local
requirements for providing, and notifying beneficiaries of their
financial liability related to non-covered care.
Comment: A few commenters urged CMS to grant beneficiaries
presumptive SNF coverage from the date a prospective appeal is
requested to at least the date of the QIO decision.
Response: While we appreciate the commenters' suggestion, we
decline to create a policy that would provide presumptive SNF coverage
for the days in which a prospective appeal is being adjudicated by the
QIO. To qualify for SNF services coverage, section 1861(i) of the Act
requires Medicare beneficiaries to have a medically necessary 3-
consecutive-day inpatient hospital stay within 30 days of admission to
a SNF. However, beneficiaries eligible for the proposed prospective
appeals process had their hospital status changed from inpatient to
outpatient receiving observation services. This means the beneficiaries
may not have acquired the necessary 3-day stay to qualify for SNF
coverage. Indeed, this is one of the primary reasons the court in
Alexander directed CMS to create an expedited determination process for
eligible beneficiaries. Therefore, in order to meet the 3-day stay
requirement, as established by statute, most eligible beneficiaries
would have to receive a favorable decision from the QIO. If CMS were to
provide presumptive SNF coverage for the days in which a QIO is
adjudicating a prospective appeal, but then a beneficiary did not
receive a favorable decision from the QIO, the SNF stay would likely
result in non-covered SNF care, with potentially significant
beneficiary out-of-pocket expenses, regardless of any previous
presumption of coverage. We believe the commenters' suggestion would,
therefore, lead to inequitable outcomes for beneficiaries that receive
unfavorable QIO decisions.
Comment: Multiple commenters supported our proposed requirement
prohibiting hospitals from billing eligible beneficiaries until the
expedited determination and reconsideration, when applicable, processes
are complete. A commenter sought clarification on the appropriate time
to bill a beneficiary for services after an expedited determination has
been made. The commenter also questioned whether the hospital should
rescind a bill issued to a beneficiary in the time between when the
beneficiary received an expedited determination and requested a timely
reconsideration. Separately, a few commenters requested
[[Page 83275]]
CMS extend the beneficiary billing protections for expedited appeals to
untimely appeals.
Response: We appreciate the commenters support for our proposal. We
proposed in Sec. 405.1211(e) that a hospital may not bill a
beneficiary who requested a timely appeal for any services at issue in
the appeal until the expedited determination process (and
reconsideration process, when applicable) is complete. This policy
mirrors existing procedures for appeals related to the termination of
non-hospital services found at Sec. 405.1202(g). If a hospital
inadvertently bills a beneficiary during a period in which the proposed
requirements restrict hospital billing, we agree with the commenter
that the hospital should immediately rescind the bill.
With respect to extending beneficiary billing protections for
untimely appeals, we appreciate the commenters' suggestion and interest
in enhancing beneficiary protections. However, pursuant to our proposed
policy, eligible beneficiaries may at any time request a standard (that
is, untimely) appeal relating to a hospital's decision to reclassify
their status from inpatient to outpatient receiving observation
services. While this policy provides beneficiaries with maximum
flexibility when considering an appeal relating to a hospital
reclassification, the timing of appeal requests could be unpredictable
and, in some cases, a standard appeal request could be submitted after
a beneficiary receives a hospital bill. We believe adopting such a
proposal would be administratively impractical for hospitals to comply
with as they could not be expected to reasonably anticipate when they
would be barred from billing a beneficiary.
Comment: A commenter suggested the adjudication timeframes for
``regular appeals'' could result in financial uncertainty for hospitals
as organizations could wait 2 years before the issuance of a final
decision.
Response: We are unclear how the commenter estimated hospitals may
have to wait 2 years before receiving a final decision. We posit the
commenter considered the potential cumulative adjudication times if an
eligible beneficiary appealed an adverse expedited reconsideration
decision to the ALJ or beyond. Nevertheless, as stated in the proposed
rule at Sec. Sec. 405.1211(e) and 405.1212(e), a hospital is only
prohibited from billing a beneficiary during the expedited levels of
the determination and reconsideration processes. However, hospitals are
permitted to bill beneficiaries after the QIO expedited determination
and reconsideration levels of appeal are complete. As with other
Medicare expedited and claim appeal processes, the higher levels of
administrative appeal may not conclude until well after the service and
billing are completed. Even so, we do not believe the proposed appeals
adjudication timeframes would introduce significant financial
uncertainty for hospitals due to the very low anticipated first level
appeals volume of around 8,000 appeals nationally, per year.
Comment: Multiple commenters sought clarification on the impact of
a beneficiary receiving a favorable expedited or standard determination
from the QIO. Their questions were as follows:
Upon the QIO issuing a favorable expedited determination
to a beneficiary who remained in the hospital during their appeal, is
the hospital required to present the IM before the beneficiary may be
discharged?
Would a beneficiary in that scenario be able to appeal the
hospital inpatient discharge to the QIO, if desired?
Upon a successful appeal, must a new inpatient order be
entered or is the hospital reclassification decision considered null
and void?
Must the inpatient order be revised if a beneficiary
received a favorable standard appeal decision and already released from
the hospital?
May a hospital collect the Part A deductible from the
beneficiary upon a favorable determination by the QIO? (The commenter
also wanted CMS to understand that some beneficiaries may have higher
out-of-pocket costs when they receive a favorable appeal, due to the
higher Part A deductible.)
Must hospitals use a specific condition code when
rebilling a Part A claim after a favorable standard appeal decision
that was requested after the hospital had billed Part B?
Another commenter suggested hospitals should not have to refund to
an eligible beneficiary any payments collected prior to the beneficiary
receiving a favorable standard appeal decision from the QIO. The
commenter suggested the Part B claim should be reopened instead and the
hospital should be paid any remaining balance before the hospital is
required to refund the beneficiary, as necessary.
Response: We did not propose and are not finalizing any changes to
other hospital notice delivery requirements. If a beneficiary is still
present in the hospital when a hospital's reclassification is reversed
by a QIO, the beneficiary would again be deemed an inpatient under the
original hospital admission order for purposes of Medicare Part A
coverage. Hospitals would then be required to follow all applicable
Medicare inpatient requirements when treating and discharging the
beneficiary to include following the standard IM delivery guidelines
set forth at Sec. 405.1205(1). However, we expect most beneficiaries
will receive their appeal decisions after being released from the
hospital as hospitals historically have reclassified beneficiaries
close to termination of hospital services. We will issue instructions
for the submission or adjustment of claims affected by a disregarded
reclassification in program instructions following this rule. The
instructions will make use of existing standard claim coding and
submission processes familiar to the affected providers.
We appreciate the feedback we received from commenters on the
expedited determination procedures. Based on analysis of the public
comments, we will be finalizing these provisions as proposed.
4. Expedited Reconsideration Procedures When a Beneficiary Is
Reclassified From an Inpatient to an Outpatient Receiving Observation
Services (Sec. 405.1212)
In new Sec. 405.1212 we proposed to set forth the procedures for
the new expedited reconsideration process. Proposed Sec. 405.1212
contained the responsibilities of the hospitals, QIOs, and
beneficiaries relative to the reconsideration process.
Proposed Sec. 405.1212(a) described an eligible beneficiary's
right to request an expedited reconsideration by a QIO when they are
dissatisfied with the expedited determination decision by the QIO.
In Sec. 405.1212(b) we proposed a process for beneficiaries to
request an expedited reconsideration by a QIO. Proposed paragraph
(b)(1) provided that beneficiaries must request an appeal to the QIO no
later than noon of the calendar day following the initial notification
of the expedited determination by the QIO. Under this proposal, the
earlier of the calendar day of the QIO's notification of the
beneficiary by telephone or in writing of its determination (under
Sec. 405.1211(c)(8)) would start the timeframe for the beneficiary to
request an expedited reconsideration. The beneficiary's request for a
reconsideration may be in writing or by telephone.
Proposed Sec. Sec. 405.1212(b)(2) and (b)(3) also explained the
responsibilities of beneficiaries to discuss the case, if
[[Page 83276]]
requested by the QIO, as well as beneficiaries' right to submit written
evidence to be considered by the QIO. Finally, proposed (b)(4) and
(b)(5) stated that if a beneficiary requests an appeal timely, they
would not be billed until the QIO makes its reconsideration decision;
however, if the beneficiary's request for an expedited reconsideration
is untimely, the hospital may bill a beneficiary before the
reconsideration determination has been made.
Proposed Sec. Sec. 405.1212(c)(1) through 405.1212(c)(4) described
the procedures that the QIO must follow in performing the expedited
reconsideration. Specifically, we proposed in Sec. 405.1212(c)(1) that
the QIO must immediately notify a hospital that a request for an
expedited reconsideration has been made; this means that the notice to
the hospital must be the day the QIO receives the request for expedited
reconsideration. Per proposed Sec. 405.1212(c)(2), the QIO would be
required to offer both the beneficiary and the hospital an opportunity
to provide further information. An example of further information from
the hospital could include an explanation of why the beneficiary was
reclassified from an inpatient to an outpatient receiving observation
services. Similarly, an example of further information from the
eligible beneficiary could include an explanation of why inpatient
status should have been maintained.
Proposed Sec. 405.1212(c)(3)(i) provided that the QIO must render
a decision and notify all relevant persons and entities within 2
calendar days of receiving all information necessary to complete the
appeal if the beneficiary requested the reconsideration by noon of the
day after receiving notice of the QIO's determination under Sec.
405.1211. This timeframe is as rapid as possible to minimize potential
liability for beneficiaries as well as to maximize their potential for
coverage in a SNF should they obtain a favorable reconsideration
decision by the QIO. A Medicare-covered SNF stay must begin within 30
days of a beneficiary's discharge from a hospital. To that end, we
proposed a review process for QIOs to make their decisions as quickly
as possible so beneficiaries receiving favorable decisions will have
time to plan for and begin a SNF stay within the 30-day limit for
coverage.
Proposed Sec. 405.1212(c)(3)(ii) provided that if a beneficiary
makes an untimely request for an expedited reconsideration, the QIO
must still accept the request and render a decision within 3 calendar
days. Under this proposal, the 2-calendar day QIO decision deadline
does not apply in the case of an untimely request for an expedited
reconsideration. However, the expeditious 3-day untimely timeframe
affords a beneficiary the ability to exercise their right to an
expedited appeal and potentially be entitled to SNF coverage within the
30-calendar day time limit for SNF coverage following hospital release,
should they receive a favorable expedited reconsideration determination
from a QIO.
The QIO decision, as required by proposed Sec. 405.1212(c)(4)(i-
iv), must include the basis and detailed rationale for the QIO
decision. The basis of a decision is a description of, and citations
to, the Medicare coverage rule, instruction, or other policies
applicable to the review. A detailed rationale includes the facts
specific to the beneficiary's situation and a detailed explanation of
why the inpatient admission did or did not satisfy the relevant
criteria for Part A coverage at the time the services were furnished.
The decision must also include the potential financial ramifications,
such as deductibles or coinsurance for the beneficiary, the
beneficiary's right to a hearing by an ALJ, and how a beneficiary may
make a request for an expedited reconsideration.
Proposed Sec. 405.1212(d) set forth the responsibilities of
hospitals in the expedited appeals process. As proposed, a hospital
may, but is not required to, submit evidence to be considered by a QIO
in making its reconsideration decision. If a hospital does not furnish
a QIO with requested additional information, the QIO may proceed to
make a decision based on the information used in the expedited
determination. This is to protect the interests of the beneficiary by
ensuring they receive their decision within the QIO's \24\ required
timeframes of 2 calendar days for a timely request and 3 calendar days
for an untimely request. This proposed policy is consistent with
obligations on hospitals in the second level expedited review of a
hospital discharge and on providers of services in the second level
expedited review of a termination of provider services (Sec.
405.1204(e)).
---------------------------------------------------------------------------
\24\ We referred to ``BFCC-QIO'' in the proposed rule but note
that we are making a technical change at Sec. 405.1211(d) to change
to ``QIO'' so that it comports with all other references to the QIO
in this subpart.
---------------------------------------------------------------------------
In Sec. 405.1212(e) we proposed that a hospital may not bill a
beneficiary who has appealed timely for any services at issue in the
appeal until the expedited reconsideration process is complete.
Proposed Sec. 405.1212(f) set forth that a QIO reconsideration is
binding on the beneficiary, hospital, and MAC unless the beneficiary
pursues an appeal with an ALJ in accordance with 42 CFR part 478
subpart B. This concept is consistent with the existing claims appeals
process currently established under Sec. Sec. 405.1000 through
405.1140. The decision is binding for purposes of payment only, such
that if the hospital submits a claim under Part A or Part B, CMS will
make payment.
Per section 1155 of the Act, a beneficiary who is dissatisfied by a
QIO's reconsideration of its initial decision may seek additional
administrative review and, ultimately, judicial review, if the amount
in controversy limits are met.\25\ Our proposal followed that process.
---------------------------------------------------------------------------
\25\ Under section 1155 of the Act, for an appeal with an ALJ,
the amount in controversy must be $200 or more, and for judicial
review, the amount in controversy must be $2,000 or more.
---------------------------------------------------------------------------
We received the following comments regarding our proposed
requirements related to the prospective appeal reconsideration
procedures.
Comment: Several commenters supported the proposed reconsideration
procedures when a beneficiary is reclassified from an inpatient to an
outpatient receiving observation services. A commenter believed the
proposed timelines for beneficiaries to request, and QIOs to render, a
reconsideration decision were reasonable and would protect the ability
of beneficiaries to potentially obtain SNF benefits within the 30-day
period following release from a hospital.
Response: We thank the commenters for their support.
Comment: A commenter suggested CMS harmonize the proposed
prospective appeals procedures with existing Parts A and B claims
appeal procedures because the commenter believed the proposed appeal
procedures do not clearly identify if beneficiaries may continue to
appeal after receiving an unfavorable QIO reconsideration decision.
Response: We explained in the proposed rule that a beneficiary who
is dissatisfied by a QIO's reconsideration of its initial determination
may seek additional administrative review and, ultimately, judicial
review, if the amount-in-controversy limits are met. This means a
beneficiary may appeal an adverse QIO reconsideration decision to an
ALJ, if the amount in controversy is $200 or more, then to the Medicare
Appeals Council (MAC), and, if the MAC denies the request for review or
issues an unfavorable decision, to
[[Page 83277]]
federal district court, as long as the amount in controversy is $2,000
or more.
Comment: A commenter asserted beneficiaries should be given up to
24 hours to request an appeal of a QIO expedited determination, rather
than noon of the next day, as was proposed in Sec. 405.1212 (b). The
commenter was concerned that beneficiaries may not understand the
appeals process in time to receive an expedited reconsideration.
Another commenter generally suggested beneficiaries receive more time
to request an expedited reconsideration.
Response: We appreciate the commenters' interest in providing
beneficiaries sufficient time to request a timely reconsideration. We
proposed the expedited reconsideration request timeframes to mirror
appeal submission timeframes for similar processes, such as inpatient
hospital discharge appeals. In our experience, beneficiaries have
sufficient opportunity to request an expedited reconsideration under
the proposed timeframes. Additionally, when a QIO provides an expedited
determination by phone, the QIO personnel will ask the beneficiary, or
their representative, if the beneficiary would like to request an
expedited reconsideration during the same phone call. This means a
beneficiary, or their representative, may immediately request a second-
level appeal (an expedited reconsideration) at the time they receive
their first-level decision (expedited determination), without having to
take any additional actions.
We note that even if the beneficiary fails to timely request an
expedited reconsideration, the QIO will process an untimely request and
the beneficiary will receive a decision in 3 calendar days (instead of
2 calendar days, which is the expedited processing timeframe).
Comment: A commenter requested that CMS acknowledge that hospitals
may submit claims and receive Part A payment for services that are on
appeal to an ALJ under the proposed prospective appeals process.
Response: We believe the commenter meant to request that CMS
confirm that hospitals may bill Medicare and receive Part B payment
while an appeal regarding a hospital status change is pending before an
ALJ. If a hospital decides to reclassify a beneficiary from inpatient
to outpatient receiving observation services, then the hospital would
only bill Medicare under Part B. Nevertheless, we confirm that a
hospital may bill Medicare for covered services while an appeal is
pending at the ALJ.
Comment: A commenter requested CMS clarify which beneficiary notice
a hospital must deliver to a beneficiary to notify them of their
financial liability following an unfavorable expedited reconsideration
decision.
Response: We proposed at Sec. 405.1212(c)(4)(i) through (iv) that
a QIO reconsideration decision must include, among other items, the
potential financial ramifications, such as deductible and coinsurance
for the beneficiary. Thus, the QIO is responsible for informing a
beneficiary of their potential financial liability related to an
unfavorable reconsideration decision.
We appreciate the feedback we received from commenters on the
expedited reconsideration procedures. Based on analysis of the public
comments, we will be finalizing these provisions as proposed.
5. Conforming Changes Beneficiary Notice of Discharge or Change in
Status Rights (Sec. 489.27)
In conjunction with the proposed notice provisions Sec. Sec.
405.1210 through 405.1212, we proposed to make conforming changes to a
related existing regulatory provision. We proposed to amend the
provider agreement requirements in Sec. 489.27(b) to cross-reference
the proposed notice requirements. Thus, proposed Sec. 489.27(b)
specified that delivery of the proposed appeals notice was required as
part of the Medicare provider agreement. Lastly, to account for this
conforming change, we proposed to change the title of Sec. 489.27 to
include ``change in status'' to more accurately reflect the actions
that would require the issuance of a notice.
We did not receive any comments on the proposed changes related to
these conforming changes. As a result, we are finalizing our policies
as proposed.
6. Conforming Changes to Quality Improvement Organization (QIO) Review
Regulations
We also proposed to amend the QIO regulations at Sec. 476.71(a) to
conform with the proposed changes in review responsibilities at
Sec. Sec. 405.1210 through 405.1212. The proposed amendment to the QIO
regulations would add a new review type to the currently enumerated
list of reviews performed by QIOs, specifically for beneficiary appeals
regarding hospital reclassifications of a fee-for-service beneficiary's
inpatient status to that of outpatient receiving observation services
when the eligibility requirements to file a prospective appeal being
finalized in this rule are met. The beneficiary eligibility
requirements for filing expedited appeals and the required processes
for those appeals are described in sections III.B.1. through III.B.5.
of this final rule. This proposed amendment to the QIO regulation
specified that QIOs perform review functions for these beneficiary
appeals in a manner that is consistent with other QIO review functions
while ensuring alignment with the proposed beneficiary eligibility and
process requirements for such appeals.
The QIO regulations at 42 CFR 476.1(a) define ``QIO review'' as a
review performed in fulfillment of a contract with CMS, either by the
QIO or its subcontractors. Under regulations at Sec. 476.71, the QIO's
review responsibilities include: (1) whether services are or were
reasonable and medically necessary for diagnosis or treatment; (2)
whether the quality of the services meets professionally recognized
standards of health care, as determined through the resolution of oral
beneficiary complaints; (3) whether care and services furnished or
proposed on an inpatient basis could be effectively furnished more
economically on an outpatient basis or in another inpatient setting;
(4) diagnostic related group (DRG) validation of diagnosis and
procedure information provided by hospitals; (5) the completeness,
adequacy and quality of hospital care provided; (6) medical necessity,
reasonableness and appropriateness of hospital admissions and
discharges; (7) medical necessity, reasonableness and appropriateness
of inpatient hospital care for which additional outlier payment is
sought; and (8) whether a hospital has misrepresented admission or
discharge information resulting in unnecessary or multiple admissions,
or inappropriate billing.
We stated in the proposed rule that our proposed amendment to Sec.
476.71(a) would add paragraph (9) to this list of QIO review
responsibilities to include the new beneficiary-initiated appeals for
when a hospital reclassifies certain fee-for-service beneficiaries'
admission status from inpatient to that of outpatient.
In considering the existing hospital discharge appeals process, CMS
determined that the circumstances for these new appeals, and the
potential impact of such appeal decisions on Part A coverage for
subsequent care in other settings, necessitated a new notification
process and review timelines which differ from the processes that
govern the existing hospital discharge appeals process. These new
appeals are discussed in section III.B. of this final rule and appear
at Sec. Sec. 405.1210 through 405.1212.
The proposed amendment to the QIO regulations, as previously
discussed, applied to the processes and timeframes
[[Page 83278]]
for the new appeals discussed in section III.B. of this final rule,
which have been designed to meet the needs of beneficiaries who have
had their inpatient status reclassified to outpatient receiving
observation services.
In general, we received comments that were supportive of having the
BFCC-QIOs conduct the new expedited and standard appeals and
reconsiderations as a new type of QIO review under proposed Sec.
476.71(a)(9), and for which QIOs would follow the processes specified
under Sec. Sec. 405.1211 and 405.1212.
Comment: Commenters indicated that QIOs' expertise conducting
similar types of beneficiary appeals as well as reviewing patient
status under the 2-midnight rule places them in an ideal position to
review the new appeals under the prospective appeals process.
Response: We thank the commenters for their recognition of the
QIOs' experience with beneficiary appeals and ability to conduct these
new beneficiary appeals. QIOs have been performing expedited reviews
for beneficiaries appealing inpatient discharges and termination of
provider services in non-hospital settings for decades. We believe
placing responsibility for reviewing the new prospective appeals with
the QIOs will ensure consistent and timely review.
CMS is finalizing the conforming change to the QIO regulation as
proposed, which adds the new prospective appeals to the enumerated list
of QIO review responsibilities under Sec. 476.71(a)(9).
A few commenters requested further clarification on specific topic
areas which we address below.
Comment: A few commenters requested clarification on the decision-
making criteria that would be used by the BFCC-QIOs for whether an
inpatient admission order was valid; citing the potential for
uncertainty, inconsistency and discretion in medical decision making.
Response: Consistent with existing CMS medical review guidance, in
determining whether an initial inpatient admission met the criteria for
Part A coverage, the QIOs would only consider the medical evidence
which was available to the physician at the time an admission decision
was made. Information which became available only after admission (for
example, test results) would not be taken into consideration ``except
in cases where considering the post-admission information would support
a finding that an admission was medically necessary'' as stated in the
Medicare Benefits Policy Manual, Ch. 1, Sec. 10.
Comment: A commenter requested clarification regarding whether the
QIOs will be staffed over weekends and holidays to conduct appeals and
whether hospitals are expected to respond to requests from QIOs for
patient records (as described in proposed Sec. 405.1211(d)(1)) over
weekends.
Response: We clarify that pursuant to their contracts, BFCC-QIOs
are required to maintain operations 24 hours a day, 7 days a week.
Should a beneficiary file a request for an expedited appeal over a
weekend or holiday, the QIO will proceed with contacting the hospital
to notify the hospital of the request and obtain medical documentation
for the appeal. The hospital is required to respond by noon of the
calendar day after the QIO notifies the hospital of the request for an
expedited appeal.
However, should a beneficiary or their representative request that
the hospital provide them with a copy of the records it provided to the
QIO for the appeal, the hospital will be required to provide the
records by no later than close of business of the first day after the
material is requested by the beneficiary or the beneficiary's
representative under 42 CFR 405.1211(d)(2). We clarify that for
administrative functions ``close of business'' generally means 5:00
p.m. in the hospital's time zone.
Comment: A few commenters requested clarification on how the QIO
will communicate decisions to the hospital and to the beneficiary.
Response: QIOs employ multiple modes of communication with
beneficiaries and providers during current expedited appeals processes
under 42 CFR 405.1202 and will do so for the expedited appeals
finalized in this rule. These multiple modes of communication are used
by the QIOs to ensure timely intake, patient record requests, and
communication of decisions to both beneficiaries and providers.
Currently a beneficiary appeal may be initiated via phone but would be
formalized in writing by the QIO as required for expedited appeals
under 42 CFR 405.1202(e)(8). QIO patient record requests for appeals,
and appeal status tracking typically occur via web-based systems and
phone. Under Sec. Sec. 405.1211 and 405.1212, QIOs are required to
notify the eligible beneficiary, the hospital, and SNF, if applicable,
of their decision by telephone and issue written decisions for both
initial determinations and reconsiderations.
Comment: Commenters suggested that CMS provide clear and objective
guidelines for the BFCC-QIOs to follow when conducting the new appeals
to ensure consistency.
Response: We appreciate the commenters' suggestion and will
consider developing further implementation guidance for the BFCC-QIOs.
Comment: A commenter suggested that the BFCC-QIOs should issue
written notices of their decisions to both the beneficiaries and the
hospitals that contain the reasons and evidence for their
determinations.
Response: We appreciate the need for beneficiaries and hospitals to
understand the basis and rationale for the QIO's decision. Under
Sec. Sec. 405.1211 and 405.1212, QIOs are required to issue written
decisions for both initial determinations and reconsiderations. These
written decisions contain the reasons for their decision-making and the
content that was evaluated to make their decisions.
Comment: A commenter suggested that CMS track the timeliness of the
BFCC-QIOs in adjudicating the appeals and to report information on
these and other appeals to the public.
Response: CMS routinely tracks the timeliness of resolving
beneficiary appeals and will do so for these new prospective appeals.
We appreciate the public's interest in ensuring accountability for the
timely conduct of these appeals and may consider additional reporting
in the future.
Comment: A few commenters suggested that CMS establish an
electronic means for the BFCC-QIO to provide updates on appeals to
hospitals.
Response: The QIOs currently maintain electronic/web-based means of
communicating with providers for beneficiary appeals--both for patient
record requests, and for appeal decisions.
Comment: A commenter expressed concern that the BFCC-QIOs may not
have adequate resources to conduct these reviews, and this may divert
resources from other areas like quality improvement and quality
reporting. The BFCC-QIOs may need to hire a large number of clinical
staff for these appeals, thus contributing to healthcare workforce
shortages. Another commenter was concerned that the new appeals could
negatively affect the QIOs' ability to work on quality reporting and
improvement programs for hospitals.
Response: We do not believe the new appeals process will
significantly affect operations or staffing within hospitals due to the
low annual volume anticipated. While we anticipate the BFCC-QIOs will
need to hire additional
[[Page 83279]]
clinical staff to review the additional appeals, we do not anticipate
this would have an impact on the clinical workforce on a national
level. Thus, we do not foresee this new appeals process having a
significant impact on clinical care resources.
We thank the commenters for their feedback and recommendations for
the prospective appeals process. After consideration of the public
comments, we will be finalizing our policies as proposed. However, we
note that we are making the following editorial/technical corrections:
In Sec. 405.1211(c)(6)(ii), we are correcting a
typographical error in the proposed regulations text and stating that
for untimely requests, the QIO must make a determination within 2
calendar days.
In Sec. 405.1211(d), we are changing ``BFCC-QIO'' to
``QIO'' to comport with all other references to the QIO in this
subpart.
In Sec. 405.1211(d)(7), we are making technical edits for
clarity.
In Sec. 405.1212 --
++ In paragraph (c)(3)(i), we are revising the phrase ``A timely
request from in accordance'' to ``A timely request in accordance'';
++ In paragraph (c)(4), we are revising the phrase ``When the QIO
issues an reconsideration'' to ``When the QIO issues a
reconsideration'', and
++ In paragraph (d), we are revising the phrase ``beyond that
furnished to the BFCC-QIO'' to ``beyond that furnished to the QIO'' to
be consistent with other references to the QIO.
In Sec. 476.71(a)(9), we are correcting the cross-
reference in the last sentence of the paragraph to refer more broadly
to ``Sec. 405.1212''.
As noted previously, after publication of this final rule regarding
the procedures for these new appeals, we intend to specify the
implementation date for filing appeal requests for retrospective and
prospective appeals. When the prospective process is fully implemented,
eligible beneficiaries who are hospitalized and receive notice of their
appeal rights and wish to pursue an appeal will be expected to utilize
the prospective procedures (proposed Sec. Sec. 405.1210 through
405.1212). We will announce the implementation dates on CMS.gov and/or
Medicare.gov.
C. Other/Out of Scope Comments
We also received comments that are outside the scope of this
rulemaking, summarized as follows.
Comment: Several commenters urged CMS to address policy issues
related to outpatient stays and observation services and the impact on
SNF coverage for Medicare beneficiaries. Some commenters recommended
that CMS count all time in the hospital towards satisfying the
requirement of a 3-day qualifying inpatient hospital stay for SNF
coverage. A commenter suggested that CMS directly address the issue of
long outpatient stays with hospitals to avoid the need for
beneficiaries to use an appeals process when they disagree with their
outpatient status. The commenter suggested that CMS should implement
policies to prohibit or severely restrict hospital reclassifications
from inpatient to outpatient and long outpatient stays, and further
suggested that hospitals should bear the burden of justifying long
outpatient stays (lasting more than two-midnights).
Response: We appreciate the concerns raised by commenters related
to observation services and long outpatient stays. This final rule
implements the court order in Alexander v. Azar for the limited purpose
of establishing appeal processes for certain Medicare beneficiaries who
are initially admitted as hospital inpatients but are subsequently
reclassified as outpatients receiving observation services during their
hospital stay and meet other eligibility criteria. It is beyond the
limited scope of this rule to address the concerns raised by commenters
regarding observation services, the counting of all hospital days
towards satisfying the statutory requirement of a 3-day qualifying
inpatient hospital stay for SNF coverage, and restricting hospital
decisions regarding the length of outpatient stays or
reclassifications. CMS acknowledges this feedback and may further
consider it in future policymaking.
D. Severability
The various provisions of this final rule are intended to implement
the court order in Alexander v. Azar, 613 F. Supp. 3d 559 (D. Conn.
2020), aff'd sub nom., Barrows v. Becerra, 24 F.4th 116 (2d Cir. 2022).
As detailed in the preamble, this final rule establishes processes for
retrospective appeals and prospective appeals (standard prospective
appeals and expedited prospective appeals). To the extent a court may
enjoin any part of this final rule, the Department intends that other
provisions or parts of provisions remain in effect. For example, the
portions of this rule addressing retrospective appeals and prospective
appeals are mutually severable from each other. Per the court order,
the retrospective appeals process applies to class members whose due
process rights may have been violated prior to the availability of the
procedural protections set forth in the prospective appeals process,
whereas the prospective appeals process applies to class members whose
due process right may be violated in the future. In addition to
applying to different beneficiaries, the retrospective and prospective
appeals processes involve different timeframes for the reviews to take
place, different contractors to perform the reviews, and potentially
different claims. The existence of the prospective appeals process does
not depend on the existence of the retrospective appeals process, and
vice versa. These distinct processes can function independent of each
other and are thus mutually severable. This example is not intended to
be exhaustive and should not be viewed as an intention by HHS to
consider specific provisions of the rule as not severable from other
provisions of the rule. To the extent a court enjoins any part of this
final rule, the other provisions of the rule would still further the
purpose of implementing the court order and establishing appeals
processes for qualifying beneficiaries.
We did not receive comments on this issue, and we intend to apply
the concept of severability to this final rule as described.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.) we are required to provide 30-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. For the purpose of the PRA and this section of
the final rule, collection of information is defined under 5 CFR
1320.3(c) of the PRA's implementing regulations.
To fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA requires that we
solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We solicited public comment on each of these issues for the
following sections of this document that contain information collection
requirements and
[[Page 83280]]
comments are responses are discussed in the following.
A. Wage Estimates
1. Private Sector
To derive average costs, we used wage data from the U.S. Bureau of
Labor Statistics' (BLS) May 2023 National Occupational Employment and
Wage Estimates (https://www.bls.gov/oes/2023/may/oes_nat.htm). In this
regard, Table 1 presents BLS' mean hourly wage, our estimated cost of
fringe benefits and other indirect costs, and our adjusted hourly wage.
Table 1--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe benefits
Occupation title Occupation code Mean hourly and other indirect Adjusted hourly
wage ($/hr) costs ($/hr) wage ($/hr)
----------------------------------------------------------------------------------------------------------------
Registered Nurse.................... 29-1141 45.42 45.42 90.84
----------------------------------------------------------------------------------------------------------------
As indicated, we are adjusting our hourly wage estimate by a factor
of 100 percent. This is necessarily a rough adjustment, both because
fringe benefits and other indirect costs vary significantly from
employer to employer, and because methods of estimating these costs
vary widely from study to study. Nonetheless, we believe that doubling
the hourly wage to estimate the total cost is a reasonably accurate
estimation method.
2. Beneficiaries
We believe that the cost for beneficiaries undertaking
administrative and other tasks on their own time is a post-tax wage of
$23.18/hr.
The Valuing Time in U.S. Department of Health and Human Services
Regulatory Impact Analyses: Conceptual Framework and Best Practices
\26\ identifies the approach for valuing time when individuals
undertake activities on their own time. To derive the costs for
beneficiaries, a measurement of the usual weekly earnings of wage and
salary workers of $1,117 \27\ for 2022, divided by 40 hours to
calculate an hourly pre-tax wage rate of $27.93/hr. This rate is
adjusted downwards by an estimate of the effective tax rate for median
income households of about 17 percent or $4.75/hr ($27.93/hr x 0.17),
resulting in the post-tax hourly wage rate of $23.18/hr ($27.93/hr-
$4.75/hr). Unlike our State and private sector wage adjustments, we are
not adjusting beneficiary wages for fringe benefits and other indirect
costs since the individuals' activities, if any, would occur outside
the scope of their employment.
---------------------------------------------------------------------------
\26\ https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//176806/VOT.pdf.
\27\ https://fred.stlouisfed.org/series/LEU0252881500A.
---------------------------------------------------------------------------
B. Information Collection Requirements (ICRs)
This final rule sets forth new appeals procedures as required by
the court order in the case Alexander v. Azar, 613 F. Supp. 3d 559 (D.
Conn. 2020)), aff'd sub nom., Barrows v. Becerra, 24 F.4th 116 (2d Cir.
2022). Certain beneficiaries in Original Medicare, who are initially
admitted to a hospital as an inpatient by a physician or otherwise
qualified practitioner but whose status during their stay was changed
to outpatient receiving observation services by the hospital, thereby
effectively denying Part A coverage for their hospital stay, may pursue
an appeal under this final rule. The appeal is filed with Medicare to
decide if the inpatient admission meets the relevant criteria for Part
A coverage.
1. ICRs Regarding Retrospective Appeals Requests (Sec. 405.932)
The provisions in new Sec. 405.932 were submitted to OMB for
review under control number 0938-1466 (CMS-10885). OMB will issue the
control number's expiration date upon their approval of the final
rule's collection of information request. The issuance of that date can
be monitored at www.Reginfo.gov.
As discussed in section III.A.3. of this final rule, Sec. 405.932
establishes that eligible parties may file in writing an appeal related
to a change in patient status which resulted in the denial of Part A
coverage. A written appeal request must be received by the eligibility
contractor no later than 365 days after the implementation date of the
final rule. Details regarding the deadline to file an appeal and where
such appeals should be filed would be posted to Medicare.gov and/or
CMS.gov once the retrospective appeals process is operational. The
written request must include the following information:
Beneficiary name.
Beneficiary Medicare number (the number on the
beneficiary's Medicare card).
Name of the hospital and dates of hospitalization.
Name of the SNF and the dates of stay (as applicable).
If the appeal includes SNF services not covered by Medicare, the
written request must also include an attestation to the out-of-pocket
payment(s) made by the beneficiary for such SNF services and must
include documentation of payments made to the SNF for such services.
We estimate that it would take an individual approximately 30
minutes (0.5 hr) to complete the appeal request including the
attestation and documentation of out-of-pocket payments for SNF
services and submit the completed information to the eligibility
contractor. Because this is a new appeal right and associated process,
CMS does not have precise data and cannot meaningfully estimate how
many individuals may request an appeal under the new appeals process.
However, we believe that the closest equivalent is using the rate of
individuals who appeal denials of initial claim determinations under
the claim appeals process at the first level of appeal to a MAC (which
is 3 percent) and aligning it with the appeal rates of higher levels of
appeal (ranging from 21 percent to 27 percent) to arrive at an estimate
of 20 percent. This estimate reflects our expectation that eligible
parties in this process will be more motivated than in the claim
appeals process to avail themselves of this unique opportunity for a
retrospective appeal on potentially high dollar claims.
Based on these data, we estimate that the total number of eligible
beneficiaries is 32,894.\28\ Assuming that 20 percent of
[[Page 83281]]
individuals (6,579 = 32,894 x 0.20) who are eligible to appeal will
file a request, we estimate a one-time burden of 3,290 hours (6,579
requests x 0.5 hr/request) at a cost of $76,262 (3,290 hr x $23.18/hr).
---------------------------------------------------------------------------
\28\ The data used in this report came from the 2022 CMS Part B
institutional administrative claims data for 100 percent of Medicare
beneficiaries enrolled in the fee-for-service (FFS) program, which
are available from the Integrated Data Repository (IDR). The IDR
contains a subset of data transmitted by the Common Working File
(CWF), a computerized database maintained by CMS in connection with
its processing and payment of Medicare claims.
---------------------------------------------------------------------------
2. ICRs Regarding Notifying Beneficiaries of Appeal Rights When
Hospital Inpatient Coverage Is Reclassified to Coverage as an
Outpatient Receiving Observation Services (Sec. 405.1210)
The provisions in new Sec. 405.1210 were submitted to OMB for
review under control number 0938-1467 (CMS-10868). OMB will issue the
control number's expiration date upon their approval of the final
rule's collection of information request. The issuance of that date can
be monitored at reginfo.gov.
Section 405.1210 requires hospitals to deliver, prior to release
from the hospital, a standardized notice informing eligible
beneficiaries of the change in status from an inpatient to an
outpatient receiving observation services, and their appeal rights if
they wish to challenge that change.
The Medicare Change of Status Notice (MCSN) is new and is intended
to be furnished only to those beneficiaries eligible for this specific
new appeal process. The MCSN notice contains only two fields that
hospitals must complete: (1) the beneficiary's name, and (2) the
beneficiary's identifier number. The remaining information (information
on the change in coverage, a description of appeal rights and how to
appeal, and the implications for skilled nursing facility coverage
following the hospital stay) is standardized.
For beneficiaries with Medicare Part B coverage, hospitals will be
required to deliver the notice to eligible beneficiaries as soon as
possible after hospital reclassifies the beneficiary from an inpatient
to an outpatient and the beneficiary has stayed in the hospital for 3
or more consecutive days but was an inpatient for fewer than 3 days.
The notice must be delivered no later than 4 hours before the
beneficiary is released from the hospital.
For beneficiaries without Medicare Part B coverage, hospitals will
be required to deliver the notice to eligible beneficiaries as soon as
possible after the change from inpatient to outpatient with observation
services is made as a 3-day hospital stay is not required for these
beneficiaries. The notice must be delivered no later than 4 hours
before the beneficiary is released from the hospital.
We estimate it would take 10 minutes (0.1667 hr) at $90.84/hr for a
Registered Nurse to complete the two data fields and deliver each
notice to the applicable beneficiary.
The 10-minute estimate is same as that for our Important Message
from Medicare (CMS-10065/10066; OMB 0938-1019), which the proposed MCSN
notice is modeled after.
In 2022 there were approximately 15,655 instances where hospital
stays met the criteria for an appeal.\29\ With regard to this final
rule we estimate that hospitals would be required to give an estimated
15,655 MCSN notices to beneficiaries each year. In aggregate, we
estimate an annual hospital burden of 2,610 hours (15,655 notices x
0.1667 hr/notice) at a cost of $237,092 (2,610 hr x $90.84/hr).
---------------------------------------------------------------------------
\29\ The data used in this report come from the 2022 CMS Part B
institutional administrative claims data for 100 percent of Medicare
beneficiaries enrolled in the fee-for-service (FFS) program, which
are available from the CMS Chronic Condition Data Warehouse
(www2.ccwdata.org/web/guest/home), accessed August 2023.
---------------------------------------------------------------------------
Please note, our data does not permit us to determine whether the
observation services occurred prior to the initial inpatient stay or
followed the change in status from inpatient to outpatient, as required
to qualify for an appeal. As a result, 15,655 MCSN notices likely
overstates the number of beneficiaries eligible for an appeal.
Please see section IV.D. of this final rule for information on how
to view the draft standardized notice and supporting documentation.
3. ICRs Regarding Applicable QIO Review Regulations (Sec. 476.71 and
Sec. 476.78)
In section III.B. of this final rule, we provided that the QIOs
will review the prospective expedited appeals under their contracts
with the Secretary. CMS expects to revise the BFCC-QIO's contracts
under the 13th Statement of Work to include the new prospective
expedited appeals requirements after publication of the final rule. The
additional costs to the government for the BFCC-QIOs to review the new
appeals would include payment for the additional level of effort
associated with communicating with beneficiaries and hospitals for the
duration of the appeal, collecting and reviewing patient records,
performing reconsiderations if requested, and providing case files
requested for further levels of review if needed. It also would include
the cost of reimbursing hospitals for the submission of patient records
for prospective expedited appeals. Hospitals would submit patient
records and request reimbursement from the QIO using the process
established in the existing memorandums of agreement (MOAs) under Sec.
476.78(a) between hospitals and the QIO having jurisdiction over the
particular State in which the hospital stay occurred.
As discussed in section III.B. of this final rule, hospitals will
be required to submit patient records to the QIOs for prospective
expedited appeals under Sec. 405.1211(d). Existing QIO regulations at
Sec. 476.78(b)(2) and (c) require providers and practitioners to
electronically submit patient records to the QIOs for purposes of one
or more QIO functions and allow for the reimbursement of providers and
practitioners by the QIO for the electronic submission of patient
records for one or more QIO functions at a rate of $3.00 per submission
under Sec. 476.78(e)(2). Hospitals that have waivers for the required
electronic submission of records under Sec. 476.78(d) may be
reimbursed by the QIO at a rate of $0.15 per page for submission of the
patient records under Sec. 476.78(e)(3).
The estimation methodology used to determine the reimbursement
rates for electronic and non-electronic submission of patient records
for one or more QIO functions is discussed further in section IX.A. of
the preamble of the Fiscal Year (FY) 2021 Hospital Inpatient
Prospective Payment System (IPPS)/Long-Term Care Prospective Payment
System (LTCH PPS) final rule (85 FR 58977 through 58985). This
estimation methodology is appropriate when applied to the proposed
prospective expedited appeals due to the substantial similarity of its
requirements and processes to those of other QIO functions upon which
these rates were determined.
In section III.B.6. of this final rule, we established the addition
of a QIO review type at Sec. 476.71(a)(9) making the QIO's review of
the prospective expedited appeals under proposed Sec. 405.1211(d) a
QIO function using our authority in section 1154(a)(18) of the Act. As
established earlier in the ICR section, the prospective appeals process
would constitute a CMS administrative action toward a specific
individual or entity. Thus, the preparation and submission of the
appeal, supporting documentation needed for the appeal, and
communications between the QIO and parties to the appeal are not
subject to
[[Page 83282]]
the PRA as stipulated under 5 CFR 1320.4(a)(2).
C. Summary of Annual Burden Estimates for Changes
Table 2--Annual Requirements and Burden Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Labor
Regulation section(s) under Title OMB Control No. Respondents Total Time per response (hours) time cost ($/ Total cost
42 of the CFR (CMS ID No.) responses (hours) hr) ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 405.932................... 0938-1466 (CMS- 32,894 6,579 0.5 (30 min)............... 3,290 23.18 76,262
10885). beneficiaries.
Sec. 405.1210.................. 0938-1467 (CMS- 6,162 hospitals.... 15,655 0.1667 (10 min)............ 2,610 90.84 237,092
10868).
-------------------------------------------------------------------------------------------------
Total........................ ................... 39,056............. 22,234 varies..................... 5,900 varies 313,354
--------------------------------------------------------------------------------------------------------------------------------------------------------
D. Submission of Comments
We have submitted a copy of this final rule to OMB for its review
of the rule's information collection requirements. The requirements are
not effective until they have been approved by OMB.
To obtain copies of the supporting statement and any related forms
for the collections discussed previously, please visit the CMS website
at https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing, or call the Reports Clearance
Office at 410-786-1326.
Comment: Multiple commenters believed CMS underestimated the burden
estimates related to hospitals timely delivering the new MCSN. A
commenter believes the estimated annual volume of expedited appeals is
generally understated because it failed to include appeals from
beneficiaries with Part A but without Part B. Another commenter
suggested CMS should be able to easily calculate the average annual
number of eligible beneficiaries without Part B and should publish the
number.
Another commenter disputed our estimate that the MCSN would take
hospital staff 10 minutes to prepare and deliver because it does not
account for any time the staff will need to answer beneficiary
questions upon delivery. Another commenter stated the burden estimate
failed to account for the hospital time and resources needed, including
the hiring of new personnel, to establish a new workflow, to provide
requested records to the QIO, and to rebill claims and refund
beneficiaries who obtained a successful appeal.
Response: We acknowledge that the proposed rule estimates did not
include hospital reclassifications of beneficiaries from inpatient to
outpatient receiving observation services for beneficiaries that did
not have Medicare Part B. Based on certain data collection limitations,
it is not possible for CMS to fully estimate the number of
beneficiaries with Part A but not Part B who are eligible to appeal in
this process. Hospital stays for this population without Part B
coverage who were changed from inpatient to outpatients receiving
observation services are not reflected in Medicare claims data, as non-
covered Part B claims are generally not submitted to Medicare.
Nevertheless, we did attempt to obtain estimates from the data that was
available and only a handful of such non-covered Part B claims existed
per year.
In the proposed rule, we estimated the time it would take a
hospital registered nurse to complete the MCSN to be 10 minutes as this
is the longstanding estimate for delivery of the IM, a very similar
notice. Throughout multiple public comment periods as part of the PRA
renewal process, we have not received any comments or concerns
regarding delivery of the IM or our estimated time to complete delivery
of the notice. We also cannot account for all circumstances and our
estimates only represent the average time we expect for notice
preparation and delivery. We note that because this is a new appeals
process, we must provide these estimates in the absence of historical
data. However, we will update these estimates in each MCSN PRA renewal
cycle. Finally, we acknowledge we did not provide burden estimates for
hospital activities beyond delivering the new notice. We have not
previously calculated the burden of activities ancillary to the appeals
process, such as rebilling or submitting documentation to the QIO, for
the IM or the Notice of Medicare Non-Coverage, which have similar
notice and appeals processes for termination of coverage of sub-acute
care. Therefore, we do not have data available to utilize for such an
estimate. Even if we were to attempt such an estimate, we believe it
would be impossible to provide an accurate estimate due to the
variation in hospital size and workflow approaches. Nevertheless, we
believe the financial impact and resource expenditure for hospitals
delivering the MCSN to be minimal as hospitals already have processes
and personnel in place that regularly deliver beneficiary notices with
similar delivery requirements of the MCSN. We expect hospitals can
incorporate this new notice into their well-established practices for
pre-release paperwork delivery by caseworkers and other hospital staff.
Comment: A commenter requested CMS provide guidance in the final
rule on the expected impact to Medicare Supplement Insurance plans
serving FFS beneficiaries, including impacts on cost-sharing, due to
the proposed appeals processes.
Response: We do not anticipate the proposed prospective appeals
process will impact existing policies related to Medicare Supplement
Insurance plans. We acknowledge that a beneficiary's cost-sharing may
at times increase or decrease due to a favorable QIO decision, which in
turn may potentially affect the amounts covered by an enrolled Medicare
Supplement Insurance plan. However, we do not have the historical data
necessary to accurately estimate any potential change in total payments
made by Medicare Supplement Insurance plans.
V. Regulatory Impact Statement
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), Executive Order 14094 entitled ``Modernizing
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct 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
[[Page 83283]]
equity). The Executive Order 14094 entitled ``Modernizing Regulatory
Review'' (hereinafter, the Modernizing E.O.) amended section 3(f) of
Executive Order 12866 (Regulatory Planning and Review). The amended
section 3(f)(1) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a rule:
(1) having an annual effect on the economy of $200 million or more in
any 1 year. A regulatory impact analysis (RIA) must be prepared for the
rules with significant regulatory action/s as per section 3(f)(1) ($200
million or more in any 1 year). This rule does not reach the economic
threshold and thus is not considered a significant rule under section
3(f)(1).
We are making the determination that the new appeals process will
not have a significant financial impact on the Medicare program or
interested parties based on our assumption about the overall number of
projected appeals. While it is difficult to project how many
beneficiaries will pursue appeals under this new process, overall, we
anticipate a relatively low volume of retrospective appeals. We
estimate that the total number of eligible beneficiaries for the
retrospective process is 32,894.\30\ We are projecting approximately
6,600 appeals at the first level of appeal (MAC level); 5,000 appeals
at the second level of appeal (QIC Level); 2,800 appeals at the third
level of appeal (ALJ level); and 150 at the Medicare Appeals Council.
There will be administrative costs associated with tasking a contractor
to serve as a point of contact and clearinghouse for incoming
retrospective appeals requests.
---------------------------------------------------------------------------
\30\ The data used in this report came from the 2022 CMS Part B
institutional administrative claims data for 100 percent of Medicare
beneficiaries enrolled in the fee-for-service (FFS) program, which
are available from the Integrated Data Repository (IDR). The IDR
contains a subset of data transmitted by the Common Working File
(CWF), a computerized database maintained by CMS in connection with
its processing and payment of Medicare claims.
---------------------------------------------------------------------------
We also anticipate a very low volume of prospective and standard
appeals on an ongoing basis. We estimate that around 15,655 notices
informing beneficiaries of their change in status and informing them of
their right to appeal will be delivered annually.\31\ We are estimating
an appeal rate of 50 percent, which would result in about 8,000 appeals
per year.
---------------------------------------------------------------------------
\31\ The data used in this report come from the 2022 CMS Part B
institutional administrative claims data for 100 percent of Medicare
beneficiaries enrolled in the fee-for-service (FFS) program, which
are available from the CMS Chronic Condition Data Warehouse
(www2.ccwdata.org/web/guest/home), accessed August 2023.
---------------------------------------------------------------------------
While our estimates reflect a relatively low number of appeals, we
acknowledge that there will be administrative costs for hospitals to
accommodate the new appeals process, as well as costs associated with
modifying contracts for MACs, QICs, and the BFCC-QIOs to perform the
retrospective, prospective and standard appeals.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
less than $9.0 million to $47.0 million in any 1 year. Individuals and
states are not included in the definition of a small entity. We are not
preparing an analysis for the RFA because we have determined, and the
Secretary certifies, that this would not have a significant economic
impact on a substantial number of small entities. In addition, section
1102(b) of the Act requires us to prepare an RIA if a rule may have a
significant impact on the operations of a substantial number of small
rural hospitals. This analysis must conform to the provisions of
section 604 of the RFA. For purposes of section 1102(b) of the Act, we
define a small rural hospital at 42 CFR 412.108 as a hospital that is
located outside of a Metropolitan Statistical Area for Medicare payment
regulations and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined, and
the Secretary certifies, that this final regulation would not have a
significant impact on the operations of 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 rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2024, that
threshold is approximately $183 million. This rule will have no
consequential effect on state, local, or tribal governments or on the
private sector.
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. Since this regulation does not impose any costs on state
or local governments, the requirements of Executive Order 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on September 27, 2024.
List of Subjects
42 CFR Part 405
Administrative practice and procedure, Diseases, Health facilities,
Health professions, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.
42 CFR Part 476
Grant programs--health, Health care, Health facilities, Health
professions, Health records, Peer Review Organization (PRO), Penalties,
Privacy, Reporting and recordkeeping requirements.
42 CFR Part 489
Health facilities, Medicare, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
0
1. The authority citation for part 405 continues to read as follows:
Authority: 42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x,
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).
0
2. Subpart I is amended by adding an undesignated center heading after
Sec. 405.930 and Sec. Sec. 405.931, 405.932, 405.934, 405.936, and
405.938 to read as follows:
Retrospective Appeals for Changes in Patient Status That Resulted in
Denial of Part A Coverage for Hospital Services
Sec.
405.931 Scope, basis, and definitions.
405.932 Right to appeal a denial of Part A coverage resulting from a
change in patient status.
405.934 Reconsideration.
405.936 Hearings before an ALJ and decisions by an ALJ or Attorney
Adjudicator.
405.938 Review by the Medicare Appeals Council and judicial review.
Sec. 405.931 Scope, basis, and definitions.
(a) Scope and basis. The provisions in Sec. Sec. 405.931 through
405.938--
(1) Implement a federal district court order requiring appeal
rights for
[[Page 83284]]
hospital stays on or after January 1, 2009, for a specified class of
beneficiaries under certain conditions (defined in Sec. 405.931(b))
who were admitted to a hospital as inpatients, but were subsequently
reclassified by the hospital as outpatients receiving observation
services; and
(2) Apply to retrospective appeals, that is, appeals for hospital
outpatient services, and as applicable, post-hospital extended care
services in a skilled nursing facility (SNF services), furnished to
eligible parties as defined in paragraph (b) of this section before the
implementation of the prospective appeal process set forth in
Sec. Sec. 405.1210 through 405.1212.
(b) Definitions. For the purposes of the appeals conducted under
Sec. Sec. 405.931 through 405.938, the following definitions apply:
Eligible party means a beneficiary who, on or after January 1,
2009, meets the following criteria, and is, thus, eligible to request
an appeal under Sec. Sec. 405.931 through 405.938:
(i) Was formally admitted as a hospital inpatient.
(ii) While in the hospital was subsequently reclassified as an
outpatient receiving observation services (as defined in Sec.
405.931(h)).
(iii) Has received an initial determination (as defined in Sec.
405.920) or a Medicare Outpatient Observation Notice (MOON) (as
described in Sec. 489.20(y)) indicating that the observation services
are not covered under Medicare Part A.
(iv)(A) Was not enrolled in the Supplementary Medical Insurance
program (that is, Medicare Part B coverage) at the time of
beneficiary's hospitalization; or
(B) Stayed at the hospital for 3 or more consecutive days but was
designated as an inpatient for fewer than 3 days, unless more than 30
calendar days has passed after the hospital stay without the
beneficiary's having been admitted to a SNF.
(v) Medicare beneficiaries who meet the requirements of the
paragraph (iv)(A) or (B) of this definition but who pursued an
administrative appeal and received a final decision of the Secretary
before September 4, 2011, are excluded from the definition of an
eligible party.
Eligibility contractor means the contractor who meets all of the
following:
(i) Is identified on the Medicare.gov website for accepting appeal
requests.
(ii) Receives appeal requests and makes determinations regarding
eligibility for the appeal under Sec. Sec. 405.931 through 405.938.
(iii) Issues notices of eligibility.
(iv) Refers valid appeal requests to the processing contractor for
a decision on the merits of the appeal.
Processing contractor means the contractor responsible for
conducting the first-level appeal and issuing a decision on the merits
of the appeal. Appeals under Sec. 405.932 are conducted by the MAC
who, at the time of the referral of the request for appeal under Sec.
405.932(d)(2), has jurisdiction over claims submitted by the hospital
where the eligible party received the services at issue.
(c) Party to an appeal. For the purposes of the appeals conducted
under Sec. Sec. 405.931 through 405.938, an eligible party is the only
party to the appeal. The provisions of Sec. 405.906 do not apply to
appeals processed under these provisions, and the provider that
furnished services to an eligible party may not file a request for an
appeal and is not considered a party to any appeal decision or
determination.
(d) Authorized representatives, appointed representatives, or
representatives of a deceased eligible party. For the purposes of
appeals conducted under Sec. Sec. 405.931 through 405.938:
(1) The provisions of Sec. 405.910 apply to an eligible party
appointing a representative to assist in such appeal, as appropriate,
except as follows:
(i) A provider of services who furnished items or services to a
beneficiary whose claims are the subject of an appeal under the
provisions of Sec. Sec. 405.931 through 405.938 is prohibited from
representing the beneficiary or eligible party in such appeal.
(ii) [Reserved.]
(2) An authorized representative (as defined in Sec. 405.902) may
act on behalf of an eligible party and has all of the same rights and
responsibilities of an eligible party throughout the appeals process.
(3) The provisions of Sec. 405.906(a)(1) apply to a deceased
eligible party in the same manner in which such provisions apply to a
deceased beneficiary.
(4) The provisions of Sec. 405.906(c) do not apply.
(5) A beneficiary who is an eligible party is considered
unrepresented if the beneficiary meets any of the following:
(i) Has not appointed a representative under Sec. 405.910.
(ii) Has an authorized representative as defined in Sec. 405.902.
(iii) Has appointed as its representative 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.
(iv) Is deceased but met the conditions for an eligible party in
paragraph (b)(1) of this section and the appeal is filed by an
individual who meets the conditions set forth in Sec. 405.906(a)(1).
(e) Prohibition on assignment of appeal rights. For the purposes of
the appeals conducted under Sec. Sec. 405.931 through 405.938, an
eligible party may not assign appeal rights to a provider under the
provisions of Sec. 405.912.
(f) Date of receipt of a notice or decision. For the purposes of
the appeals conducted under Sec. Sec. 405.931 through 405.938, the
date of receipt of a notice or decision sent by the eligibility
contractor, processing contractor or other appeals adjudicator is
presumed to be 5 calendar days following the date on the notice unless
there is evidence to the contrary.
(g) Three or more consecutive days. For the purposes of the appeals
conducted under Sec. Sec. 405.931 through 405.938, when determining if
a beneficiary is an eligible party and for the purposes of determining
coverage of SNF services under section 1861 of the Act, inpatient
hospital days are counted in accordance with Sec. 409.30, that is, a
patient must have a qualifying inpatient stay of at least 3 consecutive
calendar days starting with the admission day but not counting the
discharge day.
(h) Outpatient receiving observation services. For the purposes of
appeals conducted under Sec. Sec. 405.931 through 405.938 when
determining if a beneficiary is an eligible party, a beneficiary is
considered an outpatient receiving observation services when the
hospital changes beneficiary's status from inpatient to outpatient
while the beneficiary is in the hospital and the beneficiary
subsequently receives observation services following a valid order for
such services.
(i) Conclusive effect of a Part A coverage determination. For the
purposes of appeals under Sec. Sec. 405.931 through 405.938, the
determination with respect to coverage under Part A is conclusive and
binding with respect to the services furnished and must be applied to
any existing appeals with respect to coverage and payment for hospital
services under Part B and SNF services (as applicable).
Sec. 405.932 Right to appeal a denial of Part A coverage resulting
from a change in patient status.
(a) Filing an appeal request related to a change in patient status
which resulted in the denial of Part A coverage. (1) Only an eligible
party, the
[[Page 83285]]
party's appointed representative, or an authorized representative of an
eligible party may request an appeal at any level of the appeals
process under Sec. Sec. 405.931 through 405.938.
(2) To initiate an appeal under Sec. Sec. 405.931 through 405.938,
an eligible party, the party's appointed representative, or an
authorized representative of an eligible party must meet the following
requirements:
(i) Submit a request for an appeal in writing to the eligibility
contractor.
(ii) The request must be received by the eligibility contractor no
later than 365 calendar days after the implementation date of the final
rule. The eligibility contractor denies the written request if it is
not received by the applicable filing timeframe under paragraph (d)(3)
of this section, unless the eligible party established good cause for
late submission as specified in Sec. 405.942(b)(2) and (3).
(3) If an eligible party (or the party's representative) misfiles a
request for appeal with a contractor or government entity other than
the eligibility contractor, then for the purpose of determining
timeliness of the request for appeal, the date the misfiled request was
received by the contractor or government agency is considered the date
of receipt. The misfiled request and all documentation must be
forwarded to the eligibility contractor within 30 calendar days of
receipt, or as soon as practicable.
(b) Content of the appeal request. (1) The written request filed by
an eligible party, the party's appointed representative, or an
authorized representative of an eligible party may be made on a model
CMS form. If the model form is not used, to be valid, the written
request must include all of the following identifying information:
(i) Beneficiary name.
(ii) Beneficiary Medicare number (the number on the beneficiary's
Medicare card).
(iii) Name of the hospital and dates of hospitalization.
(iv) Name of the SNF and the dates of stay (as applicable).
(2) If the appeal includes SNF services not covered by Medicare,
the written request must also include an attestation to the out-of-
pocket payment(s) made by the beneficiary for such SNF services and
must include documentation of payments made to the SNF for such
services.
(i) Payments for an eligible party's SNF services made by a third-
party payer do not constitute out-of-pocket expenses or payment for an
eligible party. If a third-party payer made payment for the eligible
party's SNF services, then the services are excluded from consideration
in the appeal.
(ii) Payments made for cost sharing (including, but not limited to,
coinsurance and deductible) for SNF services covered by a third-party
payer are not considered an out-of-pocket payment for the purposes of
this provision.
(iii) Payments made by a family member (including payments made by
an individual not biologically related to the beneficiary) for an
eligible party's SNF services are considered an out-of-pocket payment
for the eligible party.
(3) In the written request for an appeal, an eligible party (or
their representative) may include an explanation of why the hospital
admission satisfied the relevant criteria for Part A coverage and
should have been covered under the Part A hospital insurance benefit
instead of under the Part B supplementary medical insurance benefit.
(c) Evidence and other information to be submitted with the appeal
request. (1) Eligible parties (or their representatives) are encouraged
to submit all available information and documentation, including
medical records related to the hospital stay and SNF services, as
applicable, at issue in the appeal with the written request for an
appeal.
(2) If the eligibility contractor determines there is information
missing from the request that is needed to establish the beneficiary's
eligibility as a party under Sec. 405.931(b) or satisfy other
conditions for eligibility for an appeal, the eligibility contractor
works with the appropriate MAC and attempts to obtain the information
from the provider or the eligible party (or the party's representative)
or both, as applicable. The eligibility contractor allows up to 120
calendar days for submission of missing information.
(3) If the necessary information cannot be obtained from either the
provider or the eligible party (or the party's representative), the
eligibility contractor makes an eligibility determination based on the
information available.
(d) Determining eligibility for an appeal. (1)(i) The eligibility
contractor reviews the information submitted with the appeal request
and any additional information it obtains to determine if the
individual submitting the appeal request is an eligible party and that
the services previously furnished are eligible for an appeal under
Sec. 405.931.
(ii) The eligibility contractor mails or otherwise transmits the
notice of its determination to the eligible party (or the party's
representative) within 60 calendar days of receipt of the appeal
request.
(iii) The time between the eligibility contractor's request for
missing information and receipt of such information (or in the case of
information that is requested but is not received, the time allowed by
the contractor to submit the information) does not count toward the
timeframe for issuing a notice to the eligible party (or the party's
representative).
(2) If the eligibility contractor determines that the individual is
an eligible party and the services previously furnished are eligible
for an appeal, the eligibility contractor--
(i) Issues a notice of acceptance to the eligible party (or the
party's representative), explaining that the appeal has been accepted
for processing; and
(ii) Refers the appeal to the processing contractor for
adjudication under paragraph (f) of this section.
(3)(i) If the eligibility contractor determines that the request
for appeal is untimely or incomplete, the individual does not satisfy
the requirements for an eligible party, or the services previously
furnished are not eligible for an appeal, the eligibility contractor
issues a denial notice to the individual (or the party's
representative) in writing.
(ii) The denial notice explains that the request is not eligible
for an appeal, the reason(s) for the denial of the appeal request, the
information needed to cure the denial, and the process for requesting a
review of the eligibility denial under paragraph (e) of this section.
(4) Notices regarding eligibility for an appeal issued by the
eligibility contractor are written in a manner to be understood by the
eligible party or the party's representative.
(e) Review of an eligibility contractor's denial of a request for
an appeal. (1)(i) An individual (or their representative) may request a
review of the eligibility contractor's denial of a request for an
appeal by filing a request in writing with the eligibility contractor.
(ii) The request for review should explain the reason(s) the denial
of the request for an appeal was incorrect, and should include
additional information, as applicable, to support the validity of the
original appeal request.
(2) The request for review, with any additional information, must
be received by the eligibility contractor no later than 60 calendar
days from the date of receipt of the denial notice. If the request for
review is received after this deadline, the individual (or the
individual's representative) must establish good cause for untimely
filing.
[[Page 83286]]
In determining whether good cause for untimely filing exists, the
eligibility contractor applies the provisions in Sec. 405.942(b)(2)
and (3).
(3) The review by the eligibility contractor must be conducted by
individuals not involved in the initial denial of the request for an
appeal.
(4) The eligibility contractor may issue a decision that affirms or
reverses the denial of the request for an appeal or may dismiss the
request for review. The notice of the eligibility contractor's decision
must meet both of the following requirements:
(i) Be written in a manner to be understood by the individual or
the individual's representative.
(ii) Be mailed or otherwise transmitted in writing within 60
calendar days of the date of receipt of the request for review.
(5) If the decision is to affirm the denial, or dismiss the
request, the eligibility contractor must explain the rationale for the
decision.
(6) A denial notice under paragraph (d)(3) of this section issued
due to receipt of an untimely appeal request must be reversed if the
eligible party (or the party's representative) establishes good cause
for late filing under Sec. 405.942(b)(2) and (3).
(7) If the eligibility contractor reverses the initial denial of
the request for appeal, the eligibility contractor forwards the request
for appeal to the processing contractor under paragraph (f) of this
section.
(8) The eligibility contractor's decision that affirms the initial
denial of a request for an appeal is binding and not subject to further
review.
(9) If the eligibility contractor determines that the request for
review of the eligibility denial under paragraph (e)(2) of this section
was not submitted timely, and the eligibility contractor did not find
good cause for the untimely submission, then the eligibility contractor
dismisses the request for review, and such dismissal is binding and not
subject to further review.
(f) Processing eligible requests for appeal. (1) If the processing
contractor determines there is necessary information missing from the
appeal case file, the processing contractor attempts to obtain the
information from the provider or the eligible party (or the party's
representative), as applicable.
(i) The processing contractor allows the provider or eligible party
(or the party's representative), or both, up to 60 calendar days to
submit missing information.
(ii) If the provider or eligible party (or the party's
representative) does not submit the missing information within the
allotted time, the processing contractor makes a decision on the
request for appeal based on the information available.
(iii) The time between the processing contractor's request for
information and receipt of such information (or in the case of
information that is requested but is not received, the time allowed by
the contractor to submit the information) does not count toward the
timeframe for issuing the processing contractor's decision.
(2) The processing contractor reviews the information submitted
with the appeal request and any additional information it obtains to
determine if the inpatient admission satisfied the relevant criteria
for Part A coverage at the time services were furnished. If the appeal
request also includes a request to review denied SNF services that are
eligible for an appeal, the processing contractor also determines if
such eligible SNF services satisfied relevant criteria for Part A
coverage at the time the services were furnished.
(3) Subject to the provisions in paragraph (f)(1) of this section,
the processing contractor mails or otherwise transmits its written
decision on the request for appeal within 60 calendar days of receipt
of the request.
(g) Notice and content of the decision. (1) If the processing
contractor determines that the inpatient admission, and as applicable,
SNF services, satisfied the relevant criteria for Part A coverage at
the time the services were furnished, then the processing contractor
issues notice of the favorable decision to the eligible party (or the
party's representative). The processing contractor also notifies the
hospital and SNF, as applicable, in the case of a favorable
determination for Part A coverage.
(2)(i) If the processing contractor determines that the inpatient
admission, or as applicable, SNF services, did not satisfy the relevant
criteria for Part A coverage at the time the services were furnished,
then the processing contractor issues notice of the unfavorable or
partially favorable decision to the eligible party (or the party's
representative).
(ii) The processing contractor issues a notice of a partially
favorable decision to the SNF if the inpatient admission satisfied the
relevant criteria for Part A coverage, but the SNF services did not
satisfy the relevant criteria for Part A coverage.
(3) The notice issued to the eligible party (or the party's
representative) must be written in a manner calculated to be understood
by the eligible party (or the party's representative) and include all
of the following:
(i) A clear statement of the decision made by the processing
contractor.
(ii) The reason the hospital admission, and as applicable, the SNF
services, satisfied or did not satisfy the relevant criteria for Part A
coverage at the time the services were furnished.
(iii) A summary of the facts, including as appropriate, a summary
of any clinical or scientific evidence used in making the
determination.
(iv) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies apply to the facts of the case.
(v) If a favorable decision, the effect of such decision,
including, as applicable, a statement about the obligation of the SNF
to refund any amounts collected for the covered SNF services, and that
the SNF may then submit a new claim(s) for services covered under Part
A in order to determine the amounts of benefits due.
(vi) If an unfavorable or partially favorable decision, a statement
of any specific missing documentation that should be submitted with a
request for reconsideration, if applicable.
(vii) The procedures for obtaining additional information
concerning the decision, such as specific provisions of the policy,
manual, regulations, or other rules used in making the decision.
(viii) If an unfavorable or partially favorable decision,
information about the procedures for filing a request for
reconsideration under Sec. 405.934.
(ix) Any other requirements specified by CMS.
(4) As applicable, a notice of a favorable decision issued to the
SNF (including a decision for a beneficiary not enrolled in the
Supplementary Medical Insurance program (Medicare Part B) at the time
of beneficiary's hospitalization), includes all of the following:
(i) A clear statement of the decision made by the processing
contractor.
(ii) The reason the SNF services satisfied the relevant criteria
for Part A coverage at the time the services were furnished.
(iii) A summary of the facts, including as appropriate, a summary
of any clinical or scientific evidence used in making the
determination.
(iv) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies apply to the facts of the case.
(v) The effect of such decision, including a statement explaining
that the SNF must refund any payments collected from the beneficiary
for the covered SNF services, and that the SNF
[[Page 83287]]
may then submit a new claim(s) to determine the amount of benefits due
for covered services.
(vi) Any other requirements specified by CMS.
(5) In the case of a favorable decision for a beneficiary not
enrolled in the Supplementary Medical Insurance program (Medicare Part
B) at the time of the beneficiary's hospitalization, notice is issued
to the hospital that includes all of the following:
(i) A clear statement of the decision made by the processing
contractor.
(ii) The reason the hospital admission satisfied the relevant
criteria for Part A coverage at the time the services were furnished.
(iii) A summary of the facts, including as appropriate, a summary
of any clinical or scientific evidence used in making the
determination.
(iv) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies apply to the facts of the case.
(v) The effect of such decision, including a statement explaining
that the hospital must refund any payments collected for the outpatient
hospital services, and that the hospital may then submit a new Part A
inpatient claim in order to determine the amount of benefits due for
covered services.
(vi) Any other requirements specified by CMS.
(6) In the case of a partially favorable decision issued to a SNF,
the notice includes the following:
(i) A clear statement of the decision made by the processing
contractor.
(ii) The reason the hospital admission satisfied the relevant
criteria for Part A coverage at the time the services were furnished,
and the reason the SNF services did not satisfy the relevant criteria
for Part A coverage.
(iii) A summary of the facts, including as appropriate, a summary
of any clinical or scientific evidence used in making the
determination.
(iv) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies apply to the facts of the case.
(v) The effect of such decision, including a statement explaining
that the decision is being sent for informational purposes only, and
that only the eligible party may appeal the decision to a QIC under
Sec. 405.934.
(vi) Any other requirements specified by CMS.
(h) Effect of a favorable appeal decision. (1)(i) If the processing
contractor issues a decision that the beneficiary's inpatient admission
satisfied the relevant criteria for Part A coverage and the hospital's
decision to change the inpatient admission to outpatient receiving
observation services was therefore erroneous, the beneficiary's
reclassification as an outpatient is disregarded for the purposes of
determining Part A benefits, including Part A SNF coverage, if
applicable.
(ii) For the purposes of effectuating a favorable decision by the
processing contractor, unless a Part A claim is submitted by a
hospital, any claims previously submitted for outpatient hospital
services and payments made for such services (including any applicable
deductible and coinsurance amounts) are not reopened or revised by the
MAC, and payment, as applicable, for covered SNF services may be made
by the MAC to the SNF without regard to the hospital claim.
(2) In order to determine Part A benefits to be paid and to make
payment for covered services as a result of a favorable decision, as
applicable:
(i) The SNF that furnished services to the beneficiary must refund
payments previously collected from the beneficiary for the covered
services and may then submit a Part A claim(s) for such services within
365 calendar days of receipt of the notice of a favorable decision.
(ii) In the case of a beneficiary not enrolled in the Supplementary
Medical Insurance program (Medicare Part B) at the time of the
beneficiary's hospitalization, the hospital that furnished services
must refund any payments collected for the outpatient hospital
services. After the refund is issued, the hospital may then submit a
Part A inpatient claim for such services within 365 calendar days of
receipt of the notice of a favorable decision.
(iii) In the case of a beneficiary enrolled in the Supplementary
Medical Insurance program (Medicare Part B) at the time of the
beneficiary's hospitalization, the hospital that furnished services
must refund any payments collected for the outpatient hospital services
only if the hospital chooses to submit a Part A inpatient claim for
such services. The deadline for submitting a Part A claim for such
services is 365 calendar days after receipt of the notice of a
favorable decision, and the hospital must refund any payments collected
for the outpatient services before submitting the Part A inpatient
claim.
(3) The hospital, and as applicable, the SNF, must comply with all
applicable provisions regarding charges to the beneficiary for covered
services, including but not limited to relevant provisions in part 489
Subparts B through D of this chapter.
(i) A favorable appeal decision is considered binding unless it is
reopened and revised under the provisions of Sec. Sec. 405.980 through
405.986.
(ii) The provisions regarding reopening of a redetermination in
Sec. 405.980(b) and (c) apply in the same manner to favorable
decisions issued under this section.
(4) The notice of a favorable decision issued to a hospital and, as
applicable, a SNF does not convey party status to such provider.
(i) Effect of an unfavorable or partially favorable decision. (1)
An unfavorable or partially favorable appeal decision is considered
binding unless--
(A) It is reopened and revised under the provisions of Sec. Sec.
405.980 through 405.986; or
(B) An eligible party (or the party's representative) files a
request for reconsideration under Sec. 405.934.
(2) The provisions regarding reopening of a redetermination in
Sec. 405.980(b) and (c) apply in the same manner to unfavorable or
partially favorable decisions issued under this section.
Sec. 405.934 Reconsideration.
(a) Filing a request for reconsideration. An eligible party, the
party's appointed representative, or an authorized representative who
is dissatisfied with the decision rendered by a processing contractor
in Sec. 405.932(g)(2) may request a reconsideration with a QIC within
180 calendar days of receipt of the processing contractor's notice. The
request for reconsideration must include the elements specified in the
processing contractor's notice.
(b) Applicability of other provisions. The provisions in Sec. Sec.
405.960 through 405.978 that apply to reconsiderations of initial
determinations apply to the extent they are appropriate/in the same
manner to reconsiderations performed by a QIC under this section unless
otherwise specified.
(c) Notice and content of a reconsideration. (1) If the QIC
determines that the inpatient admission, and as applicable, eligible
SNF services, satisfied the relevant criteria for Part A coverage at
the time the services were furnished, then the QIC issues notice of the
favorable reconsideration to the eligible party (or the party's
representative). The QIC also notifies the hospital and SNF, as
applicable, in the case of a favorable determination for Part A
coverage.
(2)(i) If the QIC determines that the inpatient admission, or as
applicable, SNF services, did not satisfy the relevant criteria for
Part A coverage at
[[Page 83288]]
the time the services were furnished, then the QIC issues notice of the
unfavorable or partially favorable reconsideration to the eligible
party (or the party's representative).
(ii) The QIC issues a notice of a partially favorable
reconsideration to the SNF if the inpatient admission satisfied the
relevant criteria for Part A coverage, but the SNF services did not
satisfy the relevant criteria for Part A coverage.
(3) The notice of reconsideration must be mailed or otherwise
transmitted within 60 calendar days of the QIC's receipt of the request
for reconsideration, subject to the exceptions specified in Sec.
405.970.
(4) The notice of reconsideration issued to the eligible party (or
the party's representative) must be written in a manner calculated to
be understood by the eligible party (or the party's representative) and
include all of the following:
(i) A clear statement of the decision made by the QIC.
(ii) The reason the hospital admission, and as applicable, the SNF
services, satisfied or did not satisfy the relevant criteria for Part A
coverage at the time the services were furnished.
(iii) A summary of the facts, including as appropriate, a summary
of any clinical or scientific evidence used in making the
determination.
(iv) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies apply to the facts of the case.
(v) If a favorable decision, the effect of such decision, including
a statement about the obligation of the SNF to refund any amounts
collected for the covered SNF services, and that the SNF may then
submit a new claim(s) for services covered under Part A in order to
determine the amounts of benefits due.
(vi) If the decision in Sec. 405.932(f) indicated that specific
documentation should be submitted with the reconsideration request, and
the documentation was not submitted with the request for
reconsideration, the summary must indicate how the missing
documentation affected the reconsideration.
(vii) The procedures for obtaining additional information
concerning the decision, such as specific provisions of the policy,
manual, regulations, or other rules used in making the decision.
(viii) If an unfavorable or partially favorable decision,
information concerning an eligible parties' right to an ALJ hearing,
including the applicable amount in controversy requirement and
aggregation provisions and other procedures for filing a request for an
ALJ hearing under Sec. 405.936.
(ix) Any other requirements specified by CMS.
(5) As applicable, a notice of a favorable reconsideration issued
to the SNF (including a decision for a beneficiary not enrolled in the
Supplementary Medical Insurance program (Medicare Part B) at the time
of the beneficiary's hospitalization), includes all of the following:
(i) A clear statement of the decision made by the QIC.
(ii) The reason the SNF services, satisfied the relevant criteria
for Part A coverage at the time the services were furnished.
(iii) A summary of the facts, including as appropriate, a summary
of any clinical or scientific evidence used in making the
determination.
(iv) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies apply to the facts of the case.
(v) The effect of such decision, including a statement explaining
the SNF must refund any payments collected from the beneficiary for the
covered SNF services, and that the SNF may then submit a new claim(s)
to determine the amount of benefits due for the covered services.
(vi) Any other requirements specified by CMS.
(6) In the case of a favorable reconsideration for a beneficiary
not enrolled in the Supplementary Medical Insurance program (Medicare
Part B) at the time of the beneficiary's hospitalization, notice is
issued to the hospital that includes all the following:
(i) A clear statement of the decision made by the QIC.
(ii) The reason the hospital admission satisfied the relevant
criteria for Part A coverage at the time the services were furnished.
(iii) A summary of the facts, including as appropriate, a summary
of any clinical or scientific evidence used in making the
determination.
(iv) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies apply to the facts of the case.
(v) The effect of such decision, including a statement explaining
that the hospital must refund any payments collected for the outpatient
hospital services, and that the hospital may then submit a new Part A
inpatient claim in order to determine the amount of benefits due for
covered services.
(vi) Any other requirements specified by CMS.
(7) In the case of a partially favorable reconsideration issued to
a SNF the notice includes the following:
(i) A clear statement of the decision made by the QIC.
(ii) The reason the hospital admission satisfied the relevant
criteria for Part A coverage at the time the services were furnished,
and the reason the SNF services did not satisfy the relevant criteria
for Part A coverage.
(iii) A summary of the facts, including as appropriate, a summary
of any clinical or scientific evidence used in making the
determination.
(iv) An explanation of how pertinent laws, regulations, coverage
rules, and CMS policies apply to the facts of the case.
(v) The effect of such decision, including a statement explaining
that the decision is being sent for informational purposes only, and
that only the eligible party may appeal the decision to an ALJ under
Sec. 405.936.
(vi) Any other requirements specified by CMS.
(d) Effect of a favorable reconsideration. (1)(i) If the QIC issues
a reconsideration decision that the beneficiary's inpatient admission
satisfied the relevant criteria for Part A coverage and the hospital's
decision to change the inpatient admission to outpatient receiving
observation services was therefore erroneous, the beneficiary's
reclassification as an outpatient is disregarded for the purposes of
determining Part A benefits, including both Part A hospital coverage
and Part A SNF coverage, if applicable.
(ii) For the purposes of effectuating a favorable reconsideration,
unless a Part A claim is submitted by a hospital, any claims previously
submitted for outpatient hospital services and payments made for such
services (including any applicable deductible and coinsurance amounts)
are not reopened or revised by the MAC, and payment, as applicable, for
covered SNF services may be made by the MAC to the SNF without regard
to the hospital claim.
(2) In order to determine Part A benefits to be paid and to make
payment for covered services as a result of a favorable decision, as
applicable--
(i) The SNF that furnished services to the beneficiary must refund
payments previously collected from the beneficiary for the covered
services and may then submit a Part A claim(s) for such services within
365 calendar days of receipt of the notice of a favorable decision;
(ii) In the case of a beneficiary not enrolled in the Supplementary
Medical Insurance program (Medicare Part B) at the time of the
beneficiary's hospitalization, the hospital that furnished services
must refund any
[[Page 83289]]
payments collected for the outpatient hospital services. After the
refund is issued, the hospital may then submit a Part A inpatient claim
for such services within 365 calendar days of receipt of the notice of
a favorable decision;
(iii) In the case of a beneficiary enrolled in the Supplementary
Medical Insurance program (Medicare Part B) at the time of the
beneficiary's hospitalization, the hospital that furnished services
must refund any payments collected for the outpatient hospital services
only if the hospital chooses to submit a Part A inpatient claim for
such services. The deadline for submitting a Part A claim for such
services is 365 calendar days after receipt of the notice of a
favorable decision, and the hospital must refund any payments collected
for the outpatient services before submitting the Part A inpatient
claim.
(3) The hospital, and as applicable, the SNF, must comply with all
applicable provisions regarding charges to the beneficiary for covered
services, including but not limited to relevant provisions in part 489
subparts B through D of this chapter.
(4) A favorable reconsideration is considered binding unless it is
reopened and revised under the provisions of Sec. Sec. 405.980 through
405.986. The provisions regarding reopening of a reconsideration in
Sec. 405.980(d) and (e) apply in the same manner to favorable
reconsiderations issued under this section.
(5) The notice of a favorable reconsideration sent to a hospital
and, as applicable, a favorable or partially favorable reconsideration
sent to a SNF does not convey party status.
(e) Effect of an unfavorable or partially favorable
reconsideration. (1) An unfavorable or partially favorable
reconsideration is considered binding unless--
(i) It is reopened and revised under the provisions of Sec.
405.980(d) or (e); or
(ii) An eligible party (or the party's representative) files a
request for a hearing by an ALJ under Sec. 405.936.
(2) The provisions regarding reopening of a reconsideration in
Sec. 405.980(d) and (e) apply in the same manner to unfavorable and
partially favorable decisions issued under this section.
Sec. 405.936 Hearings before an ALJ and decisions by an ALJ or
Attorney Adjudicator.
(a) Filing a request for hearing. An eligible party, the party's
appointed representative, or an authorized representative who is
dissatisfied with the reconsideration rendered by a QIC in Sec.
405.934(c)(2), or a dismissal of a request for reconsideration, may
request a hearing before an ALJ within 60 calendar days of receipt of
the reconsideration. The request for hearing must include the elements
specified in the QIC's reconsideration.
(b) Applicability of other provisions. The provisions in Sec. Sec.
405.1000 through 405.1064 that apply to ALJ hearings and decisions by
an ALJ or an attorney adjudicator apply to the extent they are
appropriate/in the same manner to ALJ hearings and decisions by an ALJ
or an attorney adjudicator under this section unless otherwise
specified.
(c) Calculating the amount remaining in controversy for an ALJ
hearing or judicial review. (1)(i) A request for ALJ hearing for an
appeal under the provisions of Sec. Sec. 405.931 through 405.938 must
meet the amount in controversy requirement in Sec. 405.1006(b).
(ii) A request for judicial review in federal district court for an
appeal under the provisions of Sec. Sec. 405.931 through 405.938 must
meet the amount in controversy requirement in Sec. 405.1006(c),
subject to the calculation methodology set forth in this paragraph.
(2) For appeals under the provisions of Sec. Sec. 405.931 through
405.938, the amount remaining in controversy for an ALJ hearing or for
judicial review in federal district court under Sec. 405.1136 is
determined by the sum of the billed charges on the Part B outpatient
hospital claim and, as applicable, any billed charges for the SNF claim
at issue, if such claims were submitted to Medicare. If no SNF claim
was submitted for services furnished to the beneficiary, then the
billed charges to the beneficiary as indicated on an itemized statement
or evidence of payment made by the beneficiary for such services are
used in calculating the amount remaining in controversy.
(3) In the case of an appeal under the provisions of Sec. Sec.
405.931 through 405.938 filed by an eligible party who was not enrolled
in Part B at the time of hospitalization, and no Part B outpatient
hospital claim was billed to Medicare, the amount remaining in
controversy is determined by the charges billed to the beneficiary by
the hospital for the outpatient hospital stay and billed charges for
SNF services, if applicable. An itemized statement from the provider
such services, or evidence of the payment made by the beneficiary to
the provider is acceptable for the purpose of calculating the amount
remaining in controversy.
(4) Any payments made, including coinsurance and deductible, for
the Part B outpatient hospital claim, and as applicable, the SNF claim
must not reduce the calculation of the amount in controversy for the
purposes of a hearing or judicial review under this paragraph.
(d) Notice and content of an ALJ or attorney adjudicator decision.
(1) If the ALJ or attorney adjudicator determines that the inpatient
admission, and as applicable, eligible SNF services, satisfied the
relevant criteria for Part A coverage at the time the services were
furnished, then the ALJ or attorney adjudicator issues notice of the
favorable decision to the eligible party (or the party's
representative).
(ii) The ALJ or attorney adjudicator also notifies the hospital and
SNF, as applicable, in the case of a favorable determination for Part A
coverage.
(2)(i) If the ALJ or attorney adjudicator determines that the
inpatient admission, or as applicable, SNF services, did not satisfy
the relevant criteria for Part A coverage at the time the services were
furnished, then the ALJ or attorney adjudicator issues notice of the
unfavorable or partially favorable decision to the eligible party (or
the party's representative).
(ii) The ALJ or attorney adjudicator issues a notice of a partially
favorable decision to the SNF if the inpatient admission satisfied the
relevant criteria for Part A coverage, but the SNF services did not
satisfy the relevant criteria for Part A coverage.
(3) The ALJ or attorney adjudicator decision issued to the eligible
party (or the party's representative) must be written in a manner
calculated to be understood by the eligible party (or the party's
representative) and include all of the following:
(i) A clear statement of the decision made by the ALJ or attorney
adjudicator.
(ii) The findings of fact.
(iii) The conclusions of law.
(iv) The reason for the determination that the hospital admission,
and as applicable SNF services, satisfied or did not satisfy the
relevant criteria for Part A coverage at the time the services were
furnished, and, to the extent appropriate, a summary of any clinical or
scientific evidence used in making the determination.
(v) The procedures for obtaining additional information concerning
the decision, such as specific provisions of the policy, manual,
regulations, or other rules used in making the decision.
(vi) If a favorable decision, the effect of such decision,
including, as applicable, a statement about the obligation of the SNF
to refund any amounts collected for the covered SNF services, and that
the SNF may then submit a new claim(s) for services
[[Page 83290]]
covered under Part A in order to determine the amount of benefits due.
(vii) If an unfavorable decision or a partially favorable decision,
information about the procedures for filing a request for review by the
Appeals Council under Sec. 405.938.
(4) As applicable, a notice of a favorable ALJ or attorney
adjudicator decision (including a decision for a beneficiary not
enrolled in the Supplementary Medical Insurance program (Medicare Part
B) at the time of the beneficiary's hospitalization) issued to the SNF,
includes the following:
(i) A clear statement of the decision made by the ALJ or attorney
adjudicator.
(ii) The findings of fact.
(iii) The conclusions of law.
(iv) The reason for the determination that the SNF services,
satisfied the relevant criteria for Part A coverage at the time the
services were furnished, and to the extent appropriate, a summary of
any clinical or scientific evidence used in making the determination.
(v) The effect of such decision, including a statement explaining
that the SNF must refund any payments collected from the beneficiary
for the covered SNF services, and that the SNF may then submit a new
claim(s) to determine the amount of benefits due for the covered
services.
(5) In the case of a favorable ALJ or attorney adjudicator decision
for a beneficiary not enrolled in the Supplementary Medical Insurance
program (Medicare Part B) at the time of beneficiary's hospitalization,
notice is issued to the hospital that includes all of the following:
(i) A clear statement of the decision made by the ALJ or attorney
adjudicator.
(ii) The findings of fact.
(iii) The conclusions of law.
(iv) The reason for the determination that the hospital admission
satisfied the relevant criteria for Part A coverage at the time the
services were furnished, and to the extent appropriate, a summary of
any clinical or scientific evidence used in making the determination.
(v) The effect of such decision, including a statement explaining
that the hospital must refund any payments collected for the outpatient
hospital services, and that the hospital may then submit a new Part A
inpatient claim in order to determine the amount of benefits due for
covered services.
(6) In the case of a partially favorable decision issued to a SNF,
the notice includes the following:
(i) A clear statement of the decision made by the ALJ or attorney
adjudicator.
(ii) The findings of fact.
(iii) The conclusions of law.
(iv) The reason for the determination that the hospital admission
satisfied the relevant criteria for Part A coverage at the time the
services were furnished, and the reason the SNF services did not
satisfy the relevant criteria for Part A coverage, and to the extent
appropriate, a summary of any clinical or scientific evidence used in
making the determination.
(v) The effect of such decision, including a statement explaining
that the decision is being sent for informational purposes only, and
that only the eligible party may appeal the decision to the Medicare
Appeals Council under Sec. 405.938.
(7) The timeframe within which notices must be issued under this
paragraph are determined under the provisions in Sec. 405.1016.
(e) Effect of a favorable ALJ or attorney adjudicator decision.
(1)(i) If the ALJ or attorney adjudicator issues a decision that the
beneficiary's inpatient admission satisfied the relevant criteria for
Part A coverage and the hospital's decision to change the inpatient
admission to outpatient receiving observation services was therefore
erroneous, the beneficiary's reclassification as an outpatient is
disregarded for the purposes of determining Part A benefits, including
Part A SNF coverage, if applicable.
(ii) For the purposes of effectuating a favorable decision by an
ALJ or attorney adjudicator, unless a Part A claim is submitted by a
hospital, any claims previously submitted for outpatient hospital
services and payments made for such services (including any applicable
deductible and coinsurance amounts) are not reopened or revised by the
MAC, and payment, as applicable, for covered SNF services may be made
by the MAC to the SNF without regard to the hospital claim.
(2) In order to determine Part A benefits to be paid and to make
payment for covered services as a result of a favorable decision, as
applicable--
(i) The SNF that furnished services to the beneficiary must refund
payments previously collected from the beneficiary for the covered
services and may then submit a Part A claim(s) for such services within
365 calendar days of receipt of the notice of a favorable decision;
(ii) In the case of a beneficiary not enrolled in the Supplementary
Medical Insurance program (Medicare Part B) at the time of the
beneficiary's hospitalization, the hospital that furnished services
must refund any payments collected for the outpatient hospital
services. After the refund is issued, the hospital may then submit a
Part A inpatient claim for such services within 365 calendar days of
receipt of the notice of a favorable decision;
(iii) In the case of a beneficiary enrolled in the Supplementary
Medical Insurance program (Medicare Part B) at the time of the
beneficiary's hospitalization, the hospital that furnished services
must refund any payments collected for the outpatient hospital services
only if the hospital chooses to submit a Part A inpatient claim for
such services. The deadline for submitting a Part A claim for such
services is 365 calendar days after receipt of the notice of a
favorable decision, and the hospital must refund any payments collected
for the outpatient services before submitting the Part A inpatient
claim.
(3) The hospital, and as applicable, the SNF, must comply with all
applicable provisions regarding charges to the beneficiary for covered
services, including but not limited to relevant provisions in part 489
Subparts B through D of this chapter.
(4) A favorable ALJ or attorney adjudicator decision is considered
binding unless it is reopened and revised under the provisions of
Sec. Sec. 405.980 through 405.986. The provisions regarding reopening
of an ALJ or attorney adjudicator decision in Sec. 405.980(d) and (e)
apply in the same manner to favorable ALJ or attorney adjudicator
decisions issued under this section.
(5) The notice of a favorable decision issued to a hospital and, as
applicable, notice of a favorable or partially favorable decision sent
to a SNF does not convey party status to such provider.
(f) Effect of an unfavorable or partially favorable ALJ or attorney
adjudicator decision. (1) An unfavorable or partially favorable ALJ or
attorney adjudicator decision is considered binding unless--
(i) It is reopened and revised under the provisions of Sec.
405.980(d) or (e); or
(ii) An eligible party (or the party's representative) files a
request for Medicare Appeals Council review under Sec. 405.938.
(2) The provisions regarding reopening of an ALJ or attorney
adjudicator decision in Sec. 405.980(d) and (e) apply in the same
manner to unfavorable and partially favorable decisions issued under
this section.
Sec. 405.938 Review by the Medicare Appeals Council and judicial
review.
(a) Filing a request for Council review. An eligible party, the
party's appointed representative, or an authorized representative who
is dissatisfied with
[[Page 83291]]
the unfavorable decision of an ALJ or an attorney adjudicator in Sec.
405.936(d)(2) may request the Council review the decision within 60
calendar days of receipt of the decision. The request for review must
contain the elements specified in the ALJ or attorney adjudicator's
decision notice.
(b) Applicability of other provisions. The provisions in Sec. Sec.
405.1100 through 405.1130 that apply to Council review apply to the
extent they are appropriate/in the same manner to Council review under
this section unless otherwise specified.
(c) Notice of the Council's action. (1) After it has reviewed all
the evidence in the administrative record and any additional evidence
received, subject to the limitations on consideration of additional
evidence in Sec. 405.1122, the Council makes a decision or remands the
case to an ALJ or attorney adjudicator.
(2) The Council may adopt, modify, or reverse the ALJ's or attorney
adjudicator's decision or recommended decision.
(3) Notice of the Council's decision or remand order is issued to
the eligible party (or the party's representative).
(i) In the case of a modification or reversal of the ALJ's or
attorney adjudicator's decision that is favorable to the eligible
party, the Council's decision includes information regarding the effect
of such decision, including, as applicable, a statement about the
obligation of the SNF to refund any amounts collected from the
beneficiary for the covered SNF services, and that the SNF may then
submit a new claim(s) for services covered under Part A in order to
determine the amount of benefits due.
(ii) If the appeal involves a beneficiary not enrolled in the
Supplementary Medical Insurance program (Medicare Part B) at the time
of the beneficiary's hospitalization, a modification or reversal of the
ALJ's or attorney adjudicator's decision that is favorable to the
eligible party with respect to hospital services also includes a
statement about the obligation of the hospital to refund any amounts
collected for the outpatient hospital services, and that the hospital
may then submit a new claim for covered inpatient hospital services in
order to determine the amount of benefits due.
(iii)(A) If the Council adopts or modifies an ALJ or attorney
adjudicator decision that is unfavorable or partially favorable to the
eligible party, the decision includes information about the procedures
for filing a request for judicial review under Sec. 405.1136,
including information regarding the amount in controversy requirement
in Sec. 405.936(c).
(B) A partially favorable decision issued by the Council refers to
a determination that the inpatient admission satisfied the relevant
criteria for Part A coverage but the SNF services did not satisfy the
relevant criteria for Part A coverage.
(4) Notice of a Council decision, favorable or partially favorable
to the eligible party, that modifies or reverses the decision or
recommended decision by an ALJ or attorney adjudicator, or a remand
order that is favorable to the eligible party, is issued to the SNF, as
applicable, and to the hospital in the case of an appeal filed by, or
on behalf of, a beneficiary not enrolled in the Supplementary Medical
Insurance program (Medicare Part B) at the time of hospitalization.
(i)(A) Notice issued to the SNF includes information regarding the
effect of such decision, including, as applicable, a statement
explaining that the SNF must refund any payments collected from the
beneficiary for the covered SNF services, and that the SNF may then
submit a new claim(s) to determine the amount of benefits due for the
covered services.
(B) A decision that is partially favorable to the eligible party is
sent to the SNF and explains the reason the hospital admission
satisfied the relevant criteria for Part A coverage at the time the
services were furnished, the reason the SNF services did not satisfy
the relevant criteria for Part A coverage and explains that the
decision is being sent for informational purposes only.
(ii) Notice issued to a hospital (in the case of an appeal filed
by, or on behalf of, a beneficiary not enrolled in the Supplementary
Medical Insurance program (Medicare Part B) at the time of
hospitalization) includes information regarding the effect of such
decision, including a statement explaining that the hospital must
refund any payments collected for the outpatient hospital services, and
that the hospital may then submit a new Part A inpatient claim in order
to determine the amount of benefits due for covered services.
(5) The timeframe within which notices must be sent under this
paragraph are determined under the provisions in Sec. 405.1100.
(d) Effect of a favorable Council decision. (1)(i) If the Council
issues a decision that the beneficiary's inpatient admission satisfied
the relevant criteria for Part A coverage and the hospital's decision
to change the inpatient admission to outpatient receiving observation
services was therefore erroneous, the beneficiary's reclassification as
an outpatient is disregarded for the purposes of determining Part A
benefits, including both Part A hospital coverage and Part A SNF
coverage, if applicable.
(ii) For the purposes of effectuating a favorable decision by the
Council, unless a Part A claim is submitted by a hospital, any claims
previously submitted for outpatient hospital services and payments made
for such services (including any applicable deductible and coinsurance
amounts) are not reopened or revised by the MAC, and payment, as
applicable, for covered SNF services may be made by the MAC to the SNF
without regard to the hospital claim.
(2) In order to determine Part A benefits to be paid and to make
payment for covered services as a result of a favorable decision, as
applicable--
(i) The SNF, that furnished services to the beneficiary must refund
payments previously collected from the beneficiary for the covered
services and may then submit a Part A claim(s) for such services within
365 calendar days of receipt of the notice of a favorable decision;
(ii) In the case of a beneficiary not enrolled in the Supplementary
Medical Insurance program (Medicare Part B) at the time of the
beneficiary's hospitalization, the hospital that furnished services
must refund any payments collected for the outpatient hospital
services. After the refund is issued, the hospital may then submit a
Part A inpatient claim for such services within 365 calendar days of
receipt of the notice of a favorable decision;
(iii) In the case of a beneficiary enrolled in the Supplementary
Medical Insurance program (Medicare Part B) at the time of the
beneficiary's hospitalization, the hospital that furnished services
must refund any payments collected for the outpatient hospital services
only if the hospital chooses to submit a Part A inpatient claim for
such services. The deadline for submitting a Part A claim for such
services is 365 calendar days after receipt of the notice of a
favorable decision, and the hospital must refund any payments collected
for the outpatient services before submitting the Part A inpatient
claim.
(3) The hospital, and as applicable, the SNF, must comply with all
applicable provisions regarding charges to the beneficiary for covered
services, including but not limited to relevant provisions in part 489
Subparts B through D of this chapter.
(4) A favorable Council decision is considered final and binding
unless it is reopened and revised under the
[[Page 83292]]
provisions of Sec. Sec. 405.980 through 405.986. The provisions
regarding reopening of a Council decision in Sec. 405.980(d) and (e)
apply in the same manner to favorable Council decisions issued under
this section.
(5) The notice of a favorable decision issued to a hospital and, as
applicable, notice of a favorable or partially favorable decision
issued to SNF does not convey party status to such provider.
(e) Effect of an unfavorable or partially favorable Appeals Council
decision. (1) An unfavorable or partially favorable Appeals Council
decision is considered final and binding unless it is reopened and
revised under the provisions of Sec. 405.980(d) or (e), or a Federal
district court issues a decision modifying the Council's decision.
(2) The provisions regarding reopening of an Appeals Council
decision in Sec. 405.980(d) and (e) apply in the same manner to
unfavorable and partially favorable decisions issued under this
section.
(f) Judicial review. (1) An eligible party (or the party's
representative) dissatisfied with a final and binding decision under
paragraph (e) of this section who satisfies the amount in controversy
requirement in Sec. 405.936(c) may request judicial review in Federal
district court under the procedures set forth in Sec. 405.1136.
(2) An eligible party (or the party's representative) who satisfies
the amount in controversy requirement in Sec. 405.936(c) and the
requirements to escalate a case from the Council in Sec. 405.1132 may
request judicial review in Federal district court under the procedures
set forth in Sec. 405.1136.
0
3. The heading of subpart J is revised to read as follows:
Subpart J--Procedures and Beneficiary Rights for Expedited
Determinations and Reconsiderations When Coverage Is Changed or
Terminated
0
4. Add Sec. Sec. 405.1210, 405.1211, and 405.1212 to read as follows:
Sec. 405.1210 Notifying eligible beneficiaries of appeal rights when
a beneficiary is reclassified from an inpatient to an outpatient
receiving observation services.
(a) Applicability and scope. (1) For purposes of this section and
Sec. Sec. 405.1211 and 405.1212, the term ``hospital'' is defined as
any facility providing care at the inpatient hospital level, whether
that care is short term or long term, acute or non-acute, paid through
a prospective payment system or other reimbursement basis, limited to
specialty care or providing a broader spectrum of services. This
definition includes critical access hospitals (CAHs).
(2) For purposes of this section and Sec. Sec. 405.1211 and
405.1212, the change in status occurs when a beneficiary is
reclassified from an inpatient to an outpatient receiving observation
services (as defined in Sec. 405.931(h)).
(3) For purposes of this section and Sec. Sec. 405.1211 and
405.1212, a beneficiary is eligible to pursue an appeal regarding a
change in status when the beneficiary meets all the following:
(i) Was formally admitted as a hospital inpatient in accordance
with an order for inpatient admission by a physician or other qualified
practitioner.
(ii) Was subsequently reclassified by the hospital as an outpatient
receiving observation services after the admission.
(iii)(A) Was not enrolled in Part B coverage at the time of the
beneficiary's hospitalization; or
(B) Stayed at the hospital for 3 or more consecutive days but was
classified as an inpatient for fewer than 3 days.
(iv) The period ``3 or more consecutive days'' is counted using the
rules for determining coverage of SNF services under section 1861 of
the Act and Sec. 409.30 of this chapter (that is, a beneficiary must
have a qualifying inpatient stay of at least 3 consecutive calendar
days starting with the admission day but not counting the discharge
day).
(b) Advance written notice of appeal rights. For all eligible
beneficiaries, hospitals must deliver valid, written notice of an
eligible beneficiary's right to pursue an appeal regarding the decision
to reclassify the beneficiary from an inpatient to an outpatient
receiving observation services. The hospital must use a standardized
notice specified by CMS in accordance with the following procedures:
(1) Timing of notice. The hospital must provide the notice not
later than 4 hours before release from the hospital and as soon as
possible after the earliest of either of the following:
(i) The hospital reclassifies the beneficiary from an inpatient to
an outpatient receiving observation services and the beneficiary is not
enrolled in Part B.
(ii) The hospital reclassifies the beneficiary from an inpatient to
an outpatient receiving observation services and the beneficiary has
stayed in the hospital for 3 or more consecutive days but was an
inpatient for fewer than 3 days.
(2) Content of the notice. The notice must include the following
information:
(i) The eligible beneficiary's change in status and the appeal
rights under Sec. 405.1211 if the beneficiary wishes to pursue an
appeal regarding that change.
(ii) An explanation of the implications of the change in status,
including the potential change in beneficiary hospital charges
resulting from a favorable decision, and subsequent eligibility for
Medicare coverage for SNF services.
(iii) Any other information required by CMS.
(3) When delivery of the notice is valid. Delivery of the written
notice of appeal rights described in this section is valid if--
(A) The eligible beneficiary (or the eligible beneficiary's
representative) has signed and dated the notice to indicate that he or
she has received the notice and can comprehend its contents, except as
provided in paragraph (b)(4) of this section; and
(B) The notice is delivered in accordance with paragraph (b)(1) of
this section and contains all the elements described in paragraph
(b)(2) of this section.
(4) If an eligible beneficiary refuses to sign the notice. The
hospital may annotate its notice to indicate the refusal, and the date
of refusal is considered the date of receipt of the notice.
Sec. 405.1211 Expedited determination procedures when a beneficiary
is reclassified from an inpatient to an outpatient receiving
observation services.
(a) Beneficiary's right to an expedited determination by the QIO.
An eligible beneficiary has a right to request an expedited
determination by the QIO when--
(1) A hospital changes a beneficiary's status from an inpatient to
an outpatient receiving observation services; and
(2) The beneficiary meets other eligibility criteria as specified
in Sec. 405.1210(a)(3).
(b) Requesting an expedited determination. (1) An eligible
beneficiary who wishes to exercise the right to an expedited
determination must submit a request to the QIO that has an agreement
with the hospital as specified in Sec. 476.78 of this chapter. The
request must be made in writing or by telephone before release from the
hospital.
(2) The eligible beneficiary, or his or her representative, upon
request by the QIO, must be available to discuss the case.
(3) The eligible beneficiary may, but is not required to, submit
written evidence to be considered by the QIO in making its decision.
[[Page 83293]]
(4) An eligible beneficiary who makes a timely request for an
expedited QIO review in accordance with paragraph (b)(1) of this
section is subject to the billing protection under paragraph (e) of
this section, as applicable.
(5) An eligible beneficiary who fails to make a timely request for
an expedited determination by a QIO, as described in paragraph (b)(1)
of this section, may still request an untimely expedited QIO
determination at any time. The QIO issues a decision in accordance with
paragraph (c)(6)(ii) of this section, but the billing protection under
paragraph (e) of this section does not apply.
(c) Procedures the QIO must follow. (1) When the QIO receives the
request for an expedited determination under paragraph (b)(1) of this
section, it must immediately notify the hospital that a request for an
expedited determination has been made.
(2) The QIO determines whether the hospital delivered valid notice
consistent with Sec. 405.1210(b)(3).
(3) The QIO examines the medical and other records that pertain to
the change in status.
(4) The QIO must solicit the views of the eligible beneficiary (or
the eligible beneficiary's representative) who requested the expedited
determination.
(5) The QIO must provide an opportunity for the hospital to explain
why the reclassification of the beneficiary from an inpatient to an
outpatient receiving observation services is appropriate.
(6) The following timeframes apply for the QIO's decision when an
eligible beneficiary requests--
(i) A timely expedited determination in accordance with paragraph
(b)(1) of this section, the QIO must make a determination within 1
calendar day of receiving all requested pertinent information specified
in paragraph (d)(1)(i) of this section; or
(ii) An untimely request for a QIO expedited determination, the QIO
must make a determination within 2 calendar days after the QIO receives
all requested information specified in paragraph (d)(1)(i) of this
section.
(7) If the QIO does not receive the information specified in
paragraph (d)(1)(i) of this section, it may make its determination
based on the evidence at hand, or it may defer a decision until it
receives the requested information.
(8) When the QIO issues an expedited determination, the QIO must
notify the eligible beneficiary, the hospital, and SNF (if applicable)
of its decision by telephone, followed by a written notice that must
include the following information:
(i) The basis for the determination.
(ii) A detailed rationale for the determination.
(iii) An explanation of the Medicare payment consequences of the
determination.
(iv) Information about the eligible beneficiary's right to an
expedited reconsideration of the QIO's determination as set forth in
Sec. 405.1212, including how to request a reconsideration and the time
period for doing so.
(d) Responsibilities of hospitals. (1)(i) Upon notification by the
QIO of the request for an expedited determination, the hospital must
supply all information that the QIO needs to make its expedited
determination, including a copy of the notice as required in Sec.
405.1210(b) of this section.
(ii) The hospital must furnish this information as soon as
possible, but no later than by noon of the calendar day after the QIO
notifies the hospital of the request for an expedited determination.
(iii) At the discretion of the QIO, the hospital must make the
information available by phone or in writing (with a written record of
any information not transmitted initially in writing).
(2)(i) At an eligible beneficiary's (or representative's) request,
the hospital must furnish the beneficiary with a copy of, or access to,
any documentation that it sends to the QIO, including written records
of any information provided by telephone.
(ii) The hospital may charge the beneficiary a reasonable amount to
cover the costs of duplicating the documentation and, if applicable,
delivering it to the beneficiary.
(iii) The hospital must accommodate such a request by no later than
close of business of the first calendar day after the material is
requested.
(e) Billing during QIO expedited review. When an eligible
beneficiary requests an expedited determination in accordance with
paragraphs (b)(1) through (b)(4) of this section, the hospital may not
bill the beneficiary for any disputed services until the expedited
determination process (and reconsideration process, if applicable) has
been completed.
(f) Effect of an expedited QIO determination. The QIO determination
is binding for payment purposes upon the eligible beneficiary,
hospital, and MAC, except if the eligible beneficiary is dissatisfied
with the determination, he or she may request a reconsideration
according to the procedures described in Sec. 405.1212.
Sec. 405.1212 Expedited reconsideration procedures regarding Part A
coverage when a beneficiary is reclassified from an inpatient to an
outpatient receiving observation services.
(a) Beneficiary's right to an expedited reconsideration. An
eligible beneficiary who is dissatisfied with a QIO's expedited
determination per Sec. 405.1211(c)(6) may request an expedited
reconsideration by the QIO identified in the written notice specified
in Sec. 405.1211(c)(8)(iv).
(b) Requesting an expedited reconsideration. (1) An eligible
beneficiary who wishes to obtain an expedited reconsideration must
submit a request for the reconsideration to the appropriate QIO, in
writing or by telephone, by no later than noon of the calendar day
following initial notification (whether by telephone or in writing)
after receipt of the QIO's determination.
(2) The eligible beneficiary, or his or her representative, must be
available to answer questions or supply information that the QIO may
request to conduct its reconsideration.
(3) The eligible beneficiary may, but is not required to, submit
evidence to be considered by the QIO in making the reconsideration.
(4) An eligible beneficiary who makes a timely request for an
expedited reconsideration in accordance with paragraph (b)(1) of this
section is subject to the billing protection under paragraph (e) of
this section, as applicable.
(5) An eligible beneficiary who fails to make a timely request for
an expedited reconsideration by a QIO, as described in paragraph (b)(1)
of this section, may still request an expedited QIO reconsideration at
any time. The QIO issues a reconsideration in accordance with paragraph
(c)(3)(ii) of this section, but the billing protection under paragraph
(e) of this section does not apply.
(c) Procedures and responsibilities of the QIO. (1) On the day the
QIO receives the request for an expedited reconsideration under
paragraph (b) of this section, the QIO must immediately notify the
hospital of the request for an expedited reconsideration.
(2) The QIO must offer the eligible beneficiary and the hospital an
opportunity to provide further information.
(3) When the eligible beneficiary makes--
(i) A timely request in accordance with paragraph (b)(1) of this
section, the QIO must make a reconsideration determination within 2
calendar days of
[[Page 83294]]
receiving all requested pertinent information; or
(ii) An untimely request, the QIO must make a reconsideration
determination within 3 calendar days of receiving all requested
pertinent information.
(4) When the QIO issues a reconsideration determination, the QIO
must notify the eligible beneficiary, the hospital, and SNF, if
applicable, of its decision by telephone, followed by a written notice
that must include the following information:
(i) The basis for the determination.
(ii) A detailed rationale for the determination.
(iii) An explanation of the Medicare payment consequences of the
determination.
(iv) Information about the eligible beneficiary's right to appeal
the QIO's reconsideration decision to OMHA for an ALJ hearing in
accordance with subpart I of this part, including how to request an
appeal and the time period for doing so.
(d) Responsibilities of the hospital. A hospital may, but is not
required to, submit evidence to be considered by a QIO in making its
reconsideration decision. If a hospital fails to comply with a QIO's
request for additional information beyond that furnished to the QIO for
purposes of the expedited determination, the QIO makes its
reconsideration decision based on the information available.
(e) Billing during QIO reconsideration. When an eligible
beneficiary requests an expedited reconsideration in accordance with
the deadline specified in paragraph (b)(1) of this section, the
hospital may not bill the beneficiary for any disputed services until
the QIO makes its reconsideration decision.
(f) Effect of an expedited QIO reconsideration. The QIO expedited
reconsideration is binding for payment purposes only, upon the eligible
beneficiary, hospital, and MAC, except if a beneficiary elects to
request a hearing by an ALJ in accordance with 42 CFR part 478 subpart
B if he or she is dissatisfied with the expedited reconsideration
decision.
PART 476--QUALITY IMPROVEMENT ORGANIZATION REVIEW
0
5. The authority citation for part 476 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
6. Section 476.71 is amended by adding paragraph (a)(9) to read as
follows:
Sec. 476.71 QIO review requirements.
(a) * * *
(9) Hospital reclassification of a beneficiary's inpatient
admission status to that of an outpatient receiving observation
services when a beneficiary meets the eligibility criteria at
Sec. Sec. 405.1210 through 405.1212 of this chapter. Appeals of
determinations are available as specified in Sec. 405.1212 of this
chapter.
* * * * *
PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL
0
7. The authority citation for part 489 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395i-3, 1395x, 1395aa(m), 1395cc,
1395ff, and 1395hh.
0
8. Section 489.27 is amended by revising the section heading and
paragraph (b) to read as follows:
Sec. 489.27 Beneficiary notice of discharge or change in status
rights.
* * * * *
(b) Notification by hospitals and other providers. Hospitals and
other providers (as identified at Sec. 489.2(b)) that participate in
the Medicare program must furnish each Medicare beneficiary, or
representative, applicable CMS notices in advance of discharge or
termination of Medicare services, or of changes from inpatient to
outpatient status, including the notices required under Sec. Sec.
405.1200, 405.1202, 405.1206, 405.1210, and 422.624 of this chapter.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-23195 Filed 10-11-24; 4:15 pm]
BILLING CODE 4120-01-P