[Federal Register: May 12, 1997 (Volume 62, Number 91)]
[Rules and Regulations]
[Page 25844-25855]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12my97-12]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 405, 417, 473
[BPD-453-FC]
RIN 0938-AG18
Medicare Program; Medicare Appeals of Individual Claims
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule with comment period.
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SUMMARY: Under section 1869 of the Social Security Act, Medicare
beneficiaries and, under certain circumstances, providers or suppliers
of health care services may appeal adverse determinations regarding
claims for benefits under Medicare Part A or Part B. This rule expands
our regulations to recognize the right of Part B appellants to a
hearing before an administrative law judge (ALJ) for claims if at least
$500 remains in dispute and the right to judicial review of an adverse
ALJ decision if at least $1,000 remains in controversy. Also, this rule
codifies in regulations: Limitations on the review by ALJs and the
courts of certain national coverage determinations, and the statutory
authority for an expedited appeals process under Part A and Part B.
[[Page 25845]]
DATES: Effective Date: This final rule is effective June 11, 1997.
Comment Date: Comments will be considered if we receive them at the
appropriate address, as provided below, no later than 5 p.m. on July
11, 1997.
ADDRESSES: Mail written comments (an original and 3 copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: BPD-453-FC, P.O. Box 26676,
Baltimore, MD 21207-0476.
If you prefer, you may deliver your written comments (an original
and 3 copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.
Comments may also be submitted electronically to the following e-
mail address: BPD453FC@hcfa.gov. E-mail comments must include the full
name and address of the sender and must be submitted to the referenced
address in order to be considered. All comments must be incorporated in
the e-mail message because we may not be able to access attachments.
Electronically submitted comments will be available for public
inspection at the Independence Avenue address, below.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code BPD-453-P. Comments received timely will be available for
public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in Room 309-G of
the Department's offices at 200 Independence Avenue, SW., Washington,
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.
(phone: (202) 690-7890).
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FOR FURTHER INFORMATION CONTACT: Morton Marcus, (410) 786-4477.
SUPPLEMENTARY INFORMATION:
I. Background
A. Appeals under Part A and Part B
The Social Security Administration (SSA) makes determinations
concerning basic entitlement to Medicare Part A and Part B. Other
determinations concerning Medicare payment of individual claims are
made initially by Medicare contractors. Fiscal intermediaries make most
Part A and some Part B determinations; carriers make most Part B
determinations. (For purposes of this preamble discussion and
regulations set forth at 42 CFR part 405, subpart H, the term
``carrier'' also refers to intermediaries authorized to make
determinations with respect to Part B benefits.)
Section 1869 of the Social Security Act (the Act) grants Medicare
beneficiaries who are dissatisfied with certain Medicare determinations
the right to a hearing before an administrative law judge (ALJ) and the
right to judicial review under certain circumstances. In general, a
hearing before an ALJ is available to resolve disputes concerning: (1)
An individual's basic entitlement to benefits under Part A or Part B of
Medicare, and (2) the amount of benefits due. Since the inception of
the Medicare program, hearings on all Part A or Part B entitlement
questions and Medicare Part A claims that have reached the ALJ hearing
level have been conducted by ALJs employed by the SSA's Office of
Hearings and Appeals (OHA). Our regulations generally address appeals
of claims arising under Part A at 42 CFR part 405, subpart G and
appeals of claims under Part B at 42 CFR part 405, subpart H.
Peer review organizations (PROs) also make certain types of Part A
and Part B determinations. Section 1155 of the Act establishes
beneficiary rights to ALJ hearings and judicial review of certain
Medicare issues (mostly inpatient hospital service denials) adjudicated
initially by PROs. In order for a PRO appellant to qualify for an ALJ
hearing and judicial review, the amount in controversy must be at least
$200 and $2,000, respectively. (However, appeals on PRO determinations
involving limitation of liability follow the appeals provisions in
subparts G and H of part 405, requiring an amount in controversy at the
ALJ level of $100 for Part A claims and $500 for Part B claims, and an
amount in controversy of $1,000 for judicial review.) Our regulations
address this subject at 42 CFR part 473, subpart B.
For enrollees of health maintenance organizations (HMOs),
competitive medical plans (CMPs), and health care prepayment plans
(HCPPs), the HMO/CMP/HCPP is responsible for making the organization
determination, which is the equivalent of the initial determination
made by the carriers and intermediaries. Section 1876(c)(5)(B) of the
Act establishes beneficiary rights to ALJ hearings and judicial review
of certain Part A and Part B claims submitted by or on behalf of
enrollees of HMOs/CMPs/HCPPs. Limited appeal rights also exist for an
HMO/CMP/HCPP. If the beneficiary requests, and is granted an ALJ
hearing, the HMO/CMP/HCPP must be made a party to the hearing and the
HMO/CMP/HCPP then has the same appeals rights as the beneficiary to
further administrative or judicial review. In order for an HMO/CMP/HCPP
appellant to qualify for an ALJ hearing and judicial review, the amount
in controversy must be at least $100 and $1,000, respectively. Our
regulations address this subject at 42 CFR 417.600 through 417.638.
For the following discussion, the term ``provider'' has the meaning
given in sections 1861(u) and 1866(e) of the Act and in 42 CFR 400.202.
That is, a provider is a hospital, rural primary care hospital, skilled
nursing facility, home health agency, comprehensive outpatient
rehabilitation facility, or a hospice that has in effect an agreement
to participate in Medicare, or a clinic, a
[[Page 25846]]
rehabilitation agency, or a public health agency that has a similar
agreement, but only to furnish outpatient physical therapy or speech
pathology services.
The term ``supplier'' is defined in Sec. 400.202 and means a
physician or other practitioner, or an entity other than a
``provider,'' that furnishes health care services under Medicare.
Although ``supplier'' encompasses physicians, our usual phraseology is
``physician or supplier.''
Under section 1879(d) of the Act, a provider, or a physician or
supplier that accepts assignment has, under certain limited
circumstances, the same appeal rights as that of an individual
beneficiary when the issue in dispute involves a service that is
excluded from coverage under section 1862(a)(1) of the Act, custodial
care, home health denials involving the failure to meet homebound or
intermittent skilled nursing care requirements, or certain supplier
refunds required under section 1879(h) of the Act. Moreover, by
regulation, we have always provided that a physician or supplier that
has taken assignment of a Medicare claim under Part B has the same
appeal rights as the beneficiary has on that claim. Additionally, we
have been providing appeal rights for providers in cases decided under
section 1879(e) of the Act.
Under section 1842(l) of the Act, a physician who does not accept
assignment must refund to the beneficiary any amounts collected for
services found to be not reasonable and necessary under section
1862(a)(1). A refund is not required if the physician did not know, and
could not reasonably have been expected to know, that Medicare would
not pay for the services or if the beneficiary was appropriately
informed in advance that Medicare would not pay for the services and
agreed in writing to pay for them. Our regulation at 42 CFR 411.408
provides that if payment is denied for unassigned claims because the
services are found to be not reasonable and necessary, the physician
who does not accept assignment has the same appeal rights as the
physician who submits claims on an assignment-related basis, as
described in subpart H of part 405 and subpart B of part 473.
Before the enactment of the Omnibus Budget Reconciliation Act of
1986 (OBRA '86, Pub. L. 99-509) on October 21, 1986, section 1869 of
the Act provided for ALJ hearings and judicial review of claims for
entitlement to Medicare Parts A and B and of disputes over claims for
benefits under Part A. There was no provision for ALJ hearings or
judicial review for disputes over the amount of Part B benefits, except
under section 1876 of the Act pertaining to HMO/CMP/HCPP denials, and
except for certain PRO matters as authorized by section 1155 of the
Act. Instead, as specified in section 1842(b)(3)(C) of the Act and our
regulations at part 405, subpart H, Medicare carriers processed claims
for Part B benefits and made an initial determination, either approving
or denying the claim, in whole or in part. A beneficiary, or a
physician, or a supplier that accepted assignment and, that disagreed
with an initial determination, could obtain a review by the carrier
that denied the claim. (Under certain circumstances, a provider could
also obtain a Part B review or fair hearing with the same limited
appeal rights for Part B initial determinations as they have for Part
A.) Following the review determination, if the amount remaining in
controversy was $100 or more, the final appeal under Part B was a
hearing before a hearing officer appointed by the carrier.
B. Appeals Provisions of the Omnibus Budget Reconciliation Act of 1986
Section 9341(a)(1) of OBRA '86 amended section 1869 of the Act to
permit hearings before ALJs and judicial review of claims for benefits
under Part B. The law provided that, for a Part B ALJ hearing, the
amount in controversy must be at least $500, and for judicial review of
a Part B dispute, the amount in controversy must be at least $1,000.
Section 9341(a)(2) of OBRA '86 amended section 1842(b)(3)(C) of the
Act to provide for a hearing before a carrier hearing officer if the
amount in controversy is at least $100, but not more than $500. (Prior
to OBRA '86, a claimant qualified for a hearing before a carrier
hearing officer by having at least $100 in controversy.)
A portion of section 9341(a)(1)(C) of OBRA '86 amended section
1869(b)(2) of the Act to provide for the aggregation of claims under
certain specific circumstances to reach the threshold minimum amount in
controversy needed for an ALJ hearing. This aggregation provision was
implemented by regulations (including 42 CFR 405.815) published in the
Federal Register on March 16, 1994 (59 FR 12172).
Section 9341(a)(1)(D) of OBRA '86 added section 1869(b)(3) to the
Act placing several limitations on the review of national coverage
determinations made under section 1862(a)(1) of the Act concerning
whether a particular type or class of items or services is covered.
Although the legislation uses the phrase ``national coverage
determinations,'' Medicare national coverage determinations are
referred to as ``national coverage decisions'' in our manuals and
regulations. Consequently, in discussions below, we use the latter
phrase. The first limitation is that an ALJ has no authority to review
such a decision, except to determine whether the national coverage
decision applies to a specific claim for benefits. The ALJ may also
determine whether the national coverage decision has been applied
correctly to the claim at issue. For example, when a national coverage
decision permits coverage if certain criteria are met, the ALJ may
reach a different factual conclusion (from lower level adjudicators)
regarding whether those criteria were met for the claim at issue.
Second, a national coverage decision may not be held unlawful or set
aside solely on the grounds that the decision was not published in
accordance with the notice and comment procedures of the Administrative
Procedure Act (5 U.S.C. 553) or section 1871(b) of the Act. Third, in
any case in which a court determines that the record is incomplete or
otherwise lacks adequate information to support the validity of a
national coverage decision, it must remand the matter to the Secretary
for additional proceedings to supplement the record. The court may not
determine that an item or service is covered except upon review of the
supplemented record.
Section 9341(a)(1)(D) of OBRA '86 also added section 1869(b)(4) to
the Act. This provision prohibits judicial review of regulations or
instructions issued prior to January 1, 1981, that relate to a method
for determining the amount of payment under Part B.
The appeals amendments contained in section 9341 of OBRA '86 apply
to items and services furnished on or after January 1, 1987.
Section 9313(a)(1) of OBRA '86 amended section 1869(b)(1) of the
Act to permit representation of beneficiaries in Medicare appeals by
the individuals who have furnished items or services to those
beneficiaries. (This statutory provision effectively invalidated
certain HCFA manual instructions in effect at the time that barred
providers from representing beneficiaries in Medicare Part A appeals.)
Section 1869(b)(1) also limits representation under the limitation on
liability provisions under section 1879 of the Act, which applies when
the appeal involves: A service that is excluded from coverage under
section 1862(a)(1) of the Act; custodial care; home health denials, if
the individual is determined to be not homebound or does not or did not
need skilled nursing care on an intermittent basis; certain
[[Page 25847]]
supplier refunds required under section 1879(h) of the Act; or cases
decided under section 1879(e) of the Act. In any of the above
situations, the provider, physician, or supplier cannot represent the
beneficiary in an appeal unless the provider or other supplier of
services waives in writing any rights for payment from the beneficiary
with respect to those items or services, including the right to any
deductible or coinsurance in connection with the service(s) at issue.
The requirement that a provider or supplier representative must waive
his or her right to payment is intended to ensure against a potential
conflict of interest between the beneficiary and the person who
furnished the items or services to the beneficiary. Further, a
provider, physician, or supplier representative is not entitled to
charge the beneficiary a fee for services furnished in connection with
representation. The representation rules contained in section
9313(a)(1) of OBRA '86 were effective on October 21, 1986, and only
affect appeals arising under section 1869 of the Act. They are the
subject of a separate regulation document under development.
C. Appeals Provisions of the Omnibus Budget Reconciliation Act of 1987
Section 4082(b) of the Omnibus Budget Reconciliation Act of 1987
(OBRA '87, Pub. L. 100-203) enacted on December 22, 1987, added
subparagraph (b)(5) to section 1869 of the Act to provide for the
expedited review of a case by an ALJ when the appellant alleges that
there are no material issues of fact in dispute. The provision is
intended to bring disputes that are beyond the authority of the ALJ
(and which thus need court intervention) to a quicker settlement. The
provision was effective with requests for ALJ hearings filed as of
February 20, 1988.
Section 4085(i)(5) of OBRA '87 amended section 1842(b)(3)(C) of the
Act by substituting the phrase ``less than $500'' for ``not more than
$500,'' thereby clarifying the amount in controversy requirement for a
carrier hearing. This provision is discussed further in section II.B.
of this preamble.
D. Implementation of OBRA Appeals Amendments Prior to the Promulgation
of Regulations
With the additional review rights granted by OBRA '86 and OBRA '87,
appellants under Part B have essentially the same appeal rights as
appellants under Part A. To implement the appeals provisions prior to
the publication of regulations, HCFA and SSA (the agency responsible
for conducting ALJ hearings) published a joint notice on June 1, 1988,
at 52 FR 20023, stating that ALJ hearings (and Appeals Council review)
under Part B would be governed to the extent possible by existing SSA
regulations at 20 CFR part 404, subparts J and R, and existing Part A
regulations at 42 CFR part 405, subpart G. The notice provided that,
prior to having an ALJ hearing under Part B, an appellant must complete
the carrier administrative review process set forth in 42 CFR part 405,
subpart H. This process calls for a carrier review and a carrier
hearing officer hearing. The notice also stated that ALJ hearings will
be held for Medicare Part B claims that meet the amount in controversy
requirement established by section 9341 of OBRA '86.
To date, Part B appeals are being processed under the provisions of
the June 1, 1988, general notice and the implementing instructions we
issued to Medicare contractors (Medicare Carriers Manual (HCFA Pub. 14-
3), section 12000ff and Medicare Intermediary Manual (HCFA Pub. 13-3),
section 3700ff).
II. Revisions to the Rules
A. Overview
It is our intention to develop a rule establishing in title 42 all
Medicare hearings and appeals procedures, including the relevant
procedures currently found in SSA's regulations in title 20. As an
interim measure to ensure uniform application of the Part A and Part B
appeals regulations, this rule, for the most part, amends subparts G
and H of part 405 to incorporate the various appeals provisions found
in section 9341(a) of OBRA '86 and section 4082(b) of OBRA '87. (As
noted earlier, we do not address section 9313(a)(1) of OBRA' 86
regarding representation of beneficiaries or the portion of section
9341(a) that deals with the aggregation of claims to establish amount
in controversy requirements for ALJ hearings.) We also make clarifying
changes to subparts G and H of part 405 and to parts 417 and 473.
B. Specific Revisions
Carrier Fair Hearing--Prior to OBRA '86, an individual could
request a carrier fair hearing (hereinafter, carrier hearing) following
the carrier's review determination if there was at least $100 in
controversy. The hearing provided by the carrier represented the final
level of appeal of a Part B determination. In 1982, the U.S. Supreme
Court, in the case of Schweiker v. McClure, 456 U.S. 188 (1982), upheld
the constitutionality of the carrier hearing process.
Section 9341(a)(2) of OBRA '86 amended section 1842(b)(3)(C) of the
Act to provide an individual with the opportunity for a carrier hearing
when the amount in controversy was ``at least $100, but not more than
$500.'' In 1987, we amended our Medicare Carriers Manual (Sec. 12005)
to require that a carrier hearing precede an ALJ hearing regardless of
the amount in controversy. HCFA and SSA restated this requirement in
their 1988 joint notice, referenced above.
The Secretary's authority to require that appellants whose claims
exceed $500 complete the carrier hearing process before obtaining an
ALJ hearing was affirmed by a decision of the U.S. Court of Appeals for
the Second Circuit in Isaacs v. Bowen, 865 F.2d 468 (2d Cir. 1989). The
Court noted that following our 1987 revision to the Medicare Carriers
Manual, Congress held hearings concerning the Medicare appeals process,
in which it heard testimony concerning our decision to require carrier
hearings in all circumstances. Congress subsequently enacted OBRA '87,
which addressed the carrier hearing procedures in two respects. First,
the language of section 1842(b)(3)(C) describing the monetary amount
for a carrier hearing was changed by substituting the phrase ``less
than $500'' for the phrase ``not more than $500.'' Second, Congress
authorized the General Accounting Office (GAO) to conduct a cost-
effectiveness study of the Secretary's requirement for carrier hearings
prior to an ALJ hearing. In light of these provisions, the U.S. Court
of Appeals in the Second Circuit found that Congress by its actions had
ratified the Secretary's decision to require carrier hearings in cases
exceeding $500.
Accordingly, we are specifying, in Sec. 405.801(a), that a carrier
hearing always precede an ALJ hearing, including cases in which the
amount in controversy at the carrier hearing level exceeds $500. We
believe that the continuation of the current carrier hearing process
serves a valuable function by assembling evidence, defining issues, and
identifying cases of carrier error or determinations that should be
changed due to the presentation of new evidence, or for other reasons.
Therefore, those cases that reach the ALJ hearing level will involve
actual disputes of fact or law and the issues before the ALJ are
clearly defined. By ensuring the development of a complete record, the
carrier hearing reduces the need for time-consuming and costly
development at the ALJ level. Retention of the carrier hearing process
results in a substantial reduction in the
[[Page 25848]]
number of cases that would otherwise have been appealed to the ALJ
level, and more expeditious processing of cases at the ALJ level.
Beneficiaries, providers, and suppliers, and the Federal government all
benefit from this process. Finally, we would like to note that in its
Report dated July 16, 1990 (HRD-90-57), GAO stated that:
The congressional intent in establishing a $500 threshold for
ALJ appeals is unclear. Court opinions initially differed on whether
the Congress intended such claims to bypass carrier fair hearings.
However, a recent federal district court appeal decision (Isaacs v.
Bowen) concluded that HCFA's instructions requiring claimants with
disputed amounts of at least $500 to go through a carrier fair
hearing before proceeding to the ALJ were valid.
National Coverage Decisions--The term ``national coverage
decision'' (NCD) refers to a statement regarding the coverage status of
specific medical services or items that HCFA makes and issues as
national policy as provided for in section 1871(a)(2) of the Act. We
publish national coverage decisions in the Medicare Coverage Issues
Manual (HCFA Pub. 6) and may also publish them in other HCFA program
manuals, including the Medicare Intermediary Manual and Medicare
Carriers Manual, or in the Federal Register as a regulation, notice, or
HCFA Ruling. All national coverage decisions are binding upon Medicare
carriers, fiscal intermediaries, PROs, HMOs, CMPs, and HCPPs. Prior to
OBRA '86, however, national coverage decisions, except those published
as HCFA Rulings, were not binding upon ALJs. (ALJs are bound by the
provisions of the Medicare law, Departmental regulations and SSA
regulations incorporated by Departmental regulations, and other
issuances as provided for by law or regulation (such as HCFA Rulings
described in 42 CFR 401.108(c), SSA Rulings in 20 CFR 422.406(b)(1),
and national coverage decisions based on section 1862(a)(1) of the
Act)).
On August 21, 1989, we published a notice in the Federal Register
(54 FR 34555) listing those current national coverage decisions that
had been issued in the Medicare Coverage Issues Manual. In that notice,
we explained that unless another statutory basis applies, national
coverage decisions are made under the authority of section 1862(a)(1)
of the Act which, among other things, prohibits payment under the
Medicare program for expenses incurred for services that are not
reasonable and necessary for the diagnosis or treatment of illness or
injury or to improve the functioning of a malformed body member. If a
determination to exclude or limit a service is made under another
statutory authority--for example, the dental exclusion under section
1862(a)(12) or the cosmetic surgery exclusion under section
1862(a)(10)--that statutory authority for exclusion or limitation
constitutes the sole basis for that determination, unless otherwise
specified. An exclusion under section 1862(a)(1) of the Act is
applicable only if no other statutory basis for exclusion exists.
Section 9341(a)(1)(D) of OBRA '86 added section 1869(b)(3) to the
Act to provide that ALJs may not review a national coverage decision
(NCD) made under section 1862(a)(1) of the Act concerning whether a
particular type or class of items or services is covered under
Medicare. This provision was effective for services furnished beginning
January 1, 1987.
All national coverage decisions made under section 1862(a)(1) of
the Act are subject to the review limitations of section 1869(b)(3).
Thus, an ALJ may not disregard, set aside, or otherwise review any
national coverage decision (that grants or limits coverage, or excludes
an item or service from coverage) made under section 1862(a)(1).
Section 1869(b)(3), however, does not apply to cases involving national
coverage decisions made under a statutory authority other than
1862(a)(1), such as the exclusion of an item of durable medical
equipment because it does not meet the requirements of section 1861(n)
of the Act. However, an ALJ will be bound by a national coverage
decision made under such other statutory authority when contained in a
regulation or in a HCFA Ruling. Moreover, while an ALJ may not
disregard, set aside, or otherwise review a national coverage decision
based upon section 1862(a)(1), an ALJ remains free to review the facts
of a particular case to determine whether the national coverage
decision applies to a specific claim for benefits and, if so, to
determine whether the national coverage decision has been applied
correctly to the claim at issue.
In OBRA '86, Congress also limited judicial review of national
coverage decisions in two significant ways. First, in section
1869(b)(3)(B), Congress provided that a court may not hold unlawful or
set aside a national coverage decision on the ground that it was not
issued in accordance with the notice and comment procedures of the
Administrative Procedure Act or section 1871(b) of the Social Security
Act. Second, Congress expressly prescribed the extent to which a
Federal court may review a challenge to a national coverage decision.
Under section 1869(b)(3)(C) of the Act, if, upon a court's initial
review of a national coverage decision, the court determines that ``the
record is incomplete or otherwise lacks adequate information to support
the validity'' of the decision, then the court must remand the matter
to the Secretary for additional proceedings to supplement the record
and the court may not determine that an item or service is covered
except upon review of the supplemented record. If a court remands a
national coverage decision to the Secretary because the record is
incomplete or inadequate, the Secretary will remand the case to HCFA
for further development. On remand from the Secretary, we have the
opportunity to supplement the record to include new, updated evidence,
and issue a revised decision, if necessary. We then are able to defend
the initial national coverage decision or a revised decision based on
state-of-the-art technology and evidence. Because ALJs have no role in
making agency policy, remand to an ALJ is not appropriate for
additional proceedings to supplement the record that was used by us to
promulgate the national coverage decision NCD). When on remand, we
decide not to revise the NCD, the supplemented record is returned to
the court that issued the remand order. When on remand, we decide to
revise the NCD, an ALJ will issue a new decision applying the revised
NCD to the facts of the claim(s) under consideration. The ALJ's
decision will then be subject to a Departmental Appeals Board (DAB)
review and, ultimately, judicial review. When an individual case is on
court remand, the proceedings must be conducted on an expedited basis.
This final rule amends subpart G, by adding a new Sec. 405.732, and
Subpart H, by adding a new Sec. 405.860, to incorporate the review
limitations on national coverage decisions described above.
Review of Payment Methodologies--Section 9341(a)(1)(D) of OBRA '86
also added section 1869(b)(4) to the Act to prohibit the Federal courts
from reviewing certain payment methodologies established by the
Secretary. Specifically, a court is not permitted to review a
regulation or instruction that relates to a method for determining the
amount of payment under Part B if the regulation was promulgated, or
the instruction issued, prior to January 1, 1981. We are adding
Sec. 405.857(b) to codify the statutory amendment barring judicial
review of pre-1981 Part B payment methodologies.
[[Page 25849]]
Departmental Appeals Board--The level of administrative review
between the ALJ hearing and judicial review is now known as
Departmental Appeals Board (DAB) review. The review of ALJ decisions in
Medicare cases had been performed by the SSA Appeals Council, along
with the review of all other SSA cases. However with the establishment
of an independent SSA, it was decided that the Medicare functions of
the Appeals Council should be exercised within the Department of Health
and Human Services (DHHS). That appellate function was assigned to the
DAB, which has experience in conducting hearings and appeals for DHHS.
We are specifying that the regulations currently in place regarding SSA
Appeals Council review, beginning at 20 CFR 404.967, apply to Medicare
appeals handled by the DAB. In appealing Part A claims under subpart G
of the regulations, appellants must request the DAB to review an ALJ's
decision before the case can be taken to court (Sec. 405.724). Although
DAB review is not specifically referred to in the OBRA '86 expansion of
the Part B appeals process, we believe this level of review should also
apply to the appeal of Part B claims. Therefore, we are adding a new
Sec. 405.856 to provide DAB review as the intermediate level of appeal
between the ALJ hearing and judicial review for the appeal of Part B
claims. If dissatisfied with the ALJ hearing decision or dismissal, an
appellant may request that the DAB review that action or the DAB may
initiate a review at its discretion. The DAB may deny, dismiss, or
grant the appellant's request for review. If the DAB grants the request
for review, or elects to review the ALJ decision at its own discretion,
it may affirm, reverse, or modify a decision or dismissal made by an
ALJ, and/or remand the case to an ALJ for further action. The DAB's
authority includes, but is not limited to, the authority to take any
action that the ALJ could have taken.
Expedited Review--Section 4082(b) of OBRA '87 added section
1869(b)(5) to the Act to provide for the expedited review of cases by
ALJs when an appellant alleges that there are no material issues of
fact in dispute. The ALJ must make an expedited determination as to
whether such facts are in dispute and, if not, must then determine the
case expeditiously so that the appellant is given an expedited
opportunity to seek judicial review on the issue of law raised. The
House Report accompanying OBRA '87 described the purpose of section
4082(b) as follows:
ALJs may resolve factual disputes and resolve cases by applying
the pertinent statutory and regulatory (standards). However, they do
not have authority to declare statutes or regulations invalid. That
is the responsibility of the Federal courts. If a claimant wishes to
challenge the legality of a regulation or the constitutionality of a
statute, and there are no factual issues in contention, the claimant
should not have to expend the resources and endure the delay
entailed in completing an ALJ review that will not resolve the case
and will not contribute to its resolution. In that situation, the
claimant should be able to present its case expeditiously to a
Federal court. In order not to waste the time of the Federal court,
however, there needs to be some assurance that there are no
questions of fact in contention, since the resolution of the factual
dispute might either resolve the case entirely or have an important
influence on the proper framing of the legal issues. The Committee
bill establishes a procedure for expediting judicial review in
appropriate cases. It permits a claimant to allege that there are no
factual disputes before the ALJ, and to request the ALJ to make an
expedited determination to that effect. If the ALJ made such a
determination, he would close the case quickly and permit the
claimant to go immediately to Federal court.
H.R. Report No. 391, 100th Cong., 1st Sess. 429 (October 26, 1987).
In light of the above legislative history, we believe that the
Congress intended section 1869(b)(5) to provide an expedited review
process for all cases in which the ALJ has no authority to grant the
relief requested by the appellant, that is, when the only material
issue is the constitutionality of a statute or the validity of a
regulation, HCFA Ruling, or national coverage decision based on section
1862(a)(1) of the Act that the ALJ is bound to apply to the case.
However, the expedited review process would not apply to a challenge to
a manual instruction or a policy statement. (ALJs are, among other
things, required to apply the Department's regulations, HCFA Rulings,
and national coverage decisions based on section 1862(a)(1) of the Act,
but are not bound by HCFA manuals or other operating guidelines--see 20
CFR 422.406(b)(1)).
We are amending subparts G and H of part 405 of the regulations to
include expedited review of cases in which the appellant challenges the
constitutionality of a statute or the validity of a regulation, HCFA
Ruling, or national coverage decision based on section 1862(a)(1) of
the Act, and there are no material issues of fact in dispute. An
expedited appeals process is already in place for part A appellants
under Sec. 405.718. That provision was issued in November 1975 in
response to the U.S. Supreme Court's decision in Weinberger v. Salfi,
422 U.S. 749 (1975), which indicated that the Secretary had the
authority to determine in particular cases that full exhaustion of
administrative remedies was not necessary for a decision to be
``final'' within the meaning of the Act. The Court's decision left it
to the Secretary to determine when and how the expedited review might
be initiated. Although the Sec. 405.718 review procedures are a
reasonable exercise of the Secretary's authority, they are inconsistent
in some respects with the expedited review process that the Secretary
is required to provide under section 1869(b)(5) of the Act. The current
regulation (Sec. 405.718) allows a Part A appellant to request
expedited review after a reconsideration determination has been issued,
but does not specifically require that the appellant must first file a
request for an ALJ hearing. This is inconsistent with section
1869(b)(5) of the Act, which clearly contemplates that the expedited
review process will be initiated as part of the ALJ hearing process and
that, for cases pending at the ALJ level, the ALJ will make the
expedited determination as to whether there are any material issues of
fact in dispute. Accordingly, subpart G and subpart H need to be
revised. We are revising the regulations to conform to section
1869(b)(5) of the Act and to specify that, in order for an appellant to
qualify for expedited review, a request for an ALJ hearing must be
filed and the amount in controversy for court review must be met. Thus,
in cases in which a reconsideration determination or a carrier hearing
decision has been made, an expedited appeals process may be used in
lieu of an ALJ hearing and DAB review (expedited review may also be
initiated at the DAB level) if the appellant asserts, and the ALJ or
DAB, as appropriate, agrees that the only issue in controversy in the
matter is the constitutionality of a statutory provision or the
validity of a regulatory provision, HCFA Ruling, or a national coverage
decision based on section 1862(a)(1) of the Act. The ALJ's or DAB's
determination to this effect exhausts the appellant's administrative
remedies. The appellant may then file a civil action in a Federal
district court.
Clarifying Revisions--We are making other clarifying changes to
part 405, subparts G and H; part 417, subpart Q, and part 473, as
identified below:
<bullet> We define ``after receipt of the notice'', to mean that an
appellant is presumed to have received a notice from the carrier, the
ALJ, or the DAB 5 days after the date on the notice, unless it is shown
that the notice was received
[[Page 25850]]
earlier or later (Sec. 405.802). The purpose of this addition is to
provide a definition that is consistent with the terminology used in
subpart G.
<bullet> We add the word ``carrier'' to various provisions in
subpart H to clearly distinguish between carrier hearings and ALJ
hearings.
<bullet> For consistency with the Part A appeals provisions in
subpart G (Sec. 405.701(c)), Sec. 405.801(c) is revised to indicate
that subparts J and R of 20 CFR part 404 are also applicable to ALJ,
DAB, and judicial review conducted under subpart H, except to the
extent that specific provisions are contained in subpart H.
<bullet> One concern arising from a decision of the Supreme Court
in Darby v. Cisneros, 113 S.Ct. 2539 (1993), is that where regulations
deem agency action to be ``final,'' a court could find that action to
be immediately reviewable even if the agency action is an initial
determination or an intermediate appeal step. Therefore, because the
term ``final'' decision has been construed to mean that an
administrative decision may be subject to immediate judicial review, we
have removed in subparts G and H of part 405, subpart Q of part 417,
and part 473 all references to ``final'' decisions (except for those
decisions made at the DAB level, which are final and immediately
reviewable by the courts). The regulations state that non-final
administrative decisions (for example, initial determinations, review/
reconsideration determinations and carrier hearing decisions) are
``binding'' on the appellants, unless appealed in a timely fashion.
<bullet> We replace the terms ``Social Security Administration''
and ``Health Care Financing Administration'' with ``SSA'' or ``HCFA'',
as appropriate.
We also make a number of technical revisions for consistency and
clarification, as included in the following summary.
III. Summary of Revisions
Current regulations concerning appeals of Part A claims
determinations are at 42 CFR part 405, subpart G, ``Reconsiderations
and Appeals Under Medicare Part A.'' Regulations concerning appeals of
Part B claims determinations are at 42 CFR part 405, subpart H,
``Appeals under the Medicare Part B Program.'' We revised these two
subparts to incorporate the OBRA '86 and OBRA '87 appeals provisions
and to make additional clarifying changes. Corresponding clarifying
changes are made to regulations at 42 CFR part 417, subpart Q,
``Beneficiary Appeals'' (for enrollees of HMOs/CMPs/HCPPs) and 42 CFR
part 473, subpart B, ``Utilization and Quality Control Peer Review
Organizations (PRO) Reconsiderations and Appeals.''
We redesignated and revised Secs. 405.718 and 405.718a through
405.718e to modify the procedures for using an expedited review process
in accordance with section 1869(b)(5) of the Act, and to improve
readability.
We revised Sec. 405.724 to specify that the SSA regulations
governing Appeals Council review, apply to Medicare appeals handled by
the DAB, the level of appeal between the ALJ hearing and judicial
review.
We revised Sec. 405.730 to update a statutory reference and to make
minor editorial changes.
We added a new Sec. 405.732 to implement the OBRA '86 provision
regarding the limitations imposed on ALJs and courts in their review of
national coverage decisions issued by HCFA under section 1862(a)(1) of
the Act.
We revised Sec. 405.801(a) to reference the statutory provisions
allowing Part B claimants to seek an ALJ hearing if the amount
remaining in controversy after the carrier hearing is at least $500 and
to seek judicial review if the amount remaining in controversy after
the ALJ hearing is at least $1,000. This revision conforms the
regulations to current carrier manual instructions that require an
appellant to complete the carrier fair hearing process before
proceeding to an ALJ hearing.
In Sec. 405.801(b), we moved the definition of ``with reasonable
promptness'' to the section on definitions at Sec. 405.802 and replaced
it with a section stating our longstanding policy on appeal rights for
physicians and suppliers who accept assignment and the appeal rights
for non-participating physicians who meet the refund provisions under
section 1842(l)(1)(A) of the Act.
We revised Sec. 405.801(c) to improve readability and to indicate
that subparts J and R of 20 CFR part 404 are applicable to ALJ, DAB,
and judicial review conducted under subpart H, except to the extent
that specific provisions are contained in subpart H.
We revised Sec. 405.802 to define ``after receipt of the notice''
as being 5 days after the date on the notice, unless it is shown that
the notice was received earlier or later. Also, we moved the definition
of ``with reasonable promptness'' from Sec. 405.801(b) to this section.
We revised Sec. 405.803 to update the cross-references, and to
reorganize the material in list form to improve readability.
In Sec. 405.806 we removed the reference to a ``final'' decision
and made minor editorial changes to improve readability.
In Sec. 405.821, we removed an incorrect cross-reference.
In Sec. 405.831, we revised the heading by adding the words ``at
carrier hearing''.
In Sec. 405.832, we revised paragraph (c)(1) to correct a statutory
reference.
We revised Sec. 405.833 to make minor editorial changes.
We amended Sec. 405.834 by reorganizing the material in list form
and, in accordance with the requirements of section 1869(b)(2)(B) of
the Act, we added a requirement that the carrier hearing officer's
decision includes notification to the parties of their right to an ALJ
hearing if at least $500 remains in controversy following the carrier
hearing.
We revised Sec. 405.835 to state that a carrier hearing officer's
decision is not binding if a request for an ALJ hearing is made.
In Sec. 405.841 we amended paragraph (b) to correct a regulatory
cross reference.
We redesignated Sec. 405.860 as Sec. 405.836. We made minor
editorial changes to the section.
We added a new Sec. 405.853 titled ``Expedited review'' to explain
the procedure under which a case may go to court using the expedited
appeals process, in accordance with section 1869(b)(5) of the Act.
We added a new Sec. 405.855 titled ``ALJ hearing'' to incorporate
the provisions of section 9341 of OBRA '86 that amended section 1869(b)
of the Act to provide Part B appellants with the right to an ALJ
hearing. This section specifies the procedures for requesting an ALJ
hearing.
We added a new Sec. 405.856 to specify that the SSA regulations
governing Appeals Council review, apply to Medicare appeals handled by
the DAB, the level of appeal between the ALJ hearing and judicial
review. (Corresponding changes are also made in Secs. 417.634 and
473.46).
We added a new Sec. 405.857 titled ``Court review'' that: (1)
Specifies the general requirements for requesting judicial review; and
(2) codifies section 1869(b)(4) of the Act prohibiting judicial review
of regulations or instructions issued prior to January 1, 1981, that
relate to a method for determining the amount of payment under Part B.
In a new Sec. 405.860, we specify the provisions of section
1869(b)(3) of the Act limiting review by ALJs and the courts of
national coverage decisions issued by us under section 1862(a)(1) of
the Act.
[[Page 25851]]
We revised several sections in subparts G and H of part 405, and in
parts 417 and 473 of the regulations to remove the references to
``final'' decisions. This change removes any implication that a lower
administrative decision is immediately appealable to a court. The
affected sections are: 405.708 (a) and (b), 405.717, 405.750, 405.806,
405.812, 405.832(a), 405.835, 405.842(b), 417.612, 417.626, 473.38, and
473.48.
Additionally, we made several technical changes throughout the
subpart and substituted ``SSA'' or ``HCFA'' where the words ``Social
Security Administration'' or ``Health Care Financing Administration''
appeared in the affected sections. In a few sections, we inserted ``he
or she'' instead of ``he'' to make those particular sections gender
neutral. Other technical changes made reflect current nomenclature and
conform with our style requirements.
IV. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite prior public comment on proposed rules. The
notice of proposed rulemaking includes a reference to the legal
authority under which the rule is proposed and either the terms and
substances of the proposed rule or a description of the subjects and
issues involved. The notice of proposed rulemaking can be waived,
however, if an agency finds good cause that a notice-and-comment
procedure is impracticable, unnecessary, or contrary to the public
interest and incorporates a statement of the finding and its reasons in
the rule issued.
Since this rule merely codifies provisions of the Social Security
Act and existing agency practices that have been upheld by the U.S.
Court of Appeals for the Second Circuit and makes various clarifying
changes to existing regulations, we believe that it is unnecessary to
publish a proposed rule.
Specifically, this rule codifies the various appeal provisions
found in section 9341(a) of the Omnibus Reconciliation Act of 1986 and
section 4082(b) of the Omnibus Reconciliation Act of 1987. These two
provisions contain limitations on the review by ALJs and the courts of
national coverage decisions and the statutory authority for an
expedited appeals process under Part A and Part B. This rule also
expands our regulations to require that appellants whose claims exceed
$500 complete the carrier hearing process before obtaining an ALJ
hearing, a long-standing agency practice upheld by the U.S. Court of
Appeals for the Second Circuit in Issacs v. Bowen, 865 F.2d 468 (2d
Cir. 1989). The rule also makes clarifying changes to subparts G and H
of part 405 and to parts 417 and 473. In addition, these changes to the
regulations have no impact on program costs. Therefore, we find good
cause to waive the notice of proposed rulemaking and to issue this
final rule with comment period.
We will consider comments we receive by the date and time specified
in the DATES section of this preamble from anyone who believes that in
making these changes we have deviated from the provisions of the
statute or the existing agency practices referenced above. Although we
cannot respond to comments individually, if we change these rules as a
result of comments, and, if we proceed with a subsequent document, we
will respond to the comments in the preamble to that document.
V. Regulatory Impact Statement
Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612), we prepare a regulatory flexibility analysis unless we
certify that a rule would not have a significant economic impact on a
substantial number of small entities. For purposes of the RFA, all
providers and suppliers are considered to be small entities.
Individuals and States are not included in the definition of a small
entity.
Also, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. Such
an analysis must conform to the provisions of section 603 of the RFA.
For purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 50 beds.
The provisions of this rule codify statutory requirements regarding
appeals rights for Part A and Part B appellants and limitations on the
review of national coverage decisions by ALJs and the courts.
Because the appeals provisions of this final rule with comment
period have been implemented through the 1988 Federal Register notice
and manual instructions issued to the Medicare carriers, we do not
believe that the publication of this rule will have any significant
effect on the appeals process.
The provision in Sec. 405.801(a) requiring a carrier hearing prior
to an ALJ hearing regardless of the amount in controversy is not
statutory, but a long-standing practice that has been affirmed by the
U.S. Court of Appeals for the Second Circuit in Issacs v. Bowen, 865 F.
2d 468 (2d Cir. 1989). The carrier hearing has proven beneficial to
appellants and the government by reducing the number of time-consuming
and costly cases forwarded to the ALJs. Additionally, in order to
provide Part B appellants with the same rights as Part A appellants, we
propose to include DAB review as an additional level of review for Part
B claims.
For these reasons, we are not preparing analyses for either the RFA
or section 1102(b) of the Act because we have determined, and we
certify, that this rule will not have a significant economic impact on
a substantial number of small entities or a significant impact on the
operations of a substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was not reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medicare, Reporting and recordkeeping
requirements, Rural areas, X-rays.
42 CFR Part 417
Administrative practice and procedure, Grant programs-health,
Health care, Health facilities, Health insurance, Health maintenance
organizations (HMO), Loan programs-health, Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 473
Administrative practice and procedure, Health care, Health
professions, Peer Review Organizations (PRO), Reporting and
recordkeeping requirements.
42 CFR Chapter IV is amended as follows:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
A. Part 405, is amended as set forth below:
Subpart G--Reconsiderations and Appeals Under Medicare Part A
1. The authority citation for subpart G continues to read as
follows:
Authority: Secs. 1102, 1151, 1154, 1155, 1869(b), 1871, 1872 and
1879 of the Social Security Act (42 U.S.C. 1302, 1320, 1320c, 1320c-
3, 1320c-4, 1395ff(b), 1395hh, 1395ii and 1395pp).
2. Section 405.717 is revised to read as follows:
[[Page 25852]]
Sec. 405.717 Effect of a reconsidered determination.
The reconsidered determination is binding upon all parties unless--
(a) A request for a hearing is filed with SSA or HCFA within 60
days after the date of receipt of notice of the reconsidered
determination by the parties (for purposes of this section, the date of
receipt of notice of the reconsidered determination is presumed to be 5
days after the date of the notice, unless it is shown that the notice
was received earlier or later); or
(b) The reconsidered determination is revised in accordance with
Sec. 405.750; or
(c) The expedited appeals process is used in accordance with
Sec. 405.718.
Secs. 405.718a through 405.718e [Removed]
3. Sections 405.718a through 405.718e are removed and Sec. 405.718
is revised to read as follows:
Sec. 405.718 Expedited appeals process.
(a) Conditions for use of expedited appeals process (EAP). A party
may use the EAP to request court review in place of an administrative
law judge (ALJ) hearing or Departmental Appeals Board (DAB) review if
the following conditions are met:
(1) HCFA has made a reconsideration determination; an ALJ has made
a hearing decision; or DAB review has been requested, but a final
decision has not been issued.
(2) The filing entity is a party referred to in Sec. 405.718(d).
(3) The party has filed a request for an ALJ hearing in accordance
with Sec. 405.722, or DAB review in accordance with 20 CFR 404.968.
(4) The amount remaining in controversy is $1,000 or more.
(5) If there is more than one party to the reconsideration
determination or hearing decision, each party concurs, in writing, with
the request for the EAP.
(b) Content of the request for EAP. The request for the EAP:
(1) Alleges that there are no material issues of fact in dispute;
and
(2) Asserts that the only factor precluding a decision favorable to
the party is a statutory provision that is unconstitutional or a
regulation, national coverage decision under section 1862(a)(1) of the
Act, or HCFA Ruling that is invalid.
(c) Place and time for requesting an EAP.--(1) Place for filing
request. The person must file a written request--
(i) At an office of SSA or HCFA; or
(ii) If the person is in the Philippines, at the Veterans
Administration Regional Office or with an ALJ; or
(iii) If the person is a qualified railroad retirement beneficiary,
at an office of the Railroad Retirement Board.
(2) Time of filing request. The party may file a request for the
EAP--
(i) If the party has requested a hearing, at any time prior to
receipt of the notice of the ALJ's decision;
(ii) Within 60 days after the date of receipt of notice of the
ALJ's decision or dismissal, unless the time is extended in accordance
with the standards set out in 20 CFR 404.925(c). For purposes of this
section, the date of receipt of the notice is presumed to be 5 days
after the date on the notice, unless it is shown that the notice was
received later; or
(iii) If the party has requested DAB review, at any time prior to
receipt of notice of the Board's decision.
(d) Parties to the EAP. The parties to the EAP are the persons who
were parties to the reconsideration determination and, if appropriate,
to the hearing.
(e) Determination on request for EAP. (1) For EAP requests
initiated at the ALJ level, an ALJ determines whether all conditions of
paragraphs (a) and (b) of this section are met.
(2) If a hearing decision has been issued, the DAB determines
whether all conditions of paragraphs (a) and (b) of this section are
met.
(f) ALJ or DAB certification for the EAP. If the party meets the
requirements for the EAP, the ALJ or the DAB, as appropriate, certifies
the case in writing stating that:
(1) The facts involved in the claim are not in dispute;
(2) Except as indicated in paragraph (f)(3) of this section, HCFA's
interpretation of the law is not in dispute;
(3) The sole issue(s) in dispute is the constitutionality of a
statutory provision or the validity of a regulation, HCFA Ruling, or
national coverage decision based on section 1862(a)(1) of the Act.
(4) Except for the provision challenged, the right(s) of the party
is established; and
(5) The determination or decision made by the ALJ or DAB is final
for purposes of seeking judicial review.
(g) Effect of ALJ or DAB certification. (1) Following the issuance
of the certification described in paragraph (f) of this section, the
party waives completion of the remaining steps of the administrative
appeals process.
(2) The 60-day period for filing a civil suit in a Federal district
court begins on the date of receipt of the ALJ or DAB certification.
(h) Effect of a request for EAP that does not result in
certification. If a request for the EAP does not meet all the
conditions for use of the process, the ALJ or DAB so advises the party
and treats the request as a request for hearing or DAB review, as
appropriate.
4. Section 405.724 is revised to read as follows:
Sec. 405.724 Departmental Appeals Board (DAB) Review.
Regulations beginning at 20 CFR 404.967 regarding SSA Appeals
Council Review are also applicable to DAB review of matters addressed
by this subpart.
5. Section 405.730 is revised to read as follows:
Sec. 405.730 Court review.
(a) To the extent authorized by sections 1869, 1876(c)(5)(B), and
1879(d) of the Act, a party to a Departmental Appeals Board (DAB)
decision or an ALJ decision if the DAB does not review the ALJ
decision, may obtain a court review if the amount remaining in
controversy is $1,000 or more. A party may obtain court review by
filing a civil action in a district court of the United States in
accordance with the provisions of section 205(g) of the Act. The filing
procedure is set forth at 20 CFR 422.210.
(b) A party to a reconsidered determination or an ALJ hearing
decision may obtain a court review if the amount in controversy is
$1,000 or more, and he or she requests and meets the conditions for the
expedited appeals process set forth in Sec. 405.718.
6. Section 405.732 is added to read as follows:
Sec. 405.732 Review of national coverage decisions (NCDs).
(a) General. (1) HCFA makes NCDs either granting, limiting, or
excluding Medicare coverage for a specific medical service, procedure
or device. NCDs are made under section 1862(a)(1) of the Act or other
applicable provisions of the Act. An NCD is binding on all Medicare
carriers, fiscal intermediaries, PROs, HMOs, CMPs, and HCPPs when
published in HCFA program manuals or the Federal Register.
(2) Under section 1869(b)(3) of the Act, only NCDs made under
section 1862(a)(1) of the Act are subject to the conditions of
paragraphs (b) through (d) of this section.
(b) Review by ALJ. (1) An ALJ may not disregard, set aside, or
otherwise review an NCD.
(2) An ALJ may review the facts of a particular case to determine
whether an NCD applies to a specific claim for benefits and, if so,
whether the NCD has been applied correctly to the claim.
(c) Review by Court. (1) A court's review of an NCD is limited to
whether the record is incomplete or otherwise
[[Page 25853]]
lacks adequate information to support the validity of the decision,
unless the case has been remanded to the Secretary to supplement the
record regarding the NCD. The court may not invalidate an NCD except
upon review of the supplemented record.
(2) A Federal court may not hold unlawful or set aside an NCD
because it was not issued in accordance with the notice and comment
procedures of the Administrative Procedure Act (5 U.S.C. 553) or
section 1871(b) of the Act.
(d) Remands--(1) Secretary's action. When a court remands an NCD
matter to the Secretary because the record in support of the NCD is
incomplete or otherwise lacks adequate information, the Secretary
remands the case to HCFA in order to supplement the record.
(2) Remand to HCFA. HCFA supplements the record with new or updated
evidence, including additional information from other sources, and may
issue a revised NCD.
(3) Final Actions. (i) The proceedings to supplement the record are
expedited.
(ii) When HCFA does not issue a revised NCD, it returns the
supplemented record to the court for review.
(iii) When HCFA issues a revised NCD, it forwards the case to an
ALJ who issues a new decision applying the revised NCD to the facts of
the claim(s) under consideration. The ALJ's decision is subject to DAB
review and, ultimately, judicial review.
7. In Sec. 405.750, the heading and paragraph(b) introductory text
are revised to read as follows:
Sec. 405.750 Time period for reopening initial, revised, or
reconsidered determinations and decisions or revised decisions of an
ALJ or the Departmental Appeals Board (DAB); binding effect of
determination and decisions.
* * * * *
(b) Reopenings concerning a request for payment. An initial,
revised, or reconsidered determination of HCFA, or a decision or
revised decision of an ALJ or of the DAB, with respect to an
individual's right concerning a request for payment under Medicare Part
A, which is otherwise binding under 20 CFR 404.955 or 404.981 and
Secs. 405.708 or 405.717 of this subpart may be reopened:
* * * * *
Subpart H--Appeals Under the Medicare Part B Program
8. The authority citation for subpart H continues to read as
follows:
Authority: Secs. 1102, 1842(b)(3)(C), and 1869(b) of the Social
Security Act (42 U.S.C. 1302, 1395u(b)(3)(C), 1395ff(b)).
9. Section 405.801 is revised to read as follows:
Sec. 405.801 Part B appeals--general description.
(a) The Medicare carrier makes an initial determination when a
request for payment for Part B benefits is submitted. If an individual
beneficiary is dissatisfied with the initial determination, he or she
may request, and the carrier will perform, a review of the claim.
Following the carrier's review determination, the beneficiary may
obtain a carrier hearing if the amount remaining in controversy is at
least $100. The beneficiary is also entitled to a carrier hearing
without the benefit of a review determination when the initial request
for payment is not being acted upon with reasonable promptness (as
defined in Sec. 405.802). Following the carrier hearing, the
beneficiary may obtain a hearing before an ALJ if the amount remaining
in controversy is at least $500. If the beneficiary is dissatisfied
with the decision of the ALJ, he or she may request the Departmental
Appeals Board (DAB) to review the case. Following the action of the
DAB, the beneficiary may file suit in Federal district court if the
amount remaining in controversy is at least $1,000.
(b) The rights of a beneficiary under paragraph (a) of this section
to appeal the carrier's initial determination are granted also to--
(1) A physician or supplier that furnishes services to a
beneficiary and that accepts an assignment from the beneficiary, or
(2) A physician who meets the conditions of section 1842(l)(1)(A)
of the Act pertaining to refund requirements for nonparticipating
physicians who have not taken assignment on the claim(s) at issue.
(c) Procedures governing the determinations by SSA as to whether an
individual has met basic Part B entitlement requirements are covered in
subpart G of this part and 20 CFR part 404, subpart J. Subparts J and R
of 20 CFR part 404 are also applicable to ALJ, DAB, and judicial review
conducted under subpart H, except to the extent that specific
provisions are contained in this subpart.
10. In Sec. 405.802, the undesignated introductory text is
republished and two new definitions are added, in alphabetical order,
to read as follows:
Sec. 405.802 Definitions.
As used in subpart H of this part, the term--
After receipt of the notice means 5 days after the date on the
notice, unless it is shown that the notice was received earlier or
later.
* * * * *
With reasonable promptness means within a period of 60 consecutive
days after the receipt by the carrier of a request for payment.
11. Section 405.803 is revised to read as follows:
Sec. 405.803 Initial determination.
(a) Carriers make initial determinations regarding claims for
benefits under Medicare Part B.
(b) An initial determination for purposes of this subpart includes
determinations such as the following:
(1) Whether services furnished are covered.
(2) Whether the deductible has been met.
(3) Whether the receipted bill or other evidence of payment is
acceptable.
(4) Whether the charges for services furnished are reasonable.
(5) If the services furnished to a beneficiary by a physician or a
supplier pursuant to an assignment under Sec. 424.55 of this chapter
are not covered because they are determined to be not reasonable and
necessary under Sec. 411.15(k) of this chapter, whether the
beneficiary, physician or supplier, or a physician who meets the
requirements of Sec. 411.408, knew or could reasonably have been
expected to know at the time the services were furnished that the
services were not covered.
(c) The following are not initial determinations for purposes of
this subpart:
(1) Any issue or factor for which SSA or HCFA has sole
responsibility, for example, whether an independent laboratory meets
the conditions for coverage of services; whether a Medicare overpayment
claim should be compromised, or collection action terminated or
suspended.
(2) Any issue or factor which relates to hospital insurance
benefits under Medicare Part A.
12. Section 405.806 is revised to read as follows:
Sec. 405.806 Effect of Initial Determination.
The initial determination is binding upon all parties to the claim
for benefits unless the determination is--
(a) Reviewed in accordance with Secs. 405.810 through 405.812; or
(b) Revised as a result of a reopening in accordance with
Sec. 405.841.
13. Section 405.833 is revised to read as follows:
Sec. 405.833 Record of carrier hearing.
A complete record of the proceedings at the carrier hearing is
made. The
[[Page 25854]]
testimony is transcribed and copies of other documentary evidence are
reproduced in any case when directed by the hearing officer, the
carrier, or HCFA. The record will also be transcribed and reproduced at
the request of any party to the hearing provided the requesting party
bears the cost.
14. Section 405.834 is revised to read as follows:
Sec. 405.834 Carrier hearing officer's decision.
(a) As soon as practicable after the close of a carrier hearing,
the carrier hearing officer issues a decision in the case based upon
the evidence presented at the hearing or otherwise included in the
hearing record. The decision is issued as a written notice to the
parties and contains--
(1) Findings of fact,
(2) A statement of reasons, and
(3) Notification to the parties of their right to an ALJ hearing
when the amount remaining in controversy is at least $500.
(b) A copy of the decision is mailed to the parties to the hearing
at their last known addresses.
15. Section 405.835 is revised to read as follows:
Sec. 405.835 Effect of carrier hearing officer's decision.
The carrier hearing officer's decision is binding upon all parties
to the hearing unless--
(a) A request for an ALJ hearing is filed in accordance with
Sec. 405.855, or
(b) The decision is revised in accordance with Sec. 405.841.
16. Section 405.860 is redesignated as Sec. 405.836 and revised to
read as follows:
Sec. 405.836 Authority of the carrier hearing officer.
The carrier hearing officer, in adjudicating Medicare Part B
claims, complies with all of the provisions of, and regulations issued
under, title XVIII of the Act, as well as with HCFA Rulings, national
coverage decisions, and other policy statements, instructions, and
guides issued by HCFA.
17. Section 405.853 is added to read as follows:
Sec. 405.853 Expedited appeals process.
(a) Conditions for use of expedited appeals process (EAP). A party
may use the EAP set forth in Sec. 405.718 of this chapter to request
court review in place of the ALJ hearing or Departmental Appeals Board
(DAB) review if the following conditions are met:
(1) The carrier hearing officer has made a decision; an ALJ has
made a hearing decision; or DAB review has been requested, but a final
decision has not been issued.
(2) The filing entity is a party referred to in Sec. 405.718(d) of
this chapter.
(3) The party has filed a request for an ALJ hearing in accordance
with Sec. 405.855, or DAB review in accordance with 20 CFR 404.968.
(4) The amount remaining in controversy is $1,000 or more.
(5) If there is more than one party to the hearing decision, each
party concurs, in writing, with the request for an EAP.
(b) Content of the request for EAP. The request for an EAP:
(1) Alleges that there are no material issues of fact in dispute;
and
(2) Asserts that the only factor precluding a decision favorable to
the party is a statutory provision that is unconstitutional or a
regulation, national coverage decision under section 1862(a)(1) of the
Act, or HCFA Ruling that is invalid.
18. Section 405.855 is added to read as follows:
Sec. 405.855 ALJ hearing.
(a) Right to hearing. A party to the carrier hearing has a right to
a hearing before an ALJ if--
(1) The party files a written request for an ALJ hearing within 60
days after receipt of the notice of the carrier hearing decision; and
(2) The amount remaining in controversy is $500 or more.
(b) Place of filing hearing request. The request for an ALJ hearing
must be made in writing and filed with the carrier that issued the
decision, a Social Security office, or, in the case of a qualified
railroad retirement beneficiary, an office of the Railroad Retirement
Board.
(c) Effect of ALJ hearing decision. (1) An ALJ's decision is
binding on all parties to the hearing unless--
(i) The DAB reviews the ALJ decision;
(ii) The DAB does not review the ALJ decision, and the party
requests judicial review;
(iii) The decision is revised by the DAB or an ALJ in accordance
with the provisions of Sec. 405.750 of this chapter; or
(iv) The expedited appeals process is used.
19. Section 405.856 is added to read as follows:
Sec. 405.856 Departmental Appeals Board (DAB) review.
Regulations beginning at 20 CFR 404.967 regarding SSA Appeals
Council Review are applicable to DAB review of matters addressed by
this subpart.
20. Section 405.857 is added to read as follows:
Sec. 405.857 Court review.
(a) General rule. To the extent authorized by sections 1869,
1876(c)(5)(B), and 1879(d) of the Act, a party to a DAB decision, or an
ALJ decision if the DAB does not review the ALJ's decision, may obtain
a court review if the amount remaining in controversy is $1,000 or
more. A party may obtain court review by filing a civil action in a
district court of the United States in accordance with the provisions
of section 205(g) of the Act. The filing procedure is set forth in 20
CFR 422.210.
(b) Prohibition against court review of certain Part B regulations
or instructions. Under section 1869(b)(4) of the Act, a court may not
review a regulation or instruction that relates to a method of payment
under Part B if the regulation was promulgated, or the instruction
issued, before January 1, 1981.
21. Section 405.860 is added to read as follows:
Sec. 405.860 Review of national coverage decisions (NCDs).
(a) General. (1) HCFA makes NCDs either granting, limiting, or
excluding Medicare coverage for a specific medical service, procedure
or device. NCDs are made under section 1862(a)(1) of the Act or other
applicable provisions of the Act. An NCD is binding on all Medicare
carriers, fiscal intermediaries, PROs, HMOs, CMPs, and HCPPs when
published in HCFA program manuals or the Federal Register.
(2) Under section 1869(b)(3) of the Act, only NCDs made under
section 1862(a)(1) of the Act are subject to the conditions of
paragraphs (b) through (d) of this section.
(b) Review by ALJ. (1) An ALJ may not disregard, set aside, or
otherwise review an NCD.
(2) An ALJ may review the facts of a particular case to determine
whether an NCD applies to a specific claim for benefits and, if so,
whether the NCD has been applied correctly to the claim.
(c) Review by Court. (1) A court's review of an NCD is limited to
whether the record is incomplete or otherwise lacks adequate
information to support the validity of the decision, unless the case
has been remanded to the Secretary to supplement the record regarding
the NCD. The court may not invalidate an NCD except upon review of the
supplemented record.
(2) A Federal court may not hold unlawful or set aside an NCD
because it was not issued in accordance with the notice and comment
procedures of the Administrative Procedure Act (5 U.S.C. 553) or
section 1871(b) of the Act.
[[Page 25855]]
(d) Remands--(1) Secretary's action. When a court remands an NCD
matter to the Secretary because the record in support of the NCD is
incomplete or otherwise lacks adequate information, the Secretary
remands the case to HCFA in order to supplement the record.
(2) Remand to HCFA. HCFA supplements the record with new or updated
evidence, including additional information from other sources, and may
issue a revised NCD.
(3) Final Actions. (i) The proceedings to supplement the record,
are expedited.
(ii) When HCFA does not issue a revised NCD, it returns the
supplemented record to the court for review.
(iii) When HCFA issues a revised NCD, it forwards the case to an
ALJ who issues a new decision applying the revised NCD to the facts of
the claim(s) under consideration. The ALJ's decision is subject to DAB
review and, ultimately, judicial review.
PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL
PLANS, AND HEALTH CARE PREPAYMENT PLANS
B. Part 417 is amended as set forth below:
1. The authority citation for part 417 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh), secs. 1301, 1306, and 1310 of the Public
Health Service Act (42 U.S.C. 300e, 300e-5, and 300e-9); and 31
U.S.C. 9701.
2. Section 417.634 is revised to read as follows:
Sec. 417.634 Departmental Appeals Board (DAB) review.
Any party to the hearing, including the HMO or CMP, who is
dissatisfied with the hearing decision, may request the DAB to review
the ALJ's decision or dismissal. Regulations beginning at 20 CFR
404.967 regarding SSA Appeals Council Review are applicable to DAB
review for matters addressed by this subpart.
PART 473--RECONSIDERATIONS AND APPEALS
C. Part 473 is amended as set forth below:
1. The authority citation for part 473 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
2. In Sec. 473.46, paragraph (a) is revised to read as follows:
Sec. 473.46 Departmental Appeals Board (DAB) and judicial review.
(a) The circumstances under which the DAB will review an ALJ
hearing decision or dismissal are the same as those set forth at 20 CFR
404.970, (``Cases the Appeals Council will review'').
* * * * *
D. Technical Amendments.
Secs. 405.711, 405.712, 405.714, 405.715, 405.716, 405.720, 405.722,
405.750, 405.807, 405.841, 405.871 [Amended]
1. In Secs. 405.711, 405.712, 405.714, 405.715, 405.716, 405.720,
405.722, 405.750(a), 405.807(b), and 405.871, the following changes are
made:
a. The words ``Social Security Administration'' are removed
wherever they appear, and ``SSA'' is added in their place.
b. The words ``Health Care Financing Administration'' are removed
wherever they appear, and ``HCFA'' is added in their place.
Sec. 405.708, 405.812, 405.832, 405.842, 417.612, 417.626 [Amended]
2. In Secs. 405.708(a) and (b), 405.812, 405.832(a), 405.842(b),
417.612(a) and 417.626 the word ``final'' or the words ``final and''
are removed wherever they appear.
Secs. 405.722, 405.747, 417.632 [Amended]
3. Sections 405.722, 405.747, and 417.632(b) are amended by
removing the term ``presiding officer'' wherever it appears and adding,
in its place, ``ALJ''.
Sec. 405.821 [Amended]
4. In Sec. 405.821, paragraph (c), is amended by removing the
parenthetical phrase ``(see Sec. 405.801)''.
Sec. 405.831 [Amended]
5. In Sec. 405.831, the heading is amended by adding the words ``at
carrier hearing'' before the word ``and''.
Sec. 405.832 [Amended]
6. In Sec. 405.832, paragraph (c)(1) is amended by removing the
reference to ``section 1842(b)(3)(c)'' and adding in its place,
``section 1842(b)(3)(C)''.
Sec. 405.841 [Amended]
7. In Sec. 405.841, paragraph (b) is amended by removing the
parenthetical reference ``(see 20 CFR 404.958)'' and adding in its
place the parenthetical reference ``(see 20 CFR 404.988(b) and
404.989)''.
Sec. 473.38 [Amended]
8. In Sec. 473.38 the following changes are made:
(a) The heading is amended by removing the word ``Finality'' and
adding in its place ``Effect''.
(b) In paragraph (a), the words ``final and'' are removed.
Sec. 473.48 [Amended]
9. a. In Sec. 473.48, in paragraphs (a)(1) and (a)(2), the word
``final'' is removed and ``binding'' is added in its place.
b. In paragraph (b), the word ``final'' is removed.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: March 7, 1997.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 97-12263 Filed 5-9-97; 8:45 am]
BILLING CODE 4120-01-P