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The Centers for Medicare & Medicaid Services (CMS) recently published the annual adjustments to the amount in controversy (AIC) threshold amounts for Administrative Law Judge (ALJ) hearings and judicial review under the Medicare appeals process.  For calendar year 2019, the AIC threshold amounts will remain at $160 for ALJ hearings and will increase to $1,630 for judicial review.  The adjustments will be effective for requests for ALJ hearings and judicial review filed on or after January 1, 2019.

Medicare appeals generally consist of a five level appeals process.  This process applies to appeals regarding a disagreement with a coverage or payment decision made by Medicare, a Medicare health plan, or a Medicare Prescription Drug Plan.  For Medicare Part A and B, when initial claim determinations are made by fiscal intermediaries or carriers, all parties to that determination, such as beneficiaries, providers and suppliers, have the right to appeal the Medicare coverage decision.  Appeals of Medicare Part A and B claims must follow the procedures set out in section 1869 of the Social Security Act (the “Act”).  The Medicare Part A and B appeals process generally includes the following five appeal levels, with ALJ reviews of Medicare appeals constituting the third level of appeal:

  1. Redetermination by a Medicare Administrative Contractor;
  2. Reconsideration by a Qualified Independent Contractor;
  3. Decision by the Office of Medicare Hearings and Appeals;
  4. Review by the Medicare Appeals Council; and
  5. Judicial Review in Federal District Court.

Appeals to a Medicare health plan or Medicare Prescription Drug Plan also include a five level appeals process.  However, for an appeal of a Medicare health plan decision, level one involves reconsideration by the health plan and level two constitutes a review by an Independent Review Entity.  For an appeal of a Medicare Prescription Drug Plan decision, level one involves a redetermination from the drug plan and level two is a review by an Independent Review Entity.  The next three levels in the appeals process mirror levels three to five in the Medicare Part A and B appeals process.

Originally, section 1869(b)(1)(E) of the Act set the AIC threshold amounts for ALJ hearings and judicial review at $100 and $1,000, respectively, for Medicare Part A and B appeals.  The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), section 940, made further amendments that require the AIC threshold amount to be adjusted annually.  In addition, section 940(b)(2) of the MMA applied the  AIC adjustment requirements to Medicare Part C and Medicare Advantage (MA) appeals, as well as particular health maintenance organization and competitive health plan appeals.  For Medicare Part D appeals, section 101 of the MMA provides for the application of the AIC adjustment requirement.

The CMS notice provides the following specifics regarding the application of the AIC adjustment requirement to the various types of appeals:

  1. For Medicare Part A and B Appeals – The federal regulations implementing the Act require the HHS Secretary to publish changes to the AIC threshold amounts in the Federal Register for Medicare Part A and B appeals. A statutory formula is used for the annual adjustment of AIC threshold amounts and is provided in the implementing regulations.  For a party to be entitled to a hearing, he or she must meet all AIC requirements in the federal regulations.
  2. For Medicare Part C and MA Appeals – The federal regulations implementing the Act discuss the AIC threshold amounts. The regulations also grant any party  to the reconsideration (except the MA organization) that is dissatisfied with the reconsideration determination a right to an ALJ hearing, provided that the remaining amount in controversy after reconsideration meets the established annual threshold requirement.  However, any party, including the MA organization, can request judicial review as long as the AIC meets the established annual threshold requirement.
  3. For Health Maintenance Organizations, Competitive Medical Plans, and HealthCare Prepayment Plan Appeals – The annual adjustment to the AIC amounts applies to certain beneficiary appeals depending on the context of the health maintenance organization or medical plan. In addition, the Medicare Part C appeals rules also apply to health care prepayment plan appeals.
  4. For Medicare Part D Appeals – The MMA requires a prescription drug plan sponsor to meet the requirements established in sections 1852(g)(4) and (g)(5) of the Act. The federal regulations implementing the Act state that the Part C appeals rules, including the annually adjusted AIC threshold amount, apply to Part D appeals as appropriate, unless the Part D appeals rules provides otherwise.  The regulations further grant Part D enrollees that are dissatisfied with the independent review entity (IRE) reconsideration determination, a right to an ALJ hearing, provided that the remaining amount in controversy after IRE reconsideration meets the established annual threshold requirement.  Further, Part D enrollees can request judicial review of an ALJ or Medicare Appeals Council decision, if, in part, the AIC meets the established annual threshold amount.

The CMS Notice is available at: https://www.gpo.gov/fdsys/pkg/FR-2018-09-20/pdf/2018-20506.pdf.

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