Appeals Legislative and Regulatory Developments

Legislation and Regulation Regarding Medicare Appeals

Legislation and Regulation Regarding Medicare Appeals

Medicare, Medicaid, and SCHIP Benefits Improvement & Protection Act of 2000 (BIPA), Section 521

In Section 521 of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), Congress required a major restructuring to improve the process that Medicare beneficiaries can use to appeal claims denials. The law includes a series of structural and procedural changes to the appeals process. Part of these provisions:

  • Amends Section 1869 of the Social Security Act to require revisions to the Medicare appeals process
  • Establishes uniform process for Medicare Parts A and B
  • Revised time frames, including reduced decision-making time frames for most administrative appeals levels, as well as the right to escalate a case that’s not decided on time to the next appeal level
  • Established new entities, Qualified Independent Contractors (QIC)
    • Mandates all second-level appeals, also known as reconsiderations, to be conducted by Qualified Independent Contractors (QICs).
    • Requires that QICs utilize a comprehensive data system to collect and share information about appeals decisions, give weight to carrier and fiscal intermedicary local coverage determinations, and conduct panel reviews (panels which include medical professionals) of all medical necessity denials.
    • Replaces the Hearing Officer Hearing process for Medicare Part B claims and establish a new second level of appeal for Medicare Part A claims.

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)

On December 8, 2003, following publication of the proposed rule, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) was enacted. The MMA includes a number of provisions that affect the Medicare claim appeals process. Most notably the new law includes:

  • Revised redetermination and reconsideration decision-making time frames
  • A reduction in the minimum required number of QICs from 12 to 4
  • Requirement to transfer of the ALJ function from SSA to HHS no earlier than July 1, 2005, but not later than October 1, 2005
  • Revised requirements for appeals decision notices
  • Requirement for providers and suppliers to present any evidence for an appeal no later than the QIC reconsideration level, unless there is good cause that prevented the timely introduction of the evidence
  • Establishment of a process for the correction of minor errors or omissions without pursuing an appeal
  • Requires QIC to have a physician reviewer for all claims pertaining to treatment by a physician.

Several of these changes were already part of CMS’s proposed rule.

See Title X, Subtitle D section 931-940A "Appeals and Recovery"


The statutory appeals provisions dramatically reduced the timeframes for adjudicating fee-for-service Medicare claims appeals – a process that could exceed 1,000 days was reduced to 300 days. This change required a substantial overhaul of the appeals process – a complicated restructuring involving all levels of the Medicare appeals process.

CMS published an interim final rule that establishes new regulations for implementing the new appeals process for claims denials required by section 521 of BIPA and the MMA.

  • This final rule sets forth in one location all regulations covering administrative appeals of Medicare Part A and Part B claims, including for the first time Medicare-specific procedures for carrying out ALJ hearings.
  • The interim final rule sets forth regulations to implement all structural and procedural changes to the existing appeals process. Implementation of these new procedures will take place in two stages.
    • First, beginning on May 1, 2005, all first level appeals (“redeterminations”) carried out by fiscal intermediaries will (generally Part A appeals) be subject to QIC reconsiderations. These appeals generally involve Medicare Part A services, such as services furnished by hospitals, skilled nursing facilities, and home health agencies.
    • Then, beginning January 1, 2006, appeals of redeterminations carried out by Medicare carries (part B appeals, involving physician services and durable medical equipment items, for example) will be subject to QIC reconsiderations. The new ALJ rules will be in effect for all appeals that come through the QICs.
    • Thus, in 2006, the new Medicare appeals process will take effect for all Part A and B Medicare claims.

Regulations for Medicare Part A & B appeals set forth at 42 Code of Federal Regulations, Subpart I, Sections 405.900 through Section 405.1140.

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