oversight

Medicare Appeals Process: Part B Changes Appear to Be Fulfilling Their Purpose

Published by the Government Accountability Office on 1990-07-16.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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     Lhited States
     General     Accounting Office
     Washington, D.C.205-48
     ----                                                             -                                       --
     Human Resources Ilivision

     b-2344 17

     *My     14;. l!WI


    The Honorable Lloyd f3entsen
    Chairman. Committee on Finance
    Cnited States Senate
    The Honorable John D. Rockefeller, IV
    Chairman, Subcommitteeon Medicare and
      i0z-q Term Care
    Committee on Finance
    United States &nate
    The Honorable Dan Rostenkowski
    Chairman, Committee on Ways and Mc-ans
    Hollse of Representatives

    The Honorable Pete Stark
    Chairman, Subcommitwe on Health
    Committee on Ways and Means
    ii,mse of Representatives

    As agreed with your offices, this study provides information on the
    changes in claim volume and outcomesat the courier level following
    recent changesin the Medicare Part B appeals process1Thk report also
    provides information regarding the requirement that a claimant appeal
    an adverse decision to the carrier before being permitted to appeal to a
    federal administrative law judge (AW) when the disputed amount is
    more than $590. Further, it assessesthe potential changein the ALJ
    caseload if the disputed amount threshold was lowered.
    This report also fulfills our mandate under the OmnibusBudget Recon-
    ciliation Act of 1987 (P.L. 100-203, section 4082 (d)). The act directed us
    to study the cost effectiveness of the Health Care Financing Administra-
    tion’s (HCFI’S)requirement that Part B casesgo through h hearing at the
    carrier ievel before they are appealed to an ALJ.”


    ‘Thv IIIILI~I d~kmn:na~wns about cuveng~ for panic&r    9erwe   and the amam of payment for
    Pan 11c!alms are made by w-ricm. *urh as f3lue Crms;Blue Shipid or aher mmreval    ~nurran,‘e
    cumpanws. whch al’v Rwwrall~ pcti~~~~~np this function under contrdn Cork Mth    Care Financulg
    .AdmrntslrdW-r

    ‘h wparaLeEpo17pnwdwl           stirtlstwal Infurmalron on ?k ALJ heanngs pm       includmg the
    number and ‘Ia~t~s I.( .U.J I a-1 fikd. I ht ~wtLwm.e of case5 by ryp uf hearq, &the      ,,n!c rrqulrd
                                           . .
    IO clrmplcr~~ Ihc htwml: JJ~WL%* 5~ hrarislw         on the PZI B Adminwrrawe  JJW Judge Hearings
    l’rwns    tG.40 IIRD-St’- 18. \IIV :A. IRRR)




    Page I                                GAO/   tiIUTS(MY   Part B Changer    to Mrdk~rr   Apm~sI+WWSS
Background               program to provide supplemental medical insurance coverage for most
                         individuals age 65 and older. HCFA,within the Department of Health and
                         Human Services, administers the Medicare program. In fiscal year 1989,
                         Part B covered approximately 32.4 million enrolleesand paid benefits of
                         about $38.? billion.
                         The Medicare program provides specific appeal rights for Part B claim-
                         ants. These are the individual beneficiary or a medical provider such as
                         a physician, laboratory, or supplier of medical equipment or services. At
                         the inception of the program, Part B claims were not accorded the same
                         appeal rights as Part A claims (the hospital insurance portion) becatise
                         they were expected to be for substantially smaller amounts than Part A
                         claims. In addition, Part B claims are far more numerous than Part A
                         claims and this posed the possibility of a substantial workload if judi-
                         cial review was accorded to all of them.
                         Recent legislative and administrative changeswere made in the appeals
                         processbecause cKrnants expressed concernsabout the fairness and
                         adequacy of the Part B appeals process. For example,claimants were
                         concerned that the hearing officers at the carrier level were not objet-
                         tive because their continued employment may depend on the carriers’
                         being satisfied with the decisions they render. To attempt to resolve
                         claimants’ concerns about the Part B process,the Congress changed the
                         processto make it more like Part A by adding appeal options beyond the
                         carrier. Review of Part B claims by an AW is now available if the dis-
                         puted amount is $500 or more and judicial review is available if the dis-
                         puted amount is %1,000 or more.RA claimant can combine denied claims
                         to meet these limitations.

                         The 1987 legislative change and the need for program economies
                         prompted HCFAto revise the way carriers processedappeals.


Part B Appeals Process   Before 1987, the appeals process worked as follows. First, the claim
Before 1987              underwent a “carrier review,” which is a review of written casedocu-
                         mentation by a claims processor other than the one that made the “ini-
                         tial claim determination.” If the carrier review decision agreed with the
                         initial determination and the amount in dispute was at least $100, the
                         case could be apFeaM to the next level. a hearing officer, a!so at the
                         carrier.

                         .4t the hearing officer IeveI,claimants could select one of three types of
                         “carrier fair hearings”: on-the-record,’ telephone, or in-person. On-the-
                         record hearings involved evaluations of the written casedocumentation
                         that did not provide claimants an opportunity io give oraI testimony. If
                         claimants chose on-the-record hearings, tky could not subsguently
                         reques: a telephone or in-person hearing. There were no appeal options
                         beyond the carrier level. (Seefigure I.1 for an illustration of the hearing
                         process in effect until January 1, 1967.)


Part B Appeals Process   The legislative change authorizing appeals to an AU becameeffective
as of 1987               January  1,1987. HCFArequired that casesgo through a car&r fair
                         hearing before being appealen LOthe ALJ, but HCFAdid not change the
                         way appeals were processedwithin carriers.
                         In i988, however, HCFAchanged the appeals process within carriers. It
                         required, with someexceptions, that casesgo through an on-the-record
                         hearing before being appealed. As before, claimants initially choosing an
                         on-the-record hearing could not subsequently request a telephone or in-
                         person hearing. If disputed amounts were still over 66VOafter the
                         hearing, claimants could then appeal to an AU.

                         Claimants initially requesting a telephone or in-person haring, how-
                         ever, now had to go through the on-the-record heating. After that
                         hearing, for disputed amounts of at lest $500, these claimants could
                         either go to the requested telephone or in-person hearing or appeal
                         directly to the AW. The on-the-record hearing requirement was phased in
                         by caniers from April to June 1988. Figure I.2 shows the appals pro-
                         cezzafter the legislative and administrative changes.
                         HCFAofficials state that the mandatory on-the-record hearing was intro-
                         duced to expedite casesand to reduce costs by directing cases away
                         from the more lengthy and expensive telephone and in-person hearings.
                         Representatives for the Kationa! Senior Citkens law Center mtifled
                         before the House Judiciary Committee,” however, that the on-the-record


                         “Oversight heannz on the ildjudiratory pmc4urr    of the lkpartment of Health and Human Services.
                         Subcommnrw    on Admm~srratwe      14~. and Gwemmental    Relauow. House Judiciary Corn-v-qtee. June
                         27. 1989.




                         Page 3                              GAO; HRD9047      Pa   B Changea rn Mulicue    Apb       Process
                                                        .--




                    hearing step often is a source of confusion about appeal rights and con-
                    tribut.?s to the overall delay in the review of Part B claims. They also
                    testified regarding concerns about the effect of on-the-record hearings
                    on the rights of claimants not represented by leg& counseL For example,
                    they believed that claimants might erroneously perceive that the on-the-
                    record hearing is the end of the appeals process.The representatives
                    expressed further concern about the possibility of bias in an in-person
                    hearing because the person assigned to review an on-the-record hearing
                    decision may in some way be influenced by knowing that another
                    hearing officer (supposedly at the same level of authority and compe-
                    tency) has already denied the claim.


                    The objective of our review was to gather information on the changes, if
3bjective and   ,   any, in claim volume and outcomes following the addition of the AW
tiethodology        appeal options and the introduction of mandatory on-the-record hear-
                    ings to the Medicare Part B appeals process.Specifically, we sought to
                    determine (1) the changes in outcome of casesreviewed by claims
                    processors and hearings officers; (2) the changesafter the introduction
                    of mandatory on-the-record hearings in the volume and outcome, by
                    claimant group, of casti reviewed by hearings officers; (3) the expected
                    effect on claim volume and outcomes of Iowt+g the AW threshold from
                    $500 to $100, which is the current ACJ threshold for Part A cases;and
                    (4) the cangressional intent in establishing the monetary threshold for
                    claimants appealing to an AU.

                    To determine the changes in case outcomes,we obtained quarterly data
                    from HCFA for the period October 1984 to March 1989 for cases at dif-
                    ferent stages in the appeals process. To determine the changes, by
                    claimant-group, after the introduction of mandatory on-the-record hear-
                    ings in the volume and outcomes of casesreviewed by hearings officers,
                    we obtained individual case data for the period January 1987 to March
                     1989 from 47 of the 51 Medicare carriers. We categorized claimants into
                    three groups-beneficiaries, physicians, and nonphysicians-and ana-
                    lyzed data obtained from the carriers for casesdecided before and after
                    the introduction of mandatory on-the-record hearings. The “before”
                    analysis includes cases reviewed from the introduction of the ALI
                    hearing option on January 1, 1987, to the time each carrier introduced
                    the mandatory on-the-record hearings (during the period April to June
                    1988). The “after” analysis includes casesreviewed by each carrier
                    from the time each carrier introduced the mandatory on-the-record
                    hearings to March 1989, the most current data available at the time we
                    collected data from the carriers. (Seeappendix II for our case-sampling
                   -__-                           _-...




                          methodology and appendix III for the survey form sent to the carriers.)
                          We did not assessthe extent to which other factors, such as case cnm-
                          plexity, case merit, or carrier policy might have affected case volume or
                          outcomes.
                          Using the data obtained from the carriers, we estimated the potential
                          effect on each claimant group of lowering the m threshold to $100. To
                          do this, we assumed that the pattern of decisions and appeals at a $100
                          threshold would be the same as it was for the actual caseswe reviewed
                          that were subject to the $500 limitation. Seeappendix XVfor a descrip
                          tion of this analysis and its r.:sults.
                          We also interviewed HCFAprogram operation managers and sev,yal car-
                          riers about recent changesin the Part B appeals process. In addition, we
                          reviewed statutes, regulations, legislative history, and court decisions to
                          determine the congressional intent in establishing the $500 hw
                          threshold.
                          We performed our work between July 1988 and December 1989. We did
                          not verify HCFA or carrier-provided data. With that exception, we per-
                          formed our work in accordance with generally accepted government
                          auditing standards.


                          The results of our review are provided in detail in appendix I. In sum-
Results in Brief          mary, the percentage of cases receiving a telephone or in-person hearing
                          at the earner decreased after the introduction of the mandatory on-the
                          record hearings, while the percentage of casesappealed to AUS
                          increased. The percentage of hearing-officer decisions that resulted in
                          payments to claimants also decreasedafter the on-the-record hearing
                          was made mandatory. More specifically:
                          1, There was little change in the percentageof decisions for or against
                          claimants in initial carrier determinations or carrier reviews by claims
                          processors, (See figs. I.3 and 1.4.)However, the percentage of carrier
                          hearing-officer decisions against claimants increased after the introduc-
                          tion of mandatory on-the-record hearings. [See fig. 1.5.)
                          2. Data obtained from Medicare carriers for the period January 1987
                          through March 1989 show that the largest percentage of casesreviewed
                          before and after the introduction of the mandatory on-therecord hear-
                          ings involved physicians. (See fig. 1.6.)After HCFAintroduced mandatory
                          on-the-record hearings:
l   The percentage of cases that had such hearkgs increased from 71 to 100
    percent, as expected. Among the claimant groups, casesinvolving non-
    physicians had the greatest increase.All claimant groups experienced a
    decrease in on-the-record hearing decisionsresulting in payment to
    claimants. However, after on-the-retard hearings were made mandatory,
    decisions involving physicians resulted in payments more frequently
    than did those for the other claimant groups. (See figs. I.7 and I.&)
l   The percentage of caszf~that had a telephor.t!or in-person hearing
    decreased from 29 to 6 percent, with the nonphysician claimant group
    experiencing the greatest decrease[from 38 to 6 percent). The per-
    centage of telephone or in-person hearing de&ions resulting in pay-
    ments claimants also decrem fmm 61 to 38 percent. Again, the
              to


    nonphysician group experienced the greatest decrease (from 70 to 40
    percent). (See figs. I.9 and 1.10.)
l   The percentage of casesappealed to AWSincreased from 11 to 13 per-
    cent. Cases involving beneficiaries experienced the geatest increase
    (from 11 to 16 percent). (See fig. I.1 1.)

    3. Lowering the AW threshold to $100 could be expected to increase the
    number of Part B casesappealed to ALISto about 21 percent. (See fig.
    1.12.)

    4. The congressional intent in establishing a $500 threshold for AU
    appeals is unclear. Court opinions initiaily differed on whether the Con-
    gress intended such claims to bypass carrier fair hearings. However, a
    recent federal district court appeal decision concluded that HCFA’S
    instructions requiring claimants with disputed arno~.~~ts of at least $500
    to go through a carrier fair hearing before proceeding to the AW were
    valid.

    The revisions to the Part B appeals processhave been in effect for a
    short time and more time is neededto determine if the changes we
    observed will persist. The revisions appear, however, to be fulfilling
    their intended purpose of reducing the number of telephone and in-
    person hearings at the carrier level and providing an opportunity for
    claimants to appeal beyond the carrier level. If the ALJ threshold was
    lowered to %100 to correspond with that currently used in the Part A
    appeals process, the number of casesappealed to US could be expected
    to increase substantially.
    The percentage of carrier hearing decisions resulting in payments to
    claimants decreased after the introduction of mandatory on-the-record


    Page 43                   GAO; lilux#57 P&nB changesm MedkmeAppcds Pmceu
--       .-




              hearings. Becausewe did not have case-specific data, we cannot elimi-
              nate the possibiiity that other factors, such as casecomplexity, case
              meet. or a change in carrier po!icy, may have influencd the changeswe
              are observing.


              As agreed with your offices, we did not obtain written agency comments
              on this report. However, we discussedits contents with HCFA officials
              and incorporated their commentswhere appropriate.
              We are sending copies of this report to the Secretpry of Health and
              Human Services,the Adminis+ator of HCFA, and other interested parties,
              and we will make copies available to others on request.
     .
              Please call me on (202) 275-1555 if you or yout staffs have any ques-
              tions about this report. Other rnaior contributors to this report are listed
              in appendix V.




              Linda G. Morra
              Director, Intergovernmental
                and Management Issues




              Page7
                   a,.“-                           .   .                       -.   ._   .ll-__   ___




ContRnts


                           A
Letter                                                                                                   1
Appendix I                                                                                              12
Part B Changes                 110~ the Xppmls I’mwss Changed                                           12
                               Combin Effwr of Changw on Caw Outcomt~ at the                            13
Appear to Be Fulfilling            Carrirr Level
Their Purpose                  Changes in Casts ilev.ic’wd by Hearing C)ffkers After the                21
                                   lntrclduction of Mandatory c3+thc-Ktwrd karings
                               Espwtcd Xppcals     to an ALJ if the Thr&mshold
                                                                             Was                        30
                                   1mvcrt-d
                               Congressional Intent RegardingI’se of Carrier Fair                       31
                                   Ilcilrin@  for Claims .4ppealcd to ALls

Appendix II                                                                                             33
Case Sampling
Methodology
Appendix III                                                                                            3.5
Survey Form Sent to
Medicare Part B
Carriers
Appendix   IV                                                                                           40
Estimates of the
Potential Effect of
Lowering the
Threshold for Access
to an ALJ
Appendix V
Major Contributors to
This Report
                                                                    .”. -““l.-




                                                                                 -

Tables    Table I. 1: Claims Denied in Initial Determinations by
              Claims Processors,for All Claimants
          Table 1.2:Outcomeof CasesReviewed by Claims
              Processors,for AH Claimants
          Table 1.3:Outcomeof CasesReviewed by Hearing                           21
              Officers, for All Claimants
          Table 1.4: Hearing Officer Reviews, by Claimant Group                  23
          Table 1.5:On-the-RecordHearings, by Claimant Group                     24
          Table 1.6:On-the-RecordHearing DecisionsFavoring                       25
              Claimants, by Claimant Group
          Table 1.7:Telephone and In-Person Hearings, by Claimant                27
              Group
          Table 1.8: TeIephonc and In-Person Hearing Decisions                   28
              Favoring Claimants, by Claimant Group
          Table 1.9: Sumber of Appeals to AU, by Claimant Group                  29
          Table I, 10: Expected Appeals to an ALJ at Different                   31
              Thresholds, by Claimant Group
          Tabie II. 1: Weights for Sampled Casesin Six Carriers                  33

Figures   Figure I. 1: Medicare Part B Appeals ProcessBefore
              January I,1987
          Figure 1.2: Medicare Part B Appeals ProcessAfter                       14
              Addition of AlJ and Mandatory On-the-Record
              Hearings
          Figure 1.3:Claims Denied in lnitial Determinations by                  16
              CIaims Processors,for All Claimants
          Figure 1.4:Outcomeof CasesReviewed by Claims                           1.8
              Processors,for All Claimants
          Figure 1.5:Outcomeof CasesReviewed by Hearing                          20
              Officers, for All Claimants
          Figure 1.6: Hearing Officer Reviews, by Claimant Group                 22
          Figure 1.7:On-The-RecordHearings, by Claimant Group                    24
          Figure 1.8:On-the-RecordHearing DecisionsFavoring                      25
              Claimants, by Claimant Group
          Figure 1.9: Telephone and In-Person Bearings, by                       26
              Claimant Group
          Figure I. 10: Telephone and In-Person Hearing Decisions                28
              Favoring Ciaimants, by Claimant Group
          Figure 1.11:Appeals to an AU, by Claimant Group                        29
          Figure I. 12: Expected Appeals to an AW at Different                   30
              Thresholds, by Claimant Group


          Page9
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          Figure !V. 1: Expected Outcomesfor    Beneficiaries at a     41
              $500 AW Threshold
          Figure IV.2: Expected Outcomesfor     Physkians at a $500    42
              AW Threshold
          Figure IV.3: Expected Outcomesfor     Sonphysicians at a     43
              $600 AW Threshold
          Figure lV.4: Expected Outcomesfor     Beneficiaries at a     44
              3 100 ALJ Threshold
          Figure IV.5: Expected Outcomesfor     Phystcians at a $100   45
              ALJ Threshold
          Figure IV.6: Expcted Oulcomes for     Konphysicians at a     46
              $lCO ALJ Threshold




          Abbreviations
          ALJ          administrative law judge
          GAO          General Accounting Office
          HCFA         Health Care Financing Administration
          SSA          Social Security Administration
BLANK PAGE
     Pmgt I1
Appendix I

Part B Changes Appear. to Be F’ulfii


                  1
                      Medicare Part B claims are submitted to carriers for payment fat health
MGWthe Appeals        care services provided under the program. The initial determination on
Process Changed       coverage and amount of payment is madeby a carrier claims processar.
                      If a Medicare Part B claimant-an individual beneficiary or a m4.tca.l
                      provider such as a physician, laboratory, or supplier of medical equip
                      ment or services-is dissatisfied with the initial determWation, the
                      Medicare program provides specific appeal rights. At the carrier level,
                      claims processors and hearing officers have key roles in the appeals pro-
                      cess, As shown in figure Ll, before January 1987,claimants had no
                      options for appeal beyond the carrier level.
                      Becauseclaimants expressed concerns about t!! fairness oftheprocess
                      described above and its limited opportunities for appeal two significant
                      legislative and administrative changes were made.

                      First, effective January I, 1987, the Congressprovided options for
                      claimants to appeal to an AW and, ukimateiy, to the federal coWI
                      Although these options made it possible for casesto be appealed beyond
                      the carrier, the Congress limited accessto these levels of review by
                      establishing disputed amount thresholds-S600 for appeal to an ALI,
                      and $1,000 for appeal to the federal courts. With this change, HCFA
                      required all casesto go through a carrier fair hearing before being
                      appealed.
                      Second, in 1988. HCFArequired that essentially all casts invoking $100
                      or more go through an on-the-record hearing before they becameeligible
                      for a telephone or in-person heaxing.2Implementation of these requirr+
                      ments wirs phased in by carriers during the period April ti June 1999.
                      Figure I. 2 shows the appeals process after the changes were r&e.




                      ‘The Onmbts    &dget   Recvnnliatinn   Act   of 1986   (P.L   99509.   sectla\   9341).   B   the   social
                      Secunty  Ad.

                      2~ceptbns    allowed by.HCFA for camers not conducting on-*J-lelmdhcuiryls~whm(l)theon-
                      therecord  hearing will s~grukantly delay the in-pwson heauing qwsccd.      (2) the facts of the case
                      can only be developed through oral testimony, and (3) a differwt heuMg offii       is IW a~ailabk WI
                      conduct m-person heanngs.
Figure 1.1: Meddleam PaR 6 Appeals
Process Etafore January i, 1987
                                                                         MedlUre
                                                                        Part fi clarm




                                                                                                                                       +
                                     Drspute II00                                                     3rrpute     less than $100 -
                                           or more                                                              no furthef l ppeat


                                                          v
                                                  On-the-record.
                                                telephone.     or wt-
                                                 person hernng                                                                         4
                                                                                                                        Clam    pald
                                                              cfdtm     dented
                                                                                                                                            I




                                      1 A ‘carrier review  1s a rewew of wr11ien case documenlalron              by a ckwns orocessor           olher than the cne
                                     lhat made ihe rnrhal determlnatm

                                     2 Claimants could sell      one 01 lhree types of hearq    otker    rewews.    all of which were referred to as
                                     “carrier lalr hearrngs   The clwces were on-the-record,”       ” tn-person,” or “telephone      ” The onn-lhe-
                                     record hearings were evaJualYMs ol the wrtlen case docunenlatron              whrch did not pow& clairnanls
                                     wrth an opportuntly IO make an oral presenfahon Or gwe fe$trwy              (HCFA alsa refers to these as ‘*or+
                                     Ihe+xord     decislons ‘1 Further. If clarmdnts selected the orMe-recrxd        hea, rng. tf&y couid not subs.+
                                     quenlly request an v--person or telephone hearrng

                                     3 Throughout        the process. clarms may        be d~smlssed by catrws     lor procedural   reasons, such as mrssad
                                     fllmg   deadlmes.      or be whdrawn   by Ihe      clarmanls.

                                     4 A claimant may combne              denred claims to meet monelary lhresholds

                                     5 Al each level of rewew Ihe determrr&ron made ai the prla levei 01 rewew may be altnmed In whole
                                     m ltle carrier s lavor Warm den&)  or reversed m whcbs or m part u1 Ihe clarmanl’s iaw (&rm pard).

                                     6 Dtsputed amount      relerS to Ihe dhrence   between IYe amount brl!ed and he a-1 aflowed !ess
                                     unmet deducliole and coinsurance As the case goes through the process the drspuled amwnl m&f bc
                                     reduced II demons   result an parlral payments of the drspuled arwunl

                                     7 HCFA procedures    allow for the reopening ol cases under lrmrted circumstances                     and for lhe accept-.
                                     ante JI appeals l~led late where good cause. 1s shown




                                     Page     13
lgum 1.2: Medlum         Part B Ap~~lr    Procors Aftw Addltlon of AW and MJndJtory On-UwRuord                        Hmrlngo           I.




lardatory   on-the-
    record hearqs                                          on-the-record
  Itwoduced    from                                                                                                   Clam pard
  Aprrl     I through
                                                                                                                                    I
     June 30.1988
      -,                           Dnputeor mOre
                                            1500


                                                                           Telephone  or in-
                                                                            person hearlng                            Claim patd




U hearing o~tlon                           Admmrstratwe
                                                                                                                                    b
   tnrroduced on                                                                                                       Clabm pald
  January       I,1987
  .                                                  Clam denled

                                             SSA Council                                                                            b        .
                                                                                                                       Clarm pald
                                                      Claim den&
                                                                                                                                    b
                                                                                               DlSpUte   1-S   thdn$1 .m -
                                                                                                         no further appeal




                                                                                                                                                 .
                                                                                                                                                  ,-



                                                    Put    14
                          1 4 earner raw?w IS a rpwew 01 wntlen case docummtallon by a clams prcc~rsor             olher lhan the one
                         ‘vho made Ihe mtrai delermrnallon

                         2  A!! caoes lppcakd    aller the camei revmw. w11k some exceplmns are rqwred to go tncougn Ine on.
                         tneecofd    cama for hmnng Claimants lnllrllly rqr*rIng     the wr-tk-recorti henrmg cannot sutse
                         qwntly rqwst      a tedepfmne of m-patron *arulg.                                                                      ..
                         3 Tnroughoul the prccees. clauns may be d6m~saed @ carr~s            :of p~cedual   reasons. $uch as mrssed
                         fhng deadlmes 01 be w~ltultawn by tt~ clarmantr

                         4 A clamant   may ccnnbne chmttd Ckim        10 mM   mmeUry     WmHolcls

                         5 At each kval al    rwmw. the deltrm~nalm     Mds a1the pior kvel 01rewewmay be atl~tmedIIIwhok
                         m the carmr s ln#I     (Clam clemed) of reversed n whole 01 #I part m the clatmant’s favor (clam pod)

                         6   “thspuled       nmounl” toters to the ddfsrence b~clwacn llw nmmnt bled nnd thy amount nlkwmd less
                         ~nm.it deductmIe and comsurance            As the case oosr though the process IM dmpuled amcunt may be
                         reduced       II decmms :esult VI parhal payments ot the d~spulecl arnounl

                         7 Any clatm appealed     to a Sccml Secunty Admmtstralan      (%A)   AU can b further appealed   to lhe 884
                         Appeals Coum~l

                         8 HCFA procedurea allow lor the reopenmg ot Cases under km&U crrcumstances            and for the accept-      /
                         ame of appeals Mod late where “good cause” IS shown
                                                                                                                                                     I



Combined Effect of       duction of mandatory on-therecord hearings and the addition of an AW
Changes on Case          appeals option to the Medicare Part B appeals process we analyzed HCFA
ktcomes at the           data on cases reviewed and case outcomesfor the period October 1984
                         through March 1989, aggregated by quarter for all claimants. We
krier  Level             focused our analysis on three key steps at the carrier level: the initial
                         claims determination, the carrier review of the initial determination, and
                         the hearing officer review. There was littie change in the percentage of
                         claims denied in the initial determination by claims processors after
                         introduction of the ALJ appearsoption and the mandatory on-the-record
                         hearings.3 (See fig. 1.3 and table 1.1.)

                                                                                                                                            .




                          3Statlstlcal tests to determme if a s#nlficant dlfferenfe ia case cut-      extsted after the introduc-
                     .   ‘tlon of the ALJ appe& option and mandatory on-therecurd carrier fair hearings were found to be
                          inappropriate    for the HCFA data because of the few data points available after the changer were
                          made.
Figure 1.3: Claim8 Denled in InHkl Datmnination8                       by Claims Plocorsof8. for AHClabvwnta (93              1%4-t&     19EJ)

50      PWCMlDlCWnUFll8d~OUWW




20


                                                                                                                                              y:..
10                                                                                                                                             ... j y.,:




0

 1985
 F&al    Yar


               AU heating     apEoninlmduced        on .knuary   1. 1987

               Mandatory    ‘on.therecord’carrier      farr hearings   were phased-in   by Carriers during he pmiod   April I- .kme 30. TW8




                                                            P8gc 16
                                                                                                                                               -




Table   1.1:G&ma D~i0d in Inithl
Detwminatlonr by Claim8 Proce8roW                                                             Numbu of claims
for All ClaImant (Ocr 1984.Mar 1989)                                                                                  DankdIn
                                       Flacal year/quarter                              P-d                   wt!daerlnpaft                   Pwant
                                       1965
                                                            1st                          60.956,980                   10620.677                       17.4
                                       -
                                                           2nd                           66,759,%5                    10.429.709                      15.6
                                                           3rd                           5B,562+820                   10.316,469                      15.0
                                                           4111                          70,9&X8                      rt,122.929                      15.7
                                       1966
                                                           191                           70.766.370                   12,467,666                      l7E
                                                           2nd                           69.624439                    11.792.653                      16.9       -
                                                           3rd                           76,337,4&l                   12.509.586                      16.4
                                                           4th                           82.120,678                   13925.276                       170
                                       1987
                                                            1st                          77m273.969                   14,224,361                      18.4
                                                           2nd                           84650,180                    15744,599                       18.6
                                                           3rd                           87,?24,&6                    t5.f40.995                      17.3
                                                           4th                           88.413.489                   14979.330                       16.9
                                        .---
                                       IARR
                                                           1st                           88.44i920                    16.187,746                      18.3
                                                                                                                                                             .       c
                                                           2nd                           94.249.452                   16.072.492                      17.1
                                                           3rd                           97.799.881                   15,887,506                      16.2
                                                           4th                           96.422.182                   16.591.504                      17.2
                                       1989
                                                            1st                          94,607.707                   17.133378                       16.1
                                                            2nd                         101.917.076                   18.381551                       18.0


                                       At the carrier review level, after the legislative and administrative
                                       changes were made,the percentage of cases dknissed or withdrawn
                                       increased, particularly after the introduction of mandatory on-the-
                                       record reviews. However, the data give no indication of a significant
                                       change in the percentage of carrier reviews that affirmed or reversed
                                       the initial determination,’ (Seefig I.4 and table 1.2.)




                                       ‘Stat@tical rests to determine of a sigmfkant differs      III cmz outcomes  existed   after   thy   Mroduc-
                                       tm of the AU appeals o&m and on-therecwd             rewewswwcfouodtobebmppropriakforthe
                                       HCFA data because of the few data points awLable after the changes were made.




                                       Page 17                                GAO/HRD-W67PutBChaqeav,MedkueA~Prucen
Flgun 1.4: Outcome of Corer Aovkwmd by Cldmr Pmcwwrs,                                for Al Cwrmrfta        (Oct. 1W-Mar. 1989)
loo   PuaIIl8lI~~pr-


 YI
                                                                                                                                                                       /




      -          Rgvonedin*hole~rinpM(indsimvlnIPvw)
      1---       Afbned(norindwnMfsfaWr)
      -          oisfni888d w wdldmwn

                 AW hearing option introduced       on January    1. 1987
             I
                 f&dacory    ‘on-thwecord’      carrier fair hearings   were phased-in   by ca’rbr8   during ttm pabd   A@l I -June 30,leeS


                                                           Note These are admuwstralwc rewews of the clampnts papwork        made b, a wne~   c&~ns pr-ssor
                                                           other than th6 one who made the tntt~al clams paymenl OT coverage determmattans
                                                                                                                                                                   I
                                                                                                                                                              -Y   I




                                                           Page 18
~         ~~~~~
Table 1.1: Odcomm of Cares Reviewed by Clrlmr Procoal~n,     for All Clalmrnta (Oct. 1984Mar. 1969)
                                                                               RevbwdocWom
                                                                               R=Ine
                           Number of                Affirmed                             Pat-8                      Oblll8Ud/WlthdTWll
Filcrl y~ar/qurrtor          rovlawr                 No.     Percent                 No.     Pwcent                              No.     Percent
1985
              1st             808.590            329.637           408               476.644           59.0                    2.309           03
              2nd             c m33              364739            386               577.m             610                    3.465            0.4
              3rd              979.316           357.491           365               618.140           63.3                   3.665            0.4
              4th            r.OO2.707           363.718           363               633.925           63.2                    5.144           0.5
1986
              1st            I.035263            330.559           368               643.115           62.t                  11.589            1.1
              2nd            1.182726            436.750           369               738.396           62.4                    7.560           0.6
              3rd            1.119.511           451.818           404               658,674           58.8                    9.019           0.8
              4ttl           1.230.776           M2.775 --         409               722,347           50.7                    5.666           0.5
1907                                                                                                                                      --
              1st            1.156.441           466.414           403               686,655           59.3                    5,372           0.5
              2nd            1.324.846           550.127           415               767.806           9.0                    6,911            0.5
              3rd            1.455.169           569.124           39 1              878.555           60.4                   7.490            0.5
              4th            1‘538.966           636.058           41 3              686.286           57.8                  14.622            t.0
1986
              1st            1.237,490           490,852           397               726.457           50.7                  20.181            I.6
              2nd            1.351.742           571,618           423               746.299           55.2                  33.825            2.5
              3rd            15;9.662            632.225           41 7 .-           045,357           55.6                  42.080            2.8
              4th            L596.937            702.966           440               841.076           52.7                  52,875            3.3
1989
              1st            1.314340            555.714           423                702.759          53.5                  55.867            4.3
              2nd            134b.360            550.426           41 1               706.401          52.7                  83.533            6.2


                                         At the hearing-officer level, the percentage of casesafficd by carrier
                                         hearing officers increased after the introduction of mandatory on-the
                                         retard hetings. (See fig. 1.5and table I.3.y




                                         “StatmcaJ   tcuts to dctwmmr    If a slgnrficantdifference extsted in the pemmageofcasesafti~
                                         after the mtruductwn    of the AI-J appeak oprwn and on-therecord      l-evwws wm found to be inapprw
                                         @ate becauseof the fw data plmts avaiable after the introduction of -change.
                                                                                     I                 ,-..
0
                                                                                         I---..               ,,,-,,




    -        Rewed in wbb of in pprt Cmdahanh faKw)
    ml--     Altbned(mtin~n’mt’skvc4
    m        fhmissdorwiLMmm

         I   AU heating apt&n Woducd              on January I.1987

    I:
             h.landatory ‘on-Ihe-record’carrier      fair hearings wre phased-in by canbta during Wmperiod Apd 1 - June 30.1968




                                                        Page 20
tble 1.3: Outcome of Case@ Reviewed by   Herrlng   Offtcrn,   for AtI CWnmtr        (Ott 1984-Ma~19891
                                                                                      Review Dectwnr
                                                                                     Reversed       in wtde
                          Number of                   Ammled                                or In DN#                Dlsfn~~
rcrl yerr/qusrlrr           rmvisws                    N8.   Percent                          No.    Poesat                    No.   Pariiit
                     --
85           _----
             1st                7.3w                  2.046         276                     3.477             47 ;         1.831          a 9
_____-~-.~ 2nd                 ?.650                  2.054         268                     3.69s             48.4         1.927          25.2
_~--       3rd-. -----         a.231         --       2.107         256                     3.680             448          2.434          296
-l_-i       dlh                 7.271                 1.933         26 6                    3.487             47.7         t.871          257
36                   -~
            ist                7.194                  1.129         240                     3.399             47 2         2.066          28.7
-           2nd                6287                   2.161         26 1                    3.695             446          2.431          29.3
            3rd                 9.175                 2.219         242         -           4.162             45.6         2.774          30.2
---_---____ dill               10.606                 2.555    -    24 1   --               5.405             510          2.646          24 9
37
             1st               9,590                  1.976        20.6                     4.608             4.1          3.006          31.3
            2nd               10.266                  2,536        247                      4,590             446          3.m            30.7
            3rd
            II_.--            13,598                  3.976        292                      5.6'9             418          3.943          290
            4th               14.8?0                  3,762        25 3                     7.312             49.1         3.816          25.6
38
~-___
            15'               13.679                  3,644        266                      6.344             46.4         3.691          27.0
            2nd               17,277                  4,597        26.6                     7.979             46.2         4,701          27.2
            3rd               17.952                  5,830        32 8                     7.385             41.1         4.677          26.1
----        dlh               18.724                  7.239        387                      7.223             36.6         4,262          22.8
19
            1St               14819                  5,236         35.3                     6.265             42.4         3.298          22.3
            2nd               15,873                 5,525         348                      6.274             385          4,074          25.7


                                           Data obtained from 47 Medicare carriers indicate that the majority of
hinges in Cases                            casesreviewed by carrier hearing officers before and after the intro&c-
eviewed by Hearing                         tion of mandatory on-the-record hearings invoked physician daims.
fficers After the                          However, the percentage of physician and beneficiary claims reviewed
                                           decreased after the introduction of the mandatory hearings, while the
kroduction of                              percentage of claims involving nonphysicians showed the only increase
andatory On-the-                           (from 10.4 to 16.2 percent). (See fig. 1.6.andtable 1.4.)
xord Hearings




                                           Page 21
JW 1.1: HowIng #&or       RmuJdwa, by
aimantOroup(Jan.   1987+Aar   1969)

                                        50



                                        40



                                        30



                                        20



                                        10




                                         0




                                        Page22
r&b   1.4: Hsartng Officer Reviews, by
:I&mrnt Group (Jan 19d7-Mar 1989)                                                                      Cases     revlowed
                                                                                         eelon                                    At&r
                                         Claimant group                           Number               PWCMt            NUttlbW            Pwcont
                                         Benefrclanes                                lO.ooo               400                7.600            36.2
                                         Phyorclans                                  12,400               49.6              10,ocO            47.6
                                         Nonpnysmans                                  2,600                104                3,400           16.2
                                         All claimwta                               25,ow                100.0              21.m             100.0
                                         b’olc These data retlecl me numbs 01cares. rounded IOIhe nearest hunclred. thal were revtewecl by
                                         h. >anng olf~ew at the came6 partrvalmg    tn our sludy The “belore” an&lys~s includes cases rewewed
                                         frc ,n the mlraductlon 01 the ALJ appds opt~n on January 1. t987. to the tune each camw mrroduced
                                         Ihe ,nandalory andhe-rec*rU twanngs lsomettmc dufmg the period Apnl IO Jw-+e 1988) The “afta”
                                         analyrlr mcludea cases revlewd by each camef Wn the lrmlt each tamer ntroCuc?d the mandatory
                                         m-the-record    heamgs to March 1989. the most cufmt data avadable al the t~mc we ~xlkxted dw
                                         km the tamers


                                         Before the introduction of the mandatory on-therecord hearings, 70.8
                                         percent of all cxes had an on-the-record hearing a: the carrier level
                                         compared with 100 percent when these hearings were made mandatory.
                                         While a greater percentage of casesfor all claimant groups had an on-
                                         therecord hearing after they were made mandatory, cases involving
                                         nonphysicians had the greatest increase. (See fig. 1.7and table 1.5.)




                                         Page 23                             GAO/HRDW6f          Pur   B ChrnQcs    to Medicare    Appt&   Procen
lqura 13 On-the-Record Hearings, by
l&llml Group (Jan 1987-Mar 1989)
                                      Pwmnl   d MI aca




ebie Ls: On-the-Record Hearings, by
Iaimant Group (Jan. 19WMar 1989)                                     Before                         After
                                                                     OWhe-                          Oli-thO-
                                                           Total      record                 Total record
                                      Claimant group      ~sses     hearings Percent       cases hearings Percent
                                      Benefmaries         lO.ooO        6.503    650         7.m     7.600     1coo
                                      Physmans            12.400        9.600    77 4       101ooO  10,m    -- loo.0
                                      Nonphysicms          2.600        1.600     61 5       3.400   3.4cKl    103.0
                                      All claimants       26,000      17,7go     70.8      21,400  21,ooo     loo.0


                                      The percentage of on-the-record hearings that resulted in paymentsto
                                      claimants was greater for all three claimant groups before these hear-
                                      ings were made mandatory. Physicians had the highest percentageof.
                                      favorable decisions (70.8 percent). After the introduction of mandatory


                                      Page    24                   GAO/liEDSM7 Part B Cban@~ UJMedleueAppda    Pnnxaa
                                                                                                                                             .




                                      on-the-recxxd hearings, physicians still had the highest percentage of
                                      favorable deGziions (47.0 percent) while all claimants had a favorable
                                      rate of 41.9 percent. (See fig. 1.8 and table 1.6.)


Flgun 1.8: on-lheAacord   Hasring
Dacb&nr    Favoring Cbhnta,     by    loo   -dRdwndcwr
Clahnanl Group (Jan. 1967.Mar 1989)




                                      Note An omthe-record     camer fa# heuvlg ts an evalualun of wrItlen case documen!arKm tq a arrle,
    .                                 htarmg Olfcer
                                                                                                                                             r
Tabk 1.6: On-the-Record Hearing
D8chiona Favoring C~aimanta, by                                    Before                                        Mar
C!aimant Group (Jan 1987.Mar 1989)    CIaimanl              Case8 Favombfa                              Cases Favomble
                                      OWP                revlewed dwisiona           Pwcmt           mviewed
                                                                                                      ~__     deciaha            Pefcent
                                      Benetbclartes           6.x0         3.400          52.3            7,600        2.600          342
                                      Physclans               9.&M         6.800          70 6           lO.ooO        4.700          47 0
                                      Nonphyslclans            1,600       1.100          68.6            3,400        1.500          441
                                      All claimanks          17,700      11,joo           63.1          21.ooo         8.noo          41.9
The percentege of casesthat had a telephone or in-person hearing
ranged from 22.6 percent f<,rphysicians to 38.5 percent for nonphysi-                               I
citins before on-the-record hearings were made mandatory. I3y compar-
i?;cln.after these hearings were made mtidatory, the percentage of cases
having a telephone or in-person hearing was significantly lower for all                                 1
thrtv claimant groups-3.2 percent for physicians. 5.9 percent for non-                                  1I
physicians, and 9.6 percent for beneficiaries. (See fig. I.9 and table 1.7.)




Note ‘Telephone” and “ln-person’. tamer fajr heamgs are conctucled   by a cams   hewq   ot(~w and
prowde clamants with an oppcrtumty to gwe wal lestunmy




Page   26
ciia 1.7:Tekphocnsd In-Pwsm
Mssff    I, by clslmslli   Group                                   Befots                             NW
(Jan.1 %I 7-Mar. I=)
                                                                  -w--
                                   clalmanl          TooIl   l din-panon                Totsl8#ltc~
                                   W-P                              hosfingmPerwnl     cues           h+ulngr-
                                   Bl!lll~flCl~eS   lo.m             3,400      34.0    7.600              730   9.6
                                   Physlclalls      12.400           2.800      22.6   lO.ow               320   3.2
                                   Nonphysmns        2.600           1,cm       38.5    3.roo              200   5.9
                                   Ati dalmrnts     25,004           7m         21.8   21,wo            lZS0     0.0

                                   The percentage of telephone and in-person hearing decisi-orwresuiting in
                                   payments to claimants decreased from 61.1 to 37.0 penxnt after on-the-
                                   record hearings were made mandatory. The greatest change involved
                                   cases filed by nonphysicians. Favorable decisions for this group
                                   decreasedfrom 70 to 40 prcent. (See fig. I. 10 and table 1.8.)




                                   Page   27
                                                                                                                                    ---
                                                                                                                                             .-




1--v  . . _-. .-.-r   ..-.--   -..-...   -          ..-
mring     Ddhnr      Fevorlng Cklmmt8,   1oQ   -da-Cur
I Clshant      Group yan 1987Mar 1989)




                                         Nate “Telephones’ and “In-person”   earner I~II hearings ens conducred   by a camef heaq     ohxr        and
                                         pow&   ctaunantr wtll an opporluntty 10 gve Oral teslmony


 bie 1.8: Telephone and In-PbrSOf!
 Baring De&ions    Favoring Cfain~nts,                                         3efom                                      mu
 CIJment Group. (Jan. 1987Mar. 1989)                                  Cases   Favorable                         cams Fsvombls
                                         Ctalmant group            reviewed declrbnr     Percent              revieweddecldatm     Pucmt
                                         Benetslares                    3.m        1.6cm     47.1                   730        200    274
                                         Phvslclans                     2m         2.100     75.0                   320        190    59.4
                                         Nonphysluans                   l.ooO        700     70.0                   200         84    40.0
                                         All cl8inuntr                 7.200       4.4M     81.1                  1.250       470     37.6
                                         Note FOI tha andysrr a favorable dec~srcn IS dehned as cme that revews.      III whole OI +npart. the
                                         earner s pnor dec~sron and results in a payment to the clarmanl


                                         A higher percentage of caseswas appealed to ALISby all three claimant
                                         groups after on-the-record hearings were made mandatory, with
                                         optional telephone and in-person hearings at the carrier. The greatest
                                         change was in beneficiary cases;about 16 percent were appealed to an
                                        ALI after on-therecord hearings were mademandatory, compared with
                                        11 percent before. For all claimants, the percentageof casesappealed to
                                        ALITincreased from IO.8 to 12.9 percent. (Seef&I. 11 and table 1.9.)


Flgun 1.11: Apped8 to an AU, by
CWnmt&oup(Jmn.      1967,b'qr. 1989)
                                        50    hetntdAar


                                                                                                                                                     .,
                                        40


                                        30




                                                                                                                                                     e.
Table 1.9: Nwnbw of Appdr  to ALJ, by
ClaimantGroup (Jan 19%'~Mar 1989)                                       BdOf8                                            Artor
                                                                                                           Total       Appd
                                        Ctalmaat group      c:zii      tot!xz!i           Patcent         uws       to mAW            Percent
                                        Beneftctartes       lO.mo                 1,100       11.0         7.600            1,200         15.8   ;
                                        Phystctans          12.400             1,500         12.1          10,000           1,300         13.0        .
                                        Nonphystctans        2.600               100          3.8           3400              200          5.9
                                        All ctatmantr      25,000             2,700          10.8         21,000           2,7M          f2.9




                                        Ply   29                     G.4O/Iil?lbso(n       Pan B Cbang~     co Medfcwe      Appeala   Rofcu
                                                                                                                                            :
                               -
                                       The cxpcctcd percentage of casesappealedu) ALE would be much
Expected Appeals to                    greater if the Part B ALI threshold was loweti from $600 to $100 [the                                    _
a.nALJ if the                          threshold used for xxxss to ALJS  under Part A). At the $600 threshold,
Threshold Was                          we estimate that 11.6percent of caseswould be appealed to ALIS,while                             c
                                       at the $100 threshold, about 21.1 percent of caseswould be appealed.
Lowered                                (Seefig.I.12and tableI.LO.Alsoseefigs.IV.l-nr.6.)      .                                             .

~tpa 1.12: Erpectod Appaalr to an AU
at DIfferant Thhnaholdr, by Clalmant
QroUP


                                       40




                                       Me Currm~tly. to appeal to the AU under Me&cart Part 8. Ihe dtsputed amounl must be 5500 w
                                       mate In contrast. to appeal IO the ALJ under Ma&care PalA (tIosptal-rtiattd strwts). Iht d&p&d
                                       amount mast be $100 or more




                                       Page 30
                                                                                                                                                                      -.




TJ~~J 1.10: Expectd Apperls to an AU
nt Dittorent Thnsholdr, by Cirimrnt                                                      At $saO Uwmshold                                        At $100 thshotd
Group                                                                                                                                                E-
                                                                                     TOW E-+zi                                               TotJl
                                       Ciaimnt group                             CJSM                wPJ--                                  CJJJJ      SppaJIS Percant
                                       Benetrkanes                                  1o.m                    7.S?9           15.8            lO.ooa        3.123    312
                                       Phyrlclans                                   10.cQo                  1.269           12.7             10.m             1.840            18.4

                                       Non~hys~cian~                                lO.ooo                    604            60             10.000            1.368           13.7
                                       All dJirnJntJ                             aQQ0                   a152                11.5           3om               ax31             n.1
                                       Note Far the anslyos. we assumedIhatthe pattern 01O~CI)YXIS
                                                                                                 andsppds for lO.ooO -for                                                    &
                                       clamant   group at a IloO            threshed         would    be mC swns        as it was   la   tha actwl   cases   we rs~~~ed      itm
                                       were subpct    IO Ihe 5500           threshotd




                      Although the Congress originally intended to eliminate carrier fair hear-
Congressional Intent  ings for ciaima involving disputed amounts of more than $600, and
Regarding Use of      allow them to proceed directly to an ALJ,subsequent events make it dif-
Carrier Fair Hearings ficult to determine whether that continues to be the congressional
for Claim Appealed to intent’
ALA                                    The Cmnibus Budget Reconciliation Act of 1986 amended the Social
                                       Security  Act to give Part B claimants the right to AIJ hearings for clis-
                                       putes where the amount in controversy exceeded $600. After the
                                       amendment was enacted, HCFA issued instructions rquiring claimanta
                                       with amounts in controversy of more than $500 to have a carrier fair
                                       hearing before proceeding to the ALIP A federal district court found that
                                       the Congress hcd intended the 1986 amendment to foreclose the useof
                                       carrier fair hearings for these claims.’

                                       In 1987, the Congress amendedthat part of the statute which prescribes
                                       that carriers must provide a fair hearing for Part B claims between   $100
                                       and $500. This was a technical amendment, making no subs’antive
                                       change in the law. However, it was made at a time when the Congress
                                       knew of HCFA'Sinterpretation of the carrier fair-hearing requirement
                                       and was aware of the litigation. Subsequently, the district court, which
                                       had heard the original suit, concfudedon rehearing that the 1987
                                       amendment, in effect, ratified the position of HCFA and that the instruc-
                                       tions were valid.” The decision was basedon the fact that the Congress,
                                       knowing of the dispute, had refrained from changing the law. The U.S.

                                       “Medwa.rc          !hnual   Instmcrmns.          para.     I!201 51%.

                                       71saacs         v. Ehwen.   683   F. Supp.     930.93.4       (SD.     S.Y   l!W).

                                       %edicare           Manual   Inscrunlom.          at !a%.




                                       Page       31                                            CAO/HRDBM7              Put    B Changer      to Medicwe      Au~ds        Pmcen
Cam of Appeals for the SecondCircuit, hearing an appeal of the dis-
trict court decision in 1989,upheld this district court decision.D

The Court of Appeals found that the Congress had an opportunity to
eliminate the carrier fair-hearing requirement in 1087, when it amended
selected aspects of the provision, but did not clearly do so. The court
believed that the 1087 act gave an “affirmative, legislative indication”
of the Congress’ willingn~ to leave the fair-hearing requirement in
place, at least until we completed our smdy. The court found “a visible
expression of congressional approval of the agency’s po&io~”
The legislative history and the Languageof the law provide support for
the conclusion that the courts ultimately reached-that the Department
of Health and Human Services,and thereby ~ICFA,       may require claimanti
to have a carrier fair hearing before going to an m-but they do not
permit a deftitive conclusion about congressional intent. However, even
if legislative intent to prectude carrier fair hearings for claims over $600
was clear in 1086, as the courts thought, the Congress’ action in 1087
and the Court of Appeals’ opinion in 1080 make it difficult to conclude
that this remains the legislative intent.




                                                                           .-   -
%aacs    v. Bwxen.   865   F. 2d 468   (2d Cir.   I!B9).




Page    32                                 GAO/HlUbWS7Part B m   (a Medicarew   Pnmm
Appendix II

Case Sampling Methodolcgy


                                          To determine the changm after the introduction of mandatory on-the
                                          record hearings in case volume and outcomes at the carrier levei for
                                          each claimant group, we obtained individual case data from 47 of the 5 1
                                          Medicare carriers for the period January 1987 to March 1089.’ During
                                          this period, the AU appeals option was in place and the on-the-record
                                          hearings were made mandatory.

                                          We asked carriers to separate casesconsidered when on-the-record hear-
                                          ings were mandatory from the considered before the carrier imple~
                                          mented HCFA’S on-therecord hearing requirement. The tiers       entered
                                          casedata on two forms that we pretested at carriers in New York, Ma+
                                          sachusetts, and Maryland. [See appendix iI1 for the data collection
                                          forms used to obtain individual case data.)

                                          Of the 47 participating carriers, 6 indicated that they were unabie to
                                          provide data on all casesfor the 2-year period becausea large number of
                                          caseswere involved, they did not have an automated filing and retrieval
                                          system, or both. However, these six carriers provided data for a sample
                                          of casesrandomly selected in accordance with our instructions

                                          We constructed a final data set consisting of the universe of casesfor 41
                                          carriers and a sample of casevfor 6. In total, data were collected on
                                          about ll3,006 individual cases.We weighted the sampled cases from the
                                          6 carriers using the weights shown in table II. 1.
Table 11.1:Woightr for Sampled Care5 in
six Carrier5                                                                                           ~mplOd C555           wSiQht5
                                          Carrier                                                           1917                              t99.9
                                          A                                                                      100.0                         87 0
                                          8                                                                       46.9                         48.9
                                          C                                                                       30.3                         59.0
                                          0                                                                              1                     24 2
                                          E                                                                       41.7                         43 6
                                          F                                                                       49.1                         49.1

                                          ‘Data ior 1987 were nol avadabk


                                          The estimates of caseoutcomes obtained through this analysis are sub-
                                          jectto error becauseof the sampled cases.At the 95-percent confidence




                                          ’ We did not obram dara fmm three tamers representing Prudentral of hmeflca klavse           they dwxm-
                                          tmued partrcipatmg   m the Xkdicare Part B program m Late 1SK. We also did not obtain        data fmm
                                          one Aetoa carrw    becauw of its limued Part B appPaIs activity.




                                          Page 33                            GAO/‘HRD-s(M7     Pur   B Changcj     to Medicue    Ap& ti
kvel, the error range doesnot exceed plus or minus 4 percent ir, z~qyof
our estimates.




Page 34
andix   III
SUIWJIFmn Sent to Medicare Part B Carriers


                                                               SURVUY 01 llEOfCARE
                                                     PART       b HSARIWG                OFPI;CE       CASES
                                            WITH        A     DATE      OF    SSRVICB             OY    OR      AFTER
                                                                 JAYUART           91,        1987


              IUTRODUCTION

              This    survey      is being    conducted       by the U.S.    General Accounting
              Office      (GAO) for the U.S. Congress.               The results      will be used to
              help    determine       the efEects       of changes     in the Medicate     Part B
              hearing      appeal    process.       Your help      is needed     in order  to
              complete       this   progect     successfully.        You may wish to consult       with
              the person(s)         who track      and administer        your case load statistics
              when addressing           these Gata requests.
              Before      you begin,    please  check    for accuracy         purposes,                                             your    NAHE,
              TITLE,      and ADDRE3S     on the attached    letter       introducing                                               our    survey
              and     make any corrections       in the space      provided        below:


              NAME                 :

              TITLE                :

              ADDRESS              :

              CITY                 :

              Also,       if        applicable,             please     list   any other                      pertinent            Carrier
              officials              extensively              involved      in managing                      Medicare            Part    B fair
              hearing              ICFH) appeals:




              TXTLB            :

              Please    provide     a telephone       number(s)    where                                     you and,    if
              appl icable,      the other     involved     manager   can                                     be reached,             if    we have
              any questions        about   your responses.

              PHOYB            :


              PHONE            :

              PLEASE           RETURN THIS          SHBBT        WITH        THE         SUBVBY        FORMS.            THANK       YOU




                                                   Page35
                                                                              -



                                  AppendbIIII
                                  Survey Form Sent za M@dhm       Put
                                  B curian




INSTRUCTIONS

Enclosed       are      two data    collection      forms   i.e.,   schedules               -- each
requesting           Medxare     Part    B claimant     and Carrier     fair             hearing
information.

The first         form:       Form A, relates            only     to those          Medicare      Part B
cases   with        a ‘date       of service’        (incurred          by the claimant)            an or
after     January        81, 1987; but,          not be ond the processing                      date used
by Carriers          in implementinq           the
                                                 -       +Caret
                                                       Hea                    Financing
Administration’s               (HCFA)    Part    B Interim         Guidelines           - Hearinga      and
Appea 1 s .      The aforementioned              guidelines           suggested         an effective
date of no later              than May Ql, 1988,              and     instituted         a general
requirement           (with     minor   exceptions)           for conducting             a mandatory
on-the-record            hearing,     whether        OK not an in-person                 OK telephone
hear inq is requested.                 In the sptze           provided          below,     pIease
indicate       Carrier        implementing         date     for     instituting          HCPA’a
interim      guidelines:                           (month)                       (day)              (year).

The second       form:     Form B, pertains      to only     these Medicare    Part B
cases    with    a ‘da te of service’       on or after     January 81, 1987, and
those    considered     by the Carriers       under   HCPA’s      implementing     -
interim     guidelines      which  require    mandatory     on-the-record
reviews,      whether    or not an in-person        or telephone       hearing is
requested.

For the specific         information        requested        under   each column          in the
two schedules,       refer      to detailed       instructions         provide3       belo-*.
Once you have completed             the survey        forms/schedules,          place thee; in
the pre-addressed          envelope      and mail       them as soon as possible,                   but
no later    than Harch        27, 1989.        Also,      i f you have any questions                 or
problems    with the survey,           call    Joe Faley        or Claude      Hayeck       collect
at (202)    523-0666.

PLEASE     RETURN THIS          SHEET WITH THE SURVRY FORMS

THANK IOU       FOR YOtIR COOPERATIOYi
    SpecIPIC             IRPORMATTOR
    Refer     to designated    column    title     headings.                                  Please     note that
    information       below identified        by an asterisk                                  (‘1 only applies             to
    Form B for recording        mandatory       on-the-record                                   reviews.

    Case ReLerence                       Nurber    :
    Identify       by either      an in-house     control       number     (preferable
    identifier)          or a number     in descending        order    for     those cases
    listed.        Also,    depending      upon the Carrier,         the term l casee         is
    sometimes         used interchangeably        with     the term ‘claim”,           use either
    for your       listing     purposes,      but for whatever         definitional       reference
    number      terminology       used,    please   identify       as such and be consistent
    in its      usage

    B          of    Claimant:
    Identify             -;’ a check       mark t>e type        of claimant                      requesting       a
    hearing,             i.e.,     beneficiary         and provider     with                   the latter       further
    classified               as either       physician     or non-physfcian                          (including      durable
    equipment              suppliers,        laboratories,       etc. 1

    Numbet
    ~------         of    Clairrr           In    Each      Case:

    Identify     the number of claims      combined      by the claimant   to reach
    the required      $108 dollar  threshold.         Also,   refer  to TOL 11’
    discussion      on case versus   claim    terminology.

    Oriqinal             Dollar
                         ---              Amount         In Controversy:
    Identify           the original                    dollar       amount     in dispute         at    the   time    of    the
    hearing          request.
+   Mandatory             On-The-Record                   Review       Decision:
                          --P
    Identify       the on-the-recotd-revbew                   decision       as ‘totally
    favorable”         only     if the amount           in controversy          bs totally        upheld     or
    decided      in the whole            amount    for     the claimant.           Likewise,        identify
    any total        reversal        as .totally          unfavorable.”          For all other
    claimant       rulings        involving       partial       amounts      upheld      in the favor        of
    the claimant,           identify        as a “partial’           decision.         Also,    when you
    pre-determined            that     a formal      hearing       was necessary,          identify
    these     cases     as “exempted”           from an on-the            record     review.
l   Dollar
    ---     Amount                  In     Controversy              After
                                                                    --        The Handatory            Oa-The
                                                                                                       ---        Record
    Review:
    Identify             the remaininq                  dollar       amount        in   controversy       after      the    on-
    the-record              decision
                                 Appendix Ul
                                 Survey Form Sent to ~&care          Pm%
                                 BCanicn




*   Clsiaant        Continued         With
                                      P-e       Pa--la1      CFR Appeal?t
    Identify        by    a yes      or    no   answer

    z          of
               -- CFlI:
    Identify     what type      of formal    hedring     the claimant        requested.     In
    the situations        where mandatory      on-the-record         ravicwr     were already
    held,    the telephone       and in-person       formal  tiettln+3       are the only
    options     available     to the claimant.

    CFEI Decision:
    Identify     the Carrier       fair     hearing     decision   as ‘totally
    favorable’       if the remaining          dollar     amount in controversy     in
    totally    upheld       in the favor       oE the claimant,      otherwise,   identify
    any total      reversal      as “totally        unfavorable’    and any partial
    decision    as “partial.’

    Date
    ---        of CFI     Decision
    Identify        by    day,     month,       and      year.

    Dollar
    ---          Amount      In Controversy               After
                                                          --         CFB    Decisiont

    Identify        the    remaininq         dollar         amount     in     controversy   after   the
    Carrier       fair     hearing         decision.

    Appealed       To Au?:
                   --
    Identify        by a check            mark whether,      to        your     knowledge, claiorant
    requested        a hearing            by an Administrative                 Law Judge (ALJ).




                                 hge 38
FORM A




FORM I3
                                                                .
               TYPC
                 Of
               Clrlmelnl
                                                 MInd8
                                                                    rlth   CFH
                                                       RI
       I   (Check Only One)   I Humbrr   I   I        ,El




                              I          I   I        I     I
FCRM
Appendix 11

Estimates of the Potential Effect of Lowering
the Threshold for Access to m ALJ




               . “win”    d~~r~tcsa decision that resclts in a payment co a clairnandllt.
               . “c.(,nfinrlc” denotes a case in which the claim is totally or pilrtially
                 uph&I in tlw carrier’s favor and the disputed amount is equal to P:
                 grcatcr than the monetaty threshold for appeal to an NJ, and
               . “low” dcnotcs a c;l~ in which the claim is totally or partialiy uphdd in
                 t hc carrier’s favor but t hc dollar amount remaining in controversy is
                 ICSSthan the monttary thrcshtrld for appeal to an ALJ.
                 ‘fhcbresults of rhc conditional probability analyses are shcrlvn below for
                 cb:rchvlaimant group for a S5W thrcvvholdt figs. I\‘. I -I\*.3 1and a d l(H)
                 tht~cdudti (figs. I\‘.+l\‘.(i).
Figure IV.l: Expected    Outcomar      for Baneficiarier    at a SSOO ALJ Threahdd

Ewxred      Ourcomer KM 10.000 Cla~mdnts


 Type al Clrimant        On.the.Re<otd              Optional Cdrricf                                                 A@pwkd 10 AU
                         Hcarmg Oecnion             Far Hearing




                                                     Yes           505

                          W<ll          300




                          Continue   4.500




                                                                                                                     Yes      I.485
                                                                                                                                      $
                                                     NO         3.915                                            I
 aenehary      10 000
                                                                                                                1 l-40       2.430




                                                                                                   Will
                                                                             relepnone    62   4
                                                                         I
                                                                                                   Lose    58
                                                     ‘es          264

                          Lose       s.200
                                                                                                   WI0     69
                                                    k0          U 836        in.Person   102   I

                                                                                                   Lose   233




                                                     Page 11
Figure IV.2 E*pected Outcomes for Pkyrlcians at a $503 ALJ ThrrsNd
Eapected Outcomes per 10.000Clamanrr

Type of Claimant     On-the-Record          Opcmnal Carrier         Type of carrier         catmr Far                      Apprakd to AU
                     Hearing Dertsion       Fair Hearing            Fair Heariq             Hearing Decision



                                                                                               Will             a


                                             'fer            iflo                                                          NO          SO
                                        I




                                                                                                                            Yes      1.200

 Phywan    10.000
                                                                                                                      1,    No      4.620




                                                                                               wm               13
                                                                     Telecnone     !00

                                                                                               lore            95

                                             Yes             148

                      Lose      3.700
                                                                                               won
                                             NO            3 552
                                                                     tn.PeqoIl        40
                                                                                           +
                                                                                           1 lore               35




                                             Page 42                              GAO, HJDYO67        Pan   B change, IO Mrdkam Appc&        l’romm
Figurm WA    Expectmd   Outcome        ior b!onphyoictana        at I $500 AU Threshold
Evwctrd   Outcome   per tO.WOCIatmmts


                        On-theWard                  Optianrl Carrier           Type of Carrier               Carrier Fair               Aep?akd to AU
                        Mwing      adsiorl         Fair Hewing                 Fair Herring                  HIPfifSg bcisim




                                                                                Telephone        I IO




                                                    ye5              204


                        Wttl             900


                        Conttnuc      3.400




                                                                                                                                         Yes          544
                                                                                                                                                            b
 Nonphysrcm                                        NO             3.196
          10.000
                                                                                                                                         No        2.652




                                                                           , Telephone           96         ( Lorr            0r


                                                   Yes              399
                        LOW          5.700                                 I                                  Wltl
                                                   No            5.301
                                                                               ...“.“““q--/




                                                   Page     43                                GAO/HELM367        Patt   3 Chrngee   to Med&ue   Appeals         Process
i         .‘,                                                                       --...
ngum W-1: Expected Outcomer for Etenoficiaries at a SlOO AU Threshold
Erpectsd Outcomes per 10.000Clarmants


    Typo of Claimant       On-the-Record       Oprional Carrkr    Type of Carrier               Carrier Fair              AlpplaId   to AU
                           Herring Decision    Fair Hearing       fair M*arinq                  nraring Oecisbn




                           WWl           300




                           Contmue    a.900




    Bcnettctary   IO.000




                                                                                                    Wltl
                                                                   Telephone        10
                                                                                            {-iif                   9
                                               Yes           56
                           Lose




                                               Page   44                       GAO-7                       Pm B Chrues to #edbe      Appsrb R*rrer
                       ~           --                                                                                        -
Figure IV.& Expoctod       Outcomor     for Pf’iyskl8nr      at I $100 ALJ TimMold
Expected Outcomes per IO.000 C!rmwW


Typa of      clrimmt




                                                                               Telcphanc        99


                                                      Yes           261


                           W1l-l          300                                                             Wtn     10
                                                                               In-Person        162                        yes      as
                                                      ---I                                 _:                                            b
                           Conttnue     9.700                                                             LOW    152

                                                                                                                           NO       67




                                                      No          6.439
 Phyrtcrrn    lO.Ooa
                                                                                                                       I   No    6,699




                                                                           i   Telephone        29    c



                                                      Yes            40


                                                                                                          Wlfl     I
                                                      No           960
                                                                               In-Person        1;

                                                                                                          Lose    10




                                                      Page 45
Figure IV.&    Expected   Outcomes     far Nonphyaicians      at a $100 AW    Threuhold

Eroected   Outcomes   Der IO.000 Claomanta


 type of Claimant         On.thc-Record           Oplional Carrver           Type of Carrier               Carrier Fair          Appealed to AU
                          Hcllinp Owirion         Fair Hearm                 Fair Hearing                  Herring Oacision



                                                                                                                         45

                                                                              rulemow       Z&9                                   Yes            33
                                                                                                                                                   *
                                                                                                                        200

                                                                  462                                                             NO           171


                           Win          900                                                                              26

                                                                             In-Person      213                                   ye5          103

                           Contmue     7.700




                                                                                                                                  *es        7,232
                                                                                                                                                     b
 Nonphyrlclan                                      NO          7,238
             1o.oou
                                                                                                                                  NO         6.006




                                                                             TeleDhone         24      1



                                                   Yes
                           Lose       I.400

                                                   No          1.302




                                                   Pati* 46                               GAO:      HRLWM7 Put 8 Change       to Mrdicam   Appeals       P~XSS
Major Contributors to This Report




                        .Jonathan H. Harker, Attorney-Advisor
Office of the General
Counsel,
Washington, D.C.




118241)                 PA@ 47
I7nited States
General Accounting Off’ke
Washington, D.C.20548
-----
Human   Resources   IXvision




The Honorable Liuyd Rentsen
Chairman. Committee on Finance
t’nited States Senate
The fIonorab!e John D. Rockefeller, IV
Chairman, Subcommitteeon Medicare and
   Jsnr, Term Care
Committee on Finance
i’nited States &nate
The Honorable Dan Rostenkowski
Chairman, Committee on Ways and !&ans
Hou3e of Representatives
The Honorable Pete Stark
Chairman, Subcommitteeon Kealth
Committee on Ways and Means
ii,!!~scof Representatives

As agreed with your offices, this study provides information on the
changes in claim volume and outcomes at the carrier level following
recent changesin the lMedicarePart E appeals process.’This report also
provides informatiorl regarding the requirement that a claimant appeal
an adverse decision to the carrier before being permitted to appeal to a
federal administrative law judge (AU) when the disputed amount is
more than $590. Further, it assessesthe potential change in the ALT
caseload if the disputed amount threshold was lowered.
This report also fulfills our mandate under the Omnibusi3udget Recon-
ciliztion Act of 1987 (P.L. 100-203, section 4082 (d)). The act directed us
to study the cost effectiveness of the Health Care Financing Administra-
tion’s (trc~‘s) requirement that Part B casesgo through & hearing at the
carrier ;evel before they are appealed to an ALJ.'
                         Title XVII1 of the Social Security Act authorizes the Medicare Part B
Background               program to provide supplemental medical insurancecoverage for most
                         individuals age 65 and alder. IIW.~,within the Department of Health and
                         Human Services, administers the Medicare program. In fiscal year 1989,
                         Part B covered approximately 32.4 million enrolleesand paid benefits of
                         about $38.7 billion.

                         The Medicare program provides specific appeal rights for Part B claim-
                         ants, These are the individuai beneficiary or a medical provider such as
                         a physician, laboratory, or supplier of medical equipment or services. At
                         the inception of the program, Part B claims were not accorded the same
                         appeal rights as Part A claims(the hospital insurance portion) because
                         they were expected to be for substantially smaller amounts than Part A
                         claims. In addition, Part B claims are far more numerous than Part A
                         claims 2nd this posed the possibility of a substantial workload if judi-
                         cial review was accorded to all of them.

                         Recent legislative and administrative changeswere made in the appeals
                         processbecause claimants expressed concernsabout the fairness and
                         adequacy of the Part B appeals process. For example,claimants were
                         concerned that the hearing officers at the carrier level were not objec-
                         tive becausetheir continued employment may depend on the carriers’
                         being satisfied with the decisions they render. To attempt to resolve
                         claimants’ concerns about the Part B process,the Congresschanged the
                         processto make it more like Part A by adding appeal options beyond the
                         carrier. Review of Part B claims by an ALJ is now available if the dis-
                         puted amount is $500 or more and judicial review is avaiIable if the dis-
                         puted amount is $1,000 or more.” A claimant can combine denied claims
                         to meet these !imitations.
                         The 1987 legislative change and the need for program economies
                         prompted uc~ to revise the way carriers processedappeals.


Part B Appeals Prr~ess   Before 1987, the appeaIs process worked as follows. First, the claim
Before 1987              underwent a “carrier review,” which is a review of written casedocu-
                         mentation by a claims processor other than the one that made the “ini-
                         tial claim determination.” If the carrier review decision agreed with the
                         initial determination and the amount in dispute was at least 8 100, the




                         Page 2                    GAO,‘HBtjWC’I   Part B Changes tu Medkrre   Appenb   Pmcess
t
             -----   __-




                                              --
                           case could. be appealed to the next level, a hearing tifficer, also at the
                           carrier.
                           At the hearing officer level, claimants could select one of three types of
                           “carrier fair hearings”: on-the-record,’ telephone, or in-person. On-the-
                           record hearings involved evaluations of the written casedocumentation
                           that did not provide claimants an opportunity to give oral testimony. If
                           claimants chose on-the-record hearings, they could not subsequently
                           request a telephone or in-person hearing. There were no appeal options
                           beyond the carrier level. (Seefigure I. 1 for an illustration of the hearing
                           process in effect until .January 1, 1987.)


Part B Appeals Process     The legislative change authorizing appeals to an ALI becameeffective
                           January 1, 1987. HCFA required that casesgo through a carrier fair
as of 1987                 hearing before being appealed LO the AU, but HCFA did not change the
                           way apwals were processedwithin carriers.
                           In 1988, however, HCFA changed the appeals prMess within carriers. It
                           required, with someexceptions, that casesgo through an on-the-record
                           hearing before being appealed. As before, claimants initially choosing an
                           on-the-record hearing couid not subsequently request a telephone or in-
                           person hearing. If disputed amounts were still over $500 after the
                           hearing, claimants could then appeal to an AU.
                           Claimants initially requesting a telephone or in-person hearing, how-
                           ever, now had to go through the on-the-record he;?ting.After that
                           hearing, for disputed amounts of at lest $500, these claimants could
                           either go to the requested telephone or in-person hearing or appeal
                           directly to the AU. The on-the-record hearing requirement was phased in
                           by carzers from April to June 1988. Figure I.2 shows the appals pro-
                           cerd after the legislative and administrative changes.
                           HCFA officials state that the mandatory on-therecord hearing was intro-
                           duced to expedite casesand to reduce costs by directing cases away
                           from the more lengthy and expensive telephone and in-person hearings.
                           Representatives for the Kationa! Senior Citizens Law Center testified
                           before the House Judiciary Committee,” however, that the on-the-record
                        -
                            hearing step often is a source of confusion about appeal rights and con-
                            tribut%?sto the overall delay in the review of Part B claims. They also
                            testified regarding concerns about the effect of on-the-record hearings
                            on the rights of claimants not represented by legal counsel, For example,
                            they believed that claimants might erronmusly perceive that the on-the-
                            record hearing is the end of the appeals process.The representatives
                            expressed further concern about the possibility of bias in an in-person
                            hearing because the person assigned to review an on-the-record hearing
                            decision may in some way be influenced by knowing that another
                            hearing officer (supposedly at the same level of authority and compe-
                            tency) has already denied the claim.

                    -
                            The objective of our review was to gather information on the changes, if
3bjective and   ,           any, in claim volume and outcomes following the addition of the ALJ
Methodology                 appeal options and the introduction of mandatory on-the-record hear-
                            ings to the Medicare Part B appeals process.Specifically, we sought to
                            det,ermine(I ) the changes in outcome of casesreviewed by claims
                            processors and hearings officers; (2) the changesafter the introduction
                            of mandatory on-the-record hearings in the volume and outcome, by
                            cktimant group, of cases reviewed by hearings officers; (3) the expected
                            effect on claim volume and outcomes of lowtring the AW threshold from
                            $500 to $100, which is the current ALJ threshold for Pzrt A cases;and
                            (4) the congressional intent in establishing the monetary threshold for
                            claimants appealing to an ALJ.
                            To determine the changes in case outcomes,we obtained quarterly data
                            from IKFA for the period October 1984 to March 1989 for cases at dif-
                            ferent stages in the appeals process. To determine the changes, by
                            claimant .group, after the introduction of mandatory on-the-record hear-
                            ings in the volume and outcomes of casesreviewed by hearings officers,
                            we cbtained individual case data for the period January 1987 lo March
                             1989 from 47 of the 51 Medicare carriers. We categorized claimants into
                            three groups-beneficiaries, physicians, and nonphysicians-and ana-
                            lyzed data obtained from the carriers for casesdecided before and after
                            the introduction of mandatory on-the-record hearings. The “before”
                            analysis includes cases reviewed from the introduction of the A-J
                            hearing option on January 1, 1987, to the time each carrier introduced
                            the mandatory cn-the-record hearings (during the period April to June
                             1988). The “after” analysis includes casesreviewed by each carrier
                            from the time each carrier introduced the mandatory on-the-record
                            hearings to March 1989. the most current data available at the time we
                            collected data from tkL;ccarriers. (See appendix II for our case-sampling


                            Page 4                    GAO XRLHM-57   Part B Changes   to Medicare   Appeals   Pmwesa
                   --   -            --
                            methodology   and appendix III for the survey form sent COthe carriers.)
                            We did not assessthe extent to which other factors, such as case cnm-
                            plexity, case merit, or carrier policy might have affected case volume or
                            outcomes.
                            Using the data obtained from the carriers, we estimated the potential
                            effect on each claimant group of lowering the ALJthreshold to $100. To
                            do this, we assumed that the pattern of decisions and appeals at a $100
                            threshold would be the same as it was for the actual caseswe reviewed
                            that were subject to the 5500 limitation. Seeappendix IV for a descrip
                            tion of this analysis and its r:sults.

                            We also interviewed HCFAprogram operation managers and several car-
                            riers about recent changes in the Part B appeals process. In addition, we
                            reviewed statutes. regulations, legislative history, and court decisions to
                            determine the congressional intent in establbhing the $500 ALI
                            threshold.
                            We performed our work between July 1988 and December 1989. We did
                            not verify HCM or carrier-provided data. With that exception, we per-
                            formed our work in accordance with generally accepted government
                            auditing standards.

                            The results of our review are provided in detail in appendix 1. In sum-
Results in Brief            mary, the percentage of casesreceiving a telephone or in-person hearing
                            at the carrier decreased after the introduction of the mandatory on-the-
                            record hearings, while the percentage of casesappealed to ALJS
                            increased. The percentage of hearing-officer decisions that resulted in
                            payments to claimants also decreasedafter the on-the-record hearing
                            was made mandatory. More specifically:
                            1. There was littie change in the percentage of decisions for or against
                            claimants in initial carrier determinations or carrier reviews by claims
                            processors. (See figs. I.3 and 1.4.)However, the percentage of carrier
                            hearing-officer decisions agtinst claimants increased after the introduc-
                            tion of mandatory on-the-record hearings. (See fig. 1.5.)
                            2. Data obtained from Medicare carriers for the period January 1987
                            through March 1989 show that the largest percentage of casesreviewed
                            before and after the introduction of the mandatory on-the-record hear-
                            ings involved physicians. (See fig. 1.6.)After HCFAintroduced mandatory
                            on-the-record hearings:
              l   The percentage of casesthat had such hearings increased fr& 71 to 100
                  percent, as expected. Among the claimant groups, casesinvolving non-
                  physicians had the greatest increase. All claimant groups experienced a
                  decrease in on-the-record hearing decisionsresulting in payment to
                  claimants. However, after on-the-record hearings were made mandatory,
                  decisions involving physicians resulted in payments more frequently
                  than did those for the other claimant groups. (See figs. 1.7ark 1.8.)
              l   The percentage of caszr,that had a te1ephor.ror in-person hearing
                  decreased from 29 to 6 percent, with the nonphysician claimant group
                  experiencing the greatest decrease(from 38 to 6 percent). The per-
                  centage of telephone or in-person hearing decisions resulting in pay-
                  ments to claimants also decreasedfrom 61 to 38 percent. Again, the
                  nonphysician group experienced the greatest decrease(from 70 to 40
                  percent). (See figs. I.9 and I. 10.)
              l   The percentage of casesappealed to US increased from 11 to 13 per-
                  cent. Cases involving beneficiaries experienced the g eatest increase
                  (from 1I to 16 percent). (See fig. I.1 1.)
                  3. Lowering the ALJ threshold to $100 could be expected to increase the
                  number of Part B casesappealed to ALJS to about 21 percent. (See fig.
                  1.12.)
                  4. The congressional intent in establishing a $500 threshold for ALI
                  appeals is unclear. Court opinions initially differed on whether the Con-
                  gress intended such claims to bypass carrier fair hearings. However, a
                  recent federal district court appeal decision concluded that HCFA'S
                  instructions requiring claiman& with disputed amounts of at least $500
                  to go through a carrier fair hearing before proceeding to the ALJ were
                  valid.

                  The revisions to the Part B appeals processhave been in effect for a
Conclusions       short time and more time is neededto determine if the changes we
                  observed will persist. The revisions appear, however, to be fulfilling
                  their intended purpose of reducing the number of telephone and in-
                  person hearings at the carrier level and providing an opportunity for
                  claimants to appeal beyond the carrier level. If the I\LJ threshold was
                  lowered to $100 to correspond with that currently used in the Part A
                  appeals process, the number of casesappealed to ALJScould be expected
                  to increase substantially.
                  The percentage of carrier hearing decisionsresulting in payments to
                  claimants decreased after the introduction of mandatory on-the-record
    --
         Ewl4417




         hearings. Becausewe did not have case-specific data, we cannot elimi-
         nate the possibility that other factors, such as casecomplexity, case
         metit. or a change in carrier po!icy, may have influenced the changeswe
         are observing.

         As agreed with your offices, we did not obtain written agency comments
         on this report. However, we discussedits contents with HCFA officials
         and incorporated their commentswhere appropriate.
         We are sending copies of this report to the Secretay of Health and
         Human .%rvices, the Administrator of HCFA, and other interested parties,
         and we will make copies available to others on request.
.
         Please call me on (202) 275-1655 if you or YOUI-staffs have my ques-
         tions about this report. Other major contributors to this report are listed
         in appendix V.




         Linda G. Morra
         Director, InLergovernmental
           and Management Issues




         Page 7
E
       -.--                                                                                                .
                       -..   -                   -I”.,
                                                            ,,.   I
                                                                      .. .   L   -.   ,__,.




                                 __      .__-.


                                                                                              -~_-

Contents



Appendix I
Part B Changes
Appear to Be I+?xlfi
Their Purpose




Appendix III                                                                                         3.i

Survey Form Sent to
Medicare Part B
Carriers
Appendix IV                                                                                          40
Estimates of the
Potential Effect of
Lowering the
Threshold for Access
to an ALJ
                                                         __-__
Appendix V                                                                                           4i
Major Contributors to
This Report



                                      Page   n
                                                                    --
Tables    Table 1.I : Claims Denied in Initial Determinations by         17
              Claims Processors,for All Claimants
          Table 1.2:Outcome of CasesReviewed by Claims
              Processors,for All Claimants
          Table 1.3:Outcomeof CasesReviewed by Hearing                   21
              Officers, for All Claimants
          Table 1.4: Hearing Officer Reviews, by Claimant Group          23
          Table 1.5:On-the-RecordHearings. by Claimant Group             24
          Tdble 1.6:On-the-RecordHearing DecisionsFavoring               25
              CIaimants, by Claimant Group
          Table 1.7:Telephone and In-Person Hearings, by Claimant        27
              Group
          Table 1.8:Telephone and In-Person Hearing Decisions            28
              Favoring Claimants, by Claimant Group
          Table 1.9:Sumber of Appeals to AU, by Claimant Group           29
          Table I. 10: Expected Appeals to an ALJ at Different           31
              Thresholds, by Claimant Group
          Tabie 11.1:Weights for SampledCasesin Six Carriers

Figures   Figure I. I : Medicare Part B Appeals ProcessBefore
              January 1, 1987
          Figure I.2: Medicare Part B Appeals ProcessAfter
              Addition of AU and Mandatory On-the-Record
              Hearings
          Figure I.3: Claims Denied in Initial Determinations by         16
              Claims Processors,for All Claimants
          Figure 1.4:Outcomeof CasesReviewed by Claims                   1.8
              Processors, for All Claimants
          Figure 1.5:Outcomeof CasesReviewed by Hearing                  20
              Officers, for All Ciaimants
          Figure I.6: Hearing Officer Reviews, by Claimant Group         22
          Figure 1.7:On-The-RecordHearings, by Claimant Group            24
          Figure i.8: On-the-RecordHearing DecisionsFavoring             25
              Claimants, by Claimant Group
          Figure 1.9:Telephone and In-Person Hearings, by                26
              Claimant Group
          Figure I. 10: Telephone and In-Person Hearing Decisions        28
              Favoring Claimants, by Claimant Group
          Figure I. 11: Appeals to an AU, by Cttimant Group              29
          Figure I. 12: Expected Appeals to an ALT at Differer.t         30
              Thresholds, by Claimant Group


          Page   9
Contrnts




Figure !V. 1: Expected Outcvmcsfor   Beneficiaries at a      41
    $500 AU Threshold
Figure IV.2: Expected Outcomes for   Physkians at a %SOO     42
    AIJ Threshold
Figure IV.3; Expected Outcomesfur    Sonphysicians at a      43
    $500 AiJ Threshold
Figure IV.4: Expected Outcomesfor    Beneficiaries at a      44
    0 100 AIJ Threshvld
Figure IV.5: Expected Outcomesfor    Physicians at a $ IO0   45
    AW Threshold
Figure IV.6: Expcted Outcomesfor     kmphysicians at a       46
    $lCU ALJ 1 hreshoid




Abbreviations
AW         administrative law judge
GAO        GeneralAccounting Office
HCFA       Health Care Financing Administration
s!sA       Social Security Administration
                    -       d
                                              l
         . .    1       -       -   ._. ..-




BLANK PAGE

     Page 1 I
Appendix I

Part B Changes Appear to Be FbKWng
Their l?urpose

                  Medicare Part B claims are submitted to carriers for payment for health
Hqw the Appeals   care services provided under the program. The initial determination on
Prows Changed     coverage and amount of payment is madeby a carrier claims processor.
                  If a Medicare Part I3 claimant-an individual beneficiary or a media
                  provider such as a physician, laboratory, or supplier of medical equip
                  ment or services-is dissatisfied with the initial determination, the
                  Medicare program provides specific appeal rights. At the carrier level,
                  claims processors and hearing nfflcers have key roles in the appe& pro-
                  cess. As shown in figure I. 1, before January 1987,claimants had no
                  options for appeal beyond the carrier level.

                  Becauseclaimants expressed concerns about tie fairness of the process
                  described above and its limited opportunities for appeal two signifkant
                  legislative and administrative changes were made.
                  First effective January 1,1987, the Congressprovided options for
                  claimants to appeal to an AW and, ukimately, to the federal courts.~
                  Although these options made it possible for casesto be appealed beyond
                  the carrier, the Congress limited accessto these levels of review by
                  establishing disputed amount thresholds-4600 for appeal to an w,
                  and $1,000 for appeal to the federal courts. With this change, HCFA
                  required al1 casesto go through a carrier fair hearing before being
                  appealed.
                  Second, in 1988. HCFArequired that essentially all cases invoking $100
                  or more go through an on-the-record hearing before they becameeligible
                  for a telephone or in-person hearing.2Implementation of these require-
                  ments w&s phased in by carriers during the period April to June 1988.
                  Figure 1.2shows the appeals process after the changes were made,




                  ‘The Omrubw,         Budget     Heconclbarwn        Act of 19%       (P.L   99-509,   section   9341),   amending    the   Social
                  !Yiecunty Act

                  %xeptions          allowed      bg.HCF.4     for camerS     not   conducting    on-thereoxd          hearings    are when (1) the on-
                  the-record      heanng      will signUkintly         delay the    in-person  heating      requested,      (2) the facts of rtre case
                  can only     k developed          through     oral ttwmons.        and (3) a differmt       heuing      official  is nr& nvpilable  to
                  conduct      WI-petson     heanngs.
Figure 1.1: Medicare Part 6 Appeals
Process Ektfore Januaw i, 1987



                                                                                                                                                                   c
                                                                         determwmtlon                                                           Cblm patd




                                                                                       C!alm dcnred

                                                                                                                                                                   b
                                      Olspute I100                                                                     3rrpute      less than SloO -
                                            Of more                                                                               no further dpWC+i


                                                            t
                                                  On-the-record.
                                                telephone,       or m-
                                                  person     hewng                                                                                                 b                               .
                                                                                                                                                Claim    pdtd
                                                                 Clarm dcnred




                                      Notes
                                      1 A .‘carrier rewew    IS a rwew  of wrItfen                 case       documentation          by a clarms        nrocesXx       olher     than    the one
                                      that made ine 1n111al Uflermmal~on

                                      2 Clarnants coutd select one 01 three types 01 heanng ollrcer revrews                      all of whti     were referred     lo as
                                       ‘carnet lalr hearmgs        The ckxces       were   on-the-record,’       ” n-person.     or “teleohane      ” The on-the-
                                      record hearrngs      were evaluatmns       of the wtten      case docunentatlon.         whrch drd not prowie        claimants
                                      wrlh an opportunrty      to make an orai presentatron           or gwe testmooy        (HCFA also refers lo these as “an-
                                      the record   ciecrsrons     ) Further.  tl CbndnlS      selected     the on-the.record     hea.rng.    they could not subse-
                                      quently   request      an m+erson        or telephow          hearrng

                                      3 Throughout         the process,    clarms       may      be drsmlssed         by cawers         for    procedural    reasons. such as mIssad
                                      flltng deadlmes.       o: be wrthdrawn          by the     clamrants

                                      4 A clarmant        may   corwne      denied      claims      to meet       monetary       thresholds

                                      5 At each level 01 review            the delemrdtronmade                at The prrw level of rewew may                       be affIrmed      rn whole
                                      in the carrier s favor IdaIm          dented)     w reversed        rn whole or m part m the claimant                     s favw (clatm paId).

                                      6    Dsputed      amount       reiers to the drfference between    t.Qe amount billed and the amount                                     allowed    less
                                      unmet deduct~ole         and comsurance       As the case goes through the process the dtsputed                                     amounl may be
                                      reduced     11decisions     result In partial payments   of the drsputed   amount

                                      7 HCFA procedures       allow lor Ihe reopening  of cases under                         Jtmrted         cxcumstances         and for the accept..
                                      ante af appeals   filed late where    good cause     IS shown




                                      Page 13
Igum 1.2: Modlearn Part B Appeals Process                   After Addttion of ALJ and Mendatory On--Record                               Hertinge



                                                                                I        MedIcare
                                                                                        Part E chm     I




                                                     Dtrpute S 100                                                    Darpute less than $100 -
                                                           or more         I                                                 no further appeal

lar.datory   on-the-

 wtroduted      from

       June 30.1988
                                     Dt3pute 5500
                                           or more

                                                                                 Telephone  or m-
                                                                                                                                                        b
                                                                                  person hearmg                                           Clanm pald

                                                                       $                        Claim denred
                                                       t,                                                                                               k
                                                                                                                                   No funher appeal 7
                                                               telephone       or VI-
                                                                                                                                                        ?
                                                                                                                                          Clam pald

                                                                               Clatm denled

LJ hea!lng option                             Admlnlstratlve
                                                                                                                                                        *
    Introduced  on                                                                                                                        Clarm pald
   .
  January 1.1987 r

                       I
                                                       I
                                                      4 Clanm dyed

                                               SSA Cound                                                                                                b
                                                                                                                                           Clam paid
                                                            Ciatm denled
                                                                                                                                                        b
                           Olrpute 5 1 .OOO                                                                          Dwute         lessthan St ,000 -
                                                                                                                                   no further appeal




                                                        Page14                                        GAO,'HEDStMP           Put     B cbuyea    tn Medicue Apped~ Pmcem
r
                      AppendiJI     1




                      1 A carrier rr’vlew IS a review of wrllten case doCumenlallon          by   a ckms   processor   other than the one
                      uho made tne lnlllal deiermlnatlOfl

                      2 A!! cases apfXakd    after the camel rewew. wrrh SOme erceptians   are re@med to go thrcugh the on.
                      the.record tamer falf hearmg Claimants lnrhally recfueslmg the on.the-record hearmg cannOt s&se.
                      quentfy request a telephone or In-person hearag

                     3 Throughout the process. clarms may be dlsmrssed &- carriers :or procedural              reasons. such as mrss+d                    ; .
                     fllmg deadllrWSor be wlthdrarun by the clalmaflts

                     4 A clalmant       may combme dented Cfalms to rneei monetary thresholds

                     5 At each level of rewew, the Uelerminatlon made al the Wtor level a! rewew may be afftrmed IIT whole
                     in the tamer s lavor (claim den&)   or reversed In whole cx In part m Ihe clarmant‘s favor (claim pald)

                     6 O~puted amount” refers to the difference between the amount bited and Ihe amount allowed less
                     unrn& deduchole and comsurance       As the case goes through the process Ihe dl$puled amount may be
                     reduced If deCWons result In partral payments of the d6puled amount

                     7 Any claim appealed       to a Sodal Secwly   Admmlstrat~         (SSA) ALJ can te further appealed        to Ih@ SSS
                     Appeals Council

                     8 HCFA procedures allow lor the reopenmg of cases under ltmlted clrcomstances                and for the accept-         0
                     ante 01 appeats Illed late where “good cause” IS shown
                                                                                                                                                                t
                                                                                                                                                      ,
                     To detect changes in case outcomes that could be attributed to the intro-
Combined Effect of   duction of mandatory on-the-record hearings and the addition of an AW
Changes on Case      appeals option to the Medicare Part B appeals process we analyzed HCFA
3utcomes at the      data on cases reviewed and case outcomesfor the period October 1984
                     through March 1989, aggregated by qarter for all claimants. We
2arrier Level        focused our analysis on thrse key steps at the carrier level: the initial
                     claims determination, the carrier review of the initial determination, and
                     the hearing officer review. There was Iittie change in the percentage of
                     claims denied in the initial determination by claims processors after
                     introduction of the ALI appear option and the maniatory on-the-record
                     hearings.3 (See fig. I.3 and table I. 1.)




                     %tatls~lcai tests to determine if a significant dlfferenm in case outcomes existed aftPr the inrroduc-                       .         m
                     bon of the AIJ appeals option and mandatory on-tkrrcord         tamer fair hearings were found to be
                     rnappropnate    for the HCFA data because of the few data points available after the changes were
                     made




                     Page 15                                 GA0/EiRtWM7          h-t     B CXan@a     to Medicare     Appeata    Fkocese
Figure 1.3: Claims Dsnled in lnillal DetermInationa                                by Claima PTOCII~OR, fur All Clrlmants (Ott 1984Mar 1989)

50      Pomnt ot Clatmsflhd mf Ouutn


20




20



to



 0
                           ,-                         .       .,,

 1985                                        1966                                             1997                                  1988
 FiscaL Yeat


          1    AU hearing option introduced               on January        1. 1987

        El     Mandatory   ‘on-the-record’          carrier     fair hearings      were phased-in    by carriers during the period April 1 - June 30. 1986




                                                                     Page     16                                GAO/   HRD9067     Part B Changw~to Medhre   Appeah   Prtmss
                                                                                   ,-_     -        ,I

                             -,
       _.-




Tablo 1.1: C:rlrn8 Denied in Initial
Detwrnlnationr by Claims Procersors.                                                                                     Number of clalrrta
for All Claimants (Ott r9WMar        1989)                                                                                                         D#tJedJn
                                             FkaJ
                                             ___---- yrrr~quartrr                                               Pm#wd                     wholo or In par4             PWWIIt
                                             1965
                                             -_I_-
                                                                             1st                                 6c.958,960                        10520.677               17.4
                                             -                                                           -
                                                                             2nd                                 66,759,955                        10,429,709              15.6
                                             ---
                                                                             3rd                                 6&562,ezo                         10,316,489              15.0
                                                                                                                  7o,Q35.Q66                       11,122.629              t5.7
                                                                        ----4th
                                             1966
                                                                             1st                                  70,766,370                       12,487.W                17.6
                                             -__~
                                                                             2nd                                 69524.439                         llJ92.653               t6.9
                                                                             3rd                                 7m37.461                          12.506,596              16.4
                                                                              ---
                                                                             4th                                 82.120.678                        13,92!i,276             17.0
                                                            --_----.
                                             1987               --
                                                                             1st                                  77,273Q69                        14.224381               18.4
                                                                                                                                                                  --
                                                                             2no                                 64850.160-                        15,744,599              18.6
                                                                             3rd                                 67.724,&6                         15,140,595              17.5
                                                                             --
                                                                             4th                                 66.413.489                        14.979.330              16.9
                                             1966                      ---
                                                                             1st                                 88.445.920                        16.187.746              18.3
                                                                             2nd                                 94.248.452                        16.072.492              17.1
                                                                             3rd                                 97.799,Em                         15,667,506              16.2
                                                                             4th                                 96422.182                         16,591,504              17.2
                                             1989
                                                                             1st                                  Q4.607,707                       17,133.378              18.1
                                                                             2nd                                lOT.917.076                        18,38l.551              16.C


                                             At the carrier review level, after the legislative and administrative
                                             changes were made,the percentage of cases dismissed or withdrawn
                                             increased, particularly after the introduction of mandatory on-the-
                                             record reviews. However, the data give no indication of a significant
                                             change in the percentageof carrier reviews that affirmed or reversed
                                             tht! initial determination.a (Seefig. I.4 and table 1.2.)




                                             %arptical wsts to dcrcrmine If a significant difference m case outcomes ensted after cb intrduc-
                                             ucmof rhe AW appeals optmn and on-thwmxd revkwswere found TVbeinappropriate             for the
                                             HCFA    data     kaux            of the few data   points       avvrlable     after   the   changes   were   made.




                                             Page    17                                         GAO/HFtB9O-67                Put     B C~O.IUJQS
                                                                                                                                              tr, Medicuc ApgclL -
                          ’

Figure 1.4: Outcome of Cares Revlowed by Clslmr Processon, for All Claimants (Oct. 19WMar. 1989)




                                                                                                            --
                                                                                                                             -,-
                                                                                                                                    ::.:,
                                                                                                                                    ~:. .,:: .,:,-,
                                                                                                                                    .,. :..::,:..:: .: ‘::




     -          Re~563d in ~t-de or in part (in   timanra taw)
     ----       Afiirrned(norindunant’sfaWr)
     -          Dismisseda wi!hdrawn

                ALJ hearing option introduced      on January    1, 1987
            I
                ivtar datory ‘or&e-record”    carrier lair hearings   were phased-in   by caviers   during the padadmi   I- June 30.1988

                                                         Note  These are admmlslratlve reviews of the clarmants paperwork made by a carrter claims prccessor
                                                         olher than the one who madethe tnttlal clafms payment or coverage determmattons




                                                         Page 18                                    GAO-7         Put B chrnecs tn Medicare Appeala Rocese
                                         Part B Chqjcs Appear LOBr FUiilIn~
                                         l-h& Purpome




Table 1.2~Outcome of Case8 Reviewed by Ctalmr Procssson,     for All ClOimantr (Oct. 1%4&4ar 1989)
                                                                               Review docklena
                                                                              Revat      ipok
                           Number of                Afftrmed                            D                         OlsmissWwltbdnwIl
Fiacrl yarr/quartrr          rsviswr                 NO.     Percent                 NO.     Percant                      No.   Pmrcent
1905                                                    --..----
               1st            808.590            329,637                 40 a               476.644    59.0              2.309            03
              2nd             r ;5.333           364739                  38 6     ---       577,109    61.0              3,485            0.4
              3rd             979.316            357,491                                    618.140    63.1              3.665            0.4
              41h            1.002.767           363718                  363      _-        633.925    63.2              5.144            0.5
1986                                                               -..     ~-
               1st           I.035263            380,559                 36a                643.115    62.1             11.589               11
-.            2nd            1.182.726           436.750                 369 -~             736.396    62.4              7,560            06
              3rd            1.119.511           451.818                 404                658.674    58.8              9.019            0.8
Gi?           41h            1.230.776           502.77.'                409                722,347    58.7              5.656
                                                                                                                         ---              0.5
                                                                                                                                     --
              1st           1.158,441            466.414                 40 3               686655     59.3              5.372            0.5
              2nd           1.324.846            550,127                 41 5           -   767,808    58.0              5,911            0.5
              3rd           1.455,169            569.124                 39 1               678,555    604               7,490            0.5
              4th           1 538,966
                                -                636.058           ----413-                 688266     578              14,622            1.1)
1988
              1st           1.237.490            490.852             39 7                   726,457    587              20.181            1.6
              2nd           1.X11.742            571.618             423
                                                                   ~~-                      7*.5.299   552              33.625            2.5
              3rd           15:9x62              632.225             41 7                   645,357    556              42.080            2.8
              4th           1.5963%--            702.986      _-         44 0               841,076    527              52.875            3.3
1989
              1st           1.314.340            555,714             423                    702.759    53.5             55.867            4.3
              2nd           1.34”.360            550,426             411          -         706.401    52.7             @%33              6.2
                                                                                                                                     --

                                         At the hearing-officer level, the percentage of casesaffirmed by carrier
                                         hearing officers increased after the introduction of mandatory on-the-
                                         record he&rings. (See fig. I.5 and table 1.3,j5




                                         ‘Stam:~cal tc~,tstn dmmww If a sgnrficant difference existed in the percmtage oft-affi&
                                         afterrhemlnduct~crn   of the ALI app~~&~rprron andon~therecwdretie~        werefollildto beinappm
                                         priate becau~uf the few data pcrints ;rrallable afterti?eintmduction oft&changes.



                                         Page I@
Figure 1.5:Outcome of Care@ Reviewed by Hearing Ofken,                          for All Clalmantr (Oct. 19WMar. 1989)




 19W                                     lesg                                   1Wf                                  lwo
 Flvrt Ysu




             AU hearing option introduced on January 1, 1987

             Mandatory   ‘on-therecor$          carrk   lair hearings were phased-in   by carriers dlJritlg Ihe period Apti I-JlJ~~30.1988




                                                           Page   20                             GAO/‘HEMM7          Put B Changeeia Mtdture Appesh Ruxan
                                       -                                            --


                   --.                     ------                             _---.-.                                            -.
                                                                        Appendix I




able 1.3: Outcome
               -  of Carer Reviewed by Hesring Offlcerr, for All Claimafitr (Ott 1984Mar 1989)
                                                                              Revlew oeci8lonr
                                                                              Roverued in wbote
                             Number of            Affimted                        or in part                                                                                  Diami8~/withdnwn
                                                     No.
real year/quarter           - --review8
                          _~~                     ---_--    Percent----             NO.      PWCO#lt                                                                                  NO.    Percent
I35              _~__~-- _..___ --__--                                                                    .--
                  151                  7.354                                             2.046                  27 0                      3,477            47 ;                        1.831         249
__-...--.          ~_~ __~.._....
                2nd                             7650                                     2.054                  266                       3.6%             404                         1.927         25.2
                3rd                             0231                                     2.107                  256-----                  3.690            440                         2,434         296
                4th -..--                       7,271                                    1.933         l--..-"--l_266                     3,467            477                         t.871         25.7
            ________     ._--_--                   ------                                                                                                            --
96
____ ,~_..__,.__- I ~~-_~~-. ..- . ..~_-----                                                     ..-                    -----
              ist                               7.194                                    I.729        240                                 3,399            472                         2.066         20.7
-_-~~...-.                ~-__.~-      --.. --
              2nd                               8267                                   2.161 --__I__--.-26 1                              3 695            446                         2,431         29.3
-          --~ ---          .~ ~~~~-...I"
              3rd                               9.175                                  2.219          242                                 4.182            456                         2,774         30.2
----.           I.."-~-__.-___---.-_..-
              4lh                              10.606                                  2,555
                                                                                     .__.         ..-I.I -.1
                                                                                                      24                .--_.~I I-        5.405            510                         2.646         24.9
37                                                             ~~.---                                    --                               ---..
                 1 st
                                                    --.    9.590                         1,976                206                          4,608           40.1                        3.006         31.3
             ~   2nd
                   ____     _ _-            ___------10.286                              2,536                247                          G90             446                         3!162         30.7
                 3rd    --. _--.-.           - --~-13.598                                3,976           ---__~~-
                                                                                                              292                          5,679           41 8                        3.943         29.0
_-_.-.._._       4th                                14.600                               3,762                253                      -- 7312             49 1                        3.816         25.6
38                                                                                                                                --
                 1C'                                      13,679                         3,644                  266                       6.344            464                         3.691         27.0
-~~.--           2nd
                   " .-..-      --                        17,277
                                                              -_                         4,597                  26.6                      7,979            462                         4,701         27.2
____----  3rd                                             17,952                         5,630                  326                       7,305            41 1                        4.677         26.1
          4th
_____~~~._____                                            18 724                         7,239                  38.7                      7,223            366                         4,262         22.8
I9                                                                             11111----
                 1st         ~--I-~~                      14,819                    5.236                       35.3                      6,285            42.4                        3,296         22.3
                 2nd                                      15,873                         5,525                  34 8                      6.274-           39.5                        4,074         25.7


                                                                        Data obtained f?om 47 Medicare carriers indicate that the mqjority of
hanges in Cases                                                         casesreviewed by carrier hearing officers before and after the introduc-
eviewed by Hearing                                                      tion of mandatory on-the-record hearings involved physician claims.
fficers After the                                                       However, the percentage of physician and beneficiary claims reviewed
                                                                        decreased after the introduction of the mandatury hearings, while the
kroduction of                                                           percentage of claims involving nonphysicians showed the only increase
andatory On-the-                                                        (from 10.4 to 16.2 percent). (See fig. 1.6.and table 1.4.)
scord Hearings




                                                                        Page   21                                               GAO/ ffRIMtM7      Put   B Changes        to Medtcam    Appda   procesa
                                                                                                      ~._..._          --_-



                                         Appendix   I
                                         Part B Chmgen Appear (0 Be FulNlinfi
                                         Thclr Purpose




;(ure 1.6: Horrtng Offleer Reviaw~, by
hrnant   droup   (Jan. 1%Y.Mar   1989)




                                                        Before h4ardatory OTR Hearinga
                                                        After kndatwy   OTR Hearings

                                         Note Rewews by earner hearing officers    mclude “on-the”rmd.”    “tdlephono.” a& “ln-peram” ,=wr&
                                         far hearmgs




                                         Page 22                              GAO/HEtjM7        Put   B Cbmgtm to Me&are      Aopllr   Pmcem
r&k       I.& btaartng Officer Aavkws, by
Xnimant       Group (Jan 1987.Mar 1989)                                                                Case9 rsvlswed
                                                                                           BCtiOl-8                              Attrr
                                            Cfaimant group                  __.       Number           Percent          Number            Psrced
                                            Benek8anes                                  10.000              40.0           7,600              36.2
                                            Physcjans                                   12.400              49.6          10,m                47.6
                                            NonphysIcIans                                2,600              104             3,400             16.2
                                            All ctetmants                              25,ooo             100.0          21,OOtl             100.0
                                            b’ote These data reflect the number of cases. rounded 10 the nearest hundred that were rewewed by
                                            h. ,arlng othiers at the carns~s parlKwatlng rn our s!udy The “before” analysis mcludes cases rewewed
                                            lrc ;n the mtroclucnon of the ALJ appeals optid on January 1, 1987. lo the time each carnef mtrcdxed
                                            the .nandatory on-the.recvd     heanngs (sometime dunng the penod Apnl to Jcne 1988) The “after”
                                            anatyslj rncludes cases revIewed by each earner from the lrme each earner mtroduc-?d the mandatory
                                            on.the.record    hearrngs la March 1989. the most current data avatlabfe at the We we :ollecled data
                                            from me tamers


                                            Before the introduction of the mandatory on-the-record hearings, 70.8
                                            percent of all c;Lseshad an on.the-record hearing at the carrie: level
                                            compared with 100 percent when these hearings were made mandatory.
                                            While a greater percentage of casesfor all claimant groups had an on-
                                            the-record hearing after they were made mandatory, cases involving
                                            nonphysicians had the greatest increase. (See fig. 1.7and table 1.5.)




                                            Page23                                GAO/HRD9O-57    Pan B Changea u) Medicare         AppeaL Protxea
                                       Appendix       I
                                       Part B Chanqw Appear lo Be ful~llinrl
                                       Their ?%I-




igure 1.7:On-the-Record Hearing& by
Isimant Group (Jan 1987.Mar 1989)




                                       Claimant      Grou9


                                                             BeforeMmdarcq OTFIHearings
                                                             After MandatoryOTR Hearmgs

                                       Note An on-the record          Carrier lair hearing IS an evaluatiw     of wvlten case documentallon     by acamer
                                       newng 0ll:cer


able 1.5: On-the-Record Hearings, by
lalmant Group (Jan 1987.Mar 1989)                                                   Before                                           After
                                                                                    on-the-                                          On-the-           -
                                                                           Total     record                               Total       record
                                       Claimant group __..-               teses
                                                                             ---___hearings Percent                      cases      hearinqd      Percent
                                       Beneflcharles                      10,GOO       6.500    650                       7,600         7x00          1000
                                       Pilyslclans                                                           774
                                                                                                                                                    -- 1000
                                                                            12.400        9.6Go                          ~O.l-lGO      10,Goo
                                                                --_--.--~_._-.-                        __-
                                       Nonphysubns
                                                                    -.-    2.6W     1.6CNl
                                                                           --~ ~. ~___.--”                   61 5         3,400 .--     3,400         ?COG
                                       AH claimants                       25,000   17,700                    70.8       21,000        21,ooQ         10.0


                                       The percentage of on-the-record hearings that resulted in paymentsto
                                       claimants was greater for all three claimant groups before these hear-
                                       ings were made mandatory. Physicians had the highest percentageof.
                                       favorable decisions (70.8 percent). After the introduction of mandatory
                                     on-the-record hearings, physicians still had the highest percentage of
                                     favorable dui: iions (47.0 percent) while all claimants had a favorable
                                     rate of 41.9 Ixrceut. (See fig. I.8 and table L6.)


Flgun 1.1: On-the-Record Haarlng
Declsionr Favoring Clalmantr, by     1Qo    Pwmllot%vi5wdc5r
Clehmt Group (Jan 1987.Mar 1989)




       ,
                                                               Before
                                                                   htandaw
                                                                         OTR
                                                                           timiqp
                                                               After -ry        OTR l4barkqa


                                     hlote An omthe-record                  tamer fdu hesrq rS an evakatlon of written casedocumentarion by a carrier
                                     hearing officer

Table 1.5: On-the-Record Hearing
Decisions Favoring Claimants, by                                               Before                                                     After
Chimant Group (Jan 1967.Mar. 1989)   Claimant                           Cases Favorabie                                           Cases Favorable
                                     group                           reviewed decisions                Percent                reviewed decisions                  Pefcent
   I                                 Beneflclarles                          6.500        3.400              52.3                    7.600            2.600                   34 2
                                     Physmans                               9Km          6.800              708                   10,wl              4,700                   47 0
                                     Nonphysuans                            1.330        1.100              688                    3.400             1.500                   441
                                     All claimants                         17,700      11,300               63.8                 21,ooo              8,800                   41.9
                                     Note For thls analysis a fawd01e               decision   IS defined   as one     that   reverses.    m &hole   or WI q,art. the
                                     tamer S prior declsul aeld reSultS             ‘n A Lka;“L.ilt 1c ‘%   clarmant




                                     Page 25                                          GAO/ x+EmkuiP Pal-I B ChMgeS to Medicare APpda                               Procwis
a




                                                                                                                                          ..




                                         ?‘hr pvrccnc;igc of casesthat had a telephone or in-person hearing
                                         ranged from 22.6 percent f(,r physicians to 38.5 percent for nonphysi-
                                         cians before on-the-record hearings were made mandatory. F3ycompar-
                                         isin, after these hearings were made mahdatory, the percentage of cases
                                         having a telephone or in-person hearing was significantly lower for aH
                                         three claimant groups-3.2 percent for physicians, 5.9 percent for noct-
                                         physicians. and 9.6 percent for beneficiaries. (See fig. 1.9and table 1.7.)


    figure 1.9:Telephone and In-Person
    Hearinga, by Cklmant CkuP
    (Jan. 1987Mar. 1999)


                                         40




                                              El      Sekue bdmdamy OTR cleuinos

                                              111     Afmr Mmdmxy OTR Hemin~s

                                         Note Telephone and “In-person carnw farr hearmgs are conducted by a carry h-q      officer ati
                                         prowde claimants wth an oppcrtun~ty to grve oral testlmorty




                                         Page26                           GAO,‘Hi2MltM7Put B Cbrncges tn MW              Appeals Pmcese
-
Tabfr 1.t: Tdwhona rnd In-Plmraon
Harrf I, by Clalmmt QrOup                                      BOl0m                            Attu
(Jan. 1% ‘I-Mar. 1989)                                        TOkphOl%O
                                    Cfaimmt          Total and in-pcrsm               Total slKz$z
                                    0-p             cases~I-    hearings Perant     tllaoa       lleadngr  hrcan.
                                    Beneftcrarres   10.000 --- -_   3,400    340      7,640            730      9.6
                                    Physlctans      12.400    ---   2,800    22.6   10,OCK.l           320      3.2
                                    Nonphystctans    2.6a-l         l.QW     36.5    3.4ca              ml      5.9
                                    All clrrlmanm   25,004          7,200   28.8    21,um              1350     6.0


                                    The percentage of telephone and in-person hearing decisions resu&in# in
                                    payments to claimants decreased from 61.1 to 37.6 percent after on-the-           ,
                                    record hearings were made mandatory. The greatest change involved
                                    cases filed by nonphysicians. Favorabte decisions for this group
                                    decreasedfrom 70 to 40 percent. (Seefig. I.10 and table 1.8,)




                                    Page 27
                                       Appendix I
                                       Put      II Changn          Appear to   Be FuUUling
                                       TlIelr     mrpoee




                                                                                                                                                             .
                                                                                                                                                            .



gufa 1.10: Tel*phom   and In-hfson                                                                                                                               I
earirrg Ddrlonr  Favoring ClaImants,                                                                                                                                 x
                                       loo       PefomtdRwhmdCun
I Claimant Group jJan 1987.Mar 1989)




                                       Note. ‘Telephone” and “In-person’ carrier talr hearmgs are conducted by a cameo hearing olfrcer and
                                       prowde clalmanls wlh an opportumty 10 gwe oral lestlmony

ble 1.8: Telephone and In-Peraan
taring Decirtons Favoring Claimants,                                                Before                                            After
 Claimant Group (Jan 1987-Mar 1989)                                          Cases Favwsbls                                  Carea Faumb!~
                                       Claimant group
                                                -                         reviewed decisions            Percent            reviewed de&h,         Percsnt
                                       Benefrcfartes                            3.400          1.600        47.1                730       2rxl       -274
                                       Physmans                                 2,8X           2,100            75.0            320       190        59.4
                                       Nonphysctans                             1 ,m              700       70.0                200        80        40.0
                                       All clrimants                           7,200           4,4OCl       61.1              1,250       470        37.6
                                       Note For thus analysis a lavorabie decision IS dellned as one that reverses. I” whole M I” pat-l. the
                                       came! s prior decnon   and result in a payment lo the claimant


                                       A higher percentage of caseswas appealed to ALISby all three claimant                                                             i
                                       groups after on-the-record hearings were made mandatory, with
                                       optional telephone and in-person hearings at the carrier. The greatest
                                       change was In beneficiary cases;about 16 percent were appealed to an


                                       Page 2%                                          GAO/~90.67       Part     B    Changes COMedlcue Apperb   Proccw
                                          ALI after on-the-record hearings were mademandatory, compared with
                                          : 1 percent before. For all claimants, the percentage of cases appealed to                          .
                                          ALIS increased from 10.8 to 12.9 percent. (Seefig. I.1 1 and table 1.9.)



Figure 1.11: Appeelm to en AW, by
Chlmwtt Qmup (Jan. 19874hr. 1989)




                                          30




                                                                                                                                                          .
                                          Chlmmi Group                                                                                                    .

                                                El        Before Mardamry CJTA+I&~Qs                                                                  .

                                                n         Afm %ndamy OTR Hesringa                                                             .

                                                                                                                                              II
Table 1.9: Number of Appeals to ALJ, by
Claimant Ciroup (Jan. 1987.Mar. 1989)                                             Betore                             Alter
                                                                       Totd         &veal                  TOM        APPhl
                                          Claimad group               cases      toan AW       Percent    cases    to an AU    Percent
                                          3enefclartes                 lO.cGQ          1.m         11 0    7.600       1,200       15.8   )
                                          Physmans                     12.400          fsQ        12.1    lO.ooo       1.300       13.0           .
                                          Nonphysrcms             -    2.w               100       3.8     3,400        200        5.9                .
                                          All claimants               25,000           2,700      19.8    21,ow       2.7M        12.9




                                          Page 29                               GAO/tiRIFW? Put B Cblnge~ to hidcare Appcda F%-OCHS
                                                                                                                                                 .




                                        The cspcctcd ~rccntage of casesappealedLo AWS would be much                                          . .
Expected Appeals to                     greater if the Part 13rll,I threshold was lowered from SSOOto $100 (the
an ALJ if the                           threshold used for WLYWto AWS under Part A). At the $500 threshold,
Threshold Was                           we estimate that 11.5percent of caseswauld k appealed to ALJS,while                                  Y
                                        at the $lOO threshold, about 21.1 percent of caseswould be appealed.
Lowered                                 (See fig. 1.12and table I. 10, Also see figs. IV.l-JRV.6.) .
                                                                                                                                                 .




Flgum 1.12: Expected Appeals to an AU
at Dlffarent Thresholds, by Clalmant
                                        50   PuoarddAIlEx~adCuam
QrOUP




                                                                                                                                                         ,




                                                                                                                                                     ->

                                        CIslmam
                                             Group                                                                                           .

                                             I        S5OOThmshdd
                                                      $100 Threskdd

                                        Note Currently. lo appeal lo the ALJ under Medtcare Part B the dtsputed amount must be m       01
                                        mote In conlrast to appeal lo the ALJ under Medrare Part A (hosptabiated    servres). the disputed
                                        amount msst be $I&3 or more




                                                                                                                                                     L
Table 1.10: Expected Appds    to an AU
at Different Threrhold8, by ClOlIWIt                                    At s500 threshold                        At $100 thrmshold        _
Group                                                                       Ew-&j                                    ‘“““Lt
                                                                      Total                                   TOW
                                         Claimant group              easer    rppeab* Percent                ca8e8      appeal8     pwwnt
                                         Benefmanes                  10,000         i S79        158         10.000         3.123       31:
                                         Physcrans                   1moo           1.269-       12.7        10,ocO         1.640       184
                                         Nonphysrcrans               1o.ooo           604        60          10.000         1.368       13.7
                                         All cbimantr                30,ooo        3.452        11.5        36,aoo         6,331        2x1
                                         We For this analyos. we assumed that the galrem of dec6Ions and appeals for lO,M30cases for eti
                                         claimant grwp at a SlCC threshold would be the same as It YOU lor the actuat cases we rsvawed that
                                         vme subpA to the S!ik7 threshotct




                                         allow them to proceed directly to an AU, subsequent events make it dif-
Carrier Fair Hearings                    ficult to determine whether that continues to be the congressionat
for Claims Appealed to Intent*
AL&                    The Cmnibus Budget Reconciliation Act of                      1986 amended the Social
                                         Security Act to give Part B claimants the right to AI.Jhearings for dis-
                                         putes where the amount in controversy exceeded $600. After the
                                         amendment was enacted, HCFA issued instructions requiring claimants
                                         with amounts in controversy of more than $500 to have a carrier fair
                                         hearing before proceeding to the AIJ.’ A federal district court found that
                                         the Congress hzd intended the 1986 amendment to foreclose the use of
                                         carrier fair hearings for these claims7
                                         In 1987, the Congress amendedthat part of the statute which prescribes
                                         that carriers must provide a fair hearing for Part B claims between $100
                                         and $500. This was a technical amendment, making no substantive
                                         change in the law. However, it was made at a time when the Congress
                                         knew of HCFA’S interpretation of the carrier fair-hearing requirement
                                         and was aware of the litigation. Subsequently, the district court, which
                                         had heard the original suit, concluded on rehearing that the 1987
                                         amendment, in effect, ratified the position of HCFA and that the instruc-
                                         tions were valid.” The decision was basedon the fact that the Congress,
                                         knowing of the dispute, had refrained from changing the law. Tt,e US.




                                         Page 31                              GAO/HRD9047     Part B Changesto MedicareAppcnh Process
Court of Appeals for the SecondCircuit, hearing an appeal of the dis-
trict court decision in 1989,upheld this district court decision?

The Court of Appeals found that the Congress had an opportunity to
eliminate the carrier fair-hearing requirement in 1987, when it amended
selected aspects of the provision, but did not clearly do so. The court
believed that the 1987 act gave an “affirmative, legislative indication’*
of the Congress’ willingness to leave the fair-hearing requirement in
place, at least until we completed our study. The court found “a visible
expression of congressional approval of the agency’s position.”

The legislative history and the language of the law provide support for
the conclusion that the courts ukimately reached-that the Department
of Health and Human Services,and thereby HCFA,may require claimants
to have a carrier fair hearing before going to an m-but       they do not
permit a definitive conclusion about congressional intent. However, even
if legislative intent to preclude carrier fair hearings for claims over $600
was clear in 1986, as the courts thought, the Congress’ action in 1987
and the Court of Appeals’ opinion in 1989 make it diffxuh to conclude
that this remains the legislative intent.




%aa~.s v. Bowen. St% F. 2d 4% (2d Cir. 19fW).



Page 32                           GAO/HRD-90.57
                                             Part B C?ungeatn Medim AppeabProcerre
Appendix II

Case Sampling Methodology


                                               To determine the changes after the introduction of mandatory on-the-
                                               record hearings in case vohtme and outcomes at the carrier levei for
                                               each claimant group, we obtained individual case data from 47 of the 51
                                               -Medicarecarriers for the period January 1987 to l&larch1989.’ During
                                               this period, the AU appeals option was in place and the on-the-record
                                               hearings were made mandatory.
                                               We asked carriers to separate cases considered when on-therecord hear-
                                               ings were mandatory from those considered before the carrier imple-
                                               mented HCW’S on-the-record hearing requirement. The carriers entered
                                               case data on two forms that we pretested at carriers in New York, Maa-
                                               sachusetts, and Maryland. (See appendix iII for the data collection
                                               forms used to obtain individual case data.)

                                               Of the 47 participating caders, 6 indicated that they were unable to
                                               provide data on all casesfor the 2-year period becausea large number of
                                               caseswere involved, they did not have an automated filing and retrieval
                                               system, or both. However, these six carriers provided data for a sample
                                               of casesrandomly selected in accordance with our instructions
                                               We constructed a final data set consisting of the universe of casesfor 4 1
                                               carriers and a sample of casesfor 6. In total, data were collected en
                                               about 18,000 individual cases.We weighted the sampled cases from the
                                               6 carriers using the weights shown in table 11.1.
Table 11.1: Weights for Sampled   Cases   in
Six Carriers                                                                                                                       Sampled             case wsi(lhtr
                                               CfltiEir                                                                                                                       198a
                                               I_                           __---ll                          ----_.--                        -- 1987
                                               A
                                                                      --~----._-_                                                              1000                            67 0
                                               B                       --                     ----                                              489              -             48.9
                                               C                         .______._l_                                                    --      30.3                           59.0
                                               D                                                                                                        .                      242
                                                                         -___------
                                               E                                      --LI------l                                               417                             43 6
                                               F                                                                                                49 1                            49.1
                                               ‘Data      lor 1987   were   not available



                                               The estimates of caseoutcomes obtained through this analysis are sub-
                                               ject to error becauseof the sampled cases.At the 95-percent confidence




                                               Page    33                                            GAOiHltD-90.57     Part   B   Changes        to Mix&are     Appeals   Process
-
    Appwdix II
    rhe smlpllnq   MPthodology




    kvel, the error range does not exceed plus or minus 4 percent ir. any of
    our estimates.




    Page   34                    GAO/HRD3057   Part B Changes to Medicare Appeals Process
-n&x   III                                                -I_
Survey h-m Sent to Mdicare Part B Ctiers


                                                    SURVEY OF MEDICARE
                                                     Li HEARING OFFICE CASBS
                                                   PART
                                           WITH A n&TE OP SERVICE OU OR AFTER
                                                  4
             TC2k’ROOUCTION

             This    survey      is being      conducted    by the U.S.       General      Accounting
             Office      (GAO)     for the U.S. Congress.            The results      will     be used to
             help    determine         the effects      of changes     in the Medicare         Part B
             hearing      appeal      process.       Your help     is needed     in order      to
             complete       this     project     successful   ly .    You may wish to consult         with
             the person(s)           who track     and administer        your  case load statistics
             when addressing             these   data requests.
             Before  you begin,     please check  for accuracy         purposes,                      your NAME,
             TITLE,  and ADDRESS on the attached       letter      introducing                        OUT survey
             and make any corrections      in the space     provided       below:


             NAME                 :

             TITLE                :

             ADDRESS              :

             CITY                 :

             Also,       if        applicable,       please     list   any other   pertinent        Carrier
             officials              extensively        involved      in managing   Medicare        Part B fair
             hearing              (CFH) appeals:

             NAME             :


             TITLE            :
             Please      provide     a telephone       number(s)    where          you and,    if
             applicable,         the other     involved     manager    can         be reached,         ii   we have
             any questions          about   your responses.

             PHONE            :

             PHONE            :
             PLEASB RETURN THIS SHEET WITH THE SURVBY FORMS.                                   THANK YOU




                                              Page 35                         GAO/HRD9&67      Part B Changeslo fbicdJc*~Appe&x Process
                                          Append& II1
                                          SurveyForm ScnttoMcdlclrePu¶
                                          B Curlers




INSTRUCTIONS

Enclosed          are      two     data      collection       forms   i.e.,   schedules      -- each
requesting              Medicare          Part    I3 claimant     and Carrier     fair    hearing
information.

The     first      form:     Form A, relates            only to those Medicare                 Part    8
r1ases with             a 'date  of service'        [incurred        by the claimant)             on or
after     January       01,    1987; but,       not be ond the processing                    date uaed
by Carriers          in implementing            -
                                              the       +Caret
                                                      Hea                   Financing
Administration's              (HCFA) Part       B Interim         Guidelines         - Hearings        gnd
Appeals.         The aforementioned             guidelines          suggested        an effective
date     of no later         than May 01, 1988,             and instituted             a general
requirement          (with     minor   exceptions)           for conducting           a mandatory
on-the-record           hearing,     whether       or not an in-person                 or telephone
hearing      is requested.           In the space            provided        below,     pleas&
indicate       Carrier       implementing         date     for    instituting         HCFA’s
interim      guidelines:                          (month)                     (day)                (year).

The second       form:     Form B, pertains      to only     these      tiedicare   Part B
caseF#ZTF        a !date    of service’     on or after      January        01, 1987, and
those    considered      by the Carriers      under   HCFA’s       implementing         --
interim     guidelines      which   require   mandatory      on-the-record
reviews,     uhether     or not an in-person        or telephone          hearing   is
requested.

For the specific         information        requested         under   each     column     in the
two schedules,       refer      to detailed        instructions         provided       belo-,.
Once you have completed             the survey         forms/schedules,           place     ther" in
the pre-addressed          envelope      and mail        them a3 soon as possible,                  but
no later    than Harch        27, 1989.        Also,       if you have any questions                  or
problems   with    the survey,         call    Joe Faley         or Claude      Kayeck      collect
at (202)    523-8666.

PLEASE          RETURN THIS          SHEET WITH THE SURVEY POI?lS

THANK     YOU FOR YOUR COOPERATION1




                                          Page36
                                   Appendix UI
                                   Sutvcy FormSenr to Medlcarv       Pm-t
                                   B Curlem




     !zPEcIPIC       INPORMATION
     Refer    to designated    column    title      headings.                         Please    note that
    information       below identified         by an asterisk                         (+I   only applies            to
    Form B for recording        mandatory        on-the-record                         reviews.

    cane       Reference          Number :
    Identify         byeither     an in-house     control       number     (preferable
    identifier)        or a number       in descending        order    for      those cases
    listed.      Also,      depending      upon the Carrier,         the term “case.          is
    sometimes       used interchangeably          with     the term gclale”,           use either
    for your     listing       purposes,      but for whatever         definitional       reference
    number    terminology         used,    please   identify       as such and be consistent
    in its    usage

    TJJ= of Claimant:
    Ident i fy      -,A; a check       mark the type       oE claimant                   requesting       a
    hearing,         i.e.,     beneficiary         and provider     with               the latter       further
    classified           as either       physician     or non-physician                      (including      durable
    equipment          suppliers,        laboratories,       etc. 1

    W.mber
    ------ of Claims                In Each        Case:

    Identify     the number of claims      combined        by the claimant   to reach
    the required      $1@0 dolLar  threshold.          Also,    refer  to ‘COL #I”
    discussion      on case versus   claim    terminology.

    Original        Dollar
                    ---           Amount        In Controversy:
    Identify        the    original           dollar       amount     in    dispute        at    the   time    of    the
    hearing       regues     t .
+   Mandatory        On-The-Record               Review       Decision:
                     ----
    Identify        the on-the-record-review                     decision      as ‘totally
    favorable”          only     if    the    amount      in controversy           .i.s totally        upheld     or
    decided       in the whole amount                for     the claimant.             Likewise,         identify
    any total         reversal         as “totally          unfavorable.*            For all other
    claimant        rulings         involving       partial       amounts      upheld        in the favor         of
    the   claimant,          identify         as a “partial”           decision.           Also,     when you
    pre-determined             that      a formal      hearing        was necessary,            identify
    these     cases      as “exempted”            Erom an on-the            record       review.
l
    Dollar
    -PO     Amount           IA    Controversy             After
                                                           --        The Mandatory              On-The
                                                                                                ---    Record
    Review:
    Identify        the remaininq              dollar       amount     in    controversy           after      the   on-
    the-record         decision




                                  Prge 37
                                    Appendix III
                                    Survey Form Sent to MedIcart fart
                                    Elcprritrs




*                                                                                                                        i
    Claimant           Continued            Mth
                                            ---       Pa.-ma1 CFR Appeal?i
    Identify           by a yes          or      no   answer

    e          of
               --    CPA:

    Identify           what     type        offormal   hearing      the claimant       requested.      In
    the      situations             where   mandatory     on-the-record        r-views     were already
    held,        the telephone             and in-person       formdl   aettlngs       arc the only
    options         available            to the claimant.

    CPE    Decision:

    Identify           theCarrier    fair      hearing     decision                   as     ‘totally
    favorable”         if the remaining           dollar     amount                  in    controversy           irr
    totally       upheld      in the favor        of the claimant,                         otherwise,   identify
    any     total    reversal      as “totally         unfavorable*                       and any partial
    decision       as “partial.”

    Date
    ---        oE    CFH Decision
    Identify           by    day,       month,        and    year.

    Dollar
    cc__--          Amount      In Controversy                 After
                                                               --        CPA Decision:
    Identify           the    romaininq             dollar      amount     in     controversy            after     the
    Carrier          fair     hearing            decision.

    Appealed          To ALJ?:
                      --
    Identify          by     a check          mark whether,      to        your      knowledge,           claimant
    requested             a hearing           by an Administrative                 Law Judge            (ALJ).




                                    Page 38
                                                                                                                         Ddlsr
                                                                                                                        *mounl
                                                                                                                            In
                                                                                                                      conlroveroy
                                                                                                                          *n*r
                                                                                                                         CFH
                                                                                                                       DeclHon




FORM B                                                                                                                                 Prgc 1 or 2




                                                                                                          f                                     _i



       CRM 6 (Continued)
                                                                                                                                            I


I
             I
             1
                    TYPC 01
                     CFH
                 (Check       One)
                                     I
                                     1
                                         CFH   Decision
                                         (Check One)
                                                          I
                                                          I
                                                                Dollar
                                                              Amount in
                                                                              I
                                                                              I   Date of
                                                                                                IO ALJ?
                                                                                            I <#-h--L n-*1
                                                                                                              ---,_
                                                                                                              --
                                                                                                                                            I




                                                                                                              ---                    -t--

                          I          I     J          1   I                                                   -                             I
L--!                                                                     --
             1                                            I                                         I                            I          I
                                                                                                    i
                                                          I
                                                                                                    I
                                                          !
          _________
Appendix --vI\’    I_..-
                  ~~-.                 ---_
Estjmates of the Potentiail Effect of Lowering ___
the Threshold for Access to an ALJ
Figure IV.l: Expected     Outcomes     for Beneficiaries    at a $500 ALJ Threshold

Ewxred   Outcomes    per !O.OUJ Clarmanrs


 Type of Claimant        On-the-Record              Optional Carrier      Type of Carrier   Carrier   Fait    Appmkd   to AU
                         Hearing Detirion           Fair Hearing          Far neaimg        licarmg Dwision




                          Wh-l          300



                          Contfnue    4,500




 aeoefmary   TO000




                          Lose
Figure IV.2 Expected      Outcomes     for Phymcians    at a SSOJ ALJ Threshold

Expected   Outcome%   per 10.000 Clamants


 Type of Claimant         On-the-Record           Optional Carrier       Type of Garner      Carrier Fair                     Appealed to 4U
                          Hearrng Dectsion        Fair Hearing           Fair Herring        Hearing Decision




                           Conrlnue   6.000




                                                                                                                               ye5      1.200
                                                  No          5.820
 Phyrman     10.000                                                                                                      1’
                                                                                                                              NO        4.620




                                                                                                 Wm              13




                                                  YQS           I48




                                                  Page 42                          GAO, HRDW57        Pan   Li Changes to Mtdicare    .4pplls   Process
Figum IV.3: Expected Outmmm     ior Nonphyriclans       at a $500 ALJ Threshold
Erpected Outcomes per 10,OOOClwmww


Type of Claimant      On-ths-Uword           Optional Cartiw        type al Carrrcr             Carrier Fair        Appealed to AU
                      Waring De&ion          Fair Hearing           Fair Herring                Hearing Decision



                                                                                                 Wlfl

                                                                     Teleohone    110      +                            Ye5       14

                                                                                                 lose



                      Will        900


                      Corm-we   3.400




                                                                                                                        Y6!S    544
                                                                                                                                       b
 Nonphyrun                                   NO           3,196                                                    I-
             10.000
                                                                                                                   I No        2.652




                                                                     Telephone        96   Y


                                             Yes           399
                      Lose      5.700    I

                                                                  1 I”.Perron     303      ,x




                                              Page 43                            C-40, HRDW57 Part B Changes to Medicare Appeals Prows@
                                           Appendix IV
                                           E&mares      of the Potrntid      Effect    of LclmrLng
                                           thr   Threshold fur Amas         to an Au




Flgum IV.1: Expected Outcomes for Beneficiaries     at a St00 AU Threshold
Erpectrd Outcomes per 10.000 Claimants


Type of CLimrnt        On-the-Retard      Optional Carrier            type of carriw                 Carrier Fair               Appcrkd to AU
                       Heating Oacisinn   Fair Hearing                Fair Hearing                   Hearing Oecision



                                                                                                      WMl           17
                                                                          Telephone      579                                    yes         22
                                                                                                                                                 l
                                                                                                      Care        562
                                           Yes                                                                                  YO         90

                        Wan         300                                                              Wlfl
                                                                          In-Perron      570
                        Contmue   8.900                                          pLhe                             5I       dz




                                                                                                                                Y@5      2.937

 Benefiaary   10.000




                                                                      Telephone           IO    t




                       Lo5e
                                           Yes             56       I                           1 Lose                 9




                                          Page 44                                     G.4OABIHO-57      Part B Ch&x@s to Mediare AppcrL              Raer
_-- ..- - ..- - ..--   ..- - .._ - ..- - -I ..----   - ..- - -, -   .._-   ..-   .-   -   .._ -_.   -- ..--   ..- ---   ..--.   - ..- - ..- - __. -. .._-   ..- - .._ - ..- -_-   I-~_- - ..--   -. --
                                                               -I___




                                            Appendix lv
                                            Estimates of the Poten~W Effrtt uf LMJWGI#
                                            the Threahoid fur Access to an 4U




Figure IV.5 Expected Outcomes for Phyriclanr      at 8 $100 ALJ Thrsahold
ExpectedOutcomes    per 10,000 Clrtmantr


 Type of Claimant       On-the-Record       Optional Cawisr                Type of Carriw          Carrier Fak                Apf.mulrd   to AU
                        Hewing Owision      Fair Hearing                   Fair Hsarrng            Hearing Decision




                                                                            reiephone       99    1 LOIe         87       I yes               1:


                                            Yes          261                                                              I No                72



                                                                            in-Person       162                                Yes            35
                         Contrnue   5.700                                                           Lose        t52
                                                                                                                               MO             67



                                                                                                                               Yes         1.740
                                                                                                                                                   b
                                            NQ         8.439                                                              I
 Physrcran 10.000
                                                                                                                          1 No             6.69g




                                                                                                    Wltl              3
                                                                           Telephone        29
                                                                                                    Lore         26
                                            Yes           40           I
                          ose       1.000
                                            NO           960
                                                                                                    4vll-i            1
                                                                           ‘n.Perron        Ii
                                                                       1
                                                                                                    LOW          10




                                            Pr;e 45
Figure    IV.6     Expected   Outconres lor Nonphysicians at a         $100   ALJ    ThreshoK

ExoectedOutromesper           10,000Cla~~a~t~


 Type of Claimant             On-the.Retord            Optional Carrier             Type of Carrier             Carrie: Fair                    Appealed   to AU
                              Hearing Derision        Fair Hearing                  Fair Hearing                Hearing Decirion



                                                                                                                   Wlfl

                                                                                     rewhme           209   +                                    Yes             33
                                                                                                                                                                     +
                                                                                                                   Lose            ma

                                                       Yes           462                                                                         No             171


                                WI0             900                                                                WlIl

                                                                                     In-Person        213   r[..                            ,    yes            103,

                                Continue    7,700

                                                                                                                                            1 NO                 84




                                                                                                                                                 yes         ‘,232
                                                                                                                                                                       b
  NonphySlclan                                         NO          7.230                                                                    I
                 10.000
                                                                                                                                            1 NO             6.006




                                                                                                                   wdn               4

                                                                                     Telephone         24

                                                                                                                   L0T.e            20

                                                       Yes



                              ‘-1                      No          1.302



                                                                                                            I Lose                  73




                                                                                                 CAO,~HRDPS57             Part B Uhangcs   tn Medicare     Appeals         &s
Major Contributors to This Report




                                                     -______L______~
                        .lorwthan   I I.   Atrorncy-Advisor
Office of the General
Counsel,
Washington, DC.




118241)                 Page 47
        ‘




    .




.
    Vnited States
    General Accounting     Office
    Washington,   D.C. 20.5-H

    Official       Business              ’
    Penalty        for Private       Crc $300




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