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Medicare implements new claims appeal procedures

From the October ACP Observer, copyright 2005 by the American College of Physicians.

By Kerry Hunt

Q: Is Medicare making changes to the fee-for-service claims appeal process?

A: Yes. Earlier this year, the Centers for Medicare and Medicaid Services (CMS) outlined major changes to Medicare fee-for-service claims appeal procedures. The changes were required by two recent laws, including the Medicare reform legislation passed in late 2003.

Q: When will these changes take place?

A: The CMS is phasing in the new appeal procedures, beginning with Medicare Part A. Effective May 1, 2005, Part A fee-for-service claims appeals were subject to the new process. Changes for Part B fee-for-service claims will take effect Jan. 1, 2006.

Q: What changes are being made?

A: Here is a list of key appeals process changes:

  • Uniform appeal procedures will be implemented for both Part A and Part B claims.

  • The decision-making timeframe for administrative appeals will be significantly reduced to 60 days. If Medicare contractors do not respond within that time period, patients or physicians can escalate their appeal to the second level.

  • Eight qualified independent contractors will be selected to reconsider second-level appeals after a claim has been denied by a fiscal intermediary, carrier or quality improvement organization. These contractors will replace the Medicare-appointed hearing officers who currently adjudicate second-level appeals.

  • A case-specific claims appeals database will be developed to track appeals in real time. The database will allow Medicare customer service representatives to give patients and physicians real-time information on the status of appeals.

  • Third-level appeals—which are conducted by administrative law judges—will be transferred from the Social Security Administration to the Department of Health and Human Services.

Q: Under the revised process, how many appeal levels will be available?

A: Medicare will still provide five appeal levels for fee-for-service claims, although each level will feature significant changes. Here are those revised levels:

  • First appeal level: redetermination. A patient or physician can appeal an initial claim determination within 120 days of the initial decision, thereby requesting a claim redetermination. There is no monetary threshold required for a redetermination. The Medicare contractor has 60 days to review the appeal and respond.

  • Second appeal level: reconsideration. If patients or physicians are not satisfied with the first appeal decision, they may request a second-level appeal, known as a reconsideration, within 180 days. Appellants must submit all evidence pertinent to the appeal at the reconsideration level or before.

    All reconsiderations will be conducted by qualified independent contractors who are separate from the Medicare contractor responsible for both the initial determination and the redetermination. In all cases involving medical necessity denials, reconsiderations will be conducted by a qualified independent contractor review panel that consists of physicians and other health care professionals. There is no monetary threshold required for reconsiderations. Those making the appeal must be notified of the reconsideration decision within 60 days.

  • Third appeal level: administrative law judge. If patients or physicians are not satisfied with the reconsideration outcome, they can within 60 days request a hearing with an administrative law judge. To make that request, the monetary amount being contested must exceed $100. An administrative law judge must conduct a hearing and render a decision within 90 days of the hearing request date.

  • Fourth appeal level: department appeals board. If patients or physicians are not satisfied with the third-appeal level decision, they can file for a department appeals board review within 60 days of being notified of the administrative law judge's decision. The department appeals board must review the appeal and respond within 90 days.

  • Fifth appeal level: federal district court. If physicians or patients are not satisfied with the board's decision, they can request a hearing before the federal district court within 60 days--as long as the amount of the appealed claim exceeds $1,050.

Q: Will I have to file an appeal to resolve a minor claims error or omission?

A: No. Section 937 of the 2003 Medicare reform legislation required the CMS to establish a process for correcting minor claims errors or omissions without making patients or physicians file an appeal. Known as re-opening a claim, this process would take place in the case of clerical errors, minor omissions or failure to submit appropriate claim documentation.

More information about Medicare claims appeal procedure changes is online.

Kerry Hunt is a Senior Analyst in ACP's Washington office.

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