Senators Raise Concern over Medicare Claims Appeal Transfer

WASHINGTON–Members of the Senate Finance Committee, which
oversees Medicare, have raised concerns over plans to transfer
Medicare claims appeals from the Social Security Administration to
the Department of Health and Human Services.

Committee Chairman Sen. Charles Grassley, R-Iowa and Sen. Max
Baucus, D-Mont., say that staffing may be an issue when the
government transfers Administrative Law Judges–who handle Medicare
claims appeals–from Social Security to HHS. The Medicare
Modernization Act mandates the transfer no later than Oct. 1.

Social Security has about 950 judges working out of more than
100 offices nationwide. All spend at least some portion of their
time on Medicare appeals, and altogether have a support staff of
about 5,200.

HHS plans to bring on only 50 ALJs working out of only three
field offices–Cleveland; Irvine, Calif.; and Miami–with a reduced
support staff, though staff numbers could increase with additional
funding, according to CMS.

“While we understand the need to design the process with an eye
on controlling costs, we feel that three offices do not rise to the
level of a geographic distribution as envisioned by Congress in
enacting the MMA,” the lawmakers stated in a March 25 letter to HHS
Secretary Michael Leavitt and Social Security Commissioner Jo Anne
Barnhart. They added that so few offices could limit beneficiary
access to appeals judges.

The senators also brought up the fact that HHS has yet to hire
any new ALJs. “While we realize that there is a lengthy hiring
process, especially for ALJs, we are concerned that no staff,
including management, is on board yet. In fact, we understand that
several of the position descriptions and vacancy announcements have
not even been written.”

The transfer has raised concerns among providers as well. ALJs,
who handle second-level appeals, have maintained impartiality
because they work for Social Security, observers say, and moving
them under the HHS umbrella could create a conflict of
interest.

But HHS contends that other reform efforts in the claims appeals
process should alleviate the problem. Medicare will soon be
contracting out to new entities called Qualified Independent
Contractors to handle first-level appeals. The QICs will reconsider
all cases involving medical necessity issues. This, according to
HHS, should drastically reduce the number of cases passed on to the
ALJs.

Grassley and Baucus requested a response to their letter by
April 8. For more on the ALJ transfer, visit the HHS Office of
Medicare Hearings and Appeals Transition Web site, available by
clicking here.