United States: CMS Still Finding Its Way Through Significant Medicare Appeals Backlog – Proposes New Rule In An Effort To Catch Up

In the proposed rule, CMS focuses on taking administrative actions to alleviate the backlog, including introducing the concept of precedential decisions, delegating certain administrative law judge tasks to "attorney adjudicators" and clarifying certain evidentiary requirements within the administrative appeal process.

The Centers for Medicare & Medicaid Services (CMS) recently issued a proposed rule1 to address the significant backlog resulting from "an unprecedented and sustained increase" in its Medicare appeals. According to CMS, the Office of Medicare Hearings and Appeals (OMHA) had more than 750,000 pending appeals as of April 30, 2016, while it has only an adjudication capacity of 77,000 appeals per year.2 Given the current backlog, the statutory 90-day limit3 for a decision at the Administrative Law Judge (ALJ) level (the third level of the administrative appeal process) is routinely ignored by OMHA – the current average wait time is more than five times this congressionally mandated time limit.

CMS has previously identified four primary drivers for the growth in Medicare appeals – (1) an increase in the number of beneficiaries; (2) updates and changes to Medicare and Medicaid coverage and payment rules; (3) growth in appeals from State Medicaid Agencies; and (4) national implementation of the Medicare Recovery Audit Contractor Program.4 Under current resources (and without any additional appeals), CMS projects it would take 11 years for OMHA and six years for the Medicare Appeals Council (MAC) (the fourth and highest level of the administrative appeal process before federal district court) to process their respective backlogs.5

Highlights of the Proposed Rule The proposed rule comes on the heels of criticism from various branches of the federal government regarding the delay in processing Medicare appeals, including a recent Government Accountability Office Report6 identifying opportunities to improve the appeals process; the D.C. Circuit Court of Appeals' recent reversal and remand in American Hospital Association v. Burwell7; a Senate Finance Committee hearing in April 2015 titled "Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare"8; and OMHA's own "Medicare Appellant Forum"9 in 2014.

In the proposed rule, CMS specifies a three-prong approach to addressing the current backlog – (1) requesting new resources to increase adjudication capacity; (2) taking administrative actions to reduce pending appeals and implement new strategies to alleviate current backlog; and (3) proposing legislative reforms that provide additional funding and new authorities to address the volume of appeals. The proposed rule focuses on the second prong, with the major highlights of the proposed rule as follows:

  • MAC Precedential Decisions The proposed rule designates the Departmental Appeals Board chair to select MAC decisions in "which a significant legal or factual issue was fully developed on the record and thoroughly analyzed" as precedential and binding on CMS and its contractors in making initial determinations, redeterminations, and reconsiderations in an effort to provide more consistency in appeals decisions.10 To potentially minimize the number of appeals filed, CMS would provide a public listing (including being posted on the CMS website) of such final precedential decisions in order for appellants to evaluate whether to move forward with the appeals process.11

    In the proposed rule, CMS explains that if a MAC decision is designated as precedential and interprets a CMS manual instruction, that interpretation would be binding on pending and future appeals and initial determinations to which that manual instruction applies.12 Presumably, Medicare contractors will be trained with interpreting and processing appeals submitted for their review that relates to an issue that has a binding precedential decision. In order to maintain final authority, CMS would be free to follow its normal internal process to revise a manual instruction at issue, and such new instruction would apply to initial determinations superseding the precedential decision designated by the MAC.
  • Attorney Adjudicators The proposed rule includes a provision to expand OMHA's adjudicator pool by allowing OMHA to reassign a portion of its workload to non-Administrative Law Judge adjudicators, to be known as "attorney adjudicators." Specifically, the proposed rule would allow such attorney adjudicators to issue decisions when an appellant decides it does not want a hearing, or withdraws his or her request for an ALJ hearing.13

    Attorney adjudicators would also address whether a Qualified Independent Contractor (QIC) dismissal was in error – an occurrence CMS identifies as having happened more than 350 times last year.14 Decisions by attorney adjudicators can be reopened or appealed the same as if the ALJ made the decision. Under the proposed rule, the term "attorney adjudicator" would be defined as a "licensed attorney employed by OMHA with knowledge of Medicare coverage and payment laws and guidance."15
  • Admission of New Evidence at ALJ Level The proposed rule more clearly explains the criteria for which "new evidence" may be submitted at the ALJ level of appeal. Currently, any evidence that was not submitted during the first two levels of appeal will not be admitted at the ALJ level unless a party can demonstrate "good cause" for its admission.16 The current regulations provide limited context regarding what is considered "good cause," leaving a fair amount of discretion to the ALJ for such a determination. The proposed rule provides more clarity and consistency to appellants as to when new evidence may be admitted.
    Under the proposed rule, new evidence may be admitted where (1) the ALJ or attorney adjudicator finds that the new evidence is material to an issue addressed in the qualified QIC's reconsideration decision, and the issue was not identified as a material issue prior to the QIC's decision; (2) the new evidence is material to a new issue identified in the QIC's decision; (3) the party was unable to obtain the evidence before the QIC issued its reconsideration decision, and the party submits evidence that establishes the party's reasonable attempts to obtain the evidence before the decision was made; (4) the evidence was submitted by the party to the QIC but it was not included in the administrative record; and (5) the ALJ or attorney adjudicator determines the party has demonstrated that it could not have obtained the evidence before the QIC issued its reconsideration.17

Analysis for Medicare Providers CMS has struggled in adopting measures to curtail the Medicare appeals backlog, as previous measures to reduce the backlog included reliance on technological advancements in case filing and processing, which has not been sufficient.18 The most significant modification to the appeals process under the proposed rule is the adoption of precedential decisions. The concept of precedential decisions is not new – in fact, the Office of Inspector General (OIG) recommended CMS implement precedential decisions back in 1999 after reviewing the Medicare Appeals Process and determining inconsistencies across ALJs and contractor decisions.19 At that time, CMS determined it was not "feasible or appropriate" to confer precedential authority on MAC decisions, citing its inability to participate as a party in ALJ hearings (the regulations now permit such authority), and the Social Security Administration's transfer of responsibility for adjudicating Medicare appeals to CMS under the Medicare Prescription Drug, Improvement and Modernization Act of 2003.20

Although the adoption of precedential decisions should help restrain inconsistent ALJ decisions, providers should monitor how CMS plans to instruct and educate its Medicare contractors in properly implementing such precedential decisions at lower levels of appeal – with various Medicare contractors and QICs, the prospect for inaccurate interpretation and implementation of such decisions remain. In circumstances in which a precedential decision would apply to a factual question, CMS explains that the "decision would be binding where the relevant facts are the same and evidence is presented that the underlying factual circumstances have not changed" since the MAC issued the precedential decision.21 For providers concerned with Medicare claims relating to medical necessity, CMS recognizes that "many claim appeals turn on evidence of a beneficiary's condition or care at the time discrete items or services are furnished," and therefore the proposed rule on precedential decisions "is unlikely to apply to findings of fact in these appeals."22

The establishment of precedential decisions does not remove a party's right to challenge such decisions by seeking judicial review in federal court for an unfavorable MAC decision.23 It remains unclear whether CMS will allow a party to seek judicial review immediately following a determination that its appeal is denied based on precedential authority, or whether said party would need to continue moving through the appeals process for a final MAC decision.

Although the proposed rule specifies that attorney adjudicators would receive the same training as OMHA ALJs – it remains to be seen whether the establishment of "attorney adjudicators" will compromise the quality and thoroughness of review. Finally, the proposed rule is silent on modifications CMS previously has suggested to mitigate the backlog, such as implementing an alternative dispute model, as well as including OMHA facilitated mediation of claims.

Conclusion Provider frustration with the Medicare appeal process is warranted. With the increase in audit reviews, particularly of the pre-payment variety, the current Medicare appeals backlog creates a real disadvantage for providers whose cash flow is interrupted – delays in contesting such reviews halts critical cash-flow. When providers can get a timely ALJ hearing, the process has shown to offer success to providers – in 2010, more than 56 percent of ALJ decisions were fully favorable to providers.24

In a blog post announcing the release of the proposed rule, Chief Administrative Law Judge Nancy Griswold and Departmental Appeals Board Chair Constance B. Tobias noted that the president's 2017 proposed budget requests additional funding and legislative reforms to facilitate appeals processing and encourage resolution of appeals earlier in the process. Even if Congress grants the administration's requests, however, Griswold and Tobias acknowledged that the backlog of appeals still would not be eliminated before 2021. Consequently, providers should continue to monitor the proposed rule and the modifications contemplated by CMS, and insist for additional measures to relieve the significant backlog.25

  1. 81 Fed. Reg. 43790 (July 5, 2016).
  2. Id. at 43792.
  3. Section 1869(d)(1)(A) of the Act; 42 C.F.R. § 405.1046.
  4. See HHS Primer – Medicare Appeals Process available at: http://www.hhs.gov/dab/medicare-appeals-backlog.pdf
  5. Id.
  6. See Opportunities Remain to Improve Appeals Process, GAO-16-366 (May 10, 2016)
  7. 812 F.3d 183, 185 (D.C. Cir. 2016)
  8. See Full Committee Hearing Transcript, available at: http://www.finance.senate.gov/hearings/creating-a-more-efficient-and-level-playing-field-audit-and-appeals-issues-in-medicare
  9. See Medicare Appellant Forum, available at: http://www.hhs.gov/omha/files/appellant_forum_presentations.pdf
  10. 81 Fed. Reg. at 43793-43794.
  11. Id.
  12. Id.
  13. Id. at 43794-43795.
  14. Id.
  15. Id.
  16. 42 C.F.R. § 405.1028.
  17. Id. at 43829.
  18. In 2014, OMHA held a "Medicare Appellant Forum" to provide some insight of the future of the appeals process. At the forum, OMHA announced various short-term and long-term initiatives to curtail the appeals backlog, including programmatic changes as well as technological advancements. See Medicare Appellant Forum, available at: http://www.hhs.gov/omha/files/appellant_forum_presentations.pdf
  19. See Office of Inspector General Report, Medicare Administrative Appeals (September 1999) available at: https://oig.hhs.gov/oei/reports/oei-04-97-00160.pdf. CMS would not be the only agency to rely on precedential decisions, as other federal governmental administrative forums utilize precedential decisions, including the National Labor Relations Board (NLRB) and United States Citizenship and Immigration Services ("USCIS") to expedite their administrative process.
  20. See Report to Congress: Plan for the Transfer of Responsibility for Medicare Appeals (Mar. 2004) available at: https://www.ssa.gov/legislation/medicare/medicare_appeal_transfer.pdf.
  21. See 81 Fed. Reg. at 43793-43794.
  22. Id.
  23. See 42 C.F.R. § 405.1136.
  24. See OIG Report, Improvements are needed at the Administrative Law Judge Level of Medicare Appeals, (November 2012) available at: https://oig.hhs.gov/oei/reports/oei-02-10-00340.pdf
  25. The proposed rule is open for comments through 5 p.m. EDT August 29, 2016.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.