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APRIL 22, 1999, THURSDAY

SECTION: IN THE NEWS

LENGTH: 3164 words

HEADLINE: PREPARED TESTIMONY OF
VICKI GOTTLICH
NATIONAL SENIOR CITIZENS LAW CENTER
BEFORE THE HOUSE WAYS AND MEANS COMMITTEE
HEALTH SUBCOMMITTEE

BODY:

Good afternoon. I am Vicki Gottlich, an attorney with the National Senior Citizens Law Center (NSCLC) in Washington, D.C. NSCLC is a non- profit organization that has advocated for over twenty-five years on behalf of low-income older people and people with disabilities in a variety of areas, including Medicare, Medicaid, and private employer- sponsored health insurance. As part of our Medicare work, we convene monthly teleconference calls with Medicare advocates from across the country to discuss current issues and problems faced by Medicare beneficiaries. We also have a special grant from the National Association of Protection and Advocacy Systems (NAPAS) to provide technical assistance on Medicare issues to advocates for people with disabilities. Issues concerning what is a Medicare covered service and questions about appeals procedures frequently arise in my individual conversations with advocates as well as in the monthly phone calls. I therefore appreciate the opportunity to discuss with the Subcommittee today the issues Medicare advocates have identified and the experiences of beneficiaries. As the Subcommittee is aware, Medicare is divided into three pads. Part A generally covers hospital and other in-patient services, Part B generally covers doctors services and durable medical equipment, and Part C establishes the Medicare+Choice program. Each part has its own initial appeals process which beneficiaries must exhaust before moving on to a hearing before an administrative law judge (ALJ), then to review by the Department Appeals Board, and then possibly to federal court. In addition, there are special appeals rules for hospital discharge and special notices for discharge from a skilled nursing facility. There are separate procedures for quality of care complaints.
While the list sounds - and is- complicated, the average beneficiary does not experience the confusion about the process that one would think arises from such a convoluted system. Most beneficiaries are not aware of the details of appeals procedures until their claim for payment of a service, procedure or equipment is denied. When that happens, the denial notice sent to the beneficiary by the fiscal intermediary, if it is a claim under Part A, or by the carrier, if it is a claim under Part B, describes the appropriate appeals process for a claim under that part. Similarly, hospital discharge notices given to beneficiaries in advance of their discharge and "Sarrassat" notices given in advance of discharge from a skilled nursing facility describe the procedures to use in those situations. Thus, beneficiaries are given information on how to file an appeal of that particular kind of claim at the time they need the information.
The fact that beneficiaries should be informed of their rights in the fee-for-service context does not mean that the system is problem free. I will now address several of the main concerns about coverage determinations and appeals procedures raised by beneficiaries and their advocates.
National Coverage Determinations
Beneficiary representatives give great priority to establishment of a mechanism to protect the rights and interests of beneficiaries in the National Coverage Determination (NCDs) process because, under the current NCD process, their clients' rights and interests are not protected. We have considered various remedies, including litigation, to redress the harm suffered by elderly clients and clients with disabilities who are unable to obtain critically needed medical procedures because of NCDs based on scanty evidence, questionable standards, or stale information.
Currently, there are two ways in which the public might theoretically have input into the content of Medicare rules denying coverage of medical procedures. One is by involvement in the Health Care Financing Administration (HCFA) process for enacting NCDs. The second is by raising issues concerning the legitimacy of the NCD during the beneficiary appeal process I described briefly above. For different reasons, these two avenues for input by the consuming public are essentially foreclosed at this time. Involvement by consumers in the initial HCFA NCD enactment process is very rare. First, few patients know that they will need a medical procedure when the NCD rule making process is underway. Second, even if a patient has timely knowledge of an NCD process that would affect her, she generally lacks resources to participate effectively in the process. Third, as this Subcommittee is well aware, HCFA's Technology Advisory Committee (T|C) did not openly invite participation by Medicare beneficiaries or the general public. There was a lack of clarity about obtaining a NCD for new procedures, devices, etc. outside the context of an appeal.
The appeals process also provides no recourse for beneficiaries. Beneficiaries have been foreclosed from questioning NCDs in the course of coverage appeals by 42 U.S.C. 1395ff (b) (3). That provision makes it nearly impossible for a beneficiary to challenge the rule upon which services were denied by preventing consideration of the issue at the administrative level. If the claim reaches federal court, a federal judge who determines that the record is incomplete or insufficient to support the validity of the NCD must, under Section 1395ff (b) (3), remand the case for supplementation of the record. The court may only determine that an item or service is covered after review of the supplemented record.
Last fall, HCFA held a Medicare Coverage Town Meeting and published a notice in the Federal Register inviting comments on changes to the NCD process. NSCLC and the Consumer Coalition for Quality Health Care joined in comments filed by the Center for Medicare Advocacy in response to the Town Meeting and Federal Register notice. We suggested to HCFA that the agency create a meaningful opportunity for beneficiaries to question NCDs. The NCD process must be faster and less arcane. We proposed that a process be established to allow a beneficiary who is denied services or payment because of an NCD or who is seeking to establish an NCD to request prompt administrative reconsideration of the NCD. By filing a petition with HCFA, the beneficiary could initiate an administrative review of the NCD that focuses on whether it currently meets the criteria for enactment of NCDs. Such a post-enactment review is particularly necessary for NDCs involving new procedures because new evidence concerning efficacy emerges over time, with HCFA re-evaluation often lagging behind. In order to give legitimacy to this reconsideration process, the beneficiary should have the further right of appeal to federal court.
NSCLC also responded to HCFA's Federal Register request last December for nominations to the new Medicare Coverage Advisory Committee that is being formed to replace the TAC. We nominated two beneficiary representatives who have had experience with the current process. We also encouraged other beneficiary advocates, including advocates who are knowledgeable about assistive devices and other technologies, to apply to serve on the new committee. It is crucial that beneficiaries be adequately represented in any new process developed by HCFA for making NCDs. Adequate representation means inclusion of advocates who represent the interests of the diverse Medicare beneficiary community. We often refer to "seniors" when describing Medicare beneficiaries, yet over 5 million beneficiaries are younger people with disabilities. Many members of this community are adversely impacted by HCFA's failure to include new devices and technologies among Medicare's covered services. Their voice needs to be heard in any process that reviews and re-evaluates new technologies, services and procedures.
Lack of appeal rights under fee-for-service Medicare where the service has not already been received.

The current Medicare appeals process under Parts A and B is premised on a delivery model in which beneficiaries obtain a service or procedure and then seek reimbursement. This system adequately meets the needs of beneficiaries who are not waiting for a determination by Medicare before they obtain needed care. Problems arise, however, where the issue is prior authorization of services or items as opposed to reimbursement.
For many low-income beneficiaries, the current system precludes their ability to obtain the equipment and services they need. They cannot afford first to purchase the equipment or receive the service, the initial step in getting Medicare to cover their medical need, and then submit a claim for reimbursement. In the context of Medicare home health services, if the home health agency believes Medicare will no longer cover the service, the beneficiary must pay for the service privately while the agency submits a "demand bill" to the fiscal intermediary. Again, beneficiaries who cannot afford to pay out of pocket have no access to the appeals process to determine whether Medicare will in fact pay for their care.We have also found that if a home health agency or a skilled nursing facility determines on its own that Medicare will not pay, the agency or facility may deny the beneficiary access to the service by refusing to admit the beneficiary. Where that determination is not correct, the agency or facility's unwillingness to even provide the service precludes the beneficiary from filing a demand bill to get a determination from Medicare about whether the service will be covered. Without such a determination from the fiscal intermediary in these cases, the beneficiary cannot seek an appeal.
Just as beneficiaries enrolled in a Medicare+Choice plan have the opportunity for an expedited appeal when the plan denies a service, beneficiaries in fee-for-service Medicare should have access to an expedited determination that Medicare will pay (or not pay) for the needed device or services. Beneficiaries should be able to request an intermediary or carrier determination, issued within 15 days of the request, that Medicare will cover the equipment or service in question. They can then present the determination to the provider or physician and obtain the item or service in question. If the request is denied, they should have the opportunity to appeal through an expedited appeals process. Such a process will enable individuals who cannot afford to pay out of pocket the opportunity to access the appeals process.
NSCLC is co-counsel in a nationwide class action filed in the United States District Court for Connecticut called Healey v. Shalala. In that case, we are challenging the appeals process as it applies to denials, terminations, and reductions of Medicare home health services. Among the issues raised in the case are the lack of expedited review and the lack of an appeals process for beneficiaries who cannot afford to pay privately for their care. The case provides a good example of the dire consequences to the beneficiary from being deprived of both a service and a process through which to appeal that denial. Within the first few months after the Healey case was filed, two of the named plaintiffs who were denied home health services died.
I mentioned earlier that, where a provider believes that Medicare will not pay for a service and requests the beneficiary to pay out-of- pocket, the beneficiary may request that the provider submit a "demand" bill to the fiscal intermediary (for skilled nursing facility or home health claims) or to the carrier to get a determination of coverage that can then be appealed if unfavorable. We have found, unfortunately, that some providers are unwilling to submit demand bills, thus depriving beneficiaries of the right to pursue their claims with Medicare. In one egregious case from Cincinnati, it took two years to get the provider to submit the demand bill for home health services.
Adequate notice
Appeals processes work only when beneficiaries are informed of their appeal rights. In the fee for service context, as I noted earlier, standard notices explain what those rights are and how beneficiaries may access the review process.
Unfortunately, there are situations in which Medicare beneficiaries are not adequately informed of their right to appeal or, if informed, are not given information that would allow them to begin the appeal process. For example, the Healey case arose because Medicare home health beneficiaries did not receive notice from their home health agencies that their home health services would be reduced or terminated. If they did receive written notice, the notices often did not explain their right to request a "demand bill" and to file an appeal if the demand bill was rejected. In addition to the other relief in that case, we are seeking that HCFA require home health agencies to give beneficiaries a standard notice that explains what services are being denied, reduced, or terminated, the reasons for the denial, reduction, or termination of services, and the procedures to follow to get a formal determination of Medicare eligibility from the fiscal intermediary.
A GAO report/1 issued last week found that, despite a court ruling and changes made to the Medicare managed care appeals process by the Balanced Budget Act of 1997, Medicare HMOs still are not providing beneficiaries with adequate notice of their appeal rights. The GAO found that notices frequently failed to explain appeal rights and/or did not state the reason for the denial. They often were given with little advance notice of discontinuation of a service such as skilled nursing care, leaving beneficiaries without time to plan how to obtain and pay for the service. The GAO, after reviewing cases sent to the Center for Health Dispute Resolution for review, also noted that some beneficiaries do not receive notices at all.
The GAO's findings comport with the experiences of the Medicare advocates with whom I work across the country. In one case from South Florida, for example, the beneficiary was told orally by her HMO that home health services would stop the next day. She was given no an explanation why they were being terminated and given no explanation of her appeal rights. When the attorney called the HMO on the client's behalf to get more information and to ask for an expedited plan reconsideration, she was told by the plan representative that the client had no appeal rights at all..
We therefore concur with the GAO recommendations that HCFA develop standard notices and increase its oversight, monitoring and enforcement of the Medicare+Choice appeals process. We would extend this recommendation to oversight, monitoring and enforcement of the appeals processes available under other Medicare appeals systems.
Delays in the appeals process
From a policy perspective, the multiple levels of review in the appeals process appear to add confusion and to be somewhat unnecessary. However, in practice, the carrier review and intermediary reconsideration stages sometimes allow for claims to be resolved without the need for ALJ review. According to HCFA statistics, the reversal rate is 76.9% for carrier reviews and 42.9% for intermediary reconsiderations. In addition, carrier review and intermediary reconsideration provide a forum to resolve small disputes that do not meet the jurisdictional limits for ALJ hearings ($100 for Part A claims and $500 for Part B claims). The real problem that arises at this level of review is the length of time it takes to get a carrier or an intermediary determination. Delays can be particularly intolerable where a beneficiary has paid or is paying for a service out of pocket.
Several small changes can address this issue. These levels of review could be made optional for beneficiaries with larger claims who want to proceed directly to an ALJ hearing. Also, carriers and intermediaries should be required to make decisions within 30 days of receipt of the claim. If decisions are not made within that time frame, beneficiaries should be allowed to proceed automatically to the ALJ level, and be notified of this right when they are told of their initial appeal rights.
Similarly, time limitations should be established for ALJ hearings and decisions. We have heard from beneficiary representatives whose clients waiting as long as two years to get an ALJ hearing, and may wait almost as long to get a decision. Again, if time limitations are not adhered to, the beneficiary should be allowed to proceed directly to federal court. There also needs to be a provision for expedited ALJ hearings. The Social Security Administration already has a little known procedure to move a case to the top of the ALJ hearing waiting list in limited circumstances, generally where the claimant is terminally ill. This procedure may need to be broadened and better publicized to protect individuals who would meet the Medicare+Choice criteria for expedited consideration.
Clarification of the home health appeals process
When the Balanced Budget Act of 1997 transferred most of Medicare home health benefits from Part A to Part B, Congress was aware that this change could result in the same beneficiary having some of her home health claims being processed under the Part A process and some of her claims being processed under the Part B process. Thus, the BBA provides the same appeal rights for beneficiaries under Parts A and B, changing the amount in controversy for ALJ review in Part B home health claims from $500 to $100. What is not clear to advocates is whether claims for home health benefits under Part B would be administered completely as if they were claims under Part A. We would like further clarification that all home health claims, whether paid under Part A or Part B, would be administered through the Part A system.
Creation of a Medicare Court
Beneficiary advocates have questions about the creation of a special Medicare Court. We are not aware of any data to show that enough Medicare cases are filed to warrant the establishment of a new Article I court. According to HCFA reports, few intermediary reconsiderations and carrier reviews are requested, and the reversal rates, particularly for carrier reviews, are high. While we don't know the number of ALJ hearings requested, we know anecdotally that the number of appeals decreases as beneficiaries progress through the appeals system, and that few federal court cases are brought. Therefore, a first exploratory step before establishment of a new court might be to gather more empirical data about the number of appeals at the ALJ, Departmental Appeals Board, and federal court levels.
We appreciate the efforts of Chairman Thomas and this Subcommittee to support adequate appeal rights for Medicare beneficiaries. We look forward to continuing to work with you on this important issue.
FOOTNOTES:
1 Medicare Managed Care: Greater Oversight Needed to Protect Beneficiary Rights (GAO/HEHS 99-68, April 1999).

END

LOAD-DATE: April 24, 1999

Document 5 of 9.


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