Federal Register, Volume 73 Issue 52 (Monday, March 17, 2008)

[Federal Register Volume 73, Number 52 (Monday, March 17, 2008)]
[Proposed Rules]
[Pages 14342-14370]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-5189]

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Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

42 CFR Part 423

Medicare Program; Application of Certain Appeals Provisions to the
Medicare Prescription Drug Appeals Process; Proposed Rule

Federal Register / Vol. 73, No. 52 / Monday, March 17, 2008 /
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 423

[CMS-4127-P]
RIN 0938-AO87

Medicare Program; Application of Certain Appeals Provisions to
the Medicare Prescription Drug Appeals Process

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This rule proposes the procedures that the Department of
Health and Human Services would follow at the Administrative Law Judge
and Medicare Appeals Council levels in deciding appeals brought by
individuals who have enrolled in the Medicare prescription drug benefit
program and the reopening procedures that would be followed at all
levels of appeal.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on May 16, 2008.

ADDRESSES: In commenting, please refer to file code CMS-4127-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions for
``Comment or Submission'' and enter the filecode to find the document
accepting comments.
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-4127-P, P.O. Box 8016, Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-4127-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to either of the following addresses:
a. Room 445-G, Hubert H. Humphrey Building, 200 Independence
Avenue, SW., Washington, DC 20201.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
b. 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period. For information on viewing public comments, see the beginning
of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
Arrah Tabe-Bedward, (410) 786-7129 (for issues related to
reopenings and expedited access to judicial review).
Michael Lipinski, (216) 615-4084 (for issues related to ALJ level
appeals policies).
Mary Peltzer, (202) 565-0169 (for issues related to MAC level
appeals).

SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. You can assist us by referencing the file code
4127-P and the specific ``issue identifier'' that precedes the section
on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://
www.cms.hhs.gov/eRulemaking. Click on the link ``Electronic Comments on
CMS Regulations'' on that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.

Abbreviations

Because of the many terms to which we refer by abbreviation in this
proposed rule, we are listing these abbreviations and their
corresponding terms in alphabetical order below:

ALJ Administrative Law Judge
CMS Centers for Medicare & Medicaid Services
DAB Departmental Appeals Board
EAJR Expedited Access to Judicial Review
IRE Independent Review Entity
LCD Local Coverage Determination
MAC Medicare Appeals Council
NCD National Coverage Determination
QIC Qualified Independent Contractor

I. Background

[If you choose to comment on issues in this section, please include
the caption ``BACKGROUND'' at the beginning of your comments.]
The voluntary prescription drug benefit program (``Part D'') was
enacted into law by section 101 of Title I of the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-
173). The MMA specified that the prescription drug benefit would become
available on January 1, 2006 for individuals entitled to benefits under
Medicare Part A or enrolled under Medicare Part B. On January 28, 2005,
the final rule (70 FR 4194) implementing the Part D program appeared in
the Federal Register (hereinafter ``Part D rule''). This rule became
effective on March 22, 2005.
Section 1860D-4(h) of the Social Security Act (the Act) provides
that Part D plan sponsors follow appeals procedures specified in Sec.
1852(g)(5) of the Act in a manner similar to the manner such
requirements apply to Medicare Advantage (MA) organizations for Part C
appeals. Part D plan sponsors include a prescription drug plan sponsor,
an MA organization offering a Medicare Advantage prescription drug plan
(MA-PD plan), a Program of All-Inclusive Care for Elderly (PACE)
organization offering a PACE plan, and a cost plan offering qualified
prescription drug coverage.
Section 1852(g)(5) of the Act provides that enrollees in MA plans
who are dissatisfied with determinations regarding their Part C
benefits are

[[Page 14343]]

entitled, if they meet the amount in controversy requirement, to a
hearing before the Secretary to the same extent as is provided in
section 205(b) of the Act and judicial review of the Secretary's final
decision as provided in section 205(g) of the Act.
Section 1869(b)(1)(A) of the Act, which sets forth the requirements
for Part A and Part B appeals, contains similar language to that set
forth in section 1852(g)(5) of the Act and also refers to section
205(b) and (g) of the Act.
These statutory concepts are reflected in the Part D rule and a
closely related rule concerning MA organizations that also appeared in
the Federal Register on January 28, 2005 (70 FR 4588), and became
effective March 22, 2005 (hereinafter ``Part C rule''). The Part D rule
is codified at 42 CFR part 423, and addresses grievances, coverage
determinations, reconsiderations, and appeals in subpart M. The Part C
rule is codified at 42 CFR part 422, and similarly addresses
grievances, organization determinations, and appeals in subpart M. The
Part D rule states that, unless otherwise provided, the Part C rules
regarding appeals and reopenings will apply ``to the extent they are
appropriate.'' (See 42 CFR 423.562(c).) Likewise, the Part C rule
governing appeals at the Administrative Law Judge (ALJ) and Medicare
Appeals Council (MAC) levels of appeal provides that adjudicators apply
the Part A and Part B appeals and reopening procedures specified in 42
CFR part 405 ``to the extent they are appropriate.'' (see 42 CFR
422.562(d)).
Based on this statutory and regulatory framework, CMS stated in the
preamble to the interim final rule entitled ``Changes to the Medicare
Claims Appeal Procedures,'' which established new procedures for
appeals under Medicare Part A and Part B, that differences in the
appeals procedures for Part D enrollees would be addressed in a future
Part D rulemaking document (70 FR 11420), (hereinafter, ``Part 405,
subpart I rule''). The purpose of this rule is to provide guidance on
the differences in appeals procedures for Part D enrollees by proposing
more detailed regulations to govern Part D appeals (requests for drug
benefits and payment) to the ALJ, MAC, and Federal District Court and
reopenings of determinations and decisions.

II. Highlights and Organization of the Proposed Rule

[If you choose to comment on issues in this section, please include
the caption ``HIGHLIGHTS AND ORGANIZATION'' at the beginning of your
comments.]
This proposed rule contains revisions to Part 423, subpart M of
title 42 of the CFR. We are proposing to rename, reorganize, and
consolidate similar requirements into one section, and add a new
subpart ``U''. We believe that these changes will maintain or clarify
our original intent, making the revised regulation easier to read and
understand. Specifically, we are proposing to rename subpart M,
``Grievances, Coverage Determinations, Redeterminations, and
Reconsiderations''. This subpart will continue to set forth the
requirements for Part D sponsors with respect to grievances, coverage
determinations, and redeterminations. We are also proposing to add a
new subpart U, ``Reopenings, ALJ Hearings, MAC review, and Judicial
Review'' that will set forth the requirements for Part D plan sponsors,
the Part D Independent Review Entity (IRE), ALJs, and the MAC with
respect to reopenings, ALJ hearings, and MAC review of Part D appeals.
In addition, we are proposing to redesignate and reserve Sec. 423.610,
Sec. 423.612, Sec. 423.620, Sec. 423.630, and Sec. 423.634. We note
that while we are proposing to make conforming changes to the language
of some of the redesignated sections, we are not proposing to make any
substantive changes to the policies established by those provisions.
Below we are providing a crosswalk table that will enable the
reader to easily determine where the requirements will be relocated.
The crosswalk lists the current subpart, current section, proposed
subpart, and proposed section. For any discussion of the changes we are
proposing to make in this rule, we are providing both the current
section and the proposed redesignated section and paragraph.

Table--Crosswalk
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Current subpart Current section Proposed subpart Proposed section
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Subpart M--Grievances, Coverage 423.610 Right to an ALJ Subpart U--Reopening, 423.1970 Right to an
Determinations, and Appeals. hearing. ALJ Hearings, MAC ALJ hearing.
review, and Judicial
Review.
Subpart M--Grievances, Coverage 423.612 Request for an Subpart U--Reopening, 423.1972 Request for an
Determinations, and Appeals. ALJ hearing. ALJ Hearings, MAC ALJ hearing.
review, and Judicial
Review.
Subpart M--Grievances, Coverage 423.620 Medicare Subpart U--Reopening, 423.1974 Medicare
Determinations, and Appeals. Appeals Council (MAC) ALJ Hearings, MAC Appeals Council (MAC)
review. review, and Judicial review.
Review.
Subpart M--Grievances, Coverage 43.630 Judicial review. Subpart U--Reopening, 423.1976 Judicial
Determinations, and Appeals. ALJ Hearings, MAC review.
review, and Judicial
Review.
Subpart M--Grievances, Coverage 423.634 Reopening and Subpart U--Reopening, 423.1978 Reopening and
Determinations, and Appeals. revising ALJ Hearings, MAC revising
determinations and review, and Judicial determinations and
decisions. Review. decisions.
----------------------------------------------------------------------------------------------------------------

III. Provisions of the Proposed Regulations

A. General Appeals Provisions

[If you choose to comment on issues in this section, please include
the caption ``GENERAL APPEALS PROVISIONS'' at the beginning of your
comments.]
Section 1860D-4(h)(1) of the Act, which sets forth the statutory
requirements for Part D appeals, requires the Secretary to establish an
appeals process that is ``similar'' to the process used for MA
organizations under section 1852(g)(4) and (5) of the Act. Section
1852(g)(5) of the Act provides the right to a hearing ``before the
Secretary to the same extent as is provided in section 205(b) of the
Act,'' and to judicial review ``of the Secretary's final decision as
provided in section 205(g)'' of the Act. Thus, an enrollee dissatisfied
by reason of the enrollee's failure to receive a Part D

[[Page 14344]]

drug to which the enrollee believes he or she is entitled, and at no
greater charge than the enrollee believes he or she is required to pay
is entitled to a hearing and may also request judicial review of the
final decision of the Secretary.
Section 1852(g)(5) of the Act also specifies the amount in
controversy needed to pursue a hearing and judicial review. Like
section 1852(g)(5) of the Act, section 1869(b)(1)(A) of the Act, which
sets forth the statutory requirements for Part A and Part B appeals,
provides the right to a hearing ``by the Secretary to the same extent
as is provided in section 205(b)'' and the right to judicial review
``of the Secretary's final decision after such hearing as is provided
in section 205(g) of the Act.'' Under this authority, we believe that
Congress gave us discretion in designing procedural rules for appeals
under Part D.
Section 423.562(c) of the Part D rule states that ``[u]nless this
subpart provides otherwise, the regulations in part 422, subpart M of
this chapter (concerning administrative review and hearing processes
under titles II and XVIII, and representation of parties under title
XVIII of the Act) and any interpretive rules or CMS rulings issued
under these regulations, apply under this subpart to the extent they
are appropriate.'' Section 422.562(d) of the Part C rule states that
``[u]nless this subpart provides otherwise, the regulations in part 405
of this chapter (concerning the administrative review and hearing
processes and representation of parties under titles II and XVIII of
the Act), apply under this subpart to the extent they are
appropriate.'' Therefore, as discussed in the preamble to the Part D
rule, since Sec. 423.562(c) incorporates part 422, and since part 422
incorporates part 405, the provisions of part 405 apply to Part D
appeals to the extent that they are appropriate. (70 FR at 4343).
For these reasons, we propose to provide a similar appeals process
for Part D appeals at the ALJ, MAC and judicial review levels as
applies to Part A and Part B appeals, to the extent it is appropriate.
The Part 405 regulations at subparts G and H, which continue to
apply to certain pending Medicare claims appeals under Medicare Part A
and Part B, respectively, were issued before the enactment of the
Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (BIPA), Pub. L. 106-554. BIPA made significant changes to
Medicare claims appeals procedures. The MMA made further changes to
these procedures. Part 405, subpart I, contains the new BIPA and MMA
appeals procedures. Part 405, subpart I, applies to initial
determinations issued by Medicare fiscal intermediaries on or after May
1, 2005, and to initial determinations issued by carriers on or after
January 1, 2006. Part 405, subpart I, is tailored to the Medicare Part
A and Part B claims appeals process, unlike the provisions in subparts
G and H, which, in large part, follow the Social Security
Administration's procedures for disability claims. For this reason, we
have concluded that it is appropriate to apply the provisions of Part
405, subpart I, to Part D appeals at the ALJ and MAC levels with
appropriate modifications to meet the needs of Part D appeals.

B. Parties to the ALJ Hearing and MAC Review

Section 1860D-4(h) of the Act largely incorporates section
1852(g)(5) of the Act. We interpret that section as providing the right
to a hearing and to judicial review for an enrollee dissatisfied by
reason of the enrollee's failure to receive a Part D drug to which the
enrollee believes he or she is entitled, and at no greater charge than
the enrollee believes he or she is required to pay. Section 1860D-
4(h)(1) of the Act specifies that ``only the Part D eligible
individual'' is entitled to bring an appeal. Section 423.560 of the
Part D rule states that an enrollee is a Part D eligible individual who
has elected or has been enrolled in a Part D plan.
Current Sec. 423.610 (proposed Sec. 423.1970) and current Sec.
423.612 (proposed Sec. 423.1972) explain that, if an enrollee is
dissatisfied with the reconsideration determination by an IRE, the
enrollee may request a hearing before an ALJ, if the amount remaining
in controversy meets the threshold requirement established annually by
the Secretary. Similarly, under current Sec. 423.620 (proposed Sec.
423.1974), if an enrollee is dissatisfied with the ALJ's action, the
enrollee may request that the MAC review the ALJ's decision or
dismissal. Having the enrollee as the only party to an appeal differs
from the Part A and B processes where the term ``party'' includes a
beneficiary, a provider, a supplier, a Medicaid State agency, and CMS
and/or its contractors, and from the Part C appeals process where the
term ``party'' includes an enrollee, a provider, an entity with rights
with respect to the organization determination, or an MA organization.
In light of the Part D statutory and regulatory provisions, this
proposed rule makes clear that only the enrollee may request and be a
party to an ALJ hearing or MAC review. (We note that an enrollee may
appoint a representative to act on his or her behalf as discussed in
Sec. 423.560 and as set forth in Sec. 422.561 and Sec. 405.910. A
representative could include an enrollee's physician).
We are proposing not to make the Part D plan sponsor, the IRE, or
CMS a party to an ALJ hearing or the MAC review in a Part D case. The
statute and Part D rule do not explicitly provide these entities with
party status, unlike Part C where the statute provides that the
Secretary shall make an MA organization a party to ALJ hearings.
Further, the preamble to the Part D rule (70 FR 4360) states that
``[t]he plan is not a party to the ALJ hearing.'' As discussed later in
the preamble, we recognize that the involvement of CMS, the IRE, and/or
the Part D plan sponsor may be necessary to resolve the issue(s) on
appeal and we propose to allow these entities to participate in ALJ
hearings at the ALJ's discretion. The participation of Part D plan
sponsors in ALJ hearings was also contemplated in the preamble to the
proposed Part D rule (69 FR 46632, 46722), which noted that
``[a]lthough a PDP sponsor generally is not a party to the IRE appeal
and may not request a hearing before an ALJ, the sponsor is considered
a party to the ALJ hearing for the limited purpose of participation in
the hearing.'' We welcome comments on this proposed approach.

C. Timeframes for Deciding Appeals at the ALJ and MAC Levels

[If you choose to comment on issues in this section, please include
the caption ``TIMEFRAMES FOR DECIDING APPEALS AT THE ALJ AND MAC
LEVELS'' at the beginning of your comments.]
Part 405, subpart I implements the provisions of section 1869 of
the Act that require ALJs and the MAC to complete their actions within
90 days of the date an appeal is timely filed. The Part D statute and
rule do not establish timeframes for an ALJ or the MAC to issue a
decision. However, we recognize the need to ensure that Part D
enrollees receive timely actions on their requests for hearing and
review, particularly in cases where the enrollee has not obtained the
drug and a delayed decision may seriously jeopardize the enrollee's
life or health or ability to regain maximum function.
We propose to apply a 90-day adjudicatory timeframe to Part D
appeals with an expedited process for certain types of appeals.
Specifically, we propose that an ALJ and the MAC must provide an
expedited decision in situations where the appeal involves one of the
issues specified in

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Sec. 423.566(b), but does not include solely a request for payment of
Part D drugs already furnished, and when the enrollee's prescribing
physician indicates, or the ALJ or the MAC determines that applying the
standard timeframe for making a decision may seriously jeopardize the
enrollee's life or health or ability to regain maximum function. In
these situations, the ALJ and the MAC must issue a decision, dismissal
order, or remand as expeditiously as the enrollee's health condition
requires, but no later than the end of the 10-day period beginning on
the date the request for hearing or request for review is received.
This process is similar to the expedited process established at the
coverage determination, redetermination, and reconsideration levels
under the Part D rule at Sec. 423.570, Sec. 423.584, and Sec.
423.600. As discussed in applicable sections below, in order to meet
this shortened timeframe, we propose to allow certain requests,
objections, decisions, orders, and notices to be conducted orally with
written follow-up or documentation and to shorten certain timeframes
for receiving certain notices, such as the notice of hearing. All time
periods in this proposed rule refer to calendar days.
The statutory and regulatory provisions for appeals under Parts A
and B provide appellants the opportunity to request that the appeal be
transferred (or ``escalated'') to the next level of appeal, if the
Qualified Independent Contractor (QIC), ALJ, or the MAC do not complete
their actions within the statutory deadlines. The Part C and D
statutory provisions do not provide for escalation of an appeal to the
ALJ, MAC, or Federal District Court levels. We propose to not include
provisions regarding escalation in this rule, but instead we are
proposing to address the timeliness concerns of Part D enrollees by
providing for an expedited process, discussed in greater detail below.

D. Evidence

[If you choose to comment on issues in this section, please include
the caption ``EVIDENCE'' at the beginning of your comments.]
We are proposing to provide enrollees with as much flexibility as
possible concerning the evidence that may be presented for an ALJ
hearing and MAC review. We also are proposing that the entity that is
best suited to review and evaluate the evidence be the entity that
receives the evidence for review. Therefore, we are proposing that an
enrollee may submit any written evidence about his or her condition at
the time of the coverage determination that he or she wishes to have
considered at the hearing. However, we propose where an enrollee wishes
to have evidence on changes in his or her condition since the coverage
determination considered in the appeal, an ALJ or the MAC will instead
remand the case to the Part D plan sponsor. The Part D plan sponsor is
in a better position to evaluate the impact of evidence on change in
condition because it has the technical expertise needed to review such
evidence. This proposal differs from the Part 405, subpart I, rule,
because Part A and Part B appeals are retrospective; that is, the
service or item at issue was provided or received before the claim is
filed. In these situations, evidence of medical necessity is not
relevant unless it relates to the beneficiary's medical condition and
needs at the time that the beneficiary received the service or obtained
the medical product or device. In contrast, some Part D appeals involve
an enrollee requesting that the Part D plan sponsor provide him or her
with a particular drug (``drug benefit appeals''). In these cases, the
enrollee's condition may change during the course of the appeal, and
evidence of such a change in condition may impact a Part D plan
sponsor's determination regarding whether the enrollee should receive a
certain Part D drug.
We considered allowing an enrollee in such circumstances to
withdraw a pending appeal and seek a new coverage determination from
the Part D plan sponsor. However, we believe a remand would streamline
the process for the enrollee by eliminating the need for the enrollee
to both withdraw a pending appeal and to file a new coverage
determination request. Additionally, on remand the Part D plan sponsor
would have access to an already developed case file when reviewing
newly submitted evidence on change in condition, allowing for a more
efficient and effective review by reducing possible delays from
developing a new case file. We also note that under our proposal, the
enrollee would have the option to continue with his or her appeal at
the ALJ or MAC level if he or she did not wish to have change in
condition evidence considered.
We do not propose to follow the full and early presentation of
evidence provisions in Part 405, subpart I, including Sec. 405.1028.
Section 1869(b)(3) of the Act requires the full and early presentation
of evidence at the reconsideration level by providers and suppliers
absent good cause. Part 405, subpart I, extends this requirement to
beneficiaries represented by providers or suppliers in an effort to
ensure that providers or suppliers do not attempt to circumvent the
full and early presentation of evidence rules by offering to represent
beneficiaries. For Part D appeals, we propose that only the enrollee
would be a party to the appeal and because the enrollee would not be
represented by a provider or supplier attempting to circumvent this
rule we propose to not include any provisions from Part 405, subpart I,
on the full and early presentation of evidence. We propose, as
discussed above, that an enrollee may present new evidence at any time
during the appeal. However, we propose that the ALJ or MAC will not
consider evidence on change in condition occurring after the coverage
determination is made but will remand the appeal to the Part D plan
sponsor if an enrollee wishes to have such evidence examined and
considered in the appeal.

E. Claims and Overpayment

[If you choose to comment on issues in this section, please include
the caption ``CLAIMS AND OVERPAYMENT'' at the beginning of your
comments.]
The Part A and Part B appeals process may involve claims for
reimbursement from the Medicare Trust Fund made by parties to the
appeal and issues of over- or underpayment by the Federal Government.
In contrast, Part D appeals do not involve claims against the Medicare
Trust Fund by enrollees, and, therefore, the Part D appeals process
does not involve overpayments or underpayments. Rather, an enrollee may
request payment from the Part D plan sponsor in situations where the
enrollee has paid for a drug out-of-pocket (``payment appeals'').
Therefore, we do not include any references to claims, overpayment, or
underpayment in this proposed rule.

F. Other General Comments

[If you choose to comment on issues in this section, please include
the caption ``OTHER GENERAL COMMENTS'' at the beginning of your
comments.]
The Part D rule already contains provisions in current Sec.
423.610 (proposed Sec. 423.1970), current Sec. 423.612 (proposed
Sec. 423.1972), and current Sec. 423.630 (proposed Sec. 423.1976)
regarding the amount in controversy requirements for ALJ hearings and
judicial review. Therefore, we see no reason to include language
similar to that in Sec. 405.990(j) and Sec. 405.1006 regarding amount
in controversy

[[Page 14346]]

requirements for Part A and Part B appeals.
Part 405, subpart I, references the applicability of national
coverage determinations (NCDs) and local coverage determinations
(LCDs). Because neither of these types of coverage policies applies to
Part D, we propose not to include any reference to NCDs and LCDs and
not to include any provision that applies solely to the application of
NCDs and/or LCDs from Part 405, subpart I (for example, language from
Sec. 405.1060).
Part 405, subpart I, also refers to the Social Security
Administration (SSA) rules for entitlement and enrollment appeals
performed by SSA. We are not including similar references to SSA in
this proposed rule because SSA does not perform appeals regarding
enrollment in or entitlement to Part D.
Finally, Part 405, subpart I includes a provision at Sec. 405.1064
regarding ALJ decisions involving statistical samples. We are not
including similar language for Part D appeals because, as discussed
above, Part D appeals do not involve overpayment issues. Therefore,
statistical samples will not be used in reaching a decision.

IV. Specific Provisions of the Proposed Rule

A. Reopenings (Sec. 423.1980 Through Sec. 423.1986)

[If you choose to comment on issues in this section, please include
the caption ``REOPENINGS'' at the beginning of your comments.]
Current Sec. 423.634(a) (proposed Sec. 423.1978(a)) states that a
coverage determination, a redetermination, a reconsideration or a
decision of an ALJ or the MAC ``that is otherwise final and binding may
be reopened and revised by the entity that made the determination or
decision, under the rules in part 422, subpart M of this chapter.''
Section 422.616 of subpart M discusses reopenings and states that a
determination or decision ``that is otherwise final and binding may be
reopened and revised by the entity that made the determination or
decision, under the rules in part 405 of this chapter.'' Therefore, we
propose reopening regulations that generally track the Part A and Part
B reopening provisions in Sec. 405.980, Sec. 405.982, Sec. 405.984,
and Sec. 405.986. These regulations define reopening, explain who may
initiate and revise determinations and decisions and when, and the
effect of a revised determination or decision.
We believe that it is appropriate to follow the general process set
forth in Part 405, subpart I with additional language proposed at Sec.
423.1980(a)(1), (a)(3), and (a)(4), and Sec. 423.1984(g) that is
consistent with current Sec. 423.634 (proposed Sec. 423.1978) on Part
D reopenings. Since Part D appeals differ in part from Part A and Part
B appeals, we propose not to include several provisions from Sec.
405.980, Sec. 405.982, and Sec. 405.986.
1. Reopenings of Coverage Determinations, Redeterminations,
Reconsiderations, Hearings, and Reviews (Sec. 423.1980)
[If you choose to comment on issues in this section, please include
the caption ``REOPENINGS OF COVERAGE DETERMINATIONS, REDETERMINATIONS,
RECONSIDERATIONS, HEARINGS, AND REVIEWS'' at the beginning of your
comments.]
This section proposes to track the language of Sec. 405.980 on the
general rules and timeframes for reopening determinations and
decisions, except as discussed above and below. We are proposing to
define reopenings in Sec. 423.1980(a)(1), without referring to
overpayments and underpayments because these terms do not apply to Part
D appeals, as discussed above. We also are proposing in Sec. 423.1980
not to include the provision in Sec. 405.980(a)(2) that involves
situations where a fiscal intermediary or carrier denies a claim
because it did not receive information that it requested about a claim
during medical review. In addition, we are proposing not to include
Sec. 405.980(a)(3), (b)(4), and (c)(3) in this proposed rule. These
subsections refer to clerical errors related to claim submissions by
providers to fiscal intermediaries and carriers. In Part D, as
discussed above, there are no claim submissions, as the beneficiary is
not electronically submitting a claim to the Part D plan sponsor or to
CMS. Therefore, we do not believe these provisions apply to Part D
reopenings. Further, to the extent a clerical error arises (for
example, miscalculations or missing information), an enrollee should
use the grievance process established by the Part D plan sponsor.
Furthermore, we are not including in Sec. 423.1980 language
similar to Sec. 405.980(b)(5) because this provision refers to the
NCD/LCD appeals process, and NCDs and LCDs do not apply to Part D.
2. Notice of a Revised Determination or Decision (Sec. 423.1982)
[If you choose to comment on issues in this section, please include
the caption ``NOTICE OF A REVISED DETERMINATION OR DECISION'' at the
beginning of your comments.]
We are proposing in Sec. 423.1982 to follow the process
established for Part A and Part B reopenings regarding notification of
revised determinations or decisions. However, unlike Sec. 405.982,
proposed Sec. 423.1982 does not refer to revised electronic or paper
remittance for full or partial reversals. We are not incorporating this
language because revised electronic or paper remittance advice notices
are not issued for Part D appeals. Further, we propose language
requiring the IRE, ALJ, or the MAC to mail revised determinations or
decisions to the Part D plan sponsor.
3. Good Cause for Reopening (Sec. 423.1986)
[If you choose to comment on issues in this section, please include
the caption ``GOOD CAUSE FOR REOPENING'' at the beginning of your
comments.]
Section 423.1986 proposes language similar to Sec. 405.986
regarding good cause for reopening a determination or decision. We
believe it is appropriate where possible for Part D reopenings to have
the same good cause standards as Part A and Part B reopenings. We are
proposing in Sec. 423.1986(b)(1), to include the requirement in Sec.
405.986(b) regarding good cause for reopening a determination or
decision based on a change in substantive law or interpretive policy
for appeals. However, many Part D appeals involve drug benefit appeals,
where an enrollee has not received the drug. With respect to these
appeals, we are proposing in Sec. 423.1986(b)(2) that an adjudicator
may reopen a determination or decision to apply the current law or CMS
or Part D plan sponsor policy (rather than the law or CMS or Part D
plan sponsor policy at the time the original coverage determination was
made). Because the enrollee has not received the drug, any change to
the law or CMS or Part D plan sponsor policies since the initial
coverage determination may affect whether the drug should be received.

B. Expedited Access to Judicial Review (EAJR) (Sec. 423.990)

[If you choose to comment on issues in this section, please include
the caption ``EXPEDITED ACCESS TO JUDICIAL REVIEW'' at the beginning of
your comments.]
Section 1869(b)(2) of the Act requires the Secretary to establish a
process for Part A and Part B appeals where a provider, supplier or a
beneficiary may obtain expedited access to judicial review in
situations where the Departmental Appeals Board (DAB)

[[Page 14347]]

does not have authority to decide the question of law or regulation
relevant to the matters in controversy and where there is no material
issue of fact in dispute.
Unlike Part A and Part B appeals, there is no statutory requirement
for enrollees to have access to an EAJR process for Part D appeals.
However, we believe that it is appropriate to provide Part D enrollees
with an EAJR process that mirrors the process established for Part A
and Part B appeals. Under the Part A and Part B appeal process, a
review entity determines whether the DAB has the authority to decide
the question of law or regulation relevant to the matters in
controversy after finding that there is no material issue of fact in
dispute.
If the review entity certifies that the requirements for expedited
access to judicial review are met, a party may appeal directly to the
United States District Court. Even though the Part D statute does not
require this process for Part D, we believe that Part D enrollees would
benefit from this process because it provides access to judicial review
more quickly in cases where the DAB does not have the authority to
decide the question of law or regulation relevant to the matters in
controversy and there is no material issue of fact in dispute,
resulting in a more efficient appeals process. Therefore, we are
proposing in Sec. 423.990 to provide Part D enrollees the opportunity
to seek EAJR. We welcome comments on this proposal.

C. Appeals to an ALJ (Sec. 423.1000 Through Sec. 423.1063)

[If you choose to comment on issues in this section, please include
the caption ``APPEALS TO AN ALJ'' at the beginning of your comments.]
1. General
The Part D rule contains two specific provisions that apply to
appeals before an ALJ. Current Sec. 423.610 (proposed Sec. 423.1970)
describes an enrollee's right to an ALJ hearing and explains how the
amount in controversy requirements may be satisfied. Current Sec.
423.612 (proposed Sec. 423.1972) describes when and where to file a
request for hearing, specifies that the time and place of the hearing
will be set in accordance with the regulation governing Part A and Part
B appeals at Sec. 405.1020, and explains when the ALJ will dismiss a
request for hearing because it does not meet the amount in controversy
requirement.
We are proposing to follow the process set forth under Part A and
Part B for appeals to an ALJ, except as noted above and below. We have
tracked the language in the Part 405 rule for proposed Sec. 423.2000,
Sec. 423.2004, Sec. 423.2008, Sec. 423.2030, Sec. 423.2032, Sec.
423.2042, Sec. 423.2044, Sec. 423.2048, Sec. 423.2050, Sec.
423.2054, Sec. 423.2062, and Sec. 423.2063. We believe that it is
appropriate for Part D appeals to follow the Part A and Part B appeals
procedures set forth in these provisions.
2. Right to an ALJ Hearing (Sec. 423.2002)
[If you choose to comment on issues in this section, please include
the caption ``RIGHT TO AN ALJ HEARING'' at the beginning of your
comments.]
The Part D rule currently at Sec. 423.610(a) (proposed Sec.
423.1970(a)) provides that an enrollee who is dissatisfied with the IRE
reconsideration and meets the remaining amount in controversy threshold
has a right to a hearing before an ALJ. We are proposing to include
this provision in Sec. 423.2002. We are also proposing to include in
this section language similar to that in Sec. 405.1002 on how to
request an ALJ hearing, what is the date of receipt of the
reconsideration, and when a request is considered filed.
We believe it is appropriate to include this information in
proposed Sec. 423.2002 because it would be helpful to the enrollee and
any representative of the enrollee to understand how to file a request,
how we would determine the date of receipt of the reconsideration, and
when a request would be considered filed. An enrollee must have a
written IRE reconsideration notice before filing a request for an ALJ
hearing because the administrative record cannot be forwarded to the
ALJ level until the written IRE reconsideration is completed, and the
appeal cannot proceed at the ALJ level without the administrative
record. We are also proposing in Sec. 423.2002(b) that an enrollee may
request an expedited ALJ hearing, if the enrollee meets the amount in
controversy threshold and submits a request for an ALJ hearing within
60 days after receipt of the written notice of the IRE's
reconsideration where the appeal involves an issue specified in Sec.
423.566(b) but is not solely a request for payment of Part D drugs
already furnished, as discussed previously. However, we are also
proposing in Sec. 423.2016(b) that the ALJ grant the request only if
the enrollee's prescribing physician indicates or the ALJ determines
that applying the standard timeframe for making a decision may
seriously jeopardize the enrollee's life or health or ability to regain
maximum function.
As discussed above, we believe that an expedited process, similar
to the expedited process provided at the lower levels of appeal would
benefit enrollees who need quick decisions about Part D drugs due to
their health status. We propose at Sec. 423.2002(b)(3) a more informal
process for requesting an expedited hearing by proposing to permit an
enrollee to make a request for hearing orally. We believe that the oral
request would make the initiation of the ALJ appeals process faster and
easier for the enrollee. However, for the reasons stated above, an
enrollee may only file an oral request for an expedited hearing after
receiving the written IRE reconsideration notice. We also are proposing
in Sec. 423.2002(b)(4), to require the ALJ hearing office to document
and maintain documentation of any oral request.
3. Participation in an ALJ Hearing (Sec. 423.2010)
[If you choose to comment on issues in this section, please include
the caption ``PARTICIPATION IN AN ALJ HEARING'' at the beginning of
your comments.]
In an effort to reduce the administrative burden and to assist the
ALJ in resolving the issue(s) in an appeal more appropriately, we
introduced specific procedures in Part 405, subpart I, to allow CMS
and/or its contractors to participate in, or be a party to, an ALJ
hearing. As explained in the preamble to the Part 405, subpart I rule
(70 FR 11459-11460), if CMS and/or its contractors participate in an
appeal, ALJs may be able to resolve issues of fact and law more quickly
and reduce the need for remands for additional factual development.
CMS participation would provide significant benefit to the appeals
process, and would assist in creating a more complete record. Section
1860D-4(h) of the Act and the Part D rule neither require nor prohibit
participation by CMS and/or its contractors in an ALJ hearing. We
recognize that an ALJ may determine that it is appropriate to request
additional information from CMS, the IRE, and/or the Part D plan
sponsor in order to resolve an appeal. Thus, we are proposing in Sec.
423.2010, to allow CMS, the IRE, and/or the Part D plan sponsor to
participate in an ALJ hearing at the ALJ's discretion, in a manner
similar to Sec. 405.1010 for Part A and Part B appeals. Participation
in an ALJ hearing does not give the entities ``party'' status. Proposed
Sec. 423.2010(c) would give the ALJ discretion about whether to allow
CMS, the IRE, and/or the Part D plan sponsor to participate in
situations where any of these entities requests participation. The ALJ
would be

[[Page 14348]]

precluded from drawing any adverse inference if CMS, the IRE, and/or
the Part D plan sponsor elected not to participate under proposed Sec.
423.2010(g).
We believe that this proposal would allow an ALJ to decide when an
appeal would benefit from participation by one or more of these
entities. An ALJ, however, would have the flexibility to balance the
interests of the enrollee with the interests of these other entities
and to deny a request to participate. We believe this proposal is
consistent with the preamble language to the Part D rule (70 FR 4360,
4361), with respect to the role of the Part D plan sponsor, which
states, ``[t]he plan is not considered a party to the ALJ hearing, but
may participate in the hearing at the discretion of the ALJ * * *
[u]nlike under MA, the plans do not have the right to request an appeal
of an ALJ decision with which the plan disagrees.'' We noted in the
Part D rule that ``[e]ven though plans are not parties to ALJ hearings,
we continue to believe that it is important to give plans the ability
to participate in ALJ hearings. Therefore, plans may participate in
hearings at the ALJ's discretion.''
Further, if these entities do wish to participate, we propose in
Sec. 423.2010(b) to require that the request to participate be made
within a shorter timeframe. For expedited appeals, any request by CMS,
the IRE, and/or the Part D plan sponsor to participate must be made
within 1 day of receipt of the notice of hearing (5 days for non-
expedited hearings). The ALJ must then notify the entity, the enrollee,
and the Part D sponsor, if applicable, of his or her decision on the
request to participate within 1 day of receipt of the request (5 days
for non-expedited appeals). We propose these limitations due to the
very tight timeframes for expedited appeals.
In Part D appeals all requests for an ALJ hearing are brought by
enrollees. Even if an enrollee is represented by a provider or
supplier, that provider or supplier will not have a direct financial
interest in the appeal. Therefore, we are proposing that CMS, the IRE,
and the Part D plan sponsor not be a party with a right to request a
hearing under Part D. As noted above, this proposed policy is
consistent with the applicable statutory and regulatory provisions.
Moreover, this proposal is consistent with the preamble to the Part D
rule (70 FR at 4360) where we explicitly state that the Part D plan
sponsor is not a party to the appeal.
4. Request for an ALJ Hearing (Sec. 423.2014)
[If you choose to comment on issues in this section, please include
the caption ``REQUEST FOR AN ALJ HEARING'' at the beginning of your
comments.]
The Part D rule currently at Sec. 423.612(a) and (b) (proposed
Sec. 423.1972(a) and (b)) describes how, where, and when to file a
request for an ALJ hearing. We are proposing to include this
requirement in Sec. 423.2014. We are also proposing to include in this
section language similar to that in Sec. 405.1014 on requests for an
ALJ hearing, including the content of a request, where and when to file
a request and any extension of time to request a hearing. We believe
these provisions appropriately apply to Part D appeals.
Current Sec. 423.612(b) (proposed Sec. 423.1978(b)) states that
``[e]xcept when an ALJ extends the timeframe as provided in part 422,
subpart M of this chapter, the enrollee must file a request for a
hearing within 60 days of the date of the notice of an IRE
reconsideration determination.'' Similarly, Sec. 422.602(b) of the
Part C rule states that ``[e]xcept when an ALJ extends the timeframe as
provided in part 405 of this chapter, a party must file a request for a
hearing within 60 days of the date of the notice of a reconsidered
determination.'' Therefore, in proposed Sec. 423.2014, we closely
track the language of Sec. 405.1014 regarding the time in which to
request a hearing. Additionally, we are proposing in Sec.
423.2014(a)(1) and (a)(2) to require the telephone number of the
enrollee and the designated representative, if any, in any request for
an ALJ hearing. This information would assist the ALJ in quickly
contacting the enrollee or the designated representative, particularly
for expedited appeals. Because we are proposing to adopt a specific
provision to govern requests for ALJ hearings in Part D appeals, we
propose to revise current Sec. 423.612 (proposed Sec. 423.1972) to
replace the reference to the regulations in part 422, subpart M, with a
cross reference to proposed Sec. 423.2014.
Furthermore, we are proposing to require the plan name and the
enrollee's Medicare health insurance claim number. This information
would assist the ALJ in identifying the relevant plan and formulary
involved in the appeal. We also are proposing in Sec. 423.2014(a)(7)
that an enrollee who seeks an expedited hearing indicate that in his or
her request.
As discussed previously, we are proposing in Sec. 423.2014(b), a
more informal process for requesting an expedited hearing by proposing
to permit an enrollee to make a request for an expedited hearing
orally. We believe that the oral request would make the initiation of
the ALJ appeals process faster and easier for the enrollee. However, as
explained above in the discussion of Sec. 423.2002(b)(3), an enrollee
may only file an oral request for an expedited hearing after receiving
the written IRE reconsideration notice. This requirement is reflected
in Sec. 423.2014(b). A prescribing physician may also provide oral or
written support for an enrollee's request for expedited hearing by an
ALJ. In the same section, we also propose to require the ALJ hearing
office to document and maintain documentation of this oral request.
Similarly, in Sec. 423.2014(d)(2), we are proposing that an
enrollee requesting an expedited hearing be permitted to request orally
an extension of time for filing the hearing request and that such
request be documented in writing and maintained in the case file by the
ALJ hearing office.
5. Timeframes for Deciding an Appeal Before an ALJ (Sec. 423.2016)
[If you choose to comment on issues in this section, please include
the caption ``TIMEFRAMES FOR DECIDING AN APPEAL BEFORE AN ALJ'' at the
beginning of your comments.]
As discussed above, we are proposing to apply a 90-day adjudicatory
timeframe to Part D appeals with an expedited process for certain types
of appeals. Specifically, we are proposing in Sec. 423.2016(b)(1),
that an ALJ would provide an expedited decision in situations where the
enrollee requests an expedited hearing, the appeal involves an issue
specified in Sec. 423.566(b), but does not include solely a request
for payment of Part D drugs already furnished and the enrollee's
prescribing physician indicates, or the ALJ determines that applying
the standard timeframe for making a decision may seriously jeopardize
the enrollee's life or health or ability to regain maximum function. We
also are proposing that the ALJ may consider this standard as met if a
lower level adjudicator has granted a request for an expedited appeal.
The expedited appeals process is similar to the process established at
the Part D plan sponsor and IRE levels under the Part D rule at Sec.
423.570, Sec. 423.584, and Sec. 423.600.
In Sec. 423.2016(b), we are proposing that the ALJ rule on a
request for expedited hearing within 5 days of

[[Page 14349]]

receiving the request. We also are proposing in this section that the
ALJ give the enrollee prompt oral notice of this decision. If the ALJ
denies a request for an expedited hearing, the ALJ will explain that
the appeal would be processed using the 90-day timeframe, and send an
equivalent written notice within 3 days of issuance of the oral notice
to the enrollee and to the Part D plan sponsor. We propose in Sec.
423.2016(b)(4), that a decision on a request for an expedited hearing
cannot be appealed to the MAC. If the ALJ accepts the request for
expedited hearing, we propose in Sec. 423.2016(b)(5), that the ALJ
issue a written decision, dismissal order, or remand as expeditiously
as the enrollee's health condition requires, but no later than the end
of the 10-day period beginning on the date the request for hearing is
received.
Although the timeframe for the issuance of a written decision is
somewhat longer than at the lower levels, we believe this is
appropriate. The ALJ hearing is more complicated than an IRE
reconsideration because it involves the scheduling and conducting of a
hearing. The hearing entails the presentation of evidence including
testimony by parties and witnesses, necessitates a longer adjudication
period.
6. Submitting Evidence Before the ALJ Hearing (Sec. 423.2018)
[If you choose to comment on issues in this section, please include
the caption ``SUBMITTING EVIDENCE BEFORE THE ALJ HEARING'' at the
beginning of your comments.]
We are proposing in Sec. 423.2018 to adopt concepts from Sec.
405.1018 regarding when an enrollee must submit written evidence.
However, we also propose in this section to permit an enrollee to
submit any written evidence about his or her condition at the time of
the coverage determination but require the ALJ to remand a case to the
Part D plan sponsor where an enrollee wishes to have evidence
considered on changes in his or her condition since the coverage
determination.
Additionally, we are proposing in Sec. 423.2018(b) and (c) that an
enrollee must submit all written evidence that he or she wishes to have
considered at the hearing within 2 days of receiving the notice of
hearing for expedited appeals and 10 days for non-expedited appeals. We
believe that requiring evidence to be submitted within these timeframes
provides the adjudicator sufficient time to review all evidence
submitted before the hearing.
7. Time and Place for a Hearing Before an ALJ (Sec. 423.2020)
[If you choose to comment on issues in this section, please include
the caption ``TIME AND PLACE FOR A HEARING BEFORE AN ALJ'' at the
beginning of your comments.]
The Part D rule currently at Sec. 423.612(b) (proposed Sec.
423.1972(a)) describes the time and place for a hearing before an ALJ
and requires that it be set in accordance with Sec. 405.1020.
Therefore, we are proposing to include in Sec. 423.2020 language
similar to that set forth in Sec. 405.1020, including information on
the determination of how appearances are made, the notice of a hearing,
an enrollee's right to waive a hearing, an enrollee's objection to the
time and place of hearing, good cause for changing the time and place
of the hearing, the effect of rescheduling a hearing, and an enrollee's
request for an in-person hearing.
As discussed previously, we propose a more informal process for
expedited hearings by proposing in Sec. 423.2020(e)(3) and (i)(3) to
allow objections to the time and place for a hearing and requests for
in-person hearings to be made orally, and to require the ALJ hearing
office to document all oral objections or requests and maintain such
documentation in the case files. We are also proposing in Sec.
423.2020(i)(4) to not waive the adjudication period for expedited
hearings when an enrollee's request for an in-person hearing is granted
because a waiver of the adjudication period under the circumstances of
an expedited appeal could be detrimental to the enrollee's health
condition.
8. Notice of a Hearing Before an ALJ (Sec. 423.2022)
[If you choose to comment on issues in this section, please include
the caption ``NOTICE OF A HEARING BEFORE AN ALJ'' at the beginning of
your comments.]
We are proposing to mirror the language in Sec. 405.1022 regarding
notice of hearing before an ALJ in Sec. 423.2022. We believe that it
is appropriate to apply to Part D appeals procedures similar to the
Part A and Part B procedures regarding notice of a hearing.
Additionally, as discussed previously, we propose a more informal
process with respect to expedited hearings by proposing in Sec.
423.2022(a) to allow ALJs to transmit the notice of the hearing to the
enrollee and other potential participants orally followed by an
equivalent written notice within one day of the oral notice.
Additionally, we are proposing in the same provision that expedited
hearing notices be mailed or served at least 3 days before the hearing.
9. Objections to the Issues and Disqualification of the ALJ (Sec.
423.2024 and Sec. 423.2026)
[If you choose to comment on issues in this section, please include
the caption ``OBJECTIONS TO THE ISSUES AND DISQUALIFICATION OF THE
ALJ'' at the beginning of your comments.]
We are proposing to follow in Sec. 423.2024 and Sec. 423.2026 the
language in Sec. 405.1024 and Sec. 405.1026, which discusses the
process for objecting to issues in the notice of hearing and
disqualification of the ALJ. We believe it is appropriate to allow
enrollees to object to the issues described in the notice of hearing
and to maintain the processes set forth for Part A and Part B appeals
for disqualification of the ALJ for Part D appeals.
Additionally, for expedited hearings, we are proposing in Sec.
423.2024(a) and Sec. 423.2026(b), that an enrollee may submit oral or
written notice of objections to issues described in the notice of
hearing no later than 2 days before the hearing and orally notify the
ALJ no later than 2 days after the date of the notice of hearing about
any objections to the ALJ who will conduct the hearing. Further, in the
same proposed sections, we are proposing that the ALJ document all
objections or requests in writing and maintain the documentation in the
case files.
10. When an ALJ May Remand a Case (Sec. 423.2034)
[If you choose to comment on issues in this section, please include
the caption ``WHEN AN ALJ MAY REMAND A CASE'' at the beginning of your
comments.]
We are proposing to include language in Sec. 423.2034 similar to
that in Sec. 405.1034 regarding when an ALJ may remand a case. This
language is appropriate for Part D appeals because, like Part A and
Part B appeals, it may be necessary for an ALJ to remand a case to a
lower level. However, for the reasons stated above, we are proposing at
Sec. 423.2034(c), to require the ALJ to remand a case to the Part D
plan sponsor if the ALJ determines that the enrollee wishes to have
evidence on his or her change in condition after the coverage
determination considered in the appeal. As stated previously, if the
enrollee submits this type of evidence but wishes not to have it
considered, the ALJ would be able to proceed with the appeal without
considering the evidence on the enrollee's change in condition.

[[Page 14350]]

11. Description of an ALJ Hearing Process (Sec. 423.2036)
[If you choose to comment on issues in this section, please include
the caption ``DESCRIPTION OF AN ALJ HEARING PROCESS'' at the beginning
of your comments.]
We reviewed the language in Sec. 405.1036 to determine whether to
incorporate similar language in proposed Sec. 423.2036. In general, we
follow the procedures set forth for Part A and Part B appeals regarding
the right to appear and present evidence, waiver of the right to
appear, presenting written statements and oral arguments, waiver of the
adjudication period, what evidence is admissible at a hearing, and
witnesses at a hearing. With respect to waiver of the right to appear
for expedited hearings, we propose at Sec. 423.2036(b), to allow an
enrollee to indicate orally that he or she does not wish to appear at a
hearing (with appropriate documentation of this request and maintenance
of this documentation by the ALJ hearing office). At Sec.
423.2036(b)(2), we propose to allow an enrollee to withdraw his or her
waiver in writing. We also propose that by withdrawing his or her
waiver, the enrollee agrees to an extension of the adjudication period
as specified in Sec. 423.2016 that may be necessary to schedule and
hold a hearing. For the reasons discussed above, we are proposing in
Sec. 423.2036(e) (what evidence is admissible at a hearing) that an
ALJ may not consider evidence on any change in condition of the
enrollee after the coverage determination by the plan sponsor.
We are proposing not to include language similar to that in Sec.
405.1036(f) on requests for subpoenas by a party. In Part 405, subpart
I, requests for subpoena by a party are limited to instances where
discovery has been sought. Discovery is permissible under Part 405,
subpart I only when CMS and/or its contractors participate in an ALJ
hearing as a party, because it is appropriate to permit discovery when
an ALJ hearing is adversarial (that is, whenever CMS and/or its
contractor is a party).
For Part D appeals, however, we propose that only an enrollee may
be a party, and therefore, Part D appeals will not be adversarial in
nature. Thus, we are proposing not to apply to Part D appeals the
provisions in Sec. 405.1036(f), which discuss subpoenas at the request
of a party, and Sec. 405.1037, which discuss discovery. However, we
propose to allow an ALJ to issue a subpoena on his or her own
initiative, as under Sec. 405.1036(f) for Part A and Part B appeals,
because an ALJ may need to obtain additional information in order to
resolve an issue(s) in a Part D appeal.
In instances when an ALJ issues a subpoena, we intend to follow
similar procedures regarding the reviewability and enforcement of
subpoenas as outlined in 405.1036(f).
12. Deciding a Case Without a Hearing Before an ALJ and Prehearing and
Posthearing Conferences (Sec. 423.2038 and Sec. 423.2040)
[If you choose to comment on issues in this section, please include
the caption ``DECIDING A CASE WITHOUT A HEARING BEFORE AN ALJ AND
PREHEARING AND POSTHEARING CONFERENCES'' at the beginning of your
comments.]
We are proposing in Sec. 423.2038 and Sec. 423.2040 to follow the
language set forth in Sec. 405.1038 and Sec. 405.1040, which
discusses the process for deciding a case without a hearing before an
ALJ and prehearing and posthearing conferences. We believe it is
appropriate to use these processes for Part D appeals. Additionally,
for expedited hearings, we are proposing in Sec. 423.2038(b)(1)(i) and
Sec. 423.2040(c), that an enrollee may orally notify the ALJ that he
or she does not wish to appear before the ALJ at a hearing and may also
orally indicate that he or she does not wish to receive a written
notice of the conference.
Further, we are proposing that the ALJ document all objections or
requests in writing and maintain the documentation in the case files.
Finally, we are proposing in Sec. 423.2040(c) that, for expedited
hearings, the ALJ inform the enrollee of the time, place, and purpose
of the conference within a shorter timeframe (at least 2 days before
the conference date) than for non-expedited appeals (at least 7 days
before the conference date).
13. Notice of an ALJ Decision (Sec. 423.2046)
[If you choose to comment on issues in this section, please include
the caption ``NOTICE OF AN ALJ DECISION'' at the beginning of your
comments.]
We are proposing in Sec. 423.2046 to follow the procedures in
Sec. 405.1046 regarding notice of an ALJ decision. We believe it is
appropriate to provide a similar notice process in Part D appeals. We
are not proposing to include language from Sec. 405.1046(a) regarding
overpayment cases involving multiple beneficiaries because Part D
appeals do not involve overpayments. We also are proposing in Sec.
423.2046(d), that an ALJ issue a decision, as expeditiously as the
enrollee's health condition requires, but no later than the end of the
10-day period for expedited hearings.
14. Dismissal of a Request for Hearing Before an ALJ (Sec. 423.2052)
[If you choose to comment on issues in this section, please include
the caption ``DISMISSAL OF A REQUEST FOR HEARING BEFORE AN ALJ'' at the
beginning of your comments.]
We are proposing in Sec. 423.2052, to follow the language in Sec.
405.1052 regarding dismissal of a request for an ALJ hearing because we
believe that it is appropriate for an ALJ to dismiss Part D appeals for
the same reasons as an ALJ would dismiss Part A and Part B appeals. We
also are proposing to shorten the timeframes for expedited appeals in
two instances.
First, we propose at Sec. 423.2052(a)(2)(ii), that an ALJ may
dismiss a request for expedited hearing when the enrollee (or his or
her representative) does not appear at the time and place set for the
hearing and has not contacted the ALJ hearing office within 2 days
(instead of the standard 10 days for non-expedited appeals) and
provided good cause (as determined by the ALJ) for not appearing.
Second, we propose at Sec. 423.2052(a)(2)(iii), that an ALJ may
dismiss a request for hearing when the enrollee (or his or her
representative) does not appear at the time and place set for the
hearing and if the ALJ sends a notice to the enrollee asking why the
enrollee did not appear, the ALJ does not receive a response to the
notice from the enrollee within 2 days for expedited hearings (and 10
days for non-expedited hearings) or the enrollee does not provide good
cause for failing to appear.
We also are proposing at Sec. 423.2052(a)(5), that a request for
hearing may be dismissed if the enrollee dies while the request for
hearing is pending and the enrollee's representative has no remaining
financial interest in the case and does not continue the appeal. Unlike
Medicaid State agencies in Part A and Part B appeals, State
Pharmaceutical Assistance Programs (SPAPs) do not have an independent
right to appeal. While a SPAP may have a financial interest and may
wish to pursue an appeal, the SPAP would have authority to do so only
if the SPAP was appointed as the enrollee's representative. Therefore,
we are proposing that if an SPAP has been appointed as the enrollee's
representative, the SPAP could continue an appeal after an enrollee
dies provided that the appointment continues to be valid.

[[Page 14351]]

Additionally, we are proposing at Sec. 423.2052(b) to follow the
language of Sec. 405.1052(b), which requires the ALJ to mail a written
notice of dismissal to the enrollee.

D. Appeals to the MAC (Sec. 423.2100 Through Sec. 423.2134)

[If you choose to comment on issues in this section, please include
the caption ``APPEALS TO THE MAC'' at the beginning of your comments.]
1. General
The Part D rule includes one provision concerning MAC review.
Current Sec. 423.620 (proposed Sec. 423.1974) provides that an
enrollee who is dissatisfied with an ALJ's hearing decision may request
that the MAC review the ALJ decision or dismissal. Further, it states
that ``[t]he regulations under part 422, subpart M of this chapter
regarding MAC review apply to matters addressed by this subpart, to the
extent applicable.'' Section 422.608 of the Part C rule states that
``[t]he regulations under part 405 of this chapter regarding MAC review
apply to matters addressed by this subpart to the extent that they are
appropriate.'' Therefore, we propose in the provisions regarding MAC
review to follow the language in Part 405, subpart I, as appropriate
and have tracked the language in the Part 405, subpart I, for proposed
Sec. 423.2106, Sec. 423.2116, Sec. 423.2118, Sec. 423.2120, Sec.
423.2128, and Sec. 423.2130. In addition, because we are proposing to
adopt a specific provision to govern requests for MAC review in Part D
appeals, we propose to revise current Sec. 423.620 (proposed Sec.
423.1974) to replace the reference to the regulations in part 405,
subpart I, with a cross reference to proposed Sec. 423.2102.
2. Medicare Appeals Council Review: General (Sec. 423.2100)
The Part D rule currently at Sec. 423.620 (proposed Sec.
423.1970) provides that an enrollee who is dissatisfied with an ALJ's
hearing decision may request that the MAC review the ALJ decision or
dismissal. We are proposing to include this requirement in Sec.
423.2100. We are also proposing in Sec. 423.2100 to follow the
language of Sec. 405.1100, which describes who may request MAC review,
the de novo standard of MAC review, and timeframes for issuing a
decision or remand because we believe that Part D appeals should not
differ from Part A and Part B appeals with respect to these provisions,
except as discussed above. We further propose language in Sec.
423.2100(c) establishing the 10 day adjudicatory timeframe for
expedited reviews.
3. Request for MAC Review When ALJ Issues Decision or Dismissal (Sec.
423.2102)
We are proposing to include in Sec. 423.2102 language similar to
that set forth in Sec. 405.1102 on requests for MAC review when the
ALJ issues a decision or dismissal. We believe it is appropriate to
include this information in proposed Sec. 423.2102 because it would
help the enrollee and any representative of the enrollee to understand
how to file a request for MAC review and how the date of receipt of the
request would be determined, and when a request would be considered
filed. We also are proposing at Sec. 423.2102(a)(2), that an enrollee
may request expedited review if the enrollee submits a written request
for MAC review within 60 days after receipt of the ALJ's decision or
dismissal and the appeal involves an issue specified in Sec.
423.566(b) but does not include solely a request for payment of Part D
drugs already furnished.
As discussed above, we believe that an expedited MAC review process
similar to the expedited process provided at lower levels of appeal
would benefit enrollees who need quick decisions about Part D drugs due
to their health status. We are proposing at Sec. 423.2102(a)(2), a
more informal process for requesting an expedited review by proposing
to permit an enrollee to make a request for review orally. We believe
that the oral request would make the initiation of the MAC appeals
process faster and easier for the enrollee. A prescribing physician may
also provide oral or written support for an enrollee's request for
expedited review by the MAC. We also are proposing in Sec.
423.2102(a)(2)(ii) to require the MAC to document and maintain
documentation of this oral request.
Similarly, in Sec. 423.2102(b)(1), we are proposing that an
enrollee requesting an expedited review be permitted to orally request
an extension of time for filing the request, and that the request be
documented in writing and maintained in the case file by the MAC.
4. MAC Actions When Request for Review Is Filed (Sec. 423.2108)
We are proposing to follow the requirements in Sec. 405.1108
regarding MAC actions when a request for review is filed, including de
novo review of an ALJ's decision. Specifically, we propose in Sec.
423.2108(d) an expedited process for certain types of appeals. We
propose in Sec. 423.2108(d)(1), to require the MAC to provide an
expedited decision where an enrollee requests the review, the appeal
involves an issue specified in Sec. 423.566(b), but does not include
solely a request for payment of Part D drugs already furnished, and the
enrollee's prescribing physician indicates, or the MAC determines that
applying the standard timeframe for making a decision may seriously
jeopardize the enrollee's life or health or ability to regain maximum
function. We also are proposing that the MAC may consider this standard
as met if a lower level of adjudicator has granted a request for an
expedited appeal.
We are proposing in Sec. 423.2108(d)(2)(i) that the MAC deny a
request for expedited review, because the standard for expedited review
is not met, within 5 days after receiving the request for expedited
review. We also are proposing in Sec. 423.2108(d)(2)(ii) that the MAC
would send the enrollee and Part D plan sponsor written notice of the
denial within 5 days after receiving the request that explains that the
appeal will be processed using the 90-day timeframe. Instead of
notifying the enrollee and Part D plan sponsor that the MAC has granted
the request for expedited review, we propose to use these resources to
process the expedited appeal.
If the MAC accepts the request for expedited review, we propose in
Sec. 423.2108(d)(2), that the MAC issue a decision, dismissal order,
or remand, as expeditiously as the enrollee's health condition
requires, but no later than the end of the 10-day period beginning on
the date the request for review is received by the entity specified in
the ALJ's written notice of decision. This process is similar to the
process established at the coverage determination, redetermination, and
reconsideration levels under the Part D rule at Sec. 423.570, Sec.
423.584, and Sec. 423.600.
5. MAC Review on Its Own Motion (Sec. 423.2110)
On March 23, 2007, CMS published a CMS Ruling (CMS-4083-NR) in the
Federal Register. The CMS ruling established an interim process for
referring Part D cases to the MAC for review under its own motion
authority. This ruling permits CMS and its IRE to refer cases to the
MAC for own motion review and largely applies the provisions of Sec.
405.1110, with the notable exception of the standard of review.
We propose in this rule to largely follow this Ruling and the
requirements set forth in Sec. 405.1110 regarding MAC own motion
reviews, with certain

[[Page 14352]]

modifications. Proposed Sec. 423.2110, reflects our proposal that the
enrollee is the only party to an ALJ hearing and that CMS and/or the
Part D IRE may participate as a non-party in the ALJ hearing. Proposed
Sec. 423.2110 differs from Sec. 405.1110 in that Sec. 423.2110
applies the same standard of review to such requests whether CMS or IRE
simply requested to participate in the ALJ hearing or actually
participated in the ALJ hearing. This proposed difference is due to the
ALJ having the discretion under proposed Sec. 423.2010 not to allow
CMS or the Part D IRE to participate as a non-part in the ALJ hearing.
Because ALJs have discretion to deny a CMS or IRE request to
participate in an ALJ hearing, we believe it is appropriate under Sec.
423.2110 to apply the same standard of review to requests for MAC own
motion review whether CMS or IRE requested to participate or actually
participated in the ALJ hearing.
For administrative efficiency, we are proposing to limit to CMS and
the Part D IRE the ability to refer a case to the MAC for review under
its own motion authority. We expect that most of the referrals would be
made through the Part D IRE, because it is responsible for monitoring
plan effectuation of favorable decisions and serves as a repository for
all completed Part D ALJ case files.
The Part D IRE does not have a financial or business interest in
the outcome of the case. Therefore, we believe that the Part D IRE is
in the best position to objectively examine whether an ALJ decision
warrants review by the MAC. While Part D plan sponsors would not be
permitted to refer a Part D case to the MAC for review under its own
motion authority, Part D plan sponsors would have the opportunity to
communicate with, and provide input to, CMS or the Part D IRE on ALJ
decisions that may warrant a referral to the MAC. Given the large
number of Part D plans, we believe that limiting own motion referrals
to CMS and the Part D IRE is a more streamlined and efficient approach.
We welcome comments on this proposed approach.
We also note that CMS Ruling (CM-4083-NR) would be superseded by
these regulations upon implementation of a final rule.
6. Content of Request for Review (Sec. 423.2112)
We are proposing to include in Sec. 423.2112 language similar to
that in Sec. 405.1112 on content of a request for review. However, we
propose at Sec. 423.2112(a)(4), to require the telephone number of the
enrollee to be included in any request for MAC review. This information
would assist the MAC in contacting the enrollee, particularly for
expedited appeals. Additionally, we are proposing in Sec.
423.2112(a)(4) to require the plan name and the enrollee's Medicare
health insurance claim number. We also are proposing at Sec.
423.2112(a)(4), that an enrollee who seeks an expedited review indicate
that his or her request is for an expedited review.
As discussed previously, we propose in Sec. 423.2112(a)(2) a more
informal process for requesting an expedited review by proposing to
permit an enrollee to make a request for review orally. We believe that
the oral request would make the initiation of the MAC appeals process
faster and easier for the enrollee. We also are proposing to require
the MAC to document and maintain documentation of this oral request.
7. Dismissal of Request for Review (Sec. 423.2114)
In Sec. 423.2114, we are proposing the process for dismissing a
request for review for Part D appeals. The proposed process tracks the
Part A and Part B process, except for dismissals involving deceased
enrollees. We are proposing at Sec. 423.2114(c), that a request for
review may be dismissed if the enrollee dies while the request for
review is pending and the enrollee's representative, if any, either has
no remaining financial interest in the case or does not continue the
appeal. As discussed above, unlike Medicaid State agencies in Part A
and Part B appeals, SPAPs do not have an independent right to appeal.
While an SPAP may have a financial interest and may wish to pursue an
appeal, the SPAP would have authority to do so only if the SPAP was
appointed as the enrollee's representative. Therefore, we propose that
an SPAP that has been appointed as the enrollee's representative could
continue an appeal after an enrollee dies provided that the appointment
continues to be valid.
8. What Evidence May Be Submitted to the MAC (Sec. 423.2122)
We reviewed the language in Sec. 405.1122 to determine whether to
incorporate similar language in proposed Sec. 423.2122. In general, we
are proposing to follow the procedures for Part A and Part B appeals
regarding what evidence may be submitted to the MAC. For the reasons
discussed above, we are proposing in Sec. 423.2122(a)(3) that the MAC
would not consider evidence on any change in condition after a coverage
determination by the plan sponsor that the enrollee wishes to have
considered and would remand such a case to the Part D plan sponsor.
Like in Sec. 405.1122, we are proposing in Sec. 423.2122 to allow the
MAC to issue a subpoena when it determines certain information is
reasonably necessary for a full presentation of a case. We also are
proposing in Sec. 423.2122(b) not to include language similar to that
in Sec. 405.1122(d) on party requests for subpoenas, as only the
enrollee is a party to a Part D appeal, and as a result, there will be
no discovery in these appeals. For the reasons set forth above, we are
proposing to allow the MAC to issue a subpoena only on its own
initiative. In addition, if necessary, the MAC may request enforcement
of a subpoena by the Secretary. The time period for the MAC to issue a
final action or remand the case would be stayed for 15 days or until
the Secretary makes a decision with respect to the enforcement request,
whichever occurs first.
9. Oral Argument (Sec. 423.2124)
We are proposing in Sec. 423.2124, to follow the language similar
to that in Sec. 405.1124 because we believe that oral arguments may be
necessary in some Part D appeals. We also are proposing in Sec.
423.2124(b) that, for expedited appeals, the enrollee be informed of
the time and place of the oral argument at least 2 days before the
scheduled date of the oral argument, which is shorter than our proposed
10-day timeframe for non-expedited appeals. We believe that providing
notice of an oral argument within these timeframes provides the
enrollee sufficient time to prepare for the oral argument.
10. Case Remanded by the MAC (Sec. 423.2126)
We are proposing in Sec. 423.2126, to mirror the language in Sec.
405.1126 regarding when the MAC may remand a case. This language is
appropriate for Part D appeals because it may be necessary for the MAC
to remand a case to a lower level. Additionally, we are proposing in
Sec. 423.2126(a)(4), that when an ALJ has issued a recommended
decision, an enrollee may file with the MAC briefs or other written
statements about the facts and law relevant to the case within 20 days
of the date on the recommended decision or with the request for review
for expedited appeals. As discussed above, we also are proposing in
Sec. 423.2126(b), to require the MAC to remand a case to the Part D
plan sponsor if the MAC determines that the enrollee wishes to have
evidence on his or her change in condition after the coverage
determination by the plan sponsor considered in the appeal.

[[Page 14353]]

E. Judicial Review (Sec. 423.2136 Through Sec. 423.2140)

[If you choose to comment on issues in this section, please include
the caption ``JUDICIAL REVIEW'' at the beginning of your comments.]
The Part D rule includes one provision concerning judicial review.
Current Sec. 423.630(a) (proposed Sec. 423.1976(a)) provides that an
enrollee may request judicial review of an ALJ's decision if the MAC
denied the enrollee's request for review and the amount in controversy
threshold is met. Current Sec. 423.630(b) (proposed Sec. 423.1976(b))
also states that an enrollee may request judicial review of the MAC
decision if it is the final agency decision and the amount in
controversy threshold is met. To request judicial review, this section
states that an enrollee must file a civil action in a District Court of
the United States in accordance with section 205(g) of the Act.
Finally, current Sec. 423.630(c) (proposed Sec. 423.1976(c)) tells
the reader to ``[s]ee part 422, subpart M of this chapter, for a
description of the procedures to follow in requesting judicial
review.''
Section 422.612 explains that part 405 contains a description of
the procedures to follow in requesting judicial review. Therefore, we
propose to follow the language of the Part 405, subpart I, as
appropriate. Thus, we have tracked the language in the Part 405,
subpart I, for proposed Sec. 423.2134, Sec. 423.2138, and Sec.
423.2140. We believe that it is appropriate for Part D appeals to
follow the Part A and Part B appeals procedures set forth in these
provisions. Because we propose to adopt specific procedures for
requesting judicial review of final Part D decisions, we propose to
delete the cross-reference to Part 422, subpart M, from current Sec.
423.620(c) (proposed Sec. 423.1976(c)) and replace it with a cross-
reference to the proposed procedures for requesting judicial review in
proposed Sec. 423.2136.

V. Collection of Information Requirements

This document does contain information collection requirements;
however, the Paperwork Reduction Act of 1995 exempts the information
collection activities referenced in this Proposed Rule. In particular,
5 CFR 1320.4 excludes collection activities during the conduct of
administrative actions such as redeterminations, reconsiderations, and/
or appeals. Specifically, these actions are taken after the initial
determination or a denial of payment.

VI. Response to Comments

Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.

VII. Regulatory Impact Statement

[If you choose to comment on issues in this section, please include
the caption ``Regulatory Impact Analysis'' at the beginning of your
comments.]

A. Overall Impact

We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism, and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Order 12866 (as amended) directs agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
As explained in the analysis that follows, we have determined that this
proposed rule is not a major rule since it will impose no consequential
costs and will not have an economic effect of $100 million or more.
Accordingly, it is not a major rule.
The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, we
estimate that a number of Part D plan sponsors (insurers) are small
entities as that term is used in the RFA (include small businesses,
nonprofit organizations, and small governmental jurisdictions). As
indicated above, a number of Part D plan sponsors (insurers) are small
entities due to their nonprofit status. Few if any of the Part D plans
sponsors meet the SBA size standard for a small insurance firm by
having revenues of $6 million or less in any 1 year. Individuals and
States are not included in the definition of a small entity.
This proposed rule will affect primarily individuals enrolled in
Part D plans who appeal Part D plan decisions. It makes no substantive
changes in the Part D benefit and deals directly only with appeals
procedures administered by Federal employees. To date, the volume of
Part D appeals is small and the amounts of money involved, although
substantial to many of these individuals, are a very small percentage
of aggregate Part D plan costs. Accordingly, we do not believe that
there will be significant economic impacts on Part D plans. Therefore,
the Secretary has determined that this proposed rule would not have a
significant economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 603 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a metropolitan statistical area and has fewer
than 100 beds. This rule will not have any effect on hospitals.
Therefore, the Secretary has determined that this proposed rule will
not have a significant impact on the operations of a substantial number
of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. That threshold
level is currently approximately $130 million. This proposed rule
contains no mandates on State, local, or tribal governments in the
aggregate, or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This proposed rule has no such effects.

B. Anticipated Effects

This proposed rule has no direct effects on the original Medicare
program, since it applies only to the Part D prescription drug program.
It would have few direct effects on Part D plans, since it addresses
primarily the details

[[Page 14354]]

of appeals procedures and process at the ALJ hearing and MAC review
levels. Most of the proposed procedures do not vary substantially from
existing appeals practices. For example, both under existing practices,
upon which this proposed rule is largely modeled, and the proposed
rule, neither the government nor the Part D sponsor is a ``party'' to
the appeal and therefore neither incurs any legal costs, unless it
chooses to participate in the ALJ hearing or MAC review. However, some
provisions would be new. Most importantly, we propose to provide for an
expedited appeals process when a delay in obtaining a drug may
seriously jeopardize the enrollee's life, health, or ability to regain
maximum function. This change would affect spending by Part D and the
Medicare program by accelerating coverage of a drug in those cases
where the enrollee succeeded in the expedited appeal.
The Part D appeals process is administered in large part by the
plans themselves. Our rules require plans to have effective grievance
and appeals processes that operate timely and effectively to meet
enrollee needs. In addition, we impose substantive standards on issues
such as plan formularies and the process for obtaining exceptions from
formulary restrictions where medically necessary. We provide for
within-plan appeals from initial plan decisions. If a problem cannot be
resolved at the plan level, we provide for an independent external
review through a CMS contractor. (Cases concerning the quality of care
take a different route, through Quality Improvement Organizations.)
Only those cases where the problem cannot be resolved at those levels
go to the so-called third and fourth levels of appeal for a hearing
before an ALJ and review by the Medicare Appeals Council, respectively.
The primary effects of this proposed rule will be to tailor the
third and fourth level appeal procedures, designed primarily for the
original Medicare program, to the unique aspects of the Part D program.
This proposed rule reflects and builds upon recent changes in the third
and fourth levels of appeals process for Part A and Part B claims
appeals (see the Interim Final Rule at 70 FR 11420 (March 8, 2005)). We
note that the effects of that rule were extensively analyzed in the
Regulatory Impact Analysis published with the rule. The overall
conclusion of that impact analysis was that costs to affected persons
and entities would be minimal, although the anticipated costs to the
Federal government from revised procedures would be substantial.
As discussed earlier in this preamble, our existing policy is that,
unless otherwise provided, Part D procedures will follow the procedures
established for appeals under Part A and Part B to the extent they are
appropriate. The proposed provisions parallel the Part A and Part B
provisions, to the extent appropriate. For example, in this proposed
rule we have proposed to eliminate references to national and local
coverage determinations because these policies do not apply to Part D.
Likewise; we eliminate references to Social Security appeals because
they are irrelevant to Part D. We note that such changes do not
necessarily imply an actual change in the procedures for processing
Part D appeals. The proposed rule would in part simply codify existing
practices already in place. Other changes we propose are intended to
make the appeals process more flexible and responsive to the needs and
circumstances of program participants. For example, a common type of
appeal is an appeal from the denial of coverage for a drug used for an
``off-label'' indication (one that has not been officially approved by
the Food and Drug Administration). Medicare Part D pays for many, but
not all, ``off-label'' uses. The process and procedure changes we
propose do not directly change the likelihood an enrollee will prevail
in appeal, although they may slightly raise the number of such appeals
by clarifying the procedures that will apply to such appeals and
affording an opportunity to request an expedited appeal. The new
expedited appeals procedures will allow us to respond quickly to urgent
medical needs of enrollees.
Total enrollment in Part D plans is about 25 million persons
(including enrollment in Medicare Advantage Plans that cover
prescription drugs). We estimate the total number of third level
appeals (ALJ hearings) in fiscal year 2007 to be approximately 350, or
about 15 appeals per million enrollees. Only a fraction of these would
ever be appealed to the fourth level (MAC review). While the dollar
value of these appeals has not been tabulated, the amount is likely to
reach several thousand dollars on average (the amount in controversy
threshold for an appeal in 2008 is $120 for ALJ hearings and $1180 for
federal district court review, but the time and effort involved to
pursue an appeal is likely to foster appeals most frequently when the
amount is considerably higher). Consequently, the annual total of the
amounts in controversy is likely to be in the range of several million
dollars. In contrast, total Part D spending in calendar 2007 (which is
roughly equivalent to the fiscal year total) is estimated to be
approximately $50 billion dollars. Thus, viewed either in absolute or
relative terms, any effects of the proposed rule either on the
administrative costs or outcomes of these cases are unlikely to be more
than a fraction of one percent of the major rule threshold. Likewise,
effects on overall plan costs or benefit payments are likely to be
minimal.
Accordingly, we do not believe that these procedures, which include
both codifications of existing practices and new procedures for the
third and fourth levels of appeal will have any consequential net
effect on the Part D program, except to clarify the procedures that
will apply to the relatively small number of cases that reach those
levels of the appeals process. While the volume of appeal cases may
increase slightly, adopting the procedures outlined in this proposed
rule would benefit enrollees by clarifying the procedures that will
apply to these appeals and affording an opportunity to request an
expedited appeal in certain circumstances where a faster decision is
necessary in order to protect the life and health of the enrollee. We
welcome comments on these conclusions.

C. Alternatives Considered

There are no major alternatives to this proposed rule. We have
proposed a number of specific provisions and provided a justification
for each, throughout this preamble. We welcome comments on these
proposals and on any effects that we may not have anticipated, as well
as comments on additional or alternative reforms that could improve the
appeals process further.
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 423

Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Health
professionals, Medicare, Penalties, Privacy, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:

[[Page 14355]]

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

1. The authority citation for part 423 continues to read as
follows:

Authority: Secs 1102, 1860D-1 through 1860D-42, and 1871 of the
Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-152,
and 1395hh).

2. The heading for Subpart M is revised to read as follows:

Subpart M--Grievances, Coverage Determinations, Redeterminations,
and Reconsiderations

3. A new Sec. 423.558, is added to Subpart M to read as follows:

Sec. 423.558 Scope.

(a) This subpart sets forth the requirements relating to the
following:
(1) Part D plan sponsors with respect to grievances, coverage
determinations, and redeterminations.
(2) Part D IRE with respect to reconsiderations; and
(3) Part D enrollees' rights with respect to grievances, coverage
determinations, redeterminations, and reconsiderations.
(b) The requirements regarding Reopenings, ALJ Hearings, MAC
review, and Judicial Review are set forth in subpart U of this chapter.

Sec. 423.562 [Amended]

4. In Sec. 423.562--
A. In paragraph (b)(4)(iv), the cross-reference to ``Sec.
423.610'' is removed and the cross-reference to ``Sec. 423.1970'' is
added in its place.
B. In paragraph (b)(4)(v), the cross-reference to ``Sec. 423.620''
is removed and the cross-reference to ``Sec. 423.1974'' is added in
its place.
C. In paragraph (b)(4)(vi), the cross-reference to ``Sec.
423.630'' is removed and the cross-reference to ``Sec. 423.1976'' is
added in its place.

Sec. 423.576 [Amended]

5. In Sec. 423.576--
A. The cross-reference to ``Sec. 423.580 through Sec. 423.630''
is removed and the cross-references to ``Sec. 423.580 through Sec.
423.604 and Sec. 423.1970 through Sec. 423.1976'' are added in its
place.
B. The cross-reference to ``423.634'' is removed and the cross-
reference to ``Sec. 423.1978'' is added in its place.

Sec. 423.580 [Amended]

6. In Sec. 423.580, the cross-reference to ``Sec. 423.634'' is
removed, and the cross-reference to ``Sec. 423.1978'' is added in its
place.

Sec. 423.602 [Amended]

7. In Sec. 423.602(b)(2), the cross-reference to ``Sec. 423.610''
is removed, and the cross-reference to ``Sec. 423.1970'' is added in
its place.

Sec. 423.604 [Amended]

8. In Sec. 423.604, the cross-reference to ``Sec. 423.612'' is
removed, and the cross-reference to ``Sec. 423.1972'' is added in its
place.

Sec. 423.610 [Removed and Reserved]

9. Section 423.610 is removed and reserved.

Sec. 423.612 [Removed and Reserved]

10. Section 423.612 is removed and reserved.

Sec. 423.620 [Removed and Reserved]

11. Section 423.620 is removed and reserved.

Sec. 423.630 [Removed and Reserved]

12. Section 423.630 is removed and reserved.

Sec. 423.634 [Removed and Reserved]

13. Section 423.634 is removed and reserved.
14. A new subpart U is added to read as follows:
Subpart U--Reopening, ALJ Hearings, MAC Review, and Judicial Review
Sec.
423.1968 Scope.
423.1970 Right to an ALJ hearing.
423.1972 Request for an ALJ hearing.
423.1974 Medicare Appeals Council (MAC) review.
423.1976 Judicial review.
423.1978 Reopening and revising determinations and decisions.
423.1980 Reopening of coverage determinations, redeterminations,
reconsiderations, hearings and reviews.
493.1982 Notice of a revised determination or decision.
423.1984 Effect of a revised determination or decision.
423.1986 Good cause for reopening.
423.1990 Expedited access to judicial review.
423.2000 Hearing before an ALJ: General rule.
423.2002 Right to an ALJ hearing.
423.2004 Right to ALJ review of IRE notice of dismissal.
423.2008 Parties to an ALJ hearing.
423.2010 When CMS, the IRE, or Part D Plan Sponsors may participate
in an ALJ hearing.
423.2014 Request for an ALJ hearing.
423.2016 Timeframes for deciding an Appeal before an ALJ.
423.2018 Submitting evidence before the ALJ hearing.
423.2020 Time and Place for a Hearing before an ALJ.
423.2022 Notice of a hearing before an ALJ.
423.2024 Objections to the issues.
423.2026 Disqualification of the ALJ.
423.2030 ALJ hearing procedures.
423.2032 Issues before an ALJ.
423.2034 When an ALJ may remand a case.
423.2036 Description of an ALJ hearing process.
423.2038 Deciding a case without a hearing before an ALJ.
423.2040 Pre-hearing and post-hearing conferences.
423.2042 The administrative record.
423.2044 Consolidated hearing before an ALJ.
423.2046 Notice of an ALJ decision.
423.2048 The effect of an ALJ's decision.
423.2050 Removal of a hearing request from an ALJ to the MAC.
423.2052 Dismissal of a request for a hearing before an ALJ.
423.2054 Effect of dismissal of a request for a hearing before an
ALJ.
423.2062 Applicability of policies not binding on the ALJ and MAC.
423.2063 Applicability of CMS rulings.
423.2100 Medicare Appeals Council (MAC) Review: General.
423.2102 Request for MAC review when an ALJ issues decision or
dismissal.
423.2106 Where a request for review may be filed.
423.2108 MAC Actions when request for review is filed.
423.2110 MAC reviews on its own motion.
423.2112 Content of request for review.
423.2114 Dismissal of request for review.
423.2116 Effect of dismissal of request for MAC review or request
for hearing.
423.2118 Obtaining evidence from the MAC.
423.2120 Filing briefs with the MAC.
423.2122 What evidence may be submitted to the MAC.
423.2124 Oral arguments.
423.2126 Case remanded by the MAC.
423.2128 Action of the MAC.
423.2130 Effect of the MAC's decision.
423.2134 Extension of time to file action in Federal District Court.
423.2136 Judicial review.
423.2138 Case remanded by a Federal District Court.
423.2140 MAC review of ALJ decision in a case remanded by a Federal
District Court.

Subpart U--Reopening, ALJ Hearings, MAC Review, and Judicial Review

Sec. 423.1968 Scope.

This subpart sets forth the requirements relating to the following:
(a) Part D sponsors, the Part D IRE, ALJs, and the MAC with respect
to reopenings.
(b) ALJs with respect to hearings.
(c) MAC with respect to review of part D appeals.
(d) Part D enrollees' rights with respect to reopenings, ALJ
hearings, MAC reviews, and judicial review by a Federal District Court.

Sec. 423.1970 Right to an ALJ hearing.

(a) If the amount remaining in controversy after the IRE
reconsideration meets the threshold requirement established annually by
the Secretary, an enrollee who is

[[Page 14356]]

dissatisfied with the IRE reconsideration determination has a right to
a hearing before an ALJ.
(b) If the basis for the appeal is the refusal by the Part D plan
sponsor to provide drug benefits, CMS uses the projected value of those
benefits to compute the amount remaining in controversy. The projected
value of a Part D drug or drugs shall include any costs the enrollee
could incur based on the number of refills prescribed for the drug(s)
in dispute during the plan year.
(c) Aggregating appeals to meet the amount in controversy--(1)
Enrollee. Two or more appeals may be aggregated by an enrollee to meet
the amount in controversy for an ALJ hearing if--
(i) The appeals have previously been reconsidered by an IRE;
(ii) The request for ALJ hearing lists all of the appeals to be
aggregated and each aggregated appeal meets the filing requirement
specified in Sec. 423.1972(b); and
(iii) The ALJ determines that the appeals the enrollee seeks to
aggregate involve the delivery of prescription drugs to a single
enrollee.
(2) Multiple enrollees. Two or more appeals may be aggregated by
multiple enrollees to meet the amount in controversy for an ALJ hearing
if--
(i) The appeals have previously been reconsidered by an IRE;
(ii) The request for ALJ hearing lists all of the appeals to be
aggregated and each aggregated appeal meets the filing requirement
specified in Sec. 423.1972(b); and
(iii) The ALJ determines that the appeals the enrollees seek to
aggregate involve the same prescription drug.

Sec. 423.1972 Request for an ALJ hearing.

(a) How and where to file a request. The enrollee must file a
written request for a hearing with the entity specified in the IRE's
reconsideration notice.
(b) When to file a request. Except when an ALJ extends the
timeframe as provided in Sec. 423.2014(d), the enrollee must file a
request for a hearing within 60 days of the date of the notice of an
IRE reconsideration determination. The time and place for a hearing
before an ALJ will be set in accordance with Sec. 423.2020 of this
chapter.
(c) Insufficient amount in controversy. (1) If a request for a
hearing clearly shows that the amount in controversy is less than that
required under Sec. 423.1970, the ALJ dismisses the request.
(2) If, after a hearing is initiated, the ALJ finds that the amount
in controversy is less than the amount required under Sec. 423.1970,
the ALJ discontinues the hearing and does not rule on the substantive
issues raised in the appeal.

Sec. 423.1974 Medicare Appeals Council (MAC) review.

An enrollee who is dissatisfied with an ALJ hearing decision may
request that the MAC review the ALJ's decision or dismissal as provided
in Sec. 423.2102.

Sec. 423.1976 Judicial review.

(a) Review of ALJ's decision. The enrollee may request judicial
review of an ALJ's decision if--
(1) The MAC denied the enrollee's request for review; and
(2) The amount in controversy meets the threshold requirement
established annually by the Secretary.
(b) Review of MAC decision. The enrollee may request judicial
review of the MAC decision if it is the final decision of CMS and the
amount in controversy meets the threshold established in paragraph
(a)(2) of this section.
(c) How to request judicial review. In order to request judicial
review, an enrollee must file a civil action in a district court of the
United States in accordance with section 205(g) of the Act. (See Sec.
423.2136 for a description of the procedures to follow in requesting
judicial review.)

Sec. 423.1978 Reopening and revising determinations and decisions.

(a) A coverage determination or redetermination made by a Part D
plan sponsor, a reconsideration made by the independent review entity
specified in Sec. 423.600, or the decision of an ALJ or the MAC that
is otherwise final and binding may be reopened and revised by the
entity that made the determination or decision as provided in Sec.
423.1980 through Sec. 423.1986.
(b) The filing of a request for reopening does not relieve the Part
D plan sponsor of its obligation to make payment or provide benefits as
specified in Sec. 423.636 or Sec. 423.638 of this chapter.
(c) Once an entity issues a revised determination or decision, the
revisions made by the decision may be appealed.
(d) A decision not to reopen by the Part D plan sponsor or any
other entity is not subject to review.

Sec. 423.1980 Reopenings of coverage determinations,
redeterminations, reconsiderations, hearings and reviews.

(a) General rules. (1) A reopening is a remedial action taken to
change a final determination or decision, even though the final
determination or decision may have been correct at the time it was made
based on the evidence of record. Consistent with Sec. 423.1978(a),
that action may be taken by--
(i) A Part D plan sponsor to revise the coverage determination or
redetermination;
(ii) An IRE to revise the reconsideration;
(iii) An ALJ to revise the hearing decision; or
(iv) The MAC to revise the hearing or review decision.
(2) When an enrollee has filed a valid request for an appeal of a
coverage determination, redetermination, reconsideration, hearing, or
MAC review, no adjudicator has jurisdiction to reopen an issue that is
under appeal until all appeal rights for that issue are exhausted. Once
the appeal rights for the issue have been exhausted, the Part D plan
sponsor, IRE, ALJ, or MAC may reopen as set forth in this section.
(3) Consistent with Sec. 423.1978(b), the filing of a request for
reopening does not relieve the Part D plan sponsor of its obligation to
make payment or provide benefits as specified in Sec. 423.636 or Sec.
423.638.
(4) Consistent with Sec. 423.1978(d), the Part D plan sponsor's,
IRE's, ALJ's, or MAC's decision on whether to reopen is final and not
subject to appeal.
(5) A determination under the Medicare secondary payer provisions
of section 1862(b) of the Act that Medicare has an MSP recovery claim
for drug claims that were already reimbursed by the Part D plan sponsor
is not a reopening.
(b) Timeframes and requirements for reopening coverage
determinations and redeterminations initiated by a Part D plan sponsor.
A Part D plan sponsor may reopen and revise its coverage determination
or redetermination on its own motion--
(1) Within 1 year from the date of the coverage determination or
redetermination for any reason.
(2) Within 4 years from the date of the coverage determination or
redetermination for good cause as defined in Sec. 423.1986.
(3) At any time if there exists reliable evidence as defined in
Sec. 405.902 that the coverage determination was procured by fraud or
similar fault as defined in Sec. 405.902.
(c) Timeframe and requirements for reopening coverage
determinations and redeterminations requested by an enrollee. (1) An
enrollee may request that a Part D plan sponsor reopen its coverage
determination or redetermination within 1 year from the date of the
coverage determination or redetermination for any reason.
(2) An enrollee may request that a Part D plan sponsor reopen its
coverage determination or redetermination within 4 years from the date
of the

[[Page 14357]]

coverage determination or redetermination for good cause in accordance
with Sec. 423.1986.
(d) Timeframes and requirements for reopening reconsiderations,
hearing decisions and reviews initiated by an IRE, ALJ, or the MAC. (1)
An IRE may reopen its reconsideration on its own motion within 180 days
from the date of the reconsideration for good cause in accordance with
Sec. 423.1986. If the IRE's reconsideration was procured by fraud or
similar fault, then the IRE may reopen at any time.
(2) An ALJ or the MAC may reopen a hearing decision on its own
motion within 180 days from the date of the decision for good cause in
accordance with Sec. 423.1986. If the hearing decision was procured by
fraud or similar fault, then the ALJ or the MAC may reopen at any time.
(3) The MAC may reopen its review decision on its own motion within
180 days from the date of the review decision for good cause in
accordance with Sec. 423.1986. If the MAC's decision was procured by
fraud or similar fault, then the MAC may reopen at any time.
(e) Timeframes and requirements for reopening reconsiderations,
hearing decisions, and reviews requested by an enrollee. (1) An
enrollee who received a reconsideration may request that an IRE reopen
its reconsideration within 180 days from the date of the
reconsideration for good cause in accordance with Sec. 423.1986.
(2) An enrollee who received an ALJ hearing decision may request
that an ALJ or the MAC reopen the hearing decision within 180 days from
the date of the hearing decision for good cause in accordance with
Sec. 423.1986.
(3) An enrollee who received a MAC decision may request that the
MAC reopen its decision within 180 days from the date of the review
decision for good cause in accordance with Sec. 423.1986.

Sec. 423.1982 Notice of a revised determination or decision.

(a) When adjudicators initiate reopenings. When any determination
or decision is reopened and revised as provided in Sec. 423.1980--
(1) The Part D plan sponsor, IRE, ALJ, or the MAC must mail its
revised determination or decision to the enrollee at his or her last
known address.
(2) The IRE, ALJ, or the MAC must mail its revised determination or
decision to the Part D plan sponsor.
(3) An adverse revised determination or decision must state the
rationale and basis for the reopening and revision and any right to
appeal.
(b) Reopenings initiated at the request of an enrollee. (1) The
Part D plan sponsor, IRE, ALJ, or the MAC must mail its revised
determination or decision to the enrollee at his or her last known
address.
(2) The IRE, ALJ, or the MAC must mail its revised determination or
decision to the Part D plan sponsor.
(3) An adverse revised determination or decision must state the
rationale and basis for the reopening and revision and any right to
appeal.

Sec. 423.1984 Effect of a revised determination or decision.

(a) Coverage determinations. The revision of a coverage
determination is binding unless an enrollee submits a request for a
redetermination that is accepted and processed in accordance with Sec.
423.580 through Sec. 423.590.
(b) Redeterminations. The revision of a redetermination is binding
unless an enrollee submits a request for an IRE reconsideration that is
accepted and processed in accordance with Sec. 423.600 through Sec.
423.604.
(c) Reconsiderations. The revision of a reconsideration is binding
unless an enrollee submits a request for an ALJ hearing that is
accepted and processed in accordance with Sec. 423.1970 through Sec.
423.1972 and Sec. 423.2000 through Sec. 423.2063.
(d) ALJ hearing decisions. The revision of a hearing decision is
binding unless an enrollee submits a request for a MAC review that is
accepted and processed as specified in Sec. 423.1974 and Sec.
423.2100 through Sec. 423.2130.
(e) MAC review. The revision of a MAC determination or decision is
binding unless an enrollee files a civil action in which a Federal
District Court accepts jurisdiction and issues a decision.
(f) Appeal of only the portion of the determination or decision
revised by the reopening. Only the portion of the coverage
determination, redetermination, reconsideration, or hearing decision
revised by the reopening may be subsequently appealed.
(g) Effect of a revised determination or decision. Consistent with
Sec. 423.1978(c), a revised determination or decision is binding
unless it is appealed or otherwise reopened.

Sec. 423.1986 Good cause for reopening.

(a) Establishing good cause. Good cause may be established when--
(1) There is new and material evidence that--
(i) Was not available or known at the time of the determination or
decision; and
(ii) May result in a different conclusion; or
(2) The evidence that was considered in making the determination or
decision clearly shows on its face that an obvious error was made at
the time of the determination or decision.
(b) Change in substantive law or interpretative policy--(1) General
rule. A change of legal interpretation or policy by CMS in a
regulation, CMS ruling, or CMS general instruction, whether made in
response to judicial precedent or otherwise, is not a basis for
reopening a determination or hearing decision regarding appeals under
this section.
(2) An adjudicator may reopen a determination or decision to apply
the current law or CMS or the Part D plan sponsor policy rather than
the law or CMS or the Part D plan sponsor policy at the time the
coverage determination is made in situations where the enrollee has not
yet received the drug and the current law or CMS or the Part D plan
sponsor policy may affect whether the drug should be received.
(c) Third party payer error. A request to reopen a claim based upon
a third party payer's error in making a primary payment determination
when Medicare processed the claim in accordance with the information in
its system of records or on the claim form does not constitute good
cause for reopening.

Sec. 423.1990 Expedited access to judicial review.

(a) Process for expedited access to judicial review.
(1) For purposes of this section, a ``review entity'' means an
entity of up to three reviewers who are ALJs or members of the
Departmental Appeals Board, as determined by the Secretary.
(2) In order to obtain expedited access to judicial review (EAJR),
a review entity must certify that the MAC does not have the authority
to decide the question of law or regulation relevant to the matters in
dispute and that there is no material issue of fact in dispute.
(3) An enrollee may make a request for EAJR only once with respect
to a question of law or regulation for a specific matter in dispute in
an appeal.
(b) Conditions for making the expedited appeals request. (1) An
enrollee may request EAJR in place of an ALJ hearing or MAC review if
the following conditions are met:
(i) An IRE has made a reconsideration determination and the
enrollee has filed a request for an ALJ hearing in accordance with
Sec. 423.2002 and a final decision of the ALJ has not been issued; or

[[Page 14358]]

(ii) An ALJ has made a decision and the enrollee has filed a
request for MAC review in accordance with Sec. 423.2102 and a final
decision of the MAC has not been issued.
(2) The requestor is an enrollee.
(3) The amount remaining in controversy meets the threshold
requirements established annually by the Secretary.
(4) If there is more than one enrollee to the hearing or MAC
review, each enrollee concurs, in writing, with the request for the
EAJR.
(5) There are no material issues of fact in dispute.
(c) Content of the request for EAJR. The request for EAJR must--
(1) Allege that there are no material issues of fact in dispute and
identify the facts that the enrollee considers material and that are
not disputed; and
(2) Assert that the only factor precluding a decision favorable to
the enrollee is--
(i) A statutory provision that is unconstitutional, or a provision
of a regulation that is invalid and specify the statutory provision
that the enrollee considers unconstitutional or the provision of a
regulation that the enrollee considers invalid, or
(ii) A CMS Ruling that the enrollee considers invalid.
(3) Include a copy of the IRE reconsideration and of any ALJ
hearing decision that the enrollee has received;
(4) If the IRE reconsideration or ALJ hearing decision was based on
facts that the enrollee is disputing, state why the enrollee considers
those facts to be immaterial; and
(5) If the IRE reconsideration or ALJ hearing decision was based on
a provision of a law, regulation, or CMS Ruling in addition to the one
the enrollee considers unconstitutional or invalid, a statement as to
why further administrative review of how that provision applies to the
facts is not necessary.
(d) Place and time for an EAJR request. (1) Method and place for
filing request. The enrollee may include an EAJR request in his or her
request for an ALJ hearing or MAC review, or, if an appeal is already
pending with an ALJ or the MAC, file a written EAJR request with the
ALJ hearing office or MAC where the appeal is being considered. The ALJ
hearing office or MAC forwards the request to the review entity within
5 days of receipt.
(2) Time of filing request. The enrollee may file a request for
EAJR--
(i) If the enrollee has requested a hearing, at any time before
receipt of the notice of the ALJ's decision; or
(ii) If the enrollee has requested MAC review, at any time before
receipt of notice of the MAC's decision.
(e) Determination on EAJR request. (1) The review entity described
in paragraph (a) of this section will determine whether the request for
EAJR meets all of the requirements of paragraphs (b), (c), and (d) of
this section.
(2) Within 60 days after the date the review entity receives a
request and accompanying documents and materials meeting the conditions
in paragraphs (b), (c), and (d) of this section, the review entity will
issue either a certification in accordance with paragraph (f) of this
section or a denial of the request.
(3) A determination by the review entity either certifying that the
requirements for EAJR are met pursuant to paragraph (f) of this section
or denying the request is final and not subject to review by the
Secretary.
(4) If the review entity fails to make a determination within the
timeframe specified in paragraph (e)(2) of this section, then the
enrollee may bring a civil action in Federal District Court within 60
days of the end of the timeframe.
(f) Certification by the review entity. If an enrollee meets the
requirements for the EAJR, the review entity certifies in writing
that--
(1) The material facts involved in the appeal are not in dispute;
(2) Except as indicated in paragraph (f)(3) of this section, the
Secretary's interpretation of the law is not in dispute;
(3) The sole issue(s) in dispute is the constitutionality of a
statutory provision, or the validity of a provision of a regulation or
CMS Ruling;
(4) But for the provision challenged, the enrollee would receive a
favorable decision on the ultimate issue; and
(5) The certification by the review entity is the Secretary's final
action for purposes of seeking expedited judicial review.
(g) Effect of certification by the review entity. If an EAJR
request results in a certification described in paragraph (f) of this
section--
(1) The enrollee that requested the EAJR is considered to have
waived any right to completion of the remaining steps of the
administrative appeals process regarding the matter certified.
(2) The enrollee has 60 days, beginning on the date of the review
entity's certification within which to bring a civil action in Federal
District Court.
(3) The enrollee must satisfy the requirements for venue under
section 205(g) of the Act, as well as the requirements for filing a
civil action in a Federal District Court under Sec. 423.2136.
(h) Rejection of EAJR. (1) If a request for EAJR does not meet all
the conditions set out in paragraphs (b), (c), and (d) of this section,
or if the review entity does not certify a request for EAJR, the review
entity advises the enrollee in writing that the request has been
denied, and returns the request to the ALJ hearing office or the MAC,
which will treat it as a request for hearing or for MAC review, as
appropriate.
(2) Whenever a review entity forwards a rejected EAJR request to an
ALJ hearing office or the MAC, the appeal is considered timely filed
and the 90-day decision making timeframe begins on the day the request
is received by the hearing office or the MAC.

Sec. 423.2000 Hearing before an ALJ: General rule.

(a) If an enrollee is dissatisfied with an IRE's reconsideration,
the enrollee may request a hearing.
(b) A hearing may be conducted in person, by video-teleconference,
or by telephone. At the hearing, the enrollee may submit evidence
subject to the restrictions in Sec. 423.2018, examine the evidence
used in making the determination under review, and present and/or
question witnesses.
(c) In some circumstances, the Part D plan sponsor, or a
representative of CMS, including the IRE, may participate in the
hearing as specified in Sec. 423.2010.
(d) The ALJ issues a decision based on the hearing record.
(e) If an enrollee waives his or her right to appear at the hearing
in person or by telephone or video-teleconference, the ALJ may make a
decision based on the evidence that is in the file and any new evidence
that is submitted for consideration.
(f) The ALJ may require the enrollee to participate in a hearing if
it is necessary to decide the case. If the ALJ determines that it is
necessary to obtain testimony from a person other than the enrollee, he
or she may hold a hearing to obtain that testimony, even if the
enrollee has waived the right to appear. In that event, however, the
ALJ will give the enrollee the opportunity to appear when the testimony
is given, but may hold the hearing even if the enrollee decides not to
appear.
(g) An ALJ may also issue a decision on the record on his or her
own initiative if the evidence in the hearing record supports a fully
favorable finding.

[[Page 14359]]

Sec. 423.2002 Right to an ALJ hearing.

(a) Consistent with Sec. 423.1970(a), an enrollee may request a
hearing before an ALJ if--
(1) The enrollee files a written request for an ALJ hearing within
60 days after receipt of the written notice of the IRE's
reconsideration; and
(2) The enrollee meets the amount in controversy requirements of
Sec. 423.1970.
(b) An enrollee may request that the hearing before an ALJ be
expedited if:
(1) The appeal involves an issue specified in Sec. 423.566(b) but
does not include solely a request for payment of Part D drugs already
furnished;
(2) The enrollee submits a written or oral request for an expedited
ALJ hearing within 60 days of the date of the written notice of an IRE
reconsideration determination. The request can only be submitted after
the enrollee receives the written IRE reconsideration notice. The
request should also explain why applying the standard timeframe may
seriously jeopardize the life or health of the enrollee; and
(3) The enrollee meets the amount in controversy requirements of
Sec. 423.1970. The ALJ must document all oral requests for expedited
hearings in writing and maintain the documentation in the case files.
(c) For purposes of this section, the date of receipt of the
reconsideration is presumed to be 5 days after the date of the written
reconsideration, unless there is evidence to the contrary.
(d) For purposes of meeting the 60-day filing deadline, the request
is considered as filed on the date it is received by the entity
specified in the IRE's reconsideration.

Sec. 423.2004 Right to ALJ review of IRE notice of dismissal.

(a) An enrollee has a right to have an IRE's dismissal of a request
for reconsideration reviewed by an ALJ if--
(1) The enrollee files a request for an ALJ review within 60 days
after receipt of the written notice of the IRE's dismissal.
(2) The enrollee meets the amount in controversy requirements of
Sec. 423.1970.
(3) For purposes of this section, the date of receipt of the IRE's
dismissal is presumed to be 5 days after the date of the written
dismissal notice, unless there is evidence to the contrary.
(4) For purposes of meeting the 60-day filing deadline, the request
is considered as filed on the date it is received by the entity
specified in the IRE's dismissal.
(b) If the ALJ determines that the IRE's dismissal was in error, he
or she vacates the dismissal and remands the case to the IRE for a
reconsideration.
(c) An ALJ's decision regarding an IRE's dismissal of a
reconsideration request is final and not subject to further review.

Sec. 423.2008 Parties to an ALJ hearing.

(a) Who may request a hearing. Only an enrollee (or an enrollee's
representative) may request a hearing before an ALJ.
(b) Who are parties to the ALJ hearing. The enrollee (or the
enrollee's representative) who filed the request for hearing is the
only party to the ALJ hearing.

Sec. 423.2010 When CMS, the IRE, or Part D plan sponsors may
participate in an ALJ hearing.

(a) An ALJ may request, but may not require, CMS, the IRE, and/or
the Part D plan sponsor to participate in any proceedings before the
ALJ, including the oral hearing, if any.
(b) CMS, the IRE, and/or the Part D plan sponsor may request to
participate in the hearing process.
(1) For non-expedited hearings, any request by CMS, the IRE, and/or
the Part D plan sponsor to participate must be made within 5 days of
receipt of the notice of hearing.
(2) Within 5 days of receipt of a request to participate in a non-
expedited hearing, the ALJ must notify the entity, the Part D plan
sponsor, if applicable and the enrollee of his or her decision on the
request to participate.
(3) For expedited hearings, any request by CMS, the IRE, and/or the
Part D plan sponsor to participate must be made within 1 day of receipt
of the notice of hearing. Requests may be made orally or submitted by
facsimile to the hearing office.
(4) Within 1 day of receipt of a request to participate in an
expedited hearing, the ALJ must notify the entity, the Part D plan
sponsor, if applicable, and the enrollee of his or her decision on the
request to participate.
(c) The ALJ has discretion not to allow CMS, the IRE, and/or the
Part D plan sponsor to participate.
(d) Participation may include filing position papers or providing
written testimony to clarify factual or policy issues in a case, but it
does not include calling witnesses or cross-examining the witnesses of
an enrollee to the hearing.
(e) When CMS, the IRE, and/or the Part D plan sponsor participates
in an ALJ hearing, CMS, the IRE, and/or the Part D plan sponsor may not
be called as a witness during the hearing.
(f) CMS, the IRE, and/or the Part D plan sponsor must submit any
position papers within the timeframe designated by the ALJ.
(g) The ALJ cannot draw any adverse inferences if CMS, the IRE,
and/or the Part D plan sponsor decide not to participate in any
proceedings before an ALJ, including the hearing.

Sec. 423.2014 Request for an ALJ hearing.

(a) Content of the request. The request for an ALJ hearing must be
made in writing, except as set forth in paragraph (b) of this section.
The request, including any oral request, must include all of the
following--
(1) The name, address, telephone number, and Medicare health
insurance claim number of the enrollee.
(2) The name, address, and telephone number of the appointed
representative, as defined at Sec. 423.560, if any.
(3) The appeals case number assigned to the appeal by the IRE, if
any.
(4) The prescription drug in dispute.
(5) The plan name.
(6) The reasons the enrollee disagrees with the IRE's
reconsideration.
(7) A statement of any additional evidence to be submitted and the
date it will be submitted.
(8) A statement that the enrollee is requesting an expedited
hearing, if applicable.
(b) Request for expedited hearing. If an enrollee is requesting
that the hearing be expedited, the enrollee may make the request for an
ALJ hearing orally, but only after receipt of the written IRE
reconsideration notice. The ALJ hearing office must document all oral
requests in writing and maintain the documentation in the case files. A
prescribing physician may provide oral or written support for an
enrollee's request for expedited review.
(c) When and where to file. Consistent with Sec. 423.1972(a) and
(b), the request for an ALJ hearing after an IRE reconsideration must
be submitted--
(1) Within 60 days from the date the enrollee receives written
notice of the IRE's reconsideration;
(2) With the entity specified in the IRE's reconsideration.
(i) If the request for hearing is timely filed with an entity other
than the entity specified in the IRE's reconsideration, the deadline
specified in Sec. 423.2016 for deciding the appeal begins on the date
the entity specified in the IRE's reconsideration receives the request
for hearing.
(ii) If the request for hearing is filed with an entity, other than
the entity specified in the IRE's reconsideration, the ALJ hearing
office must notify the appellant of the date of receipt of the request
and the commencement of the adjudication timeframe.
(d) Extension of time to request a hearing. (1) Consistent with

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Sec. 423.1972(b), if the request for hearing is not filed within 60
days of receipt of the written IRE's reconsideration, an enrollee may
request an extension for good cause.
(2) Any request for an extension of time must be in writing or, for
expedited reviews, in writing or oral. The ALJ hearing office must
document all oral requests in writing and maintain the documentation in
the case file.
(3) The request must give the reasons why the request for a hearing
was not filed within the stated time period, and must be filed with the
entity specified in the notice of reconsideration.
(4) If the ALJ finds there is good cause for missing the deadline,
the time period for filing the hearing request will be extended. To
determine whether good cause for late filing exists, the ALJ uses the
standards set forth in Sec. 405.942(b)(2) and (b)(3) of this chapter.
(5) If a request for hearing is not timely filed, the adjudication
period in Sec. 423.2016 begins the date the ALJ grants the request to
extend the filing deadline.

Sec. 423.2016 Timeframes for deciding an Appeal before an ALJ.

(a) Hearings. (1) When a request for an ALJ hearing is filed after
an IRE has issued a written reconsideration, the ALJ must issue a
decision, dismissal order, or remand, as appropriate, no later than the
end of the 90-day period beginning on the date the request for hearing
is received by the entity specified in the IRE's notice of
reconsideration, unless the 90-day period has been extended as provided
in this subpart.
(2) The adjudication period specified in paragraph (a) of this
section begins on the date that a timely filed request for hearing is
received by the entity specified in the IRE's reconsideration, or, if
it is not timely filed, the date that the ALJ grants any extension to
the filing deadline.
(b) Expedited hearings. (1) Standard for expedited hearing. The ALJ
must provide an expedited hearing decision if the appeal involves an
issue specified in Sec. 423.566(b), but is not solely a request for
payment of Part D drugs already furnished, and the enrollee's
prescribing physician indicates, or the ALJ determines that applying
the standard timeframe for making a decision may seriously jeopardize
the enrollee's life, health or ability to regain maximum function. The
ALJ may consider this standard as met if a lower level adjudicator has
granted a request for an expedited hearing.
(2) Grant of a request. If the ALJ grants a request for expedited
hearing, the ALJ must:
(i) Make the decision to grant an expedited hearing within 5 days
of receipt of the request for expedited hearing;
(ii) Give the enrollee prompt oral notice of this decision; and
(iii) Subsequently send to the enrollee at his or her last known
address and to the Part D plan sponsor written notice of the decision.
This notice may be provided within the written notice of hearing.
(3) Denial of a request. If the ALJ denies a request for expedited
hearing, the ALJ must:
(i) Make this decision within 5 days of receipt of the request for
expedited hearing;
(ii) Give the enrollee prompt oral notice of the denial that
informs the enrollee of the denial and explains that the ALJ will
process the enrollee's request using the 90-day timeframe for non-
expedited ALJ hearings; and
(iii) Subsequently send to the enrollee at his or her last known
address and to the Part D plan sponsor an equivalent written notice of
the decision within 3 days after the oral notice.
(4) A decision on a request for expedited hearing may not be
appealed.
(5) Timeframe for adjudication. (i) If the ALJ accepts a request
for expedited hearing, the ALJ must issue a written decision, dismissal
order or remand, as expeditiously as the enrollee's health condition
requires, but no later than the end of the 10-day period beginning on
the date the request for hearing is received by the entity specified in
the IRE's written notice of reconsideration, unless the 10-day period
has been extended as provided in this subpart.
(ii) The adjudication period specified in paragraph (b)(5)(i) of
this section begins on the date that a timely provided request for
hearing is received by the entity specified in the IRE's
reconsideration, or, if it is not timely provided, the date that the
ALJ grants any extension to the filing deadline.

Sec. 423.2018 Submitting evidence before the ALJ hearing.

(a) All hearings. An enrollee may submit any written evidence that
he or she wishes to have considered at the hearing.
(1) An ALJ will not consider any evidence submitted regarding a
change in condition of an enrollee after the appealed coverage
determination was made.
(2) An ALJ will remand a case to the Part D plan sponsor where an
enrollee wishes evidence on his or her change in condition after the
coverage determination to be considered.
(b) Non-expedited hearings. (1) Except as provided in this
paragraph, an enrollee must submit all written evidence he or she
wishes to have considered at the hearing with the request for hearing
or within 10 days of receiving the notice of hearing.
(2) If an enrollee submits written evidence later than 10 days
after receiving the notice of hearing, the period between the time the
evidence was required to have been submitted and the time it is
received is not counted toward the adjudication deadline specified in
Sec. 423.2016.
(c) Expedited hearings. (1) Except as provided in this section, an
enrollee must submit all written evidence he or she wishes to have
considered at the hearing with the request for hearing or within 2 days
of receiving the notice of hearing.
(2) If an enrollee submits written evidence later than 2 days after
receiving the notice of hearing, the period between the time the
evidence was required to have been submitted and the time it is
received is not counted toward the adjudication deadline specified in
Sec. 423.2016.
(d) The requirements of paragraphs (b) and (c) of this section do
not apply to oral testimony given at a hearing.

Sec. 423.2020 Time and place for a hearing before an ALJ.

(a) General. Consistent with Sec. 423.1972(b), the ALJ sets the
time and place for the hearing, and may change the time and place, if
necessary.
(b) Determining how appearances are made. (1) The ALJ will direct
that the appearance of an individual be conducted by video-
teleconferencing if the ALJ finds that video-teleconferencing
technology is available to conduct the appearance.
(2) The ALJ may also offer to conduct a hearing by telephone if the
request for hearing or administrative record suggests that a telephone
hearing may be more convenient for the enrollee.
(3) The ALJ, with the concurrence of the Managing Field Office ALJ,
may determine that an in-person hearing should be conducted if--
(i) The video-teleconferencing technology is not available; or
(ii) Special or extraordinary circumstances exist.
(c) Notice of hearing. (1) The ALJ sends a notice of hearing to the
enrollee, the Part D plan sponsor that issued the coverage
determination, and the IRE that issued the reconsideration, advising
them of the proposed time and place of the hearing.

[[Page 14361]]

(2) The notice of hearing will require the enrollee (and any
potential participant from CMS, the IRE, and/or the Part D plan who has
requested to participate in the hearing consistent with Sec. 423.2010)
to reply to the notice by:
(i) Acknowledging whether they plan to attend the hearing at the
time and place proposed in the notice of hearing; or
(ii) Objecting to the proposed time and/or place of the hearing.
(d) An enrollee's right to waive a hearing. An enrollee may also
waive the right to a hearing and request that the ALJ issue a decision
based on the written evidence in the record.
(1) As specified in Sec. 423.2000, the ALJ may require the
enrollee to attend a hearing if it is necessary to decide the case.
(2) If the ALJ determines that it is necessary to obtain testimony
from a person other than the enrollee, he or she may still hold a
hearing to obtain that testimony, even if the enrollee has waived the
right to appear. In those cases, the ALJ would give the enrollee the
opportunity to appear when the testimony is given but may hold the
hearing even if the enrollee decides not to appear.
(e) An enrollee's objection to time and place of hearing. (1) If an
enrollee objects to the time and place of the hearing, the enrollee
must notify the ALJ at the earliest possible opportunity before the
time set for the hearing.
(2) The enrollee must state the reason for the objection and state
the time and place he or she wants the hearing to be held.
(3) The objection must be in writing except for an expedited
hearing when the objection may be provided orally. The ALJ must
document all oral objections to the time and place of an expedited
hearing in writing and maintain the documentation in the case files.
(4) The ALJ may change the time or place of the hearing if the
enrollee has good cause. (Section 423.2052(a)(2) provides the
procedures the ALJ follows when an enrollee does not respond to a
notice of hearing and fails to appear at the time and place of the
hearing.)
(f) Good cause for changing the time or place. The ALJ can find
good cause for changing the time or place of the scheduled hearing and
reschedule the hearing if the information available to the ALJ supports
the enrollee's contention that--
(1) The enrollee or his or her representative is unable to attend
or to travel to the scheduled hearing because of a serious physical or
mental condition, incapacitating injury, or death in the family; or
(2) Severe weather conditions make it impossible to travel to the
hearing; or
(3) Good cause exists as set forth in paragraph (g) of this
section.
(g) Good cause in other circumstances. (1) In determining whether
good cause exists in circumstances other than those set forth in
paragraph (f) of this section, the ALJ considers the enrollee's reason
for requesting the change, the facts supporting the request, and the
impact of the proposed change on the efficient administration of the
hearing process.
(2) Factors evaluated to determine the impact of the change
include, but are not limited to, the effect on processing other
scheduled hearings, potential delays in rescheduling the hearing, and
whether any prior changes were granted the enrollee.
(3) Examples of other circumstances an enrollee might give for
requesting a change in the time or place of the hearing include, but
are not limited to, the following:
(i) The enrollee has attempted to obtain a representative but needs
additional time.
(ii) The enrollee's representative was appointed within 10 days of
the scheduled hearing for non-expedited hearings (or 2 days for
expedited hearings) and needs additional time to prepare for the
hearing.
(iii) The enrollee's representative has a prior commitment to be in
court or at another administrative hearing on the date scheduled for
the hearing.
(iv) A witness who will testify to facts material to an enrollee's
case is unavailable to attend the scheduled hearing and the evidence
cannot be otherwise obtained.
(v) Transportation is not readily available for an enrollee to
travel to the hearing.
(vi) The enrollee is unrepresented, and is unable to respond to the
notice of hearing because of any physical, mental, educational, or
linguistic limitations (including any lack of facility with the English
language).
(h) Effect of rescheduling hearing. If a hearing is postponed at
the request of the enrollee for any of the above reasons, the time
between the originally scheduled hearing date and the new hearing date
is not counted toward the adjudication deadline as specified in Sec.
423.2016.
(i) An enrollee's request for an in-person hearing.
(1) If an enrollee objects to a video-teleconferencing hearing or
to the ALJ's offer to conduct a hearing by telephone, the enrollee must
notify the ALJ at the earliest possible opportunity before the time set
for the hearing and request an in-person hearing.
(2) The enrollee must state the reason for the objection and state
the time or place he or she wants the hearing to be held.
(3) The request must be in writing except for an expedited hearing
for which the request may be provided orally. The ALJ must document all
oral objections to an expedited video-teleconferencing or telephone
hearing in writing and maintain the documentation in the case files.
(4) When an enrollee's request for an in-person hearing is granted,
the enrollee is deemed to have waived the adjudicatory timeframe as
specified in Sec. 423.2016, except if the ALJ has granted the
enrollee's request for an expedited appeal.
(5) The ALJ may grant the request, with the concurrence of the
Managing Field Office ALJ, upon a finding of good cause and will
reschedule the hearing for a time and place when the enrollee may
appear in person before the ALJ.

Sec. 423.2022 Notice of a hearing before an ALJ.

(a) Issuing the notice. (1) After the ALJ sets the time and place
of the hearing, the notice of the hearing will be mailed or otherwise
transmitted to the enrollee and other potential participants, as
provided in Sec. 423.2020(c) at their last known addresses, or given
by personal service, unless the enrollee has indicated in writing that
he or she does not wish to receive this notice.
(2) The notice is mailed or served at least 20 days before the
hearing, except for expedited hearings where written notice is mailed
or served at least 3 days before the hearing. For expedited hearings,
the ALJ may orally provide notice of the hearing to the enrollee and
other potential participants but oral notice must be followed by an
equivalent written notice within 1 day of the oral notice.
(b) Notice information. (1) The notice of hearing contains a
statement of the specific issues to be decided and will inform the
enrollee that he or she may designate a person to represent him or her
during the proceedings.
(2) The notice must include an explanation of the procedures for
requesting a change in the time or place of the hearing, a reminder
that, if the enrollee fails to appear at the scheduled hearing without
good cause, the ALJ may dismiss the hearing request, and other
information about the scheduling and conduct of the hearing.
(3) The enrollee will also be told if his or her appearance or that
of any other

[[Page 14362]]

witness is scheduled by video-teleconferencing, telephone, or in
person. If the ALJ has scheduled the enrollee to appear at the hearing
by video-teleconferencing, the notice of hearing will advise that the
scheduled place for the hearing is a video-teleconferencing site and
explain what it means to appear at the hearing by video-
teleconferencing.
(4) The notice advises the enrollee that if he or she objects to
appearing by video-teleconferencing or telephone, and wishes instead to
have his or her hearing at a time and place where he or she may appear
in person before the ALJ, he or she must follow the procedures set
forth at Sec. 423.2020(i) for notifying the ALJ of his or her
objections and for requesting an in-person hearing.
(c) Acknowledging the notice of hearing. (1) If the enrollee or his
or her representative does not acknowledge receipt of the notice of
hearing, the ALJ hearing office attempts to contact the enrollee for an
explanation.
(2) If the enrollee states that he or she did not receive the
notice of hearing, an amended notice is sent to him or her by certified
mail or, if available, fax or e-mail. See Sec. 423.2052 for the
procedures the ALJ follows in deciding if the time or place of a
scheduled hearing will be changed if an enrollee does not respond to
the notice of hearing.

Sec. 423.2024 Objections to the issues.

(a) If an enrollee objects to the issues described in the notice of
hearing, he or she must notify the ALJ in writing at the earliest
possible opportunity before the time set for the hearing, and no later
than 5 days before the hearing, except for expedited hearings in which
the enrollee must submit written or oral notice of objection no later
than 2 days before the hearing. The ALJ hearing office must document
all oral objections in writing and maintain the documentation in the
case files.
(b) The enrollee must provide the reasons for his or her
objections.
(c) The ALJ makes a decision on the objections either in writing or
at the hearing.

Sec. 423.2026 Disqualification of the ALJ.

(a) An ALJ may not conduct a hearing if he or she is prejudiced or
partial to the enrollee or has any interest in the matter pending for
decision.
(b) If an enrollee objects to the ALJ who will conduct the hearing,
the enrollee must notify the ALJ within 10 days of the date of the
notice of hearing, except for expedited hearings in which the enrollee
must submit written or oral notice no later than 2 days after the date
of the notice of hearing. The ALJ must document all oral objections in
writing and maintain the documentation in the case files. The ALJ
considers the enrollee's objections and decides whether to proceed with
the hearing or withdraw.
(c) If the ALJ withdraws, another ALJ will be appointed to conduct
the hearing. If the ALJ does not withdraw, the enrollee may, after the
ALJ has issued an action in the case, present his or her objections to
the MAC in accordance with Sec. 423.2100 through Sec. 423.2130. The
MAC would then consider whether the hearing decision should be revised
or a new hearing held before another ALJ.

Sec. 423.2030 ALJ hearing procedures.

(a) General rule. A hearing is open to the enrollee and to other
persons the ALJ considers necessary and proper.
(b) At the hearing. The ALJ fully examines the issues, questions
the enrollee and other witnesses, and may accept documents that are
material to the issues consistent with Sec. 423.2018.
(c) Missing evidence. The ALJ may also stop the hearing temporarily
and continue it at a later date if he or she believes that there is
material evidence missing at the hearing.
(d) Reopen the hearing. The ALJ may reopen the hearing at any time
before he or she mails a notice of the decision in order to receive new
and material evidence pursuant to Sec. 423.1986. The ALJ may decide
when the evidence is presented and when the issues are discussed.

Sec. 423.2032 Issues before an ALJ.

(a) General rule. The issues before the ALJ include all the issues
brought out in the coverage determination, redetermination, or
reconsideration that were not decided entirely in an enrollee's favor.
However, if evidence presented before the hearing causes the ALJ to
question a favorable portion of the determination, he or she notifies
the enrollee before the hearing and may consider it an issue at the
hearing.
(b) New issues--(1) General. The ALJ may consider a new issue at
the hearing if he or she notifies the enrollee about the new issue any
time before the start of the hearing.
(2) Content of the new issues. The new issue may include issues
resulting from the participation of CMS, the IRE, and/or the Part D
plan sponsor at the ALJ level of adjudication and from any evidence and
position papers submitted by CMS, the IRE, and/or the Part D plan
sponsor for the first time to the ALJ.
(3) Consideration of new issues. The ALJ or the enrollee may raise
a new issue; however, the ALJ may only consider a new issue if its
resolution--
(i) Could have a material impact on the issue or issues that are
the subject of the request for hearing; and
(ii) Is permissible under the rules governing reopening of
determinations and decisions as specified in Sec. 423.1980.
(c) Adding issues to a pending appeal. An ALJ may not add any
issue, including one that is related to an issue that is appropriately
before an ALJ, to a pending appeal unless it has been adjudicated at
the lower appeals levels and the enrollee is notified of the new
issue(s) before the start of the hearing.

Sec. 423.2034 When an ALJ may remand a case.

(a) General. If an ALJ believes that the written record is missing
information that is essential to resolving the issues on appeal and
that information can be provided only by CMS, the IRE, and/or the Part
D plan sponsor, then the ALJ may either:
(1) Remand the case to the IRE that issued the reconsideration; or
(2) Retain jurisdiction of the case and request that the CMS, the
IRE, and/or the Part D plan sponsor forward the missing information to
the appropriate hearing office.
(b) ALJ remands a case to an IRE. Consistent with Sec.
423.2004(b), the ALJ will remand a case to the appropriate IRE if the
ALJ determines that an IRE's dismissal of a request for reconsideration
was in error.
(c) ALJ remands a case to a Part D Plan Sponsor. The ALJ will
remand a case to the Part D plan sponsor if the ALJ determines that the
enrollee wishes evidence on his or her change in condition after the
coverage determination to be considered in the appeal.

Sec. 423.2036 Description of an ALJ hearing process.

(a) The right to appear and present evidence. (1) An enrollee has
the right to appear at the hearing before the ALJ to present evidence
and to state his or her position. An enrollee may appear by video-
teleconferencing, telephone, or in person as determined under Sec.
423.2020.
(2) An enrollee may also make his or her appearance by means of a
representative, who may make his or her appearance by video-
teleconferencing, telephone, or in person, as determined under Sec.
423.2020.
(3) Witness testimony may be given and CMS, IRE, and Part D plan
sponsor participation may also be accomplished by video-
teleconferencing, telephone, or in person, as determined under Sec.
423.2020.

[[Page 14363]]

(b) Waiver of the right to appear. (1) An enrollee may send the ALJ
a written statement indicating that he or she does not wish to appear
at the hearing.
(i) For expedited hearings, an enrollee may indicate in writing or
orally that he or she does not wish to appear at the hearing.
(ii) The ALJ hearing office must document all oral waivers in
writing and maintain the documentation in the case files.
(2) The enrollee may subsequently withdraw his or her waiver in
writing at any time before the notice of the hearing decision is
issued; however, by withdrawing the waiver the enrollee agrees to an
extension of the adjudication period as specified in Sec. 423.2016,
that may be necessary to schedule and hold the hearing.
(3) Even if the enrollee waives his or her right to appear at a
hearing, the ALJ may require him or her to attend an oral hearing if
the ALJ believes that a personal appearance and testimony by the
enrollee is necessary to decide the case.
(c) Presenting written statements and oral arguments. An enrollee
or an enrollee's appointed representative, as defined at Sec. 423.560,
may appear before the ALJ to state the enrollee's case, to present a
written summary of the case, or to enter written statements about the
facts and law material to the case in the record.
(d) Waiver of adjudication period. At any time during the hearing
process, the enrollee may waive the adjudication deadline specified in
Sec. 423.2016 for issuing a hearing decision. The waiver may be for a
specific period of time agreed upon by the ALJ and the enrollee.
(e) What evidence is admissible at a hearing. The ALJ may receive
evidence at the hearing even though the evidence is not admissible in
court under the rules of evidence used by the court. However, the ALJ
may not consider evidence on any change in condition of an enrollee
after a coverage determination. If the enrollee wishes for the evidence
to be considered, the ALJ must remand the case to the Part D plan
sponsor as set forth in Sec. 423.2034(c).
(f)(1) Subpoenas. When it is reasonably necessary for the full
presentation of a case, an ALJ may, on his or her own initiative, issue
subpoenas for the appearance and testimony of witnesses and for the
enrollee and/or the Part D plan sponsor to make books, records,
correspondence, papers, or other documents that are material to an
issue at the hearing available for inspection and copying.
(2) Reviewability of an ALJ Subpoena. A subpoena issued by an ALJ
is not subject to immediate review by the MAC. The subpoena may be
reviewed solely during the MAC's review specified in Sec. 423.2102 and
Sec. 423.2110.
(3) Exception. To the extent a subpoena compels disclosure of a
matter which an objection based on privilege, or other protection from
disclosure such as case preparation, confidentiality, or undue burden,
was made before an ALJ, the MAC may review immediately the ruling of
the ALJ on the objections to the subpoena or that portion of the
subpoena as applicable.
(i) Upon notice to the ALJ that the enrollee or a non-party, as
applicable, intends to seek MAC review of the ALJ's ruling on the
subpoena, the ALJ must stay all proceedings affected by the subpoena.
(ii) The proceedings are stayed for 15 days or until the MAC issues
a written decision that affirms, reverses, or modifies the ALJ's
subpoena, whichever comes first.
(iii) If the MAC does not take action within the 15 days, then the
stay is lifted and the enrollee or non-party must comply with the ALJ's
subpoena.
(4) Enforcement. (i) If the ALJ determines that an enrollee or
person other than the enrollee subject to a subpoena issued under this
section has refused to comply with the subpoena, the ALJ may request
that the Secretary seek enforcement of the subpoena in accordance with
section 205(e) of the Act, 42 U.S.C. 405(e).
(ii) After submitting the enforcement request, the time period for
the ALJ to issue a decision, dismissal or remand a case in response to
a request for hearing is stayed for 15 days or until the Secretary
makes a decision with respect to the enforcement request, whichever
occurs first.
(iii) Any enforcement request by an ALJ must consist of a written
notice to the Secretary describing in detail the ALJ's findings of
noncompliance and his or her specific request for enforcement, and
providing a copy of the subpoena and evidence of its receipt by
certified mail by the enrollee or person other than the enrollee
subject to the subpoena.
(iv) The ALJ must promptly mail a copy of the notice and related
documents to the individual or entity subject to the subpoena, to the
enrollee, and to any other affected person.
(g) Witnesses at a hearing. Witnesses may appear at a hearing. They
testify under oath or affirmation, unless the ALJ finds an important
reason to excuse them from taking an oath or affirmation. The ALJ may
ask the witnesses any questions relevant to the issues and allow the
enrollee or his or her appointed representative, as defined at Sec.
423.560.

Sec. 423.2038 Deciding a case without a hearing before an ALJ.

(a) Decision wholly favorable. If the evidence in the hearing
record supports a finding in favor of the enrollee(s) on every issue,
the ALJ may issue a hearing decision without giving the enrollee(s)
prior notice and without holding a hearing. The notice of the decision
informs the enrollee(s) that he or she has the right to a hearing and a
right to examine the evidence on which the decision is based.
(b) Enrollee does not wish to appear. (1) The ALJ may decide a case
on the record and not conduct a hearing if--
(i) The enrollee indicates in writing or, for expedited hearings
orally or in writing, that he or she does not wish to appear before the
ALJ at a hearing, including a hearing conducted by telephone or video-
teleconferencing, if available. The ALJ hearing office must document
all oral requests not to appear at a hearing in writing and maintain
the documentation in the case files; or
(ii) The enrollee lives outside the United States and does not
inform the ALJ that he or she wants to appear.
(2) When a hearing is not held, the decision of the ALJ must refer
to the evidence in the record on which the decision was based.

Sec. 423.2040 Prehearing and posthearing conferences.

(a) The ALJ may decide on his or her own, or at the request of the
enrollee to the hearing, to hold a prehearing or posthearing conference
to facilitate the hearing or the hearing decision.
(b) For non-expedited hearings, the ALJ informs the enrollee of the
time, place, and purpose of the conference at least 7 days before the
conference date, unless the enrollee indicates in writing that he or
she does not wish to receive a written notice of the conference.
(c) For expedited hearings, the ALJ informs the enrollee of the
time, place, and purpose of the conference at least 2 days before the
conference date, unless the enrollee indicates orally or in writing
that he or she does not wish to receive a written notice of the
conference.
(d) The ALJ hearing office must document all oral requests not to
receive written notice of the conference in writing and maintain the
documentation in the case files.
(e) At the conference, the ALJ may consider matters in addition to
those stated in the notice of hearing, if the

[[Page 14364]]

enrollee consents in writing. A record of the conference is made.
(f) The ALJ issues an order stating all agreements and actions
resulting from the conference. If the enrollee does not object, the
agreements and actions become part of the hearing record and are
binding.

Sec. 423.2042 The administrative record.

(a) Creating the record. (1) The ALJ makes a complete record of the
evidence, including the hearing proceedings, if any.
(2) The record will include marked as exhibits, the documents used
in making the decision under review, including, but not limited to,
medical records, written statements, certificates, reports, affidavits,
and any other evidence the ALJ admits.
(3) An enrollee may review the record at the hearing, or, if a
hearing is not held, at any time before the ALJ's notice of decision is
issued.
(4) If a request for review is filed, the complete record,
including any recording of the hearing, is forwarded to the MAC.
(5) A typed transcription of the hearing is prepared if an enrollee
seeks judicial review of the case in a Federal district court within
the stated time period and all other jurisdictional criteria are met,
unless, upon the Secretary's motion prior to the filing of an answer,
the court remands the case.
(b) Requesting and receiving copies of the record. (1) An enrollee
may request and receive a copy of all or part of the record, including
the exhibits list, documentary evidence, and a copy of the tape of the
oral proceedings. The enrollee may be asked to pay the costs of
providing these items.
(2) If an enrollee requests all or part of the record from the ALJ
and an opportunity to comment on the record, the time beginning with
the ALJ's receipt of the request through the expiration of the time
granted for the enrollee's response does not count toward the
adjudication deadline.

Sec. 423.2044 Consolidated hearing before an ALJ.

(a) A consolidated hearing may be held if one or more of the issues
to be considered at the hearing are the same issues that are involved
in another request for hearing or hearings pending before the same ALJ.
(b) It is within the discretion of the ALJ to grant or deny an
enrollee's request for consolidation. In considering an enrollee's
request, the ALJ may consider factors such as whether the issue(s) may
be more efficiently decided if the requests for hearing are combined.
In considering the enrollee's request for consolidation, the ALJ must
take into account the adjudication deadlines for each case and may
require an enrollee to waive the adjudication deadline associated with
one or more cases if consolidation otherwise prevents the ALJ from
deciding all of the appeals at issue within their respective deadlines.
(c) The ALJ may also propose on his or her own motion to
consolidate two or more cases in one hearing for administrative
efficiency, but may not require an enrollee to waive the adjudication
deadline for any of the consolidated cases.
(d) Before consolidating a hearing, the ALJ must notify CMS of his
or her intention to do so, and CMS may then elect to participate in the
consolidated hearing by sending written notice to the ALJ.
(1) For non-expedited hearings, any request by CMS to participate
must be made within 5 days of receipt of the ALJ's notice of the
consolidation.
(2) For expedited hearings, any request by CMS to participate must
be made within 1 day of receipt of the ALJ's notice of the
consolidation. Requests may be made orally or submitted by facsimile to
the hearing office.
(e) If the ALJ decides to hold a consolidated hearing, he or she
may make either a consolidated decision and record or a separate
decision and record on each issue. The ALJ ensures that any evidence
that is common to all appeals and material to the common issue to be
decided is included in the consolidated record or each individual
record, as applicable.

Sec. 423.2046 Notice of an ALJ decision.

(a) General rule. Unless the ALJ dismisses the hearing, the ALJ
will issue a written decision that gives the findings of fact,
conclusions of law, and the reasons for the decision.
(1) For expedited hearings, the ALJ issues a written decision
within the 10-day adjudication timeframe under Sec. 423.2016(b)(5).
(2) The decision must be based on evidence offered at the hearing
or otherwise admitted into the record.
(3) A copy of the decision should be mailed to the enrollee at his
or her last known address.
(4) A copy of the written decision should also be provided to the
IRE that issued the reconsideration determination, and to the Part D
plan sponsor that issued the coverage determination.
(b) Content of the notice. The decision must be provided in a
manner calculated to be understood by an enrollee and must include--
(1) The specific reasons for the determination, including, to the
extent appropriate, a summary of any clinical or scientific evidence
used in making the determination;
(2) The procedures for obtaining additional information concerning
the decision; and
(3) Notification of the right to appeal the decision to the MAC,
including instructions on how to initiate an appeal under this section.
(c) Limitation on decision. When the amount of payment for the Part
D drug is an issue before the ALJ, the ALJ may make a finding as to the
amount of payment due. If the ALJ makes a finding concerning payment
when the amount of payment was not an issue before the ALJ, the Part D
plan sponsor may independently determine the payment amount. In either
of the aforementioned situations, an ALJ's decision is not final for
purposes of determining the amount of payment due. The amount of
payment determined by the Part D plan sponsor in effectuating the ALJ's
decision is a new coverage determination under Sec. 423.566.
(d) Timing of decision. For non-expedited hearings, the ALJ issues
a decision no later than the end of the 90-day period beginning on the
date the request for hearing is received by the entity specified in the
IRE's reconsideration, unless the 90-day period is extended as provided
in Sec. 423.2016. For expedited hearings, the ALJ issues a decision as
expeditiously as the enrollee's health condition requires, but no later
than the end of the 10-day period beginning on the date the request for
hearing is received by the entity specified in the IRE's
reconsideration, unless the 10-day period is extended as provided in
Sec. 423.2016.
(e) Recommended decision. An ALJ issues a recommended decision if
he or she is directed to do so in a MAC remand order. An ALJ may not
issue a recommended decision on his or her own motion. The ALJ mails a
copy of the recommended decision to the enrollee at his or her last
known address.

Sec. 423.2048 The effect of an ALJ's decision.

The decision of the ALJ is binding on all parties to the hearing
unless--
(a) An enrollee requests a review of the decision by the MAC within
the stated time period or the MAC reviews the decision issued by an ALJ
under the procedures set forth in Sec. 423.2110, and the MAC issues a
final action;

[[Page 14365]]

(b) The decision is reopened and revised by an ALJ or the MAC under
the procedures explained in Sec. 423.1980;
(c) The expedited access to judicial review process at Sec.
423.1990 is used;
(d) The ALJ's decision is a recommended decision directed to the
MAC and the MAC issues a decision; or
(e) In a case remanded by a Federal District Court, the MAC assumes
jurisdiction under the procedures in Sec. 423.2138 and the MAC issues
a decision.

Sec. 423.2050 Removal of a hearing request from an ALJ to the MAC.

If a request for hearing is pending before an ALJ, the MAC may
assume responsibility for holding a hearing by requesting that the ALJ
send the hearing request. If the MAC holds a hearing, it conducts the
hearing according to the rules for hearings before an ALJ. Notice is
mailed to the enrollee at his or her last known address informing him
or her that the MAC has assumed responsibility for the case.

Sec. 423.2052 Dismissal of a request for a hearing before an ALJ.

Dismissal of a request for a hearing is in accordance with the
following:
(a) An ALJ dismisses a request for a hearing under any of the
following conditions:
(1) At any time before notice of the hearing decision is mailed, if
the enrollee asks to withdraw the request. This request may be
submitted in writing to the ALJ or be made orally at the hearing. The
request for withdrawal must include a clear statement that the enrollee
is withdrawing the request for hearing and does not intend to further
proceed with the appeal. If an attorney or other legal professional on
behalf of an enrollee files the request for withdrawal, the ALJ may
presume that the representative has advised the enrollee of the
consequences of the withdrawal and dismissal.
(2) Neither the enrollee that requested the hearing nor the
enrollee's representative appears at the time and place set for the
hearing, if--
(i) The enrollee was notified before the time set for the hearing
that the request for hearing might be dismissed without further notice
for failure to appear; or
(ii) The enrollee did not appear at the time and place of hearing
and does not contact the ALJ hearing office within 10 days for non-
expedited hearings and 2 days for expedited hearings and provide good
cause for not appearing; or
(iii) The ALJ sends a notice to the enrollee asking why the
enrollee did not appear; and the enrollee does not respond within 10
days for non-expedited hearings; the ALJ does not receive the
enrollee's response within 2 days for expedited hearings or the
enrollee does not provide good cause for the failure to appear. For
expedited hearings, an enrollee may submit his or her response orally
to the ALJ.
(iv) In determining whether good cause exists under paragraph
(a)(2) of this section, the ALJ considers any physical, mental,
educational, or linguistic limitations (including any lack of facility
with the English language) the enrollee may have.
(3) The person requesting a hearing has no right to it under Sec.
423.2002.
(4) The enrollee did not request a hearing within the stated time
period and the ALJ has not found good cause for extending the deadline,
as provided in Sec. 423.2014(d).
(5) The enrollee died while the request for hearing is pending and
the request for hearing was filed by the enrollee or the enrollee's
representative, and the enrollee's surviving spouse or estate has no
remaining financial interest in the case and the enrollee's
representative, if any, does not want to continue the appeal.
(6) The ALJ dismisses a hearing request entirely or refuses to
consider any one or more of the issues because an IRE, an ALJ or the
MAC has made a previous determination or decision under this subpart
about the enrollee's rights on the same facts and on the same issue(s),
and this previous determination or decision has become final by either
administrative or judicial action.
(7) The enrollee abandons the request for hearing. An ALJ may
conclude that an enrollee has abandoned a request for hearing when the
ALJ hearing office attempts to schedule a hearing and is unable to
contact the enrollee after making reasonable efforts to do so.
(8) Consistent with Sec. 423.1972(c)(1), the ALJ dismisses a
hearing request if a request clearly shows that the amount in
controversy is less than that required under Sec. 423.1970.
(b) Notice of dismissal. The ALJ mails a written notice of the
dismissal of the hearing request to the enrollee at his or her last
known address. The written notice provides that there is a right to
request that the MAC vacate the dismissal action.
(c) Consistent with Sec. 423.1972(c)(2), the ALJ discontinues a
hearing and does not rule on the substantive issues raised in the
appeal if, after a hearing is initiated, the ALJ finds that the amount
in controversy is less than the amount required under Sec. 423.1970.

Sec. 423.2054 Effect of dismissal of a request for a hearing before
an ALJ.

The dismissal of a request for a hearing is binding, unless it is
vacated by the MAC under Sec. 423.2108(b).

Sec. 423.2062 Applicability of policies not binding on the ALJ and
MAC.

(a) ALJs and the MAC are not bound by CMS program guidance, such as
program memoranda and manual instructions, but will give substantial
deference to these policies if they are applicable to a particular
case.
(b) If an ALJ or MAC declines to follow a policy in a particular
case, the ALJ or MAC decision must explain the reasons why the policy
was not followed. An ALJ or MAC decision to disregard a policy applies
only to the specific coverage determination being considered and does
not have precedential effect.

Sec. 423.2063 Applicability of CMS rulings.

CMS Rulings are published under the authority of the CMS
Administrator. Consistent with Sec. 401.108 of this chapter, rulings
are binding on all CMS components, and on all HHS components that
adjudicate matters under the jurisdiction of CMS.

Sec. 423.2100 Medicare appeals council review: general.

(a) Consistent with Sec. 423.1974, the enrollee may request that
the MAC review an ALJ's decision or dismissal.
(b) When the MAC reviews an ALJ's written decision, it undertakes a
de novo review.
(c) The MAC issues a final action or remands a case no later than
the end of the 90-day period beginning on the date the request for
review is received (by the entity specified in the ALJ's written notice
of decision), unless the 90-day period is extended as provided in this
subpart or the enrollee requests expedited MAC review.
(d) If an enrollee requests expedited MAC review, the MAC issues a
final action or remand as expeditiously as the enrollee's health
condition requires, but no later than the end of the 10-day period
beginning on the date the request for review is received (by the entity
specified in the ALJ's written notice of decision), unless the 10-day
period is extended as provided in this subpart.

Sec. 423.2102 Request for MAC review when ALJ issues decision or
dismissal.

(a)(1) An enrollee to the ALJ hearing may request a MAC review if
the enrollee files a written request for a MAC review within 60 days
after receipt of the ALJ's written decision or dismissal.

[[Page 14366]]

(2) An enrollee may request that MAC review be expedited if the
appeal involves an issue specified in Sec. 423.566(b) but does not
include solely a request for payment of Part D drugs already furnished.
(i) If an enrollee is requesting that the MAC review be expedited,
the enrollee submits an oral or written request within 60 days after
the receipt of the ALJ's written decision or dismissal. A prescribing
physician may provide oral or written support for an enrollee's request
for expedited review.
(ii) The MAC must document all oral requests for expedited review
in writing and maintain the documentation in the case files.
(3) For purposes of this section, the date of receipt of the ALJ's
written decision or dismissal is presumed to be 5 days after the date
of the notice of the decision or dismissal, unless there is evidence to
the contrary.
(4) The request is considered as filed on the date it is received
by the entity specified in the notice of the ALJ's action.
(b) An enrollee requesting a review may ask that the time for
filing a request for MAC review be extended if--
(1) The request for an extension of time is in writing or, for
expedited reviews, in writing or oral. The MAC must document all oral
requests in writing and maintain the documentation in the case file.
(2) The request explains why the request for review was not filed
within the stated time period. If the MAC finds that there is good
cause for missing the deadline, the time period will be extended. To
determine whether good cause exists, the MAC uses the standards
outlined at Sec. 405.942(b)(2) and Sec. 405.942(b)(3).
(c) An enrollee does not have the right to seek MAC review of an
ALJ's remand or an ALJ's affirmation of an IRE's dismissal of a request
for reconsideration.

Sec. 423.2106 Where a request for review may be filed.

When a request for a MAC review is filed after an ALJ has issued a
written decision or dismissal, the request for review must be submitted
to the entity specified in the notice of the ALJ's action. If the
request for review is timely filed with an entity other than the entity
specified in the notice of the ALJ's action, the MAC's adjudication
period to conduct a review begins on the date the request for review is
received by the entity specified in the notice of the ALJ's action.
Upon receipt of a request for review from an entity other than the
entity specified in the notice of the ALJ's action, the MAC sends
written notice to the enrollee of the date of receipt of the request
and commencement of the adjudication timeframe.

Sec. 423.2108 MAC Actions when request for review is filed.

(a) General. Except as specified in paragraph (c) of this section,
when an enrollee requests that the MAC review an ALJ's decision, the
MAC will review the ALJ's decision de novo. The enrollee requesting
review does not have a right to a hearing before the MAC. The MAC will
consider all of the evidence admitted into the administrative record.
Upon completion of its review, the MAC may adopt, modify, or reverse
the ALJ's decision or remand the case to the ALJ for further
proceedings. Unless the MAC's review is expedited as provided in
paragraph (d) of this section, the MAC must issue its action no later
than 90 days after receiving the request for review, unless the 90-day
period has been extended as provided in this subpart.
(b) Review of ALJ's dismissal. When an enrollee requests that the
MAC review an ALJ's dismissal, the MAC may deny review or vacate the
dismissal and remand the case to the ALJ for further proceedings.
(c) MAC dismissal of request for review. The MAC will dismiss a
request for review when the individual or entity requesting review does
not have a right to a review by the MAC, or will dismiss the request
for a hearing for any reason that the ALJ could have dismissed the
request for hearing.
(d) Expedited reviews--(1) Standard for expedited reviews. The MAC
must provide an expedited review if the appeal involves an issue
specified in Sec. 423.566(b), but does not include solely a request
for payment of Part D drugs already furnished, enrollee's prescribing
physician indicates, or the MAC determines that applying the standard
timeframe for making a decision may seriously jeopardize the enrollee's
life or health or ability to regain maximum function. The MAC may
consider this standard as met if a lower level adjudicator has granted
a request for an expedited appeal.
(2) Grant of a Request. If the MAC grants a request for expedited
review, the MAC must:
(i) Make this decision within 5 days of receipt of the request for
expedited review;
(ii) Give the enrollee prompt oral notice of this decision; and
(iii) Issue a decision, dismissal order or remand, as expeditiously
as the enrollee's health condition requires, but no later than the end
of the 10-day period beginning on the date the request for review is
received by the entity specified in the ALJ's written notice of
decision.
(3) Denial of a request. If the MAC denies a request for expedited
review, the MAC must:
(i) Make this decision within 5 days of receipt of the request for
expedited review;
(ii) Give the enrollee and Part D plan sponsor within 5 days of
receiving the request written notice of the denial. The written notice
must inform the enrollee of the denial and explain that the MAC will
process the enrollee's request using the 90-day timeframe for non-
expedited reviews.
(4) A decision on a request for expedited review may not be
appealed.

Sec. 423.2110 MAC reviews on its own motion.

(a) General rule. The MAC may decide on its own motion to review a
decision or dismissal issued by an ALJ. CMS or the IRE may refer a case
to the MAC for it to consider reviewing under this authority any time
within 60 days after the ALJ's written decision or dismissal is issued.
(b) Referral of cases. (1) CMS or the IRE may refer a case to the
MAC if, in the view of CMS or the IRE, the decision or dismissal
contains an error of law material to the outcome of the claim or
presents a broad policy or procedural issue that may affect the public
interest. CMS or the IRE may also request that the MAC take own motion
review of a case if--
(i) CMS or the IRE participated or requested to participate in the
appeal at the ALJ level; and
(ii) In CMS' or the IRE's view, the ALJ's decision or dismissal is
not supported by the preponderance of evidence in the record or the ALJ
abused his or her discretion.
(2) CMS' or the IRE's referral to the MAC is made in writing and
must be filed with the MAC no later than 60 days after the ALJ's
written decision or dismissal is issued.
(i) The written referral will state the reasons why CMS or the IRE
believes that the MAC should review the case on its own motion.
(ii) CMS or the IRE will send a copy of its referral to the
enrollee and to the ALJ.
(iii) The enrollee may file exceptions to the referral by
submitting written comments to the MAC within 20 days of the referral
notice.
(iv) An enrollee submitting comments to the MAC must send the
comments to CMS or the IRE.

[[Page 14367]]

(c) Standard of review--(1) Referral by CMS or the IRE when CMS or
the IRE participated or requested to participate in the ALJ level. If
CMS or the IRE participated or requested to participate in an appeal at
the ALJ level, the MAC exercises its own motion authority if there is
an error of law material to the outcome of the case, an abuse of
discretion by the ALJ, the decision is not consistent with the
preponderance of the evidence of record, or there is a broad policy or
procedural issue that may affect the general public interest. In
deciding whether to accept review under this standard, the MAC will
limit its consideration of the ALJ's action to those exceptions raised
by CMS or the IRE.
(2) Referral by CMS or the IRE when CMS or the IRE did not
participate or request to participate in the ALJ proceedings. The MAC
will accept review if the decision or dismissal contains an error of
law material to the outcome of the case or presents a broad policy or
procedural issue that may affect the general public interest. In
deciding whether to accept review, the MAC will limit its consideration
of the ALJ's action to those exceptions raised by CMS or the IRE.
(d) MAC's action. (1) If the MAC decides to review a decision or
dismissal on its own motion, it will mail the results of its action to
the enrollee and to CMS or the IRE, as appropriate.
(2) The MAC may adopt, modify, or reverse the decision or
dismissal, may remand the case to an ALJ for further proceedings or may
dismiss a hearing request.
(3) The MAC must issue its action no later than 90 days after
receipt of the CMS or the IRE referral, unless the 90-day period has
been extended as provided in this subpart.
(4) The MAC may not issue its action before the 20-day comment
period has expired, unless it determines that the agency's referral
does not provide a basis for reviewing the case.
(5) If the MAC declines to review a decision or dismissal on its
own motion, the ALJ's decision or dismissal remains the final agency
action in the case.

Sec. 423.2112 Content of request for review.

(a)(1) The request for MAC review must be filed with the entity
specified in the notice of the ALJ's action.
(2) The request for review must be in writing and may be made on a
standard form, except for requests for expedited reviews which may be
made orally.
(3) The MAC must document all oral requests in writing and maintain
the documentation in the case file.
(4) A written request that is not made on a standard form or, for
expedited requests, an oral request, is accepted if it includes the
enrollee's name and telephone number, the plan name; Medicare health
insurance claim number; the ALJ appeal number; the specific Part D
drug(s) for which the review is requested; a statement that the
enrollee is requesting an expedited review, if applicable; and the name
and signature of the enrollee or the representative of the enrollee.
(b) The request for review must identify the parts of the ALJ
action with which the enrollee requesting review disagrees and explain
why he or she disagrees with the ALJ's decision, dismissal, or other
determination being appealed.
(c) The MAC will limit its review of an ALJ's actions to those
exceptions raised by the enrollee in the request for review, unless the
enrollee is unrepresented. For purposes of this section only, a
representative is either anyone with a valid appointment as the
enrollee's representative or is a member of the enrollee's family, a
legal guardian or an individual who routinely acts on behalf of the
enrollee, such as a family member or friend who has a power of
attorney.

Sec. 423.2114 Dismissal of request for review.

The MAC dismisses a request for review if the enrollee requesting
review did not file the request within the stated period of time and
the time for filing has not been extended. The MAC also dismisses the
request for review if--
(a) The enrollee asks to withdraw the request for review;
(b) The individual or entity does not have a right to request MAC
review; or
(c) The enrollee died while the request for review is pending and
the enrollee's representative, if any, either has no remaining
financial interest in the case or does not want to continue the appeal.

Sec. 423.2116 Effect of dismissal of request for MAC review or
request for hearing.

The dismissal of a request for MAC review or denial of a request
for review of a dismissal issued by an ALJ is binding and not subject
to further review unless reopened and vacated by the MAC. The MAC's
dismissal of a request for hearing is also binding and not subject to
judicial review.

Sec. 423.2118 Obtaining evidence from the MAC.

An enrollee may request and receive a copy of all or part of the
record of the ALJ hearing, including the exhibits list, documentary
evidence, and a copy of the tape of the oral proceedings. However, the
enrollee may be asked to pay the costs of providing these items. If an
enrollee requests evidence from the MAC and an opportunity to comment
on that evidence, the time beginning with the MAC's receipt of the
request for evidence through the expiration of the time granted for the
enrollee's response will not be counted toward the adjudication
deadline.

Sec. 423.2120 Filing briefs with the MAC.

Upon request, the MAC will give the enrollee requesting review a
reasonable opportunity to file a brief or other written statement about
the facts and law relevant to the case. Unless the enrollee requesting
review files the brief or other statement with the request for review,
the time beginning with the date of receipt of the request to submit
the brief and ending with the date the brief is received by the MAC
will not be counted toward the adjudication timeframe set forth in
Sec. 423.2100. The MAC may also request, but not require, CMS, the
IRE, and/or the Part D plan sponsor to file a brief or position paper
if the MAC determines that it is necessary to resolve the issues in the
case. The MAC cannot draw any adverse inference if CMS, the IRE, and/or
the Part D plan sponsor either participates, or decides not to
participate in MAC review.

Sec. 423.2122 What evidence may be submitted to the MAC.

(a) Appeal before the MAC on request for review of ALJ's decision.
(1) If the MAC is reviewing an ALJ's decision, the MAC will consider
the evidence contained in the record of the proceedings before the ALJ,
and any new evidence that relates to the period before the coverage
determination. If the hearing decision decides a new issue that the
enrollee was not afforded an opportunity to address at the ALJ level,
the MAC considers any evidence related to that issue that is submitted
with the request for review.
(2) If the MAC determines that additional evidence is needed to
resolve the issues in the case and the hearing record indicates that
the previous decision-makers have not attempted to obtain the evidence,
the MAC may remand the case to an ALJ to obtain the evidence and issue
a new decision.
(3) The MAC will not consider any new evidence submitted regarding
a change in condition of an enrollee after a coverage determination is
made. The MAC will remand a case to the Part D plan sponsor if the MAC
determines that the enrollee wishes to have evidence on his or her
change in

[[Page 14368]]

condition after the coverage determination considered.
(b) Subpoenas. When it is reasonably necessary for the full
presentation of a case, the MAC may, on its own initiative, issue
subpoenas requiring an enrollee or Part D plan sponsor to make books,
records, correspondence, papers, or other documents that are material
to an issue at the hearing available for inspection and copying.
(1) To the extent a subpoena compels disclosure of a matter for
which an objection based on privilege, or other protection from
disclosure such as case preparation, confidentiality or undue burden,
was made before the MAC, the Secretary may review immediately that
subpoena or a portion of the subpoena.
(2) Upon notice to the MAC that an enrollee or Part D plan sponsor
intends to seek the Secretary review of the subpoena, the MAC must stay
all proceedings affected by the subpoena, tolling the time period for
the MAC to issue a final action or remand a case in response to a
request for review for 15 days or until the Secretary makes a decision
with respect to the review request, whichever occurs first.
(3) If the Secretary does not grant review within the time allotted
for the stay, the stay is lifted and the subpoena stands.
(c) Enforcement. (1) If the MAC determines that an enrollee or
other person or entity subject to a subpoena issued under this section
has refused to comply with the subpoena, the MAC may request the
Secretary to seek enforcement of the subpoena in accordance with
section 205(e) of the Act, 42 U.S.C. 405(e).
(2) After submitting the enforcement request, the time period for
the MAC to issue a final action or remand a case in response to a
request for review is stayed for 15 days or until the Secretary makes a
decision with respect to the enforcement request, whichever occurs
first.
(3) Any enforcement request by the MAC must consist of a written
notice to the Secretary describing in detail the MAC's findings of
noncompliance and its specific request for enforcement, and providing a
copy of the subpoena and evidence of its receipt by certified mail by
the enrollee or other person or entity subject to the subpoena.
(4) The MAC must promptly mail a copy of the notice and related
documents to the enrollee or other person or entity subject to the
subpoena, and to any other affected person.

Sec. 423.2124 Oral argument.

An enrollee may request to appear before the MAC to present oral
argument.
(a) The MAC grants a request for oral argument if it decides that
the case raises an important question of law, policy, or fact that
cannot be readily decided based on written submissions alone.
(b) The MAC may decide on its own that oral argument is necessary
to decide the issues in the case. If the MAC decides to hear oral
argument, it informs the enrollee of the time and place of the oral
argument at least 10 days before the scheduled date or, in the case of
an expedited review, at least 2 days before the scheduled date.
(c) In case of a previously unrepresented enrollee, a newly hired
representative may request an extension of time for preparation of the
oral argument and the MAC must consider whether the extension is
reasonable.
(d) The MAC may also request, but not require, CMS, the IRE, and/or
the Part D plan sponsor to appear before it if the MAC determines that
it may be helpful in resolving the issues in the case.
(e) The MAC cannot draw any adverse inference if CMS, the IRE, and/
or the Part D plan sponsor decide not to participate in the oral
argument.

Sec. 423.2126 Case remanded by the MAC.

(a) When the MAC may remand a case to the ALJ. (1) The MAC may
remand a case in which additional evidence is needed or additional
action by the ALJ is required. The MAC will designate in its remand
order whether the ALJ will issue a final decision or a recommended
decision on remand.
(2) Action by ALJ on remand. The ALJ will take any action that is
ordered by the MAC and may take any additional action that is not
inconsistent with the MAC's remand order.
(3) Notice when case is returned with a recommended decision. When
the ALJ sends a case to the MAC with a recommended decision, a notice
is mailed to the enrollee at his or her last known address. The notice
tells the enrollee that the case was sent to the MAC, explains the
rules for filing briefs or other written statements with the MAC, and
includes a copy of the recommended decision.
(4) Filing briefs with the MAC when ALJ issues recommended
decision. (i) An enrollee may file with the MAC briefs or other written
statements about the facts and law relevant to the case within 20 days
of the date on the recommended decision or with the request for review
for expedited appeals. An enrollee may ask the MAC for additional time
to file a brief or written statement. The MAC will extend this period,
as appropriate, if the enrollee shows that he or she has good cause for
requesting the extension.
(ii) All other rules for filing briefs with and obtaining evidence
from the MAC follow the procedures explained in this subpart.
(5) Procedures before the MAC. (i) The MAC, after receiving a
recommended decision, will conduct proceedings and issue its decision
or dismissal according to the procedures explained in this subpart.
(ii) If the MAC determines that more evidence is required, it may
again remand the case to an ALJ for further inquiry into the issues,
rehearing, receipt of evidence, and another decision or recommended
decision. However, if the MAC decides that it can get the additional
evidence more quickly, it will take appropriate action.
(b) When the MAC must remand a case to the Part D plan sponsor. The
MAC will remand a case to the Part D plan sponsor if the MAC determines
that the enrollee wishes evidence on his or her change in condition
after the coverage determination to be considered in the appeal.

Sec. 423.2128 Action of the MAC.

(a) After it has reviewed all the evidence in the administrative
record and any additional evidence received, subject to the limitations
on MAC consideration of additional evidence in Sec. 423.2122, the MAC
will make a decision or remand the case to an ALJ.
(b) The MAC may adopt, modify, or reverse the ALJ hearing decision
or recommended decision.
(c) The MAC mails a copy of its decision to the enrollee at his or
her last known address, to CMS, to the IRE, and to the Part D plan
sponsor.

Sec. 423.2130 Effect of the MAC's decision.

The MAC's decision is binding unless a Federal District Court
issues a decision modifying the MAC's decision or the decision is
revised as the result of a reopening in accordance with Sec. 423.1980.
An enrollee may file an action in a Federal District Court within 60
days after the date the enrollee receives written notice of the MAC's
decision.

Sec. 423.2134 Extension of time to file action in Federal District
Court.

(a) An enrollee may request that the time for filing an action in a
Federal District Court be extended.
(b) The request must--
(1) Be in writing.

[[Page 14369]]

(2) Give the reasons why the action was not filed within the stated
time period.
(3) Be filed with the MAC.
(c) If the enrollee shows that he or she had good cause for missing
the deadline, the time period will be extended. To determine whether
good cause exists, the MAC uses the standards specified in Sec.
405.942(b)(2) or (b)(3) of this chapter.

Sec. 423.2136 Judicial review.

(a) General rule. To the extent authorized by sections
1876(c)(5)(B) and 1860D-4(h) of the Act and consistent with Sec.
423.1976, an enrollee may obtain a court review of a MAC decision if
the amount in controversy meets the threshold requirement estimated
annually by the Secretary.
(b) Court in which to file civil action. (1) Consistent with Sec.
423.1976(c), any civil action described in paragraph (a) of this
section must be filed in the District Court of the United States for
the judicial district in which the enrollee resides.
(2) If the enrollee does not reside within any judicial district,
the civil action must be filed in the District Court of the United
States for the District of Columbia.
(c) Time for filing civil action. (1) Any civil action described in
paragraph (a) of this section must be filed within the time periods
specified in Sec. 423.2130 or Sec. 423.2134, as applicable.
(2) For purposes of this section, the date of receipt of the notice
of the MAC's decision shall be presumed to be 5 days after the date of
the notice, unless there is a reasonable showing to the contrary.
(3) Where a case is certified for judicial review in accordance
with the expedited access to judicial review process in Sec. 423.1990,
the civil action must be filed within 60 days after receipt of the
review entity's certification, except where the time is extended by the
ALJ or MAC, as applicable, upon a showing of good cause.
(d) Proper defendant. (1) In any civil action described in
paragraph (a) of this section, the Secretary of HHS, in his or her
official capacity, is the proper defendant. Any civil action properly
filed shall survive notwithstanding any change of the person holding
the Office of the Secretary of HHS or any vacancy in such office.
(2) If the complaint is erroneously filed against the United States
or against any agency, officer, or employee of the United States other
than the Secretary, the plaintiff enrollee will be notified that he or
she has named an incorrect defendant and is granted 60 days from the
date of receipt of the notice in which to commence the action against
the correct defendant, the Secretary.
(e) Standard of review. (1) Under section 205(g) of the Act, the
findings of the Secretary of HHS as to any fact, if supported by
substantial evidence, are conclusive.
(2) When the Secretary's decision is adverse to an enrollee due to
an enrollee's failure to submit proof in conformity with a regulation
prescribed under section 205(a) of the Act pertaining to the type of
proof an enrollee must offer to establish entitlement to payment, the
court will review only whether the proof conforms with the regulation
and the validity of the regulation.

Sec. 423.2138 Case remanded by a Federal District Court.

When a Federal District Court remands a case to the Secretary for
further consideration, unless the court order specifies otherwise, the
MAC, acting on behalf of the Secretary, may make a decision, or it may
remand the case to an ALJ with instructions to take action and either
issue a decision, take other action, or return the case to the MAC with
a recommended decision. If the MAC remands a case, the procedures
specified in Sec. 423.2140 will be followed.

Sec. 423.2140 MAC Review of ALJ decision in a case remanded by a
Federal District Court.

(a) General rules. (1) In accordance with Sec. 423.2138, when a
case is remanded by a Federal District Court for further consideration
and the MAC remands the case to an ALJ, a decision subsequently issued
by the ALJ becomes the final decision of the Secretary unless the MAC
assumes jurisdiction.
(2) The MAC may assume jurisdiction based on written exceptions to
the decision of the ALJ that an enrollee files with the MAC or based on
its authority under paragraph (c) of this section.
(3) The MAC either makes a new, independent decision based on the
entire record that will be the final decision of the Secretary after
remand, or remands the case to an ALJ for further proceedings.
(b) An enrollee files exceptions disagreeing with the decision of
the ALJ. (1) If an enrollee disagrees with an ALJ decision described in
paragraph (a) of this section, in whole or in part, he or she may file
exceptions to the decision with the MAC.
(2) Exceptions may be filed by submitting a written statement to
the MAC setting forth the reasons for disagreeing with the decision of
the ALJ.
(i) The enrollee must file exceptions within 30 days of the date
the enrollee receives the decision of the ALJ or submit a written
request for an extension within the 30-day period.
(ii) The MAC will grant a timely request for a 30-day extension. A
request for an extension of more than 30 days must include a statement
of reasons as to why the enrollee needs the additional time and may be
granted if the MAC finds good cause under the standard established in
Sec. 405.942(b)(2) or (b)(3).
(3) If written exceptions are timely filed, the MAC considers the
enrollee's reasons for disagreeing with the decision of the ALJ. If the
MAC concludes that there is no reason to change the decision of the
ALJ, it will issue a notice addressing the exceptions and explaining
why no change in the decision of the ALJ is warranted. In this
instance, the decision of the ALJ is the final decision of the
Secretary after remand.
(4) When an enrollee files written exceptions to the decision of
the ALJ, the MAC may assume jurisdiction at any time. If the MAC
assumes jurisdiction, it makes a new, independent decision based on its
consideration of the entire record adopting, modifying, or reversing
the decision of the ALJ or remanding the case to an ALJ for further
proceedings, including a new decision. The new decision of the MAC is
the final decision of the Secretary after remand.
(c) MAC assumes jurisdiction without exceptions being filed. (1)
Any time within 60 days after the date of the written decision of the
ALJ, the MAC may decide to assume jurisdiction of the case even though
no written exceptions have been filed.
(2) Notice of this action is mailed to the enrollee at his or her
last known address.
(3) The enrollee will be provided with the opportunity to file a
brief or other written statement with the MAC about the facts and law
relevant to the case.
(4) After the brief or other written statement is received or the
time allowed (usually 30 days) for submitting them has expired, the MAC
will either issue a final decision of the Secretary affirming,
modifying, or reversing the decision of the ALJ, or remand the case to
an ALJ for further proceedings, including a new decision.
(d) Exceptions are not filed and the MAC does not otherwise assume
jurisdiction. If no exceptions are filed and the MAC does not assume
jurisdiction over the case within 60 days after the date of the ALJ's
written decision, the decision of the ALJ

[[Page 14370]]

becomes the final decision of the Secretary after remand.

Authority: (Catalog of Federal Domestic Assistance Program No.
93.778, Medical Assistance Program) (Catalog of Federal Domestic
Assistance Program No. 93.773, Medicare--Hospital Insurance; and
Program No. 93.774, Medicare--Supplementary Medical Insurance
Program)

Dated: October 4, 2007.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Constance B. Tobias,
Chair, The Departmental Appeals Board.
Perry Rhew,
Chief Administrative Law Judge, Office of Medicare Hearings and
Appeals.
Approved: December 7, 2007.
Michael O. Leavitt,
Secretary.

Editorial Note: This document was received at the Office of the
Federal Register on March 11, 2008.

[FR Doc. E8-5189 Filed 3-14-08; 8:45 am]
BILLING CODE 4120-01-P