[Federal Register Volume 82, Number 10 (Tuesday, January 17, 2017)]
[Rules and Regulations]
[Pages 4974-5140]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-32058]



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Vol. 82

Tuesday,

No. 10

January 17, 2017

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 401, 405, 422, et al.





Medicare Program: Changes to the Medicare Claims and Entitlement, 
Medicare Advantage Organization Determination, and Medicare 
Prescription Drug Coverage Determination Appeals Procedures; Final Rule

Federal Register / Vol. 82 , No. 10 / Tuesday, January 17, 2017 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 401, 405, 422, 423, and 478

[HHS-2016-79]
RIN 0991-AC02


Medicare Program: Changes to the Medicare Claims and Entitlement, 
Medicare Advantage Organization Determination, and Medicare 
Prescription Drug Coverage Determination Appeals Procedures

AGENCY: Centers for Medicare & Medicaid Services, HHS.

ACTION: Final rule.

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SUMMARY: This final rule revises the procedures that the Department of 
Health and Human Services (HHS) follows at the Administrative Law Judge 
(ALJ) level for appeals of payment and coverage determinations for 
items and services furnished to Medicare beneficiaries, enrollees in 
Medicare Advantage (MA) and other Medicare competitive health plans, 
and enrollees in Medicare prescription drug plans, as well as appeals 
of Medicare beneficiary enrollment and entitlement determinations, and 
certain Medicare premium appeals. In addition, this final rule revises 
procedures that the Department of Health and Human Services follows at 
the Centers for Medicare & Medicaid Services (CMS) and the Medicare 
Appeals Council (Council) levels of appeal for certain matters 
affecting the ALJ level.

DATES: These regulations are effective on March 20, 2017.

FOR FURTHER INFORMATION CONTACT: Joella Roland, (410) 786-7638 (for 
issues related to CMS appeals policies and reopening policies).
    Jason Green, (571) 777-2723 (for issues related to Administrative 
Law Judge appeals policies).
    Angela Roach, (202) 565-0132 (for issues related to Council appeals 
policies).

SUPPLEMENTARY INFORMATION: 

Abbreviations

    Because we refer to a number of terms by abbreviation or a 
shortened form in this proposed rule, we are listing these 
abbreviations and shortened forms, and their corresponding terms in 
alphabetical order below:

AASIS--ALJ Appeal Status Information System
Act--Social Security Act
ALJ--Administrative Law Judge
APA--Administrative Procedure Act
BIPA--Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000 (Pub. L. 106-554)
CMS--Centers for Medicare & Medicaid Services
Council--Medicare Appeals Council
DAB--Departmental Appeals Board
DME--Durable Medical Equipment
EAJR--Expedited Access to Judicial Review
HHS--U.S. Department of Health and Human Services
IRE--Independent Review Entity
IRMAA--Income Related Monthly Adjustment Amount
MA--Medicare Advantage
MAO--Medicare Advantage Organization
MMA--Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (Pub. L. 108-173)
OCPM--OMHA Case Processing Manual
OIG--HHS Office of Inspector General
OMHA--Office of Medicare Hearings and Appeals
QIC--Qualified Independent Contractor
QIO--Quality Improvement Organization
SSA--Social Security Administration
VTC--Video-teleconferencing

Section 1557 of the Affordable Care Act

    Independent of the standards in this final rule, the Department 
commits to complying with section 1557 of the Affordable Care Act, Pub. 
L. 111-148, 124 Stat. 470 (42 U.S.C. 18116), which prohibits 
discrimination on the basis of race, color, national origin, sex, age, 
or disability in certain health programs and activities. HHS issued a 
final rule to implement section 1557, Nondiscrimination in Health 
Programs and Activities, on May 18, 2016. 81 FR 31376. The final rule 
applies, in part, to health programs and activities administered by the 
Department.

Table of Contents

I. Background
    A. Overview of the Appeals Process
    B. Recent Workload Challenges
II. Summary of the Proposed Provisions and Response to Comments on 
the July 5, 2016, Proposed Rule
    A. General Provisions of the Proposed Regulations
    1. Precedential Final Decisions of the Secretary
    2. Attorney Adjudicators
    3. Application of 405 Rules to Other Parts
    4. OMHA References
    5. Medicare Appeals Council References
    B. Specific Provisions of Part 405, Subpart I and Part 423, 
Subparts M and U
    1. Overview
    2. General Provisions, Reconsiderations, Reopenings, and 
Expedited Access to Judicial Review
    a. Part 423, Subpart M General Provisions (Sec.  423.562)
    b. Part 423, Subpart U Title and Scope (Sec.  423.1968)
    c. Medicare Initial Determinations, Redeterminations and Appeals 
General Description (Sec.  405.904)
    d. Parties to the Initial Determinations, Redeterminations, 
Reconsiderations Proceedings on a Request for Hearing, and Council 
Review (Sec.  405.906)
    e. Medicaid State Agencies (Sec.  405.908)
    f. Appointed Representatives (Sec.  405.910)
    g. Actions That Are Not Initial Determinations (Sec.  405.926)
    h. Notice of A Redetermination (Sec.  405.956)
    i. Time Frame for Making a Reconsideration Following a 
Contractor Redetermination, Withdrawal or Dismissal of a Request for 
a Reconsideration, and Reconsideration (Sec. Sec.  405.970, 405.972, 
and 405.974)
    j. Notice of Reconsideration (Sec.  405.976)
    k. Effect of a Reconsideration (Sec.  405.978)
    l. Reopenings (Sec. Sec.  405.980, 405.982, 405.984, 423.1978, 
423.1980, 423.1982, and 423.1984)
    m. Expedited Access to Judicial Review (Sec. Sec.  405.990 and 
423.1990)
    3. ALJ Hearings
    a. Hearing Before an ALJ and Decision by an ALJ and Attorney 
Adjudicator: General Rule (Sec. Sec.  405.1000 and 423.2000)
    b. Right to an ALJ Hearing (Sec. Sec.  405.1002 and 423.2002)
    c. Right to a Review of QIC or IRE Notice of Dismissal 
(Sec. Sec.  405.1004 and 423.2004)
    d. Amount in Controversy Required for an ALJ Hearing (Sec. Sec.  
405.1006 and 423.1970)
    e. Parties to an ALJ Hearing (Sec. Sec.  405.1008 and 423.2008)
    f. CMS and CMS Contractors as Participants or Parties in the 
Adjudication Process (Sec. Sec.  405.1010, 405.1012, and 423.2010)
    i. Section 405.1010: When CMS or Its Contractors May Participate 
in the Proceedings on a Request for an ALJ Hearing
    ii. Section 423.2010: When CMS, the IRE, or Part D Plan Sponsors 
May Participate in the Proceedings on a Request for an ALJ Hearing
    iii. Section 405.1012: When CMS or Its Contractors May Be a 
Party to a Hearing
    g. Request for an ALJ Hearing or Review of a QIC or an IRE 
Dismissal (Sec. Sec.  405.1014, 423.1972 and 423.2014)
    i. Requirements for a Request for Hearing or Review of a QIC or 
an IRE Dismissal
    ii. Requests for Hearing Involving Statistical Sampling and 
Extrapolations
    iii. Opportunity To Cure Defective Filings
    iv. Where and When To File a Request for Hearing or Review of a 
QIC or an IRE Dismissal
    v. Sending Copies of a Request for Hearing and Other Evidence to 
Other Parties to the Appeal
    vi. Extending Time To File a Request for Hearing or Review of a 
QIC or an IRE Dismissal
    h. Time Frames for Deciding an Appeal of a QIC or an IRE 
Reconsideration or an Escalated Request for a QIC Reconsideration, 
and Request for Council Review When an ALJ Does Not Issue a Decision 
Timely (Sec. Sec.  405.1016, 405.1104 and 423.2016)
    i. Section 405.1016: Time Frames for Deciding an Appeal of a QIC 
or an

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Escalated Request for a QIC Reconsideration
    ii. Section 405.1104: Request for Council Review When an ALJ 
Does Not Issue a Decision Timely
    iii. Section 423.2016: Time Frames for Deciding an Appeal of an 
IRE Reconsideration
    i. Submitting Evidence (Sec. Sec.  405.1018 and 423.2018)
    j. Time and Place for a Hearing Before an ALJ (Sec. Sec.  
405.1020 and 423.2020)
    k. Notice of a Hearing Before an ALJ and Objections to the 
Issues (Sec. Sec.  405.1022, 405.1024, 423.2022, and 423.2024)
    l. Disqualification of the ALJ or Attorney Adjudicator 
(Sec. Sec.  405.1026 and 423.2026)
    m. Review of Evidence Submitted by the Parties (Sec.  405.1028)
    n. ALJ Hearing Procedures (Sec. Sec.  405.1030 and 423.2030)
    o. Issues Before an ALJ or Attorney Adjudicator (Sec. Sec.  
405.1032, 405.1064 and 423.2032)
    p. Requesting Information From the QIC or IRE, and Remanding an 
Appeal (Sec. Sec.  405.1034, 405.1056, 405.1058, 423.2034, 423.2056, 
and 423.2058)
    q. Description of the ALJ Hearing Process and Discovery 
(Sec. Sec.  405.1036, 405.1037, and 423.2036)
    r. Deciding a Case Without a Hearing Before an ALJ (Sec. Sec.  
405.1038 and 423.2038)
    s. Prehearing and Posthearing Conferences (Sec. Sec.  405.1040 
and 423.2040)
    t. The Administrative Record (Sec. Sec.  405.1042 and 423.2042)
    u. Consolidated Proceedings (Sec. Sec.  405.1044 and 423.2044)
    v. Notice of Decision and Effect of an ALJ's or Attorney 
Adjudicator's Decision (Sec. Sec.  405.1046, 405.1048, 423.2046, and 
423.2048)
    w. Removal of a Hearing Request From an ALJ to the Council 
(Sec. Sec.  405.1050 and 423.2050)
    x. Dismissal of a Request for Hearing or Request for Review and 
Effect of a Dismissal of a Request for Hearing or Request for Review 
(Sec. Sec.  405.1052, 405.1054, 423.2052 and 423.2054)
    4. Applicability of Medicare Coverage Policies (Sec. Sec.  
405.1060, 405.1062, 405.1063, 423.2062, and 423.2063)
    5. Council Review and Judicial Review
    a. Council Review: General (Sec. Sec.  405.1100, 423.1974 and 
423.2100)
    b. Request for Council Review When ALJ Issues Decision or 
Dismissal (Sec. Sec.  405.1102 and 423.2102)
    c. Where a Request for Review or Escalation May Be Filed 
(Sec. Sec.  405.1106 and 423.2106)
    d. Council Actions When Request for Review or Escalation Is 
Filed (Sec. Sec.  405.1108 and 423.2108)
    e. Council Reviews on Its Own Motion (Sec. Sec.  405.1110 and 
423.2110)
    f. Content of Request for Review (Sec. Sec.  405.1112 and 
423.2112)
    g. Dismissal of Request for Review (Sec. Sec.  405.1114 and 
423.2114)
    h. Effect of Dismissal of Request for Council Review or Request 
for Hearing (Sec. Sec.  405.1116 and 423.2116)
    i. Obtaining Evidence From the Council (Sec. Sec.  405.1118 and 
423.2118)
    j. What Evidence May Be Submitted to the Council (Sec. Sec.  
405.1122 and 423.2122)
    k. Case Remanded by the Council (Sec. Sec.  405.1126 and 
423.2126)
    l. Action of the Council (Sec. Sec.  405.1128 and 423.2128)
    m. Request for Escalation to Federal Court (Sec.  405.1132)
    n. Judicial Review (Sec. Sec.  405.1136, 423.1976, and 423.2136)
    o. Case Remanded by a Federal Court (Sec. Sec.  405.1038 and 
423.2138)
    p. Council Review of ALJ decision in a Case Remanded by a 
Federal District Court (Sec. Sec.  405.1140 and 423.2140)
    C. Specific Provisions of Part 405, Subpart J Expedited 
Reconsiderations
    D. Specific Provisions of Part 422, Subpart M
    1. General Provisions (Sec.  422.562).
    2. Notice of Reconsidered Determination by the Independent 
Entity (Sec.  422.594).
    3. Request for an ALJ Hearing (Sec.  422.602).
    4. Medicare Appeals Council (Council) Review (Sec.  422.608).
    5. Judicial Review (Sec.  422.612)
    6. Reopening and Revising Determinations and Decisions (Sec.  
422.616)
    7. How an MA Organization Must Effectuate Standard 
Reconsideration Determinations and Decisions, and Expedited 
Reconsidered Determinations (Sec. Sec.  422.618 and 422.619)
    8. Requesting Immediate QIO Review of the Decision To Discharge 
From the Inpatient Hospital and Fast-Track Appeals of Service 
Terminations to Independent Review Entities (IREs) (Sec. Sec.  
422.622 and 422.626).
    E. Specific Provisions of Part 478, Subpart B
    1. Applicability and Beneficiary's Right to a Hearing 
(Sec. Sec.  478.14 and 478.40)
    2. Submitting a Request for a Hearing (Sec.  478.42)
    3. Determining the Amount in Controversy (Sec.  478.44)
    4. Medicare Appeals Council and Judicial Review (Sec.  478.46)
    5. Reopening and Revision of a Reconsidered Determination or a 
Decision (Sec.  478.48)
    F. Effective Date and Applicability of the Provisions of the 
Final Rule
III. Comments Beyond the Scope of the Final Rule
IV. Provisions of the Final Rule
V. Collection of Information Requirements
VI. Regulatory Impact Statement
VII. Federal Analysis

I. Background

A. Overview of the Appeals Process

    In accordance with provisions of sections 1155, 1852, 1860D-4, 
1869, and 1876 of the Social Security Act (Act), and associated 
implementing regulations, there are multiple administrative appeal 
processes for Medicare fee-for-service (Part A and Part B) claim, 
entitlement and certain premium initial determinations; MA (Part C) and 
other competitive health plan organization determinations; and Part D 
plan sponsor coverage determinations and certain premium 
determinations. The first, and in many instances a second, level of 
administrative appeal are administered by Medicare contractors, Part D 
plan sponsors, MA organizations or Medicare plans, or by the SSA. For 
example, under section 1869 of the Act, the Medicare claims appeal 
process involves redeterminations conducted by the Medicare 
Administrative Contractors (which are independent of the staff that 
made the initial determination) followed by reconsiderations conducted 
by Qualified Independent Contractors (QICs). However, all of the 
appeals discussed in this final rule can be appealed to the ALJs at the 
Office of Medicare Hearings and Appeals (OMHA) if the amount in 
controversy requirement and other requirements are met after these 
first and/or second levels of appeal.
    OMHA, a staff division within the Office of the Secretary of HHS, 
administers the nationwide ALJ hearing program for Medicare claim, 
organization and coverage determination, and entitlement and certain 
premium appeals. If the amount in controversy and other filing 
requirements are met, a hearing before an ALJ is available following a 
Quality Improvement Organization (QIO) reconsidered determination under 
section 1155 of the Act; a Social Security Administration (SSA) or QIC 
reconsideration, or a request for QIC reconsideration for which a 
decision is not issued timely and a party requests escalation of the 
matter under section 1869(b)(1)(A) and (d) of the Act (Part A and Part 
B appeals); an Independent Review Entity (IRE) reconsideration or QIO 
reconsidered determination under sections 1876(c)(5)(B) or 1852(g)(5) 
of the Act (Part C and other managed health plan appeals); or an IRE 
reconsideration under section 1860D-4(h) of the Act (Part D appeals). 
In addition, under current regulations a review by an ALJ is available 
following a dismissal of a request for reconsideration, if the amount 
in controversy and other filing requirements are met.
    OMHA provides Medicare beneficiaries and the providers and 
suppliers that furnish items or services to Medicare beneficiaries, as 
well as applicable plans, Medicare Advantage Organizations (MAOs), and 
Medicaid State agencies with a fair and impartial forum to address 
disagreements regarding: Medicare coverage and

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payment determinations made by Medicare contractors, MAOs, or Part D 
plan sponsors; and determinations related to Medicare beneficiary 
eligibility and entitlement, Part B late enrollment penalties, and 
income related monthly adjustment amounts (IRMAAs), which apply to 
Medicare Part B and Part D premiums, made by SSA. Further review of 
OMHA ALJ decisions, except decisions affirming a dismissal of a request 
for reconsideration, is available from the Medicare Appeals Council 
(Council) within the DAB, a staff division within the Office of the 
Secretary of HHS. Judicial review is then available for Council 
decisions in Federal courts, if the amount in controversy and other 
requirements are met.
    OMHA ALJs began adjudicating appeals in July 2005, based on section 
931 of the MMA, which required the transfer of responsibility for the 
ALJ hearing level of the Medicare claim and entitlement appeals process 
from SSA to HHS. New rules at 42 CFR part 405, subpart I and subpart J 
were also established to implement statutory changes to the Medicare 
fee-for-service (Part A and Part B) appeals process made by BIPA in 
2000 and the MMA in 2003. Among other things, these new rules addressed 
appeals of reconsiderations made by QICs, which were created by BIPA 
for the Part A and Part B programs. These rules also apply to appeals 
of SSA reconsiderations. The statutory changes made by BIPA included a 
90-day adjudication time frame for ALJs to adjudicate appeals of QIC 
reconsiderations beginning on the date that a request for an ALJ 
hearing is timely filed. The new part 405, subpart I rules were 
initially proposed in the November 15, 2002 Federal Register (67 FR 
69312) (2002 Proposed Rule) to implement BIPA, and were subsequently 
implemented in an interim final rule with comment period, which also 
set forth new provisions to implement the MMA, in the March 8, 2005 
Federal Register (70 FR 11420) (2005 Interim Final Rule). Correcting 
amendments to the 2005 Interim Final Rule were published in the June 
30, 2005 Federal Register (70 FR 37700) (2005 Correcting Amendment I) 
and in the August 26, 2005 Federal Register (70 FR 50214) (2005 
Correcting Amendment II), and the final rule was published in the 
December 9, 2009 Federal Register (74 FR 65296) (2009 Final Rule). 
Subsequent revisions to part 405, subpart I to implement the 
Strengthening Medicare and Repaying Taxpayers Act of 2012 (SMART Act, 
Pub. L. 112-242) were published in the February 27, 2015 Federal 
Register (80 FR 10611) (SMART Act Final Rule).
    In addition to the part 405, subpart I rules, OMHA applies the 
rules at 42 CFR part 478, subpart B to individuals' appeals of QIO 
reconsidered determinations; part 422, subpart M to appeals of IRE 
reconsiderations or QIO reconsidered determinations under the MA (Part 
C) and other competitive health plan programs; and part 423, subpart U 
to appeals of IRE reconsiderations under the Medicare prescription drug 
(Part D) program.

B. Recent Workload Challenges

    In recent years, the Medicare appeals process has experienced an 
unprecedented and sustained increase in the number of appeals. At OMHA, 
for example, the number of requests for an ALJ hearing or review 
increased 1,222 percent, from fiscal year (FY) 2009 through FY 2014. We 
attribute the growth in appeals to: (1) The expanding Medicare 
beneficiary population \1\ and utilization of services across that 
population; (2) enhanced monitoring of payment accuracy in the Medicare 
Part A and Part B (fee-for-service) programs; (3) growth in appeals 
from State Medicaid agencies \2\ for beneficiaries dually enrolled in 
both Medicare and Medicaid; and (4) national implementation of the 
Medicare fee-for-service Recovery Audit program \3\ in 2009. The 
increasing number of requests has strained OMHA's available resources 
and resulted in delays for appellants to obtain hearings and decisions.
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    \1\ Enrollment in fee-for-service Medicare and MA and other 
competitive health plans increased from roughly 49 million 
beneficiaries and enrollees in 2011 to 55.5 million in 2015, while 
enrollment in Part D prescription drug plans and MA prescription 
drug plans increased from roughly 29.5 million in 2011 to 39.5 
million in 2015 (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Dashboard/Medicare-Enrollment/Enrollment%20Dashboard.html).
    \2\ In FY 2009, OMHA received 230 requests for hearing filed by 
Medicaid State agencies, compared to nearly 25,000 in FY 2014.
    \3\ As of April 25, 2016, Recovery Audit-related appeals 
accounted for 31 percent of the pending appeals at OMHA. Based on 
trends in receipts at this time, we estimate that Recovery Audit 
related appeals currently constitute 20 percent of incoming appeals.
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    Despite significant gains in OMHA ALJ productivity (in FY 2014, 
each OMHA ALJ issued, on average, a record 1,048 decisions and an 
additional 456 dismissals, compared to an average of 471 decisions and 
80 dismissals per ALJ in 2009), and CMS and OMHA initiatives to address 
the increasing number of appeals,\4\ the number of requests for an ALJ 
hearing and requests for reviews of QIC and IRE dismissals continue to 
exceed OMHA's capacity to adjudicate the requests. As of September 30, 
2016, OMHA had over 650,000 pending appeals, while OMHA's adjudication 
capacity--based on a maximum sustainable capacity of 1,000 appeals per 
ALJ team--was approximately 92,000 appeals per year.
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    \4\ CMS and OMHA initiatives include OMHA's Settlement 
Conference Facilitation and Statistical Sampling Initiative; and 
CMS's QIC formal telephone discussion demonstration and increased 
use of prior authorization models for areas with high payment error 
rates.
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    HHS has a three-prong approach to addressing the increasing number 
of appeals and the current backlog of claims waiting to be adjudicated 
at OMHA: (1) Request new resources to invest at all levels of appeal to 
increase adjudication capacity and implement new strategies to 
alleviate the current backlog; (2) take administrative actions to 
reduce the number of pending appeals and implement new strategies to 
alleviate the current backlog ; and (3) propose legislative reforms 
that provide additional funding and new authorities to address the 
volume of appeals. In this final rule, HHS is pursuing the three-prong 
approach by implementing rules that expand the pool of available OMHA 
adjudicators and improve the efficiency of the appeals process by 
streamlining the processes so less time is spent by adjudicators and 
parties on repetitive issues and procedural matters. In particular, we 
believe the proposals we are finalizing in section II.A.2 below to 
provide authority for attorneys to issue decisions when a decision can 
be issued without an ALJ hearing, dismissals when an appellant 
withdraws his or her request for an ALJ hearing, remands as provided in 
Sec. Sec.  405.1056 and 423.2056 as finalized in this rule or at the 
direction of the Council, and reviews of QIC and IRE dismissals, could 
redirect approximately 24,500 appeals per year to attorney 
adjudicators, who would be able to process these appeals at a lower 
cost than would be required if only ALJs were used to address the same 
workload (see section VI below for more details regarding our 
estimate).

II. Summary of the Proposed Provisions and Responses to Comments on the 
July 5, 2016, Proposed Rule

    In the July 5, 2016 Federal Register, we published a proposed rule 
that would revise the procedures that the Department of Health and 
Human Services would follow at the ALJ level for appeals of payment and 
coverage determinations for items and services furnished to Medicare 
beneficiaries, enrollees in MA and other Medicare competitive health 
plans, and enrollees

[[Page 4977]]

in Medicare prescription drug plans, as well as appeals of Medicare 
beneficiary enrollment and entitlement determinations, and certain 
Medicare premium appeals. 81 FR 43790. In addition, we proposed to 
revise procedures that the Department of Health and Human Services 
would follow at the CMS and the Council levels of appeal for certain 
matters affecting the ALJ level. Discussed below are the comments to 
the July 5, 2016, proposed rule. We include a summary and explanation 
of each proposed regulatory provision, provide a summary of, and 
responses to, the comments received, and describe the changes, if any, 
to be made in finalizing the provision in this rulemaking.
    We received 68 timely comments on the proposed rule from 
individuals, organizations representing providers and suppliers, 
beneficiary advocacy groups, law offices, health plans, CMS 
contractors, and others. Summaries of the public comments and our 
responses to those comments are set forth below.

A. General Provisions of the Proposed Regulations

1. Precedential Final Decisions of the Secretary
    Council decisions are binding on the parties to that particular 
appeal and are the final decisions of the Secretary from which judicial 
review may be sought under section 205(g) of the Act, in accordance 
with current Sec. Sec.  405.1130, 422.612(b), 423.2130, and 478.46(b). 
As explained in the 2009 Final Rule (74 FR 65307 through 65308), 
``binding'' indicates the parties are obligated to abide by the 
adjudicator's action or decision unless further recourse is available 
and a party exercises that right. ``Final'' indicates that no further 
administrative review of the decision is available and judicial review 
may be immediately sought.
    In 1999, the HHS Office of Inspector General (OIG) issued a report 
entitled ``Medicare Administrative Appeals--ALJ Hearing Process'' (OEI-
04-97-00160) (Sept. 1999) (http://oig.hhs.gov/oei/reports/oei-04-97-00160.pdf). In that report, the OIG noted that the DAB respondents 
voiced strong interest in having precedent setting authority in the 
Medicare administrative appeals process ``to clean-up inconsistencies 
in the appeals process.'' The OIG recommended that such a case 
precedent system be established.
    Pursuant to section 931(a) of the MMA, HHS and SSA developed a plan 
for the transition of the ALJ hearing function for some types of 
Medicare appeals from SSA to HHS, and addressed the feasibility of 
precedential authority of DAB decisions. See Report to Congress: Plan 
for the Transfer of Responsibility for Medicare Appeals (Mar. 2004) 
(https://www.ssa.gov/legislation/medicare/medicare_appeal_transfer.pdf). HHS determined that at that time, it was 
not feasible or appropriate to confer precedential authority on Council 
decisions, but indicated that it would reevaluate the merits of 
granting precedential authority to some or all Council decisions after 
the BIPA and MMA changes to the appeals process were fully implemented.
    BIPA and MMA changes to the appeals process have now been fully 
implemented and we stated in the proposed rule that we believed it was 
appropriate to propose that select Council decisions be made 
precedential to increase consistency in decisions at all levels of 
appeal for appellants. We proposed in proposed Sec.  401.109 to 
introduce precedential authority to the Medicare claim and entitlement 
appeals process under part 405, subpart I for Medicare fee-for-service 
(Part A and Part B) appeals; part 422, subpart M for appeals of 
organization determinations issued by MA and other competitive health 
plans (Part C appeals); part 423, subparts M and U for appeals of Part 
D prescription drug coverage determinations; and part 478, subpart B 
for appeals of certain QIO determinations. 81 FR 43790, 43792-43794. We 
proposed in Sec.  401.109(a) that the Chair of the DAB would have 
authority to designate a final decision of the Secretary issued by the 
Council as precedential. In the proposed rule we stated that we 
believed this would provide appellants with a consistent body of final 
decisions of the Secretary upon which they could determine whether to 
seek appeals. We also stated it would assist appeal adjudicators at all 
levels of appeal by providing clear direction on repetitive legal and 
policy questions, and in limited circumstances, factual questions. 
Further, we stated that in the limited circumstances in which a 
precedential decision would apply to a factual question, the decision 
would be binding where the relevant facts are the same and evidence is 
presented that the underlying factual circumstances have not changed 
since the Council issued the precedential final decision.
    We stated in the proposed rule that it is appropriate for the DAB 
Chair to have the role of designating select Council decisions as 
precedential. The DAB Chair leads the DAB, which was established in 
1973. The DAB has wide jurisdiction over disputes arising under many 
HHS programs and components, and has issued precedential decisions for 
many years within several of its areas of jurisdiction. (Examples of 
DAB jurisdiction may be found at 45 CFR part 16, 42 CFR part 498, 42 
CFR part 426, and on the DAB's Web site at www.hhs.gov/dab.) The 
Council has been housed within the DAB as an organization since 1995 
and is itself also under the leadership of the DAB Chair. Thus, we 
stated that the DAB Chair brings both expertise in the Medicare claims 
appeals over which the Council has jurisdiction and experience from the 
DAB's precedential cases to carrying out the role of designating 
Council decisions to be precedential. Moreover, we stated in the 
proposed rule that having the designation performed by the DAB Chair 
respects the continued independence of the Council as an adjudicative 
body by allowing the DAB to determine the effect of its own decisions. 
We also stated that limiting binding precedential effect to selected 
decisions provides the necessary discretion to designate as 
precedential those Council decisions in which a significant legal or 
factual issue was fully developed on the record and thoroughly 
analyzed. We further stated that designation might not be appropriate 
where an issue was mentioned in the decision as relevant but was not 
outcome determinative, and therefore may not have been as fully 
developed as is necessary for precedential decisions or where the 
issues addressed are not likely to have broad application beyond the 
particular case.
    To help ensure appellants and other stakeholders are aware of 
Council decisions that are designated as precedential, we proposed in 
Sec.  401.109(b) that notice of precedential decisions would be 
published in the Federal Register, and the decisions themselves would 
be made available to the public, with necessary precautions taken to 
remove personally identifiable information that cannot be disclosed 
without an individual's consent. We stated that designated precedents 
would be posted on an accessible Web site maintained by HHS, and that 
decisions of the Council would bind all lower-level decision-makers 
from the date that the decisions are posted on the HHS Web site.
    We proposed in Sec.  401.109(c) to make these precedential 
decisions binding on all CMS components, on all HHS components that 
adjudicate matters under the jurisdiction of CMS, and on SSA to the 
extent that SSA components adjudicate matters under the jurisdiction of 
CMS, in the same manner

[[Page 4978]]

as CMS Rulings under current Sec.  401.108. That means the precedential 
decision would be binding on CMS and its contractors in making initial 
determinations, redeterminations, and reconsiderations, under part 405 
subpart I, or equivalent determinations under parts 422 subpart M, 423 
subparts M and U, and 478 subpart B; OMHA ALJs and, as proposed in 
section II.B of the proposed rule (and discussed in section II.A.2 
below), attorney adjudicators; the Council in its future decisions; and 
SSA to the extent that it adjudicates matters under the jurisdiction of 
CMS. Individual determinations and decisions by CMS contractors, OMHA 
ALJs, and the Council currently are not precedential and have no 
binding effect on future initial determinations (and equivalent 
determinations) or claims appeals. We did not propose to change the 
non-precedential status and non-binding effect on future initial 
determinations (and equivalent determinations) or claim appeals of any 
determinations or decisions except as to Council decisions designated 
as precedential by the DAB Chair.
    We proposed to specify the scope of the precedential effect of a 
Council decision designated by the DAB Chair in Sec.  401.109(d). 
Specifically, we proposed that the Council's legal analysis and 
interpretation of an authority or provision that is binding (see, for 
example Sec. Sec.  405.1060 and 405.1063) or owed substantial deference 
(see, for example Sec.  405.1062) would be binding in future 
determinations and appeals in which the same authority or provision is 
applied and is still in effect. However, we proposed that if CMS 
revises the authority or provision that is the subject of a 
precedential decision, the Council's legal analysis and interpretation 
would not be binding on claims or other disputes to which the revised 
authority or provision applies. For example, if a Council decision 
designated as precedential by the DAB Chair interprets a CMS manual 
instruction, that interpretation would be binding on pending and future 
appeals and initial determinations to which that manual instruction 
applies. However, CMS would be free to follow its normal internal 
process to revise the manual instruction at issue. Once the revised 
instruction is issued through the CMS process, the revised instruction 
would apply to making initial determinations on all claims thereafter. 
We stated that this would help ensure that CMS continues to have the 
ultimate authority to administer the Medicare program and promulgate 
regulations, and issue sub-regulatory guidance and policies on Medicare 
coverage and payment.
    If the decision is designated as precedential by the DAB Chair, we 
proposed in Sec.  401.109(d) that the Council's findings of fact would 
be binding in future determinations and appeals that involve the same 
parties and evidence. For example, we stated in the proposed rule that 
if a precedential Council decision made findings of fact related to the 
issue of whether an item qualified as durable medical equipment (DME) 
and the same issue was in dispute in another appeal filed by the same 
party, and that party submitted the same evidence to support its 
assertion, the findings of fact in the precedential Council decision 
would be binding. However, we noted that many claim appeals turn on 
evidence of a beneficiary's condition or care at the time discrete 
items or services are furnished, and that therefore Sec.  401.109, as 
proposed, is unlikely to apply to findings of fact in these appeals.
    In addition, consistent with Sec.  401.109, we proposed at Sec.  
405.968(b)(1) to add precedential decisions designated by the Chair of 
the Departmental Appeals Board (DAB) as an authority that is binding on 
the QIC. We also proposed at Sec. Sec.  405.1063 and 423.2063, which 
currently cover the applicability of laws, regulations, and CMS 
Rulings, to add new paragraph (c) to the sections to provide that 
precedential decisions designated by the DAB Chair in accordance with 
Sec.  401.109 are binding on all CMS components, all HHS components 
that adjudicate matters under the jurisdiction of CMS, and (in Sec.  
405.1063(c)) on the Social Security Administration to the extent that 
components of the Social Security Administration adjudicate matters 
under the jurisdiction of CMS. Finally, we proposed to add precedential 
decisions to the titles of Sec. Sec.  405.1063 and 423.2063 to reflect 
the additional topic covered by proposed paragraph (c).
    We received forty-eight comments on this proposal. In two 
instances, the same commenter submitted the same comment twice, so 
there were forty-six distinct comments. Among those offering comments 
were providers and suppliers and organizations representing them, 
beneficiary advocacy groups, health plan providers and administrators, 
and individuals. Overall, the majority of commenters supported the 
proposal to designate certain Council cases as precedent, but some of 
them made requests for clarification or modification, which we address 
below. Twelve commenters either opposed the proposal or suggested that 
it be tabled for further review. Some commenters did not take a clear 
position in favor of or against adoption of the proposal but offered 
various comments which we address below. Provided below are summaries 
of the specific comments received and responses to these comments:
    Comment: Numerous commenters raised concerns regarding the lack of 
specific standards or criteria for selecting precedential decisions. 
One commenter suggested that the Council should adopt the standards 
currently used by federal circuit courts for designating precedential 
decisions. Two commenters requested clarity on the precedential effect 
of factual findings. One further opined that factual statements should 
never be given precedential effect because the Council is not a fact 
finding institution and because facts change over time. One commenter 
suggested that only decisions fully favorable to beneficiaries should 
be designated as precedential. Two commenters suggested that all 
Council decisions involving legal analysis or interpretations of 
authority should have precedential force, and others suggested that in 
addition to granting precedential authority to the Council, the rule 
should require MACs and QICs to treat prior ALJ decisions as 
precedential.
    Response: We appreciate the commenters' concern about additional 
clarity as to how decisions will be selected to have precedential 
effect. As explained above, the purpose of Sec.  401.109 is to increase 
predictability and consistency in decision-making throughout the 
appeals process, and to provide clear direction on repetitive legal and 
policy questions. We believe that designating certain decisions as 
precedential, and therefore binding on all lower levels of review, will 
help ensure that appellants and other stakeholders are provided a more 
predictable outcome at all stages of review. In addition, selecting 
certain decisions as precedential helps to ensure that similar cases 
receive consistent results.
    We understand commenters' concern that stakeholders understand the 
considerations that will guide designation of precedential Council 
decisions. However, given that the variety of issues that may arise in 
the interpretation and application of Medicare law and policy is broad 
and changes rapidly, it is not practicable to articulate a 
comprehensive set of criteria that the DAB Chair must follow to 
determine which decisions are appropriate for such designation. We can, 
however, identify some factors that the DAB Chair may consider when

[[Page 4979]]

determining whether to designate a decision as precedential. The 
primary goal is to identify Council decisions involving issues of wide 
applicability where designation as precedent is likely to materially 
contribute to improving predictability and consistency in decisions 
prospectively. For example, decisions that address recurring legal 
issues, or interpret or clarify an existing law, CMS rule or policy, 
may be appropriately designated as precedential. In addition, the DAB 
Chair may also consider whether a decision has general application to a 
broad number of cases. Another factor the DAB Chair may consider is 
whether a decision analyzes or interprets a legal issue of general 
public interest. Before designating a decision as precedential, the DAB 
Chair may also take into consideration the state of the record 
developed at the lower levels of review. Records where the facts are 
fully developed and analyzed, or where legal arguments have been fully 
raised and argued are better candidates for precedential designation.
    In response to the commenter's suggestion that the Council should 
adopt standards currently used by federal circuit courts for 
designating precedential decisions, we do not believe federal court 
standards provide the best model for criteria transferable to this 
internal agency administrative adjudication process. As a threshold 
matter, each federal circuit court establishes its own standards for 
designating precedent, so there is no uniform circuit court rule the 
Council can simply adopt. Moreover, there are substantial differences 
between the Medicare appeals system and the federal court system, and 
many factors considered by federal circuit courts in designating 
precedential decisions have no application in the Medicare appeals 
context. For example, many federal circuit courts will designate a 
decision as precedential if it establishes a rule of law within the 
circuit or creates a conflict with another circuit. Such criteria would 
not be applicable or helpful for the Council to consider because the 
Medicare appeals process is not divided into circuits. It is worth 
noting, however, that the factors identified in the preceding paragraph 
are similar to some of the factors federal circuit courts typically 
consider in designating precedent.
    In regards to the effect of factual findings in precedential 
decisions, the Council's legal analysis and interpretation in a 
decision is applied in a specific factual context, as is also true with 
court decisions. That analysis and interpretation in a decision 
designated as precedential must be applied by decision-makers at lower 
levels in future cases in which the same authority or provision applies 
and is still in effect. If the same authority or provision would not 
apply in a future case because the relevant facts are not the same, the 
precedential decision also would not be applicable in the future case. 
Moreover, if CMS issues new regulatory provisions or revised policies, 
a precedential decision analyzing and interpreting the prior 
regulations or policies may not apply on review of a coverage decision 
made under the new regulation or policy if the relevant content of the 
new regulation or policy is different from that interpreted in the 
precedential decision.
    We understand the commenters may be concerned that proposed Sec.  
401.109(d)(2) authorizes the establishment of generally applicable 
``factual precedent.'' That proposed section, however, provides that 
factual findings in precedential decisions are binding only in future 
determinations and appeals involving the same parties, facts, and 
circumstances. The purpose of this provision is to discourage parties 
to a precedential decision from subsequently filing repetitive appeals 
involving the same facts in an effort to get a ``second bite at the 
apple.'' It does not mean factual findings in a precedential decision 
would be binding in future claims involving different facts, parties, 
or circumstances.
    We also disagree with the assertion that the Council is not a fact-
finding institution. The Council's review is de novo and based on 
review of the entire administrative record as compiled through the OMHA 
level of appeal, including review of the hearing if one was conducted, 
as well as all additional admissible evidence and briefings submitted 
to the Council. Accordingly, Council decisions properly include factual 
findings and, as stated above, adjudicators will take into 
consideration relevant factual changes when determining whether a 
precedential decision should apply. We disagree with the suggestion 
that the DAB Chair should limit the pool of precedential decisions to 
only those that are favorable to the beneficiary. We do not believe the 
DAB should take into consideration to which party the decision was 
favorable when designating a decision as precedential. To do so would 
insert bias into the selection process, which goes against the DAB's 
mission to provide impartial and independent review. We also disagree 
with the suggestion that all Council decisions involving legal analysis 
or interpretations of authority should have precedential effect. We 
understand the commenter's suggestion in this regard is to ensure 
consistency in the types of decisions that are designated as 
precedential. However, many Council decisions turn on the resolution of 
specific disputes of fact or on issues too unusual to have 
applicability or usefulness in other cases. As such, in those 
instances, the legal analyses or interpretations will not have 
widespread applicability or usefulness. We also decline to require MACs 
and QICs to treat prior ALJ decisions as precedential. Although there 
are limited circumstances where an ALJ decision may become a final 
decision, it is the role of the Council to issue final decisions on 
behalf of the Secretary. Those decisions of the Council designated as 
precedent will be binding on cases to which they are applicable at all 
lower levels of the agency adjudication process nationwide. We do not 
believe it would be appropriate for the decision of a single ALJ to 
establish precedent affecting parties nationwide without having been 
subject to review by the Council. Moreover, because ALJs would not be 
bound by each other's decisions, the decision of a MAC or QIC issued in 
compliance with one ALJ's decision might be reversed by a different 
ALJ. Therefore, making individual ALJ decisions precedential and 
binding on MACs and QICs would not necessarily serve the goal of 
increasing predictability and consistency.
    Based on comments received and for the reasons we set forth, we are 
adding the following language to the final regulation at Sec.  
401.109(a) to include general criteria the DAB Chair may consider when 
selecting a Council decision as precedential, ``In determining which 
decisions should be designated as precedential, the DAB Chair may take 
into consideration decisions that address, resolve, or clarify 
recurring legal issues, rules or policies, or that may have broad 
application or impact, or involve issues of public interest.''
    Comment: Several commenters questioned the provision granting the 
DAB Chair sole authority to designate decisions as precedential, or 
suggested that the designation process should include input from other 
sources, including providers, contractors, stakeholders, CMS, and OMHA. 
One commenter expressed concern that the DAB Chair as an agency 
employee may be biased against appellants. Other commenters felt the 
rule should provide a mechanism for appellants, advocates, and 
stakeholders to request that specific decisions be deemed precedential. 
In a

[[Page 4980]]

similar vein, some commenters felt that the rule should include 
procedures for challenging and overturning precedent. Some commenters 
suggested that these procedures should include granting appellants the 
right to seek judicial review after a decision is deemed precedential. 
A few commenters expressed concern that the rule contains no time 
frames for designating and applying precedential decisions.
    Response: We disagree that it is inappropriate for the DAB Chair to 
have the sole authority to designate certain Council decisions as 
precedential. The Council is an adjudicatory and deliberative body 
comprised of the DAB Chair, Administrative Appeals Judges and Appeals 
Officers and is independent of the agency's operating divisions. To 
involve others, whether components of the agency or outside parties, in 
the designation process would undermine the independence of the 
Council. Any influence on the Council's legal interpretation or 
analysis outside the record and arguments developed within the scope of 
a case is inappropriate. Moreover, the DAB Chair, as a member of the 
Council, has the expertise and experience to determine which decisions 
should be designated as precedential because they will provide improved 
predictability and consistency across future cases. We also note here 
the designation of a decision as precedential does not create a new law 
or policy. By designating decisions as precedential, the DAB Chair is 
merely providing for consistent legal interpretation and analysis of 
CMS's existing laws, rule and policies. The contention that the DAB 
Chair as an ``agency employee'' may create a body of law that is more 
favorable to HHS is unsupported. The mission of the DAB is to provide 
impartial, independent review of disputed decisions in a wide range of 
HHS programs under more than 60 statutory provisions. The DAB Chair 
will continue to advance that mission when designating precedential 
Council decisions.
    To the extent that appellants or CMS or its contractors believe 
that a case may result in a decision that should be considered 
precedential, then the parties are free to argue so in their appeal 
requests or own motion referrals. In addition, the Council routinely 
permits parties to file briefs and other written statements pursuant to 
42 CFR 405.1120, which constitutes an appropriate mechanism by which 
parties could argue the potential precedential status of a decision. 
Filing a brief in a case would also aid in the fuller development and 
analysis of legal issues, which may make the resulting decision a 
better candidate for precedential designation.
    The regulations provide recourse to those appellants who do not 
agree with a Council's decision--judicial review. Appellants who 
disagree with the Council's legal interpretation or analysis in a 
decision may appeal the decision to federal district court in 
accordance with Sec.  405.1136, regardless of whether the decision is 
designated as precedential. CMS also has recourse if it disagrees with 
a precedential decision. If CMS disagrees with the Council's legal 
interpretation and analysis of CMS's policy or rule, then CMS may 
change the policy or rule, or issue a later clarification or ruling. 
Given these existing mechanisms by which parties may challenge 
decisions on the merits or by which CMS may prospectively change 
policies, we do not believe it is necessary to include appeal rights or 
other procedures specific to challenging the designation of particular 
decisions as precedential.
    We also decline to specify a timeframe in which the DAB Chair must 
designate a decision as precedential because resource and procedural 
constraints may limit how quickly the designation process may be 
completed. We do anticipate, however, that the DAB Chair will generally 
make the designation within a reasonable amount of time after the 
issuance of the decision, though as noted below, the DAB Chair may 
choose to wait to designate certain decisions as precedent until the 
time to file a request for judicial review expires. We also expect 
publication of the decision in the Federal Register to be done around 
the same time as a precedential decision is identified on the HHS Web 
site in order to provide public notice.
    Comment: We received several comments requesting clarification on 
the effects of Council decisions designated as precedential. Two 
commenters sought clarification as to how findings made in precedential 
decisions should be used in the context of Medicare Part C and D 
appeals, and asked whether MAOs and Part D plan sponsors will be held 
accountable to these findings from an oversight perspective. One 
commenter sought clarification as to whether the Council will designate 
as precedential decisions relating to pre-service and copayment issues. 
Other commenters requested clarification on the effect of federal 
district court decisions that reverse Council decisions designated as 
precedential. One commenter further opined that because of the 
possibility of precedential decisions being overturned on judicial 
review, it is inappropriate to make Council decisions precedential. A 
few commenters also suggested that the rule should include procedures 
for reversing claim denials resulting from subsequently overturned 
precedent. One commenter requested clarification as to whether a party 
whose appeal is denied based on a precedential decision must proceed 
through the full appeals process prior to seeking judicial review of 
the denial.
    Response: We understand the desire for clarification on the effects 
of precedential decisions. To the extent the commenters are seeking 
clarification as to whether Part C and D plans will be required to 
determine the applicability of precedential decisions when adjudicating 
future cases, we clarify that Sec.  401.109, as finalized, applies to 
all Medicare parts. As previously stated, the legal analysis and 
interpretation of a Medicare authority or provision in a decision 
designated as precedential must be applied by decision-makers at lower 
levels in future cases in which the same authority or provision applies 
and is still in effect. If the commenters seek clarification on whether 
Part C and D plans will be subject to additional oversight by CMS 
related to the application of precedential decisions, after the rule is 
finalized CMS will evaluate the extent to which the application of 
precedential decisions will require modification to existing plan 
oversight processes. In regards to whether Council decisions related to 
pre-service and copayment issues will be designated as precedential, we 
have outlined the factors the DAB Chair may consider when designating a 
precedential decision in the final regulation at Sec.  401.109(a). With 
regard to the effect of a federal court decision that reverses a 
particular Council decision designated as precedential, the individual 
case would no longer be binding on the parties and would no longer 
serve as precedent. In order to ensure that this situation rarely 
arises, however, the DAB Chair may choose to wait to designate certain 
decisions as precedent until the time for appeal expires or until a 
federal court renders a final, unreviewable, decision on judicial 
review. Although we recognize the possibility that a Council decision 
designated as precedential may later be reversed, we do not agree that 
it is therefore inappropriate to designate certain decisions as 
precedential. The proposed structure is similar to the federal court 
system, where a federal circuit court's decision may be given 
precedential effect even though it ultimately may be reversed by the 
United States Supreme Court.

[[Page 4981]]

    We also recognize the possibility that an appellant may seek 
judicial review of a later case applying the precedential decision. If 
a federal court reverses a later case applying a precedential Council 
decision, then the effect of the court's ruling on the original 
precedential decision will depend on many factors, including the 
court's basis for reversal, whether the court remands to the Council, 
whether the court's decision itself is non-precedential or non-
published, and whether other federal courts have issued conflicting 
decisions. For example, a finding by the court that the precedent was 
misapplied to the later case might have a different impact than a 
finding that the rationale underlying the precedent was erroneous. Due 
to the many different possibilities, we do not believe we can address 
in advance the possible effects of federal court decisions on later 
cases applying precedential Council decisions.
    For the same reasons, we also do not find it appropriate to create 
new procedures for reversing claim denials resulting from subsequently 
overturned precedent. We do note, however, that the existing appeals 
process permits some of the relief sought. If a party believes that a 
denial is based on overturned precedent, then it is free to appeal the 
denial and make that argument before the adjudicator.
    If a party believes that its claim has been inappropriately denied 
because of the application of a precedential decision, the party must 
still exhaust the administrative appeals process as statutorily 
required under sections 1869 and 205 of the Act. We are without 
authority in this rulemaking to waive statutory requirements.
    Comment: Some commenters expressed concerns that the proposal 
undermines ALJ independence and one commenter expressed concern that 
granting precedential authority to the Council will impose greater 
limits on the scope of ALJ reviews than currently exist.
    Response: We disagree that the proposed rule impedes ALJ 
independence. ALJs, as well as the Council, are required to apply the 
laws and regulations pertaining to the Medicare and Medicaid programs 
as well as CMS rulings published under the authority of the CMS 
Administrator, regardless of whether a decision is designated as 
precedential (see Sec.  405.1063). Council decisions do not create new 
laws or policies, but instead interpret CMS's existing laws, 
regulations and rulings and determine how they apply to specified 
circumstances. An ALJ remains free to determine whether and how the 
relevant authority as interpreted by the Council applies in the context 
of a specific case.
    Comment: Many commenters voiced general support for the proposal, 
but indicated contractors, providers, and suppliers need to be 
adequately trained and educated regarding the proper application of 
precedential decisions. A few commenters suggested that MACs and QICs 
should be provided with summaries of each precedential decision 
explaining how the decision may be applied to future claims. A few 
commenters sought clarification as to whether precedential decisions 
will be treated as supplemental to CMS manuals and guidelines. A few 
commenters also requested that all OMHA and Council decisions be made 
publicly available, even if non-precedential. One commenter suggested 
that precedential decisions should be posted on the Council's Web site 
and should only apply to claims decided after the posting date.
    Response: We thank the commenters for their support. As we stated 
in the proposed rule, in addition to publishing decisions designated as 
precedential in the Federal Register, precedential decisions will be 
posted on an accessible HHS Web site and a precedential decision would 
be binding from the date posted. As regards the request that all OMHA 
and Council decisions be made publicly available (even if not 
precedential), we note that implementing this suggestion to publish the 
high volume of decisions issued at both the OMHA and Council levels 
would require extensive additional resources.
    We agree that it is important for CMS, its contractors, providers, 
beneficiaries and other stakeholders to be educated on the existence of 
precedential decisions and their effects on pending appeals. In order 
to promote consistency, CMS, OMHA and the Council have participated in 
joint training sessions for the past several years. We anticipate 
including training sessions on precedential decisions as an effective 
means of educating all levels of adjudicators. In addition, education 
sessions may also be appropriate during forums where the public 
participates, such as the OMHA Appellant Forum. We find it inadvisable, 
however, to require the Council to provide to MACs and QICs summaries 
of each precedential decision discussing the precedential effect of a 
decision and how it should be applied to future cases. The precedent 
arises from the Council decision itself, and creating separate 
summaries risks possible ambiguity or misunderstanding. While lower 
levels of review are bound by a legal interpretation or analysis, or 
certain factual findings, stated in a Council decision that has been 
designated as precedential, it is outside the Council's jurisdiction to 
instruct the review of lower-level adjudicators in cases not before the 
Council.
    As we have noted, Council precedents do not create new law or 
policy and therefore do not ``supplement'' manuals or guidelines but 
may analyze, interpret, and apply them.
    Comment: One commenter felt the proposal will not effectively 
reduce the backlog because it will take a significant amount of time to 
establish a meaningful body of precedential decisions.
    Response: We acknowledge that it will take time to establish a body 
of precedential decisions addressing enough issues to meaningfully 
impact the backlog. Nevertheless, we believe that establishing 
precedential decisions will allow for more predictable and consistent 
outcomes at all levels of administrative review. Moreover, we 
anticipate that designating certain Council decisions as precedential 
will help parties better determine the likelihood of success on appeal 
and assist parties in making decisions regarding whether to pursue 
administrative appeal of their cases.
    After review and consideration of the comments received, and for 
the reasons discussed above and in the proposed rule, we are finalizing 
the changes to Sec. Sec.  405.968, 405.1063, and 423.2063 as proposed 
without modification, and are finalizing Sec.  401.109 with the 
following modification. As discussed above, we are adding the following 
language to Sec.  401.109(a) to include the general factors the DAB 
Chair may consider when selecting a Council decision as precedential: 
``In determining which decisions should be designated as precedential, 
the DAB Chair may take into consideration decisions that address, 
resolve, or clarify recurring legal issues, rules or policies, or that 
may have broad application or impact, or involve issues of public 
interest.''
2. Attorney Adjudicators
    As described below, we proposed changes to provide authority for 
attorney adjudicators to issue decisions when a decision can be issued 
without an ALJ conducting a hearing under the regulations, to dismiss 
appeals when an appellant withdraws his or her request for an ALJ 
hearing, to remand appeals as provided in Sec. Sec.  405.1056 and 
423.2056 or at the direction of the Council, and to conduct reviews of 
QIC

[[Page 4982]]

and IRE dismissals. 81 FR 43790, 43794-43795. Sections 1155, 
1852(g)(5), 1860D-4(h), 1869(b)(1)(A), and 1876(c)(5)(B) of the Act 
provide a right to a hearing to the same extent as provided in section 
205(b) by the HHS Secretary for certain appealable decisions by 
Medicare contractors or SSA, when the amount in controversy and other 
filing requirements are met. Hearings under these statutory provisions 
are conducted by OMHA ALJs with delegated authority from the HHS 
Secretary, in accordance with these sections and the APA.
    Under current Sec. Sec.  405.1038 and 423.2038, OMHA ALJs are also 
responsible for a portion of the appeals workload that does not require 
a hearing because a request for an ALJ hearing may also be addressed 
without conducting a hearing. For example, under Sec. Sec.  405.1038 
and 423.2038, if the evidence in the hearing record supports a finding 
in favor of the appellant(s) on every issue, or if all parties agree in 
writing that they do not wish to appear before the ALJ at a hearing, 
the ALJ may issue a decision on the record without holding a hearing. 
Under current Sec. Sec.  405.1052(a)(1) and 423.2052(a)(1), OMHA ALJs 
must also address a large number of requests to withdraw requests for 
ALJ hearings, which appellants often file pursuant to litigation 
settlements, law enforcement actions, and administrative agreements in 
which they agree to withdraw appeals and not seek further appeals of 
resolved claims. In addition, pursuant to Sec. Sec.  405.1004 and 
423.2004, OMHA ALJs review whether a QIC or IRE dismissal was in error. 
Under these sections, the ALJ reviews the dismissal, but no hearing is 
required. In FY 2015, OMHA ALJs addressed approximately 370 requests to 
review whether a QIC or IRE dismissal was in error. Also adding to the 
ALJs' workload are remands to Medicare contractors for information that 
can only be provided by CMS or its contractors under current Sec. Sec.  
405.1034(a) and 423.2034(a), and for further case development or 
information at the direction of the Council. Staff may identify the 
basis for these remands before an appeal is assigned to an ALJ and a 
remand order is prepared, but an ALJ must review the appeal and issue 
the remand order, taking the ALJ's time and attention away from 
hearings and making decisions on the merits of appeals.
    Under section 1869(d) of the Act, an ALJ must conduct and conclude 
a hearing on a decision of a QIC under subsection (c). Subsection (c) 
of section 1869 of the Act involves the conduct of reconsiderations by 
QICs. We stated in the proposed rule that we believe the statute does 
not require the action to be taken by an ALJ in cases where there is no 
QIC reconsideration (for example, where the QIC has issued a 
dismissal), or in cases of a remand or a withdrawal of a request for an 
ALJ hearing, and therefore the findings of fact and conclusions of law 
need not be rendered. As we stated in the proposed rule, ALJ hearings 
are ideally suited to obtain testimony and other evidence, and hear 
arguments related to the merits of a claim or other determination on 
appeal. ALJs are highly qualified to conduct those hearings and make 
findings of fact and conclusions of law to render a decision in the 
more complex records presented with a mix of documentary and 
testimonial evidence. However, we stated in the proposed rule that 
well-trained attorneys can perform a review of the administrative 
record and more efficiently draft the appropriate order for certain 
actions, such as issuing dismissals based on an appellant's withdrawal 
of a request for an ALJ hearing, remanding appeals for information or 
at the direction of the Council, and conducting reviews of QIC and IRE 
dismissals.
    In addition, current Sec. Sec.  405.1038 and 423.2038 provide 
mechanisms for deciding cases without an oral hearing, based on the 
written record. Cases may be decided without an oral hearing when the 
record supports a finding in favor of the appellant(s) on every issue; 
all of the parties have waived the oral hearing in writing; or the 
appellant lives outside of the United States and did not inform the ALJ 
that he or she wishes to appear, and there are no other parties who 
wish to appear. We stated in the proposed rule that, in these 
circumstances, the need for an experienced adjudicator knowledgeable in 
Medicare coverage and payment law continues, and well-trained attorneys 
can review the record, identify the issues, and make the necessary 
findings of fact and conclusions of law when the regulations do not 
require a hearing to issue a decision in the appealed matter.
    To enable OMHA to manage requests for ALJ hearings and requests for 
reviews of QIC and IRE dismissals in a more timely manner and increase 
service to appellants, while preserving access to a hearing before an 
ALJ in accordance with the statutes, we proposed to revise rules 
throughout part 405, subparts I and J; part 422, subpart M; part 423, 
subparts M and U; and part 478, subpart B, to provide authority that 
would allow attorney adjudicators to issue decisions when a decision 
can be issued without an ALJ conducting a hearing under the 
regulations, to dismiss appeals when an appellant withdraws his or her 
request for an ALJ hearing, and to remand appeals for information that 
can only be provided by CMS or its contractors or at the direction of 
the Council, as well as to conduct reviews of QIC and IRE dismissals. 
We also proposed to revise the rules so that decisions and dismissals 
issued by attorney adjudicators may be reopened and/or appealed in the 
same manner as equivalent decisions and dismissals issued by ALJs. As 
we stated in the proposed rule, allowing attorney adjudicators to issue 
decisions, dismissals, and remands as described above, and to conduct 
reviews of QIC and IRE dismissals would expand the pool of OMHA 
adjudicators and allow ALJs to focus on cases going to a hearing, while 
still providing appellants with quality reviews and decisions, 
dismissals, and remands. In addition, we proposed that the rights 
associated with an appeal adjudicated by an ALJ would extend to any 
appeal adjudicated by an attorney adjudicator, including any applicable 
adjudication time frame, escalation option, and/or right of appeal to 
the Council.
    In addition, we noted that even if an attorney adjudicator was 
assigned to adjudicate a request for an ALJ hearing, that hearing 
request still could be reassigned to an ALJ for an oral hearing if the 
attorney adjudicator determined that a hearing could be necessary to 
render a decision. For example, if the parties waived their rights to 
an oral hearing in writing, allowing a decision to be issued without 
conducting an oral hearing in accordance with current Sec. Sec.  
405.1038(b)(1) or 423.2038(b)(1), but the attorney adjudicator believed 
testimony by the appellant or another party would be necessary to 
decide the appeal, the attorney adjudicator would refer the appeal to 
an ALJ to determine whether conducting an oral hearing would be 
necessary to decide the appeal regardless of the waivers, pursuant to 
current Sec. Sec.  405.1036(b)(3) or 423.2036(b)(3). We also noted that 
parties to a decision that is issued without an ALJ conducting an oral 
hearing pursuant to current Sec. Sec.  405.1038(a) or 423.2038(a) (that 
is, the decision is favorable to the appellant on every issue and 
therefore may be issued based on the record alone) continue to have a 
right to a hearing and a right to examine the evidence on which the 
decision is based and may pursue that right by requesting a review of 
the decision by the Council, which can remand the case for an ALJ to

[[Page 4983]]

conduct a hearing and issue a new decision.
    To implement this proposal, we proposed to revise provisions 
throughout part 405 subpart I, part 422 subpart M, part 423 subparts M 
and U, and part 478 subpart U, as detailed in proposed revisions to 
specific sections and in section III of the proposed rule. In addition, 
we proposed to define an attorney adjudicator in Sec.  405.902, which 
provides definitions that apply to part 405 subpart I, as a licensed 
attorney employed by OMHA with knowledge of Medicare coverage and 
payment laws and guidance. We also proposed to indicate in Sec.  
405.902 that the attorney adjudicator is authorized to take the actions 
provided for in subpart I on requests for ALJ hearing and requests for 
reviews of QIC dismissals. We stated that these revisions to Sec.  
405.902 would provide the public with an understanding of the attorney 
adjudicator's qualifications and scope of authority, and we also noted 
that attorney adjudicators would receive the same training as OMHA 
ALJs, which we note would focus on substantive areas of Medicare 
coverage and payment policy, as well as administrative procedures 
unrelated to the hearing components for which ALJs are exclusively 
responsible.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    We received forty-seven comments on this proposal. A majority of 
the comments came from providers and suppliers, organizations 
representing providers and suppliers, beneficiary advocacy 
organizations, representatives, health plan providers, CMS contractors, 
and individuals. Twenty-nine of the commenters, mostly from the 
appellant community, generally supported or raised no objection to the 
proposal, but had requests for clarification, suggestions for 
modifications, and concerns or questions. Three commenters fully 
supported the proposal. Five commenters were equivocal. Three 
commenters generally supported the proposal, but opposed allowing 
attorney adjudicators to conduct reviews of QIC and IRE dismissals. 
Seven commenters opposed the proposal, including two comments from 
professional associations for ALJs.
    Comment: A majority of commenters, mostly from organizations 
representing the appellant community, voiced broad support for the 
proposal, but a few commenters questioned whether the use of attorney 
adjudicators would significantly alleviate the backlog. One commenter 
questioned the utility of using attorney adjudicators given that all 
attorney adjudicators would be afforded the same training as ALJs. The 
commenter suggested it seemed logical to simply hire more ALJs instead.
    Response: We thank the commenters for their support. Requests for a 
hearing before an ALJ have increased dramatically in recent years and 
appeals pending at OMHA continue to exceed OMHA's capacity to 
adjudicate appeals within the time frames set forth in the statute and 
rules. The introduction of attorney adjudicators is one action that 
would help OMHA process cases more efficiently. Attorney adjudicators 
would allow OMHA to identify and adjudicate appeals that do not require 
a hearing as early in the administrative process as possible. The use 
of attorney adjudicators to adjudicate these appeals would reduce the 
wait time for appellants to receive decisions in cases in which no 
hearing is required or conducted. It would also help to address the 
volume of appeals OMHA continues to receive by channeling some of those 
appeals through a less costly adjudicator, which will allow OMHA to 
hire more adjudicators than the same resources would allow if allocated 
to hiring ALJs and support staff, while reserving ALJs and their 
support staff for appeals that require a hearing. We estimated in the 
proposed rule that, based on FY 2015 data, the proposal to expand the 
pool of adjudicators at OMHA could redirect approximately 23,650 
appeals per year to attorney adjudicators, to process these appeals at 
a lower cost to the government than would be required if only ALJs were 
used to address the same workload. (Basing the estimates on FY 2016 
data, we now estimate the impact to be approximately 24,500 appeals per 
year.) Thus, we believe the use of attorney adjudicators will help OMHA 
manage high receipt levels, and help alleviate the backlog by allowing 
OMHA to increase its overall adjudication capacity. OMHA has added as 
many ALJs and support staff as its current space and budget allow it to 
sustain. Additional ALJs and support staff will be hired to meet the 
need for adjudicators, as resources become available. However, the 
proposal would allow for OMHA to adjudicate more appeals using existing 
resources by providing for adjudication by attorney adjudicators of 
appeals that do not require a hearing before an ALJ.
    Comment: Two commenters asked if attorney adjudicators would be 
doing the work that paralegals are already currently performing under 
the direction of an ALJ.
    Response: Some OMHA paralegals do currently draft remands, 
dismissals, and decisions that will be made on the record under the 
direction of an ALJ. However, we do not believe that is comparable to 
the work that will be performed by attorney adjudicators. Attorney 
adjudicators would be licensed attorneys and would have full 
responsibility for reviewing the record, assessing the pertinent facts 
in the record and identifying the relevant authorities, conducting the 
necessary analysis, and drafting and issuing the decision, remand, or 
dismissal under the attorney adjudicator's signature.
    Comment: A few commenters believed that attorney adjudicators would 
not resolve the backlog because providers are unlikely to waive their 
right to a hearing if doing so would require them to forego the ability 
to present clinical information to either an ALJ or an attorney 
adjudicator.
    Response: As discussed above and in the proposed rule, we believe 
attorney adjudicators will be an important new resource to help address 
the volume of appeals by increasing OMHA's adjudications capacity, 
which may help alleviate the backlog of pending appeals at OMHA. 
However, we have not suggested that the attorney adjudicator proposal 
will resolve the backlog; it is one of a number of administrative 
actions that we are undertaking to address the appeals workload and 
resulting backlog, and is in concert with other actions, such as 
requesting additional funding for the program. Further, we do not 
believe the proposal would require providers or other appellants to 
forego the ability to present clinical information to either an ALJ or 
attorney adjudicator. Although waiving the right to a hearing under 
current Sec. Sec.  405.1038(b) and 423.2038(b) means an appellant and 
the other parties forgo the ability to present clinical information to 
an ALJ at a hearing, that does not preclude the appellant and other 
parties from presenting written information, including clinical 
information, for the ALJ to consider in issuing a decision based on the 
record alone, in accordance with current Sec. Sec.  405.1018 and 
423.2018. The same would be true under the regulations as finalized in 
this rule, except that an attorney adjudicator instead of an ALJ would 
issue the decision. The decision to waive the right to appear at a 
hearing before an ALJ is solely at the discretion of the appellant and, 
as finalized in this rule, the other parties who would be sent a notice 
of hearing if a hearing were to be scheduled. By waiving the right to 
appear at a hearing, the party would be requesting that the ALJ or 
attorney adjudicator issue a decision based on the written evidence in 
the record. In

[[Page 4984]]

addition, we note that parties also have the option to withdraw a 
waiver of the right to appear at the hearing any time before a notice 
of decision has been issued under Sec. Sec.  405.1036(b)(2) and 
423.2036(b)(2).
    Comment: Many of the commenters who generally supported the 
proposal believed that OMHA should establish clear and specific 
guidelines for both the qualifications and the hiring of attorney 
adjudicators. Commenters suggested that attorney adjudicators should 
have at least one to three years of experience in Medicare coverage, 
payment, and appeals, obtained through work with a provider, OMHA, or 
CMS or its contractors. A few commenters recommended that OMHA hire its 
existing attorney advisors working under the direction of ALJs as 
attorney adjudicators.
    Response: We thank the commenters for their support. We believe the 
definition we proposed in Sec.  405.902 is sufficient to identify the 
requirement that attorney adjudicators be licensed attorneys, the 
knowledge that attorney adjudicators will possess, and their scope of 
authority. OMHA will identify desirable qualifications, including the 
specific knowledge, skills, and abilities necessary for an attorney 
adjudicator to be successful in the position, and human resource 
professionals will determine the specific guidelines for the 
qualifications and hiring for the position of attorney adjudicator in 
accordance with the Office of Personnel Management and HHS Departmental 
standards, after the effective date of the rule. The position 
description for the attorney adjudicator position and the job 
announcements will reflect these assessments and determinations. 
Further, although we may consider hiring existing OMHA attorney 
advisors as attorney adjudicators, we do not believe it would be 
appropriate to detail this type of information in the regulations at 
this time, or to make statements about what the qualifications may be 
before those delegated with authority to take human resource actions, 
such as the classification of positions and the determination of 
qualification standards, are consulted.
    Comment: Most commenters emphasized the importance of training to 
help ensure attorney adjudicator decisions are consistent with Medicare 
law and guidance. One commenter from a professional association for 
ALJs indicated ``with no definition of well trained or review criteria, 
an attorney adjudicator with little or no Medicare adjudicatory 
training or experience is more likely to issue a legally or factually 
incorrect decision than a well-seasoned ALJ.'' By contrast, several of 
the commenters who generally supported the proposal appreciated that, 
as discussed above and in section II.B of the proposed rule, attorney 
adjudicators would receive the same training as ALJs.
    Response: We thank the commenters for their support, and disagree 
with the commenter who opined that in the absence of clearly defined 
training or review criteria, an attorney adjudicator with little or no 
Medicare adjudicatory training/experience would be more likely to issue 
a legally or factually incorrect decision than an ALJ. Section 405.902, 
as finalized in this rule, defines an attorney adjudicator as a 
licensed attorney employed by OMHA ``with knowledge of Medicare 
coverage and payment laws and guidance.'' As noted above (and discussed 
in section II.B of the proposed rule), attorney adjudicators would 
undergo the same training as new OMHA ALJs to help ensure that their 
decisions are consistent with Medicare law and guidance. In addition to 
hiring qualified adjudicators, OMHA ALJs and other legal staff, which 
would include attorney adjudicators, are required to attend continuing 
education and training programs to maintain familiarity with the most 
current Medicare law and guidance.
    Comment: One commenter, on behalf of an association for ALJs, asked 
``what does guidance mean with respect to the Medicare Program, and if 
the attorney adjudicator receives guidance as to how to proceed with 
the claim from a supervisor at OMHA, an attorney adjudicator is not an 
independent decision-maker.''
    Response: We believe this commenter misinterpreted the term 
``guidance'' as set forth in the definition of attorney adjudicator in 
Sec.  405.902. CMS and its contractors issue guidance that describe 
criteria for coverage and payment of items and services in the form 
local coverage determinations (LCDs), and CMS program memoranda and 
manual instructions. This is the guidance that is referenced in the 
definition of attorney adjudicator in Sec.  405.902. Current Sec.  
405.1062(a) provides that ALJs are not bound by LCDs or CMS program 
guidance but must give substantial deference to these policies if they 
are applicable to a particular case. Section 405.1062(a), as finalized 
in this rule, extends the provision to require that attorney 
adjudicators, like ALJs, give the same substantial deference to these 
polices.
    Comment: To guarantee an impartial and fair adjudication process, 
some commenters suggested OMHA should require attorney adjudicators to 
file a financial disclosure report to ensure no financial conflicts of 
interest exist. Other commenters believed that the fact that attorney 
adjudicators would be rated and eligible for awards could create a 
conflict of interest because attorney adjudicators would have no 
protection from agency interference and may be assigned cases outside 
of rotation.
    Response: As executive branch employees, all OMHA employees are 
subject to the Federal criminal conflict of interest statute at 18 
U.S.C. 208, which prohibits a federal employee from participating in 
matters in which the employee, certain family members, or certain 
business associates have a financial interest, and to the Federal 
Employee Standards of Conduct at 5 CFR 2635, which provide general 
principles of ethical conduct and administer requirements regulating 
appearances of conflicts of interests, gifts, financial interests, 
impartiality in official duties, outside employment, and misuse of 
position. The regulations at 5 CFR 2634, implementing Federal statutes 
and administered by the Office of Government Ethics, set the guidelines 
for which employees are required to file financial disclosure reports 
subject to certification by an ethics official, in accordance with 
applicable statutes. HHS ethics officials, in consultation with the 
Office of Government Ethics, will determine which employees will be 
required to submit financial disclosures in accordance with the ethics 
regulations at 5 CFR 2634, which determines the content of such 
disclosures.
    In addition, Sec. Sec.  405.1026 and 423.2026, as finalized in this 
rule, serve as important safeguards in the administrative appeals 
process, and provide that an ALJ or attorney adjudicator cannot 
adjudicate an appeal if he or she is prejudiced or partial to any party 
or has any interest in the matter pending for decision. This rule as 
finalized also provides a process that would allow a party to object to 
an assigned ALJ or attorney adjudicator. The objecting party would also 
have the opportunity to have the Council review the objections in cases 
where an adjudicator does not withdraw pursuant to Sec. Sec.  405.1026 
and 423.2026.
    Under 5 U.S.C. 43 and 5 CFR 430.101, attorney adjudicators, as 
Federal employees, would be subject to the Performance Management 
Appraisal Program (PMAP), which provides for an annual performance 
appraisal of HHS Federal employees. ALJs are exempt from annual 
performance appraisals pursuant to 5 U.S.C. 4301(2)(D) and 5 CFR 
430.202(b). However, the statutes

[[Page 4985]]

governing PMAPs do not provide an exclusion that would exempt attorney 
adjudicators from annual performance reviews. Annual performance 
reviews are an important tool for holding employees accountable and we 
believe that as stewards of taxpayer dollars, we are responsible for 
holding adjudicators accountable for minimal production levels and 
levels of quality in their work, through annual performance reviews or 
otherwise. However, in managing its obligation to administer PMAPs for 
all OMHA employees except ALJs, OMHA will take precautions to avoid 
performance criteria that would interfere with an attorney 
adjudicator's ability to independently make findings of fact based on 
the record, identify the applicable authorities, and issue a decision 
in accordance with those authorities, so as to afford attorney 
adjudicators with a similar level of qualified decisional independence 
that is afforded to ALJs. Further, OMHA's business process is to assign 
appeals to ALJs in rotation so far as practicable, as required under 5 
U.S.C. 3105, and OMHA would assign appeals to attorney adjudicators in 
the same manner. Based on the foregoing, we believe there will be 
protections in place to guarantee an impartial and fair adjudication 
process for all parties to an appeal before an OMHA adjudicator, 
regardless of whether the case is assigned to an ALJ or to an attorney 
adjudicator.
    Comment: Some commenters felt that attorney adjudicator decisions 
should be subject to oversight or a quality review process.
    Response: We thank the commenters for their suggestion. In addition 
to reviews by the Council pursuant to a party's request for review or a 
referral by CMS as a check on individual decisions issued by ALJs and 
as proposed, attorney adjudicators, OMHA has a quality assurance 
program (QAP). The OMHA QAP involves a retrospective review of ALJ 
decisions and assists OMHA in identifying opportunities for training 
and policy development to increase decisional quality. The OMHA QAP 
will include attorney adjudicator decisions after the rule is 
implemented.
    Comment: One commenter suggested OMHA should compile a yearly 
report to assess the impact attorney adjudicators have on the backlog, 
including the types of decisions issued and the percentage of 
dispositions that were in favor of the government.
    Response: We thank the commenter for its suggestion. The OMHA Web 
site (www.hhs.gov/omha) currently contains summary tables that list 
overall disposition data and dispositions by ALJ. The data, which is 
organized by fiscal year, includes the number of dispositions that were 
fully favorable, unfavorable, partially favorable, and dismissed. The 
disposition data will be expanded to include data for attorney 
adjudicators as they begin to decide appeals. We believe this data 
would assist OMHA and the public with assessing the impact of attorney 
adjudicators on the appeals workload.
    Comment: One commenter indicated the proposed rule does not specify 
who would assign the cases to the ALJs and attorney adjudicators. 
Several commenters asked how cases will be assigned to attorney 
adjudicators and suggested OMHA must establish a well-defined process 
for assignment of cases to attorney adjudicators.
    Response: OMHA's business process is to assign appeals to ALJs in 
rotation so far as practicable, as required under 5 U.S.C. 3105, and 
OMHA would assign appeals to attorney adjudicators in the same manner. 
More information on the appeal assignment process is available in the 
OMHA Case Processing Manual (OCPM), which is accessible to the public 
at the OMHA Web site (www.hhs.gov/omha). If an appeal is initially 
assigned to an ALJ and the ALJ later determines it can be adjudicated 
by an attorney adjudicator, the appeal would be reassigned to an 
attorney adjudicator in the same manner as a new appeal assignment to 
an attorney adjudicator. Similarly, if an appeal is initially assigned 
to an attorney adjudicator and the attorney adjudicator later 
determines that only an ALJ can adjudicate the appeal, the appeal would 
be reassigned to an ALJ in the same manner as a new appeal assignment 
to an ALJ.
    Comment: Several commenters supported the proposal to allow 
requests for hearings initially assigned to an attorney adjudicator to 
be reassigned to an ALJ for oral hearing if necessary in order to 
render a decision. However, commenters suggested OMHA establish clearer 
guidance and thresholds for reassignment and a timeline for an attorney 
adjudicator to reassign an appeal to an ALJ. One commenter indicated 
the proposal does not provide the regulatory text or authority for an 
attorney adjudicator to refer an appeal to an ALJ for hearing when the 
attorney adjudicator determines a hearing is required. A few commenters 
also indicated the proposal does not specify the procedure for 
reassignment of cases from an ALJ to an attorney adjudicator, where the 
ALJ has determined the disposition could be fully favorable, nor does 
the proposal require the ALJ to make a record of such a determination.
    Response: We believe the threshold requirement of whether a hearing 
is necessary for a decision is clear in the statute and regulations. In 
addition, we decline to establish a time frame in the regulations for 
an attorney adjudicator to reassign a case to an ALJ, as this would be 
an internal process, and to do so would limit our flexibility to 
establish and change business processes through OMHA operational 
policies, which the Administrative Procedure Act (APA) permits OMHA to 
adopt without notice and comment rulemaking. We also do not believe 
that regulation text or authority is necessary for an attorney 
adjudicator to refer an appeal to an ALJ, as an attorney adjudicator 
would be referring the appeal to an ALJ because the attorney 
adjudicator believes that he or she does not have the authority to 
issue a decision in the appeal, for example, because the attorney 
adjudicator believes a hearing is necessary to decide the appeal.
    Further, the procedure for reassignment of cases from an ALJ to an 
attorney adjudicator, for example, where the ALJ has determined the 
disposition could be fully favorable to the appellants on every issue 
based on the record and no other party is liable for the claims at 
issue, will also be established by OMHA operational policies, including 
the OCPM. However, we note that in the scenario presented in the 
comment, the ALJ would also have the authority to retain assignment of 
the appeal and issue a decision without conducting a hearing. In the 
event that an ALJ determines the disposition could be fully favorable 
to the appellants on every issue based on the record and no other party 
is liable for the claims at issue and the case is reassigned to an 
attorney adjudicator, the ALJ will not make a record of the 
determination because the attorney adjudicator will make an independent 
assessment and will not be bound by the ALJ's determination.
    Comment: Several commenters asked whether OMHA would inform the 
parties to an appeal when the appeal is assigned to an attorney 
adjudicator.
    Response: OMHA would continue its current practice of issuing a 
Notice of Assignment to appellants when a request is assigned, which 
includes the assigned adjudicator. Appellants and other parties can 
also obtain and track the status of a pending appeal, including its 
assigned adjudicator, by visiting OMHA's ALJ Appeal Status Information 
System (AASIS) page at: http://aasis.omha.hhs.gov.
    Comment: Several commenters asked whether a party waiving the right 
to attend the hearing could choose a

[[Page 4986]]

decision by either an attorney adjudicator or an ALJ, and whether 
parties could object to the assignment. One commenter suggested 
modeling the attorney adjudicator process on existing Federal court 
process for the assignment of magistrates, where all parties would be 
given the option for their case to be assigned to an attorney 
adjudicator.
    Response: Sections 405.1038 and 423.2038, as finalized in this 
rule, specifically indicate an ALJ or attorney adjudicator may decide a 
case on the record when an appeal can be decided without a hearing 
before an ALJ. These regulations, as finalized, serve as notice that 
waiving the right to appear at a hearing allows an attorney adjudicator 
to issue a decision, if a hearing is not necessary to decide the appeal 
(we note that a hearing may still be conducted by an ALJ if it is 
necessary to decide the appeal, even if one or more of the parties has 
waived their right to appear at the hearing). We believe that allowing 
the parties to choose whether an ALJ or attorney adjudicator will issue 
the decision when the right to appear at the hearing is waived, or to 
object if the appeal is assigned to an attorney adjudicator would 
negate some of the anticipated efficiencies of the proposal and provide 
the parties with undue influence over the adjudicator assigned to the 
appeal. However, we note that under Sec. Sec.  405.1036(b)(2) and 
423.2036(b)(2), as finalized in this rule, appellants and other parties 
may withdraw a waiver of the right to appear at the hearing at any time 
before a notice of decision has been issued. In addition, if an 
appellant has concerns about the individual assigned to the appeal 
having a conflict or bias, Sec. Sec.  405.1026 and 423.2026, as 
finalized in this rule, can be used to request that the adjudicator 
withdraw from the appeal. We appreciate the suggestion to consider 
having an option for the parties to have their case assigned to an 
attorney adjudicator, similar to the Federal court process for some 
magistrate assignments. However, we do not believe that such an option 
would be appropriate for the administrative appeals addressed in this 
rule, because attorney adjudicators may only adjudicate appeals that do 
not require a hearing. A hearing may be necessary in some cases to 
decide the appeal, and in these cases, under section 1869 of the Act 
and the regulations finalized in this rule, only an ALJ may conduct a 
hearing.
    Comment: Two commenters from professional associations for ALJs 
indicated that appellants, including self-represented appellants, may 
not know the difference between a decision by an independent ALJ as 
compared to a decision issued by an attorney adjudicator. In the 
commenters' opinion, the record must clearly demonstrate a valid and 
informed waiver of the right to have a claim heard by an ALJ.
    Response: We do not believe there will be a qualitative distinction 
in decisions issued by ALJs and attorney adjudicators, and both 
adjudicators will share a similar qualified decisional independence 
with respect to the decisions that they issue, as discussed further 
below. However, parties to Medicare claims and appeals are presumed to 
have knowledge of the published Medicare rules and guidance, regardless 
of whether they have representation. Therefore, we believe this final 
rule would serve as sufficient notice that by waiving the right to 
appear at a hearing, parties would be aware that the decision may be 
issued by either an ALJ or an attorney adjudicator, if no hearing is 
required to decide the appeal. However, we will review and revise 
appeal instructions, and online and other guidance available to 
appellants to highlight that if an oral hearing is waived, an attorney 
adjudicator may issue the decision. We will also review and revise 
current Form HHS-723 (Waiver of Right to an Administrative Law Judge 
(ALJ) Hearing) to clearly convey that a decision may be issued by an 
attorney adjudicator.
    With regard to unrepresented beneficiaries and enrollees, we 
believe they represent the most vulnerable segment of the appellant 
population. However, it is rare that an unrepresented beneficiary 
waives the right to appear at the hearing. In practice, in the few 
instances when this does occur, OMHA reviews the stated reason for 
waiving the right to appear at the hearing and may contact the 
unrepresented beneficiary or enrollee to confirm that the waiver is 
knowingly made. We believe this process will help ensure that an 
unrepresented beneficiary or enrollee understands the implications of 
waiving his or her right to appear at the hearing and the record 
demonstrates that understanding. In addition, we are reviewing the 
current form for waiving the right to appear at a hearing (form HHS-
723), to determine if revisions may be necessary so users will 
understand that by waiving the right to appear at the hearing, the 
waiving party would be aware that the decision may be issued by either 
an ALJ or an attorney adjudicator, if no hearing is required to decide 
the appeal.
    Comment: Several commenters asked whether a party could appeal an 
unfavorable decision by an attorney adjudicator to an ALJ. Several 
commenters believed OMHA should allow parties who disagree with the 
attorney adjudicator's decision to request an ALJ review the attorney 
adjudicator's decision and allow the ALJ to reissue an amended decision 
should the ALJ find the attorney adjudicator's decision to be 
deficient.
    Response: A party would not have the right to appeal an unfavorable 
decision by an attorney adjudicator to an ALJ. All parties to an appeal 
would receive a written notice of decision issued by an attorney 
adjudicator. The notice of decision would provide instructions for 
requesting a review of the decision by the Council if a party disagrees 
with the decision. The rights associated with an appeal adjudicated by 
an ALJ would extend to any appeal adjudicated by an attorney 
adjudicator, including any applicable adjudication time frame, 
escalation option, and/or right of appeal to the Council (see 
Sec. Sec.  405.1102 and 405.1106, as finalized in this rule). Parties 
to a decision issued without an ALJ conducting an oral hearing pursuant 
to Sec. Sec.  405.1038(a) or 423.2038(a) continue to have a right to a 
hearing and a right to examine the evidence on which the decision is 
based, and may pursue that right by requesting review of the decision 
by the Council, which can remand the case for an ALJ to conduct a 
hearing and issue a new decision.
    Comment: One commenter noted that the proposed rule is silent on 
the requirements for a timely request for ALJ hearing when a party to 
an appeal wishes to appeal a fully favorable on the record decision 
issued by an attorney adjudicator.
    Response: As discussed above, parties to a decision issued without 
an ALJ conducting an oral hearing pursuant to Sec. Sec.  405.1038(a) or 
423.2038(a) continue to have a right to an ALJ hearing, and may pursue 
that right by appealing to the Council, which can remand the case for 
an ALJ to conduct a hearing and issue a new decision. Sections 
405.1102(a)(1) and 423.2102(a)(1), as finalized in this rule, provide 
that a party to a decision or dismissal issued by an ALJ or attorney 
adjudicator may request a review of the decision by the Council by 
filing a written request for review within 60 calendar days after 
receipt of the ALJ's or attorney adjudicator's decision or dismissal. 
We believe Sec. Sec.  405.1102(a)(1) and 423.2102, as finalized in this 
rule, provide the requirements for filing a timely request to appeal a 
decision issued by an attorney adjudicator, including a fully favorable 
decision issued by an attorney

[[Page 4987]]

adjudicator. In addition, we note that the notice of decision sent with 
an attorney adjudicator's decision will include instructions for filing 
a request for review with the Council, including the time frame in 
which the request for review must be filed.
    Comment: One commenter stated ``in any waiver to allow a decision 
by an attorney adjudicator, it must be clearly explained that by 
accepting such a decision, the beneficiary may be waiving his or her 
right to appeal the decision to the Federal district court as it will 
not have completed all administrative proceedings below.''
    Response: We disagree with the commenter's interpretation that a 
beneficiary would be waiving their right to appeal to Federal district 
court by waiving the right to an ALJ hearing. Section 405.904(a)(2), as 
finalized in this rule, states ``If the beneficiary obtains a hearing 
before the ALJ and is dissatisfied with the decision of the ALJ, or if 
the beneficiary requests a hearing and no hearing is conducted, and the 
beneficiary is dissatisfied with the decision of an ALJ or attorney 
adjudicator, he or she may request the Council to review the case. If 
the Council reviews the case and issues a decision, and the beneficiary 
is dissatisfied with the decision, the beneficiary may file suit in 
Federal district court if the amount remaining in controversy and the 
other requirements for judicial review are met.''
    Comment: A few commenters, on behalf of Medicare contractors, asked 
whether attorney adjudicators could render summary decisions in favor 
of CMS Recovery Auditors or other interested contractors, or only in 
favor of the appellant. These commenters suggested summary decisions 
should be permitted to extend in both directions.
    Response: We interpret the commenter's use of the term ``summary 
decisions'' to mean decisions that are issued on the record without a 
hearing before an ALJ, and we assume the commenters are asking whether 
attorney adjudicators could issue decisions on the record that are 
favorable to CMS and its contractors (or to CMS, the IRE, and/or the 
plan sponsor) pursuant to Sec. Sec.  405.1038(a) and 423.2038(a). 
Sections 405.1038(a) and 423.2038(a), as finalized in this rule, 
clearly limit the ALJ's or attorney adjudicator's ability to issue 
decisions on the record to situations where the administrative record 
supports a finding fully in favor of the appellant(s) on every issue 
and no other party to the appeal is liable for claims at issue. 
Decisions that are favorable to CMS and its contractors (or to CMS, the 
IRE, and/or the plan sponsor), are not fully favorable to the 
appellant(s) (because CMS and its contractors (or CMS, the IRE and/or 
the plan sponsor) are not appellants in a request for an ALJ hearing), 
and therefore, such a decision could not be issued on the record under 
Sec. Sec.  405.1038(a) and 423.2038(a.), as finalized in this rule.
    Comment: Many commenters suggested that OMHA establish a bright 
line rule and clear scope of an attorney adjudicator's authority. One 
commenter indicated ``the number of cases that fall within [attorney 
adjudicators'] scope of authority is so limited, that their use will 
have no more than negligible impact on the processing of appeals.''
    Response: We believe the rule as finalized, clearly establishes the 
scope of an attorney adjudicator's authority. The scope and authority 
of an attorney adjudicator to issue decisions under the rule as 
finalized, is set forth in Sec.  405.902, which states an ``attorney 
adjudicator means a licensed attorney employed by OMHA with knowledge 
of Medicare coverage and payment laws and guidance, and authorized to 
take the actions provided for in this subpart on requests for ALJ 
hearing and requests for reviews of QIC dismissals.'' Other rules in 
the subpart then describe when an attorney adjudicator may issue a 
decision, dismissal, or remand. As finalized in this rule, an attorney 
adjudicator may issue: (1) Decisions that can be issued without an ALJ 
conducting a hearing in accordance with Sec. Sec.  405.1038 and 
423.2038; (2) dismissals when an appellant withdraws his or her request 
for an ALJ hearing in accordance with Sec. Sec.  405.1052 and 423.2052; 
(3) remands to the QIC, IRE, or other contractor, or the Part D plan 
sponsor, in accordance with Sec. Sec.  405.1056 and 423.2056; and (4) 
reviews of QIC and IRE dismissals in accordance with Sec. Sec.  
405.1004 and 423.2004.
    Comment: Some commenters supported allowing attorney adjudicators 
to issue dismissals when an appellant withdraws a request for hearing, 
remands for information that can only be supplied by CMS or contractors 
and, in certain instances, issue decisions that are fully favorable to 
the appellant, but the commenters opposed allowing attorney 
adjudicators to review a QIC or IRE dismissal, stating neither Sec.  
405.1004 nor Sec.  423.2004 preclude a hearing being held for review of 
a QIC or IRE dismissal, respectively. These commenters suggested that 
the review of QIC and IRE dismissals ``may sometimes require a hearing 
to determine findings of fact or conclusions of law.''
    Response: We recognize that current Sec. Sec.  405.1004 and 
423.2004 do not preclude conducting a hearing on a review or a QIC or 
IRE dismissal, and acknowledge review of QIC and IRE dismissals may 
sometimes require a hearing to determine findings of fact or 
conclusions of law. As discussed previously regarding the reassignment 
of cases from an attorney adjudicator to an ALJ, an attorney 
adjudicator may refer an appeal to an ALJ because the attorney 
adjudicator believes that he or she does not have the authority to 
issue a decision in the appeal, for example, because the attorney 
adjudicator believes a hearing is necessary to determine findings of 
fact or conclusions of law. These appeals will be reassigned to an ALJ 
to conduct a hearing. However, as discussed above and in section II.B 
of the proposed rule, although under section 1869(d) of the Act, an ALJ 
must conduct and conclude a hearing on a decision of a QIC, we believe 
that the statute does not require that the same action be taken by an 
ALJ in cases where there is no QIC reconsideration, for example, where 
the QIC has dismissed the request for reconsideration. In addition, we 
believe the determination whether a QIC or IRE dismissal was issued in 
error generally can be conducted on the record, given the limited scope 
of review, in the same manner as QICs review MAC dismissals of 
redetermination requests, and the Council reviews ALJ dismissals of 
requests for hearing. Moreover, we believe attorney adjudicators will 
be capable of reviewing the administrative record, identifying the 
issues related to the dismissal, and determining whether the QIC and 
IRE dismissal was issued in error.
    Comment: One commenter requested that for cases where an attorney 
adjudicator finds the QIC or IRE dismissed an appeal in error, the 
appeal should be remanded to the QIC or IRE with the attorney 
adjudicator's reasoning for the decision and with instructions on how 
to proceed.
    Response: Sections 405.1004(b) and 423.2004(b), as finalized in 
this rule, state if the ALJ or attorney adjudicator determines that the 
QIC's or IRE's dismissal was in error, he or she vacates the dismissal 
and remands the case to the QIC or IRE for a reconsideration in 
accordance with Sec. Sec.  405.1056 and 423.2056. We expect that an 
ALJ's or attorney adjudicator's notice of remand will explain the ALJ's 
or attorney adjudicator's basis for vacating the QIC's or IRE's 
dismissal, and Sec. Sec.  405.1056(d) and 423.2056(d)), as finalized in 
this rule, state that the ALJ or attorney adjudicator will remand the 
case to the

[[Page 4988]]

QIC or IRE for a reconsideration, which we believe is the only required 
instruction.
    Comment: A few commenters, including two professional associations 
for ALJs, opposed the attorney adjudicator proposal on the basis that 
the proposal is inconsistent with the APA or the Act and improperly 
delegates decision-making authority to individuals who are not 
appointed as ALJs. The commenters also argued provisions of the APA and 
the Act give ALJs judicial independence to render decisions, and 
attorney adjudicators do not have judicial independence to the same 
extent as ALJs.
    Response: We disagree with the commenters and believe the proposal 
is fully consistent the APA and the Act. As a preliminary matter, we 
note that in interpreting the APA, courts have held that ALJs have 
``qualified decisional independence'' in carrying out their 
adjudicative functions, rather than full ``judicial independence.'' 
According to the case law, the intent of the APA is that ALJs should 
decide each case based on the record evidence, free from any pressure 
from their employing agencies to reach a particular result in a 
particular case. This decisional independence is designed to help 
ensure impartial decision-making and to maintain public confidence in 
the essential fairness of the process. This decisional independence is, 
however, ``qualified'' because ALJs are still bound to follow the 
regulations and policies of their employing agency, and are also 
subject to direction designed to ensure efficient operation and service 
to the public. See Butz v. Economou, 438 U.S. 478, 513 (1978); Abrams 
v. Social Security Administration, 703 F. 3d 538, 545 (Fed. Cir. 2012); 
Nash v. Bowen, 869 F. 2d 675, 680 (2nd Cir. 1989), cert. denied, 493 
U.S. 812 (1989); Nash v. Califano, 613 F. 2d 10, 15 (2nd Cir. 1980). In 
implementing this final rule, OMHA will afford attorney adjudicators 
the same level of qualified decisional independence. As discussed 
above, OMHA will take precautions to avoid performance criteria that 
would interfere with an attorney adjudicator's ability to independently 
make findings of fact based on the record, identify the applicable 
authorities, and issue a decision in accordance with those authorities, 
so as to afford attorney adjudicators with a similar level of qualified 
decisional independence that is afforded to ALJs. Further, OMHA's 
business process is to assign appeals to ALJs in rotation so far as 
practicable, as required under 5 U.S.C. 3105, and OMHA would assign 
appeals to attorney adjudicators in the same manner. This qualified 
decisional independence helps ensure an impartial and fair adjudication 
process for all parties to an appeal before an OMHA adjudicator, 
regardless of whether the case is assigned to an ALJ or to an attorney 
adjudicator.
    Sections 554 and 556 of the APA apply only to adjudications that 
are required by statute to be determined on the record after an 
opportunity for an agency hearing. In accordance with sections 1155, 
1852(g)(5), 1860D-4(h), 1869(b)(1)(A), and 1876(c)(5)(B) of the Act and 
their implementing regulations (at 42 CFR part 405 subpart I, part 478 
subpart B, part 422 subpart M, and part 423 subpart U), individuals 
dissatisfied with certain lower level appeal determinations are 
entitled to a hearing, subject to timely filing and amount in 
controversy limitations, to the same extent as is provided under 
section 205(b) of the Act. Reading these sections together, the Act 
directs the Secretary of Health and Human Services to provide an 
opportunity for a hearing regarding the right to Medicare benefits, 
which the Secretary has delegated to OMHA ALJs to conduct and render a 
decision. The rule, as finalized, is not inconsistent with the APA or 
the Act, but instead would augment this process by authorizing attorney 
adjudicators to make decisions in appeals when there is no requirement 
for a hearing, or in cases where parties waive the right to appear at a 
hearing before an ALJ and the hearing is not necessary to make a 
decision. The Act requires only that parties be given an opportunity 
for a hearing; no provision of the Act requires the Secretary to 
utilize an ALJ to issue a decision that does not require a hearing, for 
example, because the parties have waived their right to one or because 
no reconsideration has been issued.
    Parties will continue to have an opportunity for a hearing where a 
reconsideration has been issued, the hearing request has been timely 
filed, and the amount remaining in controversy has been met. In that 
respect, the proposal, as finalized in this rule, does not change the 
process or the rights of the parties. For example, if the parties 
waived their rights to an oral hearing in writing, allowing a decision 
to be issued without conducting an oral hearing in accordance with 
Sec. Sec.  405.1038(b)(1) or 423.2038(b)(1), but the attorney 
adjudicator believed testimony by the appellant or another party would 
be necessary to decide the appeal, the attorney adjudicator would refer 
the appeal to an ALJ to determine whether conducting an oral hearing 
would be necessary to decide the appeal regardless of the waivers, 
pursuant to Sec. Sec.  405.1036(b)(3) or 423.2036(b)(3). In addition, 
parties to a decision issued without an ALJ conducting an oral hearing 
pursuant to Sec. Sec.  405.1038(a) or 423.2038(a) continue to have a 
right to a hearing and a right to examine the evidence on which the 
decision is based, and may pursue that right by requesting review of 
the decision by the Council, which can remand the case for an ALJ to 
conduct a hearing and issue a new decision. Under the rule we are 
finalizing, either an attorney adjudicator or an ALJ may issue a 
decision when no hearing is required before an ALJ, but if a hearing is 
to be held, the ALJ will conduct that hearing and issue the decision. 
We believe this process is fully in accord with the APA and the Act.
    Comment: One commenter suggested that ``it is a violation of 
statute to assign attorney adjudicators to render decisions that are 
less than fully favorable to a beneficiary because it deprives the 
beneficiary of an impartial ALJ, appointed and protected under the 
provisions of the APA.''
    Response: We disagree with the commenter. In accordance with 
section 1869(b)(1)(A) of the Act, any individuals dissatisfied with an 
initial determination and reconsideration are entitled to a hearing, 
subject to timely filing and amount in controversy limitations, and 
(d)(1)(A) states that an ALJ ``shall conduct and conclude a hearing on 
a decision of a qualified independent contractor under subsection (c) 
and render a decision on such hearing'' (emphasis added). However, the 
rule we are finalizing, provides for a decision by another adjudicator 
(an attorney adjudicator) if such a hearing is waived under Sec.  
405.1038(b) or not required under Sec.  405.1038(c), as finalized in 
this rule. As discussed above, no provision of the Act requires the 
Secretary to utilize an ALJ to issue a decision that does not require a 
hearing. OMHA will afford attorney adjudicators with a similar level of 
qualified decisional independence that is afforded to ALJs, to help 
ensure an impartial and fair adjudication process for all parties to an 
appeal before an OMHA adjudicator, regardless of whether the case is 
assigned to an ALJ or to an attorney adjudicator.
    Comment: One commenter referred to the language in section II.B of 
the proposed rule where we stated that we believed well-trained 
attorneys could review the record, identify the issues, and make the 
necessary findings of fact and conclusions of law when the regulations 
do not require a hearing to

[[Page 4989]]

issue a decision in the appealed matter. 81 FR 43790, 43794. The 
commenter indicated ``well-trained attorney'' is not defined in the 
proposed regulation and asked whether a ``well trained'' attorney is 
required to be a member in good standing of a bar in the United States.
    Response: Section Sec.  405.902, as finalized in this rule, states 
an ``Attorney Adjudicator means a licensed attorney employed by OMHA 
with knowledge of Medicare coverage and payment laws and guidance, and 
authorized to take the actions provided for in this subpart on requests 
for ALJ hearing and requests for reviews of QIC dismissals.'' A 
licensed attorney would be a member in good standing of a bar in the 
United States.
    Comment: One commenter argued that proposed Sec.  
405.1006(e)(1)(ii), (e)(1)(iii) and (e)(2)(iii) may overcomplicate the 
process of aggregating claims because an attorney adjudicator could 
determine that the minimum amount in controversy was met, but would be 
required to refer the appeal to an ALJ if it appeared that the claims 
were not properly aggregated or if the appeal did not meet the required 
amount in controversy, in order for an ALJ to dismiss the request for 
hearing. The commenter also believed ALJs might simply adopt the 
attorney adjudicator's preliminary determination, which could result in 
improperly denied requests for hearing.
    Response: We appreciate the commenter's perspective but believe 
these procedures are necessary to help ensure that a request for a 
hearing before an ALJ is reviewed by an ALJ before being dismissed for 
not meeting the amount in controversy required for an ALJ hearing. A 
referral to an ALJ would only be necessary when the attorney 
adjudicator believes the appealed claims do not meet the amount in 
controversy requirement and the aggregation request may not be valid, 
because the request for hearing would be subject to a possible 
dismissal for not meeting the amount in controversy requirement. 
Section 405.1006(e)(1) and (2), as finalized in this rule, provide that 
only an ALJ may determine that the claims were not properly aggregated 
and therefore do not meet the minimum amount in controversy required 
for an ALJ hearing. Thus, the ALJ is required to make this 
determination, and would not be permitted to simply adopt the attorney 
adjudicator's preliminary determination without conducting an 
independent review. If an ALJ dismisses a request for hearing after 
determining that an aggregation request was not valid, and therefore 
the minimum amount in controversy was not met, and the appellant does 
not agree with the dismissal, the appellant may request a review of the 
dismissal by the Council. Instructions for requesting a review by the 
Council will be included in the notice of dismissal sent to the 
appellant with the ALJ's dismissal order.
    After review and consideration of the comments received, and for 
the reasons discussed above and in the proposed rule, we are finalizing 
our proposals as discussed above without modification to provide 
authority for attorney adjudicators to issue decisions when a decision 
can be issued without an ALJ conducting a hearing under the 
regulations, dismissals when an appellant withdraws his or her request 
for an ALJ hearing, remands as provided in Sec. Sec.  405.1056 and 
423.2056 or at the direction of the Council, and reviews of QIC and IRE 
dismissals. Also, we are finalizing the definition of attorney 
adjudicator in Sec.  405.902 as proposed without modification.
    In addition, we are making a conforming technical revision to Sec.  
423.558(b) to replace ``ALJ hearings'' with ``ALJ hearings and ALJ and 
attorney adjudicator decisions'' for consistency with the revised title 
of part 423, subpart U, and the revisions discussed above providing for 
attorney adjudicator reviews.
3. Application of 405 Rules to Other Parts
    Current Sec.  422.562(d) states that unless subpart M regarding 
grievances, organization determinations and appeals under the MA 
program provides otherwise, the regulations found in part 405 apply 
under subpart M to the extent appropriate. In addition, current Sec.  
422.608, which is a section within subpart M, provides that the 
regulations under part 405 regarding Council review apply to the 
subpart to the extent that they are appropriate. Pursuant to Sec.  
417.600, these rules governing MA organization determinations are also 
applicable to beneficiary appeals and grievances when the beneficiary 
is enrolled in a competitive medical plan or HMO (also known as ``cost 
plan'') under section 1876 of the Act; therefore our discussion of MA 
proceedings applies also to cost plan appeals and grievances initiated 
under Sec.  417.600.
    Similar to current Sec.  422.562(d), Sec.  478.40(c) indicates that 
the part 405 regulations apply to hearings and appeals under subpart B 
of part 478 regarding QIO reconsiderations and appeals, unless they are 
inconsistent with specific provisions in subpart B. Thus, the part 405 
rules are used, to the extent appropriate, for administrative review 
and hearing procedures in the absence of specific provisions related to 
administrative reviews and hearing procedures in part 422, subpart M; 
and part 478, subpart B, respectively. These general references to part 
405 are often helpful in filling in gaps in procedural rules when there 
is no rule on point in the respective part. However, as we stated in 
the proposed rule, there has been confusion on the application of part 
405 rules when a part 405 rule implements a specific statutory 
provision that is not in the authorizing statute for the referring 
subpart and HHS has not adopted a similar policy for the referring 
subpart in its discretion to administer the MA, QIO, and cost plan 
appeals programs (81 FR 43795). For example, certain procedures and 
provisions of section 1869 of the Act (governing certain determinations 
and appeals under Medicare Part A and Part B) that are implemented in 
part 405, subpart I are different than or not addressed in sections 
1155 (providing for reconsiderations and appeals of QIO 
determinations), 1852(g) (providing for appeals of MA organization 
determinations), and 1876 (providing for appeals of organization 
determinations made by section 1876 health maintenance organizations 
(HMOs) and competitive medical plans (CMPs)). Section 1869 of the Act 
provides for, among other things, redeterminations of certain initial 
determinations, QIC reconsiderations following redeterminations or 
expedited determinations; ALJ hearings and decisions following a QIC 
reconsideration; DAB review following ALJ decisions; specific time 
frames in which to conduct the respective adjudications; and, at 
certain appeal levels, the option to escalate appeals to the next level 
of appeal if the adjudication time frames are not met. In addition, 
section 1869(b)(3) of the Act does not permit providers and suppliers 
to introduce evidence in an appeal brought under section 1869 of the 
Act after the QIC reconsideration, unless there is good cause that 
precluded the introduction of the evidence at or before the QIC 
reconsideration.
    In contrast, sections 1852(g)(5) of the Act and 1876(c)(5)(B) of 
the Act incorporate some, but not all, of the provisions of section 
1869 of the Act, and add certain requirements, such as making the MAO, 
HMO, or CMP a party to an ALJ hearing. For example, sections 1852(g)(5) 
and 1876(c)(5)(B) of the Act specifically incorporate section 
1869(b)(1)(E)(iii) of the Act to align the amount in controversy 
requirements for an ALJ hearing and judicial review among the three 
sections. However,

[[Page 4990]]

sections 1852(g) and 1876(c)(5)(B) do not incorporate adjudication time 
frames and escalation provisions, or the limitation on new evidence 
provision of section 1869(b)(3) of the Act.
    Additionally, section 1155 of the Act provides for an individual's 
right to appeal certain QIO reconsidered determinations made under 
section 1154 of the Act directly to an ALJ for hearing. However, 
section 1155 of the Act does not reference section 1869 of the Act or 
otherwise establish an adjudication time frame, and provides for a 
different amount in controversy requirement for an ALJ hearing.
    Despite these statutory distinctions, HHS has established similar 
procedures by regulation to the extent practicable, when not addressed 
by statute. For example, section 1860D-4(h) of the Act, which addresses 
appeals of coverage determinations under Medicare Part D, incorporates 
paragraphs (4) and (5) of section 1852(g) of the Act. As discussed 
above, section 1852(g) does not incorporate adjudication time frames 
from section 1869 of the Act or otherwise establish such time frames. 
However, through rulemaking for Part D coverage determination appeals, 
HHS has adopted a 90-day adjudication time frame for standard requests 
for an ALJ hearing and requests for Council review of an ALJ decision, 
as well as a 10-day adjudication time frame when the criteria for an 
expedited hearing or review are met.
    To clarify the application of the part 405 rules, we proposed 
revisions to parts 422 and 478. Specifically, we proposed in Sec. Sec.  
422.562(d) and 422.608 that the part 405 rules would not apply when the 
part 405 rule implements a statutory provision that is not also 
applicable to section 1852 of the Act (81 FR 43796, 43876-43877). 
Similarly, we proposed in Sec.  478.40(c) that the part 405 rules would 
not apply when the part 405 rule implements a statutory provision that 
is not also applicable to section 1155 of the Act (81 FR 43890-43891). 
In addition, we proposed in Sec.  478.40(c) to remove language that 
equates an initial determination and reconsidered determination made by 
a QIO to contractor initial determinations and reconsidered 
determinations under part 405 because that language has caused 
confusion with provisions that are specific to part 405 and QIC 
reconsiderations, and it is not necessary to apply the remaining part 
405, subpart I procedural rules in part 478, subpart B proceedings. We 
stated in the proposed rule that, in addition to clarifying the 
application of part 405 rules to other parts, these revisions would 
help ensure that statutory provisions that are specific to certain 
Medicare appeals are not applied to other appeals without HHS first 
determining, through rulemaking, whether it would be appropriate to 
apply a provision and how best to tailor aligning policies for those 
other appeals (81 FR 43796). In our discussion of these proposals, we 
identified the statutory differences in sections 1155 and 1852(g) of 
the Act compared to section 1869 discussed above.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received three comments on proposed Sec. Sec.  
422.562(d), 422.608, and 478.40(c), expressing concern that the added 
language is too general and does not address the specific changes that 
are intended by the proposals. The commenters indicated that the 
general language will create more confusion rather than clarifying 
existing ambiguity about which part 405 rules apply to MA program 
appeals under part 422, subpart M and to appeals of QIO reconsidered 
determinations under part 478, subpart B, and may have the unintended 
consequence of stripping away protections for unrepresented 
beneficiaries. Two of the commenters stated that the proposals will 
take away important safeguards that currently provide consistency in 
application of beneficiary rights across the appeals spectrum and 
provide answers in the absence of specific applicable provisions. The 
same commenters argued that under proposed Sec. Sec.  422.562(d) and 
422.608, part 405 rules apply to administrative reviews, hearing 
processes, and representation of parties ``to the extent that they are 
appropriate, unless the part 405 regulation implements a provision of 
section 1869 of the Act that is not also in section 1852(g)(5) of the 
Act'' but the only provisions of section 1869 of the Act that are 
referenced in section 1852(g)(5) of the Act relate to amounts in 
controversy. The commenters argued that the language of the proposals 
would mean that all sections of part 405, other than those relating to 
amounts in controversy, are unavailable to fill the gaps in part 422, 
subpart M. The same commenters used the part 405 rule in Sec.  
405.1018, which requires a good cause determination for the submission 
of new evidence by providers, suppliers, and beneficiaries represented 
by a provider or supplier, if such evidence was not submitted prior to 
the issuance of the QIC's reconsideration determination, as an example 
of where the proposals may have an unintended consequence of taking 
away a beneficiary safeguard. The commenters suggested that if current 
Sec.  405.1018(d), which states that the requirements of Sec.  405.1018 
do not apply to oral testimony given at a hearing, or to evidence 
submitted by an unrepresented beneficiary, was not available in part 
422, subpart M proceedings, then an enrollee in the MA program may not 
be able to invoke the protections in Sec.  405.1018(d). All commenters 
requested that after the agency provides further details on which part 
405 rules do not apply, it should provide the public with an 
opportunity to review the specific changes and allow them to make more 
meaningful comments on the proposal.
    Response: We do not agree with the comment that the proposal would 
mean that all sections of part 405, other than those relating to 
amounts in controversy, are unavailable to fill the gaps in part 422, 
subpart M. The proposal related to part 405, subpart I provisions that 
implement requirements in section 1869 of the Act that are not also 
contained in section 1852(g). Section 1852(g)(5) of the Act, which is 
implemented in part 422, subpart M, does, as the commenter highlights, 
reference portions of section 1869 of the Act related to the amount in 
controversy threshold. However, section 1852(g)(5) of the Act also 
entitles an MA enrollee to ``a hearing before the Secretary to the same 
extent as is provided in section 205(b) [of the Act],'' which is also 
referenced in section 1869 of the Act. Thus, section 1852(g) of the Act 
includes certain provisions, in addition to the amount in controversy 
provisions, that are also in section 1869 of the Act. The provisions of 
part 405, subpart I that implement these provisions would continue to 
apply to part 422, subpart M appeals to the extent they are 
appropriate, and therefore the proposal would not mean that all 
sections of part 405, subpart I, other than those relating to amounts 
in controversy, are unavailable to fill the gaps in part 422, subpart 
M. Rather, as we explained in the preamble to the proposed rule, the 
proposal would serve to clarify that the provisions of part 405, 
subpart I that implement provisions of section 1869 of the Act that are 
not also addressed in sections 1852 and 1155 of the Act, are not 
appropriate to apply in appeals initiated under part 422, subpart M, 
and part 478, subpart B. Using the commenter's example of Sec.  
405.1018, only paragraphs (c) and (d)(2) specifically relate to a 
provision of section 1869 of the Act; specifically, as we explained in 
the proposed rule, section 1869(b)(3) of the Act does not permit 
providers and suppliers to

[[Page 4991]]

introduce evidence in an appeal brought under section 1869 of the Act 
after the QIC reconsideration, unless there is good cause that 
precluded the introduction of the evidence at or before the QIC 
reconsideration. The other subsections of Sec.  405.1018 do not 
effectuate a specific provision of section 1869 of the Act, but rather 
relate to the hearing before the Secretary, which is also required 
under section 1852(g) of the Act, and therefore applying the other 
subsections of Sec.  405.1018 to part 422, subpart M would continue to 
be appropriate under the proposal.
    Proposed Sec. Sec.  422.562(d), 422.608, and 478.40(c) were 
intended to clarify the application of part 405 rules to appeals and 
hearings initiated under other parts and to help ensure that statutory 
provisions that are specific to appeals under section 1869 of the Act 
are not applied to other appeals without HHS first determining, through 
rulemaking, whether it would be appropriate to apply a provision and 
how best to tailor aligning policies for those other appeals. In 
explaining the proposal, we also provided examples of specific 
provisions in section 1869 of the Act that are not also in sections 
1852 and 1155 of the Act, and therefore the proposal would impact the 
part 405, subpart I provisions that implement those specific provisions 
of section 1869 of the Act that we discussed in explaining the 
proposal. While we believe our proposals provided sufficient 
information and notice regarding the part 405, subpart I provisions 
that would not apply in MA program appeals under part 422, subpart M 
and in appeals of QIO reconsidered determinations under part 478, 
subpart B, commenters raised concerns that the proposal and proposed 
regulation text were not sufficiently detailed. In response to the 
commenters' concerns we are finalizing Sec. Sec.  422.562(d), 422.608, 
and 478.40(c) with modifications to specify in greater detail those 
part 405 provisions that implement provisions of section 1869 of the 
Act that are not also applicable to sections 1852 or 1155 of the Act, 
and that we do not believe apply to part 422, subpart M and part 478, 
subpart B adjudications. We specifically discussed three such 
provisions in section II.C of the proposed rule. The three specific 
topics covered by part 405, subpart I that implement provisions of 
section 1869 of the Act and that we believe do not apply to part 422, 
subpart M and part 478, subpart B adjudications are: (1) Specific time 
frames to conduct adjudications at each level of administrative appeal 
(sections 1869(a)(3)(C)(ii), (c)(3)(C)(i), (d)(1), and (d)(2) of the 
Act); (2) the option to request escalation of appeals when a QIC, OMHA, 
or the Council does not render a decision within an applicable 
adjudication time frame (sections 1869(c)(3)(C)(ii) and (d)(3) of the 
Act); and (3) the requirement that a provider or supplier, or 
beneficiary represented by a provider or supplier, must establish good 
cause to introduce evidence that was not presented at the 
reconsideration by the QIC (section 1869(b)(3) of the Act). Because 
these provisions of section 1869 of the Act were discussed in the 
proposed rule as examples of provisions that are not also included in 
sections 1852 and 1155 of the Act, and that we do not believe apply to 
appeals and hearings under part 422, subpart M and part 478, subpart B, 
and because these three areas have historically been the subject of the 
greatest confusion for appellants and OMHA staff regarding application 
of part 405 rules to other parts, we are finalizing the proposal with 
respect to those three areas. We will conduct additional notice and 
comment rulemaking if we identify additional provisions in the part 
405, subpart I rules that implement provisions of section 1869 of the 
Act that are not also included in sections 1852(g) and 1155 of the Act, 
and we believe those provisions should not apply to part 422, subpart M 
and part 478, subpart B adjudications. Furthermore, we believe that 
listing the specific sections of part 405, subpart I that do not apply 
in MA program appeals under part 422, subpart M, and in appeals of QIO 
reconsidered determinations under part 478, subpart B addresses 
commenters' concerns regarding confusion or ambiguity.
    Section 1869(d)(1)(A) of the Act provides that unless the appellant 
waives the statutory adjudication time frame, the ALJ conducts and 
concludes a hearing on a decision of the QIC and renders a decision no 
later than the end of the 90-day period beginning on the date a request 
for hearing is timely filed. In addition, section 1869(d)(2) of the Act 
provides that the DAB conducts and concludes a review of the decision 
on a hearing and renders a decision no later than the end of the 90-day 
period beginning on the date a request for review is timely filed. 
Sections 1852(g)(5) and 1155 of the Act do not contain similar 
adjudication time frames for an ALJ and DAB to render a decision. 
Therefore, we are specifying in Sec. Sec.  422.562(d) and 478.40(c), 
and in Sec.  422.608 through reference to Sec.  422.562(d)(2), that the 
adjudication time frames at the OMHA level and the Council in part 405 
do not apply in proceedings under either part 422, subpart M or part 
478, subpart B. Similarly, because the part 405 escalation provisions 
originate in section 1869(c)(3)(C)(ii) and (d)(3) of the Act and are 
not incorporated into sections 1852(g) or 1155 of the Act, and the part 
405 rules for adjudication time frames for an ALJ or the Council do not 
apply, we are specifying that the options to request escalation of an 
appeal in part 405 do not apply in proceedings under either part 422, 
subpart M or part 478, subpart B. In addition, we do not think it would 
be appropriate to apply the part 405, subpart I rules to time frames 
for adjudications below the OMHA level for Part C and QIO appeals 
because those parts already contain regulations regarding time frames 
and expediting appeals that are different from the part 405, subpart I 
provisions. For example, under Sec.  422.572(f) and Sec.  422.590(g), 
if an MAO fails to provide the enrollee with timely notice of an 
expedited organization determination or expedited reconsideration, the 
failure constitutes an adverse determination; the adverse decision 
then, respectively, is subject to appeal or must be forwarded to the 
IRE. With respect to OMHA-level adjudication time frames and the option 
to escalate an appeal from the OMHA level to the Council, we note that 
Sec.  405.1016, as finalized in this rule, applies only to requests for 
a hearing filed after a QIC has issued a reconsideration. In the final 
rule establishing the MA program, CMS stated that part 405 regulatory 
provisions that are dependent upon QICs would not apply to part 422, 
subpart M adjudications because an IRE--not a QIC--conducts 
reconsiderations for MA appeals (70 FR 4588, 4676). We believe the same 
rationale extends to reconsiderations conducted by a QIO under part 
478, subpart B. We also believe it is unwise to extend the adjudication 
time frames to additional cases or to create an option for escalation 
of an appeal where such provisions are not required by statute given 
the current volume of pending appeals at OMHA and the Council. However, 
we note that the vast majority of MA and QIO appeals are filed by 
beneficiaries and enrollees, and current OMHA and Council policy 
provides for the prioritization of appeals filed by beneficiaries or 
enrollees. Thus, we anticipate that there will be little change in 
adjudicatory processing times for most appellants in MA program appeals 
and appeals of QIO reconsidered determinations. Accordingly, we do not 
believe that the policies we are finalizing above will take away 
current

[[Page 4992]]

protections or safeguards for beneficiaries.
    In addition, section 1869(b)(3) of the Act states that a provider 
or supplier may not introduce evidence in any appeal that was not 
presented at the QIC reconsideration unless there is good cause that 
precluded the introduction of such evidence at or before that 
reconsideration. Several provisions in part 405 implement this 
limitation on the submission of new evidence by providers and 
suppliers, as well as beneficiaries represented by providers and 
suppliers, and further implement rules for the review of whether good 
cause exists for late submissions. Neither section 1852(g)(5) nor 
section 1155 of the Act contains a similar limitation on the submission 
of new evidence by providers and suppliers if such evidence was not 
presented at an earlier stage in the appeal proceedings. Furthermore, 
the requirement to show good cause for the introduction of new evidence 
applies to evidence that was not presented at the QIC reconsideration 
and, as noted above, part 405 provisions that are dependent upon QICs 
do not apply to adjudications under part 422, subpart M, and we believe 
the same rationale extends to reconsiderations conducted by QIOs under 
part 478, subpart B. Therefore, we are specifying in Sec. Sec.  
422.562(d) and 478.40(c), and in Sec.  422.608 through reference to 
Sec.  422.562(d)(2), that the good cause limitations on new evidence 
submitted by providers, suppliers, and beneficiaries represented by a 
provider or supplier, outlined in part 405, subpart I do not apply in 
proceedings under part 422, subpart M or part 478, subpart B. Although 
two commenters expressed concern that the proposals could mean that an 
enrollee in the MA program would not be able to invoke the protection 
of current Sec.  405.1018(d), these finalized rules specifically 
identify Sec. Sec.  405.1018(c), 405.1028(a), and 405.1122(c) as part 
405 sections that do not apply in part 422, subpart M, and therefore 
the protections afforded to unrepresented beneficiaries in current 
Sec.  405.1018(d) are unnecessary in part 422, subpart M appeals 
because there is no need for any appellant in a Part C appeal to show 
good cause for the introduction of new evidence for the first time at 
the OMHA level. As we stated above, we do not believe that the policies 
we are finalizing will take away current protections or safeguards for 
beneficiaries appealing an MA organization determination (or cost plan 
determination) or appealing from a QIO determination.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
following changes to Sec. Sec.  422.562(d), 422.608, and 478.40(c). We 
are specifying in Sec. Sec.  422.562(d) and 478.40(c), and in 422.608 
through reference to Sec.  422.562(d)(2), those specific provisions of 
part 405, subpart I discussed in the proposed rule that are not 
applicable to MA program appeals under part 422, subpart M or appeals 
of QIO reconsidered determinations under part 478, subpart B, as 
discussed above. The provisions we are specifying are: (1) Sec.  
405.950 (time frames for making a redetermination); (2) Sec.  405.970 
(time frame for making a reconsideration following a contractor 
redetermination, including the option to escalate an appeal to the OMHA 
level); (3) Sec.  405.1016 (time frames for deciding an appeal of a QIC 
reconsideration or escalated request for a QIC reconsideration, 
including the option to escalate an appeal to the Council); (4) The 
option to request that an appeal be escalated from the OMHA level to 
the Council as provided in Sec.  405.1100(b) and the time frames for 
the Council to decide an appeal of an ALJ's or attorney adjudicator's 
decision or an appeal that is escalated from the OMHA level to the 
Council as provided in Sec.  405.1100(c) and (d); (5) Sec.  405.1132 
(request for escalation to Federal court); and (6) Sec. Sec.  
405.956(b)(8), 405.966(a)(2), 405.976(b)(5)(ii), 405.1018(c), 
405.1028(a), and 405.1122(c) and any other references to requiring a 
determination of good cause for the introduction of new evidence by a 
provider, supplier, or a beneficiary represented by a provider or 
supplier.
4. OMHA References
    When the 2005 Interim Final Rule was published in March 2005, 
implementing the part 405, subpart I rules, OMHA was not yet in 
operation. Further, processes and procedures were being established 
under the part 405 subpart I rules, with new CMS contractors and the 
newly transitioned ALJ hearing function. Since that time, OMHA and CMS 
and its contractors have developed operating arrangements to help 
ensure appeals flow between CMS contractors and OMHA, and that appeal 
instructions for appellants provide clear direction on how and where to 
file requests for hearings and reviews. However, many of the current 
rules for the ALJ hearing program that OMHA administers reflect the 
transition that was occurring at the time of the 2005 Interim Final 
Rule, and OMHA is not mentioned in the regulation text.
    To provide clarity to the public on the role of OMHA in 
administering the ALJ hearing program, and to clearly identify where 
requests and other filings should be directed, we proposed to define 
OMHA in Sec.  405.902 as the Office of Medicare Hearings and Appeals 
within the U.S. Department of Health and Human Services, which 
administers the ALJ hearing process in accordance with section 
1869(b)(1) of the Act. We also proposed to amend rules throughout part 
405, subparts I and J; part 422, subpart M; part 423, subparts M and U; 
and part 478, subpart B to reference OMHA or an OMHA office, in place 
of current references to an unspecified entity, ALJs, and ALJ hearing 
offices, when a reference to OMHA or an OMHA office provides a clearer 
explanation of a topic. To implement these changes, we proposed to 
revise provisions throughout part 405 subparts I and J, part 422 
subpart M, part 423 subparts M and U, and part 478 subpart U, as 
detailed in proposed revisions to specific sections in section III of 
the proposed rule.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received three comments on this proposal. One commenter 
supported the proposal as necessary to update regulatory language to 
clearly reflect the role of OMHA in administering ALJ appeals. Two 
commenters opposed the proposal. One commenter argued that each change 
from ``ALJ'' to ``OMHA'' takes a specific power granted directly to an 
ALJ adjudicating a case and transfers it to OMHA administrators. 
Another commenter interpreted the proposal as a transfer of control 
over ALJs' workloads from ALJs to OMHA.
    Response: We disagree with the commenters' interpretation of the 
proposal as a transfer of authority from ALJs to OMHA administrators. 
Rather, the proposal provides clarity to the public on the role of OMHA 
in administering the ALJ hearing program and clearly identifies where 
requests and other filings should be directed to ease appellant 
confusion and more efficiently process appeals by helping to ensure 
filings are properly routed. As discussed above (and in section II.D of 
the proposed rule), many of the current rules for the ALJ hearing 
program that OMHA administers reflect the transition that was occurring 
at the time of the 2005 Interim Final Rule. OMHA was not yet in 
operation or mentioned in the regulation text at the time the Interim 
Final Rule was published in March 2005. We believe that reference to 
OMHA or an OMHA office in place of current references to an unspecified 
entity, ALJs, and ALJ hearing offices

[[Page 4993]]

would provide a clearer explanation of a topic in certain regulations 
and would clarify areas of the regulations that may have confused 
appellants in the past. For example, current Sec.  405.970(e)(2)(ii) 
states that, for cases that have been escalated from the 
reconsideration level of appeal to the OMHA level of appeal, the QIC 
forwards the case file ``to the ALJ hearing office.'' The concept of an 
ALJ hearing office is most analogous to OMHA's individual field 
offices. In practice, however, the QIC sends case files for escalated 
cases to a centralized location, not to individual field offices. Thus, 
we believe reference to OMHA would be more appropriate here. Similarly, 
as another example, current Sec.  405.1104 states that an appellant who 
files a timely request for hearing before an ALJ and whose appeal 
continues to be ``pending before the ALJ'' at the end of an applicable 
adjudication time period under Sec.  405.1016 may request to escalate 
the appeal to the Council level of review. However, appeals that are 
eligible to be escalated may be unassigned and not yet before an ALJ. 
Thus, we believe that it would be appropriate to state ``pending with 
OMHA'' in this regulation (see Sec.  405.1016(f)(1), as finalized).
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing our 
proposals without modification to define OMHA and replace certain 
references to ALJs, ALJ hearing offices, and unspecified entities with 
a reference to OMHA or an OMHA office.
5. Medicare Appeals Council References
    The Council is currently referred to as the ``MAC'' throughout 
current part 405, subpart I; part 422, subpart M; and part 423, 
subparts M and U. This reference has caused confusion in recent years 
with the transition from Fiscal Intermediaries and Carriers, to 
Medicare administrative contractors--for which the acronym ``MAC'' is 
also commonly used--to process claims and make initial determinations 
and redeterminations in the Medicare Part A and Part B programs. In 
addition, current Sec. Sec.  422.618 and 422.619 reference the Medicare 
Appeals Council but use ``Board'' as the shortened reference, and part 
478, subpart B, references the DAB as the reviewing entity for appeals 
of ALJ decisions and dismissals but the Council is the entity that 
conducts reviews of ALJ decisions and dismissals, and issues final 
decisions of the Secretary for Medicare appeals under part 478, subpart 
B.
    To address potential confusion with references to Medicare 
administrative contractors and align references to the Council as the 
reviewing entity for appeals of ALJ decisions and dismissals throughout 
part 405, subpart I; part 422, subpart M; and part 423, subparts M and 
U, we proposed to amend the following rules to replace ``MAC'' or 
``Board'' with ``Council'': Sec. Sec.  405.902, 405.904, 405.906, 
405.908, 405.910, 405.926, 405.980, 405.982, 405.984, 405.990, 
405.1026, 405.1036, 405.1037, 405.1042, 405.1046, 405.1048, 405.1050, 
405.1052, 405.1054, 405.1060, 405.1062, 405.1063, 405.1100, 405.1102, 
405.1104 (as re-designated and revised as proposed Sec.  405.1016(e)-
(f)), 405.1106, 405.1108, 405.1110, 405.1112, 405.1114, 405.1116, 
405.1118, 405.1120, 405.1122, 405.1124, 405.1126, 405.1128, 405.1130, 
405.1132, 405.1134, 405.1136, 405.1138, 405.1140, 422.561, 422.562, 
422.608, 422.612, 422.616, 422.618, 422.619, 422.622, 422.626, 423.560, 
423.562, 423.1968, 423.1974, 423.1976, 423.1978, 423.1980, 423.1982, 
423.1984, 423.1990, 423.2026, 423.2036, 423.2042, 423.2046, 423.2048, 
423.2050, 423.2052, 423.2054, 423.2062, 423.2063, 423.2100, 423.2102, 
423.2106, 423.2108, 423.2110, 423.2112, 423.2114, 423.2116, 423.2118, 
423.2120, 423.2122, 423.2124, 423.2126, 423.2128, 423.2130, 423.2134, 
423.2136, 423.2138, and 423.2140.
    In addition, to align references to the Council as the reviewing 
entity for appeals of ALJ decisions and dismissals in part 478, subpart 
B, we proposed to amend Sec. Sec.  478.46 and 478.48 to replace 
``Departmental Appeals Board'' and ``DAB,'' with ``Medicare Appeals 
Council'' and ``Council''.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received two comments on this proposal--one of which 
was a collective comment submitted by the four then-current CMS DME 
Medicare Administrative Contractors (MACs). Both comments supported the 
proposal to replace references to ``MAC'' with ``Council'' as necessary 
to reduce confusion between the Council and CMS Medicare Administrative 
Contractors.
    Response: We thank the commenters for their support and agree that 
the proposed revisions will reduce confusion.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing our 
proposals without modification to replace references to ``MAC'' and 
``Board,'' with ``Council'' in the sections listed above, and to 
replace references to ``Departmental Appeals Board'' and ``DAB'' with 
``Medicare Appeals Council'' and ``Council'' in Sec. Sec.  478.46 and 
478.48. In addition to the sections listed above, we are also making a 
conforming technical revision to Sec.  423.558(b) to replace the 
reference to ``MAC'' in Sec.  423.558(b) with ``Council.''

B. Specific Provisions of Part 405, Subpart I and Part 423, Subparts M 
and U

1. Overview
    Part 405, subpart I and part 423, subpart U contain detailed 
procedures for requesting and adjudicating a request for an ALJ 
hearing, and a request for a review of a QIC or IRE dismissal. Part 
423, subpart U provisions were proposed in the March 17, 2008 Federal 
Register (73 FR 14342) and made final in the December 9, 2009 Federal 
Register (74 FR 65340), and generally follow the part 405, subpart I 
procedures. In this final rule, we generally discuss provisions of the 
proposed rule related to part 405, subpart I, and then whether any 
aligning revisions to part 423, subpart U, were proposed, unless a 
provision is specific to part 405 and there is no corresponding part 
423 provision. We then discuss the policies we are finalizing in this 
final rule related to parts 405 and 423.
2. General Provisions, Reconsiderations, Reopenings, and Expedited 
Access to Judicial Review
a. Part 423, Subpart M General Provisions (Sec.  423.562)
    Current Sec.  423.562(b)(4) lists the appeal rights of a Part D 
plan enrollee, if the enrollee is dissatisfied with any part of a 
coverage determination. Specifically, paragraph (b)(4)(v) describes the 
right to request Council review of the ALJ's hearing decision if the 
ALJ affirms the IRE's adverse coverage determination in whole or in 
part, and paragraph (b)(4)(vi) describes the right to judicial review 
of the hearing decision if the Council affirms the ALJ's adverse 
coverage determination in whole or in part, and the amount in 
controversy requirements are met. We proposed revisions to paragraphs 
(b)(4)(v) and (vi) to account for the possibility that an appeal at the 
OMHA level could be decided by an attorney adjudicator or by an ALJ 
without conducting a hearing. 81 FR 43790, 43797. We proposed to revise 
paragraph (b)(4)(v) to insert ``or attorney adjudicator'' after each 
instance of ``the ALJ.'' We stated in the proposed rule that this 
proposal was necessary to implement the proposal to allow attorneys to 
adjudicate requests for an ALJ hearing when no hearing is

[[Page 4994]]

conducted as proposed in section II.B of the proposed rule (and 
discussed in section II.A.2 above), by stating the right to request 
Council review of an attorney adjudicator decision that affirms the 
IRE's adverse coverage determination. We also proposed to remove 
``hearing'' before ``decision'' in paragraph (b)(4)(v) to reflect that 
an attorney adjudicator issues decisions without conducting a hearing, 
and an ALJ may issue a decision without conducting a hearing.
    In paragraph (b)(4)(vi), we proposed to remove ``ALJ's'' and insert 
``ALJ's or attorney adjudicator's'' in its place to implement the 
proposal to allow attorneys to adjudicate requests for an ALJ hearing 
when no hearing is conducted as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 above), by including an 
attorney adjudicator's decision as a decision that may be affirmed by 
the Council. We also proposed to remove ``hearing'' before ``decision'' 
in paragraph (b)(4)(vi) because while the Council may conduct a 
hearing, Council decisions are generally issued without conducting a 
hearing, and the decision of the Council is subject to judicial review.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 above related to our general proposals to 
provide authority for attorney adjudicators to issue certain decisions, 
dismissals and remands, and to revise the rules so that decisions and 
dismissals issued by attorney adjudicators may be reopened and/or 
appealed in the same manner as equivalent decisions and dismissals 
issued by ALJs. Accordingly, for the reasons discussed above and in the 
proposed rule, we are finalizing these changes to Sec.  423.562 as 
proposed without modification.
b. Part 423, Subpart U Title and Scope (Sec.  423.1968)
    The current heading of part 423, subpart U references ALJ hearings 
but does not reference decisions. We proposed to revise the heading by 
replacing ``ALJ Hearings'' with ``ALJ hearings and ALJ and attorney 
adjudicator decisions'' to reflect that subpart U covers decisions by 
ALJs and attorney adjudicators, as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 above). 81 FR 43790, 
43797.
    Current Sec.  423.1968 explains the scope of the requirements in 
subpart U. We proposed in Sec.  423.1968 to expand the scope of subpart 
U to include actions by attorney adjudicators, as proposed in section 
II.B of the proposed rule (and discussed in section II.A.2 above). 81 
FR 43790, 43797. Specifically, we proposed at Sec.  423.1968(a) to add 
that subpart U sets forth requirements relating to attorney 
adjudicators with respect to reopenings; at Sec.  423.1968(b) to add 
that subpart U sets forth requirements relating to ALJ decisions and 
decisions of attorney adjudicators if no hearing is conducted; and at 
Sec.  423.1968(d) to add that subpart U sets forth the requirements 
relating to Part D enrollees' rights with respect to ALJ hearings and 
ALJ or attorney adjudicator reviews. We stated that these changes are 
necessary to accurately describe the scope of the revised provisions of 
subpart U to implement the attorney adjudicator proposal discussed in 
section II.B of the proposed rule and II.A.2 of this final rule above.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 above related to our general proposals to 
provide authority for attorney adjudicators to issue certain decisions, 
dismissals and remands, and to revise the rules so that decisions and 
dismissals issued by attorney adjudicators may be reopened and/or 
appealed in the same manner as equivalent decisions and dismissals 
issued by ALJs. Accordingly, for the reasons discussed above and in the 
proposed rule, we are finalizing these changes to Sec.  423.1968 as 
proposed without modification.
c. Medicare Initial Determinations, Redeterminations and Appeals: 
General Description (Sec.  405.904)
    Section 405.904(a) provides a general overview of the entitlement 
and claim appeals process to which part 405, subpart I applies. Current 
paragraphs (a)(1) and (a)(2) provide that if a beneficiary obtains a 
hearing before an ALJ and is dissatisfied with the decision of the ALJ, 
the beneficiary may request that the Council review the case. To 
provide for the possibility that a decision may be issued without 
conducting a hearing by an ALJ, as permitted under current rules, or an 
attorney adjudicator, as proposed in II.B of the proposed rule (and 
discussed in section II.A.2 of this final rule above), we proposed to 
add language in paragraphs (a)(1) and (a)(2) to provide that if the 
beneficiary is dissatisfied with the decision of an ALJ or attorney 
adjudicator when no hearing is conducted, the beneficiary may request 
that the Council review the case. We stated in the proposed rule that 
this would provide a comprehensive overview of the entitlement and 
claim appeals process, with information on the potential for and right 
to appeal decisions by ALJs when no hearing is conducted, and the right 
to appeal decisions by attorney adjudicators. 81 FR 43790, 43797.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment on this proposal. The commenter 
supported our proposal as necessary to ensure that beneficiaries' 
concerns were given appropriate consideration by clearly stating that 
there is a right to request that the Council review a case when no 
hearing is conducted and a decision is issued by an ALJ or attorney 
adjudicator.
    Response: We thank the commenter for its support. We believe the 
changes will help beneficiaries (and others appellants pursuant to 
Sec.  405.904(b)) understand that they have the same right to appeal 
decisions by ALJs when no hearing is conducted, or decisions by 
attorney adjudicators, as they currently have to appeal decisions by an 
ALJ when a hearing is conducted.
    After review and consideration of the comment received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec.  405.904 as proposed, with the following 
modifications. We are removing ``Administrative Law Judge (ALJ)'' and 
``Medicare Appeals Council (Council)'' from paragraph (a)(1) and adding 
``ALJ'' and ``Council'' in their places, respectively, for consistency 
with the rest of part 405, subpart I and because the term ``ALJ'' is 
already defined in Sec.  405.902.
d. Parties to the Initial Determinations, Redeterminations, 
Reconsiderations Proceedings on a Request for Hearing, and Council 
Review (Sec.  405.906)
    Section 405.906 discusses parties to the appeals process and 
subsection (b) addresses parties to the redetermination, 
reconsideration, hearing and MAC. We proposed in the paragraph heading 
and introductory text to subsection (b) to replace the phrases 
``hearing and MAC'' and ``hearing, and MAC review,'' respectively, with 
``proceedings on a request for hearing, and Council review'' because, 
absent an assignment of appeal rights, the parties are parties to all 
of the proceedings on a request for hearing, including the hearing if 
one is conducted, and they are parties to the Council's review. 81 FR 
43790, 43797.
    We received no comments on this proposal, other than comments in 
support of our general proposals to replace references to ``MAC'' and 
``Board,'' with ``Council,'' and to replace references to 
``Departmental Appeals Board'' and ``DAB'' with ``Medicare Appeals 
Council'' and ``Council,'' as

[[Page 4995]]

discussed in section II.A.5 above. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing these 
changes to Sec.  405.906 as proposed without modification.
e. Medicaid State Agencies (Sec.  405.908)
    Section 405.908 discusses the role of Medicaid State agencies in 
the appeals process and states that if a State agency files a request 
for redetermination, it may retain party status at the QIC, ALJ, MAC 
and judicial review levels. We proposed to replace ``ALJ'' with 
``OMHA'' to provide that the State agency has party status regardless 
of the adjudicator assigned to the State agency's request for an ALJ 
hearing or request for review of a QIC dismissal at the OMHA level of 
review, as attorney adjudicators may issue decisions on requests for 
hearing and adjudicate requests for reviews of QIC dismissals, as 
proposed in section II.B of the proposed rule (and discussed in section 
II.A.2 above). 81 FR 43790, 43797-43798.
    Provided below is a summary of the specific comment received and 
response to the comment:
    Comment: We received one comment on this proposal. The commenter 
supported the proposal to clarify that Medicaid State agencies that 
file a request for redetermination have the right to retain party 
status at the OMHA level regardless of whether a case is assigned to an 
ALJ or to an attorney adjudicator. However, the commenter asked that 
the term ``OMHA level of review'' be replaced with ``and attorney 
adjudicator or ALJ review,'' or, alternatively, that the term ``OMHA 
level of review'' be defined as the level of review that entails review 
by an ALJ or attorney adjudicator, and used consistently throughout the 
regulations. The commenter expressed concern that the term ``OMHA level 
of review'' could be confusing because the term is not currently in 
common use.
    Response: We thank the commenter for the recommendation. As a 
preliminary matter, we note that the changes proposed in Sec.  405.908 
to which the commenter is referring would revise the last sentence to 
read, ``If a State agency files a request for redetermination, it may 
retain party status at the QIC, OMHA, Council, and judicial review 
levels.'' The word ``review'' in this sentence is part of the term 
``judicial review'' as described in Sec.  405.1136, rather than a 
general descriptor of all levels of appeal. Therefore, we believe the 
term to which the commenter objects can more accurately be described as 
the ``OMHA level.'' We believe the term ``OMHA level'' provides a 
convenient shorthand for referring to the adjudication level that 
entails an ALJ hearing, or an on-the-record review by an ALJ or 
attorney adjudicator, and we note that the term is also used in 
proposed Sec. Sec.  405.910, 405.956, 405.976, 405.1028, 405.1032, 
405.1046, 405.1100, 405.1108, 405.1110, 405.1122, 423.2032, 423.2110, 
and 423.2122. We do not share the commenter's concern that the term as 
used in proposed Sec.  405.908 or elsewhere in part 405, subpart I or 
part 423, subparts M and U is confusing, especially in light of the 
proposed addition of ``OMHA'' and ``attorney adjudicator'' to the 
definitions being finalized in Sec.  405.902, which collectively define 
OMHA as administering the ALJ hearing process in accordance with 
section 1869(b)(1) of the Act, and attorney adjudicators as employees 
of OMHA who are authorized to take actions under subpart I on requests 
for ALJ hearing.
    After review and consideration of the comment received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec.  405.908 as proposed without modification.
f. Appointed Representatives (Sec.  405.910)
    As described below, we proposed a number of revisions to the rules 
in Sec.  405.910 concerning the appointment of a representative to act 
on behalf of an individual or entity in exercising his or her right to 
an initial determination or appeal. 81 FR 43790, 43798-43799. The 2002 
Proposed Rule (67 FR 69318 through 69319) explained that the Sec.  
405.910 requirements for a valid appointment of a representative are 
necessary to help ensure that adjudicators are sharing and 
disseminating confidential information with the appropriate 
individuals. The 2005 Interim Final Rule (70 FR 11428 through 11431) 
adopted a general requirement to include a beneficiary's health 
insurance claim number (HICN) for a valid appointment of a 
representative in Sec.  405.910(c)(5). The SMART Act Final Rule (80 FR 
10614, 10617) revised Sec.  405.910(c)(5) to explicitly limit the 
requirement to include a beneficiary's HICN to instances in which the 
beneficiary is the party appointing a representative. However, the 
Medicare manual provision for completing a valid appointment of 
representative (Medicare Claims Processing Manual (Internet-Only Manual 
100-4), chapter 29, section 270.1.2) details the requirements for an 
appointment of representation to contain a unique identifier of the 
party being represented. Specifically, if the party being represented 
is the beneficiary, the Medicare number must be provided, and if the 
party being represented is a provider or supplier, the National 
Provider Identifier (NPI) number should be provided. Additionally, the 
official form for executing a valid appointment of representative (form 
CMS-1696 (OMB No. 0938-0950), available at https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS1696.pdf) provides a blank 
space for the party to include a Medicare or NPI number. To assist 
adjudicators in sharing and disseminating confidential information only 
with appropriate individuals, we proposed to revise Sec.  405.910(c)(5) 
to add a requirement to include the Medicare NPI of the provider or 
supplier that furnished the item or service when the provider or 
supplier is the party appointing a representative. We stated in the 
proposed rule that we were retaining the requirement to identify the 
beneficiary's Medicare HICN when the beneficiary is the party 
appointing a representative.
    Section 405.910 also addresses defective appointments, and 
delegations and revocations of appointments. However, there has been 
confusion on the effects on the adjudication of an appeal when a 
defective appointment must be addressed, or when an adjudicator is not 
timely informed of a delegation or revocation of an appointment. To 
address the effect of a defective appointment on the adjudication of an 
appeal to which an adjudication time frame applies, we proposed to add 
Sec.  405.910(d)(3), which would extend an applicable adjudication time 
frame from the later of (1) the date that a defective appointment of 
representative was filed or (2) the date the current appeal request was 
filed by the prospective appointed representative, to the date that the 
defect in the appointment was cured or the party notifies the 
adjudicator that he or she will proceed with the appeal without a 
representative. We proposed this revision because, in accordance with 
Sec.  405.910(d)(1) and (d)(2), a prospective appointed representative 
lacks the authority to act on behalf of a party and is not entitled to 
obtain or receive any information related to the appeal. Thus, contact 
with the party may be necessary to obtain missing information from the 
appointment, which may delay adjudicating the appeal until the 
appointment is cured or the party decides to proceed with the appeal 
without a representative. However, we proposed that if the request was 
filed by a prospective

[[Page 4996]]

appointed representative, the request would be considered filed for the 
purpose of determining timeliness of the request, even if the 
individual is not the appointed representative after the appointment is 
cured, or the party decides to proceed with the appeal without a 
representative.
    We also proposed at Sec.  405.910(f)(1) to replace ``ALJ level'' 
with ``OMHA level'' so there would be no confusion that proceedings at 
the OMHA level are considered proceedings before the Secretary for 
purposes of appointed representative fees, regardless of whether the 
case is assigned to an ALJ or attorney adjudicator.
    Section 405.910(i)(2) and (i)(3) provide that if an appeal involves 
an appointed representative, an ALJ sends notices of actions or appeal 
decisions, and requests for information or evidence regarding a claim 
that is appealed to the appointed representative. We proposed to insert 
``or attorney adjudicator'' after ``ALJ'' in Sec.  405.910(i)(2) and 
(i)(3). This would provide that attorney adjudicators, as proposed in 
section II.B of the proposed rule (and discussed in section II.A.2 of 
this final rule above), like an ALJ under the current provisions, would 
send notices of actions or appeal decisions, and requests for 
information or evidence regarding a claim that is appealed to the 
appointed representative.
    A representative and/or the represented party is responsible for 
keeping the adjudicator of a pending appeal current on the status of 
the representative. In practice, sometimes adjudicators are not 
informed of a delegation or revocation of an appointment of 
representative that has been filed for an appeal, which results in 
confusion and potentially duplicative or unnecessary proceedings. We 
proposed to revise Sec.  405.910(l)(2) (which, as described later, we 
proposed to re-designate as (l)(1)(ii)) to add that a delegation is not 
effective until the adjudicator receives a copy of the party's written 
acceptance of the delegation, unless the representative and designee 
are attorneys in the same law firm or organization, in which case the 
written notice to the party of the delegation may be submitted if the 
acceptance is not obtained from the party. This revision would 
emphasize the importance of keeping adjudicators current on the status 
of the representative and also state the effects of failing to do so. 
The revisions we proposed to Sec.  405.910(l)(2) (re-designated as 
proposed (l)(1)(ii)) would also serve to assist adjudicators in sharing 
and disseminating confidential information only with appropriate 
individuals, and to provide adjudicators with appropriate contact 
information for scheduling purposes. To accommodate proposed paragraph 
(l)(2), we proposed to re-designate current paragraph (l), except for 
the title of the paragraph, as paragraph (l)(1), and to also re-
designate the current subparagraphs accordingly. In addition, we 
proposed to add a missing ``by'' in current paragraph (l)(1)(ii) (re-
designated as (l)(1)(i)) of Sec.  405.910 to indicate that a designee 
accepts to be obligated ``by'' and comply with the requirements of 
representation. We also proposed to revise language in current 
paragraph (l)(2) (re-designated as proposed (1)(l)(ii)) of Sec.  
405.910 to clarify that ``this signed statement'' refers to the 
``written statement signed by the party,'' and the written statement 
signed by the party is not required when the appointed representative 
and designee are attorneys in the same law firm or organization and the 
notice of intent to delegate under paragraph (l)(1)(i) indicates that 
fact. To further emphasize the importance of keeping adjudicators 
current on the status of the representative and clarify the effects of 
failing to do so, we also proposed to add at Sec.  405.910(l)(3) and 
(m)(4) that a party's or representative's failure to notify the 
adjudicator that an appointment of representative has been delegated or 
revoked, respectively, is not good cause for missing a deadline or not 
appearing at a hearing.
    We did not propose any changes for part 423, subpart U because it 
does not have a corresponding provision for representative 
appointments.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: Two commenters expressed concern that the proposed changes 
will not resolve the inefficiencies and inconsistencies that parties 
currently experience when appointing and changing representatives. The 
commenters recommended that instead of adding additional regulations, 
changes are needed in OMHA's internal procedures for receiving and 
processing appointments of representatives and changes in 
representatives to ensure that these appointments and changes are 
processed efficiently and consistently.
    Response: OMHA is currently implementing several tools that we 
believe will assist with making our internal processing procedures more 
consistent, more efficient, and more appellant-friendly. The OCPM, 
available on the OMHA Web site, establishes uniform day-to-day 
procedures for processing appeals at the OMHA level of adjudication, 
including a detailed chapter outlining procedures related to 
representatives. OMHA is also developing an electronic case management 
system that will streamline case processing and will have a public 
facing portal for appellants and representatives to electronically file 
documents, including relevant appointment of representative forms, and 
to check the status of appeals online. OMHA maintains a toll free 
beneficiary help line and an OMHA national toll free line to assist 
beneficiaries and other appellants with questions regarding their 
appeals. Finally, OMHA provides in-house training periodically to its 
ALJs, attorneys, and other staff to help ensure understanding and 
compliance with all regulations and internal policy applicable to 
processing appeals. We anticipate that these tools and ongoing training 
will help improve OMHA's case processing and address the commenters' 
concerns. However, we note that OMHA is responsible for protecting the 
personally identifiable information and protected health information 
contained in the administrative record, and as such, requires changes 
in representation to be filed for each appeal to which the change is 
applicable. We believe the tools discussed above and the proposed 
changes to the regulation that we are adopting in this final rule, will 
help to ensure the administrative record for the appeal is complete, 
and the authorization for the representative to receive appeal-related 
information is present for each appeal.
    Comment: One commenter asked whether the regulations required use 
of the beneficiary's entire Medicare health insurance claim number 
(HICN) for a valid appointment of representative or if an abbreviated 
HICN is adequate, and whether it is statutorily required to send a copy 
of the appointment of representative form to the other parties when the 
representative files an appeal or if it is sufficient to include it 
only in the copy of the appeal request that is sent to the ``DME MAC, 
QIC, ALJ, or adjudicator.''
    Response: We note as an initial matter that the proposed changes to 
Sec.  405.910 do not specifically address or impact either of the 
questions asked by the commenter. The regulation at Sec.  
405.910(c)(5), which is also carried over into Sec.  405.910(c)(5) as 
finalized in this rule, requires that when a beneficiary is the 
represented party, a valid appointment must include the beneficiary's 
HICN. The language of the regulation does not permit an abbreviated or 
partial identification and therefore a complete HICN is required. With 
respect to the commenter's second

[[Page 4997]]

question, the regulation at Sec.  405.910(c)(7), which is carried over 
into the Sec.  405.910(c)(7) as finalized in this rule, states that to 
be valid, the appointment of representation must be filed with the 
entity processing the party's initial determination or appeal. There is 
no requirement in section 1869 of the Act or in part 405, subpart I to 
send a copy of an appointment of representative to other parties to the 
appeal. While section III.A.3.g.v of the proposed rule (discussed in 
section II.B.3.g.v of the final below) addresses certain copy 
requirements when submitting a request for hearing, the Appointment of 
Representative form is not specifically addressed in that section. 
Section 405.1014(d)(1), as finalized in this rule, states that if 
additional materials submitted with a request are necessary to provide 
the information required for a complete request in accordance with 
Sec.  405.1014(b), copies of those materials must be sent to the other 
parties as well. With respect to representative information, Sec.  
405.1014(a)(1)(iii), as finalized in this rule, specifies that a 
request for hearing must contain the name, address, and telephone 
number of the designated representative and does not separately require 
that the appellant also provide a copy of the Appointment of 
Representative form. However, to the extent the request for hearing 
does not otherwise contain this information, a copy of the Appointment 
of Representative form may be sent to the other parties to fulfill this 
requirement. With regard to appeals filed with a Medicare 
Administrative Contractor and QIC, there is no requirement, statutory 
or otherwise, that an appellant provide a copy of a request for appeal 
or any other filings to the other parties to the appeal. Although the 
commenter did not specifically mention requests for review filed with 
the Council, we note that Sec.  405.1106(a) and (b), as finalized in 
this rule, require that appellants send requests for Council review or 
request for escalation to the entity specified in the notice of the 
ALJ's or attorney adjudicator's action or to OMHA respectively, and 
copies of the request to the other parties who received notice of the 
ALJ or attorney decision or dismissal or the QIC reconsideration, 
respectively. Section 405.1112, as finalized, requires that the request 
for review or escalation contain the name and signature of the 
representative. As with requests for an ALJ hearing, if the request for 
Council review or escalation does not otherwise include the 
representative's name or signature, a copy of the Appointment of 
Representative form may be sent to the other parties in fulfillment of 
the copy requirements in Sec.  405.1106(a) and (b).
    Comment: Two commenters noted that the official form used for 
appointment of a representative (CMS-1696) required revisions to 
address certain appointments and representatives. One commenter 
indicated that the form did not provide for a physician's National 
Provider Identification number (NPI) when the party being represented 
is a physician. Another commenter noted that the form should include a 
place for a health plan to indicate ``the name/title of [its] 
representative and whether they will be attending as a witness, 
representative, or medical expert.''
    Response: Form CMS-1696 provides that when the party being 
represented is a provider, the provider's NPI must be provided, and 
contains a box at the top of the form after the party name for either 
the HICN or National Provider Identifier number. In the context of an 
NPI, the term ``provider'' has been given a broader definition than in 
other Medicare contexts. When the final rule adopting the NPI as the 
standard unique health identifier for health care providers for use in 
the health care system was published in 2004, the term ``health care 
provider'' was defined as ``a provider of services (as defined in 
section 1861(u) of the Act, 42 U.S.C. 1395x(u)), a provider of medical 
or health services (as defined in section 1861(s) of the Act, 42 U.S.C. 
1395x(s)), and any other person or organization who furnishes, bills, 
or is paid for health care in the normal course of business.''45 CFR 
160.103. In Sec.  405.902, the term ``provider'' is defined more 
narrowly as ``a hospital, critical access hospital, skilled nursing 
facility, comprehensive outpatient rehabilitation facility, home health 
agency, or hospice that has in effect an agreement to participate in 
Medicare, or clinic, rehabilitation agency, or public health agency 
that has in effect a similar agreement, but only to furnish outpatient 
physical therapy or speech pathology services, or a community mental 
health center that has in effect a similar agreement but only to 
furnish partial hospitalization services.'' ``The term ``supplier'' is 
separately defined as ``unless the context otherwise requires, a 
physician or other practitioner, a facility, or other entity (other 
than a provider of services) that furnishes items or services under 
Medicare.''
    Consistent with existing Medicare manual provisions found in 
chapter 29, section 270.1.2 of the Medicare Claims Processing Manual 
(Internet-Only Manual 100-4), Sec.  405.910(c)(5), as finalized in this 
rule, expressly requires that when a provider or supplier is the party 
appointing a representative, the provider's or supplier's NPI must be 
provided in order to create a valid appointment, and a physician is 
included in the Sec.  405.902 definition of supplier. We thank the 
commenters for the suggestion to revise form CMS-1696, and may consider 
the suggestion for potential future clarification to the form. However, 
we note that the regulation is the binding authority, and parties 
wishing to appoint a representative must comply with the requirements 
of Sec.  405.910.
    With respect to the second comment, the commenter is correct that 
form CMS-1696 does not currently address appointment of a 
representative by a health plan. The MAO is a party to a Part C MA 
appeal, and an applicable plan (which may be a health plan) may be a 
party to an appeal involving a Medicare Secondary Payer (MSP) 
overpayment recovery assessed against the applicable plan. Although the 
form does not currently address health plans, health plans may use form 
CMS-1696, instead of a providing a separate notice that complies with 
Sec.  405.910(c). However, in our experience, the individuals who file 
an appeal or appear at a hearing on behalf of health plans are 
generally employees of the plan, including medical directors, physician 
or nurse advisors, regulatory analysts, or in-house counsels. Indeed, 
this appears consistent with the commenter's request for a space to 
indicate whether the ``representative'' will be attending as a witness, 
representative, or medical expert. An appointment of representation 
under Sec.  405.910 is not necessary where an individual who is 
employed by the plan is the person filing the appeal or appearing on 
behalf of the plan, and a representative, as that term is used in Sec.  
405.910, generally does not serve as a witness or medical expert in an 
appeal. Nevertheless, there may be instances where a health plan or 
applicable plan wishes to appoint a non-employee representative. In 
these instances Sec.  405.910(a) is clear that any party to an appeal 
may appoint a representative. We note, however, that health plans and 
applicable plans that opt to use form CMS-1696 to appoint a 
representative would not have HICNs or NPIs, and would not need to 
complete that box, and we did not propose to require that another 
unique identifier be included in appointments of representative where a 
health plan or applicable plan is the party being represented.
    After review and consideration of the comments received, for the 
reasons

[[Page 4998]]

discussed above and in the proposed rule, we are finalizing the changes 
noted above to Sec.  405.910 as proposed without modification.
g. Actions That Are Not Initial Determinations (Sec.  405.926)
    Current Sec.  405.926(l) provides that an ALJ's decision to reopen 
or not to reopen a decision is not an initial determination, and in 
accordance with the introductory language of Sec.  405.926, is 
therefore not appealable under subpart I. In section III.A.2.l of the 
proposed rule, we proposed to revise the reopening rules to provide 
that attorney adjudicators would have the authority to reopen their 
decisions to the same extent that ALJs may reopen their decisions under 
the current provisions. We proposed to insert ``or attorney 
adjudicator's'' after ``ALJ's'' in Sec.  405.926(l) to provide that the 
attorney adjudicator's decision to reopen or not reopen a decision also 
is an action that is not an initial determination and therefore not an 
appealable action under subpart I. 81 FR 43790, 43799.
    Current Sec.  405.926(m) provides that a determination that CMS or 
its contractors may participate in or act as parties in an ALJ hearing 
is not an initial determination, and in accordance with the 
introductory language of Sec.  405.926, is therefore not appealable 
under subpart I. As explained in section III.A.3.f of the proposed rule 
and II.B.3.f of this final rule below, we proposed to revise Sec.  
405.1010, which currently discusses when CMS or a contractor may 
participate in an ALJ hearing. As explained in the proposal to revise 
Sec.  405.1010, CMS or a contractor may elect to participate in the 
proceedings on a request for an ALJ hearing for which no hearing is 
conducted, in addition to participating in an ALJ hearing as a non-
party participant. To align with our proposed revision to Sec.  
405.1010, we proposed to revise Sec.  405.926(m) to indicate that CMS 
or its contractors may participate in the full scope of the proceedings 
on a request for an ALJ hearing, including the hearing, by replacing 
``participate in or act as parties in an ALJ hearing,'' with 
``participate in the proceedings on a request for an ALJ hearing or act 
as parties in an ALJ hearing.'' 81 FR 43790, 43799.
    We received no comments on these proposals, other than: (1) 
Comments discussed in section II.A.2 of the final rule above related to 
our general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs; and (2) comments discussed in 
sections III.A.3.f.i through III.A.3.f.iii of this final rule below 
related to our proposals regarding CMS and CMS contractors as 
participants or parties in the adjudication process. Accordingly, for 
the reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec.  405.926 as proposed without modification.
h. Notice of a Redetermination (Sec.  405.956)
    Current Sec.  405.956(b)(8) requires that the notice of a 
redetermination include a statement that evidence not submitted to the 
QIC is not considered at an ALJ hearing or further appeal, unless the 
appellant demonstrates good cause as to why that evidence was not 
provided previously. We proposed to remove ``an ALJ hearing'' and add 
``the OMHA level'' in its place so that the notice of a redetermination 
is clear that, absent good cause and subject to the exception in Sec.  
405.956(d) for beneficiaries not represented by a provider or supplier, 
evidence that was not submitted to the QIC is not considered by an ALJ 
or an attorney adjudicator, as defined in section II.B of the proposed 
rule and II.A.2 of this final rule above. 81 FR 43790, 43799.
    We received no comments on this proposal, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing these 
changes to Sec.  405.956 as proposed without modification.
i. Time Frame for Making a Reconsideration Following a Contractor 
Redetermination, Withdrawal or Dismissal of a Request for a 
Reconsideration, and Reconsideration (Sec. Sec.  405.970, 405.972, and 
405.974)
    As discussed in the 2005 Interim Final Rule (70 FR 11444 through 
11445) and the 2009 Final Rule (74 FR 65311 through 65312), HHS adopted 
a policy of providing for one level of administrative review of a 
dismissal of a request for appeal. As a result, an adjudicator's 
decision or dismissal when reviewing a dismissal action issued at the 
previous level is binding and not subject to further review. The policy 
balances a party's need for review and the need for administrative 
finality. The policy is embodied in the rules relating to reviews of 
dismissals at the next adjudicative level in Sec. Sec.  405.972(e), 
405.974(b)(3), 405.1004(c), 405.1102(c), 405.1108(b), and 405.1116.
    At the QIC level of appeal, a review of a contractor 
redetermination and a review of a contractor's dismissal of a request 
for a redetermination are both characterized as a ``reconsideration.'' 
While the outcome of a QIC's reconsideration of a contractor dismissal 
is differentiated and further reviews are not permitted in accordance 
with Sec.  405.974(b)(3), an ambiguity exists with regard to the time 
frame for completing this type of reconsideration and escalation 
options when that time frame is not met. Current Sec.  405.970 
establishes the time frame for making a reconsideration without further 
qualification. However, section 1869(b)(1)(D)(i) of the Act establishes 
that a right to a reconsideration of an initial determination (which 
includes a redetermination under section 1869(a)(3)(D) of the Act) 
exists if a timely request for a reconsideration is filed within 180 
days following receipt of a contractor's redetermination, which is 
discussed in Sec.  405.962. In contrast, Sec.  405.974(b)(1) requires 
that a request for a QIC reconsideration of a contractor's dismissal of 
a request for redetermination be filed within 60 calendar days after 
receiving the contractor's notice of dismissal. Section 1869 of the Act 
does not address dismissals. Rather, section 1869(c)(3)(C)(i) and 
(c)(3)(C)(ii) of the Act only provide for a time frame to complete a 
reconsideration of an initial determination, and an option to escalate 
a case if that time frame is not met.
    The effect of the ambiguity in Sec.  405.970 is the potential 
escalation of a request for a QIC reconsideration of a contractor's 
dismissal when the reconsideration is not completed within 60 calendar 
days of a timely filed request for a reconsideration of the dismissal, 
and a potential hearing being required in accordance with Sec.  
405.1002(b). The potential effect of this ambiguity is contrary to the 
policy of limiting reviews of dismissals to the next adjudicative level 
of administrative appeal, as well as the statutory construct for 
providing ALJ hearings after QIC reconsiderations of redeterminations, 
or escalations of requests for reconsiderations following a 
redetermination. We also note that in the parallel context of an ALJ 
review of

[[Page 4999]]

a QIC's dismissal of a request for reconsideration, Sec. Sec.  405.1002 
and 405.1004 establish a clear distinction between a request for 
hearing following a QIC reconsideration and a request for a review of a 
QIC dismissal, and Sec. Sec.  405.1016 and 405.1104 address the 
adjudication time frames for ALJ decisions, and the option to escalate 
an appeal to the Council when a time frame is not met, only in the 
context of a request for hearing, in accordance with section 1869(d)(1) 
and (d)(3)(A) of the Act.
    To address this unintended outcome of Sec.  405.970, we proposed to 
amend the title of Sec.  405.970 and paragraphs (a), (b)(1), (b)(2), 
(b)(3), (c), (e)(1), and (e)(2)(i) to provide that the provisions would 
only apply to a request for a reconsideration following a contractor 
redetermination, and not to a request for QIC review of a contractor's 
dismissal of a request for redetermination. We stated in the proposed 
rule that these revisions would further our policy on reviews of 
dismissals and help appellants better understand what may be escalated 
to OMHA for an ALJ hearing. We also proposed to replace ``the ALJ 
hearing office'' in current paragraph (e)(2)(ii) with ``OMHA'' because 
the QIC sends case files for escalated cases to a centralized location, 
not to individual field offices. We did not propose any parallel 
changes for part 423 because subpart U does not address IRE 
reconsiderations and subpart M does not have a provision with the same 
ambiguity. 81 FR 43790, 43799-43800.
    To provide additional clarity to the procedures for reviews of 
dismissal actions, we also proposed to amend the text in Sec. Sec.  
405.972(b)(3), (e) and 405.974(b)(3), and the introductory text of 
Sec.  405.974(b) to replace the references to a ``reconsideration'' of 
a contractor's dismissal of a request for redetermination with the word 
``review'' so that the QIC's action is referred to as a review of a 
contractor's dismissal of a request for redetermination. We also 
proposed to revise the section heading of Sec.  405.972 to read 
``Withdrawal or dismissal of a request for reconsideration or review of 
a contractor's dismissal of a request for redetermination,'' and the 
section heading of Sec.  405.974 to read, ``Reconsideration and review 
of a contractor's dismissal of a request for redetermination.'' We 
stated in the proposed rule that these revisions are consistent with 
the description of a reconsideration in section 1869(c)(3)(B)(i) of the 
Act and Sec.  405.968(a). As we stated in the proposed rule, a QIC's 
review of a contractor dismissal action is limited to the 
appropriateness of the dismissal action and does not consist of a 
review of the initial determination and redetermination, which is the 
meaning attributed to a reconsideration. In reviewing a contractor 
dismissal action, the QIC either affirms or vacates the dismissal of 
the request for redetermination. If a dismissal action is vacated, the 
appeal is remanded back to the MAC to conduct a redetermination on the 
merits (Sec.  405.974). 81 FR 43790, 43800.
    Current Sec.  405.972(e) provides that a QIC's dismissal of a 
request for reconsideration is binding unless it is modified or 
reversed by an ALJ under Sec.  405.1004. As discussed in section II.B 
of the proposed rule and II.A.2 of this final rule above, we proposed 
that an attorney adjudicator may conduct a review of a QIC's dismissal 
of a request for reconsideration and in section III.A.3.c of the 
proposed rule (discussed in section II.B.3.c of this final rule below), 
we proposed to revise Sec.  405.1004 to provide the effect of an 
attorney adjudicator's action taken in reviewing the QIC dismissal is 
equivalent to the effect of an ALJ's action taken in reviewing the QIC 
dismissal. To align with our proposed revision to Sec.  405.1004, we 
proposed to insert ``or attorney adjudicator'' after ``an ALJ'' in 
Sec.  405.972(e) to indicate that a QIC's dismissal of a request for 
reconsideration is binding unless it is modified or reversed by an ALJ 
or attorney adjudicator under Sec.  405.1004. 81 FR 43790, 43800.
    We received no comments on these proposals, other than: (1) 
Comments discussed in section II.A.2 above related to our general 
proposals to provide authority for attorney adjudicators to issue 
certain decisions, dismissals and remands, and to revise the rules so 
that decisions and dismissals issued by attorney adjudicators may be 
reopened and/or appealed in the same manner as equivalent decisions and 
dismissals issued by ALJs; and (2) comments discussed in section II.A.4 
above related to our general proposal to reference OMHA or an OMHA 
office, in place of current references to an unspecified entity, ALJs, 
and ALJ hearing offices, when a reference to OMHA or an OMHA office 
provides a clearer explanation of a topic. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing these 
changes to Sec. Sec.  405.970, 405.972, and 405.974 as proposed without 
modification.
j. Notice of Reconsideration (Sec.  405.976)
    Section 1869(b)(3) of the Act states that a provider or supplier 
may not introduce evidence in any appeal that was not presented at the 
reconsideration conducted by a QIC unless there is good cause as to why 
the evidence was not provided prior to the issuance of the QIC's 
reconsideration. Under this authority, Sec.  405.976(b)(5)(ii) provides 
that a notice of reconsideration must include a summary of the 
rationale for the reconsideration that specifies that all evidence that 
is not submitted prior to the issuance of the reconsideration will not 
be considered at the ALJ level, or made part of the administrative 
record, unless the appellant demonstrates good cause as to why the 
evidence was not provided prior to the issuance of the QIC's 
reconsideration; however, it does not apply to a beneficiary unless the 
beneficiary is represented by a provider or supplier or to state 
Medicaid agencies. The statement that the evidence will not be made 
part of the administrative record is inconsistent with our practice of 
making a complete record of the administrative proceedings for further 
reviews, including documents submitted by parties that were not 
considered in making the decision. Current Sec.  405.1028(c) states 
that if good cause does not exist, the ALJ must exclude the evidence 
from the proceedings and may not consider it in reaching a decision. 
However, it does not instruct the ALJ to remove the evidence from the 
administrative record, and to do so would preclude an effective review 
of the good cause determination. In addition, we noted in the 2005 
Interim Final Rule (70 FR 11464) that under current Sec.  
405.1042(a)(2), excluded evidence is part of the record because it 
states that in the record, the ALJ must also discuss any evidence 
excluded under Sec.  405.1028 and include a justification for excluding 
the evidence. To help ensure that the evidence is preserved in the 
administrative record, we proposed to delete ``or made part of the 
administrative record'' from the paragraph in Sec.  405.976(b)(5)(ii). 
81 FR 43790, 43800.
    Current Sec.  405.976(b)(7) requires that the QIC notice of 
reconsideration contain a statement of whether the amount in 
controversy needed for an ALJ hearing is met when the reconsideration 
is partially or fully unfavorable. As further discussed in section 
III.A.3.d of the proposed rule and II.B.3.d of the final rule below, we 
proposed revisions to Sec.  405.976(b)(7) along with revisions to the 
methodology for calculating the amount in controversy required for an 
ALJ hearing under Sec.  405.1006(d) to better align the

[[Page 5000]]

amount in controversy with the actual amount in dispute. Please refer 
to section III.A.3.d of the proposed rule and II.B.3.d of this final 
rule below for a discussion of these proposals.
    We did not propose any changes to part 423 because subpart U does 
not address IRE reconsiderations and subpart M does not contain similar 
provisions.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: One commenter requested that the notice of reconsideration 
contain language clarifying that good cause does not exist for a 
provider's submission of new evidence for the first time at the OMHA 
level, if the documentation was in the provider's possession during an 
audit that results in an initial determination.
    Response: We appreciate the commenter's input, but believe the 
regulations as finalized in this rule clearly indicate that providers 
and suppliers should submit all evidence that is relevant to their 
appeal as early in the appeal process as possible, and the 
circumstances in which an ALJ or attorney adjudicator may find good 
cause for the introduction of new evidence at the OMHA level (see 
Sec. Sec.  405.966(a)(2), 976(b)(5)(ii), 405.1018, 405.1028, and 
405.1030). We understand that appellants may not always know which 
documents are necessary to support their appeal. To assist appellants, 
contractors issuing redetermination notices are instructed at Sec.  
405.956(b)(6) to identify ``specific missing documentation,'' that 
should be submitted with the request for reconsideration. We encourage 
appellants to submit any and all evidence that may help with their 
appeal before the OMHA level. Section 405.1018 requires a provider, 
supplier, or a beneficiary represented by a provider or supplier, that 
wishes to introduce new evidence to submit a statement explaining why 
the evidence was not previously submitted to the QIC, or a prior 
decision-maker. We also believe the regulations, as finalized in this 
rule, clearly set forth the consequences for not showing good cause. We 
proposed that Sec.  405.1018(c)(2) be added to state that if the 
provider or supplier, or beneficiary represented by a provider or 
supplier, fails to include the statement explaining why the evidence 
was not previously submitted, the evidence will not be considered. To 
strengthen the existing requirement for the full and early presentation 
of evidence, we are finalizing our proposed changes at Sec.  
405.1018(c)(2), as discussed in section II.B.3.i below.
    We proposed at Sec.  405.1028(a)(2)(i) through (v) to include 
specific instances when an ALJ or attorney adjudicator may find good 
cause for the introduction of new evidence submitted by a provider, 
supplier, or beneficiary represented by a provider or supplier that is 
submitted for the first time at the OMHA level, but the ultimate 
finding of whether there is good cause under these provisions would be 
at the discretion of the ALJ or attorney adjudicator. We believe that 
the proposed changes to Sec.  405.1028 that we are adopting provide 
sufficient guidance regarding the circumstances in which an ALJ or 
attorney adjudicator may find good cause, and thus we do not believe it 
is necessary to include the commenter's requested revision in the 
notice of reconsideration. As explained above (and discussed in section 
III.A.2.j of the proposed rule), the proposed change to the notice of 
reconsideration at Sec.  405.976(b)(5)(ii) was intended to reflect that 
evidence submitted after the reconsideration that does not meet the 
good cause standard will still be preserved in the administrative 
record, as the statement in Sec.  405.976(b)(5)(ii) that the evidence 
would not be made part of the administrative record was inconsistent 
with current practice of making a complete record of the administrative 
proceedings for further review. In our ongoing effort to streamline the 
Medicare Appeals process, we encourage appellants to submit evidence as 
early on in the appeals process as possible, but do not believe the 
commenter's suggested revision is necessary to accomplish this goal.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
without modification this change to Sec.  405.976(b)(5)(ii) as 
proposed.
k. Effect of a Reconsideration (Sec.  405.978)
    Section 405.978 discusses the effect of a QIC reconsideration, and 
states that a reconsideration is binding on all parties unless, among 
other things, an ALJ decision is issued in accordance with a request 
for an ALJ hearing made in accordance with Sec.  405.1014. As discussed 
in section II.B of the proposed rule and II.A.2 of this final rule 
above, we proposed that an attorney adjudicator may issue a decision on 
a request for an ALJ hearing when a hearing is not conducted, and in 
section III.A.3.v of the proposed rule (as discussed in section 
II.B.3.v of this final rule below), we proposed to revise Sec.  
405.1048 to provide the effect of an attorney adjudicator's decision is 
equivalent to the effect of an ALJ's decision. To align with our 
proposals to provide that an attorney adjudicator may issue a decision 
on a request for an ALJ hearing when a hearing is not conducted and the 
effect of that decision is equivalent to the effect of an ALJ's 
decision, we proposed to insert ``or attorney adjudicator'' after the 
first use of ``ALJ'' in Sec.  405.978(a) to indicate that a QIC 
reconsideration is binding on all parties unless, among other things, 
an ALJ or attorney adjudicator decision is issued in accordance to a 
request for an ALJ hearing made in accordance with Sec.  405.1014. 81 
FR 43790, 43800-43801.
    We received no comments on this proposal, other than comments 
discussed in section II.A.2 above related to our general proposals to 
provide authority for attorney adjudicators to issue certain decisions, 
dismissals and remands, and to revise the rules so that decisions and 
dismissals issued by attorney adjudicators may be reopened and/or 
appealed in the same manner as equivalent decisions and dismissals 
issued by ALJs. Accordingly, for the reasons discussed above and in the 
proposed rule, we are finalizing this change to Sec.  405.978 as 
proposed without modification.
l. Reopenings (Sec. Sec.  405.980, 405.982, 405.984, 423.1978, 
423.1980, 423.1982, and 423.1984)
    As discussed below, we proposed a number of revisions to the rules 
governing reopening and revision of initial determinations and appeal 
decisions. 81 FR 43790, 43801. Sections 405.980 and 423.1980 set forth 
the rules governing reopening and revision of initial determinations, 
redeterminations, reconsiderations, decisions, and reviews; Sec. Sec.  
405.982 and 423.1982 set forth the rules governing notice of a revised 
determination or decision; and Sec. Sec.  405.984 and 423.1984 set 
forth the rules on the effect of a revised determination or decision. 
Pursuant to Sec. Sec.  405.1038 and 423.2038, an ALJ may issue a 
decision on a request for hearing without conducting a hearing in 
specified circumstances. As proposed in section II.B of the proposed 
rule (and discussed in section II.A.2 of this final rule above), an 
attorney adjudicator also would be able to issue decisions on requests 
for an ALJ hearing in specified circumstances, issue dismissals when a 
party withdraws a request for hearing, and issue decisions on requests 
to review QIC or IRE dismissals.
    We proposed to insert ``or attorney adjudicator'' or ``attorney 
adjudicator's,'' after ``ALJ'' or ``ALJ's'' in

[[Page 5001]]

Sec. Sec.  405.980(a)(1)(iii), (a)(4), (a)(5), (d) introductory text, 
(d)(2), (e)(2); 405.982(a), (b); 405.984(d); 423.1980(a)(1)(iii), 
(a)(4), (d) introductory text, (d)(2), (e)(2); 423.1982(a), (a)(1), 
(a)(2), (b), (b)(1), and (b)(2); 423.1984(d); 423.1978(a); 
423.1980(a)(2). We stated in the proposed rule that these revisions 
would provide that decisions issued by attorney adjudicators, as 
proposed in section II.B of the proposed rule (and discussed in section 
II.A.2 of this final rule above), may be reopened in the same manner as 
decisions issued by an ALJ (that is, when there is good cause in 
accordance with Sec. Sec.  405.986 or 423.1986, or the decision was 
procured by fraud or similar fault), and with the same limitations, 
requirements, and effects as reopening an ALJ decision. We stated in 
the proposed rule that we believe it is necessary for an attorney 
adjudicator or the Council to have the authority to reopen the attorney 
adjudicator's decision on the same bases as an ALJ or the Council may 
reopen the ALJ's decision under the current rules; to address instances 
in which there is good cause to reopen the attorney adjudicator's 
decision (in accordance with Sec. Sec.  405.986 or 423.1986) or the 
attorney adjudicator's decision was procured by fraud or similar fault; 
and the action should be subject to the same limitations and 
requirements, and have the same effects as an ALJ's action under the 
provisions.
    We also proposed to replace ``hearing decision,'' ``hearing 
decisions,'' or ``hearings,'' with ``decision'' or ``decisions'' in the 
titles of Sec. Sec.  405.980 and 423.1980; Sec. Sec.  
405.980(a)(1)(iii), (d) introductory text, (d)(2), (e) introductory 
text, and (e)(2); 423.1980(a)(1)(iii), (d) introductory text, (d)(2), 
(e) introductory text, and (e)(2); to replace ``hearing'' with ``ALJ or 
attorney adjudicator decision'' in Sec. Sec.  405.980(a)(1)(iv), 
(a)(4), (e)(2); 423.1980(a)(1)(iv), (a)(2), and (e)(2); and to replace 
``ALJ hearing decisions'' and ``hearing decision,'' with ``ALJ or 
attorney adjudicator decisions'' and ``ALJ or attorney adjudicator 
decision'', respectively, in Sec. Sec.  405.984(d) and 423.1984(d). We 
stated in the proposed rule that these revisions would avoid any 
confusion that reopening under these provisions is limited to decisions 
for which an oral hearing was conducted, whether the decision is issued 
by an ALJ without conducting a hearing, as permitted under current 
rules or by an attorney adjudicator without conducting a hearing, as 
proposed in section II.B of the proposed rule (and discussed in section 
II.A.2 of this final rule above).
    In addition, we proposed to add in Sec. Sec.  405.980(a)(1)(iii), 
(d)(2), (e)(2), and 423.1980(a)(1)(iii), (d)(2), (e)(2) that an ALJ, or 
attorney adjudicator as proposed in section II.B of the proposed rule 
(and discussed in section II.A.2 of this final rule above), revises 
``his or her'' decision and may reopen ``his or her'' decision, which 
reflects our current policy that the deciding ALJ may reopen his or her 
decision, and avoids any potential confusion that an ALJ or attorney 
adjudicator may reopen the decision of another ALJ or attorney 
adjudicator. We also proposed to insert ``its'' before ``review'' in 
Sec. Sec.  405.980(a)(1)(iv) and 423.1980(a)(1)(iv) to indicate that 
the Council's review decision may only be reopened by the Council, to 
differentiate it from an ALJ or attorney adjudicator decision that the 
Council may also reopen. In addition, we proposed to specify in 
Sec. Sec.  405.980(d)(2) and (e)(2), and 423.1980(d)(2) and (e)(2) that 
the Council may reopen ``an ALJ or attorney adjudicator'' decision 
consistent with the current policy that the Council may reopen an ALJ 
decision, and to differentiate the provisions from Sec. Sec.  
405.980(d)(3) and (e)(3), and 423.1980(d)(3) and (e)(3), which provide 
for the Council to reopen its review decision. We also proposed in 
Sec.  405.980(e)(3) to insert ``Council'' before ``review'' to clarify 
that a party to a Council review may request that the Council reopen 
its decision.
    Finally, we proposed at Sec.  405.984(c) to replace ``in accordance 
with Sec.  405.1000 through Sec.  405.1064'' with ``in accordance with 
Sec.  405.1000 through Sec.  405.1063'' to account for the proposed 
removal of Sec.  405.1064 discussed below.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 above related to our general proposals to 
provide authority for attorney adjudicators to issue certain decisions, 
dismissals and remands, and to revise the rules so that decisions and 
dismissals issued by attorney adjudicators may be reopened and/or 
appealed in the same manner as equivalent decisions and dismissals 
issued by ALJs. Accordingly, for the reasons discussed above and in the 
proposed rule, we are finalizing our proposals as discussed above, 
without modification, to revise the rules governing the reopening and 
revision of initial determinations, redeterminations, reconsiderations, 
decisions, and reviews.
m. Expedited Access to Judicial Review (Sec. Sec.  405.990 and 
423.1990)
    Sections 405.990 and 423.1990 set forth the procedures governing 
expedited access to judicial review (EAJR). Current Sec. Sec.  
405.990(d) and 423.1990(d) allow a requesting party to file an EAJR 
request with an ALJ or the Council, which is then responsible for 
forwarding the request to the EAJR review entity within 5 calendar days 
of receipt. In accordance with Sec. Sec.  405.990(f) and 423.1990(e), a 
request for EAJR must be acted upon by the EAJR review entity within 60 
calendar days after the date that the review entity receives a request 
and accompanying documents and materials. In practice, this process has 
resulted in confusion and delays for requesting parties when EAJR 
requests are sent directly to an ALJ or the Council. To simplify the 
process for requesting parties and to help ensure the timely processing 
of EAJR requests, we proposed to revise Sec. Sec.  405.990(d)(1) and 
423.1990(d)(1) to direct EAJR requests to the DAB, which administers 
the EAJR process. Specifically, we proposed at Sec. Sec.  
405.990(d)(1)(i) and (ii), and 423.1990(d)(1)(i) and (ii) that the 
requestor or enrollee may file a written EAJR request with the DAB with 
the request for ALJ hearing or Council review if a request for ALJ 
hearing or Council review is not pending, or file a written EAJR 
request with the DAB if an appeal is already pending for an ALJ hearing 
or otherwise before OMHA or the Council. We also proposed to revise 
Sec. Sec.  405.990(i)(1) and (2) and 423.1990(h)(1) and (2) so that the 
review entity would forward a rejected EAJR request to OMHA or the 
Council instead of an ALJ hearing office or the Council, to align with 
the revised EAJR filing process in which a request for ALJ hearing is 
submitted to the DAB with an EAJR request; we stated that this would 
also help ensure OMHA can process the request for an ALJ hearing as 
quickly as possible in the event an EAJR request is rejected.
    Sections 405.990(i)(2) and 423.1990(h)(2) provide that a 90 
calendar day time frame will apply to an appeal when a rejected EAJR 
request is received by the hearing office or the Council. Section 
405.990(b)(1)(ii) states that an EAJR request may be filed when a 
request for a QIC reconsideration has been escalated for an ALJ 
hearing, and in accordance with current Sec.  405.1016(c), a 180 
calendar day time frame will apply in that circumstance. In addition, 
Sec. Sec.  405.1036(d) and 423.2036(d) allow an appellant or enrollee 
to waive the adjudication period for an ALJ to issue a decision 
specified in Sec. Sec.  405.1016 and 405.2016, respectively, at any 
time during the hearing process. To address the possibility that a time 
frame other than

[[Page 5002]]

90 calendar days applies to an appeal, or no adjudication time frame 
applies to an appeal, we proposed to revise Sec. Sec.  405.990(i)(2) 
and 423.1990(h)(2) to remove the reference to 90 calendar days and 
provide that if an adjudication time frame applies to an appeal, the 
adjudication time frame begins on the day the request for hearing is 
received by OMHA or the request for review is received by the Council, 
from the EAJR review entity.
    In addition, we proposed at Sec.  405.990(i)(1) to remove the 
redundant ``request'' after ``EAJR request'' in current paragraph 
(i)(1), which was a drafting error; and at Sec.  423.1990(b)(1)(i) to 
remove ``final'' before referring to a decision, dismissal, or remand 
order of the ALJ or attorney adjudicator, as proposed in section II.B 
of the proposed rule (and discussed in section II.A.2 above), because 
as we explained in the 2009 Final Rule (74 FR 65307 through 65308), 
final decisions of the Secretary are those for which judicial review 
may be immediately sought under section 205(g) of the Act and the use 
of ``final'' in current Sec.  423.1990(b)(1)(i) may cause confusion 
with such a final decision.
    We received no comments on these proposals, other than: (1) 
comments discussed in section II.A.2 above related to our general 
proposals to provide authority for attorney adjudicators to issue 
certain decisions, dismissals and remands, and to revise the rules so 
that decisions and dismissals issued by attorney adjudicators may be 
reopened and/or appealed in the same manner as equivalent decisions and 
dismissals issued by ALJs; and (2) comments discussed in section II.A.4 
above related to our general proposal to reference OMHA or an OMHA 
office, in place of current references to an unspecified entity, ALJs, 
and ALJ hearing offices, when a reference to OMHA or an OMHA office 
provides a clearer explanation of a topic. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing these 
changes to Sec.  405.990 and 423.1990 as proposed without modification.
3. ALJ hearings
a. Hearing Before an ALJ and Decision by an ALJ and Attorney 
Adjudicator: General Rule (Sec. Sec.  405.1000 and 423.2000)
    As described below, we proposed a number of revisions to Sec. Sec.  
405.1000 and 423.2000, which provide a general overview and rules for 
hearings before an ALJ and decisions on requests for hearings. 81 FR 
43790, 43802-43803. We proposed to revise Sec. Sec.  405.1000(d), (e), 
(g); and 423.2000(d), (e), (g) to include decisions by attorney 
adjudicators, as proposed in section II.B of the proposed rule (and 
discussed in section II.A.2 above). We also proposed to retitle the 
sections to reflect that the provisions of the section extend to 
decisions by both ALJ and attorney adjudicators. We proposed to change 
the language in Sec. Sec.  405.1000(a), (b), (c), and (d); and 
423.2000(a) and (b) to state that a hearing may only be conducted by an 
ALJ. We stated in the proposed rule that these revisions would provide 
readers with an accurate overview of how a request for an ALJ hearing 
would be adjudicated, including the potential that a decision could be 
issued without conducting a hearing by an ALJ or an attorney 
adjudicator as proposed in section II.B of the proposed rule (and 
discussed in section II.A.2 above), while informing readers that if a 
hearing is conducted, an ALJ will conduct the hearing.
    Section 405.1000(c) provides that CMS or a contractor may elect to 
participate in a hearing, and Sec.  423.2000(c) provides that CMS, the 
IRE or Part D plan sponsor may request to participate in a hearing. As 
discussed in section III.A.3.f of the proposed rule and II.B.3.f of 
this final rule below, we proposed to revise Sec. Sec.  405.1010 and 
423.2010 so that these entities may elect (for Sec.  405.1010) or 
request (for Sec.  423.2010) to participate in the proceedings on a 
request for hearing, including participation before a hearing is 
scheduled. We proposed to revise Sec. Sec.  405.1000(c) and 423.2000(c) 
so that the sections would reference Sec. Sec.  405.1010 and 423.2010, 
respectively, with regard to participating in the proceedings. We 
stated in the proposed rule that by referencing Sec. Sec.  405.1010 and 
423.2010, the proposed revisions would direct readers to those sections 
addressing the full scope of potential participation by CMS or its 
contractors, or a Part D plan sponsor, on a request for an ALJ hearing, 
including participating in the proceedings on a request for an ALJ 
hearing, which as discussed in proposed Sec. Sec.  405.1010 and 
423.2010, may include any proceedings before an oral hearing is 
scheduled. We also proposed in Sec.  405.1000(c) to state that CMS or 
its contractor may join the hearing before an ALJ as a party under 
Sec.  405.1012, which would direct readers to the appropriate section 
addressing the full scope of CMS or its contractor acting as a party. 
(Because CMS, the IRE, and the Part D plan sponsor may not be a party 
to a hearing under part 423, subpart U, there is no corollary to Sec.  
405.1012 in that subpart and therefore a similar revision was not 
proposed for Sec.  423.2000(c).)
    Sections 405.1000(d) and 423.2000(d) provide that a decision is 
based on the hearing record, and Sec. Sec.  405.1000(g) and 423.2000(g) 
reference a hearing record in describing when a decision can be issued 
based on the record, without a hearing. However, Sec. Sec.  405.1042 
and 423.2042 identify the record as the administrative record. We 
stated in the proposed rule that the references to a hearing record in 
paragraphs (d) and (g) may cause confusion when no hearing is 
conducted. To make the terminology consistent throughout the rules, 
account for decisions that are issued without a hearing being 
conducted, and minimize confusion, we proposed to revise Sec. Sec.  
405.1000(d) and 423.2000(d) so that a decision is based on the 
administrative record, including, for an ALJ, any hearing record, and 
Sec. Sec.  405.1000(g) and 423.2000(g) to provide that a decision is 
based on the administrative record.
    Section 405.1000(e) and (g) discuss two circumstances in which a 
decision on a request for hearing can be issued by an ALJ without 
conducting a hearing, either where the parties waive the hearing or 
where the record supports a fully favorable finding. Related to Sec.  
405.1000(e), Sec.  405.1000(f) discusses the ALJ's authority to conduct 
a hearing even if the parties waive the hearing. As discussed in 
section III.A.3.r of the proposed rule and II.B.3.r of this final rule 
below, we proposed to revise Sec.  405.1038 to modify the circumstances 
in which a decision on a request for hearing can be issued without 
conducting a hearing. As discussed in the proposed revisions to Sec.  
405.1038, we proposed in Sec.  405.1038 that a case could be decided 
without a hearing before an ALJ if: (1) waivers are obtained by the 
parties entitled to a notice of hearing in accordance with Sec.  
405.1020(c) (Sec.  405.1038(b)(1)(i)); or (2) the record supports a 
fully favorable finding for the appellant on every issue and no other 
party to the appeal is liable for the claims at issue, unless CMS or a 
contractor has elected to be a party to the hearing (Sec.  
405.1038(a)). We proposed to revise Sec.  405.1000(e), (f), and (g) for 
consistency with the Sec.  405.1038 proposals and to accurately 
summarize when a decision on a request for hearing can be issued 
without conducting a hearing in accordance with proposed Sec.  
405.1038. We did not propose similar changes in Sec.  423.2000(e), (f), 
and (g) because we did not propose changes to when a decision on a 
request for hearing can be issued without conducting a hearing in Sec.  
423.2038.
    Current Sec.  405.964(c) requires a QIC to consolidate requests for 
a

[[Page 5003]]

reconsideration filed by different parties on the same claim before a 
reconsideration is made on the first timely filed request. While 
current Sec.  405.1044 permits an ALJ to consolidate requests for 
hearing 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 
pending before the same ALJ, the provision is discretionary and 
dependent on the requests being assigned to the same ALJ. To mitigate 
the potential of requests for hearing on the same claim filed by 
different parties being separately adjudicated, we proposed to add 
Sec.  405.1000(h) to require that when more than one party files a 
timely request for hearing on the same claim before a decision is made 
on the first timely filed request, the requests are consolidated into 
one proceeding and record, and one decision, dismissal, or remand is 
issued. We noted in the proposed rule that if a decision was issued on 
the first timely request before an additional request is timely filed 
or good cause is found to extend the period to file the additional 
request for hearing, a reopening of the decision could be considered by 
the deciding adjudicator in accordance with Sec.  405.980. For example, 
we stated that if a request is submitted with new and material evidence 
that was not available at the time of the decision and may result in a 
different conclusion, the reopening provisions at Sec.  405.980 would 
apply. Because only the enrollee is a party in a part 423, subpart U 
proceeding on a request for an ALJ hearing, no corresponding changes 
were proposed for Sec.  423.2000.
    Provided below are summaries of the specific comment received and 
response to the comment:
    Comment: We received one comment on these proposals. The commenter 
strongly supported our proposal to revise Sec.  405.1000(e), (f), and 
(g) for consistency with our Sec.  405.1038 proposals which, among 
other things, would preclude an ALJ from issuing a fully favorable 
decision on the record if CMS or a CMS contractor has elected to be a 
party to the hearing in accordance with Sec.  405.1012. The commenter 
stated that when audit contractors have an opportunity to present their 
findings, it helps ensure that ALJ decisions reflect a fuller 
understanding of the circumstances.
    Response: We thank the commenter for its support. As the commenter 
indicated, we proposed to revise Sec.  405.1000(e), (f), and (g) for 
consistency with proposed Sec.  405.1038. However, we note that we 
inadvertently included language in proposed Sec.  405.1000(g) that is 
not consistent with the language in proposed Sec.  405.1038(a) 
(relating to fully favorable decisions issued on the record). Proposed 
Sec.  405.1000(g) states that an ALJ or attorney adjudicator may issue 
a decision on the record if the evidence in the administrative record 
supports a fully favorable finding for the appellant, ``and there is no 
other party or no other party is entitled to a notice of hearing in 
accordance with Sec.  405.1020(c).'' However, proposed Sec.  
405.1038(a) states that an ALJ or attorney adjudicator may issue a 
decision without an ALJ conducting a hearing if the evidence in the 
administrative record supports a finding fully in favor of the 
appellant(s) on every issue ``and no other party to the appeal is 
liable for the claims at issue . . . unless CMS or a contractor has 
elected to be a party to the hearing in accordance with Sec.  
405.1012.'' Thus, consistent with our proposal to revise Sec.  
405.1000(g) for consistency with Sec.  405.1038(a), in this final rule, 
we are revising the language in Sec.  405.1000(g) to be consistent with 
the language of Sec.  405.1038(a) as finalized in this rule. We are 
revising Sec.  405.1000(g) to state that, ``An ALJ or attorney 
adjudicator may also issue a decision on the record on his or her own 
initiative if the evidence in the administrative record supports a 
fully favorable finding for the appellant, and no other party to the 
appeal is liable for the claims at issue, unless CMS or a contractor 
has elected to be a party to the hearing in accordance with Sec.  
405.1012.''
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, and in section 
II.B.3.r below concerning Sec.  405.1038 (which also explains the 
circumstances in which a decision on a request for hearing can be 
issued without conducting a hearing), we are finalizing Sec. Sec.  
405.1000 and 423.2000 as proposed with the modifications discussed 
above.
b. Right to an ALJ Hearing (Sec. Sec.  405.1002 and 423.2002)
    As discussed below, we proposed a number of revisions to Sec. Sec.  
405.1002 and 423.2002, which discuss a right to an ALJ hearing. 81 FR 
43790, 43803. Current Sec. Sec.  405.1002(a) and 423.2002(a) provide 
that a party to a QIC reconsideration or the enrollee who receives an 
IRE reconsideration, respectively, may ``request'' a hearing before an 
ALJ if the party or enrollee files a timely request and meets the 
amount in controversy requirement. However, a party or enrollee is 
entitled to a hearing only when those requirements are met. See 
sections 1860D-4(h) and 1869(b)(1)(A) of the Act. Therefore, we 
proposed to revise Sec. Sec.  405.1002(a) and 423.2002(a) introductory 
text to state that the party to a QIC reconsideration or the enrollee 
who receives an IRE reconsideration has a right to a hearing rather 
than may request a hearing. These revisions would align the provisions 
with the statute and clarify that the party or enrollee has a right to 
a hearing before an ALJ when the criteria are met.
    Current Sec. Sec.  405.1002(a)(4) and 423.2002(e) provide that the 
request is considered filed on the date it is received by the entity 
specified in the QIC's or IRE's reconsideration. There has been 
confusion when a request is sent to an OMHA office that is not 
specified in the reconsideration, and this error causes delays in 
processing the request. We proposed to revise Sec. Sec.  405.1002(a)(4) 
and 423.2002(e) to replace ``entity'' with ``office'' to avoid 
confusion that the request may be filed with OMHA as an entity, and 
therefore any OMHA office, rather than the specific OMHA office 
identified in the QIC's or IRE's reconsideration. We stated in the 
proposed rule that this would help ensure appellants are aware that a 
request for hearing must be filed with the office indicated in the 
notice of reconsideration to avoid delays. For example, when the notice 
of reconsideration indicates that a request for hearing must be filed 
with the OMHA central docketing office, an appellant will cause a delay 
if the request is sent to the QIC or IRE, or an OMHA field office. We 
also noted in the proposed rule that as explained in the 2009 Final 
Rule (74 FR 65319 through 65320), pursuant to current Sec.  
405.1014(b)(2), if a request for hearing is timely filed with an entity 
other than the entity specified in the notice of reconsideration, the 
request is not treated as untimely or otherwise rejected. We stated 
that this would remain true for requests that are timely filed with an 
office other than the office specified in the notice of 
reconsideration, pursuant to proposed Sec.  405.1014(c)(2), which 
incorporates the requirement from current Sec.  405.1014(b)(2). This 
would also apply in part 423, subpart U adjudications because the same 
language appears in current Sec.  423.2014(c)(2) and is incorporated in 
proposed Sec.  423.2014(d)(2).
    Current Sec.  405.1002(b)(1) provides that when a party files a 
request with the QIC to escalate the appeal, it is escalated to ``the 
ALJ level.'' We proposed to revise Sec.  405.1002(b)(1) to replace ``to 
the ALJ level'' with ``for a hearing before an ALJ'' so that when a 
request for a QIC

[[Page 5004]]

reconsideration is escalated, it is escalated ``for a hearing before an 
ALJ.'' We stated in the proposed rule that this would help ensure that 
the right to a hearing is clear when an appeal is escalated from the 
QIC. There is no corresponding provision in part 423, subpart U.
    Current Sec.  423.2002(c) provides that the ALJ must document all 
oral requests for expedited hearings. However, an ALJ is not assigned 
to an appeal until after the request for hearing is received and 
processed. Thus, we proposed to revise Sec.  423.2002(c) to state that 
``OMHA'' must document all oral requests for expedited hearings. There 
is no corresponding provision in part 405, subpart I.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: Two commenters generally supported the proposal to replace 
``entity'' with ``office'' in proposed Sec. Sec.  405.1002(a)(4) and 
423.2002(e), but expressed concern that beneficiaries may nevertheless 
continue to send requests for hearing to the wrong entity or office. 
The commenters therefore urged OMHA to continue its policy of accepting 
requests that are timely filed with the wrong entity or office, and to 
incorporate this policy in regulation.
    Response: As we explained in section III.A.3.g.iv of the proposed 
rule (and discussed in section II.B.3.g.iv below), Sec. Sec.  
405.1014(b)(2) and 423.2014(c)(2)(i) state that if a request for 
hearing is timely filed with an entity other than the entity specified 
in the QIC's or IRE's reconsideration, the deadline specified in Sec.  
405.1016 or Sec.  423.2016 for deciding the appeal begins on the date 
the entity specified in the QIC's or IRE's reconsideration receives the 
request for hearing. We proposed to incorporate portions of Sec. Sec.  
405.1014(b)(2) and 423.2014(c)(2)(i) in proposed Sec. Sec.  
405.1014(c)(2) and 423.2014(d)(2)(i), respectively, but to replace 
``entity'' with ``office'' in both sections (to help ensure appellants 
are aware that a request for hearing or request for review of a QIC or 
IRE dismissal must be filed with the office indicated in the QIC's or 
IRE's notice of reconsideration or dismissal in order to avoid delays) 
and ``submitted'' with ``filed'' in Sec.  423.2014(d)(1) (for 
consistency with Sec.  405.1014 and Sec.  422.602). We also noted above 
and in section III.A.3.b and section III.A.3.g.iv of the proposed rule 
(discussed in section II.B.3.g.iv below) that, for those few requests 
for hearing that are misrouted by a party, the date the request for 
hearing was received in the incorrect office would be used to determine 
the timeliness of the request, as explained in the 2009 Final Rule (74 
FR 65319 through 65320).
    We agree with the commenter that OMHA's policy of not treating as 
untimely a request for an ALJ hearing that is timely filed with an 
office other than the office specified in the QIC's or IRE's 
reconsideration should be expressly stated in the regulation. Thus, as 
discussed in section II.B.3.g.iv below, we are finalizing the 
additional language in proposed Sec. Sec.  405.1014(c)(2) and 
423.2014(d)(2)(i) to clarify that, if the request for hearing is timely 
filed with an office other than the office specified in the QIC's 
reconsideration, the request is not treated as untimely.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec. Sec.  405.1002 and 423.2002 as proposed without 
modification. In addition, as discussed above and in section 
II.B.3.g.iv below, we are adding language in Sec. Sec.  405.1014(c)(2) 
and 423.2014(d)(2)(i) to clarify that, if the request for hearing is 
timely filed with an office other than the office specified in the 
QIC's reconsideration, the request is not treated as untimely.
c. Right to a Review of QIC or IRE Notice of Dismissal (Sec. Sec.  
405.1004 and 423.2004)
    As discussed below, we proposed several revisions to Sec. Sec.  
405.1004 and 423.2004, which discuss the right to an ALJ review of a 
QIC notice of dismissal or IRE notice of dismissal, respectively. 81 FR 
43790, 43803-43804. As proposed in section II.B of the proposed rule 
(and discussed in section II.A.2 above), attorney adjudicators or ALJs 
would conduct reviews of QIC or IRE dismissals. Accordingly, we 
proposed to remove references to an ALJ in the titles of proposed 
Sec. Sec.  405.1004 and 423.2004, though ALJs would continue to have 
the authority to conduct reviews of QIC or IRE dismissals if a request 
for a review of a QIC or IRE dismissal is assigned to an ALJ. We also 
proposed to insert ``or attorney adjudicator'' after ALJ in Sec. Sec.  
405.1004(a) introductory language, (b), (c); and 423.2004(a) 
introductory language, (b), and (c), to provide that an attorney 
adjudicator could review a QIC or IRE dismissal, as proposed in section 
II.B of the proposed rule (and discussed in section II.A.2 above). We 
also proposed to replace the reference to ``entity'' in current 
Sec. Sec.  405.1004(a)(4) and 423.2004(a)(4), with ``office,'' for the 
same reasons discussed in III.A.3.b of the proposed rule and II.B.3.b 
of this final rule above, for amending parallel language in Sec. Sec.  
405.1002 and 423.2002.
    Current Sec. Sec.  405.1004(b) and 423.2004(b) provide that if an 
ALJ determines that the QIC's or IRE's dismissal was in error, he or 
she vacates the dismissal and remands the case to a QIC or IRE. As 
discussed in III.A.3.p of the proposed rule and II.B.3.p of this final 
rule below, we proposed to revise the remand provisions and add new 
Sec. Sec.  405.1056 and 405.1058, 423.2056, and 423.2058 to govern when 
remands may be issued, whether and to what extent remands may be 
reviewed, providing notice of a remand, and the effect of a remand. We 
also proposed to revise Sec. Sec.  405.1004(b) and 423.2004(b) to add 
references to proposed Sec. Sec.  405.1056 and 423.2056, respectively, 
to explain that the remand would be in accordance with proposed 
Sec. Sec.  405.1056 and 423.2056, which as discussed in section 
III.A.3.p of the proposed rule and II.B.3.p of this final rule below, 
would address issuing remands and notices thereof, including for 
remands of QIC or IRE dismissals.
    Current Sec. Sec.  405.1004(c) and 423.2004(c) state that an ALJ's 
decision regarding a QIC's or IRE's dismissal of a reconsideration 
request is binding and not subject to further review, and that the 
dismissal of a request for ALJ review of a QIC's or IRE's dismissal of 
a reconsideration request is binding and not subject to further review, 
unless vacated by the Council under Sec.  405.1108(h) or Sec.  
423.2108(b), respectively. In our experience, these sections as 
currently drafted have been a source of confusion for adjudicators and 
appellants. The two sentences convey different actions that can result 
from a request for review of a QIC or IRE dismissal--a decision 
regarding whether the QIC's or IRE's dismissal was correct, or a 
dismissal of the appellant's request for an ALJ review of the QIC's or 
IRE's dismissal. We proposed to separate and further distinguish the 
two situations to avoid the current confusion that results from two of 
the three possible outcomes that may result from a request to review a 
QIC or IRE dismissal (the third being a remand of the dismissal, 
addressed in paragraph (b) in the respective sections) being in the 
same paragraph by proposing a separate paragraph for each outcome 
currently addressed in paragraph (c).
    We proposed to revise Sec. Sec.  405.1004(c) and 423.2004(c) to 
include the possible outcome in the first sentence of current 
Sec. Sec.  405.1004(c) and 423.2004(c) of a decision affirming the 
QIC's or IRE's dismissal. We also proposed to move language in current 
Sec. Sec.  405.1004(c) and 423.2004(c) stating that the decision of an 
ALJ on a request for review of a QIC dismissal is binding and not 
subject to

[[Page 5005]]

further review, to proposed Sec. Sec.  405.1048(b) and 423.2048(b), 
which as discussed in section III.A.3.v of the proposed rule and 
II.B.3.v of this final rule below, would address the effects of 
decisions on requests to review a QIC or IRE dismissal. In addition, we 
proposed in Sec. Sec.  405.1004(c) and 423.2004(c), respectively, to 
state that a decision affirming a QIC or IRE dismissal would be issued 
in accordance with proposed Sec. Sec.  405.1046(b) and 423.2046(b), 
which as discussed in section III.A.3.v of the proposed rule and 
II.B.3.v of this final rule below, would address issuing decisions on 
requests for review of a QIC or IRE dismissal and notices thereof.
    The 2009 Final Rule (74 FR 65311 through 65312) also explained that 
if a request for ALJ review of a QIC dismissal was invalid and thus 
subject to dismissal, the dismissal of the request to review a QIC 
dismissal was binding and not subject to further review (however, a 
party could request that the dismissal be vacated by the Council 
pursuant to Sec.  405.1108(b)). We proposed to add Sec. Sec.  
405.1004(d) and 423.2004(d) to state that the ALJ or attorney 
adjudicator may dismiss a request for review of a QIC's or an IRE's 
dismissal in accordance with proposed Sec. Sec.  405.1052(b) or 
423.2052(b), respectively, which as discussed in section III.A.3.x of 
the proposed rule and II.B.3.x of this final rule below, would address 
dismissals of requests for review of a QIC or IRE dismissal and notices 
thereof. We also proposed to move language in current Sec. Sec.  
405.1004(c) and 423.2004(c) stating that the dismissal is binding and 
not subject to further review unless the dismissal is vacated, to 
proposed Sec. Sec.  405.1054(b) and 423.2054(b), which would address 
the effects of a dismissal of a request for review of a QIC's or an 
IRE's dismissal and as discussed in section III.A.3.x of the proposed 
rule and II.B.3.x of this final rule below, would provide authority for 
an ALJ or attorney adjudicator to vacate a dismissal and therefore 
replace the current reference to the Council.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 above related to our general proposals to 
provide authority for attorney adjudicators to issue certain decisions, 
dismissals and remands, and to revise the rules so that decisions and 
dismissals issued by attorney adjudicators may be reopened and/or 
appealed in the same manner as equivalent decisions and dismissals 
issued by ALJs. Accordingly, for the reasons discussed above and in the 
proposed rule, we are finalizing these changes to Sec. Sec.  405.1004 
and 423.2004 as proposed without modification.
d. Amount in Controversy Required for an ALJ Hearing (Sec. Sec.  
405.976, 405.1006, 422.600, 423.1970, and 478.44)
    As described below, we proposed a number of changes to the amount 
in controversy provisions in Sec. Sec.  405.1006, 423.1970, and 478.44, 
as well as an associated change to Sec.  405.976(b)(7) regarding the 
content of a QIC's notice of reconsideration. 81 FR 43790, 43804-43810, 
43854. Current Sec.  405.1006 sets forth the requirements for meeting 
the amount in controversy for an ALJ hearing. The title of current 
Sec.  405.1006 states that the amount in controversy is required to 
``request'' an ALJ hearing and judicial review. However, as discussed 
in III.A.3.b of the proposed rule and II.B.3.b of this final rule 
above, section 1869(b)(1)(A) of the Act states that a party is entitled 
to a hearing before the Secretary and judicial review, subject to the 
amount in controversy and other requirements. To align the title of 
Sec.  405.1006 with the statutory provision, we proposed that the 
amount in controversy is required ``for'' an ALJ hearing and judicial 
review rather than ``to request'' an ALJ hearing and judicial review. 
Put another way, a party may request an ALJ hearing or judicial review, 
albeit unsuccessfully, without satisfying the amount in controversy 
requirement.
    Section 1869(b)(1)(E) of the Act establishes the minimum amounts in 
controversy for a hearing by the Secretary and for judicial review, but 
does not establish how to calculate the amounts in controversy. Current 
Sec.  405.1006(d) states that the amount remaining in controversy is 
calculated based on the actual amount charged to the individual (a 
beneficiary) for the items or services in question (commonly referred 
to as billed charges), reduced by any Medicare payments already made or 
awarded for the items or services, and any deductible and coinsurance 
amounts applicable to the particular case. In an effort to align the 
amount in controversy with a better approximation of the amount at 
issue in an appeal, we proposed to revise the basis (that is, the 
starting point before any deductions for any payments already made by 
Medicare or any coinsurance or deductible that may be collected) used 
to calculate the amount in controversy. For appeals of claims submitted 
by providers of services, physicians, and other suppliers that are 
priced based on a published Medicare fee schedule or published 
contractor-priced amount (as discussed below), rather than using the 
actual amount charged to the individual as the basis for the amount in 
controversy, we proposed to use the Medicare allowable amount for the 
items and/or services being appealed, subject to the exceptions 
discussed below. An allowable amount is the maximum amount of the 
billed charge deemed payable for the item or service. For the purposes 
of the amount in controversy under Sec.  405.1006, we proposed at Sec.  
405.1006(d)(2)(i)(A) that for items and services with a published 
Medicare fee schedule or published contractor-priced amount, the basis 
for the amount in controversy would be the allowable amount, which 
would be the amount reflected on the fee schedule or in the contractor-
priced amount for those items or services in the applicable 
jurisdiction and place of service.
    We stated in the proposed rule that for a vast majority of items 
and services furnished and billed by physicians and other suppliers, 
allowable amounts are determined based on Medicare fee schedules. Fee 
schedules generally are updated and published on an annual basis by CMS 
through rulemaking, and CMS and its contractors have tools and 
resources available to inform physicians and other suppliers of 
allowable amounts based on these fee schedules, including the Physician 
Fee Schedule Look-up Tool available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PFSlookup/ and spreadsheets for other 
fee schedules that can be accessed on the CMS Web site through the fee 
schedule main page at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/FeeScheduleGenInfo/index.html. Allowable amounts for 
many contractor-priced items and services are also included in these 
tools and resources. Allowable amounts are included on the Medicare 
remittance advice for paid items and services, but not for items and 
services that are denied. However, where the allowable amount for an 
item or service is determined based on a published fee schedule or 
contractor-priced amount, we stated that we anticipated that 
appellants, other than beneficiaries who are not represented by a 
provider, supplier, or Medicaid State agency, would be able to use the 
existing CMS and contractor tools and resources to determine allowable 
amounts for denied services when filing a request for hearing, and 
those amounts could be verified by OMHA in determining whether the 
claims included in the request meet the amount in controversy 
requirement. As discussed below, where the appellant is a beneficiary 
who is not represented by a provider, supplier, or Medicaid State

[[Page 5006]]

agency, we proposed that CMS would require the QIC to specify in the 
notice of reconsideration, for partially or fully unfavorable 
reconsideration decisions, whether the amount remaining in controversy 
is estimated to meet or not meet the amount required for an ALJ hearing 
under proposed Sec.  405.1006(d).
    We stated in the proposed rule that, due to the pricing methodology 
for many items and services furnished by providers of services, such as 
hospitals, hospices, home health agencies, and skilled nursing 
facilities, at the present time an allowable amount is not easily 
discerned or verified with existing CMS and contractor pricing tools 
(for example, there is no pricing tool available for hospital 
outpatient services paid under the outpatient prospective payment 
system (OPPS)) for pre-payment claim denials (where items or services 
on the claim are denied, in full or in part, before claim payment has 
been made). Similarly, we stated that items and services furnished by 
providers or suppliers that are always non-covered, as well as unlisted 
procedures, may not have published allowable amounts based on a fee 
schedule or a published contractor-priced amount. Therefore, we 
proposed at Sec.  405.1006(d)(2)(i)(B) to continue using the provider's 
or supplier's billed charges as the basis for calculating the amount in 
controversy for appeals of claims that are not priced according to a 
CMS-published fee schedule and do not have a published contractor-
priced amount (except as discussed below). We noted that the method for 
calculating the amount in controversy in this scenario would be the 
same as under current Sec.  405.1006(d), and we stated that we believe 
that all appellants have access to this information through claims 
billing histories, remittance advices, or the column titled ``Amount 
Provider [or Supplier] Charged'' on the Medicare Summary Notice. 
However, we solicited comment on whether existing tools and resources 
are available that would enable providers, suppliers, and Medicaid 
State agencies to submit an allowable amount in their request for 
hearing, as proposed in section III.A.3.g.i of the proposed rule (and 
discussed in section II.B.3.g.i below) for items and services not 
subject to published fee schedules or published contractor-priced 
amounts, and whether those amounts could also be verified by OMHA. We 
also solicited comment on how such tools and resources could be used in 
appeals filed by beneficiaries.
    Current Sec.  405.1006(d)(1) introductory text uses ``the actual 
amount charged the individual for the items and services in question'' 
as the basis (starting point) for calculating the amount in 
controversy, before any reductions described in paragraphs (d)(1)(i) 
and (ii) (for any Medicare payments already made or awarded and any 
deductible and coinsurance applicable in the particular case) occur. 
For the reasons discussed above, we proposed to revise paragraph (d)(1) 
introductory text to state that in situations other than those 
described in Sec.  405.1006(d)(3) through (7) (discussed below), the 
amount in controversy is computed as ``the basis for the amount in 
controversy for the items and services in the disputed claim as defined 
in paragraph (d)(2)'', less applicable reductions described in 
paragraphs (d)(1)(i) and (ii), and proposed to revise paragraph (d)(2) 
to specify the amount that would be used as the basis for the amount in 
controversy on a situational basis. We also proposed at Sec.  
405.1006(d)(3) through (7) five exceptions to the general calculation 
methodology specified in proposed paragraphs (d)(1) and (2).
    There has also been confusion in calculating the amount in 
controversy when an appealed reconsideration involves multiple claims. 
Section 1869 of the Act and part 405, subpart I provide for an appeals 
process in which each claim decision is appealed and separately 
adjudicated. However, in some instances, claims are considered together 
based on an appellant's request. To address confusion with calculating 
the amount in controversy when reconsiderations involve multiple claims 
and to help ensure Sec.  405.1006 clearly conveys that the amount in 
controversy requirement must be met for each appealed claim unless the 
claim can be aggregated as discussed below, we proposed in Sec.  
405.1006(d)(1) to clarify that the amount in controversy is based on 
the items or services in the disputed ``claim.''
    We proposed to maintain the current reduction to the calculation of 
the amount in controversy in Sec.  405.1006(d)(1)(i), which states that 
the basis for the amount in controversy is reduced by any Medicare 
payments already made or awarded for the items or services. In 
addition, current Sec.  405.1006(d)(1)(ii) provides that the basis for 
the amount in controversy is further reduced by ``[a]ny deductible and 
coinsurance amounts applicable in the particular case.'' We proposed to 
revise Sec.  405.1006(d)(1)(ii) to read, ``Any deductible and/or 
coinsurance amounts that may be collected for the items or services.'' 
We stated in the proposed rule that we believe revising this provision 
is appropriate to better align the amount at issue in the appeal and 
the amount in controversy so that in situations where a provider or 
supplier is prohibited from collecting applicable coinsurance and/or 
deductible, or must refund any such amounts already collected, the 
basis for the amount in controversy is not reduced by that amount (for 
example, if a provider or supplier is held liable for denied services 
under the limitation on liability provision in section 1879 of the Act, 
any amounts collected for the denied service, including coinsurance 
and/or deductible must be refunded).
    As discussed above, we proposed at Sec.  405.1006(d)(2)(i) that, 
for situations other than those described in Sec.  405.1006(d)(2)(ii) 
and (iii), the basis for calculating the amount in controversy under 
Sec.  405.1006(d)(1) would be the Medicare allowable amount, which is 
the amount reflected on the fee schedule or in the contractor-priced 
amount for those items or services in the applicable jurisdiction and 
place of service if there is a published Medicare fee schedule or 
published contractor-priced amount for the items or services in the 
disputed claim; or if there is no published Medicare fee schedule or 
contractor-priced amount for the items or services in the disputed 
claim, the basis for the amount in controversy would be the provider or 
supplier's billed charges submitted on the claim for the items and 
services. We stated that we believe providers, suppliers, and Medicaid 
State agencies would be able to utilize existing CMS and CMS contractor 
tools and resources to determine the allowable amount for items and 
services with published fee schedule or published contractor-priced 
amounts, and for items or services without a published fee schedule or 
published contractor-priced amount, the calculation methodology for the 
amount in controversy would be the same as the calculation methodology 
specified in current Sec.  405.1006(d). However, we stated there may be 
instances where a beneficiary would appeal a claim for items and 
services for which the allowable amount would be the basis for the 
amount in controversy under proposed Sec.  405.1006(d)(2)(i)(A) (for 
example, a claim for items or services with a published fee schedule or 
published contractor-priced amount that does not involve an overpayment 
and for which the beneficiary has not been determined to be financially 
responsible). We stated that we believe most beneficiaries are not 
familiar with published fee schedule or contractor-priced amounts and 
may be unable to determine the amount in controversy in

[[Page 5007]]

these circumstances with the resources currently available to them. 
However, as discussed below, we proposed at Sec.  405.976(b)(7) that 
the QIC include in the notice of reconsideration a statement of whether 
the amount in controversy is estimated to meet or not meet the amount 
required for an ALJ hearing, if the request for reconsideration was 
filed by a beneficiary who is not represented by a provider, supplier, 
or Medicaid State agency, and the reconsideration is partially or fully 
unfavorable to the appellant. For appeals filed by beneficiaries, often 
the amount at issue is aligned not with the Medicare allowable amount, 
but rather with the billed charges of the provider or supplier. For 
example, where a beneficiary is held financially responsible for a 
denied claim under the limitation on liability provisions in section 
1879 of the Act because he or she received an Advance Beneficiary 
Notice of Noncoverage (ABN), the beneficiary is responsible for the 
billed charges on the claim. Or, for a claim not submitted on an 
assignment-related basis that is denied, the beneficiary may be 
responsible for the billed charges, or the billed charges subject to 
the limiting charge in section 1848(g) of the Act. Medicare notifies 
the beneficiary of the amount he or she may be billed for denied 
services on the Medicare Summary Notice in a column titled, ``Maximum 
You May Be Billed.'' For appeals filed by a provider, supplier, or 
Medicaid State agency for denied items or services for which the 
beneficiary was determined to be financially responsible, we stated in 
the proposed rule that we believed providers, suppliers, and Medicaid 
State agencies would have sufficient access to the provider or 
supplier's billing information and Medicare claims processing data to 
determine the amount charged to the beneficiary. Accordingly, we 
proposed at Sec.  405.1006(d)(2)(ii) that for any items or services for 
which a beneficiary has been determined to be financially responsible, 
the basis for the amount in controversy is the actual amount charged to 
the beneficiary (or the maximum amount the beneficiary may be charged 
if no bill has been received) for the items or services in the disputed 
claim. As discussed above, this amount would be set forth on the 
Medicare Summary Notice in the column titled ``Maximum You May Be 
Billed.''
    We also proposed at Sec.  405.1006(d)(2)(iii) that if a beneficiary 
received or may be entitled to a refund of the amount the beneficiary 
previously paid to the provider or supplier for the items or services 
in the disputed claim under applicable statutory or regulatory 
authorities, the basis for the amount in controversy would be the 
actual amount originally charged to the beneficiary for the items or 
services in the disputed claim, as we stated in the proposed rule we 
believed that the amount originally charged to the beneficiary is more 
reflective of the actual amount at issue for the beneficiary and for 
the provider or supplier in this situation. We also stated we believed 
appellants would have access to and would use the same information for 
determining the basis for the amount in controversy under paragraph 
Sec.  405.1006(d)(2)(iii) as they would under Sec.  405.1006(d)(2)(ii).
    As discussed above, we proposed at Sec.  405.1006(d)(3) through (7) 
five exceptions to the general methodology used to calculate the amount 
in controversy specified in Sec.  405.1006(d)(1). Current Sec.  
405.1006(d)(2) provides that, notwithstanding current Sec.  
405.1006(d)(1), when payment is made for items or services under 
section 1879 of the Act or Sec.  411.400, or the liability of the 
beneficiary for those services is limited under Sec.  411.402, the 
amount in controversy is computed as the amount that the beneficiary 
would have been charged for the items or services in question if those 
expenses were not paid under Sec.  411.400 or if that liability was not 
limited under Sec.  411.402, reduced by any deductible and coinsurance 
amounts applicable in the particular case. We proposed to re-designate 
current Sec.  405.1006(d)(2) as Sec.  405.1006(d)(3) and to revise the 
paragraph to state that when payment is made for items or services 
under section 1879 of the Act or Sec.  411.400, or the liability of the 
beneficiary for those services is limited under Sec.  411.402, the 
amount in controversy would be calculated in accordance with Sec.  
405.1006(d)(1) and (2)(i), except there is no deduction under paragraph 
(d)(1)(i) for expenses that are paid under Sec.  411.400 or as a result 
of liability that is limited under Sec.  411.402. For example, when a 
claim for items or services is denied under section 1862(a)(1)(A) of 
the Act because the items or services were not reasonable and necessary 
for the treatment of illness or injury or to improve the functioning of 
a malformed body member, Medicare payment may nonetheless be made under 
the limitation on liability provisions of section 1879 of the Act if 
neither the provider/supplier nor the beneficiary knew, or could 
reasonably have been expected to know, that payment would not be made. 
In instances such as these, we proposed that the amount in controversy 
would be calculated as if the items or services in the disputed claim 
were denied and no payment had been made under section 1879 of the Act. 
We stated in the proposed rule that we believed this exception was 
appropriate because appellants may still wish to appeal findings of 
non-coverage related to items and services for which liability of the 
party was limited or payment was made under section 1879 of the Act or 
Sec.  411.400 or for which the beneficiary was indemnified under Sec.  
411.402, but if these payments or indemnifications were deducted from 
the basis for the amount in controversy, the amount in controversy 
could be zero. As this exception relates only to whether deductions are 
made under Sec.  405.1006(d)(1)(i) for any Medicare payments already 
made or awarded for the items or services, and the amount in 
controversy would otherwise be calculated in accordance with proposed 
Sec.  405.1006(d)(1) and (d)(2)(i), we stated we believed appellants 
would have access to and would use the same information for determining 
the amount in controversy under Sec.  405.1006(d)(3) as they would 
under Sec.  405.1006(d)(1) and (d)(2)(i).
    Current Sec.  405.1006 does not address calculating the amount in 
controversy for matters involving a provider or supplier termination of 
a Medicare-covered item or service when the beneficiary did not elect 
to continue receiving the item or service (for example, Sec.  
405.1206(g)(2) provides that if a beneficiary is dissatisfied with a 
QIO's determination on his or her discharge and is no longer an 
inpatient in a hospital, the determination is subject to the general 
claims appeal process). In this circumstance, items and services have 
not been furnished, and therefore, a claim has not been submitted. Yet 
the beneficiary may elect not to continue receiving items or services 
while appealing the provider or supplier termination due to potential 
financial responsibility for the items or services. While an amount in 
controversy cannot be assessed for a period of time during which no 
items or services were furnished, a beneficiary may assert a continuing 
need for the items or services based on his or her condition at the 
time an appeal is heard. To address this circumstance, we proposed new 
Sec.  405.1006(d)(4), which would provide that when a matter involves a 
provider or supplier termination of Medicare-covered items or services 
and the beneficiary did not elect to continue receiving the items or 
services that are disputed by a

[[Page 5008]]

beneficiary, the amount in controversy is calculated as discussed above 
regarding proposed (d)(1) and (d)(2)(ii) (which addresses situations 
where the beneficiary is determined to be financially responsible), 
except that the basis for the amount in controversy and any deductible 
and coinsurance that may be collected for the items or services are 
calculated using the amount the beneficiary would have been charged if 
the beneficiary had received the items or services that the beneficiary 
asserts should be covered by Medicare based on the beneficiary's 
current condition at the time an appeal is heard, and Medicare payment 
was not made. We stated that this proposal would allow the beneficiary 
to pursue coverage for an item or service and potentially meet the 
amount in controversy requirement in instances in which he or she would 
not otherwise be able to pursue a hearing before an ALJ because no 
items or services have been rendered and therefore no amount in 
controversy exists because there is no disputed claim. In these 
instances, the beneficiary has been notified of a preliminary decision 
by a provider or supplier that Medicare will not cover continued 
provision of the items or services in dispute. Therefore, we stated in 
the proposed rule that we believed using the amount the beneficiary 
would be charged if the beneficiary elected to continue receiving the 
items or services that the beneficiary asserts should be covered and if 
Medicare payment were not made for these items or services (in other 
words, the amount the beneficiary would be charged if the beneficiary 
were financially responsible for these items or services) is most 
reflective of the actual amount in dispute. Most beneficiary appeals of 
provider or supplier terminations of Medicare-covered items or services 
involve the termination of Part A services and, therefore, we stated 
that we expected it would be rare that the amount in controversy would 
be less than that required for an ALJ hearing. However, we also stated 
that we expected that beneficiaries wishing to determine if the amount 
in controversy required for an ALJ hearing was met could obtain from 
the provider or supplier the amount the beneficiary would be charged if 
the beneficiary elected to continue receiving the items or services and 
Medicare payment were not made. In addition, as discussed below, we 
proposed at Sec.  405.976(b)(7) that the QIC would include in its 
notice of reconsideration a statement of whether the amount in 
controversy is estimated to meet or not meet the amount required for an 
ALJ hearing, if the request for reconsideration was filed by a 
beneficiary who is not represented by a provider, supplier, or Medicaid 
State agency, and the reconsideration decision was partially or fully 
unfavorable.
    We considered using Medicare payable amounts for denied items and 
services as the basis for the amount in controversy calculation 
specified in proposed Sec.  405.1006(d)(1), as we stated that would be 
a more precise estimate of the amount at issue in the appeal than 
either the Medicare allowable amount or the billed charges. Payable 
amounts would take into account payment rules related to the items and 
services furnished that may increase or decrease allowable amounts (for 
example, multiple surgery reductions, incentive payments, and 
competitive bidding payments). However, we stated that CMS systems do 
not currently calculate payable amounts for denied services, and 
undertaking major system changes would delay implementation and has 
been determined not to be cost effective. While payable amounts may be 
a better representation of the amount at issue in the appeal, we stated 
in the proposed rule that we believed the Medicare allowable amount and 
the other amount in controversy calculations provided in proposed Sec.  
405.1006(d) are appropriate and reliable estimates that align well with 
the amount at issue for claims for which a payable amount has not been 
calculated.
    However, we stated that for post-payment denials, or overpayments, 
a payable amount has been determined and would be the most reliable 
indicator of the amount actually at issue in the appeal. Therefore, we 
proposed new Sec.  405.1006(d)(5) to state that, notwithstanding the 
calculation methodology in proposed paragraphs (d)(1) and (2), when a 
claim appeal involves an overpayment determination, the amount in 
controversy would be the amount of the overpayment specified in the 
demand letter. In a post-payment denial, the amount of the overpayment 
identified in the demand letter is readily available to appellants, and 
is the most accurate reflection of the amount actually at issue in the 
appeal. In addition, current Sec.  405.1006 does not address appeals 
that involve an estimated overpayment amount determined through the use 
of sampling and extrapolation. In this circumstance, the claims sampled 
to determine the estimated overpayment may not individually meet the 
amount in controversy requirement, but the estimated overpayment 
determined through the use of extrapolation may meet the amount in 
controversy requirement. To address this circumstance, we also proposed 
in new Sec.  405.1006(d)(5) that when a matter involves an estimated 
overpayment amount determined through the use of sampling and 
extrapolation, the estimated overpayment as extrapolated to the entire 
statistical sampling universe is the amount in controversy. We stated 
that this proposal would provide appellants the opportunity to appeal 
claims that may not individually meet the amount in controversy 
requirement if such claims were part of the sample used in making an 
overpayment determination that does meet the amount in controversy 
requirement. Because the overpayment determination reflects the amount 
for which the appellant is financially responsible, we stated in the 
proposed rule that we believed it would be appropriate to allow 
appellants to appeal individual claims in the sample that was used to 
determine the overpayment. Whether an appeal involves an individual 
overpayment or an estimated overpayment determined through the use of 
sampling and extrapolation, we stated in the proposed rule that we 
believed appellants against whom an overpayment was assessed would need 
only to consult the demand letter they received in order to determine 
the amount in controversy. However, we also stated that we expected 
there may be circumstances where a beneficiary wishes to appeal an 
overpayment that was assessed against a provider or supplier, and in 
these situations the beneficiary may not have a copy of the demand 
letter that was received by the provider or supplier. For this reason, 
and as discussed below, we proposed at Sec.  405.976(b)(7) that the QIC 
would include in its notice of reconsideration a statement of whether 
the amount in controversy is estimated to meet or not meet the amount 
required for an ALJ hearing, if the request for reconsideration was 
filed by a beneficiary who is not represented by a provider, supplier, 
or Medicaid State agency, and the reconsideration decision was 
partially or fully unfavorable.
    We also proposed new Sec.  405.1006(d)(6), which would provide that 
when a beneficiary files an appeal challenging only the computation of 
a coinsurance amount, or the amount of a remaining deductible 
applicable to the items or services in the disputed claim, the amount 
in controversy is the difference between the amount of the coinsurance 
or remaining deductible, as

[[Page 5009]]

determined by the contractor, and the amount of the coinsurance or 
remaining deductible the beneficiary believes is correct. We stated in 
the proposed rule that we believed this provision is appropriate in 
these instances because, without this provision, the amount in 
controversy determined under the general calculation methodology in 
Sec.  405.1006(d)(1) would be zero for a paid claim. In addition, we 
also stated that we believed that the calculation proposed at Sec.  
405.1006(d)(6) would appropriately reflect the amount at issue for the 
beneficiary in these appeals where the computation of a coinsurance 
amount, or the amount of a remaining applicable deductible is 
challenged. We further stated that we believed beneficiaries would have 
access to the coinsurance and/or deductible amounts determined by the 
contractor for the paid claim on the beneficiary's Medicare Summary 
Notice, in the column titled ``Maximum You May Be Billed,'' and would 
need only to subtract the amount of coinsurance and/or deductible the 
beneficiary believes he or she should have been charged in order to 
arrive at the amount in controversy. We stated we expected it would be 
extremely rare for a non-beneficiary appellant to file an appeal 
challenging the computation of a coinsurance amount or the amount of a 
remaining deductible.
    In addition, we proposed new Sec.  405.1006(d)(7) to provide that 
for appeals of claims where the allowable amount has been paid in full 
and the appellant is challenging only the validity of the allowable 
amount, as reflected in the published Medicare fee schedule or in the 
published contractor-priced amount applicable to the items or services 
in the disputed claim, the amount in controversy is the difference 
between the amount the appellant argues should have been the allowable 
amount for the items or services in the disputed claim in the 
applicable jurisdiction and place of service, and the published 
allowable amount for the items or services. We stated in the proposed 
rule that we believed this provision is appropriate in these instances 
because, without this provision, the amount in controversy determined 
under the general calculation methodology in Sec.  405.1006(d)(1) would 
be zero for such paid claims. In addition, we stated we believed that 
the calculation proposed at Sec.  405.1006(d)(7) would appropriately 
reflect the amount at issue for the appellant in these appeals. We also 
stated that we believed that, generally, these types of appeals are 
filed by providers and suppliers who are already familiar with the 
allowable amount for the items or services in the disputed claim based 
on information obtained from published fee schedules or contractor-
priced amounts. Further, we stated that we believed that a fee schedule 
or contractor price challenge filed by a beneficiary on a paid claim 
would be a very rare occurrence. However, as discussed below, in the 
event a beneficiary would want to file such an appeal, the beneficiary 
could obtain an estimate of the amount in controversy from the QIC 
reconsideration. As discussed further below, we proposed at Sec.  
405.976(b)(7) that the QIC would include in its notice of 
reconsideration a statement of whether the amount in controversy is 
estimated to meet or not meet the amount required for an ALJ hearing, 
if the request for reconsideration was filed by a beneficiary who is 
not represented by a provider, supplier, or Medicaid State agency, and 
the reconsideration decision was partially or fully unfavorable.
    In the event that a reconsideration, or a redetermination if the 
appeal was escalated from the QIC without a reconsideration, involves 
multiple claims and some or all do not meet the amount in controversy 
requirement, section 1869 of the Act states that, in determining the 
amount in controversy, the Secretary, under regulations, shall allow 
two or more appeals to be aggregated if the appeals involve the 
delivery of similar or related services to the same individual by one 
or more providers or suppliers, or common issues of law and fact 
arising from services furnished to two or more individuals by one or 
more providers or suppliers. Under this authority, Sec.  405.1006(e) 
provides for aggregating claims to meet the amount in controversy 
requirement.
    The title of current Sec.  405.1006(e)(1) for aggregating claims 
when appealing a QIC reconsideration is phrased differently than the 
corresponding title for aggregating claims when escalating a request 
for a QIC reconsideration in current Sec.  405.1006(e)(2), which may 
cause confusion. We proposed to revise the title to Sec.  
405.1006(e)(1) to ``Aggregating claims in appeals of QIC 
reconsiderations for an ALJ hearing'' so it clearly applies to 
aggregating claims in appeals of QIC reconsiderations, and is parallel 
to the phrasing used in the title of Sec.  405.1006(e)(2). The proposed 
titles of Sec.  405.1006(e)(1) and (e)(2), and proposed Sec.  
405.1006(e)(2)(ii) would also replace ``to the ALJ level'' with ``for 
an ALJ hearing'' to again highlight that the appeal of a QIC 
reconsideration or escalation of a request for a QIC reconsideration is 
for an ALJ hearing.
    Current Sec.  405.1006(e)(1)(ii) provides that to aggregate claims, 
the request for ALJ hearing must list all of the claims to be 
aggregated. We stated in the proposed rule that this has caused 
confusion because some appellants read current Sec.  405.1006(e)(1)(ii) 
as allowing appeals of new claims to be aggregated with claims in 
previously filed appeals, provided the new request for hearing lists 
the claims involved in the previously filed appeals. However, current 
Sec.  405.1006(e)(2)(i), which applies to aggregating claims that are 
escalated from the QIC for a hearing before an ALJ, requires that the 
claims were pending before the QIC in conjunction with the same request 
for reconsideration. We noted in the proposed rule that in the context 
of a request for hearing, aggregating new claims with claims from 
previously filed requests could delay the adjudication of the requests 
and is inconsistent with the current rule for aggregating claims that 
are escalated from the QIC. To address these issues and bring 
consistency to the aggregation provisions, we proposed to revise Sec.  
405.1006(e)(1)(ii) to require the appellant(s) to request aggregation 
of the claims in the same request for ALJ hearing or in multiple 
requests for an ALJ hearing filed with the same request for 
aggregation. We stated that this would allow an individual or multiple 
appellants to file either one request for an ALJ hearing for multiple 
claims to be aggregated, or multiple requests for an ALJ hearing for 
the appealed claims when requesting aggregation, while requiring them 
to be filed together with the associated request for aggregation. We 
also proposed in Sec.  405.1006(e)(1)(iii) and (e)(2)(iii) that an ALJ 
or attorney adjudicator may determine that the claims that a single 
appellant seeks to aggregate involve the delivery of similar or related 
services, or the claims that multiple appellants seek to aggregate 
involve common issues of law and fact, but only an ALJ may determine 
the claims that a single appellant seeks to aggregate do not involve 
the delivery of similar or related services, or the claims that 
multiple appellants seek to aggregate do not involve common issues of 
law and fact. We proposed this because an attorney adjudicator 
adjudicating requests for an ALJ hearing when no hearing is conducted, 
as proposed in section II.B of the proposed rule (and discussed in 
section II.A.2 above), would not be permitted under this proposed rule 
to dismiss a request for an ALJ hearing due to procedural issues such 
as an invalid aggregation

[[Page 5010]]

request. Because only an ALJ would be permitted to dismiss a request 
for an ALJ hearing because there is no right to a hearing, which 
includes not meeting the amount in controversy requirement for a 
hearing, in accordance with proposed Sec.  405.1052(a), an attorney 
adjudicator could not make a determination that the aggregation 
criteria were not met because that determination would result in a 
dismissal of a request for an ALJ hearing.
    Current Sec.  405.976(b)(7) requires that the QIC notice of 
reconsideration contain a statement of whether the amount in 
controversy needed for an ALJ hearing is met when the reconsideration 
is partially or fully unfavorable. We proposed to revise Sec.  
405.976(b)(7) to require that the QIC notice of reconsideration include 
a statement of whether the amount in controversy is estimated to meet 
or not meet the amount required for an ALJ hearing only if the request 
for reconsideration was filed by a beneficiary who is not represented 
by a provider, supplier, or Medicaid State agency, and the 
reconsideration is partially or fully unfavorable. In line with current 
practice, we did not propose to require that the QIC indicate what it 
believes to be the exact amount in controversy, but rather only an 
estimate of whether it believes the amount in controversy is met, 
because, as we stated in the proposed rule, we believe the ultimate 
responsibility for determining whether the amount in controversy 
required for an ALJ hearing is met lies with appellants, subject to 
verification by an ALJ or attorney adjudicator (though, as discussed in 
section II.B of the proposed rule and II.A.2 of this final rule above, 
only an ALJ would be able to dismiss a request for hearing for failure 
to meet the amount in controversy required for an ALJ hearing). We 
stated in the proposed rule that we believe that providers, suppliers, 
and Medicaid State agencies have the tools, resources, and payment 
information necessary to calculate the amount in controversy in 
accordance with Sec.  405.1006(d), and are familiar with the allowable 
amounts for the places of service in which they operate. Furthermore, 
applicable plans against whom a Medicare Secondary Payer overpayment is 
assessed would have access to the overpayment amount specified in the 
demand letter, which would be used to determine the amount in 
controversy under proposed Sec.  405.1006(d)(5). Thus, we stated that 
we did not believe it was necessary for the QICs to continue to provide 
this statement for providers, suppliers, applicable plans, Medicaid 
State agencies, or beneficiaries represented by providers, suppliers or 
Medicaid State agencies. Furthermore, as discussed in section 
III.A.3.g.i of the proposed rule and II.B.3.g.i of this final rule 
below, we proposed that appellants, other than beneficiaries who are 
not represented by a provider, supplier, or Medicaid State agency, 
include the amount in controversy in their requests for hearing (unless 
the matter involves a provider or supplier termination of Medicare-
covered items or services that is disputed by a beneficiary, and the 
beneficiary did not elect to continue receiving the items or services). 
As providers, suppliers, Medicaid State agencies, applicable plans, and 
beneficiaries represented by a provider, supplier, or Medicaid State 
agency would be responsible for calculating the amount in controversy 
and including it on the request for hearing as proposed in section 
III.A.3.g.i of the proposed rule (and discussed in section II.B.3.g.i 
below), we stated that we did not believe a statement by the QIC that 
indicates only whether the amount in controversy was or was not met 
adds significant value to such appellants. Furthermore, we expected 
that the Medicare allowable amount under proposed Sec.  
405.1006(d)(2)(i)(A) would be the basis for the amount in controversy 
in the majority of Part B appeals filed by non-beneficiary appellants. 
While QICs have access to the amount charged to an individual based on 
billed charges, the allowable amounts for claims vary based on where 
these items and services were furnished, and the applicable fee 
schedules and contractor-priced amounts, and continuing to require the 
QICs to include a statement whether the amount in controversy needed 
for an ALJ hearing is met in all instances in which the decision is 
partially or fully unfavorable to the appellant would require 
substantially more work by the QIC, and could delay reconsiderations 
and increase costs to the government.
    Although we did not propose that beneficiaries who are not 
represented by a provider, supplier, or Medicaid State agency would 
need to include the amount in controversy on their requests for hearing 
(as discussed later in this preamble), we stated in the proposed rule 
that we believed there may be instances where a beneficiary would want 
to know if the amount in controversy meets the amount required for an 
ALJ hearing when deciding whether to file a request for hearing. We 
also stated we believed there may be instances where a beneficiary who 
is not represented by a provider, supplier, or Medicaid State agency 
may not currently have sufficient information to determine whether the 
amount in controversy required for an ALJ hearing is met under proposed 
Sec.  405.1006. For example, under proposed Sec.  405.1006(d)(2)(i)(A), 
for items and services with a published Medicare fee schedule or 
published contractor-priced amount (and for which the beneficiary was 
determined to be not financially responsible), the basis for the amount 
in controversy would generally be the allowable amount, which is the 
amount reflected on the fee schedule or in the contractor-priced amount 
for those items or services in the applicable jurisdiction and place of 
service. Beneficiaries not represented by a provider, supplier, or 
Medicaid State agency would not generally be expected to be familiar 
with fee schedule and contractor-priced amounts, and we stated we 
believed they may have difficulty determining whether the amount in 
controversy required for an ALJ hearing is met in these cases. We also 
stated we believed beneficiaries not represented by a provider, 
supplier, or Medicaid State agency might be unable to determine the 
amount of an overpayment assessed against a provider or supplier for 
items or services furnished to the beneficiary for purposes of 
calculating the amount in controversy under proposed Sec.  
405.1006(d)(5), as the beneficiary might not have access to the demand 
letter received by the provider or supplier, and may no longer have 
access to the Medicare Summary Notice reflecting the original payment 
amount. Accordingly, because there are situations where such 
beneficiaries may not have sufficient information to determine the 
amount in controversy, we proposed to revise Sec.  405.976(b)(7) to 
state that the QIC would include in its notice of reconsideration a 
statement of whether the amount in controversy is estimated to meet or 
not meet the amount required for an ALJ hearing, if the request for 
reconsideration was filed by a beneficiary who is not represented by a 
provider, supplier, or Medicaid State agency, and the reconsideration 
decision was partially or fully unfavorable.
    Current Sec.  423.1970 describes the amount in controversy 
requirement for part 423, subpart U proceedings. For the same reasons 
we proposed to revise Sec.  405.1006(e)(1)(ii), we proposed in Sec.  
423.1970(c)(1)(ii) and (c)(2)(ii) to provide that a single enrollee's 
or multiple enrollees' request for

[[Page 5011]]

aggregation, respectively, must be filed at the same time the request 
(or requests) for hearing for the appealed reconsiderations is filed. 
In addition, we proposed to revise Sec.  423.1970(c)(1)(ii) and Sec.  
423.1970(c)(2)(ii) to state that the request for aggregation and 
requests for hearing must be filed within 60 calendar days after 
receipt of the notice of reconsideration for each reconsideration being 
appealed, unless the deadline is extended in accordance with Sec.  
423.2014(d). Our proposal would help ensure there is no confusion that 
the timely filing requirement applies to each of the requests for 
hearing filed with the request for aggregation. Because we proposed to 
directly reference the 60 calendar day filing requirement under Sec.  
423.1972(b) and the possible extension of the filing requirement under 
Sec.  423.2014(d), we also proposed to remove the current references in 
Sec.  423.1970(c)(1)(ii) and (c)(2)(ii) to the filing requirement in 
Sec.  423.1972(b). In addition, for the same reasons we proposed to 
revise Sec.  405.1006(e)(1)(iii) and (e)(2)(iii), we proposed in Sec.  
423.1970(c)(1)(iii) and (c)(2)(iii) that an ALJ or attorney adjudicator 
may determine that the appeals that a single enrollee seeks to 
aggregate involve the delivery of prescription drugs to a single 
enrollee, or the appeals that multiple enrollees seek to aggregate 
involve the same prescription drugs, but only an ALJ may determine 
appeals that a single enrollee seeks to aggregate do not involve the 
delivery of prescription drugs to a single enrollee, or the appeals 
that multiple enrollees seek to aggregate do not involve the same 
prescription drugs. We proposed to replace ``prescription'' in current 
Sec.  423.1970(c)(2)(iii) with ``prescription drugs'' in proposed Sec.  
423.1970(c)(2)(iii) for consistency with current and proposed Sec.  
423.1970(c)(1)(iii). Finally, we also proposed to correct the spelling 
of ``prescription'' in current Sec.  423.1970(c)(2)(iii).
    Current Sec.  422.600(b) provides that the amount in controversy 
for appeals of reconsidered determinations to an ALJ (under the Part C 
MA program), is computed in accordance with part 405. However, if the 
basis for the appeal is the MAO's refusal to provide services, current 
Sec.  422.600(c) provides that the projected value of those services 
are used to compute the amount in controversy. We did not propose to 
revise these provisions because, as we stated in the proposed rule, we 
believed the proposed revisions to Sec.  405.1006 described above 
encompass and have application to the scenarios appealed under part 
422, subpart M. In particular, we noted that as is the case under 
current Sec.  405.1006, if an enrollee received items or services and 
is financially responsible for payment because the MAO has refused to 
cover the item or services, the amount in controversy would be 
calculated using the billed charges as the basis for the amount in 
controversy, as provided in proposed Sec.  405.1006(d)(2)(ii). We 
stated that if the enrollee did not receive the items or services, the 
provisions of current Sec.  422.600(c) would apply. We also noted that 
current Sec. Sec.  422.622(g)(2) and 422.626(g)(3) provide for an 
appeal to an ALJ, the Council, or federal court of an IRE's affirmation 
of a termination of provider services ``as provided for under [part 
422, subpart M],'' thus triggering the amount in controversy rules in 
422.600, which cross-reference part 405 (that is, the rules proposed 
here). We stated that proposed Sec.  405.1006 would address scenarios 
appealed under part 422, subpart M that are not clearly addressed in 
current Sec.  405.1006, such as provider service terminations, which 
would be addressed in proposed Sec.  405.1006(d)(4), and coinsurance 
and deductible challenges, which would be addressed in proposed Sec.  
405.1006(d)(6).
    Current Sec.  478.44(a) also references back to part 405 provisions 
for determining the amount in controversy when requesting an ALJ 
hearing after a QIO reconsidered determination. We proposed revisions 
to Sec.  478.44 in section III.D.3 of the proposed rule (as discussed 
in section II.E.3 below), to update part 405 references, but we did not 
propose in Sec.  478.44 to revise how the current or proposed part 405 
provision would be applied in calculating the amount in controversy. 
Similar to the part 422, subpart M provisions discussed above, we 
stated that we believe the proposed revisions to Sec.  405.1006 
described above encompass and have application to the scenarios 
appealed under part 478, subpart B.
    We received 14 comments on these proposals. Provided below are 
summaries of the specific comments received and responses to these 
comments:
    Comment: Two commenters supported our proposal to revise the title 
of Sec.  405.1006 to reflect that the amount in controversy threshold 
is required ``for an ALJ hearing and judicial review'' rather than ``to 
request an ALJ hearing and judicial review.'' One commenter felt that 
this revision would more closely align the regulation with the 
corresponding statutory provision at Sec.  1869(b)(1)(E) of the Act. 
The other commenter believed that the current title of Sec.  405.1006 
may have resulted in beneficiaries not filing a request for hearing if 
they were confused or unsure about whether the minimum amount in 
controversy was met.
    Response: We thank the commenters for their support, and we are 
finalizing the proposal to revise the title of Sec.  405.1006 without 
modification.
    Comment: Six commenters opposed our proposal at Sec.  
405.1006(d)(2)(i)(A) to use the Medicare allowable amount as the basis 
for the amount in controversy for items and services that are priced 
based on a published Medicare fee schedule or published contractor-
priced amount, and recommended we withdraw the proposal or publish 
user-friendly, online resources to help the public better understand 
the proposed calculation methodology. In general, the commenters felt 
that the proposal would prevent physicians, beneficiaries, and other 
appellants from appealing low-dollar claims and, rather than 
streamlining the appeals process, the proposal would create confusion 
among appellants, ALJs, and attorney adjudicators. One commenter 
recommended that the higher of the Medicare allowable amount or the 
amount charged the individual for the items or services in question be 
used to determine the amount in controversy.
    Response: As explained above, we proposed to revise the calculation 
methodology for the amount in controversy in order to arrive at an 
amount that more accurately reflects the amount at stake for 
appellants. We estimated in section VI (Regulatory Impact Statement) of 
the proposed rule (81 FR 43790, 43856) that our proposals could remove 
appeals related to over 2,600 low-value Part B claims per year from the 
ALJ hearing process, after accounting for the likelihood that 
appellants would aggregate claims to meet the minimum amount in 
controversy required for an ALJ hearing. However, we noted in the 
proposed rule that appeals filed by Medicare beneficiaries and MA and 
Part D prescription drug plan enrollees would be minimally impacted 
because these individuals often appeal claim or coverage denials for 
which they are financially responsible, and for which we would continue 
basing the amount in controversy on the provider or supplier's billed 
charges.
    After considering the comments received and further analysis of our 
proposal to revise the calculation of the amount in controversy to use 
the Medicare allowable amount as set forth in proposed Sec.  
405.1006(d)(2)(i)(A), we

[[Page 5012]]

have decided not to finalize proposed Sec.  405.1006(d)(2)(i)(A) at 
this time. While we continue to believe that the amount in controversy 
should more closely reflect the actual amount at stake in an appeal, we 
believe that the costs to the appellant community and the government 
outweigh the benefits of fewer appeals entering the ALJ hearing process 
under the proposed methodology for calculating the amount in 
controversy.
    Based on further analysis spawned by the public comments, we 
believe the costs of the proposal are likely higher than originally 
anticipated. These costs include costs to the appellant community in 
identifying the published Medicare fee schedule or published 
contractor-priced amount to include in the request for hearing; and the 
administrative costs to the government of calculating the amount for 
certain appellants, and verifying and resolving conflicts over the 
calculation. While our estimation of 2,600 fewer appeals for low-value 
claims that we believe would enter the appeals process if the proposal 
were finalized does provide a clear benefit, we estimate the costs to 
the Federal government would be roughly twice the projected benefit and 
recognize the appellant community would incur additional costs as well. 
Therefore, we do not believe this estimated benefit outweighs the 
potential costs at this time based on our revised analysis.
    Thus, at this time we are not finalizing our proposal under Sec.  
405.1006(d)(2)(i)(A) to use the Medicare allowable amount as the basis 
for the amount in controversy for items and services that are priced 
based on a published Medicare fee schedule or published contractor-
priced amount. In addition, we are not finalizing proposed Sec.  
405.1006(d)(2)(i)(B), because, given that we are not finalizing 
proposed Sec.  405.1006(d)(2)(i)(A), there is no longer a need to 
distinguish between items and services with and without a published 
Medicare fee schedule or contractor-priced amount. Instead, we will 
continue to use the methodology specified in Sec.  405.1006(d)(1) as 
the general methodology for calculating the amount in controversy, 
except that we are finalizing our proposal to replace ``for the items 
and services in question'' with ``for the items and services in the 
disputed claim'' in Sec.  405.1006(d)(1) introductory text because the 
amount in controversy is calculated on a claim-by-claim basis, and 
there has been confusion when a single reconsideration decision 
involves multiple claims. We are also replacing ``applicable in the 
particular case'' with ``that may be collected for the items or 
services'' in Sec.  405.1006(d)(1)(ii) because, as explained above and 
in section III.A.3.d of the proposed rule, there may be situations 
where a provider or supplier is prohibited from collecting applicable 
coinsurance and/or deducible amounts, or must refund any such amounts 
already collected, and in these situations the amount in controversy 
should not be reduced by that amount. Furthermore, because we will 
continue to use Sec.  405.1006(d)(1), as revised above, we are not 
finalizing proposed Sec.  405.1006(d)(1).
    In addition, we also are not finalizing proposed Sec.  
405.1006(d)(2)(ii) and (iii) because there is no need to define the 
basis for the amount in controversy in specific situations, as the 
amount in controversy would be calculated on the basis of the amount 
charged the individual in all of the scenarios described in proposed 
Sec.  405.1006(d)(2)(i) through (iii). However, for the reasons 
discussed above and in section III.A.3.d of the proposed rule, we 
continue to believe that it would be appropriate to finalize separate 
calculations of the amount in controversy to address the situations in 
proposed Sec.  405.1006(d)(3) through (7). Therefore, we are 
finalizing, with the modifications discussed below, the exceptions to 
the general calculation methodology that we proposed at Sec.  
405.1006(d)(3) through (7), which are being renumbered as Sec.  
405.1006(d)(2) through (6) in this final rule.
    Comment: One commenter supported our proposal to use the Medicare 
allowable amount as the basis for the amount in controversy for items 
and services that are priced based on a published Medicare fee schedule 
or published contractor-priced amount. Another commenter supported our 
proposal to continue using the provider's or supplier's billed charges 
as the basis for calculating the amount in controversy for appeals of 
claims that are not priced according to a CMS-published fee schedule 
and do not have a published contractor-priced amount (subject to the 
exceptions delineated in the proposed rule).
    Response: We thank the commenters for their support. However, for 
the reasons explained above, we are not finalizing our proposal at 
Sec.  405.1006(d)(2)(i)(A) to use the Medicare allowable amount as the 
basis for the amount in controversy for items and services that are 
priced based on a published Medicare fee schedule or published 
contractor-priced amount.
    Comment: One commenter stated that the proposed rule ``establishes 
the minimum amounts in controversy for a hearing by the Secretary and 
for judicial review, but does not establish how to calculate the 
amounts in controversy.'' The commenter also stated that the proposal 
to use the Medicare allowable amount as the basis for the amount in 
controversy for appeals of claims that are priced based on a published 
Medicare fee schedule or published contractor-priced amount, could be 
burdensome for MAOs, who would need to provide their contracted rates 
for every provider and plan type for appeals that involve supplemental 
benefits offered by the plan. Finally, the commenter requested 
clarification on how the proposal would affect pre-service requests for 
coverage.
    Response: We disagree with the comment that the proposed rule would 
establish the minimum amounts in controversy for an ALJ hearing and 
judicial review, but that it would not establish how to calculate the 
amount in controversy. Section 1869(b)(1)(E) of the Act establishes the 
amount in controversy threshold amounts for an ALJ hearing and judicial 
review at $100 and $1,000, respectively, for Medicare Part A and Part B 
appeals, adjusted annually by the percentage increase in the medical 
care component of the consumer price index (CPI) for all urban 
consumers (U.S. city average) for July 2003 to July of the year 
preceding the year involved and rounded to the nearest multiple of $10. 
Section 1869(b)(1)(E) of the Act is then referenced and the same amount 
in controversy thresholds and adjustments are made applicable to 
competitive medical plan (also known as cost plan) appeals in section 
1876(c)(5)(b) of the Act, to Part C MA appeals in section 1852(g)(5) of 
the Act, and to Part D Prescription Drug appeals in section 1860D-4(h) 
of the Act (by reference back to section 1852(g) of the Act). Thus, the 
minimum amount in controversy thresholds required for an ALJ hearing 
and judicial review are established by statute, and are reflected in 
the regulations at current Sec.  405.1006(b) and (c).
    However, as we explained above and in the proposed rule, the 
statute does not specify how to calculate the amount in controversy. 
Section 405.1006(d)(1) provides that, subject to the exception in 
paragraph (d)(2), the amount in controversy is computed as the actual 
amount charged the individual for the items and services in question, 
reduced by any Medicare payments already made or awarded for the items 
or services and any deductible or coinsurance amounts applicable in the 
particular case. Because the actual amount charged the individual may 
not

[[Page 5013]]

always be an accurate reflection of the amount at issue for appellants, 
we proposed to revise the calculation methodology in Sec.  405.1006(d) 
in a manner that better aligns the amount in controversy with the 
amount at stake in an appeal. In general, we proposed in Sec.  
405.1006(d)(1) that, subject to certain exceptions, the amount in 
controversy would be the calculated as the basis for the amount in 
controversy as defined in paragraph (d)(2), reduced by any Medicare 
payments already made or awarded for the items or services and any 
deductible and/or coinsurance amounts that may be collected for the 
items or services. In proposed Sec.  405.1006(d)(2), we explained how 
the basis for the amount in controversy would be calculated in 
different situations, and in Sec.  405.1006(d)(3) through (7) we 
proposed five exceptions to the general calculation methodology 
specified in proposed paragraphs (d)(1) and (2).
    With regard to the commenter's concern that under our proposal at 
Sec.  405.1006(d)(2)(i)(A), MAOs would need to provide their contracted 
rates for appeals that involve supplemental plan benefits, and the 
commenter's request for clarification regarding how this proposal would 
affect pre-service requests for coverage, we note that, for the reasons 
explained above, we are not finalizing our proposal in Sec.  
405.1006(d)(2)(i)(A) to use the Medicare allowable amount as the basis 
for the amount in controversy for items and services that are priced 
based on a published Medicare fee schedule or published contractor-
priced amount, nor are we finalizing proposed Sec.  405.1006(d)(2)(ii) 
or (d)(2)(iii).
    Comment: Two commenters suggested HHS consider increasing the 
minimum amount in controversy required for an ALJ hearing. One of these 
commenters recommended raising the minimum amount in controversy from 
$100 to $300, and the other recommended raising it from $100 to $500. 
(As the annually adjusted amount in controversy threshold for an ALJ 
hearing was $150 at the time the comments were received, we presume the 
commenters are referring to the amount in controversy without regard to 
the annual adjustments required under section 1869(b)(1)(E)(iii) of the 
Act.) The commenters stated that raising the amount in controversy 
would reduce the number of appeals for small-dollar claims and generate 
savings in adjudication costs for the government and staffing costs for 
health plans.
    Response: The amount in controversy threshold required for an ALJ 
hearing is specified in section 1869(b)(1)(E) of the Act. We appreciate 
the commenters' recommendations, but we do not have the authority to 
change the amount in controversy threshold specified in the statute.
    Comment: One commenter observed that claim determinations resulting 
from a single audit are frequently separated into multiple overpayment 
recovery actions, which increases administrative burden on appellants 
and CMS, and also may make it difficult for appellants to aggregate 
claims to meet the amount in controversy requirement because the 
overpayment recovery actions often occur on different dates. The 
commenter recommended the agency prohibit Medicare contractors from 
separating claims that result from the same audit or investigation. 
Another commenter felt our proposals at Sec. Sec.  405.1006(e)(1)(iii), 
(e)(2)(iii), 423.1970(c)(1)(iii), and (c)(2)(iii) providing that only 
an ALJ could determine that a request for aggregation was invalid were 
overly complicated, could make the role of an attorney adjudicator 
duplicative, and, without appropriate safeguards, could result in an 
ALJ merely adopting an attorney adjudicator's recommendation on whether 
a request for aggregation was valid without further review.
    Response: With regard to the recommendation that the agency 
prohibit contractors from separating claims that result from the same 
audit or investigation, we note that permitted practices for CMS 
contractor audits are not within the scope of this rulemaking. We do 
not agree with the commenter that our proposal that only an ALJ can 
determine the invalidity of a request for aggregation is overly 
complicated. As explained above and in section III.A.3.d of the 
proposed rule, we believe that only an ALJ can determine the invalidity 
of a request for aggregation, because that determination would result 
in a dismissal of a request for an ALJ hearing. However, we believe it 
would be unnecessary and inefficient to require an ALJ to determine 
that a request for aggregation was valid for an appeal that was 
assigned to an attorney adjudicator. With respect to the concern that 
the ALJ could merely adopt the attorney adjudicator's recommendation on 
whether a request for aggregation was valid without further review, we 
note that Sec.  405.1006(e)(1) and (2), as finalized in this rule, 
provide that only an ALJ may determine that the claims were not 
properly aggregated and therefore do not meet the minimum amount in 
controversy required for an ALJ hearing. Thus, the ALJ is required to 
make this determination, and would not be permitted to simply adopt the 
attorney adjudicator's preliminary determination without doing an 
independent review. We address the commenters concerns regarding the 
role of an attorney adjudicator compared to that of an ALJ more fully 
in section II.A.2 above.
    Comment: One commenter stated that, for durable medical equipment, 
prosthetics, orthotics and supplies (DMEPOS) claims, in the case of an 
unrepresented beneficiary, the amount in controversy should include any 
set-up, handling or freight charges incurred in delivering the item to 
the beneficiary. The commenter stated that this amount is included in 
the allowable amount, but that the basis for the amount in controversy 
in situations described in proposed Sec.  405.1006(d)(2)(iii) (where 
the beneficiary received or may be entitled to a refund of the amount 
the beneficiary previously paid to the provider or supplier for the 
items or services in the disputed claim under applicable statutory or 
regulatory authority) would be the actual amount originally charged to 
the beneficiary for those items and services as delivered to the 
beneficiary.
    Response: We believe the commenter is requesting to define the 
basis in proposed Sec.  405.1006(d)(2)(iii) as the amount originally 
charged to the beneficiary for the items or services, including any 
set-up or delivery fees. Because we are not finalizing our proposal at 
Sec.  405.1006(d)(2)(i)(A) to use the Medicare allowable amount as the 
basis for the amount in controversy for items and services that are 
priced based on a published Medicare fee schedule or published 
contractor-priced amount, as discussed above, we are not finalizing 
proposed Sec.  405.1006(d)(2)(iii) to define the basis for the amount 
in controversy when a beneficiary received or may be entitled to a 
refund of the amount the beneficiary previously paid to the provider or 
supplier for the items or services in the disputed claim under 
applicable statutory or regulatory authority. Under proposed Sec.  
405.1006(d)(2)(iii), the basis for the amount in controversy would be 
the actual amount originally charged to the beneficiary. We proposed 
Sec.  405.1006(d)(2)(iii) as an exception to the calculation in 
proposed Sec.  405.1006(d)(2)(i) in situations where the beneficiary 
received or may be entitled to a refund of the amount the beneficiary 
previously paid to the provider or supplier under applicable authority. 
Because we are no longer finalizing Sec.  405.1006(d)(2)(i) as 
proposed, there is no longer a need to finalize Sec.  
405.1006(d)(2)(iii). Therefore, as discussed above, the amount in

[[Page 5014]]

controversy in this situation would be calculated as provided under 
Sec.  405.1006(d)(1) as finalized in this rule (the actual amount 
charged the individual for the items and services in the disputed 
claim, reduced by any Medicare payments already made or awarded and any 
deductible and/or coinsurance amounts that may be collected for the 
items or services). In most cases, we expect that the amount charged 
the individual for the items and services in the disputed claim would 
be inclusive of delivery and set-up expenses. Subject to a few 
exceptions, suppliers rarely include a separate charge for delivery and 
set-up. Delivery and service are an integral part of a DME supplier's 
cost of doing business, and such costs are ordinarily assumed to have 
been taken into account by suppliers in setting the prices they charge 
for covered items and services (see Medicare Claims Processing Manual 
(Internet-Only Manual 100-04), chapter 20, section 60). As such, and as 
noted by the commenter, these costs have already been accounted for in 
the calculation of the fee schedules, and separate delivery and service 
charges for DME items are not permitted except in rare and unusual 
circumstances. In the rare and unusual circumstances where a separate 
charge is permitted (for example, when a supplier delivers an item 
outside the area in which the supplier normally does business), that 
charge, if billed on the same claim, would be factored into the amount 
charged the individual for purposes of calculating the amount in 
controversy under Sec.  405.1006(d)(1) as finalized in this rule.
    Comment: One commenter opposed our revision to current Sec.  
405.1006(d)(2), which we proposed to re-designate as Sec.  
405.1006(d)(3), because the commenter felt that current Sec.  
405.1006(d)(2) was easier to understand.
    Response: Because we are not finalizing our proposal at Sec.  
405.1006(d)(2)(i)(A) to use the Medicare allowable amount as the basis 
for the amount in controversy for items and services that are priced 
based on a published Medicare fee schedule or published contractor-
priced amount, we are also not finalizing our proposal to revise and 
re-designate current Sec.  405.1006(d)(2), except the proposal to add 
``Limitation on liability'' as a paragraph heading. In addition, for 
consistency with paragraph (d)(1)(ii) as finalized in this rule, we are 
also replacing the phrase ``any deductible and coinsurance amounts 
applicable in the particular case'' as set forth in current Sec.  
405.1006(d)(2) with ``any deductible and/or coinsurance amounts that 
may be collected for the items or services.''
    Comment: One commenter asked how to calculate the amount in 
controversy when Medicare is secondary to another insurer and makes a 
supplemental payment under Sec.  411.32 because the primary payment is 
less than the charges for the services, but the supplemental payment 
amount is less than required under Sec.  411.33(a) or (e). The 
commenter also asked why in these instances the beneficiary's Medicare 
Summary Notice (MSN) does not include a footnote stating that the 
amount of Medicare's payment was determined in accordance with Sec.  
411.33(a) or (e).
    Response: Under current Sec.  405.1006(d), the amount in 
controversy in this situation is calculated as the amount charged the 
individual for the items and services in question, reduced by any 
Medicare payments already made or awarded for the items or services and 
any deductible and coinsurance amounts applicable in the particular 
case, regardless of any payment amounts made or awarded by the primary 
insurer. Because the scenario raised by the commenter does not fall 
under any of the exceptions in Sec.  405.1006(d)(2) through (6) as 
finalized in this rule, the amount in controversy would continue to be 
calculated as provided under Sec.  405.1006(d)(1) as finalized in this 
rule (the amount charged the individual for the items and services in 
the disputed claim, reduced by any Medicare payments already made or 
awarded for the items or services and any deductible and/or coinsurance 
amounts that may be collected for the items or services). The 
commenter's question regarding footnotes on Medicare Summary Notices is 
outside the scope of this rulemaking.
    Comment: One commenter supported the addition of proposed Sec.  
405.1006(d)(4) to address how the amount in controversy is calculated 
for a provider or supplier termination of Medicare-covered items or 
services that is disputed by a beneficiary, and the beneficiary did not 
elect to continue receiving the items or services. The commenter, a 
beneficiary advocacy organization, also asked what relief could be 
sought when a provider refuses to furnish or reinstate the terminated 
item or service after an ALJ determines the termination was not 
appropriate, or when the ALJ lacks the authority to rule on whether 
Medicare payment should be made for items or services that the 
beneficiary continued to receive (and paid for) after the termination 
date. The commenter was concerned that beneficiaries receive inadequate 
notice of the limited scope of an ALJ's authority in these matters, and 
earlier notice on the scope of expedited appeals under part 405, 
subpart J and the right to request a demand bill could help avoid these 
situations.
    Response: We thank the commenter for its support of our proposal to 
address how the amount in controversy is calculated for a provider or 
supplier termination of Medicare-covered items or services that is 
disputed by a beneficiary, and the beneficiary did not elect to 
continue receiving the items or services. The comments regarding what 
relief may be sought when a provider refuses to furnish the terminated 
item or service after the ALJ determines the termination was not 
appropriate or when the ALJ lacks authority to rule on whether payment 
should be made for items or services that the beneficiary continued to 
receive after termination, and the suggestions regarding notice on the 
scope of expedited appeals and the right to request a demand bill are 
all outside the scope of this rulemaking. However, we may take them 
into consideration when making any future revisions to the provider 
service termination process.
    Comment: We received two comments in support of our proposal at 
Sec.  405.976(b)(7) to require QICs to include in their notice of 
reconsideration a statement of whether the amount in controversy is 
estimated to meet or not meet the amount required for an ALJ hearing, 
if the request for reconsideration was filed by a beneficiary who is 
not represented by a provider, supplier, or Medicaid State agency, and 
the reconsideration decision was partially or fully unfavorable.
    Response: We thank the commenters for their support. As discussed 
in section II.B.3.d below, we are not finalizing our proposal under 
Sec.  405.1006(d)(2)(i)(A) to use the Medicare allowable amount as the 
basis for the amount in controversy for items and services that are 
priced based on a published Medicare fee schedule or published 
contractor-priced amount. However, we continue to believe that the 
ultimate responsibility for determining whether the amount in 
controversy required for an ALJ hearing is met lies with appellants, 
subject to verification by an ALJ or attorney adjudicator. Therefore we 
are finalizing without modification our proposal to require QICs to 
include in their notice of reconsideration a statement of whether the 
amount in controversy is estimated to meet or not meet the amount 
required for an ALJ hearing only

[[Page 5015]]

if the request for reconsideration was filed by a beneficiary who is 
not represented by a provider, supplier, or Medicaid State agency, and 
the reconsideration decision was partially or fully unfavorable. As we 
stated above and in section III.A.3.d of the proposed rule, we believe 
providers, suppliers, Medicaid State agencies, and applicable plans 
have the tools, resources, and payment information necessary to 
calculate the amount in controversy, and we believe that to be 
especially true in light of our decision not to finalize proposed Sec.  
405.1006(d)(2)(i)(A) to use the Medicare allowable amount to calculate 
the amount in controversy for items and services that are priced based 
on a published Medicare fee schedule or published contractor-priced 
amount. However, we recognize that beneficiaries may not have access to 
these same tools, resources, and payment information, and we believe it 
is appropriate for the QIC to continue furnishing an estimate of 
whether the amount in controversy is met for reconsiderations that are 
partially or fully unfavorable on requests for reconsideration filed by 
beneficiaries who are not represented by a provider, supplier, or 
Medicaid State agency.
    Comment: We received several comments on our proposal under Sec.  
405.1014(a)(1)(viii) to require that appellants, other than 
beneficiaries who are not represented by a provider, supplier, or 
Medicaid State agency, to include the amount in controversy in their 
requests for hearing.
    Response: We address these comments in sections II.B.3.g.i below.
    After review and consideration of the comments received, for the 
reasons discussed above, we are finalizing proposed Sec.  405.1006 with 
the following modifications. We are not finalizing our proposal at 
Sec.  405.1006(d)(2)(i)(A) to use the Medicare allowable amount to 
calculate the amount in controversy for items and services that are 
priced based on a published Medicare fee schedule or published 
contractor-priced amount. In addition, we are not finalizing Sec.  
405.1006(d)(2)(i)(B), because, given that we are not finalizing Sec.  
405.1006(d)(2)(i)(A), there is no longer a need to distinguish between 
items and services with and without a published Medicare fee schedule 
or contractor-priced amount. We also are not finalizing proposed Sec.  
405.1006(d)(2) or (d)(2)(i) introductory text, as there is no need for 
this language given that we are not finalizing Sec.  
405.1006(d)(2)(i)(A) or (B). Accordingly, we are maintaining the text 
of current Sec.  405.1006(d)(1), except that we are: (1) Adding ``In 
general'' as a paragraph heading as proposed; (2) replacing ``for the 
items and services in question'' with ``for the items and services in 
the disputed claim'' in Sec.  405.1006(d)(1) introductory text as 
proposed; and (3) replacing ``Any deductible and coinsurance amounts 
applicable in the particular case'' in current Sec.  405.1006(d)(1)(ii) 
with ``Any deductible and/or coinsurance amounts that may be collected 
for the items or services'' as proposed. Furthermore, as discussed 
above, because we will continue to use current Sec.  405.1006(d)(1) as 
revised above to calculate the amount in controversy, we are not 
finalizing proposed Sec.  405.1006(d)(1) introductory text.
    In addition, we also are not finalizing proposed Sec.  
405.1006(d)(2)(ii) and (iii) because there is no need to define the 
basis for the amount in controversy in specific situations, as the 
amount in controversy would be calculated on the basis of the amount 
charged the individual in all of the scenarios described in proposed 
Sec.  405.1006(d)(2)(i) through (iii). Furthermore, we are not 
finalizing our proposal to revise and re-designate current Sec.  
405.1006(d)(2) as Sec.  405.1006(d)(3), except for the proposal to add 
``Limitation on liability'' as a paragraph heading. However, for 
consistency with paragraph (d)(1)(ii) as finalized, we are replacing 
``any deductible and coinsurance amounts applicable in the particular 
case'' in current Sec.  405.1006(d)(2) with ``any deductible and/or 
coinsurance amounts that may be collected for the items or services.''
    We are finalizing proposed Sec.  405.1006(d)(4), (5), (6), and (7) 
with the modifications discussed below, but re-designating them as 
paragraphs (d)(3), (4), (5), and (6), respectively, because we are not 
finalizing proposed Sec.  405.1006(d)(2) or re-designating current 
Sec.  405.1006(d)(2) as Sec.  405.1006(d)(3). We are replacing ``in 
accordance with paragraphs (d)(1) and (d)(2)(ii) of this section, 
except that the basis for the amount in controversy'' in paragraph 
(d)(3) as finalized (proposed paragraph (d)(4)) with ``in accordance 
with paragraph (d)(1) of this section, except that the amount charged 
to the individual.'' In addition, we are replacing ``Notwithstanding 
paragraphs (d)(1) and (2) of this section'' in paragraphs (d)(4), (5), 
and (6) as finalized (proposed paragraphs (d)(5), (6), and (7)) with 
``Notwithstanding paragraph (d)(1) of this section.''
    Finally, we are finalizing our proposal to revise Sec.  
405.976(b)(7), the section heading of Sec.  405.1006, and the changes 
to Sec.  405.1006(e)(1) introductory text, (e)(1)(ii) and (iii), (e)(2) 
introductory text, (e)(2)(ii) and (iii), and Sec.  423.1970(c)(1)(ii) 
and (iii), (c)(2)(ii) and (iii) as proposed, without modification.
e. Parties to an ALJ Hearing (Sec. Sec.  405.1008 and 423.2008)
    Current Sec. Sec.  405.1008 and 423.2008 discuss the parties to an 
ALJ hearing. Because current Sec. Sec.  405.1002(a) and 423.2002(a) 
already address who may request a hearing before an ALJ after a QIC or 
IRE issues a reconsideration and current Sec.  405.1002(b) addresses 
who may request escalation of a request for a QIC reconsideration, we 
proposed to remove current Sec. Sec.  405.1008(a) and 423.2008(a). 81 
FR 43790, 43810.
    We proposed to retain and revise the language as discussed below in 
current Sec. Sec.  405.1008(b) and 423.2008(b), but remove the 
paragraph designation. Current Sec. Sec.  405.1008(b) and 423.2008(b) 
identify the parties ``to the ALJ hearing,'' but this could be read to 
be limited to parties to an oral hearing, if a hearing is conducted. To 
address this potential confusion, we proposed to revise Sec. Sec.  
405.1008 and 423.2008 to replace ``parties to an ALJ hearing'' with 
``parties to the proceedings on a request for an ALJ hearing'' and 
``party to the ALJ hearing'' with ``party to the proceedings on a 
request for an ALJ hearing.'' Likewise, we also proposed to revise the 
titles to Sec. Sec.  405.1008 and 423.2008 from ``Parties to an ALJ 
hearing'' to ``Parties to the proceedings on a request for an ALJ 
hearing.'' 81 FR 43790, 43810.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received one comment on proposed Sec. Sec.  405.1008 
and 423.2008 regarding parties to an ALJ hearing. The comment was 
submitted by a Recovery Auditor trade/advocacy group and expressed 
concerns about how the proposals related to status at ALJ hearings 
would impact CMS audit contractors' interests in the hearings and their 
ability to elect party status.
    Response: As we explain above, these proposals removed some 
redundancies in current Sec. Sec.  405.1008(a) and 423.2008(a) and 
clarified the language to address potential confusion that the sections 
applied only to parties to an oral hearing, if a hearing is conducted, 
rather than to parties to the proceedings on a request for an ALJ 
hearing. Although the commenter included the caption to this proposal 
in its submission, the comments relate to proposed Sec. Sec.  405.1010, 
405.1012 and 423.2010. Therefore, we respond to this comment in section 
II.B.3.f.i below.

[[Page 5016]]

    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec. Sec.  405.1008 and 423.2008 as proposed without 
modification.
f. CMS and CMS Contractors as Participants or Parties in the 
Adjudication Process (Sec. Sec.  405.1010, 405.1012, and 423.2010)
    As further described below, we proposed significant revisions to 
Sec. Sec.  405.1010 and 405.1012 regarding CMS and CMS contractors as 
participants or parties in proceedings on a request for an ALJ hearing, 
and to Sec.  423.2010 regarding CMS, the IRE, or a Part D plan sponsor 
as participants in proceedings on a request for an ALJ hearing. 81 FR 
43790, 43810-43816, 43862-43863, and 43879-43880.
i. Section 405.1010: When CMS or Its Contractors May Participate in the 
Proceedings on a Request for an ALJ Hearing
    Current Sec.  405.1010(a) provides that an ALJ may request, but may 
not require, CMS and/or its contractors to participate in any 
proceedings before the ALJ, including the oral hearing, if any, and CMS 
or its contractors may elect to participate in the hearing process. 
Under current Sec.  405.1010(b), if that election is made, CMS or its 
contractor must advise the ALJ, the appellant, and all other parties 
identified in the notice of hearing of its intent to participate no 
later than 10 calendar days after receiving the notice of hearing. 
Section 405.1010(c) sets forth what participation includes and Sec.  
405.1010(d) states that participation does not include CMS or its 
contractor being called as a witness during the hearing. Section 
405.1010(e) requires CMS or its contractors to submit any position 
papers within the time frame designated by the ALJ. Finally, Sec.  
405.1010(f) states that the ALJ cannot draw any adverse inferences if 
CMS or a contractor decides not to participate in any proceedings 
before an ALJ, including the hearing.
    We stated in the proposed rule that the reference to the period in 
which an election to participate must be filed beginning upon receipt 
of the notice of hearing in current Sec.  405.1010(b) has caused 
confusion when CMS or its contractors attempt to enter proceedings 
before a hearing is scheduled, or when no notice of hearing is 
necessary because an appeal may be decided on the record. To help 
ensure that CMS and its contractors have the opportunity to enter the 
proceedings with minimal disruption to the adjudication process prior 
to a hearing being scheduled or when a hearing may not be conducted, we 
proposed in Sec.  405.1010(a)(1) to provide that CMS or its contractors 
may elect to participate in the proceedings on a request for an ALJ 
hearing upon filing a notice of intent to participate in accordance 
with paragraph (b), at either of, but not later than, two distinct 
points in the adjudication process described in paragraph (b)(3).
    As provided in current Sec.  405.1010(a) and (f), we proposed at 
Sec.  405.1010(a)(2) that an ALJ may request but may not require CMS 
and/or one or more of its contractors to participate in any proceedings 
before the ALJ, including the oral hearing, if any; and the ALJ cannot 
draw any adverse inferences if CMS or the contractor decides not to 
participate in the proceedings.
    We proposed in Sec.  405.1010(b) to address how CMS or a contractor 
makes an election to participate in an appeal, before or after receipt 
of a notice of hearing or when a notice of hearing is not required. 
Under Sec.  405.1010(b)(1), we proposed that if CMS or a contractor 
elects to participate before receipt of a notice of hearing (such as 
during the 30 calendar day period after being notified that a request 
for hearing was filed as proposed in Sec.  405.1010(b)(3)(i)) or when a 
notice of hearing is not required, CMS or the contractor must send 
written notice of its intent to participate to the parties who were 
sent a copy of the notice of reconsideration, and to the assigned ALJ 
or attorney adjudicator, as proposed in section II.B of the proposed 
rule (and discussed in section II.A.2 above), or if the appeal is not 
yet assigned, to a designee of the Chief ALJ. We proposed at Sec.  
405.1010(b)(1) to provide for sending the written notice of intent to 
participate to an ALJ or attorney adjudicator assigned to an appeal 
because, as we discussed in section II.B of the proposed rule and 
II.A.2 of this final rule above, an attorney adjudicator also would 
have the authority to issue decisions on a request for an ALJ hearing 
when no hearing is conducted, and in accordance with proposed Sec.  
405.1010, CMS or its contractors are permitted to participate in the 
proceedings on such a request. We also proposed at Sec.  405.1010(b)(1) 
to provide for sending the notice of intent to participate to a 
designee of the Chief ALJ if a request for an ALJ hearing is not yet 
assigned to an ALJ or attorney adjudicator because CMS or a contractor 
could file an election to be a participant in the proceedings before 
the assignment process is complete. We stated in the proposed rule that 
proposed Sec.  405.1010(b)(1) would help ensure that the potential 
parties to a hearing, if a hearing is conducted, would receive notice 
of the intent to participate, and also help ensure that adjudicators 
who are assigned to an appeal after an election is made would be aware 
of the election. Because only an ALJ may conduct a hearing and the 
parties to whom a notice of hearing is sent may differ from the parties 
who were sent a copy on the notice of reconsideration, we proposed at 
Sec.  405.1010(b)(2) that if CMS or a contractor elects to participate 
after receiving a notice of hearing, CMS or the contractor would send 
written notice of its intent to participate to the ALJ and the parties 
who were sent a copy of the notice of hearing.
    We proposed at Sec.  405.1010(b)(3)(i) that CMS or a contractor 
would have an initial opportunity to elect to be a participant in an 
appeal within 30 calendar days after notification that a request for 
hearing has been filed with OMHA, if no hearing is scheduled. CMS and 
its contractors have the capability to see that a QIC reconsideration 
had been appealed to OMHA in the case management system used by QICs. 
This system would provide constructive notice to the QICs when the 
system indicates an appeal has been filed with OMHA, which OMHA can 
monitor through the date that the reconsideration data is transferred 
to OMHA to adjudicate the request for an ALJ hearing. Under proposed 
Sec.  405.1010(b)(3)(ii), a second opportunity to elect to be a 
participant in an appeal would become available if a hearing is 
scheduled; as in the current rule, CMS or a contractor would have 10 
calendar days after receiving the notice of hearing to make the 
election.
    As we stated in the proposed rule, we considered allowing CMS or a 
contractor to make an election at any time prior to a decision being 
issued if a hearing was not scheduled, or sending a notice that a 
decision would be issued without a hearing and establishing an election 
period after such notice. However, both of these options would disrupt 
and delay the adjudication process, as well as add administrative 
burdens on OMHA. We stated in the proposed rule that we believed the 30 
calendar day period after notification that a request for hearing was 
filed is sufficient time for CMS or a contractor to determine whether 
to elect to be a participant in the appeal while the record is reviewed 
for case development and to prepare for the hearing, or determine 
whether a decision may be appropriate based on the record in accordance 
with Sec.  405.1038.
    We proposed to consolidate current Sec.  405.1010(c) through (e) in 
proposed

[[Page 5017]]

Sec.  405.1010(c) to address the roles and responsibilities of CMS or a 
contractor as a participant. Proposed Sec.  405.1010(c)(1) would 
incorporate current Sec.  405.1010(c), which provides that 
participation may include filing position papers or providing testimony 
to clarify factual or policy issues, but it does not include calling 
witnesses or cross-examining a party's witnesses. However, we proposed 
to revise Sec.  405.1010(c) to state in Sec.  405.1010(c)(1) that 
participation may include filing position papers ``and/or'' providing 
testimony to emphasize that either or both may be done, and to state 
that participation would be subject to proposed Sec.  405.1010(d)(1) 
through (3) (discussed below). We proposed to incorporate current Sec.  
405.1010(d) in proposed Sec.  405.1010(c)(2) to provide that when CMS 
or a contractor participates in a hearing, they may not be called as 
witnesses and, thus, are not subject to examination or cross-
examination by parties to the hearing. However, to be clear about how a 
party and the ALJ may address statements made by CMS or a contractor 
during the hearing given that limitation, we also proposed in Sec.  
405.1010(c)(2) that the parties may provide testimony to rebut factual 
or policy statements made by the participant, and the ALJ may question 
the participant about the testimony.
    We proposed to incorporate current Sec.  405.1010(e) in proposed 
Sec.  405.1010(c)(3) with certain revisions as discussed below. Current 
Sec.  405.1010(e) states that CMS or its contractor must submit any 
position papers within the time frame designated by the ALJ. We 
proposed in Sec.  405.1010(c)(3) to include written testimony in the 
provision, establish deadlines for submission of position papers and 
written testimony that reflect the changes in participation elections 
in proposed Sec.  405.1010(b), and require that copies of position 
papers and written testimony be sent to the parties. Specifically, we 
proposed in Sec.  405.1010(c)(3)(i) that CMS or a contractor position 
paper or written testimony must be submitted within 14 calendar days of 
an election to participate if no hearing has been scheduled, or no 
later than 5 calendar days prior to the scheduled hearing unless 
additional time is granted by the ALJ. We proposed to add ``written 
testimony'' to recognize that CMS or a contractor may submit written 
testimony as a participant, in addition to providing oral testimony at 
a hearing. We proposed to require position papers and written testimony 
be submitted within 14 calendar days after an election if no hearing is 
scheduled to help ensure the position paper and/or written testimony 
are available when determinations are made to schedule a hearing or 
issue a decision based on the record in accordance with Sec.  405.1038. 
We also proposed to require that if a hearing is scheduled, position 
papers and written testimony be submitted no later than 5 calendar days 
prior to the hearing (unless the ALJ grants additional time) to help 
ensure the ALJ and the parties have an opportunity to review the 
materials prior to the hearing. Additionally, under proposed Sec.  
405.1010(c)(3)(ii), CMS or a contractor would need to send a copy of 
any position paper or written testimony submitted to OMHA to the 
parties who were sent a copy of the notice of reconsideration if the 
position paper or written testimony is submitted to OMHA before receipt 
of a notice of hearing, or to the parties who were sent a copy of the 
notice of hearing if the position paper or written testimony is 
submitted after receipt of a notice of hearing. Current Sec.  405.1010 
does not address the repercussions of a position paper not being 
submitted in accordance with the section. Therefore, we proposed in 
Sec.  405.1010(c)(3)(iii) that a position paper or written testimony 
would not be considered in deciding an appeal if CMS or a contractor 
fails to send a copy of its position paper or written testimony to the 
parties, or fails to submit its position paper or written testimony 
within the established time frames. We stated in the proposed rule that 
this would help ensure CMS or contractor position papers and written 
testimony are submitted timely and shared with the parties.
    Current Sec. Sec.  405.1010 does not limit the number of entities 
that may elect to be participants, which currently includes 
participating in a hearing if a hearing is conducted, and current Sec.  
405.1012 does not limit the number of entities that may elect to be a 
party to a hearing. We stated in the proposed rule that this has 
resulted in hearings for some appeals being difficult to schedule and 
taking longer to conduct due to multiple elections. To address these 
issues, we proposed at Sec.  405.1010(d)(1) that when CMS or a 
contractor has been made a party to the hearing under Sec.  405.1012, 
CMS or a contractor that elected to be a participant under Sec.  
405.1010 may not participate in the oral hearing, but may file a 
position paper and/or written testimony to clarify factual or policy 
issues in the case (oral testimony and attendance at the hearing would 
not be permitted). Similarly, we proposed at Sec.  405.1010(d)(1) that 
CMS or a contractor that elected to be a party to the hearing, but was 
made a participant under Sec.  405.1012(d)(1), as discussed below, 
would also be precluded from participating in the oral hearing, but 
would be permitted to file a position paper and/or oral testimony to 
clarify factual or policy issues in the case. We proposed at Sec.  
405.1010(d)(2) that if CMS or a contractor did not elect to be a party 
to the hearing under Sec.  405.1012, but more than one entity elected 
to be a participant under Sec.  405.1010, only the first entity to file 
a response to the notice of hearing as provided under Sec.  405.1020(c) 
may participate in the oral hearing, but additional entities that filed 
a subsequent response to the notice of hearing could file a position 
paper and/or written testimony to clarify factual or policy issues in 
the case (though they would not be permitted to attend the hearing or 
provide oral testimony). We proposed that the first entity to file a 
response to the notice of hearing as provided under Sec.  405.1020(c) 
may participate in the hearing for administrative efficiency. Under 
this approach, if multiple entities elected to participate in the 
proceedings prior to the issuance of a notice of hearing, in accordance 
with proposed Sec.  405.1010(b)(1), any of these entities wishing to 
participate in the oral hearing would need to indicate this intention 
in the response to the notice of hearing. If more than one entity 
indicated its intention to attend and participate in the oral hearing, 
only the first entity to file its response would be permitted to do so. 
The remaining entities would be permitted only to file a position paper 
and/or written testimony (unless the ALJ grants leave to additional 
entities to attend the hearing, as discussed below). We considered an 
alternate proposal of the first entity that made an election to 
participate being given priority for participating in the hearing, but 
believed that would result in other participants being uncertain 
whether they will be participating in the hearing until as few as 5 
days prior to the hearing. We also considered a process in which the 
ALJ would assess which participant that responded to the notice of 
hearing would be most helpful to the ALJ at the hearing, or in the 
alternative, permitting all participants to be at the hearing unless 
the ALJ determined a participant is not necessary for the hearing, but 
we were concerned that both of these approaches would add 
administrative burden to the ALJ and could result in participants and 
parties being uncertain of which participants will be at the hearing 
until shortly

[[Page 5018]]

before the hearing. We solicited comments on the alternatives 
considered above, and other potential alternatives.
    Notwithstanding the limitations on CMS and CMS contractor 
participation in proposed Sec.  405.1010(d)(1) and (2), we proposed in 
Sec.  405.1010(d)(3) that the ALJ would have the necessary discretion 
to allow additional participation in the oral hearing when the ALJ 
determines an entity's participation is necessary for a full 
examination of the matters at issue. For example, we stated in the 
proposed rule that if an appeal involves LCDs from multiple MAC 
jurisdictions, the ALJ may determine that allowing additional MACs to 
participate in a hearing is necessary for a full examination of the 
matters at issue. Similarly, if an overpayment determined through the 
use of a statistical sample and extrapolation is at issue, the ALJ may 
determine that allowing the contractor that conducted the sampling to 
participate in the hearing is necessary to address issues related to 
the sampling and extrapolation, in addition to another contractor that 
made an election to clarify the policy and factual issues related to 
the merits of claims in the sample.
    Currently, there are no provisions in Sec.  405.1010 to address the 
possibility of CMS or a contractor making an invalid election. We 
proposed to revise Sec.  405.1010(e) to add new provisions to establish 
criteria for when an election may be deemed invalid and provide 
standards for notifying the entity and the parties when an election is 
deemed invalid. We proposed in Sec.  405.1010(e)(1) that an ALJ or 
attorney adjudicator may determine an election is invalid if the 
election was not timely filed or the election was not sent to the 
correct parties. We stated that this would help ensure that CMS and its 
contractors make timely elections and inform parties of elections. To 
provide notice to the entity and the parties that an election was 
deemed invalid, we proposed in Sec.  405.1010(e)(2) to require a 
written notice of an invalid election be sent to the entity that 
submitted the election and the parties who are entitled to receive 
notice of the election. We proposed in Sec.  405.1010(e)(2)(i) that if 
no hearing is scheduled for the appeal or the election was submitted 
after the hearing occurred, the notice of an invalid election would be 
sent no later than the date the decision, dismissal, or remand notice 
is mailed. We proposed in Sec.  405.1010(e)(2)(ii) that if a hearing is 
scheduled for the appeal, the written notice of an invalid election 
would be sent prior to the hearing, and that if the notice would be 
sent fewer than 5 calendar days before the hearing is scheduled to 
occur, oral notice must be provided to the entity, and the written 
notice must be sent as soon as possible after the oral notice is 
provided.
ii. Section 423.2010: When CMS, the IRE, or Part D Plan Sponsors May 
Participate in the Proceedings on a Request for an ALJ Hearing
    Current Sec.  423.2010 is similar to current Sec.  405.1010, except 
that CMS, the IRE, or the Part D plan sponsor may only request to 
participate, and the time periods to request to participate are shorter 
than the time periods to elect to participate under Sec.  405.1010, 
which provides the ALJ with time to consider the request to participate 
and make a determination on whether to allow participation by the 
entity. In addition, current Sec.  423.2010 addresses participation in 
Part D expedited appeals. Like proposed Sec.  405.1010(a), we proposed 
at Sec.  423.2010(a) to provide CMS, the IRE, and the Part D plan 
sponsor with an opportunity to participate in the proceedings on a 
request for an ALJ hearing at two distinct points in the adjudication 
process, but the current policy of requiring the entity to request to 
participate is maintained. We proposed at Sec.  423.2010(b)(3)(i) and 
(ii) that, if no hearing is scheduled, CMS, the IRE and/or the Part D 
plan sponsor would have an initial opportunity to request to be a 
participant in an appeal within 30 calendar days after notification 
that a standard request for hearing was filed with OMHA, or within 2 
calendar days after notification that a request for an expedited 
hearing was filed. We stated in the proposed rule that the initial 30 
calendar day period after notification that a standard request for 
hearing was filed with OMHA would be the same time frame provided under 
Sec.  405.1010 for initial CMS and contractor elections, and we stated 
that we believed that the 30 calendar day period after notification 
that a request for hearing was filed is sufficient time for CMS, the 
IRE, and the Part D plan sponsor to determine whether to request to be 
a participant in the proceedings and for the request to be considered 
and granted or denied as the case is reviewed to determine whether a 
decision may be appropriate based on the record in accordance with 
Sec.  423.2038. We also stated we believed the 2 calendar day period 
after notification that an expedited request for hearing was filed is a 
reasonable period of time for CMS, the IRE, or the Part D plan sponsor 
to determine whether to request to be a participant in the proceedings 
given the 10-day adjudication time frame. We proposed at Sec.  
423.2010(b)(3)(iii) and (iv) to provide a second opportunity to request 
to be a participant in an appeal if a hearing is scheduled. We proposed 
at Sec.  423.2010(b)(3)(iii) that if a non-expedited hearing is 
scheduled, CMS, the IRE, or the Part D plan sponsor would continue to 
have 5 calendar days after receiving the notice of hearing to make the 
request. We proposed at Sec.  423.2010(b)(3)(iv) that if an expedited 
hearing is scheduled, CMS, the IRE, or the Part D plan sponsor would 
continue to have 1 calendar day after receiving the notice of hearing 
to make the request. These time frames were carried over from current 
Sec.  423.2010(b)(1) and (b)(3), and provide the ALJ with time to 
consider the request and notify the entity of his or her decision on 
the request to participate. As provided in current Sec.  423.2010(a) 
and (g), we proposed at Sec.  423.2010(a)(2) to provide that an ALJ may 
request but may not require CMS, the IRE, or the Part D plan sponsor to 
participate in any proceedings before the ALJ, including the oral 
hearing, if any, and that the ALJ may not draw any adverse inferences 
if CMS, the IRE, or the Part D plan sponsor declines to be a 
participant to the proceedings.
    We proposed in Sec.  423.2010(b) to adopt the standards governing 
how an election is made in proposed Sec.  405.1010(b) in governing how 
a request to participate is made, except that an oral request to 
participate could be made for an expedited hearing, and OMHA would 
notify the enrollee of the request to participate in such cases.
    Current Sec.  423.2010(b)(2) and (b)(4) provide that an ALJ will 
notify an entity requesting to participate of the decision on the 
request within 5 calendar days for a request related to a non-expedited 
hearing, or 1 calendar day for a request related to an expedited 
hearing. We proposed to incorporate these time frames into proposed 
Sec.  423.2010(c). In addition, we proposed in Sec.  423.2010(c)(1) 
that if no hearing is scheduled, the notification is made at least 20 
calendar days before the ALJ or attorney adjudicator (as proposed in 
section II.B of the proposed rule (and discussed in section II.A.2 
above)) issues a decision, dismissal, or remand. This would provide the 
participant with time to submit a position paper in accordance with 
proposed Sec.  423.2010(d)(3)(i), as discussed below. We also proposed 
to incorporate current Sec.  423.2010(c) into proposed Sec.  
423.2010(c), so that the provision clearly states that the assigned ALJ 
or attorney adjudicator (as proposed in section II.B of the proposed 
rule (and

[[Page 5019]]

discussed in section II.A.2 above)) has discretion to not allow CMS, 
the IRE, or the Part D plan sponsor to participate. We proposed in 
Sec.  423.2010(c) that an attorney adjudicator as well as the ALJ may 
make a decision on a request to participate because a request to 
participate may be submitted for appeals that may be assigned to an 
attorney adjudicator and those appeals could also benefit from CMS, the 
IRE, or the Part D plan sponsor participation in the proceedings. We 
did not propose to limit the number of participants in a hearing 
similar to proposed Sec.  405.1010(d) because the ALJ has the 
discretion to deny a request to participate under Sec.  423.1010 and 
may therefore deny a request to participate if the ALJ determines that 
a hearing would have sufficient participant involvement or does not 
need participant involvement.
    We proposed at Sec.  423.2010(d) to consolidate current Sec.  
423.2010(d) through (f), to address the roles and responsibilities of 
CMS, the IRE, or the Part D plan sponsor as a participant. 
Specifically, we proposed at Sec.  423.2010(d)(1) to generally 
incorporate current Sec.  423.2010(d), which provides that 
participation may include filing position papers or providing testimony 
to clarify factual or policy issues, but it does not include calling 
witnesses or cross-examining a party's witnesses. However, we proposed 
in Sec.  423.2010(d)(1) that participation may include filing position 
papers ``and/or'' providing testimony to emphasize that either or both 
may be done, and to remove the limitation that testimony must be 
written because participation may include providing oral testimony 
during the hearing. We proposed at Sec.  423.2010(d)(2) to incorporate 
current Sec.  423.2010(e), which provides that when participating in a 
hearing, CMS, the IRE, or the Part D plan sponsor may not be called as 
a witness during the hearing and, thus, are not subject to examination 
or cross-examination by the enrollee at the hearing. However, to be 
clear about how an enrollee and the ALJ may address statements made by 
CMS, the IRE, or the Part D plan sponsor during the hearing given that 
limitation, we also proposed in Sec.  423.2010(d)(2) that the enrollee 
may rebut factual or policy statements made by the participant, and the 
ALJ may question the participant about its testimony.
    We proposed at Sec.  423.2010(d)(3) to incorporate current Sec.  
423.2010(f) with certain revisions as discussed below. Current Sec.  
423.2010(f) states that CMS, the IRE, and/or the Part D plan sponsor 
must submit any position papers within the time frame designated by the 
ALJ. We proposed in Sec.  423.2010(d)(3) to include written testimony 
in the provision, establish deadlines for submission of position papers 
and written testimony that reflect the changes in participation 
requests in proposed 423.2010(b), and require that copies of position 
papers and written testimony be sent to the enrollee. Specifically, we 
proposed in Sec.  423.2010(d)(3) that, unless the ALJ or attorney 
adjudicator grants additional time to submit a position paper or 
written testimony, a CMS, the IRE, or the Part D plan sponsor position 
paper or written testimony must be submitted within 14 calendar days 
for a standard appeal or 1 calendar day for an expedited appeal after 
receipt of the ALJ's or attorney adjudicator's decision on a request to 
participate if no hearing has been scheduled, or no later than 5 
calendar days prior to a non-expedited hearing or 1 calendar day prior 
to an expedited hearing. We proposed to add ``written testimony'' to 
recognize that CMS, the IRE, or the Part D plan sponsor may submit 
written testimony as a participant, in addition to providing oral 
testimony at a hearing. We proposed to require that position papers and 
written testimony be submitted within 14 calendar days for a standard 
appeal or 1 calendar day for an expedited appeal after receipt of the 
ALJ's or attorney adjudicator's decision on a request to participate if 
no hearing has been scheduled to help ensure the position paper and/or 
written testimony are available when determinations are made to 
schedule a hearing or issue a decision based on the record in 
accordance with Sec.  405.1038. We also proposed to require that if a 
hearing is scheduled, position papers and written testimony be 
submitted no later than 5 calendar days prior to a non-expedited 
hearing or 1 calendar day prior to an expedited hearing (unless the ALJ 
grants additional time) to help ensure the ALJ and the enrollee have an 
opportunity to review the materials prior to the hearing. Similar to 
proposed Sec.  405.1010(c)(3)(iii), we also proposed at Sec.  
423.2010(d)(3)(ii) that a copy of the position paper or written 
testimony must be sent to the enrollee, and at Sec.  423.2010(d)(iii) 
that a position paper or written testimony would not be considered in 
deciding an appeal if CMS, the IRE, and/or the Part D plan sponsor 
fails to send a copy of the position paper or written testimony to the 
enrollee or fails to submit the position paper or written testimony 
within the established time frames. This would help ensure CMS, IRE, or 
Part D plan sponsor position papers and written testimony are submitted 
timely and shared with the enrollee.
    Currently, there are no provisions in Sec.  423.2010 to address the 
possibility of CMS, the IRE, and/or the Part D plan sponsor making an 
invalid request to participate. We proposed to revise Sec.  423.2010(e) 
to add new provisions to establish criteria for when a request to 
participate may be deemed invalid and provide standards for notifying 
the entity and the enrollee when a request to participate is deemed 
invalid. We proposed in Sec.  423.2010(e)(1) that an ALJ or attorney 
adjudicator may determine a request to participate is invalid if the 
request to participate was not timely filed or the request to 
participate was not sent to the enrollee. We stated that this would 
help ensure that CMS, the IRE, and/or the Part D plan sponsor make 
timely requests to participate and inform the enrollee of requests. To 
provide notice to the entity and the enrollee that a request to 
participate was deemed invalid, we proposed in Sec.  423.2010(e)(2) to 
require that a written notice of an invalid request be sent to the 
entity that made the request and the enrollee. We proposed in Sec.  
423.2010(e)(2)(i) that if no hearing is scheduled for the appeal or the 
request was made after the hearing occurred, the notice of an invalid 
request would be sent no later than the date the decision, dismissal, 
or remand order is mailed. We proposed in Sec.  423.2010(e)(2)(ii) that 
if a non-expedited hearing is scheduled for the appeal, written notice 
of an invalid request would be sent prior to the hearing, and that if 
the notice would be sent fewer than 5 calendar days before the hearing, 
oral notice must be provided to the entity, and the written notice must 
be sent as soon as possible after the oral notice is provided. We 
proposed in Sec.  423.2010(e)(2)(iii) that if an expedited hearing is 
scheduled for the appeal, oral notice of an invalid request must be 
provided to the entity, and the written notice must be sent as soon as 
possible after the oral notice is provided. We proposed to require the 
oral notice for expedited hearings because the very short time frames 
involved in expedited hearing proceedings often do not allow for 
delivery of a written notice and the oral notice will help ensure the 
entity is made aware of the invalid request prior to the hearing.
iii. Section 405.1012: When CMS or Its Contractors May Be a Party to a 
Hearing
    Current Sec.  405.1012(a) states that CMS and/or its contractors 
may be a party to an ALJ hearing unless the request for hearing is 
filed by an unrepresented beneficiary. Current Sec.  405.1012(b) states

[[Page 5020]]

that CMS and/or the contractor(s) advises the ALJ, appellant, and all 
other parties identified in the notice of hearing that it intends to 
participate as a party no later than 10 calendar days after receiving 
the notice of hearing. Current Sec.  405.1012(c) states that, when CMS 
or its contractors participate in a hearing as a party, it may file 
position papers, provide testimony to clarify factual or policy issues, 
call witnesses or cross-examine the witnesses of other parties. CMS or 
its contractor(s) will submit any position papers within the time frame 
specified by the ALJ. CMS or its contractor(s), when acting as parties, 
may also submit additional evidence to the ALJ within the time frame 
designated by the ALJ. Finally, current Sec.  405.1012(d) states that 
the ALJ may not require CMS or a contractor to enter a case as a party 
or draw any adverse inferences if CMS or a contractor decides not to 
enter as a party. As stated previously, we proposed significant changes 
to Sec.  405.1012.
    Current Sec.  405.1012 does not limit the number entities that may 
elect to be a party to the hearing. We stated in the proposed rule that 
this has resulted in hearings for some appeals being difficult to 
schedule and taking longer to conduct due to multiple elections. To 
address these issues, we proposed at Sec.  405.1012(a)(1), except as 
provided in proposed paragraph (d) discussed below, to only allow 
either CMS or one of its contractors to elect to be a party to the 
hearing (unless the request for hearing is filed by an unrepresented 
beneficiary, which precludes CMS and its contractors from electing to 
be a party to the hearing). Current Sec.  405.1012(b) states that CMS 
or a contractor advises the ALJ, appellant, and all other parties 
identified in the notice of hearing that it intends to participate as a 
party no later than 10 calendar days after receiving the notice of 
hearing. We proposed at Sec.  405.1012(a) to incorporate and revise a 
portion of current Sec.  405.1012(b), to require that an election to be 
a party must be filed no later than 10 calendar days after the QIC 
receives the notice of hearing, because notices of hearing are sent to 
the QIC in accordance with Sec.  405.1020(c) (the remaining portion of 
current Sec.  405.1012(b) is incorporated with revisions into proposed 
Sec.  405.1012(b), as discussed below).
    Current Sec.  405.1012 does not have a provision similar to current 
Sec.  405.1010(a), which states that an ALJ may request that CMS and/or 
one or more of its contractors participate in the proceedings, but 
current Sec.  405.1012(d) does provide that the ALJ may not require CMS 
or a contractor to enter a case as a party or draw any adverse 
inference if CMS or a contractor decided not to enter as a party. In 
practice, ALJs do at times request that CMS or a contractor elect to be 
a party to the hearing, in conjunction with a request for participation 
under current Sec.  405.1010(a). To align the provisions and reflect 
ALJ practices, we proposed at Sec.  405.1012(a)(2) to state that an ALJ 
may request but not require CMS and/or one or more of its contractors 
to be a party to the hearing. We also proposed in Sec.  405.1012(a)(2) 
to incorporate current Sec.  405.1012(d) to provide that that an ALJ 
cannot draw any adverse inferences if CMS or a contractor decides not 
to enter as a party.
    We proposed at Sec.  405.1012(b) to address how CMS or a contractor 
elects to be a party to the hearing. We proposed to follow the same 
process in current Sec.  405.1012(b) so that under proposed Sec.  
405.1012(b), CMS or the contractor would be required to send written 
notice of its intent to be a party to the hearing to the ALJ and the 
parties identified in the notice of hearing, which includes the 
appellant.
    We proposed to set forth the roles and responsibilities of CMS or a 
contractor as a party in Sec.  405.1012(c). Proposed Sec.  
405.1012(c)(1) would incorporate current Sec.  405.1012(c) with some 
changes in wording, both of which provide that as a party to the 
hearing, CMS or a contractor may file position papers, submit evidence, 
provide testimony to clarify factual or policy issues, call witnesses, 
or cross-examine the witnesses of other parties. We proposed in Sec.  
405.1012(c)(2) to include written testimony, such as an affidavit or 
deposition, in the provision; establish deadlines for submission of 
position papers, written testimony, and evidence; and require that 
copies of position papers, written testimony, and evidence be sent to 
the parties that were sent a copy of the notice of hearing. 
Specifically, we proposed in Sec.  405.1012(c)(2)(i) and (c)(2)(ii) 
that any position papers, written testimony, and evidence must be 
submitted no later than 5 calendar days prior to the hearing, unless 
the ALJ grants additional time to submit the materials, and copies must 
be sent to the parties who were sent a copy of the notice of hearing. 
We proposed to add ``written testimony'' to recognize that CMS or a 
contractor may submit written testimony, in addition to providing oral 
testimony at a hearing. We also proposed to require that position 
papers, written testimony, and/or evidence be submitted no later than 5 
calendar days prior to the hearing (unless the ALJ grants additional 
time), and that copies be submitted to the parties sent notice of the 
hearing, to help ensure the ALJ and the parties have an opportunity to 
review the materials prior to the hearing. Current Sec.  405.1012 does 
not address the consequence of failure to submit a position paper or 
evidence in accordance with the section. We proposed in Sec.  
405.1012(c)(2)(iii) that a position paper, written testimony, and/or 
evidence would not be considered in deciding an appeal if CMS or a 
contractor fails to send a copy of its position paper, written 
testimony, and/or evidence to the parties or fails to submit the 
position paper, written testimony, and/or evidence within the 
established time frames. We stated in the proposed rule that this would 
help ensure CMS or contractor position papers and evidence are 
submitted timely and shared with the parties.
    As discussed above, current Sec.  405.1012 does not limit the 
number of entities (that is, CMS and its contractors) that may elect to 
be a party to the hearing and, as also discussed above, we proposed to 
revise Sec.  405.1010 and 405.1012 to limit the number of entities that 
participate in a hearing unless an ALJ determines that an entity's 
participation is necessary for a full examination of the matters at 
issue. We proposed to revise Sec.  405.1012(d)(1) to provide that if 
CMS and one or more contractors, or multiple contractors file elections 
to be a party to a hearing, the first entity to file its election after 
the notice of hearing is issued is made a party to the hearing and the 
other entities are made participants in the proceedings under Sec.  
405.1010, subject to Sec.  405.1010(d)(1) and (3) (and as such may file 
position papers and provide written testimony to clarify factual or 
policy issues in the case, but may not participate in the oral hearing 
unless the ALJ grants leave to the entity to participate in the oral 
hearing in accordance with Sec.  405.1010(d)(3)). Similar to proposed 
Sec.  405.1010(d)(3), we also proposed in Sec.  405.1012(d)(2) that, 
notwithstanding the limitation in proposed Sec.  405.1012(d)(1), an ALJ 
may grant leave for additional entities to be parties to the hearing if 
the ALJ determines that an entity's participation as a party is 
necessary for full examination of the matters at issue.
    We stated in the proposed rule that we believed allowing the first 
entity to file an election after a notice of hearing is issued to be a 
party to the hearing is administratively efficient and provides an 
objective way to determine which entity is made a party based on the 
competing elections, while providing an opportunity to participate in 
the appeal

[[Page 5021]]

by filing a position paper and/or written testimony under Sec.  
405.1010 for those that file later in time, or to be made a participant 
or party to the hearing by the ALJ under the ALJ's discretionary 
authority under proposed Sec. Sec.  405.1010(d)(3) and 405.1012(d)(2). 
We considered an alternate proposal of the first entity that had 
elected participant status under Sec.  405.1010, if any, being given 
priority for being made a party to the hearing, but stated that we 
believed that would result in other entities making a party election 
being uncertain whether they will be made a party to the hearing until 
as few as 5 days prior to the hearing (assuming the notice of hearing 
is sent 20 days prior to the scheduled hearing, as required by Sec.  
405.1022(a), the QIC receives the notice of hearing 5 days later, and 
the entity or entities responding to the notice of hearing can make 
their election as late as 10 calendar days after the QIC's receipt of 
the notice, leaving only 5 days prior to the hearing). We also 
considered a process by which the ALJ would assess which entity making 
a party election would be most helpful to the ALJ at the hearing, or in 
the alternative, permitting all entities that filed a party election to 
be made a party to the hearing unless the ALJ determined an entity is 
not necessary for the hearing, but both of these approaches would add 
administrative burden to the ALJ and could result in CMS, contractors 
and parties being uncertain of which entities will be parties to the 
hearing until shortly before the hearing. We solicited comments on the 
alternatives considered above.
    Finally, we proposed to add new Sec.  405.1012(e) to address the 
possibility of CMS or a contractor making an invalid election. Proposed 
Sec.  405.1012(e)(1) would provide that an ALJ or attorney adjudicator 
may determine an election is invalid if the request for hearing was 
filed by an unrepresented beneficiary, the election was not timely, the 
election was not sent to the correct parties, or CMS or a contractor 
had already filed an election to be a party to the hearing and the ALJ 
did not determine that the entity's participation as a party is 
necessary for a full examination of the matters at issue. We stated 
that this would help ensure that CMS and its contractors make timely 
elections and inform parties of elections, and also provide a mechanism 
to address an election when the request for hearing was filed by an 
unrepresented beneficiary or when another entity has already filed an 
election to be a party to the hearing. To provide notice to the entity 
and the parties that an election was deemed invalid, we proposed in 
Sec.  405.1012(e)(2) to require that a written notice of an invalid 
election be sent to the entity that made the election and the parties 
who were sent the notice of hearing. We proposed in Sec.  
405.1012(e)(2)(i) that if the election was submitted after the hearing 
occurred, the notice of an invalid election would be sent no later than 
the date the decision, dismissal, or remand notice is mailed. We 
proposed in Sec.  405.1012(e)(2)(ii) that if the election was submitted 
before the hearing occurs, the written notice of invalid election would 
be sent prior to the hearing, and that if the notice would be sent 
fewer than 5 calendar days before the hearing is scheduled to occur, 
oral notice would be provided to the entity that submitted the 
election, and the written notice to the entity and the parties who were 
sent the notice of hearing would be sent as soon as possible after the 
oral notice is provided.
    Provided below are summaries of the specific comments we received 
relating to our proposed revisions to Sec. Sec.  405.1010, 405.1012, 
and 423.2010, and responses to these comments. Because many commenters 
submitted comments that touched on all three proposals, we are 
collectively addressing in this section comments that related to 
sections III.A.3.f.i, ii, and iii of the proposed rule:
    Comment: We received five comments expressing support of proposed 
Sec. Sec.  405.1010, 405.1012, and 423.2010 and discussing some 
specific benefits that commenters believed the proposal will have on 
the hearing process. One commenter noted that the clarifications in the 
proposed rules will help appellants better prepare their arguments if 
they are aware that CMS or a contractor will be participating in the 
hearing process. Several commenters noted that the proposed limitation 
on the number of entities that may be a party to a hearing and 
participate in the oral hearing will eliminate unnecessary delays and 
duplicative and redundant argument and testimony that currently occur 
when multiple contractors elect or request to be a participant or party 
to the same hearing. One commenter indicated that the proposals will 
make scheduling hearings easier. One commenter indicated that the 
proposed changes will help ALJs make better use of limited time, 
allowing them to hear more cases. The same commenter noted that because 
the quality and credibility of the evidence, rather than the quantity, 
influences decision making, having more than one contractor present 
during the hearing does not add value to the process.
    Response: We thank the commenters for their support and agree that 
the proposed rules set necessary parameters that will help ensure that 
hearings involving CMS or a contractor as a participant or a party will 
be as efficient as possible and that the expectations and roles of 
those entities when they elect either status are clear.
    Comment: Two commenters suggested that the rules should go further 
and prohibit CMS or one of its contractors from participating in the 
proceedings on a request for an ALJ hearing if CMS or one of its 
contractors has entered the appeal as a party. The commenters argued 
that the rights of a party encompass all the rights of a participant 
and it is unclear what additional value would be gained from allowing 
another entity to enter as a participant in such instances.
    Response: Section 405.1010(d)(1), as finalized in this rule, states 
that if CMS or a contractor has been made a party to a hearing in 
accordance with Sec.  405.1012, no entity that elected to be a 
participant in the proceedings in accordance with Sec.  405.1010 (or 
that elected to be a party to the hearing but was made a participant in 
accordance with Sec.  405.1012(d)(1) as finalized in this rule) may 
participate in the oral hearing, but such entity may file a position 
paper and/or written testimony to clarify factual or policy issues in 
the case. We believe that involvement by CMS or its contractors in the 
proceedings on a request for hearing may be beneficial and can assist 
in clarifying factual and policy issues and providing a fuller 
examination of the matters at issue that may be necessary to resolve 
appeals.
    While the interest of administrative efficiency supports limiting 
participation at the oral hearing, we do not believe the same rationale 
applies to position papers and written testimony. The submission of 
position papers and written testimony adds minimal burden to the 
appeals process, may assist with clarifying facts and policy, and 
allows for a fuller presentation of the appeal. While it is possible 
that there may be some repetition in the written submissions, we 
believe that there is potential added value in permitting contractors 
to submit position papers and written testimony for consideration in 
this situation.
    Comment: Two commenters that currently hold QIC contracts submitted 
comments opposed to the limitations placed on CMS and its contractors 
participating in an oral hearing pursuant to Sec.  405.1010(d). 
According to one commenter, contractors often bring a

[[Page 5022]]

unique perspective to ALJ hearings and participation of all interested 
parties and participants allows for a robust and complete presentation 
of the case and often yields greater consistency in decisions. The 
commenter noted that given the involvement of multiple contractors in 
any given appeal prior to the OMHA level--such as MACs, Zone Program 
Integrity Contractors (ZPICs), and Recovery Auditors--one contractor 
cannot always effectively address all issues in an appeal, and argued 
that when multiple contractors participate in an oral hearing, the 
contractors coordinate their presentations so that they do not repeat 
testimony when they are in agreement to keep the hearing duration at a 
minimum. The second commenter argued that the limitations proposed in 
Sec.  405.1010(d) would significantly impact the QIC's ability to meet 
its contractual requirements for oral non-party participation at 
hearings and that QICs, in response, would have to elect participation 
in many additional hearings in order to meet those requirements, 
placing an administrative burden on OMHA to manage the participation 
requests.
    Response: We agree that there is value in having CMS and its 
contractors involved in the proceedings at OMHA as participants, but we 
believe that limiting the number of participants at the oral hearing 
while still providing CMS and its contractors with an opportunity to 
share their unique perspectives through position papers and written 
testimony strikes an appropriate balance between administrative 
efficiency and obtaining as much information as possible for the ALJ to 
render a decision on the matter. In addition, we note that Sec.  
405.1010(d)(3), as finalized in this rule, also permits additional 
participation in the oral hearing if the ALJ determines that a 
precluded entity's participation is necessary for a full examination of 
the matters at issue such as cases involving multiple MAC 
jurisdictions, significant dollar amounts at issue, extrapolation, and 
pre-pay or post-pay audits. Finally, with respect to concerns related 
to a contractor's ability to satisfy its contractual obligations, after 
the final rule is effective, CMS intends to make necessary contract 
modifications to account for the provisions of this final rule related 
to contractor participation, and encourage the contractors to 
coordinate participation in the hearings.
    Comment: We also received one comment, jointly submitted by four 
entities holding DME MAC contracts, opposing the limitation on the 
number of contractor participants at oral hearings. The commenters 
noted that in the case of a large appeal involving statistical sampling 
and extrapolation or consolidated hearings, multiple DME MACs may have 
processed claims that are at issue in the appeals, and the restriction 
on the number of participants at the oral hearing makes it impossible 
for each to have its ``day in court.'' The commenters argued that the 
contractor permitted to participate at the oral hearing may not have 
access to information on the beneficiaries and claims from other DME 
MAC jurisdictions and could not present any argument or defense for 
those denials. Finally, the commenters noted that it is impossible for 
those contractors who are not permitted to participate at the oral 
hearing to anticipate and refute arguments in a position paper written 
in the absence of knowledge of the appellant's defense.
    Response: Section 405.1010(d)(3), as finalized in this rule, 
provides that if CMS or a contractor is precluded from participating in 
the oral hearing under the provisions limiting the number of 
participants, the ALJ may grant leave to the precluded entity to 
participate in the oral hearing if the ALJ determines that the entity's 
participation is necessary for a full examination of the matters at 
issue. This paragraph provides the ALJ with necessary discretion to 
permit additional participants at the hearing in situations such as the 
ones noted above by the commenter, where multiple contractor 
participants at hearing may be necessary for a full examination of the 
issues. We provided examples above highlighting when an ALJ may find it 
necessary to exercise the discretion afforded to the ALJ in Sec.  
405.1010(d)(3). In one example, we indicated that when an appeal 
involves LCDs from multiple MAC jurisdictions, the ALJ may determine 
that allowing additional MACs to participate in a hearing is necessary 
for a full examination of the matters at issue. In another example, we 
suggested that in overpayment cases involving statistical sampling and 
extrapolation, the ALJ may allow participation in the oral hearing by 
both the contractor that conducted the sampling who is necessary to 
address issues related to the sampling and extrapolation and another 
contractor that made an election to participate to clarify the policy 
and factual issues related to the merits of the claims in the sample. 
The examples presented by the commenter--cases involving statistical 
sampling and extrapolation or consolidated hearings in which multiple 
contractor jurisdictions are involved and a single contractor does not 
have information on all beneficiaries or claims involved--are similar 
instances when the ALJ may use his or her discretion to permit 
additional participants at the oral hearing because the additional 
participants may be necessary for a full examination of the matters at 
issue.
    With respect to the commenter's concern that the contractor 
permitted to participate in the oral hearing may not have access to 
information on the beneficiaries and claims from other DME MAC 
jurisdictions and could not present any argument or defense for those 
denials, we note that even when a contractor is not permitted to 
participate in the oral hearing under Sec.  405.1010(d)(1), the 
contractor can still submit position papers and written testimony, 
which may provide helpful information to the contractor participating 
in the oral hearing. However to help further ensure that CMS or a CMS 
contractor that has elected party status is able to fully represent the 
position of CMS in cases where the entity that elected party status 
does not have information on all beneficiaries or claims involved, or 
where the entity that has elected party status deems it necessary to 
call another CMS contractor as a witness, we are amending proposed 
Sec.  405.1010(d)(3) to provide that CMS or a contractor that is 
precluded from participating in the oral hearing under paragraph Sec.  
405.1010(d)(1) may still be called as a witness by CMS or a contractor 
that is a party to the hearing in accordance with Sec.  405.1012. We 
expect the need for CMS or a contractor as a party to call another CMS 
contractor as a witness would be an infrequent occurrence, and believe 
this approach strikes the appropriate balance between administrative 
efficiency and addressing the commenter's concerns.
    With respect to the commenter's concern that position papers and 
written testimony will be inadequate to refute arguments that are made 
at the hearing, we note that the role of participants, both in written 
submissions and participating in the oral hearing, is to provide 
testimony to clarify factual or policy issues, and does not include 
calling witnesses or cross-examining the witness of a party to the 
hearing. In addition, we believe that CMS and its contractors are 
already familiar with the appellant's arguments based on the 
contractors' review of the record and involvement in the lower-level 
appeal decisions or the initial determination. Accordingly, we believe 
that contractors have generally set forth their positions on those 
arguments in the lower-level decisions or will have an

[[Page 5023]]

opportunity to do so through the written submissions to OMHA.
    Comment: One commenter requested that OMHA institute a notification 
process to notify contractors of which entity submitted its election to 
participate first and, therefore, is permitted to participate in the 
oral hearing. The commenter noted that timely notification is important 
because it takes additional time and resources to plan for 
participation at the hearing. The commenter also suggested that instead 
of adopting a rule in which the first entity to file a response to the 
notice of hearing may participate in the oral hearing, OMHA should give 
priority to MACs and QICs over RAs because initial determinations, 
redeterminations, and reconsiderations are formal steps in the appeals 
process.
    Response: The proposed rules do not specifically address 
notification to the entities regarding whether they will participate at 
the oral hearing or participate by submission of position papers and/or 
written testimony. If a hearing is scheduled, the assigned ALJ will 
notify the contractors regarding their participation prior to the 
hearing. OMHA will develop a consistent notification process, including 
guidance on when notification to the contractors should be made and the 
method of delivery of such notification, which will be made part of the 
OCPM. The OCPM describes OMHA case processing procedures in greater 
detail, provides frequent examples to aid understanding, and it is 
accessible by the public on the OMHA Web site (www.hhs.gov/omha).
    As discussed in the comment summary above, we considered 
alternatives to the proposed rule that the first entity to file a 
response to a notice of hearing be given priority for participating at 
the hearing, however we decided that giving the first entity priority 
is administratively efficient and provides an objective and clear way 
of determining which contractor is allowed to participate at the oral 
hearing. We do not agree with the commenter that OMHA should give 
priority to MACs and QICs over RAs as we believe, from our experience 
and from feedback we received from stakeholders, that there are valid 
and equal arguments why each of these entities' participation may be 
valuable in the proceedings. We again note that Sec.  405.1010(d)(3), 
as finalized in this rule, would allow the ALJ to permit multiple 
participants to attend the hearing if the participation of multiple 
entities at the hearing would be necessary for a full examination of 
the matters at issue.
    Comment: We received one comment in support of proposed Sec.  
405.1010(b)(3) allowing two distinct points in the adjudication process 
for contractors to elect to participate. However, the commenter 
suggested that the timing of the election periods specified in Sec.  
405.1010(b)(3)(i) and (ii) be calculated starting with notification to 
the contractor rather than notification to the QIC. The commenter 
indicated that notice to the QIC does not give equal notice to the 
contractors and that there are delays in the transmission of 
information regarding whether a request for hearing has been filed and 
when the case is advanced in the Medicare appeals case processing 
system from the QIC level to the OMHA level.
    Response: We thank the commenter for its support of proposed Sec.  
405.1010(b)(3) and believe that by providing two distinct points 
governing the timing of an election to participate in the proceedings 
helps ensure that CMS and its contractors have the opportunity to enter 
the proceedings with minimal disruption to the adjudication process. 
The proposed regulation on timing of the election to participate 
provides that if no hearing is scheduled, CMS or its contractors must 
make the election no later than 30 calendar days after the notification 
that a request for hearing was filed or, if a hearing is scheduled, no 
later than 10 calendar days after receiving the notice of hearing. We 
believe that the 30 calendar day and 10 calendar day timeframes set 
forth in Sec.  405.1010(b)(3)(i) and (ii) (as finalized) provide 
adequate time for all contractors to receive notice and to file an 
election to be a participant. With respect to the commenter's concern 
regarding notice to the contractors when a request for hearing is 
filed, in addition to the constructive notice provided to the QICs, 
OMHA and CMS will begin the process of modifying contract provisions 
with regards to hearing request notifications after the effective date 
of this final rule. CMS and OMHA will develop a process to notify the 
contractors of the hearing requests and CMS will convey the process to 
the contractors when it is ready to be operationalized.
    Pursuant to Sec.  405.1020(c)(1) (as finalized in this rule), if a 
hearing is scheduled, the ALJ would send notice of the hearing to the 
QIC, to CMS and any contractor that the ALJ believes would be 
beneficial to the hearing, and, as discussed below, to CMS or any 
contractor that elected to participate in the proceedings in accordance 
with Sec.  405.1010(b). Therefore, if a contractor has elected to 
participate in the proceedings before a notice of hearing has been 
sent, under Sec.  405.1020(c)(1), if a hearing is ultimately scheduled 
that entity will receive a copy of the notice of hearing directly from 
OMHA. While contractors not specified in Sec.  405.1020(c)(1) will not 
receive a copy of the notice of hearing directly from OMHA, we believe 
that limiting the number of notices provided to those entities 
specified in Sec.  405.1020(c)(1) is necessary to minimize the 
administrative burden on OMHA. Further, we do not believe that limiting 
the number of notices will compromise the interests of contractors 
because we plan to issue sub-regulatory guidance, including educational 
materials and contractual modifications that will establish processes 
to accommodate the regulatory changes. These processes will relate to 
timely notice, information sharing, and coordination among affected 
contractors that may have an interest in participating in the same 
hearing. CMS will begin the process of issuing sub-regulatory guidance 
and contractual modifications after the effective date of this final 
rule.
    Comment: We received a comment asking whether the submission of a 
written notice of intent to participate will be the same for cases 
assigned to an attorney adjudicator and cases assigned to an ALJ, and 
whether the notice of intent to participate will be accepted in 
electronic form. The comment also asked, with respect to the filing of 
a notice of intent to participate prior to assignment of the appeal to 
an ALJ or attorney adjudicator, if the Chief ALJ will have only one 
designee and, if not, how contractors will know to whom to send the 
notices.
    Response: The process for submission of a notice of intent to 
participate under Sec.  405.1010(b) is the same regardless of whether 
the appeal is assigned to an ALJ or an attorney adjudicator. Rather, 
the distinctions in Sec.  405.1010(b) regarding the notice of intent to 
participate are based on whether a notice of hearing has been issued 
and the timing of the election. After the final rule becomes effective, 
OMHA will develop consistent procedures for the receipt of notices of 
intent to participate in ALJ and attorney adjudicator proceedings, 
including specific instructions regarding where notices of intent to 
participate for appeals that are not yet assigned to an ALJ or attorney 
adjudicator should be directed. We will also consider including an 
option for submitting notices of the intent to participate in 
electronic form. These case processing details will be made part of the 
OCPM, a reference guide outlining the day-to-day operating 
instructions, policies, and

[[Page 5024]]

procedures of OMHA. The OCPM describes OMHA case processing procedures 
in greater detail and is accessible to the public on the OMHA Web site 
(www.hhs.gov/omha).
    Comment: We received two comments in support of proposed Sec. Sec.  
405.1010(c)(3) and 423.2010(d)(3), which place time frames on the 
submission of position papers and written testimony by CMS or its 
contractors, and by CMS, the IRE, and/or Part D plan sponsor, 
respectively, require that copies are sent to other parties, and 
provide that if the participating entities fail to submit the items 
within the specified time frame or to send copies to the other parties, 
then the position paper and/or written testimony will not be considered 
in deciding the appeal. The commenters recommended that the time frames 
in proposed Sec. Sec.  405.1010(c)(3) and 423.2010(d)(3) for submitting 
position papers and written testimony also apply to the requirement to 
send copies to other parties. We also received one comment requesting 
that the same revision be made to Sec.  405.1012(c)(2)(ii) regarding 
the time frame for sending to the other parties copies of any position 
papers, written testimony, and evidentiary submissions that CMS or one 
of its contractors submits to OMHA as a party to the hearing.
    Response: We thank the commenters for their support. We intended 
that the time frames in Sec. Sec.  405.1010(c)(3)(i), 
423.2010(d)(3)(i), and 405.1012(c)(2)(i) also be applied to copies of 
position papers and written testimony sent to the other parties. Given 
this was not clear to the commenters, we are modifying the language in 
proposed Sec. Sec.  405.1010(c)(3)(ii), 423.2010(d)(3)(ii), and 
405.1012(c)(2)(ii) to better convey the requirement. We are revising 
Sec.  405.1010(c)(3)(ii) to state that a copy of any position paper or 
written testimony submitted to OMHA must be sent to the other parties 
within the same time frame specified in Sec.  405.1010(c)(3)(i). 
Because Sec.  405.1010(c)(3)(i) requires the submission to OMHA to be 
sent within 14 calendar days of an election to participate, if no 
hearing has been scheduled, or no later than 5 calendar days prior to 
the hearing if a hearing is scheduled, unless the ALJ grants additional 
time, the requirement that the copies be sent to the other parties 
within these same time frames will ensure that the copies are also 
timely received by the parties. Similarly, we are revising Sec.  
423.2010(d)(3)(ii) to state that a copy of any position paper and 
written testimony that CMS, the IRE, or the Part D plan sponsor submits 
to OMHA must be sent to the enrollee within the same time frames that 
it must be submitted to OMHA as provided in Sec.  423.2010(d)(3)(i)(A) 
and (B). Finally, we also are revising Sec.  405.1012(c)(2)(ii) to 
state that a copy of any position paper, written testimony, or evidence 
submitted to OMHA must be sent to the other parties within the same 
time frame specified in Sec.  405.1012(c)(2)(i).
    Comment: We received one comment supporting the 14 calendar day 
time frame proposed in Sec.  405.1010(c)(3)(i) for submitting a 
position paper or written testimony after an election to participate if 
no hearing is scheduled, but suggesting that the start for calculating 
the 14 calendar days should begin with ``response to the contractor and 
not the QIC.''
    Response: We thank the commenter for its support but believe that 
the commenter misinterpreted when the 14 calendar day time frame 
proposed in Sec.  405.1010(c)(3)(i) begins. The time frame for 
submission of a position paper or written testimony specified in 
proposed Sec.  405.1010(c)(3)(i) begins on the date of the contractor's 
election to participate if no hearing has been scheduled, not on the 
date the QIC or the contractor receives the notice of hearing.
    Comment: We received one comment that expressed concern that the 
stated time frame in Sec.  405.1010(c)(3)(i), requiring the submission 
of CMS or contractor position papers and written testimony no later 
than 5 calendar days prior to the scheduled hearing, unless additional 
time is granted by the ALJ, is an unreasonably short period and does 
not allow sufficient time for an appellant to react to new arguments or 
proposed theories that may be contained in those written submissions 
prior to the hearing. The commenter suggested that this short time 
frame is unfavorable to appellants.
    Response: Current Sec.  405.1010 does not set forth specific time 
frames for submitting position papers and written testimony. Current 
Sec.  405.1010(e) states only that CMS or its contractor must submit 
any position papers within the timeframe designated by the ALJ. ALJs, 
however, would often accept written submissions up to and including on 
the day of the hearing. We believe that the requirement to submit any 
position papers or written testimony not later than 5 calendar days 
prior to the scheduled hearing provides sufficient time for the ALJ and 
the parties to review the submissions prior to the hearing and will 
provide a clear and consistent time frame regarding these submissions. 
In addition, we believe that Sec.  405.1010(c)(3)(iii) (as finalized in 
this rule), which provides that if CMS or a contractor fails to submit 
its position paper or written testimony within the set time frames then 
the submissions will be excluded from consideration, provides 
additional protections that are favorable to appellants.
    Comment: Another commenter noted that when CMS or its contractor 
``is called to provide position papers and written testimony'' but 
fails to submit the position paper or written testimony on time, the 
entities should be required to provide the requested written 
submissions or provide a valid reason for why the requested information 
could not be provided. The commenter noted that the information may 
have a significant impact on the outcome of an appeal.
    Response: We first want to clarify that, under the rules as 
finalized, when CMS or a contractor makes an affirmative election to 
participate and wishes to submit a position paper and/or written 
testimony, it must do so within the specified time frames provided in 
Sec.  405.1010(c)(3)(i) or the submissions are excluded from 
consideration pursuant to Sec.  405.1010(c)(3)(iii). We believe that 
providing time frames for submissions by CMS or its contractors when 
they elect to participate helps to ensure that any submissions are 
timely received and that appellants and other parties will have an 
opportunity to review them prior to the hearing, if a hearing is 
conducted. The comment suggests that the position paper and written 
testimony of concern was requested by the ALJ, however Sec. Sec.  
405.1010(a)(2) and 405.1012(a)(2) (both as finalized in this rule) 
provide that although an ALJ may request CMS and/or one of its 
contractors to participate in any proceedings before the ALJ, or to be 
a party at the hearing, the ALJ cannot require such participation or 
party status and cannot draw any adverse inferences if CMS or the 
contractor decides not to participate in any proceedings or to be a 
party at the hearing. The language set forth in proposed Sec.  
405.1010(a)(2) was not changed from the current regulations, but rather 
combines the rules currently found at Sec.  405.1010(a) and (f). 
Similarly, the language in proposed Sec.  405.1012(a)(2) was carried 
forward from current Sec.  405.1012(d). We do not believe that the 
commenter's suggestion of making the submissions mandatory or requiring 
that CMS or its contractor provide valid reasons for failing to submit 
certain requested written testimony is consistent with the established 
rule that an ALJ may not require that CMS or a contractor participate 
in the proceedings or be a

[[Page 5025]]

party at the hearing. The limited resources and broad programmatic 
responsibilities facing CMS and its contractors may not allow for 
participation or party status election in all appeals. We believe that 
CMS and its contractors must have some discretion in determining when 
election of participant or party status under Sec. Sec.  405.1010 and 
405.1012 is most appropriate given those resources and other 
responsibilities.
    Finally, we disagree with the commenter's suggestion that when CMS 
or a contractor fails to provide requested position papers and/or 
written testimony that it will have a significant impact on the appeal. 
First, if an ALJ or attorney adjudicator 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 or its 
contractors, the information may be requested from the QIC that 
conducted the reconsideration or its successors under Sec.  405.1034, 
as finalized in this rule. Second, CMS or its contractors will likely 
elect participation or party status in those appeals that involve more 
complex issues of fact or law and where their participation or party 
status will be most useful. Finally, while position papers and/or 
written testimony submitted by CMS or its contractors may be helpful in 
clarifying factual issues or policy, we do not believe that the failure 
to submit position papers or written testimony is likely to result in 
any negative impact on the appellant or other parties. The appellant 
and other parties obviously may still present their full testimony and 
arguments and the ALJ or attorney adjudicator will consider evidence in 
the administrative record as appropriate, including all administrative 
proceedings, prior to issuing a decision.
    Comment: We received two comments supporting the clarification in 
proposed Sec.  405.1010(c)(2) that even though CMS or its contractor is 
not subject to examination or cross-examination by the parties, the 
parties ``may provide testimony to rebut factual or policy statements 
made by a participant, and the ALJ may question the participant about 
its testimony.'' The commenters requested that this language be 
modified to more affirmatively require that the parties be given the 
opportunity to provide testimony and to ensure that beneficiaries are 
made aware of this option at the hearing. The commenter also requested 
that CMS provide advocate education about this provision. We received 
one comment that made this same request with respect to the enrollee's 
ability to rebut factual or policy statements made by CMS, the IRE, or 
the Part D plan sponsor participant in the course of Part D hearings as 
provided in proposed Sec.  423.2010(d)(2).
    Response: We thank the commenters for their support. We agree that 
the proposed language in both Sec. Sec.  405.1010(c)(2) and 
423.2010(d)(2) helps to clarify how a party and the ALJ may address 
statements made by participating entities during the hearing. However, 
we believe that the ALJ is in the best position to help ensure that a 
beneficiary or enrollee is aware of this option during the course of 
the hearing, and that ALJs may use their discretion to regulate the 
course of the hearing, including by affirmatively asking parties if 
they want to rebut factual or policy statements made by a participant 
during the hearing. We anticipate that OMHA ALJs will receive training 
on all the rules once they become effective, including the rules in 
Sec. Sec.  405.1010(c)(2) and 423.2010(d)(2). We do not agree that 
additional revisions to the language in Sec. Sec.  405.1010(c)(2) and 
423.2010(d)(2) are necessary because the language as finalized in this 
rule provides the necessary protection while still balancing the right 
and role of the ALJ to control the hearing. CMS provides ongoing 
stakeholder education and anticipates that education regarding this 
provision and the other rules will be available after the rules are 
effective.
    Comment: One commenter stated that although the regulations at 
Sec.  405.1010(c)(2) provide that contractors participating in an ALJ 
hearing cannot be called as witnesses, the regulations should clarify 
that they cannot also voluntarily testify as a witness. The commenter 
noted that in its experience, Medical Directors of the contractors 
often participate in the hearings and offer commentary on the clinical 
judgment of the treating professionals, which the commenter views as 
inappropriate witness testimony. The commenter stated that if witness 
testimony is desired by a contractor, a witness must be identified and 
qualified, and the appellant must have the right to cross-examine the 
witness.
    Response: We believe that Sec.  405.1010(c) as finalized in this 
rule clarifies the roles and responsibilities of CMS and contractors 
who are participants at the oral hearing. We note that Sec.  
405.1010(c)(1) and (2), as finalized in this rule, incorporate the 
policies from current Sec.  405.1010(c) and (d), providing that 
participants may file position papers or provide testimony to clarify 
factual or policy issues in a case, but may not call witnesses or 
cross-examine the witnesses of a party to the hearing, and may not be 
called as a witness itself, with the exception we are finalizing in 
Sec.  405.1010(d)(3) of this rule to allow CMS or a contractor that has 
been made a party to the hearing in accordance with Sec.  405.1012 to 
call as a witness CMS or another contractor that has been precluded 
from participating in the hearing. Further, Sec.  405.1010(c)(2), as 
finalized, now clarifies that a participant is also not subject to 
examination or cross examination by the parties and includes a new 
provision that clarifies that a party may rebut factual or policy 
statements made by a participant and the ALJ may question the 
participant about its testimony. Although the commenter suggests that 
contractor participants often do not follow the limitations on 
participation set by the regulations, including by voluntarily 
testifying as witnesses, we believe that the additional clarification 
in these provisions regarding the roles and responsibilities of CMS or 
a contractor as a participant will help ensure that participants only 
provide testimony to clarify factual or policy issues in a case. In 
circumstances in which a party believes that a participant is providing 
testimony outside of the scope of clarifying factual or policy issues, 
the party may raise the issue with the ALJ.
    Comment: Two commenters recommended that the rules clarify how an 
ALJ should proceed if a contractor fails to make an appearance at the 
hearing after notifying the ALJ and appellant(s) of its intention to be 
a participant or party to the oral hearing. The commenters recommended 
that if CMS or a contractor fails to appear at a hearing, ``no further 
participation or party status should be permitted for that entity.''
    Response: If CMS or a contractor is a party or participant to the 
oral hearing but does not appear at the scheduled time and place of the 
hearing after notice of the hearing has been provided, the hearing may 
proceed without that entity. While the involvement of CMS and/or a 
contractor in the hearing as either a participant or a party is 
permitted by Sec. Sec.  405.1010 and 405.1012, the regulations do not 
require or guarantee such participation or party status, and thus the 
election of participant or party status, and the extent of 
participation, is at the discretion of CMS and its contractors. We 
believe this is clear in the regulations as finalized at Sec. Sec.  
405.1010(a), 405.1012(a), and 423.2010(a), and that the regulations do 
not need to be further clarified in this regard. Therefore, we believe 
that if CMS or a contractor that has elected to

[[Page 5026]]

be a participant or a party at the hearing fails to appear at the 
hearing and notice of the hearing time and place has been duly 
provided, then the ALJ may proceed without that entity. Also, there is 
no provision that excludes the entity from further participation in the 
proceedings if there are opportunities for such participation, and we 
do not believe it would be appropriate to limit further participation 
after an election is made, as we believe that CMS and contractor 
participation may be beneficial and can assist in clarifying factual or 
policy issues in a case. In addition, there may be administrative 
reasons, including scheduling conflicts, which prevent an entity from 
appearing at the hearing at the last minute. For the same reasons 
discussed above, we believe that any position papers or written 
testimony that had been previously submitted in accordance with the 
time frames in Sec. Sec.  405.1010(c)(3) and 405.1012(c)(2) may still 
be considered by the ALJ.
    Comment: One commenter requested the rules be revised to add a 
requirement making CMS's or its contractor's attendance mandatory 
``when one of the issues in the hearing concerns that entity's 
violation or non-compliance with existing statute or CMS policy.'' The 
commenter suggested that by inviting CMS or its contractor to the 
hearing, the entities are given an opportunity to recognize that they 
are in violation and will have a chance of correcting the situation.
    Response: Section 405.1010(a)(2), as finalized in this rule, 
provides that an ALJ may request that CMS and/or one of its contractors 
participate in the proceedings before the ALJ, including the oral 
hearing, if any, but also provides that the ALJ may not require the 
participation and may not draw any adverse inferences if CMS or the 
contractor decides not to participate. These provisions carry forward 
policies in current Sec.  405.1010(a) and (f). The limited resources 
and broad programmatic responsibilities facing CMS and its contractors 
may not allow for participation or party status election in all 
appeals. We believe that CMS and its contractors must have some 
discretion in determining when election of participant or party status 
under Sec. Sec.  405.1010 and 405.1012 is most appropriate given those 
resources and other responsibilities. Finally, it is not clear what the 
commenter means when he suggests that ``one of the issues in the 
hearing concerns that entity's violation or non-compliance with 
existing statute or CMS policy.'' The ALJ scope of review is on the 
issues related to the appealed claim in accordance with Sec.  405.1032. 
If the appellant believes the claim was denied in error as a result of 
non-compliance with relevant authority, such as a statute or 
regulation, or authority that is owed substantial deference, such as 
LCDs and program memoranda, those arguments should be articulated for 
the ALJ to consider in adjudicating the appealed claim. It is not 
necessary that CMS or a contractor be present for the ALJ to consider 
that argument and make a de novo determination applying the authority. 
On the other hand, if the commenter is suggesting that CMS or a 
contractor needs to be present at hearing for the ALJ to explain to 
that entity why that entity's decision constituted a ``violation or 
non-compliance with existing statute or CMS policy,'' we do not agree 
that this is necessary because the ALJ's decision and rationale will be 
explained in the ALJ's written decision on the case, a copy of which is 
sent to the QIC in accordance with Sec.  405.1046(a)(1) as finalized in 
this rule, and therefore available to CMS and its contractors. OMHA 
ALJs are responsible for administering hearings to resolve coverage and 
payment disputes, not to provide CMS or contractor education, and we do 
not believe that mandating CMS or a contractor to attend the hearing to 
address the appellant's assertions furthers the hearing process.
    Comment: One commenter pointed out that under the proposed 
regulations no actual notice would be provided to CMS contractors when 
appeals are filed, and the ``30-day constructive notice window'' is the 
only opportunity for a contractor to participate in an appeal that 
could be assigned to an attorney adjudicator. The commenter stated that 
under the proposed rule, an ALJ hearing notice is the only actual 
notice to the contractors and the only opportunity for contractors to 
appear as parties. The commenter suggested that the proposed rule may 
be ``a step backward in the important area of program integrity.''
    Response: We do not agree with the commenter and believe that the 
rules as finalized make necessary clarifications in defining when and 
how CMS or its contractors may elect, or request (for Part D appeals), 
to participate in the proceedings on a request for an ALJ hearing. 
Current Sec.  405.1010 provides that CMS or its contractors may elect 
to be a participant within 10 calendar days of receiving the notice of 
hearing. Current Sec.  423.2010 requires CMS, the IRE, or the Part D 
plan sponsor to request participation no later than 5 calendar days 
after receipt of the notice of hearing for a non-expedited hearing, or 
1 calendar day after receipt of the notice of hearing for an expedited 
hearing. Neither current rule specifically addresses appeals for which 
a hearing is not scheduled. Sections 405.1010(b) and 423.2010(b), as 
finalized, clarify that CMS or its contractors may elect or request 
participant status in proceedings even if a hearing is not conducted or 
is not necessary, with the applicable limitations and timeframes to 
help ensure that an election or request is filed in a timely manner 
after notification that a request for hearing is filed. We believe 
that, as finalized, Sec. Sec.  405.1010(b) and 423.2010(b) provide 
necessary clarity for contractors in electing or requesting 
participation in appeals for which no hearing is scheduled, and in 
providing such clarification, may encourage additional participation in 
such proceedings and therefore support program integrity. In response 
to the commenter's concern that the only notice provided to CMS 
contractors when a request for hearing is filed is a constructive 
notice to the QICs, we note that OMHA and CMS plan to establish a 
process for notification to CMS contractors that a request for hearing 
has been filed, and we will communicate that process to the contractors 
after the effective date of the rule. As this is an internal process, 
we are not including this process in the regulations, because to do so 
would limit our flexibility to establish and change business processes 
and take advantage of emerging technologies through operational 
policies. The APA permits OMHA to adopt internal business processes 
without notice and comment rulemaking.
    Comment: One commenter asked OMHA to specify what sort of notice 
would be given to the Part D plan sponsor when no notice of hearing is 
issued, and what would be the acceptable forms of communication when 
the Part D plan sponsor elects to participate in the proceedings when 
no notice of hearing is required, including in appeals assigned to an 
attorney adjudicator.
    Response: OMHA and CMS plan to establish a process for notification 
to Part D plan sponsors that a request for hearing has been filed, and 
CMS will communicate that process to the Part D plan sponsors after the 
final rule becomes effective.
    In response to the commenter's question regarding acceptable forms 
of communication, Sec.  423.2010(b)(1), as finalized in this rule, 
provides that, if the Part D plan sponsor requests participation before 
it receives notice of hearing, or when no notice of hearing is 
required, the Part D Plan ``must send written notice of its request to

[[Page 5027]]

participate to the assigned ALJ or attorney adjudicator, or a designee 
of the Chief ALJ if the request is not yet assigned to an ALJ or 
attorney adjudicator, and the enrollee, except that the request may be 
made orally if a request for an expedited hearing was filed and OMHA 
will notify the enrollee of the request to participate.'' Written 
communication may be mailed or fax. However, faxes must be sent in 
accordance with procedures to protect personally identifiable 
information.
    Comment: We received two comments from CMS contractors noting that 
the initial opportunity to elect to be a participant in an appeal 
within 30 calendar days after notification that a request for hearing 
has been filed as set forth in proposed Sec.  405.1010(b)(3)(i) will 
require additional work and resources for those entities to monitor 
requests for hearings being filed with OMHA. One comment stated that 
the proposed rules create additional work that may not be productive 
because QICs will have to screen cases appealed to OMHA for potential 
participation election even though those cases may never be heard, may 
be dismissed on procedural grounds, or may be withdrawn before a 
hearing is scheduled, which is a larger number of cases than those 
currently screened by contractors upon receipt of an ALJ's notice of 
hearing. Another comment noted that although it is possible for DME 
MACs to locate cases that have been appealed beyond the QIC, the 
process of researching the lists of appealed cases and selecting cases 
for which an election of participation is desired is not part of those 
entities' normal work structure. Both comments noted that additional 
resources, including as one commenter indicated, increased 
``visibility'' of appeals filed at the OMHA level in the Medicare 
appeals case management system, and/or additional manpower, would be 
necessary to monitor cases appealed to OMHA. One comment stated that 
the DME MACs are only funded for small staffs to address ALJ appeals 
and may not have the resources to monitor and respond to the greater 
volume of appeals that may be anticipated after these rules are 
effective.
    Response: While Sec.  405.1010(b)(3)(i) as finalized in this rule 
may require increased coordination and perhaps shared resources among 
CMS and its contractors to monitor requests for hearing being filed at 
OMHA for possible participation election, we do not believe that these 
administrative concerns outweigh the benefits of Sec.  405.1010 as 
finalized in this rule, or that the final rules would impose 
unreasonable burdens on CMS or its contractors. We believe Sec.  
405.1010 as finalized adds necessary clarifications on CMS and 
contractor participation, and encourages participation in a greater 
number of appeals by clarifying that CMS and contractors may 
participate in appeals for which a hearing is not scheduled. However, 
Sec.  405.1010 as finalized does not require a contractor to make an 
election or request participation, so while participation is encouraged 
and permitted, the rules do not obligate CMS or its contractors to 
perform additional work or expend any additional resources. The limited 
resources and broad programmatic responsibilities facing CMS and its 
contractors likely will not allow for participation in all appeals, so 
CMS and its contractors will use their discretion in determining when 
election of participant status is most appropriate. With regard to the 
commenter's concern that electing participant status for cases that 
have not been scheduled for a hearing would be outside DME MACs' normal 
work structure, CMS will address modifications to systems, contractor 
coordination, and contractor resources in guidance outside of this 
rule. If necessary, after the final rule is effective, CMS will make 
the necessary contract modifications to account for the provisions of 
this final rule.
    Comment: Another comment from one of the entities that currently 
holds a QIC contract indicated that proposed Sec.  405.1010(b)(1) would 
create scheduling difficulties for contractors that may be electing to 
participate in a hearing before they receive notice of the hearing date 
and time. The commenter argued that even under the current rules, 
contractors often have to choose between cases for participation 
because hearing dates and times with different ALJs conflict or 
overlap. The commenter noted that in practical terms, there is a large 
amount of time between when a request for hearing is filed and eventual 
assignment and scheduling of a hearing, and that it would be extremely 
challenging, if not impossible, for the QIC to plan for attendance at a 
hearing of unknown date and time.
    Response: Although Sec.  405.1010(b)(1) as finalized in this rule 
permits CMS or a contractor to elect to participate in the proceedings 
on a request for an ALJ hearing before receipt of a notice of hearing 
or when a notice of hearing is not required, if a hearing is then 
scheduled, the participating entity is not obligated to attend the 
hearing and if it has not already filed a positon paper and/or written 
testimony, it may do so up to 5 calendar days prior to the hearing. 
Moreover, if a hearing is ultimately scheduled, any entity that has 
already elected to participate in the proceedings will receive a notice 
of hearing pursuant to Sec.  405.1020(c)(1) as finalized in this rule, 
and will have at that time notice of the scheduled hearing date and 
time. If the entity's schedule allows and the entity still wishes to 
participate at the oral hearing, it may file a response to the notice 
of hearing. If the scheduled hearing date and time does create a 
scheduling conflict for that entity, the entity may still elect to 
participate in the proceedings by submission of position papers or 
written testimony no later than 5 calendar days prior to the hearing, 
unless the ALJ grants additional time to submit the position paper or 
written testimony.
    Comment: One commenter requested clarification on the recourse 
available to a DME MAC if it elects to be a participant in an appeal 
and the hearing is scheduled for a date and/or time that contractor is 
unable to attend, and what effect the contractor's withdrawal from 
participation due to a schedule conflict would have on the decision of 
the ALJ or attorney adjudicator.
    Response: Consistent with Sec.  405.1020(e), CMS or a contractor 
that has elected participant status cannot request a change in the 
scheduled date or time of the hearing (unlike CMS or a contractor that 
has elected party status). However, the contractor may respond to the 
notice of hearing by indicating that it will not be able to attend due 
to a scheduling conflict without any adverse inference on the part of 
the ALJ as provided in Sec.  405.1010(a)(2), and submit a position 
paper and/or written testimony for consideration within the time frame 
set forth in Sec.  405.1010(c)(3).
    Comment: We received two comments, one from an entity that 
currently holds a QIC contract and one from the four entities that 
currently hold the DME MAC contracts, quoting the language in proposed 
Sec.  405.1010(b)(1) regarding how CMS or its contractors may make an 
election to participate ``when a notice of hearing is not required'' 
and indicating that it was unclear when a notice of hearing would not 
be required for a case.
    Response: Under our regulations as finalized in this rule, a notice 
of hearing is not required for any case in which an on-the-record 
decision may be issued pursuant to Sec.  405.1038, including: When an 
ALJ or attorney adjudicator determines the evidence in the record 
supports a finding fully in favor of the appellant(s) on every issue 
and no other party to the appeal is liable for claims at issue, unless 
CMS or a contractor has

[[Page 5028]]

elected to be a party pursuant to Sec.  405.1012 (as provided in Sec.  
405.1038(a)); when all parties who would be sent a notice of hearing 
indicate in writing that they do not wish to appear before an ALJ at a 
hearing (as provided in Sec.  405.1038(b)(1)(i)); when the appellant 
lives outside the United States and does not inform OMHA that he or she 
wants to appear at a hearing and there are no other parties who would 
be sent a notice of hearing and who wish to appear (as provided in 
Sec.  405.1038(b)(1)(ii)); or if CMS or one of its contractors submits 
a written statement or makes an oral statement at a hearing indicating 
that the item or service should be covered or payment may be made such 
that an ALJ or attorney adjudicator issues a stipulated decision in 
favor of the appellant or other liable parties (as provided in Sec.  
405.1038(c)).
    Comment: We received the following questions from the four entities 
that currently hold the DME MAC contracts regarding administrative and 
procedural mechanisms related to proposed Sec.  405.1010: (1) ``will 
the request for hearing contain a list of all parties to whom a 
response should be sent;'' (2) what mechanisms will be in place to 
assist with the assignment of cases to OMHA adjudicators in a timely 
manner; (3) how quickly after a request for hearing has been filed will 
it be assigned a firm hearing date; and (4) when and how will the DME 
MAC contractor become aware of that firm hearing date?
    Response: DME MACs would not typically receive a copy of an 
appellant's request for hearing (see Sec.  405.1014(d), as finalized in 
this rule). Furthermore, Sec.  405.1010(b)(1), as finalized in this 
rule, provides that if CMS or a contractor elects to participate in the 
proceedings before a notice of hearing is sent, or when a notice of 
hearing is not required, then the contractor must send written notice 
of its intent to participate to the assigned ALJ or attorney 
adjudicator, or a designee of the Chief ALJ if the appeal is not yet 
assigned, and the parties who were sent a copy of the notice of 
reconsideration. Therefore, we believe the commenter may have intended 
to ask whether the notice of reconsideration (as opposed to a request 
for hearing) contains a list of all parties to whom an election to 
participate would be sent under Sec.  405.1010(b)(1), as finalized in 
this rule. Under Sec.  405.976(a)(1)(i), the QIC generally sends notice 
of the reconsideration to all parties at their last known address, and 
current QIC practice involves listing all the parties to whom the 
notice of reconsideration was sent in either the address block or the 
courtesy copy section of the notice. Therefore, CMS or a CMS contractor 
need only look to the notice of reconsideration to determine which 
parties were sent a copy of the notice of reconsideration, and send a 
copy of its election to participate to the same parties.
    Proposed Sec.  405.1010 does not address the mechanisms for 
assignment of cases to OMHA adjudicators. OMHA's case assignment 
process is subject to the priority of the case (to help ensure appeals 
filed by beneficiaries are adjudicated as quickly as possible, OMHA 
designates these appeals as priority appeals, with some exceptions), 
OMHA's pending workload, and the availability of an adjudicator. More 
details on the OMHA case assignment process are available in the OCPM, 
which is accessible on the OMHA Web site (www.hhs.gov/omha). 
Contractors and others may determine whether a case has been assigned 
to an OMHA adjudicator and, if it is assigned, the assigned OMHA 
adjudicator, using AASIS, which also can be accessed through the OMHA 
Web site.
    Similarly, proposed Sec.  405.1010 does not address the length of 
time between when an appeal is filed and when a hearing date will be 
selected. The length of time between when an appeal is filed and when a 
hearing date is selected will vary based on how quickly the case is 
assigned to an OMHA ALJ, because only OMHA ALJs may conduct hearings, 
and the assigned ALJ's availability and docket of other cases. Because 
this time is subject to significant variation based on the stated 
factors, we cannot provide a generally applicable estimate.
    If and when a hearing is scheduled, the ALJ will issue a notice of 
hearing consistent with Sec.  405.1022 to the parties and other 
potential participants provided for in Sec.  405.1020(c), including, 
among others, to the QIC that issued the reconsideration and CMS or any 
contractor that the ALJ believes would be beneficial to the hearing. In 
consideration of the commenter's question regarding when and how the 
DME MAC will become aware of the hearing date if the request for 
hearing is only sent to the QIC that issued the reconsideration, DME 
MACs and other non-QIC contractors would be notified of the hearing 
date by the QIC that issues the reconsideration in accordance with CMS 
instructions to QICs for notifying other contractors of a scheduled ALJ 
hearing. However, we believe it is also appropriate for the notice of 
hearing to be sent to CMS or any contractor that elected to participate 
in the proceedings consistent with Sec.  405.1010(b), and we are 
revising our proposal at Sec.  405.1020(c)(1) to require this. Thus, a 
non-QIC contractor will receive notice of the hearing either directly 
from OMHA, if the contractor has elected to participate before receipt 
of a notice of hearing or if the ALJ believes the non-QIC contractor 
would be beneficial to the hearing, or it will receive notice of the 
hearing from the QIC if it elects to participate after notice of 
hearing is sent.
    Comment: We received one comment requesting clarification of the 
language in proposed Sec.  405.1012(a)(2), which in the commenter's 
opinion, suggests that an ALJ may request that CMS and/or one of its 
contractors be a party to a hearing requested by an unrepresented 
beneficiary. The commenter noted that although Sec.  405.1012(a)(1) 
expressly precludes CMS or its contractors from electing to be a party 
when a request for hearing is filed by an unrepresented beneficiary, 
the phrase ``and unless otherwise provided in this section'' suggests 
that an ALJ may request CMS or a contractor to be a party in hearings 
when the request is filed by an unrepresented beneficiary. The 
commenter requested that the language in proposed Sec.  405.1012(a)(2) 
expressly exclude the possibility that an ALJ may request CMS or its 
contractors to be a party in a hearing when the request for hearing is 
filed by an unrepresented beneficiary.
    Response: The ``unless otherwise provided in this section'' 
language in proposed Sec.  405.1012(a)(1) was added to address 
situations in which CMS or a CMS contractor elected to be a party but 
was precluded from being a party due to limitations on the number of 
CMS or CMS contractor parties in Sec.  405.1012(d), or due to an 
election that the ALJ determines is invalid under Sec.  405.1012(e). We 
agree that when the request for hearing is submitted by an 
unrepresented beneficiary, CMS and its contractors may not be a party 
at the hearing. This was our intent in current Sec.  405.1012(a) as 
well as our intent in proposed Sec.  405.1012(a)(2). Thus, we have 
revised the language in Sec.  405.1012(a)(2) as finalized in this rule 
to expressly state that an ALJ may request CMS or one of its 
contractors to be a party to a hearing unless the request for hearing 
is filed by an unrepresented beneficiary.
    Comment: We received one comment from a Recovery Auditor trade/
advocacy group that was submitted as a comment to proposed Sec. Sec.  
405.1008 and 423.2008, but was related to how proposed Sec. Sec.  
405.1010, 405.1012 and 423.2010 would impact CMS audit contractors' 
interests in hearings and their ability to

[[Page 5029]]

elect party status. The commenter noted that audit contractors have 
both contractual obligations under the draft Statement Work for the 
Recovery Audit Program to support their findings at hearings and a 
substantial interest in being permitted to offer a defense of their 
findings through oral testimony, cross examination, and attendance at 
the hearings. The commenter recommended that there should be a clear 
process for deciding which contractor should have primary 
responsibility for participating in hearings and suggested that the 
contractor who first denied the claim should be granted party status, 
with the subsequent contractors taking participant status. As an 
alternative, the commenter recommended that multiple entities should be 
permitted to elect to be a party to the hearing, and the ALJ could 
limit each party to only addressing issues that have not yet been 
addressed by the other parties. The commenter characterized the rules 
regarding electing party status in Sec.  405.1012 as a ``new process 
[that] would require frequent requests for leave, if audit contractors 
are not permitted to act as a party at the ALJ hearing level'' and 
stated that ``the requirement that an entity must seek permission from 
an ALJ to act as a party to a hearing imposes a cumbersome, time-
consuming step in the process, increasing the administrative burden on 
both CMS contractors and on ALJs.'' Finally, the commenter noted 
several concerns regarding timing of the election of party status and 
delays in audit contractors receiving the notice of hearing. The 
commenter indicated that the 10-day time limit for electing party 
status after the QIC receives the notice of hearing is unworkable 
because QICs frequently do not forward notices of hearings to the audit 
contractors within 10 calendar days. The commenter recommended that the 
window to elect party status be expanded to 20 calendar days and/or 
that QICs should be required to forward all notices of hearings to the 
audit contractors in a timely fashion, and failure by the QICs to do so 
should result in an extension in the time that audit contractors have 
to elect party status. Alternatively, the commenter recommended that 
ALJs should be required to notify audit contractors of all ALJ hearings 
directly. The comment noted that if QICs, which may receive the notice 
of hearing first, preemptively elect party status before the audit 
contractors receive notice of a hearing, audit contractors would be 
prevented from participating at the hearing, and such exclusion would 
make it difficult for audit contractors to satisfy their contractual 
obligations and raises due process concerns.
    Response: We believe that the rules we are finalizing on CMS and 
contractor participant and party status strike an appropriate balance 
between administrative efficiency and obtaining as much information as 
possible for the ALJ to render a decision on the matter. In addition, 
we believe that Sec. Sec.  405.1010, 405.1012, and 423.2010, as 
finalized in this rule, continue to allow for effective participation 
in the ALJ hearing process for QICs and other contractors consistent 
with 1869(c)(3)(J) of the Act and current Sec. Sec.  405.1010 and 
405.1012, as further discussed below.
    Section 405.1012(d)(1), as finalized in this rule, limits party 
status at the oral hearing to the first entity to elect party status 
after the notice of hearing is issued, but any other entity that filed 
an election for party status is made a participant in the proceedings 
under proposed Sec.  405.1010 (subject to Sec.  405.1010(d)(1) and 
(3)), and may file a position paper and/or written testimony to clarify 
factual or policy issues in the case. We believe that allowing a 
contractor that is precluded from being a party to the hearing to file 
positions papers and/or written testimony still provides the contractor 
with a meaningful opportunity to participate in the proceedings. As we 
explained in the proposed rule, we considered alternatives to the first 
to file provision in proposed Sec.  405.1012(d)(1). However, we believe 
that providing that the first entity to elect party status be made a 
party to the hearing is an administratively efficient and objective 
method of determining which contractor will be made a party to the 
hearing if more than one entity makes a party election. We do not agree 
with the commenter that the first contractor to deny the claim is 
necessarily the best entity or the most beneficial entity to have at 
the hearing. In some cases, subsequent contractors may have resolved 
the issue identified by the first contractor and further developed the 
record, and that subsequent contractor may have a more current 
understanding of the issues on appeal and the facts. In addition, when 
multiple contractors would be necessary for a full examination of the 
matters at issue, Sec. Sec.  405.1010(d)(3) and 405.1012(d)(2) as 
finalized could be used by the ALJ to grant leave to a precluded entity 
to participate in the oral hearing or to be a party to the hearing, 
respectively. Although the commenter suggested that as an alternative, 
multiple parties should always be permitted to participate at the oral 
hearing and the ALJ could use his or her discretion to limit testimony 
and argument as necessary, we believe that the process finalized in 
this final rule is more efficient and provides more clarity regarding 
expectations.
    We also disagree with the commenter's characterization of the 
process for CMS or its contractor to elect to be a party to the hearing 
as ``new'' to the extent that Sec.  405.1012(b), as finalized in this 
rule, follows the same process in current Sec.  405.1012(b) for 
electing party status by sending written notice of intent to be a party 
to the hearing to the ALJ and the parties identified in the notice of 
hearing, which includes the appellant. Although Sec.  405.1012(d), as 
finalized in this rule, places a new limitation on the number of 
contractors who have elected to be a party that may participate in the 
oral hearing, unless the ALJ grants leave to an entity to also be a 
party to the hearing, we do not believe this process imposes an 
additional administrative burden or time-consuming step. Section 
405.1012(d)(2) states that if CMS or a contractor is precluded under 
the rules from being a party to a hearing, an ALJ may grant leave for 
CMS or a contractor to be a party to the hearing if the ALJ determines 
that the entity's participation as a party is necessary for a full 
examination of the matters at issue. We disagree that this 
determination by the ALJ imposes any cumbersome, time-consuming, or 
administratively burdensome requirements on CMS of its contractors. 
While the commenter has characterized the process as requiring that 
entities ``seek permission from the ALJ to act as a party to the 
hearing,'' we do not agree that Sec.  405.1012(d)(2), as finalized in 
this rule, necessarily requires any additional filings or actions from 
the entity other than the written notice of intent to participate as a 
party provided for in Sec.  405.1012(b).
    With respect to the commenter's concern regarding audit 
contractors' ability to meet contractual obligations, including the 
concern that QICs may preemptively elect party status and preclude 
participation or party status for audit contractors, we direct the 
commenter to our response to a similar comment above that was submitted 
by a QIC. As we noted above, after the final rule is effective, we 
intend to issue sub-regulatory guidance, including educational 
materials and contractual modifications that will establish processes 
to accommodate the regulatory changes and help ensure contractor 
understanding of roles and responsibilities. These processes will 
relate to timely notice, information

[[Page 5030]]

sharing, and coordination among affected contractors that may have an 
interest in participating in the same hearing. In addition, we intend 
to update the Joint Operations Agreements to capture contractor roles 
and establish timeframes. CMS intends to make any necessary 
modifications to its contractors' statements of work and contracts to 
require coordination among the multiple contractors who may have an 
interest in electing participant and/or party status in the same 
hearing.
    Finally, we recognize that there may be some delay in certain 
contractors' receipt of the notice of hearing as it is processed 
through the QICs. However, we believe that the 10 calendar day time 
frame still provides adequate time to give notice to all contractors. 
The timeframe for forwarding a notice of hearing is reflected in the 
QIC contracts. CMS will take steps to help ensure that the QICs and 
other contractors follow the applicable regulations and contractual 
requirements. Because the QICs' contractual obligations already reflect 
a workable timeframe, and because CMS will take steps to help ensure 
that the QICs follow those contractual obligations, we do not agree 
that the first two alternatives suggested by the commenter--revising 
the regulations to extend the time frame to elect party status to 20 
days or extending the timeframe to elect party status if a QIC fails to 
timely notify contractors of the receipt of a notice of hearing--are 
necessary. We believe that the commenter's third suggestion of 
requiring that OMHA always send the notice of hearing to all 
contractors places an unnecessary administrative burden on OMHA and 
would duplicate the process for notifying the various contractor 
entities that is already managed by CMS through the QICs' contracts. As 
we noted above, after the final rule is effective, we intend to issue 
sub-regulatory guidance that will establish processes to accommodate 
the regulatory changes. CMS will begin the process of modifying 
contract provisions with regards to notices of hearing after the 
effective date of this final rule. In addition, we note that any 
contractor, including an audit contractor, that has elected to 
participate in the proceedings on a request for an ALJ hearing under 
Sec.  405.1010 will receive notice of a hearing, if one is scheduled, 
directly from OMHA pursuant to Sec.  405.1020(c)(1) as finalized in 
this rule.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec. Sec.  405.1010, 405.1012, and 423.2010 as 
proposed, with the following modifications. We are adding a requirement 
in Sec. Sec.  405.1010(c)(3)(ii), 405.1012(c)(2)(ii) and 
423.2010(d)(3)(ii) that copies of position papers and/or written 
testimony (and for purposes of Sec.  405.1012(c)(2)(ii), any evidence) 
submitted to OMHA must be sent to the other parties within the same 
timeframes that apply to the submissions to OMHA. In addition, we are 
adding language to Sec.  405.1010(d)(3) to state that if the ALJ does 
not grant leave to the precluded entity to participate in the oral 
hearing, the precluded entity may still be called as a witness by CMS 
or a contractor that is a party to the hearing in accordance with Sec.  
405.1012. To accommodate this change, we are also revising Sec.  
405.1010(c)(2) to state that when CMS or its contractor participates in 
an ALJ hearing, CMS or its contractor may not be called as a witness 
during the hearing and is not subject to examination or cross-
examination by the parties, except as provided in Sec.  405.1010(d)(3). 
We are also adding clarifying language in Sec.  405.1012(a)(2) that an 
ALJ may not request that CMS and/or one or more of its contractors be a 
party to the hearing if the request for hearing was filed by an 
unrepresented beneficiary. Finally, we are correcting a drafting error 
in the text of proposed Sec.  405.1010(c)(3)(i) by replacing ``by 
within 14 calendar days'' with ``within 14 calendar days.''
g. Request for an ALJ Hearing or Review of a QIC or an IRE Dismissal 
(Sec. Sec.  405.1014 and 423.2014)
    Sections Sec. Sec.  405.1014 and 423.2014 explain the requirements 
for requesting an ALJ hearing, including what must be contained in the 
request, when and where to file the request, the extension of time to 
request a hearing, and in Sec.  405.1014 to whom a copy of the request 
for hearing must be sent. We proposed to restructure the sections, 
clarify and provide additional instructions, and address other matters 
that have caused confusion for parties and adjudicators. 81 FR 43790, 
43816-43820.
i. Requirements for a Request for Hearing or Review of a QIC or an IRE 
Dismissal
    We proposed to revise the title and provisions of Sec. Sec.  
405.1014 and 423.2014 to more clearly cover a request for a review of a 
QIC or IRE dismissal. While the current requirements for requesting an 
ALJ hearing are generally used for requesting a review of a QIC or IRE 
dismissal in form HHS-725, we stated in the proposed rule that we 
believe that explicitly extending Sec. Sec.  405.1014 and 423.2014 to 
cover requests for these types of review would provide clarity to 
parties and adjudicators on the requirements for requesting a review of 
a QIC or IRE dismissal. As such, we proposed in the title to Sec.  
405.1014 and in subsection (a)(1) (current subsection (a)) to add ``or 
a review of a QIC dismissal'' after ``ALJ hearing,'' and in subsection 
(c) (current subsection (b)) to delete ``after a QIC reconsideration'' 
and add ``or request for review of a QIC dismissal'' after ``an ALJ 
hearing.'' Similarly, we proposed in the title to Sec.  423.2014 and in 
subsection (a)(1) (current subsection (a)) to add ``or a review of an 
IRE dismissal'' after ``ALJ hearing,'' and in subsection (d) (current 
subsection (c)) to add ``or request for review of an IRE dismissal'' 
after ``IRE reconsideration.''
    We proposed in Sec.  405.1014(a)(1)(i) through (a)(1)(vi) to 
incorporate current Sec.  405.1014(a)(1) through (a)(6) with revisions. 
In addition to the current requirements in subsection (a)(1), we 
proposed in Sec.  405.1014(a)(1)(i) to require the beneficiary's 
telephone number if the beneficiary is the filing party and is not 
represented. We stated in the proposed rule that this would help ensure 
that OMHA is able to make timely contact with the beneficiary to 
clarify his or her filing, or other matters related to the adjudication 
of his or her appeal, including scheduling the hearing. We proposed in 
Sec.  405.1014(a)(1)(ii) to require the appellant's telephone number, 
along with the appellant's name and address as currently required in 
subsection (a)(2), when the appellant is not the beneficiary, and in 
Sec.  405.1014(a)(1)(iii) to require a representative's telephone 
number, along with the representative's name and address which is 
currently included in subsection (a)(3), if a representative is 
involved. Like the beneficiary telephone number requirement, we stated 
that these requirements would help ensure that OMHA is able to make 
timely contact with a non-beneficiary appellant and any representative 
involved in the appeal to clarify the filing or other matters related 
to the adjudication of the appeal, including scheduling the hearing. 
Current subsection (a)(4) states that the request must include the 
document control number assigned to the appeal by the QIC, if any. We 
proposed in Sec.  405.1014(a)(1)(iv) to require the Medicare appeal 
number or document control number, if any, assigned to the QIC 
reconsideration or dismissal notice being appealed, to reduce confusion 
for appellants. We proposed in Sec.  405.1014(a)(1)(v) to add

[[Page 5031]]

language to the current language in subsection (a)(5), so that instead 
of requiring the ``dates of service,'' we would require the ``dates of 
service for the claims being appealed, if applicable,'' because an 
appellant may appeal some but not all of the partially favorable or 
unfavorable claims in a QIC reconsideration and a small number of 
appeals do not involve a date of service (for example, entitlement 
appeals). We proposed to incorporate the same language in current 
subsection (a)(6) into proposed subsection (a)(1)(vi).
    We proposed to add a new requirement to the content of the request 
in Sec.  405.1014(a)(1)(vii) by requiring a statement of whether the 
filing party is aware that it or the claim is the subject of an 
investigation or proceeding by the OIG or other law enforcement 
agencies. We stated that this information is necessary to assist OMHA 
staff in checking whether the provider or supplier was excluded from 
the program on the date of service at issue prior to scheduling a 
hearing or issuing a decision, as well as for the ALJ to determine 
whether to request the participation of CMS or any program integrity 
contractors that may have been involved in reviewing the claims below. 
However, we noted that the information is only required if the filing 
party is aware of an investigation and proceeding, and the information 
would not be the basis for a credibility determination on evidence or 
testimony, as an investigation or allegations prior to findings of 
wrongdoing by a court of competent jurisdiction are not an appropriate 
foundation for credibility determinations in the context of part 405, 
subpart I administrative appeals.
    As discussed in section III.A.3.d of the proposed rule and II.B.3.d 
of this final rule above, we proposed changes to the methodology for 
calculating the amount in controversy required for an ALJ hearing to 
better align the amount in controversy with the actual amount in 
dispute. We also proposed new Sec.  405.1014(a)(1)(viii) to require 
that providers, suppliers, Medicaid State agencies, applicable plans, 
and beneficiaries represented by a provider, supplier, or Medicaid 
State agency include in their request for hearing the amount in 
controversy applicable to the disputed claim, as specified in Sec.  
405.1006(d), unless the matter involves a provider or supplier 
termination of Medicare-covered items or services that is disputed by a 
beneficiary, and the beneficiary did not elect to continue receiving 
the items or services. As we discussed in section III.A.3.d of the 
proposed rule and II.B.3.d of this final rule above, we stated that in 
instances where the Medicare allowable amount would serve as the basis 
for the amount in controversy (which we believe would be the majority 
of Part B appeals), we believe providers, suppliers, and Medicaid State 
agencies would be able to utilize existing CMS tools and resources to 
determine the allowable amount used as the basis for the amount in 
controversy under proposed Sec.  405.1006(d)(2)(i)(A) and arrive at the 
amount in controversy after deducting any Medicare payments that have 
already been made or awarded and any deductible and/or coinsurance that 
may be collected for the items and services in the disputed claim. In 
addition, we stated that we believe that providers, suppliers, 
applicable plans, and Medicaid State agencies also would have access to 
the billing, payment and other necessary information to calculate the 
amount in controversy under other provisions of Sec.  405.1006(d). For 
scenarios where the basis for the amount in controversy would be 
calculated in accordance with proposed Sec.  405.1006(d)(2)(i)(B), 
(ii), (iii), or where the amount in controversy would be calculated in 
accordance with Sec.  405.1006(d)(3), (5), (6), or (7), we discussed in 
section III.A.3.d of the proposed rule and II.B.3.d of this final rule 
above how appellants would determine the amount in controversy in order 
to include it on their request for hearing. However, we stated that 
because we believe there may be instances where a beneficiary who is 
not represented by a provider, supplier, or Medicaid State agency may 
not have the information necessary to determine the amount in 
controversy under Sec.  405.1006(d) (as discussed above), we did not 
propose to require beneficiaries who are not represented by a provider, 
supplier, or Medicaid State agency to include the amount in controversy 
in their requests for hearing. Furthermore, as noted above, we did not 
propose that any appellant include the amount in controversy on 
requests for hearing where the amount in controversy would be 
calculated in accordance with Sec.  405.1006(d)(4) (for a provider or 
supplier termination of Medicare-covered items or services that is 
disputed by a beneficiary, and the beneficiary did not elect to 
continue receiving the items or services). We stated that we expected 
in this situation, a beneficiary could easily determine whether the 
minimum amount in controversy required for an ALJ hearing would be met 
through a conversation with the provider or supplier, or from the 
statement we proposed that the QIC include in its notice of 
reconsideration as discussed in section III.A.3.d of the proposed rule 
and II.B.3.d of this final rule above. However, we stated that we 
believe the exact amount in controversy could be difficult to determine 
because it may depend on unknown factors, such as the length of 
continued services that may be required, and so we are not requiring 
appellants to include this amount in the request for hearing.
    Lastly, we proposed that current Sec.  405.1014(a)(7), which 
requires a statement of any additional evidence to be submitted and the 
date it will be submitted, would be separately designated in its 
entirety as proposed Sec.  405.1014(a)(2) because the information in 
proposed Sec.  405.1014(a)(1) must be present for a request for hearing 
to be processed and therefore would make the request subject to 
dismissal if the information is not provided, as discussed below. In 
contrast, we stated that the information in proposed Sec.  
405.1014(a)(2) is only necessary if evidence would be submitted and 
would not make the request subject to dismissal if not present in the 
request.
    Similar to proposed Sec.  405.1014(a), we proposed at Sec.  
423.2014(a)(1)(i) through (a)(1)(vi) to incorporate current Sec.  
423.2014(a)(1) through (a)(6) with revisions. Current subsection (a)(3) 
states that the request must include the appeals case number assigned 
to the appeal by the IRE, if any. We proposed in Sec.  
405.1014(a)(1)(iii) to revise the requirement to state that the request 
must include the Medicare appeal number, if any, assigned to the IRE 
reconsideration or dismissal being appealed, to reflect the terminology 
used by the IRE and thereby reduce confusion for enrollees. Current 
subsection (a)(6) states that the request must include the reasons the 
enrollee disagrees with the IRE's reconsideration. We proposed to 
insert ``or dismissal'' after ``reconsideration'' to again reflect the 
terminology used by the IRE and thereby reduce confusion for enrollees. 
For the same reasons as we proposed for Sec.  405.1014(a)(1)(vii), we 
proposed at Sec.  423.2014(a)(1)(vii) to require a statement of whether 
the enrollee is aware that he or she, or the prescription for the drug 
being appealed, is the subject of an investigation or proceeding by the 
OIG or other law enforcement agencies. In addition, we proposed at 
Sec.  423.2014(a)(2) to incorporate the current Sec.  423.2014(a)(7) 
requirement to include a statement of any additional evidence to be 
submitted and the date it will be submitted, and at Sec.  
423.2014(a)(3) to incorporate the current Sec.  423.2014(a)(8) 
requirement to include a statement that the enrollee is

[[Page 5032]]

requesting an expedited hearing, if applicable.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: Several commenters objected to the introduction of 
proposed Sec.  405.1014(a)(1)(vii), stating that it would be unduly 
burdensome to require appellants to disclose any and all investigations 
and proceedings by any law enforcement agency, particularly for large 
providers such as hospital systems where the proceeding or 
investigation may relate to a different facility or be otherwise 
unrelated to the claims on appeal. In addition, the commenters 
indicated that the requirement was unclear with respect to whether a 
multi-hospital system would be considered subject to, and therefore 
required to disclose, an investigation of a single hospital within the 
system. The commenters also stated that it was unclear which individual 
in the appellant organization must be aware of the investigation or 
proceeding to trigger the obligation to disclose, for instance, whether 
an individual in the hospital's claims department would be obligated to 
report information that was known to the hospital's legal department. 
Further, the commenters expressed concern that the existence of a 
pending investigation, which has not yet determined any wrongdoing, has 
the potential to unfairly prejudice the adjudicator, who should instead 
be focused on the merits of the specific claims on appeal. In addition, 
the commenters stated that there could be instances in which an 
individual is unable to disclose a proceeding pursuant to a court 
order.
    Response: While we continue to believe that adjudicators in the 
claim appeals process should have information related to systemic 
issues with appellants that may have a bearing on the credibility of 
evidence or testimony presented to the adjudicator in an individual 
claim appeal, we believe the commenters have raised valid questions and 
concerns with proposed Sec.  405.1014(a)(1)(vii) (which would require 
appellants to disclose pending investigations or proceedings), that we 
believe require further consideration. Therefore, we are not finalizing 
proposed Sec. Sec.  405.1014(a)(1)(vii) or 423.2014(a)(1)(vii) at this 
time.
    Comment: Two commenters suggested allowing beneficiaries to furnish 
an email address instead of, or in addition to, a telephone number on 
the request for hearing because beneficiaries may not have immediate or 
consistent access to a telephone.
    Response: If the filing party is an unrepresented beneficiary, we 
proposed to require the beneficiary's telephone number to help ensure 
that OMHA is able to make timely contact with the beneficiary to 
clarify his or her filing, or other matters related to the adjudication 
of his or her appeal, including scheduling the hearing. We believe that 
the majority of beneficiaries will be able to provide a telephone 
number where they can be contacted by OMHA, or receive voicemail 
messages regarding their appeal. However, if a beneficiary indicates 
that he or she does not have a telephone number (for example, by 
writing ``none'' or ``n/a'' as his or her telephone number on the 
request for hearing or request for review of a QIC or IRE dismissal), 
the request will not be dismissed as incomplete because the beneficiary 
provided information related to the telephone number, even though an 
actual telephone number was not provided. To ensure that a 
beneficiary's personally identifiable information is protected, any 
electronic communication between OMHA and a beneficiary would need to 
be conducted via secure email or a secure portal; however, these 
technologies are not currently available for use by OMHA staff. 
Consequently, we believe it is reasonable to require a telephone number 
as the general rule, and address situations in which a beneficiary does 
not have a telephone number on an individual basis.
    Comment: Three commenters opposed requiring appellants to provide 
the amount in controversy on the request for hearing, arguing that it 
would increase the burden on appellants and it would be difficult for 
appellants without access to billing information, such as Medicaid 
State agencies, to calculate the amount in controversy.
    Response: As discussed in section II.B.3.d above, we are not 
finalizing our proposal to use the Medicare allowable amount as the 
basis for the amount in controversy for appeals of claims that are 
priced based on a published Medicare fee schedule or published 
contractor-priced amount. Because we will generally be retaining the 
existing methodology for calculating the amount in controversy under 
Sec.  405.1006(d), subject to certain revisions and the exceptions in 
Sec.  405.1006(d)(2) through (6) as finalized, we believe the 
information necessary to calculate the amount in controversy will be 
available in the record and ALJs can continue, as they do now, 
determining whether the amount in controversy was met on the basis of 
that information. Accordingly, we are not finalizing proposed Sec.  
405.1014(a)(1)(viii) to require that providers, suppliers, Medicaid 
State agencies, applicable plans, and beneficiaries represented by a 
provider, supplier, or Medicaid State agency include in their request 
for hearing the amount in controversy applicable to the disputed claim.
    Comment: Two commenters suggested that OMHA should be prohibited 
from dismissing a timely filed request for hearing due to missing 
information, such as when an appellant provides incorrect dates of 
service. The commenters also suggested that the request for hearing 
form should be simplified to avoid deterring appeals by unrepresented 
beneficiaries. One commenter added that increasing the burden on 
appellants by requiring additional information in the request for 
hearing makes it harder for appellants to exercise their rights.
    Response: We disagree with the commenters' suggestion that requests 
for hearing should not be dismissed if an appellant does not provide 
the required information. A complete request, consistent with 
Sec. Sec.  405.1014 and 423.2014, provides OMHA with the minimum 
information necessary to process the request, identify the claims on 
appeal, and schedule a hearing if necessary, as efficiently as 
possible. In addition, if any of the required information is not 
included in a request, the appellant will be given the opportunity to 
provide the information, as discussed below in section II.B.3.g.iii of 
this final rule, before the request may be dismissed (see Sec. Sec.  
405.1014(b)(1) and 423.2014(c)(1) as finalized). As further discussed 
below in section II.B.3.x of this final rule, the proposal clarifying 
the ability to dismiss a request due to missing information will 
prevent an appeal from remaining pending indefinitely if an appellant 
has demonstrated an unwillingness to provide the information necessary 
to complete the request. In addition, we believe the information 
required in the regulations for a complete request for hearing or 
request for review of a QIC or IRE dismissal will not deter appeals by 
unrepresented beneficiaries or other appellants. We do not believe 
Sec. Sec.  405.1014(a) and (b) and 423.2014(a) and (b), as finalized, 
would create additional burdens as compared to the current rule, except 
for requiring a telephone number for the beneficiary, appellant, and 
that party's representative (as discussed above, other proposed 
information requirements for filing a request are not being made 
final). Instead, the final regulations clarify the information 
requirements for requesting a hearing or

[[Page 5033]]

review of a QIC or IRE dismissal and the process for resolving missing 
information, thereby reducing confusion for appellants and, ultimately, 
reducing the number of requests that are dismissed as incomplete.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec. Sec.  405.1014 and 423.2014 as proposed, with the 
following exceptions. We are not finalizing proposed Sec. Sec.  
405.1014(a)(1)(vii), (viii), and 423.2014(a)(1)(vii).
ii. Requests for Hearing Involving Statistical Sampling and 
Extrapolations
    We proposed to add new Sec.  405.1014(a)(3) to address appeals in 
which an appellant raises issues regarding a statistical sampling 
methodology and/or an extrapolation that was used in making an 
overpayment determination. We stated in the proposed rule that OMHA has 
encountered significant issues when an appellant challenges aspects of 
a statistical sampling methodology and/or the results of extrapolations 
in separate appeals for each sampled claim involved in the statistical 
sampling and/or extrapolation. We stated that appeals often need to be 
reassigned to avoid multiple adjudicators addressing the challenges to 
the statistical sampling methodology and/or extrapolation, and any 
applicable adjudication time frames that attach to the individual 
appeals. Under proposed Sec.  405.1014(a)(3), if an appellant is 
challenging the statistical sampling methodology and/or extrapolation, 
the appellant's request for hearing must include the information in 
proposed Sec.  405.1014(a)(1) and (a)(2) for each sample claim that the 
appellant wishes to appeal, be filed within 60 calendar days of the 
date that the party received the last reconsideration for the sample 
claims (if they were not all addressed in a single reconsideration), 
and assert the reasons the appellant disagrees with the statistical 
sampling methodology and/or extrapolation in the request for hearing. 
We stated in the proposed rule that we believed it would be appropriate 
in this situation to allow the appellant's request for hearing to be 
filed within 60 calendar days of the date that the party received the 
last reconsideration for the sample claims (if they were not all 
addressed in a single reconsideration), because if the appellant also 
wishes to challenge the statistical sampling methodology and/or 
extrapolation, the appellant would wait to file a request for hearing 
until all of the QIC reconsiderations for the sample units are 
received, which could be more than 60 calendar days after the first 
received QIC reconsideration of one of the sample claims. We also 
stated that the 60 calendar day period in proposed Sec.  
405.1014(a)(3)(ii) would begin on the date the party receives the last 
reconsideration of a sample claim, regardless of the outcome of the 
claim in the reconsideration or whether the sample claim is appealed in 
the request for hearing. We stated we believed proposed Sec.  
405.1014(a)(3) would balance the party's rights to request a hearing on 
individual claims when only the sample claims are appealed, with the 
needs to holistically address issues related to statistical sampling 
methodologies and extrapolations when those determinations are also 
challenged. We did not propose any corresponding changes to Sec.  
423.2014 because sampling and extrapolation are not currently used in 
Part D appeals.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: Several commenters supported the proposal to allow 
appellants to file a single request for hearing that includes all of 
the sample claims the appellant wishes to appeal when the sample claims 
were adjudicated in separate reconsiderations and the appellant is also 
challenging the sampling methodology and/or extrapolation, so that all 
of the sample claims and related issues are before the same 
adjudicator. Two of the commenters specifically noted that revising the 
time frames to allow an appellant to wait to file a request for hearing 
until the appellant receives the last reconsideration for the sample 
claims without losing the right to appeal earlier-decided claims will 
conserve time and resources for both appellants and OMHA.
    Response: We thank the commenters for their support.
    Comment: One commenter stated that the requirement to include 
information for each sample claim in the request for hearing is too 
vague and does not provide adequate guidance as to what must be 
provided, potentially resulting in more requests for hearings being 
dismissed as incomplete. The commenter further stated that it would be 
difficult to summarize the expert analyses required for statistical 
sampling challenges in a manner suitable for a request for hearing.
    Response: With respect to the individual claim information that 
must be included in a request for hearing, we do not believe that the 
standard is vague and will result in an increased number of dismissals 
due to incomplete requests. Under Sec.  405.1014(a)(3)(i) as finalized 
in this rule, if an appellant is challenging the statistical sampling 
methodology and/or extrapolation, the request for hearing must include 
all of the information in Sec.  405.1014(a)(1) and (a)(2) for each 
sample claim that the appellant wishes to appeal. This individual claim 
information is necessary for OMHA to identify the claims on appeal and 
process the request for hearing. We note that some of the required 
information may be the same for all of the sample claims, such as the 
provider or supplier information, or the Medicare appeal number if the 
claims were all part of the same reconsideration. Because all of the 
sample claims must be appealed together under Sec.  405.1014(a)(3) as 
finalized, any redundant information would only need to be provided 
once for the request for hearing to be considered complete, and would 
not need to be listed separately for each claim so long as it is 
apparent from the request that the information provided applies to all 
of the appealed claims.
    Section 405.1014(a)(3)(iii), as finalized, requires an appellant to 
include in the request for hearing the reasons the appellant disagrees 
with the statistical sampling methodology and/or extrapolation. If an 
appellant is unable to summarize the reasons he or she disagrees with 
the statistical sampling methodology and/or extrapolation in a format 
suitable for a request for hearing, the appellant may choose to attach 
a position paper or other documentation to the request for hearing to 
better explain the reasons for the challenge. We also note that the 
requirement to include the reasons the appellant disagrees with how the 
statistical sample and/or extrapolation was conducted does not limit 
the appellant's ability to provide additional information or arguments 
during the course of the appeal. The requirement, which is similar to 
the existing requirement in Sec.  405.1014 to state the reasons the 
appellant disagrees with the QIC's reconsideration or other 
determination being appealed, provides the adjudicator with information 
on the appellant's basis for the appeal and is necessary to evaluate 
the record and prepare for the hearing. Moreover, a request for hearing 
may not be dismissed as incomplete based on the strength of the 
appellant's reasons for disagreeing with the statistical sampling 
methodology and/or extrapolation; a dismissal for an incomplete request 
would only result if no reason were provided, and only after an 
opportunity to cure the request had been provided,

[[Page 5034]]

as provided at Sec.  405.1014(b)(1) as finalized.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
Sec.  405.1014(a)(3) as proposed without modification.
iii. Opportunity To Cure Defective Filings
    There has been considerable confusion on the implications of not 
providing the information required by current Sec.  405.1014(a) in 
order to perfect a request for hearing, and significant time and 
resources have been spent on this procedural matter by parties, OMHA, 
and the Council. To provide clearer standards and reduce confusion, we 
proposed in Sec.  405.1014(b)(1) that a request for hearing or request 
for a review of a QIC dismissal must contain the information specified 
in proposed Sec.  405.1014(a)(1) to the extent the information is 
applicable, in order to be considered a complete request, and that any 
applicable adjudication time frame will not begin until the request is 
complete because the missing information is necessary to the 
adjudication of the appeal. We proposed in Sec.  405.1014(b)(1) to also 
provide an appellant with an opportunity to complete any request found 
to be is incomplete. However, we proposed that if the appellant fails 
to provide the information necessary to complete the request in the 
time frame provided, the incomplete request would be dismissed in 
accordance with proposed Sec.  405.1052(a)(7) or (b)(4). In order to 
reinforce the concept that an appellant's request and supporting 
materials is considered in its totality, we also proposed at Sec.  
405.1014(b)(2) to allow for consideration of supporting materials 
submitted with a request when determining whether the request is 
complete, provided the necessary information is clearly identifiable in 
the materials. For example, we stated in the proposed rule that if an 
appellant were to submit a request for hearing and included a copy of 
the QIC reconsideration, the Medicare appeal number on the QIC 
reconsideration would generally satisfy the subsection (a)(1)(iv) 
requirement because it clearly provides the required information. 
However, if there are multiple claims in the QIC reconsideration, the 
same document possibly would not satisfy subsection (a)(1)(v) because 
the appellant is not required to appeal all partially favorable or 
unfavorable claims, and subsection (a)(1)(v) requires the appellant to 
indicate the dates of service for the claims that are being appealed. 
Similarly, we stated that including medical records only for the dates 
of service that the appellant wishes to appeal would generally not 
satisfy subsection (a)(1)(v) because it would be unclear whether the 
appellant intended to limit the appeal to only those dates of service 
for which medical records were included, or those were the only dates 
of service for which the appellant had medical records. We proposed 
that the provisions of proposed Sec.  405.1014(b) also be adopted in 
proposed Sec.  423.2014(c) for requesting an ALJ hearing or a review of 
an IRE dismissal in Part D appeals.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment on these proposals. The commenter 
supported the proposal to deem a request complete if supporting 
materials submitted with the request clearly provide the required 
information. The commenter encouraged HHS to afford unrepresented 
beneficiaries as much flexibility and leniency as possible when 
applying the requirement to submit a complete request for hearing. To 
that end, the commenter suggested that OMHA should clearly identify any 
missing information and offer guidance as to where to locate the 
missing information.
    Response: As discussed above and in section III.A.3.g.iii of the 
proposed rule, there has been considerable confusion and considerable 
time spent on procedural matters concerning the requirements for a 
request for hearing to be considered complete. We believe that allowing 
for consideration of supporting materials submitted with a request when 
determining whether the request is complete, and providing appellants 
with an opportunity to complete the request if the request is not 
complete, would provide clearer standards and reduce confusion for all 
appellants, including unrepresented beneficiaries, with respect to the 
standards used to determine whether a request is complete. Providing 
appellants with an opportunity to complete a request for hearing when 
required information is missing would necessarily involve clearly 
identifying the missing information for the appellant. Currently, when 
a request for hearing is missing required information, OMHA sends the 
appellant a ``Request for Hearing Deficiency Notice'' that specifies 
the information that must be provided to complete the request and the 
time frame in which to respond (generally 60 calendar days). This 
practice helps ensure that appellants will have an opportunity to 
provide any missing information before a request is dismissed as 
incomplete, and this practice would continue under the final rule.
    Allowing for consideration of supporting materials when determining 
whether a request is complete would also provide ALJs and attorney 
adjudicators with additional flexibility to deem the request complete, 
even if all of the information necessary for a complete request is not 
contained on the same document. We believe the rules as finalized 
provide all appellants, including unrepresented beneficiaries, with an 
appropriate level of flexibility in providing that the all documents 
submitted with a request for hearing will be considered in determining 
whether a request is complete, and an appropriate level of leniency in 
providing for an opportunity to supplement the request with any missing 
information if OMHA identifies missing information that is required for 
a complete request.
    After review and consideration of the comment received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
Sec. Sec.  405.1014(b) and 423.2014(c) as proposed without 
modification.
iv. Where and When To File a Request for Hearing or Review of a QIC or 
an IRE Dismissal
    We proposed to incorporate portions of current Sec.  405.1014(b) in 
proposed Sec.  405.1014(c) and portions of current Sec.  423.2014(c) in 
proposed Sec.  423.2014(d) to address when and where to file a request 
for hearing or review. We proposed in Sec. Sec.  405.1014(c) 
introductory language and (c)(1), and 423.2014(d) introductory language 
and (d)(1), to incorporate a request for a review of a QIC dismissal 
and a request for a review of an IRE dismissal, respectively, and 
provide that the current 60 calendar day period to file a request for 
hearing after a party receives a QIC or an IRE reconsideration also 
applies after a party receives a QIC or IRE dismissal, which is the 
time frame stated in Sec. Sec.  405.1004 and 423.2004 to request a 
review of a QIC or IRE dismissal, respectively. We also proposed in 
Sec.  405.1014(c)(1) to add an exception for requests filed in 
accordance with proposed Sec.  405.1014(a)(3)(ii), because as discussed 
above, we proposed to require that requests for hearing on sample 
claims that are part of a statistical sample and/or extrapolation that 
the appellant also wishes to challenge would be filed together, which 
may be more than 60 calendar days after the appellant receives the 
first QIC reconsideration of one of the sample claims. In addition, we 
proposed to

[[Page 5035]]

revise the statement that a request must be ``submitted'' in current 
Sec.  423.2014(c)(1), with a request must be ``filed'' in Sec.  
423.2014(d)(1), for consistency with Sec. Sec.  405.1014 and 422.602, 
both of which use the term ``filed.'' We also proposed in Sec. Sec.  
405.1014(c)(2) and 423.2014(d)(2) to replace references to sending 
requests to the ``entity'' specified in the QIC's or IRE's 
reconsideration in current Sec. Sec.  405.1014(b)(2) and 
423.2014(c)(2), with sending requests to the ``office'' specified in 
the QIC's or IRE's reconsideration or dismissal, respectively, so they 
are properly routed. As discussed in sections III.A.3.b and III.A.3.c 
of the proposed rule (and discussed in sections II.B.3.b and II.B.3.c 
above), regarding proposed Sec. Sec.  405.1002 and 405.1004, and 
423.2002 and 423.2004, replacing ``entity'' with ``office'' in 
Sec. Sec.  405.1014, 423.1972, and 423.2014 would help ensure 
appellants are aware that a request for hearing or request for a review 
of a QIC or IRE dismissal must be filed with the office indicated in 
the QIC's or IRE's reconsideration or dismissal and avoid delays. 
However, we again noted that for the few requests for hearing that are 
misrouted by a party, a notice would be sent to the appellant when the 
request for hearing is received in the correct office and the date the 
timely request was received by the incorrect office would be used to 
determine the timeliness of the request, in accordance with proposed 
Sec. Sec.  405.1014(c)(2) and 423.2014(d)(2)(i), which would 
incorporate the misrouted request provisions from current Sec. Sec.  
405.1014(b)(2) and 423.2014(c)(2)(i). We also proposed in Sec. Sec.  
405.1014(c)(2) and 423.2014(d)(2)(i) that the adjudication time frame 
is only affected if there is an applicable adjudication time frame for 
the appeal.
    Current Sec.  423.1972(b) states that an enrollee must file a 
request for a hearing within 60 calendar days of the date of the notice 
of the IRE reconsideration determination. This requirement differs from 
Sec.  423.2002(a)(1), which states that a request for hearing must be 
filed within 60 calendar days after receipt of the IRE's 
reconsideration (this is also the standard for filing Part A and Part B 
requests for hearing after receipt of QIC reconsiderations, at Sec.  
405.1002(a)(1)). Thus, we proposed to revise Sec.  423.1972(b)(1) to 
state that a request for hearing must be filed within 60 calendar days 
after receipt of the IRE's reconsideration. We also proposed to add new 
Sec.  423.1972(b)(2), to incorporate current Sec.  423.2002(d), which 
provides the date of receipt of the reconsideration is presumed to be 5 
calendar days after the date of the written reconsideration unless 
there is evidence to the contrary (this is also a presumption for 
receipt of QIC reconsiderations in Part A and Part B appeals, at Sec.  
405.1002). These changes would align proposed Sec.  423.1972(b) with 
current Sec.  423.2002, and remove potential enrollee confusion on when 
a request for an ALJ hearing must be filed.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment on these proposals. The commenter 
asked whether the same requirements would apply when a request for 
hearing is misrouted because the CMS contractor provided the appellant 
with an incorrect address, for example, if the contractor moved or 
changed jurisdictions after the address was provided.
    Response: We assume the requirements to which the commenter is 
referring are the provisions of current Sec. Sec.  405.1014(b)(2) and 
423.2014(c)(2)(ii), which we proposed to incorporate into proposed 
Sec. Sec.  405.1014(c)(2) and 423.2014(d)(2)(ii) as a requirement for 
OMHA to notify the appellant of the date a misrouted request for 
hearing is received in the correct office and the commencement of any 
applicable adjudication time frame. We also stated in the proposed rule 
that the date a timely request was received by an incorrect office 
would be used to determine the timeliness of the request (as set forth 
in proposed Sec. Sec.  405.1014(c)(2) and 423.2014(d)(2)(i)). For most 
appeals, the notice of reconsideration or dismissal of a request for 
reconsideration instructs appellants to file their requests for hearing 
or review of a dismissal with the OMHA central docketing office, and we 
do not anticipate that changes in CMS contractors or changes to a CMS 
contractor's address will affect the accuracy of the filing address 
that is provided in the QIC's or IRE's reconsideration or dismissal. 
However, for a small segment of cases, such as Part C appeals, the 
notice of reconsideration instructs appellants to file their requests 
for hearing or review of a dismissal with the entity that conducted the 
reconsideration, which then forwards the request, along with the case 
file, to the OMHA central docketing office. In the event that the 
entity that conducted the reconsideration changes the address to file a 
request for hearing or review, due to operational changes or a change 
in the contractor, there would be a transition plan to address 
providing a new address in filing instructions and a process for 
forwarding requests sent to the previous address. Regardless, if a 
timely request for hearing or review of a dismissal is mistakenly sent 
to another CMS contractor, to an incorrect or outdated address, or to 
an OMHA field office, the request is not treated as untimely or 
otherwise rejected. In accordance with Sec. Sec.  405.1014(c)(2) and 
423.2014(d)(2)(i) as finalized in this rule, the date the request was 
received by the incorrect office would be used to determine the 
timeliness of the request, and OMHA would notify the appellant of the 
date the request was received in the correct office and the 
commencement of any applicable adjudication time frame in accordance 
with Sec. Sec.  405.1014(c)(2) and 423.2014(d)(2)(ii) as finalized.
    After review and consideration of the comment received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
Sec.  423.1972(b) as proposed without modification. In addition, we are 
finalizing Sec. Sec.  405.1014(c) and 423.2014(d) with the following 
modifications. As discussed in section II.B.3.b above, we are adding 
language to Sec. Sec.  405.1014(c)(2) and 423.2014(d)(2)(i) to clarify 
that a request for an ALJ hearing that is timely filed with an office 
other than the office specified in the QIC's or IRE's reconsideration 
is not treated as untimely. We are also removing the term ``entity 
office,'' which was a drafting error, from proposed Sec.  
405.1014(c)(2) and adding ``office'' in its place.
v. Sending Copies of a Request for Hearing and Other Evidence to Other 
Parties to the Appeal
    We proposed to incorporate the portion of current Sec.  
405.1014(b)(2) that states that the appellant must also send a copy of 
the request for hearing to the other parties and failure to do so will 
toll the ALJ's 90 calendar day adjudication deadline until all parties 
to the QIC reconsideration receive notice of the requested ALJ hearing 
in proposed Sec.  405.1014(d) with changes discussed below. Current 
Sec.  405.1014(b)(2) has been another source of considerable confusion, 
and significant time and resources have been spent on this procedural 
matter by parties, OMHA, and the Council. Current Sec.  405.1014(b)(2) 
requires an appellant to send a copy of the request for hearing to the 
other parties. Other parties consist of all of the parties specified in 
Sec.  405.906(b) as parties to the reconsideration, including 
beneficiaries in overpayment cases that involve multiple beneficiaries 
who have

[[Page 5036]]

no liability, in which case the QIC may elect to only send a notice of 
reconsideration to the appellant, in accordance with Sec.  
405.976(a)(2). We proposed in Sec.  405.1014(d)(1) to amend the current 
copy requirement by only requiring an appellant to send a copy of a 
request for an ALJ hearing or review of a QIC dismissal to the other 
parties who were sent a copy of the QIC's reconsideration or dismissal. 
We stated in the proposed rule that this change would make the standard 
consistent with requests for Council review, a copy of which must be 
sent by the appellant to the other parties who received a copy of an 
ALJ's decision or dismissal, in accordance with current Sec.  
405.1106(a). We also stated that this change would also extend the 
requirement to requests for review of a QIC dismissal to provide the 
other parties who received notice of the QIC's dismissal action with 
notice of the appellant's appeal of that action.
    We also proposed in Sec.  405.1014(d)(1) to address whether copies 
of materials that an appellant submits with a request for hearing or 
request for review of a QIC dismissal must be sent to other parties. 
Currently some ALJs consider the materials to be part of the request 
and require an appellant to send copies of all materials submitted with 
a request, while other ALJs do not consider the materials to be part of 
the request. We proposed in Sec.  405.1014(d)(1) that if additional 
materials submitted with a request are necessary to provide the 
information required for a complete request in accordance with proposed 
Sec.  405.1014(b), copies of the materials must be sent to the parties 
as well (subject to authorities that apply to disclosing the personal 
information of other parties). We also proposed that if additional 
evidence is submitted with the request for hearing, the appellant may 
send a copy of the evidence or briefly describe the evidence pertinent 
to the party and offer to provide copies of the evidence to the party 
at the party's request (subject to authorities that apply to disclosing 
the evidence). For example, if a complete request includes a position 
paper or brief that explains the reasons the appellant disagrees with 
the QIC's reconsideration, in accordance with proposed Sec.  
405.1014(a)(1)(v), a copy of the position paper or brief would be sent 
to the other parties, subject to any authorities that apply to 
disclosing the personal information of other parties. However, we 
stated that additional evidence such as medical records, is generally 
not required for a complete request, and therefore copies would not 
have to be sent, but could instead be summarized and provided to the 
other parties at their request, again subject to any authorities that 
apply to disclosing the personal information of other parties. We 
stated that this approach would balance the objectives of ensuring that 
parties to a claim and an appeal of that claim remain informed of the 
proceedings that are occurring on the claim, with the burdens on 
appellants to keep their co-parties so informed. We also noted that in 
sending a copy of the request for hearing and associated materials, 
appellants are free to include cover letters to explain the request, 
but we noted that such letters on their own do not satisfy the copy 
requirement in its current or proposed form. No corresponding changes 
were proposed in Sec.  423.2014 because the enrollee is the only party 
to the appeal.
    Current Sec.  405.1014 does not contain standards for what 
constitutes evidence that a copy of the request for hearing or review, 
or copy of the evidence or a summary thereof, was sent to the other 
parties, which has led to confusion and inconsistent practices. 
Therefore, we proposed in Sec.  405.1014(d)(2) to address this issue by 
establishing standards that an appellant would follow to satisfy the 
requirement. We proposed in Sec.  405.1014(d)(2) that evidence that a 
copy of the request for hearing or review, or a copy of submitted 
evidence or a summary thereof, was sent includes: (1) Certifications 
that a copy of the request for hearing or request for review of a QIC 
dismissal is being sent to the other parties on the standard form for 
requesting a hearing or review of a QIC dismissal; (2) an indication, 
such as a copy or ``cc'' line on a request for hearing or review, that 
a copy of the request and any applicable attachments or enclosures are 
being sent to the other parties, including the name and address of the 
recipients; (3) an affidavit or certificate of service that identifies 
the name and address of the recipient and what was sent to the 
recipient; or (4) a mailing or shipping receipt that identifies the 
name and address of the recipient and what was sent to the recipient. 
We stated in the proposed rule that we believed these options would 
provide an appellant with flexibility to document the copy requirement 
was satisfied and bring consistency to the process.
    Beyond stating that an adjudication time frame is tolled if a party 
does not satisfy the copy requirement, current Sec.  405.1014 does not 
address the consequence of not satisfying the requirement, and 
adjudicators are faced with an appeal being indefinitely tolled because 
an appellant refuses to comply with the requirement. OMHA ALJs have 
addressed this issue by providing appellants with an opportunity to 
send the required copy of the request for hearing, and by informing the 
appellant that if the copy is not sent, its request will be dismissed. 
This allows OMHA ALJs to remove requests that do not satisfy the 
requirement from their active dockets so time and resources can be 
focused on appeals of those who comply with the rules. We proposed in 
Sec.  405.1014(d)(3) that, if the appellant fails to send a copy of the 
request for hearing or request for review of a QIC dismissal, any 
additional materials, or a copy of the submitted evidence or a summary 
thereof, the appellant would be provided with an opportunity to cure 
the defects by sending the request, materials, and/or evidence or 
summary thereof described in proposed subsection (d)(1). Further, we 
proposed in Sec.  405.1014(d)(3) that if an adjudication time frame 
applies, it does not begin until evidence that the request, materials, 
and/or evidence or summary thereof were sent is received. We also 
proposed in Sec.  405.1014(d)(3) that if an appellant does not provide 
evidence within the time frame provided to demonstrate that the 
request, materials, and/or evidence or summary thereof were sent to 
other parties, the appellant's request for hearing or review would be 
dismissed.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received three comments on the proposal clarifying an 
appellant's obligation to furnish supporting documentation filed with a 
request for hearing or review of a QIC dismissal to the other parties, 
which the commenters opposed on the grounds that it would increase the 
amount of paperwork involved in filing an appeal. The commenters stated 
it would be costly and burdensome for appellants to produce and send 
the extra copies; would cause delays and increased time spent on 
appeals; and would be confusing for beneficiaries who are otherwise 
uninvolved in the appeal to receive additional paperwork.
    Response: We do not agree that this proposal increases the amount 
of paperwork that an appellant is required to send to the other 
parties. Proposed Sec.  405.1014(d)(1) incorporates the requirement to 
send a copy of the request for hearing to the other parties from 
current Sec.  405.1014(b)(2). As noted above, there has been 
considerable confusion under the current rule as to whether materials 
submitted with a request for hearing are considered part of that 
request and, therefore, whether

[[Page 5037]]

copies of that material must be sent to the other parties. Currently 
some ALJs consider any materials sent with the request for hearing to 
be part of the request and require an appellant to send copies of all 
the materials submitted with a request to the other parties. The 
proposed clarification will standardize how this requirement is applied 
and bring uniformity to the filing process by limiting the materials 
that must be sent to the other parties to those materials that provide 
the information that is required for a complete request in accordance 
with proposed Sec.  405.1014(b). Any evidence that is not required for 
a complete request can be simply summarized and provided to the other 
parties at their request, subject to any authorities that apply to 
disclosing the personal information of other parties. For example, if 
new evidence is submitted in the form of medical records, a brief 
description explaining that medical records were submitted and how to 
contact the appellant for a copy of those medical records can be 
provided to the other parties, rather than sending copies of the 
medical records with the copy of the request for hearing. In contrast, 
if a copy of the QIC reconsideration is included for the purpose of 
providing the Medicare appeal number or claim-specific information that 
is required for a complete request for hearing (that is, the 
information is not contained on a request for hearing form or letter 
sent from the appellant requesting the appeal), then a copy of the QIC 
reconsideration would have to be sent to the other parties because the 
appellant is relying on it to provide information required for a 
complete request for hearing.
    We further note that Sec.  405.1014(d)(1) as finalized actually 
reduces the number of recipients to whom an appellant is required to 
send a copy of the request and other materials. Instead of all of the 
parties to the reconsideration, which potentially includes 
beneficiaries who are not liable in overpayment cases that involve 
multiple beneficiaries, and therefore did not receive the notice of 
reconsideration in accordance with Sec.  405.976(a)(2), Sec.  
405.1014(d)(1) as finalized only requires an appellant to send a copy 
to those parties who received a copy of the QIC's reconsideration or 
dismissal. This change will reduce the time and expense for an 
appellant to produce and send the required copies, and will reduce the 
amount of paperwork sent to beneficiaries who are otherwise uninvolved 
in the appeal.
    Comment: One commenter recommended, as an alternative approach, 
only requiring providers to notify the beneficiary of the outcome of an 
appeal, and only in cases where the claims remain denied.
    Response: We do not believe that notifying beneficiaries solely of 
the outcome of the appeal when a claim remains denied would be 
sufficient in cases where the beneficiary received notice of the QIC's 
reconsideration or dismissal. Providing a complete copy of the request 
for hearing or review of a dismissal to the other parties is necessary 
to ensure that beneficiaries remain informed of the proceedings related 
to items or services furnished to them and can provide information or 
make inquiries about the appeal if they wish to do so. However, we also 
emphasize that, under the final rule, appellants are not required to 
send a copy of the request for hearing or review of a dismissal to any 
party that did not receive notice of the QIC's reconsideration or 
dismissal. This aligns the standard with current Sec.  405.1106(a), 
which requires appellants to send a copy of a request for Council 
review to the other parties who received a copy of an ALJ's decision or 
dismissal.
    Comment: Another commenter asserted that requiring an appellant to 
send copies of additional materials sent with a request for hearing or 
review of dismissal to the beneficiaries would discourage filing 
requests for claims involving multiple beneficiaries together due to 
confidentiality issues, and would result in more individual appeals and 
increased delays.
    Response: We do not agree that requiring appellants to send the 
other parties a copy of the complete request, including any additional 
materials that are necessary to complete the request, will discourage 
appellants from filing requests for claims involving multiple 
beneficiaries together. While appellants must comply with any 
authorities that apply to disclosing the personal information of other 
parties, if an appeal involves multiple beneficiaries, we believe the 
minor inconvenience of redacting a party's personal information from a 
brief or position paper when sending a copy to the other parties will 
be outweighed by the added efficiency of appealing multiple claims 
together in one request. We also note that in overpayment appeals that 
involve multiple beneficiaries who have no liability, the QIC generally 
does not send a copy of the reconsideration to the beneficiaries in 
accordance with Sec.  405.976(a)(2), and under Sec.  405.1014(d)(1) as 
finalized, a copy of the request for hearing or review of a dismissal 
is only sent to the parties who received a copy of the reconsideration. 
In addition, we note that the current requirement to send a copy of the 
request for hearing to all parties to the QIC reconsideration, 
regardless of whether the parties were sent a copy of that 
reconsideration, which has been in place since part 405, subpart I was 
promulgated in 2005, has not appeared to discourage appellants from 
filing appeals of QIC reconsiderations individually or together. Thus, 
for the reasons discussed above, we do not believe that Sec.  
405.1014(d) as finalized in this rule will discourage filing requests 
for hearing for multiple beneficiaries together, or result in more 
individual appeals or increased delays.
    Comment: One commenter expressed concern that unrepresented 
beneficiaries may have difficulty identifying where to send the 
required copies, determining which materials need to be copied, or 
summarizing other evidence. The commenter suggested that unrepresented 
beneficiaries should be afforded leniency or assisted with meeting the 
copy requirement, and suggested that QIC reconsiderations and 
dismissals should include the full names and mailing addresses of the 
parties so that appellants can easily find the information.
    Response: We thank the commenter for its suggestions. We agree that 
unrepresented beneficiaries may have difficulty determining where to 
send copies of a request, or what materials to provide to the other 
parties. Historically, if it is not apparent that an unrepresented 
beneficiary sent a copy of his or her request to the other parties, it 
has been the informal practice of both OMHA and the Council to send 
notice of the request to the other parties on the beneficiary's behalf. 
In response to the commenter's concerns, we agree that requests filed 
by unrepresented beneficiaries should not be subject to dismissal for 
failing to meet this requirement. Accordingly, we are amending Sec.  
405.1014(d)(3) to state that unrepresented beneficiaries are exempt 
from the consequences of failing to send a copy of the request, 
materials, and/or evidence or summary thereof to the other parties. We 
are also amending Sec.  405.1052(a)(7) and (b)(4) to reflect this 
exemption, as discussed in section II.B.3.x below.
    With respect to including the full names and mailing addresses of 
the parties in a QIC reconsideration or dismissal, we thank the 
commenter for its suggestion and will share this recommendation with 
the QICs. However, at this time we do not believe that it would be 
appropriate to add the parties' contact information as a content 
requirement for QIC reconsiderations

[[Page 5038]]

and dismissals in this final rule. Instead, OMHA will continue its 
current practice of assisting unrepresented beneficiaries with meeting 
the copy requirement by mailing copies of the request, materials, and/
or evidence or summary thereof to the other parties if it is not 
apparent that copies were sent by the beneficiary.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing our 
proposals to revise Sec.  405.1014(d) with modification. We are 
amending Sec.  405.1014(d)(3) to state that unrepresented beneficiaries 
are exempt from the consequences of failing to send a copy of the 
request for hearing, any additional materials, and/or a copy of 
submitted evidence or summary thereof, as described in Sec.  
405.1014(d)(1), to the other parties.
vi. Extending Time To File a Request for Hearing or Review of a QIC or 
an IRE Dismissal
    We proposed that the provisions of current Sec. Sec.  405.1014(c) 
and 423.2014(d) for extensions of time to file a request for hearing 
would be incorporated in proposed Sec. Sec.  405.1014(e) and 
423.2014(e) with changes, and would extend to requests for reviews of 
QIC and IRE dismissals. On occasion, OMHA is asked whether a request 
for an extension should be filed without a request for hearing, for a 
determination on the request for extension before the request for 
hearing is filed. We stated that in those instances, we ask the filer 
to file both the request for hearing and request for extension at the 
same time because an independent adjudication of the extension request 
would be inefficient and any adjudication time frame begins on the date 
that the ALJ grants the extension request, in accordance with current 
Sec. Sec.  405.1014(c)(4) and 423.2014(d)(5). We proposed in Sec. Sec.  
405.1014(e)(2) and 423.2014(e)(3) to require a request for an extension 
be filed with the request for hearing or request for review of a QIC or 
IRE dismissal, with the office specified in the notice of 
reconsideration or dismissal. We stated that the revisions we proposed 
in Sec. Sec.  405.1014(e)(2) and 423.2014(e)(3) would also align the 
provisions with proposed Sec. Sec.  405.1014(c) and 423.2014(d) by 
specifying that a request for an extension must be filed with the 
``office,'' rather than the ``entity,'' specified in the notice of 
reconsideration. We proposed in Sec. Sec.  405.1014(e)(3) and 
423.2014(e)(4) that an ALJ or attorney adjudicator may find good cause 
to extend the deadline to file a request for an ALJ hearing or a 
request for a review of a QIC or IRE dismissal, or there is no good 
cause for missing the deadline to file a request for a review of a QIC 
or IRE dismissal, but only an ALJ may find there is no good cause for 
missing the deadline to file a request for an ALJ hearing. As we stated 
in the proposed rule, because only an ALJ may dismiss a request for an 
ALJ hearing for an untimely filing in accordance with proposed 
Sec. Sec.  405.1052 and 423.2052, an attorney adjudicator could not 
make a determination on a request for an extension that would result in 
a dismissal of a request for hearing. We also proposed to incorporate 
current Sec. Sec.  405.1014(c)(4) and 423.2014(d)(5) into proposed 
Sec. Sec.  405.1014(e)(4) and 423.2014(e)(5), but indicate that the 
adjudication time frame begins on the date the ALJ or attorney 
adjudicator grants the request to extend the filing deadline only if 
there is an applicable adjudication period. Finally, we proposed in 
Sec. Sec.  405.1014(e)(5) and 423.2014(e)(6) to add a new provision to 
provide finality for the appellant with regard to a determination to 
grant an extension of the filing deadline. We proposed that if an ALJ 
or attorney adjudicator were to make a determination to grant the 
extension, the determination is not subject to further review. However, 
we did not propose to preclude review of a determination to deny an 
extension because such a denial would result in a dismissal for an 
untimely filing, and the dismissal and determination on the request for 
an extension would be subject to review by the Council.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 above related to our general proposals to 
provide authority for attorney adjudicators to issue certain decisions, 
dismissals and remands, and to revise the rules so that decisions and 
dismissals issued by attorney adjudicators may be reopened and/or 
appealed in the same manner as equivalent decisions and dismissals 
issued by ALJs. Accordingly, for the reasons discussed above and in the 
proposed rule, we are finalizing our proposals, as discussed above, 
without modification to revise Sec. Sec.  405.1014(e) and 423.2014(e).
h. Time Frames for Deciding an Appeal of a QIC or an IRE 
Reconsideration or an Escalated Request for a QIC Reconsideration, and 
Request for Council Review When an ALJ Does Not Issue a Decision Timely 
(Sec. Sec.  405.1016, 405.1104 and 423.2016)
i. Section 405.1016: Time Frames for Deciding an Appeal of a QIC 
Reconsideration or an Escalated Request for a QIC Reconsideration
    As discussed below, we proposed changes to Sec.  405.1016, which 
addresses the adjudication time frames for requests for hearing filed 
after a QIC has issued its reconsideration, in accordance with section 
1869(d)(1)(A) of the Act, and escalations of requests for a QIC 
reconsideration when the QIC does not issue its reconsideration within 
its adjudication time frame, which is permitted by section 
1869(c)(3)(C)(ii) of the Act. 81 FR 43790, 43820-43821 We proposed to 
revise the title of Sec.  405.1016 from ``Time frames for deciding an 
appeal before an ALJ'' to ``Time frames for deciding an appeal of a QIC 
reconsideration or escalated request for a QIC reconsideration'' 
because the section specifically applies to appeals of QIC 
reconsiderations and escalated requests for QIC reconsiderations (as 
specified in current and proposed Sec.  405.1016(a) and (c)). This 
revision would also allow for application of this section to requests 
for hearing adjudicated by attorney adjudicators, as proposed in 
section II.B of the proposed rule (and discussed in section II.A.2 
above). We also proposed to replace each instance of the term ``the 
ALJ'' with ``the ALJ or attorney adjudicator'' throughout proposed 
Sec.  405.1016 to assist appellants in understanding that an 
adjudication time frame, and the option to escalate, also would apply 
to a request for an ALJ hearing following a QIC reconsideration when 
the request has been assigned to an attorney adjudicator, as proposed 
in section II.B of the proposed rule (and discussed in section II.A.2 
above). We did not propose to change the reference to ``a request for 
an ALJ hearing'' because, as explained in section II.B of the proposed 
rule and II.A.2 above, even if an appellant waives its right to 
hearing, the case would remain subject to a potential oral hearing 
before an ALJ, and we believe the request is therefore properly 
characterized as a request for an ALJ hearing.
    We proposed to add titles to proposed Sec.  405.1016(a) to indicate 
that this paragraph discusses the adjudication period for appeals of 
QIC reconsiderations, and proposed Sec.  405.1016(c) to indicate that 
this

[[Page 5039]]

paragraph discusses the adjudication period for escalated requests for 
QIC reconsiderations. In addition, we proposed at Sec.  405.1016(a) and 
(c) to remove ``must,'' in providing that when a request for an ALJ 
hearing is filed after a QIC has issued a reconsideration, an ALJ or 
attorney adjudicator issues a decision, dismissal order, or remand to 
the QIC, as appropriate, no later than the end of the 90 calendar day 
period beginning on the date the request for hearing is received by the 
office specified in the QIC's notice of reconsideration. While the 
statute envisions that appeals will be adjudicated within the statutory 
time frame, the statute also provides for instances in which the 
adjudication time frame is not met by allowing an appellant to escalate 
his or her appeal to the next level of appeal. We believe ``must'' 
should be reserved for absolute requirements, and in the context of 
adjudication time frames, the statute provides the option for an 
appellant to escalate an appeal if the adjudication time frame is not 
met.
    We proposed to add a title to proposed Sec.  405.1016(b) to 
indicate that the paragraph discusses when an adjudication period 
begins. We also proposed to re-designate current Sec.  405.1016(b), 
which explains that the adjudication period for an appeal of a QIC 
reconsideration begins on the date that a timely filed request for 
hearing is received unless otherwise specified in the subpart, as Sec.  
405.1016(b)(1). We proposed in Sec.  405.1016(b)(2) that if the Council 
remands a case and the case was subject to an adjudication time frame 
under paragraph (a) or (c), the remanded appeal would be subject to the 
adjudication time frame of Sec.  405.1016(a) beginning on the date that 
OMHA receives the Council remand. Currently the regulations do not 
address whether an adjudication time frame applies to appeals that are 
remanded from the Council, and whether escalation is an option for 
these appeals. To provide appellants with an adjudication time frame 
for remanded appeals that were subject to an adjudication time frame 
when they were originally appealed to OMHA, we proposed in Sec.  
405.1016(b)(2) to apply the adjudication time frame under Sec.  
405.1016(a) to a remanded appeal that was subject to an adjudication 
time frame under paragraph (a) or (c). For example, if an ALJ decision 
reviewed by the Council involved a QIC reconsideration and was remanded 
by the Council, a 90 calendar day time frame would apply from the date 
that OMHA received the remand order. If the adjudication time frame is 
not met under proposed Sec.  405.1016(b)(2), the appeal would be 
subject to escalation, in accordance with proposed Sec.  405.1016(e).
    In addition, we proposed in Sec.  405.1016(a) and (b) to align the 
paragraphs with proposed Sec.  405.1014(c) by specifying that a request 
for hearing is received by the ``office,'' rather than the ``entity,'' 
specified in the QIC's notice of reconsideration.
    We proposed to add a title to proposed Sec.  405.1016(d) to 
indicate that the paragraph discusses waivers and extensions of the 
adjudication period. We proposed in Sec.  405.1016(d)(1) to incorporate 
the adjudication period waiver provision in current Sec.  405.1036(d), 
which states that, at any time during the hearing process, the 
appellant may waive the adjudication deadline specified in Sec.  
405.1016 for issuing a hearing decision, and that the waiver may be for 
a specific period of time agreed upon by the ALJ and the appellant. We 
proposed to move the provision because, as we stated in the proposed 
rule, we believe it is more appropriately addressed in Sec.  405.1016, 
as it is directly related to the adjudication period. We also proposed 
in Sec.  405.1016(d) to revise the language in current Sec.  
405.1036(d) to reference an attorney adjudicator consistent with our 
proposals in section II.B of the proposed rule and as discussed in 
section II.A.2 above; to reference the ``adjudication'' process rather 
than the ``hearing process'' to account for appeals that may not 
involve a hearing; to consistently reference an adjudication ``period'' 
for internal consistency; and to replace the reference to Sec.  
405.1016 with internal paragraph references.
    Current Sec.  405.1016 does not address delays that result from 
stays ordered by U.S. Courts. In addition, we have had instances in 
which an appellant requests a stay of action on his or her appeals 
while related matters are addressed by another court or tribunal, or by 
investigators. To address these circumstances, we proposed in Sec.  
405.1016(d)(2) that the adjudication periods specified in paragraphs 
(a) and (c) are extended as otherwise specified in subpart I, and for 
the duration of any stay of action on adjudicating the claims or 
matters at issue ordered by a court or tribunal of competent 
jurisdiction, or the duration of any stay of proceedings granted by an 
ALJ or attorney adjudicator on the motion of the appellant, provided no 
other party also filed a request for hearing on the same claim at 
issue.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received fifteen comments opposing our proposal to 
remove ``must'' from Sec.  405.1016(a) and (c). Commenters opposed the 
proposal on the grounds that the 90-day adjudication time frame is a 
statutory requirement under section 1869 of the Act, and removing 
``must'' undermines the duty owed to appellants by OMHA adjudicators 
and would only serve to increase delays in the appeals process. Several 
commenters cited a recent decision by the Court of Appeals for the 
District of Columbia Circuit that held that the statute mandated a 
decision within ninety days. The commenters stated that the ability to 
escalate an appeal to the Council is a remedy for when the statutory 
deadline is not met, as opposed to an alternative to the timely 
adjudication of an appeal, and the existence of that remedy does not 
negate the mandatory nature of the statutory time frame. One commenter 
opposed the proposal with respect to appeals filed by beneficiaries and 
Medicaid State agencies, asserting that escalation is an inadequate 
remedy for those appellants because it means forgoing a level of 
administrative review where beneficiaries have historically had the 
greatest likelihood of success, and facing similar delays at the 
Council. Another commenter stated that it was particularly important 
not to weaken the statutory right to a timely decision for low-income 
beneficiaries. One commenter interpreted the proposal as eliminating 
the option to escalate an appeal if the adjudication time limit is 
exceeded.
    Response: We do not agree that removing ``must'' from Sec.  
405.1016(a) and (c) would undermine or weaken the adjudication time 
frame set forth in section 1869(d)(1)(A) of the Act. We recognize that 
one court of appeals has held that the statutory timeframe is 
mandatory, while another court of appeals has not. Compare Cumberland 
County Hospital System, Inc., d/b/a Cape Fear Valley Health System v. 
Burwell, 816 F.3d 48, 56 (4th Cir. 2016) (holding that the Act does not 
provide a clear and indisputable right to adjudication of appeals 
before an ALJ within 90 days) with American Hospital Association, et 
al. v. Burwell, 812 F.3d 183, 192 (D.C. Cir. 2016) (holding that the 
Act imposes a clear duty on the Secretary to comply with the statutory 
time frame). We respectfully disagree that the statute mandates that 
all ALJ decisions reviewing QIC reconsiderations be issued within 90 
days. Section 1869(d)(3)(A) of the Act,

[[Page 5040]]

which provides for the consequences of failing to meet the adjudication 
time frame to render a decision in an appeal of QIC reconsideration 
decision made under section 1869(c) of the Act, contemplates that the 
adjudication time frame for an ALJ to render such a decision will not 
always be met, and provides the option for an appellant to request a 
review by the Council if the ALJ adjudication time frame is not met. 
Consistent with this section, Sec.  405.1016(f), as finalized in this 
rule, provides for escalating an appeal of a QIC reconsideration to the 
Council when a decision, dismissal, or remand is not issued by an ALJ 
or attorney adjudicator within the adjudication time frame. Removing 
``must'' does not abrogate the general expectation that a decision, 
dismissal, or remand will be issued within an applicable adjudication 
time frame, such as the 90 day time frame provided for at section 
1869(d)(1)(A) of the Act to render a decision in an appeal of QIC 
reconsideration decision made under section 1869(c) of the Act. As we 
conveyed in the proposed rule, removing ``must'' only has the effect of 
more appropriately setting expectations with regard to whether there is 
an absolute and unqualified requirement to issue a decision, dismissal, 
or remand within the adjudication time frame. Removing the word 
``must'' from Sec.  405.1016(a) and (c) also does not change the amount 
of time that an ALJ or attorney adjudicator has to issue a decision, 
dismissal, or remand before an appellant may choose to escalate his or 
her appeal to the Council. Moreover, removing ``must'' will have no 
effect on ALJs (and attorney adjudicators) issuing a decision, 
dismissal, or remand as quickly as possible, thus the change will not 
result in increased delays in obtaining a decision, dismissal, or 
remand. The Department has publicly committed itself to resolving the 
appeals backlog as quickly as possible while acting within statutory 
constraints. In particular, appeals brought by beneficiaries are 
prioritized under current OMHA policy and are generally decided within 
the applicable adjudication time frame.
    Comment: One commenter pointed out that we did not propose to 
remove ``must'' from other sections of the regulations where it 
appears, such as current Sec.  405.1014(b)(1), which states that a 
request for an ALJ hearing after a QIC reconsideration must be filed 
within 60 days from the date the party receives notice of the 
reconsideration. Two commenters stated that if filing deadlines and 
other regulatory time frames are mandatory for the parties, they should 
be mandatory for the government, too.
    Response: Although we recognize that there are other uses of 
``must'' in the regulations that we did not propose to revise, those 
are distinguishable. As we stated in the proposed rule, we believe 
``must'' should be reserved for absolute requirements. In those 
instances, the result of not meeting the requirement does not trigger 
another option. As the commenter identified, current Sec.  
405.1014(b)(1) provides that a request for hearing after a QIC 
reconsideration must be filed within 60 calendar days from the date the 
party receives notice of the reconsideration. However, we also note 
that current Sec.  405.1014(c) provides for extensions of that time 
frame in certain circumstances. Current Sec.  405.1014(b)(1) implements 
section 1869(b)(1)(D)(ii) of the Act, which provides that ``[t]he 
Secretary shall establish in regulations time limits for the filing of 
a request for a hearing by the Secretary in accordance with provisions 
in sections 205 and 206'' of the Act. Section 205(b)(1) of the Act in 
turn provides that a request for hearing ``must be filed within [60] 
days after notice of [the decision being appealed] is received by the 
individual making such request.'' Thus the statute establishes a clear 
duty for the appealing party to request a hearing within a specific 
time period after receiving a decision that the party wishes to appeal. 
If the party does not act, the party does not have a right to a 
hearing. However, we again note that when the time limit for filing a 
request for hearing is not met, the Secretary provides a mechanism for 
a party to request an extension for good cause in current Sec.  
405.1014(c).
    In contrast to the time limit for filing a request for hearing, 
Sec.  405.1016(a) and (c) set forth time frames to obtain a decision, 
dismissal, or remand, which, consistent with section 1869(d)(3)(A) of 
the Act, if not met results in the appellant having the option to 
escalate the appeal to the Council. Whereas the consequence of not 
meeting the time limit for filing a request for hearing is that an 
adjudicator is precluded from reviewing the decision being appealed, 
the consequence of exceeding the adjudication time frames is the 
appellant then has the option to escalate the appeal to the next level. 
If the appellant at the hearing level chooses not to escalate his or 
her appeal to the Council, the appeal remains pending with OMHA in 
accordance with Sec.  405.1016(e) as finalized, which replaces current 
Sec.  405.1104(c) explaining the same.
    Comment: One commenter stated that a decision should be issued in 
the provider's favor if the 90-day time frame cannot be met. Another 
commenter stated that if the government cannot meet its deadlines, the 
claim should be forfeited.
    Response: We interpret the commenters' statements as suggesting 
that Medicare should pay every denied claim that is the subject of an 
appeal of a QIC reconsideration for an ALJ hearing if a decision, 
dismissal, or remand is not issued within the adjudication time frame 
applicable to the appeal, which could include time in addition to the 
90 days based on certain regulatory provisions that allow for the 
extension of that time for certain actions or events (for example, 
Sec.  405.1016(d)). We believe such a provision would be inappropriate 
because Medicare may only pay a claim if the item or service is a 
covered benefit and coverage is not excluded by statute, and any 
applicable conditions of payment are met, unless specific statutory 
criteria are met for limiting liability on denied claims under section 
1879 of the Act or waiving an overpayment under section 1870 of the 
Act. Medicare cannot make payment on a claim when a QIC has issued a 
reconsideration that determined that the item or service is not covered 
by Medicare or payment may not be made, and if applicable, that the 
provisions for limiting liability or waiving an overpayment are not 
met. Further, there is no statutory limitation on liability or 
overpayment waiver provision that permits payment to be made if an 
adjudication time frame is not met. Rather, the statute provides that 
when an ALJ's adjudication time frame is not met for an appeal of a QIC 
reconsideration, the appellant has the option to request a review by 
the DAB, which is implemented in Sec.  405.1016(f), as finalized in 
this rule, which provides for escalating an appeal of a QIC 
reconsideration to the Council when a decision, dismissal, or remand is 
not issued by an ALJ or attorney adjudicator within the adjudication 
time frame. Moreover, we believe requiring payment to be made on a 
claim only because an adjudication time frame for an appeal of a denial 
is not met could increase the appeals workload and raise significant 
program integrity risks by creating an incentive for providers and 
suppliers to overwhelm the appeals process with appeals in an effort to 
obtain payment on claims that may not meet coverage requirements or 
conditions of payment.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to

[[Page 5041]]

Sec.  405.1016 as proposed without modification.
ii. Incorporation of the Provisions of Section 405.1104 (Request for 
Council Review When an ALJ Does Not Issue a Decision Timely) Into 
Section 405.1016(f)
    Section 405.1104 addresses how to request escalation from an ALJ to 
the Council, when an ALJ has not issued a decision, dismissal or remand 
on a QIC reconsideration within an applicable adjudication time frame, 
in accordance with section 1869(d)(3)(A) of the Act in paragraph (a); 
the procedures for escalating an appeal in paragraph (b); and the 
status of an appeal for which the adjudication time frame has expired 
but the appellant has not requested escalation in paragraph (c). We 
proposed to remove and reserve Sec.  405.1104 and incorporate the 
current Sec.  405.1104 providing for escalating a request for an ALJ 
hearing to the Council into proposed Sec.  405.1016(e) and (f) with 
revisions, as its current placement in the Council portion of part 405, 
subpart I has caused confusion. We also proposed to insert ``or 
attorney adjudicator'' after ``ALJ'' in proposed Sec.  405.1016(e) and 
(f) to assist appellants in understanding that the effect of exceeding 
the adjudication period and the option to escalate would apply to a 
request for an ALJ hearing following a QIC reconsideration when the 
request has been assigned to an attorney adjudicator, as discussed in 
section II.B of the proposed rule and II.A.2 above.
    Section 405.1104(c) is titled ``No escalation'' and states that if 
the ALJ's adjudication period set forth in Sec.  405.1016 expires, the 
case remains pending with the ALJ until a decision, dismissal order, or 
remand order is issued or the appellant requests escalation to the 
Council. We proposed in Sec.  405.1016(e) to incorporate Sec.  
405.1104(c) with changes. We proposed to revise the paragraph title for 
proposed Sec.  405.1016(e) to indicate that the paragraph discusses the 
effect of exceeding the adjudication period. Proposed Sec.  405.1016(e) 
would provide that if an ALJ or an attorney adjudicator assigned to a 
request for hearing (as proposed in section II.B of the proposed rule 
and discussed in section II.A.2 of this final rule above) does not 
issue a decision, dismissal order, or remand to the QIC within an 
adjudication period specified in the section, the party that filed the 
request for hearing may escalate the appeal when the adjudication 
period expires. However, if the adjudication period expires and the 
party that filed the request for hearing does not exercise the option 
to escalate the appeal, the appeal remains pending with OMHA for a 
decision, dismissal order, or remand. We proposed to indicate that the 
appeal remains pending with OMHA to be inclusive of situations in which 
the appeal is assigned to an ALJ or attorney adjudicator, or not yet 
assigned.
    Section 405.1104(a) describes how to request an escalation and 
states that an appellant who files a timely request for hearing before 
an ALJ and whose appeal continues to be pending before the ALJ at the 
end of the applicable ALJ adjudication period may request Council 
review if the appellant files a written request with the ALJ to 
escalate the appeal to the Council after the adjudication period has 
expired, and the ALJ does not issue a decision, dismissal order, or 
remand order within the later of 5 calendar days of receiving the 
request for escalation or 5 calendar days from the end of the 
applicable adjudication period set forth in Sec.  405.1016. We proposed 
in Sec.  405.1016(f)(1) to remove the requirement to request Council 
review in the course of requesting an escalation and to describe when 
and how to request escalation. Specifically, we proposed to revise the 
current procedures at Sec.  405.1104(a) and (a)(1), to provide that an 
appellant who files a timely request for a hearing with OMHA and whose 
appeal continues to be pending at the end of an applicable adjudication 
period may exercise the option to escalate the appeal to the Council by 
filing a written request with OMHA to escalate the appeal to the 
Council, which would simplify the process for appellants and 
adjudicators by only requiring appellants to file a single request for 
escalation with OMHA. We proposed to replace the reference to an appeal 
that ``continues to be pending before the ALJ'' in Sec.  405.1104(a) 
with an appeal that ``continues to be pending with OMHA'' in proposed 
Sec.  405.1016(f)(1) to be inclusive of situations in which the appeal 
is assigned to an ALJ or attorney adjudicator, or not yet assigned. We 
also proposed that a written request to escalate an appeal to the 
Council would be filed with OMHA to allow OMHA to provide a central 
filing option for escalation requests. Section 405.1106(b) requires 
that the appellant send a copy of the escalation request to the other 
parties and failing to do so tolls the Council's adjudication deadline 
set forth in Sec.  405.1100 until the other parties to the hearing have 
received notice. As discussed in section III.A.5.c of the proposed rule 
and II.B.5.c of this final rule below, we proposed to revise Sec.  
405.1106(b) to require that the request for escalation be sent to other 
parties who were sent a copy of the QIC reconsideration. Therefore, we 
also proposed at Sec.  405.1016(f)(1) that the appellant would send a 
copy of the escalation request to the other parties who were sent a 
copy of the QIC reconsideration so appellants would be aware of the 
requirement and which parties must be sent a copy of the escalation 
request.
    Section 405.1104(b) describes the escalation process and states if 
the ALJ is not able to issue a decision, dismissal order, or remand 
order within the time period set for in paragraph (a)(2) of the section 
(later of 5 calendar days of receiving the request for escalation or 5 
calendar days from the end of the applicable adjudication period set 
forth in Sec.  405.1016), he or she sends notice to the appellant 
acknowledging receipt of the request for escalation and confirming that 
the ALJ is not able to issue a decision, dismissal order, or remand 
order within the statutory time frame. Section 405.1104(b)(3) sates 
that if the ALJ does not act on a request for escalation within the 
time period set forth in paragraph (a)(2) of the section or does not 
send the required notice to the appellant, the QIC decision becomes the 
decision that is subject to Council review consistent with Sec.  
405.1102(a). We stated in the proposed rule that this process has 
caused confusion for both appellants and adjudicators because an 
initial escalation request must be filed with the ALJ, and if the ALJ 
is unable to issue a decision, dismissal or remand within 5 calendar 
days of receiving the escalation request or within 5 calendar days from 
the end of the applicable adjudication period, the appellant must file 
a request with the Council to move the appeal to the Council level. We 
also stated that some appellants neglect to take this second step of 
filing an escalation request with the Council. This leaves it unclear 
to the ALJ and support staff whether to continue adjudicating the 
appeal after issuing a notice that the ALJ is unable to issue a 
decision, dismissal or remand within the later of 5 calendar days of 
receiving the escalation request or 5 calendar days from the end of the 
applicable adjudication period. We proposed in Sec.  405.1016(f)(2) to 
revise the escalation process. Specifically, we proposed that if an 
escalation request meets the requirements of proposed Sec.  
405.1016(f)(1), and an ALJ or attorney adjudicator is not able to issue 
a decision, dismissal order, or remand within the later of 5 calendar 
days of receiving the request for escalation or 5

[[Page 5042]]

calendar days from the end of the applicable adjudication period, OMHA 
(to be inclusive of situations in which the appeal is assigned to an 
ALJ or attorney adjudicator, or not yet assigned) would send a notice 
to the appellant stating that an ALJ or attorney adjudicator is not 
able to issue a decision, dismissal order, or remand order within the 
adjudication period set forth in paragraph (a) or (c) of Sec.  
405.1016. We also proposed that the notice would state that the QIC 
reconsideration would be the decision that is subject to Council review 
consistent with Sec.  405.1102(a); and the appeal would then be 
automatically escalated to the Council in accordance with Sec.  
405.1108. We proposed that OMHA would then forward the case file, which 
would include the file received from the QIC and the request for 
escalation and all other materials filed with OMHA, to the Council. We 
stated in the proposed rule that we believed that this proposed process 
would help alleviate the current confusion, and would simplify the 
escalation process for appellants because appellants would not have to 
file a separate request for Council review after filing an escalation 
request with OMHA.
    Currently, invalid escalation requests are not addressed in the 
regulations. We proposed in Sec.  405.1016(f)(3) to address invalid 
escalation requests. We proposed that if an ALJ or attorney adjudicator 
determines an escalation request does not meet the requirements of 
proposed Sec.  405.1016(f)(1), OMHA would send a notice to the 
appellant explaining why the request is invalid within 5 calendar days 
of receiving the request for escalation. For example, we stated in the 
proposed rule that an escalation request would be deemed invalid if 
escalation is not available for the appeal, such as appeals of SSA 
reconsiderations; the escalation request is premature because the 
adjudication period has not expired; or the party that filed the 
escalation request did not file the request for hearing. We stated in 
the proposed rule that if an ALJ or attorney adjudicator were to 
determine the request for escalation was invalid for a reason that 
could be corrected (for example, if the request was premature), the 
appellant could file a new escalation request when the adjudication 
period expires.
    We received no comments on our proposals to revise and incorporate 
the provisions of Sec.  405.1104 into Sec.  405.1016(e) and (f), other 
than: (1) Comments discussed in section II.A.2 above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs; and (2) comments discussed in 
section II.A.4 above related to our general proposal to reference OMHA 
or an OMHA office, in place of current references to an unspecified 
entity, ALJs, and ALJ hearing offices, when a reference to OMHA or an 
OMHA office provides a clearer explanation of a topic. Accordingly, for 
the reasons discussed above and in the proposed rule, we are finalizing 
the proposals without modification.
iii. Section 423.2016: Time Frames for Deciding an Appeal of an IRE 
Reconsideration
    As discussed below, we proposed changes to Sec.  423.2016, which 
addresses the adjudication time frames for requests for hearing filed 
after an IRE has issued its reconsideration. 81 FR 43790, 43823. The 
title of current Sec.  423.2016 states, ``Timeframes for deciding an 
Appeal before an ALJ.'' We proposed to revise the title of Sec.  
423.2016 to read ``Time frames for deciding an appeal of an IRE 
reconsideration'' in order to state that the section addresses 
adjudication time frames related to appeals of IRE reconsiderations and 
to accommodate the application of this section to attorney 
adjudicators, as proposed in section II.B of the proposed rule (and 
discussed in section II.A.2 above), and as discussed earlier. We also 
proposed to insert ``or attorney adjudicator'' after ``ALJ'' throughout 
proposed Sec.  423.2016 so that an adjudication time frame would apply 
to a request for an ALJ hearing following an IRE reconsideration when 
the request has been assigned to an attorney adjudicator, as discussed 
in section II.B of the proposed rule and II.A.2 above.
    Current Sec.  423.2016(a) and (b) explain the adjudication time 
frames for standard and expedited appeals of IRE reconsiderations, 
respectively. However, the current paragraph titles refer to hearings 
and expedited hearings. We proposed at Sec.  423.2016(a) and (b) to 
retitle the paragraphs to refer to standard appeals and expedited 
appeals because the time frames apply to issuing a decision, dismissal, 
or remand, and are not limited to appeals in which a hearing is 
conducted. We proposed at Sec.  423.2016(a) and (b) to remove ``must'' 
in providing when an ALJ or attorney adjudicator issues a decision, 
dismissal order, or remand to the IRE, as appropriate, after the 
request for hearing is received by the office specified in the IRE's 
notice of reconsideration because there may be instances in which a 
decision, dismissal, or remand cannot be issued within the adjudication 
time frame, though we stated that we expect those instances to be rare 
because beneficiary and enrollee appeals are generally prioritized by 
OMHA. In addition, we proposed in Sec.  423.2016(a) and (b) to replace 
references to sending a request to the ``entity'' specified in the 
IRE's reconsideration, with the ``office'' specified in the IRE's 
reconsideration notice, to minimize confusion and delays in filing 
requests with OMHA. Similar to proposed Sec.  405.1016(b)(2), we 
proposed at Sec.  423.2016(a)(3) and (b)(6) to adopt adjudication time 
frames for appeals that are remanded by the Council. Specifically, we 
proposed in Sec.  423.2016(a)(3) that if the Council remands a case and 
the case was subject to an adjudication time frame, the remanded appeal 
would be subject to the same adjudication time frame beginning on the 
date that OMHA receives the Council remand to provide enrollees with an 
adjudication time frame for remanded appeals. In Sec.  423.2016(b)(6), 
we proposed to require that if the standards for an expedited appeal 
continue to be met after the appeal is remanded from the Council, the 
10-day expedited time frame would apply to an appeal remanded by the 
Council. If the standards for an expedited appeal are no longer met, 
the adjudication time frame for standard appeals would apply because 
the criteria for an expedited hearing are no longer present. Finally, 
we proposed at Sec.  423.2016(b) to revise the expedited appeal request 
process to permit an ALJ or attorney adjudicator to review a request 
for an expedited hearing, but not require the same ALJ or attorney 
adjudicator to adjudicate the expedited appeal, to provide OMHA with 
greater flexibility to review and assign requests for expedited 
hearings, and help ensure the 10-day adjudication process is completed 
as quickly as the enrollee's health requires. For example, if an 
attorney adjudicator were to review a request for an expedited hearing 
and determine that the standards for an expedited hearing were met, but 
did not believe a decision could be issued without a hearing, the 
attorney adjudicator could provide the enrollee with notice that the 
appeal would be expedited and transfer the appeal to an ALJ for an 
expedited hearing and decision.
    As described in section III.A.3.q of the proposed rule and II.B.3.q 
below, we proposed to move the provision for

[[Page 5043]]

waiving the adjudication period from current Sec.  423.2036(d) to 
proposed Sec.  423.2016(c) because proposed Sec.  423.2016 addresses 
adjudication time frames and, as we stated in the proposed rule, we 
believed the section is a better place for discussing adjudication time 
frame waivers.
    We proposed that the provisions of proposed Sec.  405.1016(d) also 
be adopted in proposed Sec.  423.2016(c) for adjudication period 
waivers and stays of the proceedings ordered by a court or granted by 
an ALJ or attorney adjudicator on motion by an enrollee.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: Two commenters opposed the proposal to remove ``must'' 
from Sec.  423.2016(a) and (b), stating that it would be detrimental to 
beneficiaries given the current state of the appeals system. One 
commenter added that if beneficiary and enrollee appeals are 
prioritized by OMHA, there is no compelling reason to alter the time 
frame requirement.
    Response: We disagree that the proposal will be detrimental to 
beneficiaries. As discussed in section II.B.3.h.i above in response to 
similar comments about our proposal to remove ``must'' from Sec.  
405.1016(a) and (c), removing ``must'' does not alter the applicable 
adjudication time frames, and so does not abrogate the general 
expectation that a decision, dismissal, or remand will be issued within 
those time frames. Nor will removing ``must'' have an effect on ALJs 
and attorney adjudicators issuing a decision, dismissal, or remand as 
quickly as possible, so the change will not result in delays in 
obtaining a decision, dismissal, or remand. Moreover, appeals brought 
by beneficiaries, including appeals by Part D enrollees, are 
prioritized under current OMHA policy and are generally decided within 
the applicable adjudication time frame.
    We also disagree that the proposal is unnecessary. As we explained 
in the proposed rule, there may be times in which it is not possible to 
issue a decision, dismissal, or remand within the applicable 
adjudication time frame. 81 FR 43790, 43823. Removing ``must'' from 
Sec.  423.2016(a) and (b) more accurately reflects that the time frames 
in those sections will not always be met.
    Comment: One commenter supported the proposal to adopt adjudication 
time frames for appeals that are remanded by the Council. The commenter 
requested clarification regarding how an appellant will know when OMHA 
receives a remand, starting the adjudication time frame for cases that 
are subject to an adjudication time frame.
    Response: We thank the commenter for its support. We note that when 
the Council remands an appeal to OMHA, notice of the remand is also 
sent to the appellant and other parties consistent with Sec.  405.1128. 
This notice shows the date that a remand was issued by the Council, 
giving the appellant a general idea of when a remand would have been 
received by OMHA. If an appellant would like to know the exact date 
that a remand was received by OMHA for purposes of calculating any 
applicable adjudication time frame, the appellant can contact OMHA 
directly or check the status of a specific appeal using AASIS, which 
provides public access to appeal status information and can be accessed 
through the OMHA Web site (www.hhs.gov/omha). Currently, for appeals 
that have been remanded by the Council, the original ALJ appeal number 
assigned to the case will display in AASIS with a status indicator of 
``Reopened,'' along with the new ALJ appeal number assigned to the 
remanded appeal.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec.  423.2016 as proposed without modification.
i. Submitting Evidence (Sec. Sec.  405.1018 and 423.2018)
    As described below, we proposed a number of changes to current 
Sec. Sec.  405.1018 and 423.2018, which address submitting evidence 
before an ALJ hearing is conducted. 81 FR 43790, 43823-43824. We 
proposed to retitle the sections from ``Submitting evidence before the 
ALJ hearing'' to ``Submitting evidence'' because evidence may be 
submitted and considered in appeals for which no hearing is conducted 
by an ALJ, and we believe an attorney adjudicator should be able to 
consider submitted evidence in deciding appeals as proposed in section 
II.B of the proposed rule (and discussed in section II.A.2 above). For 
the same reason, we proposed in Sec.  423.2018 to replace the 
references to ``hearings'' in the heading to paragraph (a) and in the 
introductory text to paragraphs (b) and (c), with ``appeals.'' We also 
proposed to add headings to paragraphs that do not currently have 
headings, for clarity of the matters addressed in the paragraphs.
    Current Sec.  405.1018(a) states that, except as provided in this 
section, parties must submit all written evidence they wish to have 
considered at the hearing with the request for hearing (or within 10 
calendar days of receiving the notice of hearing). We proposed in Sec.  
405.1018(a) to provide for the submission of other evidence, in 
addition to written evidence, that the parties wish to have considered. 
Other evidence could be images or data submitted on electronic media. 
We proposed to also adopt this revision in Sec.  405.1018(b) and Sec.  
423.2018(a), (b), and (c). We also proposed in Sec.  405.1018(a) to 
remove ``at the hearing'' so that parties would submit all written or 
other evidence they wish to have considered, and consideration of the 
evidence would not be limited to the hearing. We proposed a 
corresponding change to Sec.  423.2018(a).
    Current Sec.  405.1018(a) states that evidence must be submitted 
with the request for hearing, or within 10 calendar days of receiving 
the notice of hearing. This provision has caused confusion as to when 
evidence is required to have been submitted because current Sec.  
405.1014(a)(7) allows an appellant to state in the request for hearing 
that additional evidence will be submitted and the date it will be 
submitted. To reconcile the provisions, we proposed in Sec.  
405.1018(a) to provide that parties must submit all written or other 
evidence they wish to have considered with the request for hearing, by 
the date specified in the request for hearing in accordance with 
proposed Sec.  405.1014(a)(2), or if a hearing is scheduled, within 10 
calendar days of receiving the notice of hearing. We proposed to also 
adopt these revisions in Sec.  423.2018(b) and (c).
    Current Sec.  405.1018(b) addresses how the submission of evidence 
impacts the adjudication period, and provides that if evidence is 
submitted later than 10 calendar days after receiving the notice of 
hearing, the period between when the evidence ``was required to have 
been submitted'' and the time it is received does not count towards an 
adjudication period. To simplify the provision, we proposed at Sec.  
405.1018(b) that if evidence is submitted later than 10 calendar days 
after receiving the notice of hearing, any applicable adjudication 
period is extended by the number of calendar days in the period between 
10 calendar days after receipt of the notice of hearing and the day the 
evidence is received. We also proposed to adopt this provision in Sec.  
423.2018(b)(2) and (c)(2), except that in (c)(2), the adjudication time 
frame is affected if the evidence is submitted later than 2 calendar 
days after receipt of the notice of expedited hearing because 2 
calendar days is the equivalent time frame to submit evidence for 
expedited appeals before the adjudication period is affected under 
current Sec.  423.2018.

[[Page 5044]]

    Current Sec.  405.1018(c) addresses new evidence, and is part of 
the implementation of section 1869(b)(3) of the Act, which precludes a 
provider or supplier from introducing evidence after the QIC 
reconsideration unless there is good cause that prevented the evidence 
from being introduced at or before the QIC's reconsideration. These 
provisions, which provide for the early submission of evidence, help 
adjudicators to obtain evidence necessary to reach the correct decision 
as early in the appeals process as possible. We proposed to incorporate 
current Sec.  405.1018(c), which requires a provider, supplier, or 
beneficiary represented by a provider or supplier that wishes to 
introduce new evidence to submit a statement explaining why the 
evidence was not previously submitted to the QIC, or a prior decision-
maker, in proposed Sec.  405.1018(c)(1). However, current Sec.  
405.1018 does not address the consequences of not submitting the 
statement. The statute sets a bar to introducing new evidence, and the 
submitting party must establish good cause by explaining why the 
evidence was not previously submitted to the QIC, or a prior decision-
maker. However, when a provider or supplier, or beneficiary represented 
by a provider or supplier, fails to include the required statement, 
OMHA ALJs and staff spend time seeking out the explanation and 
following up with parties to fulfill their obligation. Thus, we 
proposed to revise Sec.  405.1018(c)(2) to state that if the provider 
or supplier, or beneficiary represented by a provider or supplier fails 
to include the statement explaining why the evidence was not previously 
submitted, the evidence will not be considered. Because only the 
enrollee is a party to a Part D appeal, we did not propose a 
corresponding revision to Sec.  423.2018.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: One commenter questioned whether directing parties to 
submit all evidence with the request for hearing is incompatible with 
the appeal instructions currently sent by QICs, which instruct 
appellants not to attach evidence to the hearing request and instead 
submit the evidence directly to the ALJ when the case is assigned.
    Response: We do not agree that proposed Sec.  405.1018(a) requires 
an appellant to submit all evidence with the request for hearing, or 
that the proposals are incompatible with appeal instructions currently 
sent by QICs. Under current Sec.  405.1018(a), appellants may submit 
evidence with the request for hearing or within 10 calendar days of 
receiving the notice of hearing. However, current Sec.  405.1014(a)(7) 
also provides that in a request for hearing, an appellant could provide 
a statement of any additional evidence to be submitted and the date it 
will be submitted. Due to the significant increase in appeals to OMHA 
in recent years, OMHA requested that the QICs include language 
encouraging appellants to use current Sec.  405.1014(a)(7) to submit 
evidence directly to the ALJ after the appeal was assigned, to help 
OMHA process requests for hearing more efficiently.
    Under proposed Sec.  405.1018(a), we proposed to add an explicit 
reference to the Sec.  405.1014(a)(7) provision (re-designated as 
proposed Sec.  405.1014(a)(2)) to more fully specify in proposed Sec.  
405.1018(a) when evidence may be submitted. Under proposed Sec.  
405.1018(a), evidence can be submitted after a request for hearing is 
submitted and, therefore, an appellant would not be precluded from 
submitting the evidence at a later time. For example, an appellant 
could indicate in the request for hearing that it has additional 
evidence to submit and will submit it when the appeal is assigned to an 
adjudicator. However, there may be times when the appellant wishes to 
submit new evidence with the request for hearing, such as when the 
appellant waives his or her right to appear at a hearing before an ALJ 
and requests that a decision be made on the record, or the appellant 
believes the evidence addresses the issues identified in the 
reconsideration and including the evidence may increase the likelihood 
that a decision that is fully favorable could be issued based on the 
record alone in accordance with proposed Sec.  405.1038(a). The current 
appeal instructions do not preclude an appellant from submitting 
evidence with the request for hearing, but rather request that 
appellants consider submitting it at a later time. Therefore, we 
believe that by allowing for the submission of evidence with the 
request for hearing or after the request is submitted, by the date 
specified in the request for hearing in accordance with Sec.  
405.1014(a)(2) or, if a hearing is scheduled, within 10 calendar days 
of receiving the notice of hearing, proposed Sec.  405.1018(a) is not 
incompatible with appeal instructions currently sent by QICs. However, 
we will review the appeal instructions being issued by QICs to 
determine if clarification may be appropriate to reduce potential 
confusion.
    Comment: Two commenters recommended adding language to specifically 
state that Medicaid State agencies are exempt from the requirement of 
current Sec.  405.1018(c) to provide a statement of good cause 
explaining why evidence was submitted for the first time at the OMHA 
level.
    Response: As discussed above, current Sec.  405.1018(c) is part of 
the implementation of section 1869(b)(3) of the Act (42 U.S.C. 
1395ff(b)(3)), which precludes a provider or supplier from introducing 
evidence after the QIC reconsideration without a showing of good cause. 
Considering the language of the statute, which expressly states that 
this limitation applies to providers and suppliers, we agree that the 
requirement under Sec.  405.1018(c) to support the introduction of new 
evidence with a statement of good cause does not apply to Medicaid 
State agencies. Further, we note that the provision would not apply to 
other parties or potential parties such as unrepresented beneficiaries, 
applicable plans, CMS and its contractors, or beneficiaries represented 
by someone other than a provider or supplier. To address the comment 
and more broadly clarify the application of the requirements under 
proposed Sec.  405.1018, we are redesignating proposed Sec.  
405.1018(d) as (d)(1) and clarifying that the requirements in 
paragraphs (a) and (b) do not apply to oral testimony given at a 
hearing, or to evidence submitted by unrepresented beneficiaries, as is 
the case under current Sec.  405.1018(d). Because current Sec.  
405.1018(c) applies only to providers, suppliers, and beneficiaries 
represented by a provider or supplier, we are also adding paragraph 
(d)(2) to clarify that the requirements in paragraph (c) to show good 
cause for the submission of new evidence do not apply to oral testimony 
given at a hearing or to evidence submitted by unrepresented 
beneficiaries, Medicaid State agencies, applicable plans, CMS and its 
contractors, or beneficiaries represented by someone other than a 
provider or supplier.
    Comment: One commenter stated that any limitation on new evidence 
prevents a fair hearing because OMHA does not always receive evidence 
that was submitted earlier in the appeal process. Another commenter 
suggested that Sec.  405.1018(c)(2) should be amended to provide 
flexibility for an ALJ or attorney adjudicator to review evidence that 
was not timely submitted, in his or her discretion, even without an 
explanation of good cause.
    Response: We disagree with the commenter that any limitation on new 
evidence prevents a fair hearing because OMHA does not always receive 
evidence that was submitted earlier in the appeal process. There are 
ample

[[Page 5045]]

opportunities to submit evidence at the redetermination and 
reconsideration levels of appeal, and section 1869(b)(3) of the Act 
expressly states that providers and suppliers may not introduce new 
evidence in any appeal that was not presented at the reconsideration, 
unless there is good cause which precluded the introduction of such 
evidence at or before the reconsideration. This statutory provision was 
added to promote an efficient appeals process in which adjudicators 
receive evidence as early in the appeals process as possible, but also 
allow new evidence to be introduced after the reconsideration when 
there is good cause. OMHA receives evidence from the contractors and, 
in the vast majority of cases, there is no question regarding missing 
evidence that was submitted at prior levels of appeal; but in the few 
cases in which that is a question, good cause could be found to admit 
the evidence in accordance with proposed Sec.  405.1028(a)(2)(iv). We 
also disagree with the commenter who suggested allowing additional 
flexibility for an ALJ or attorney adjudicator to consider evidence 
that was not timely submitted in accordance with section 1869(b)(3) of 
the Act without a statement of good cause, because doing so would be 
contrary to section 1869(b)(3) of the Act.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1018 and 423.2018 as proposed with the 
following modifications. We are revising Sec.  405.1018(d) to provide 
in paragraph (d)(1) that the requirements in paragraphs (a) and (b) do 
not apply to oral testimony given at a hearing or to evidence submitted 
by unrepresented beneficiaries, and in (d)(2) that the requirement in 
paragraph (c) to support new evidence with a statement of good cause 
does not apply to oral testimony given at a hearing or to evidence 
submitted by an unrepresented beneficiary, CMS or any of its 
contractors, a Medicaid State agency, an applicable plan, or a 
beneficiary represented by someone other than a provider or supplier. 
We are also correcting a drafting error and adding a missing comma to 
Sec.  423.2018(b)(1) and (c)(1) for consistency with Sec.  405.1018(a) 
and to clarify that there are three time frames when a represented 
enrollee may submit written or other evidence he or she wishes to have 
considered with the request for hearing: (1) With the request for 
hearing; (2) by the date specified in the request for hearing in 
accordance with Sec.  423.2014(a)(2); or (3) if a hearing is scheduled, 
within 10 calendar days of receiving the notice of hearing.
j. Time and Place for a Hearing Before an ALJ (Sec. Sec.  405.1020 and 
423.2020)
    As described below, we proposed a number of changes to provisions 
concerning the time and place for a hearing before an ALJ in Sec. Sec.  
405.1020 and 423.2020. 81 FR 43790, 43824-43827. As the ALJ hearing 
function transitioned from SSA, where hearings could be held at over 
140 hearing sites nation-wide, to OMHA with four field offices, OMHA 
became one of the first agencies to use video-teleconferencing (VTC) as 
the default mode of administrative hearings. The effective use of VTC 
mitigated OMHA's reduced geographic presence, and allowed OMHA to 
operate more efficiently and at lower cost to the American taxpayers. 
However, the preference of most appellants quickly turned to hearings 
conducted by telephone. We stated in the proposed rule that, in FY 
2015, over 98% of hearings before OMHA ALJs were conducted by 
telephone. Telephone hearings provide parties and their representatives 
and witnesses with the opportunity to participate in the hearing 
process with minimal disruption to their day, and require less 
administrative burden at even lower cost to the American taxpayers than 
hearings conducted by VTC. OMHA ALJs also prefer telephone hearings in 
most instances, because they allow more hearings to be conducted 
without compromising the integrity of the hearing. However, even if a 
telephone hearing is being conducted, when the ALJ conducting the 
hearing believes visual interaction is necessary for a hearing, he or 
she may conduct a VTC hearing, and when special circumstances are 
presented, ALJs may conduct in-person hearings.
    Despite the shift in preferences for most appellants to telephone 
hearings, current Sec.  405.1020 still makes VTC the default mode of 
hearing, with the option to offer a telephone hearing to appellants. In 
fact, some appellants have required the more expensive VTC hearing even 
when their representative is presenting only argument and no testimony 
is being offered. We stated in the proposed rule that we believe this 
is inefficient and results in wasted time and resources that could be 
invested in adjudicating additional appeals, and unnecessarily 
increases the administrative burdens and costs on the government for 
conducting a hearing with little to no discernable benefit to the 
parties in adjudicating denials of items or services that have already 
been furnished. Based on these considerations, we proposed that a 
telephone hearing be the default method, unless the appellant is an 
unrepresented beneficiary. We stated in the proposed rule that we 
believed that this proposal balances the costs and administrative 
burdens with the interests of the parties, recognizing that 
unrepresented beneficiaries may have an increased need and desire to 
visually interact with the ALJ.
    We proposed in Sec.  405.1020(b) to provide two standards for 
determining how appearances are made, depending on whether appearances 
are by unrepresented beneficiaries or by individuals other than 
unrepresented beneficiaries. We proposed to incorporate the provisions 
of current Sec.  405.1020(b) into proposed Sec.  405.1020(b)(1), and 
revise them to specify that they are applicable to an appearance by an 
unrepresented beneficiary who files a request for hearing. We proposed 
in subsection (b)(1) that the ALJ would direct that the appearance of 
an unrepresented beneficiary who filed a request for hearing be 
conducted by VTC if the ALJ finds that VTC technology is available to 
conduct the appearance, unless the ALJ finds good cause for an in-
person appearance. As in the current rule, we also proposed in Sec.  
405.1020(b)(1) to allow the ALJ to offer to conduct a telephone hearing 
if the request for hearing or administrative record suggests that a 
telephone hearing may be more convenient to the unrepresented 
beneficiary. The current standard for determining whether an in-person 
hearing should be conducted involves a finding that VTC technology is 
not available or special or extraordinary circumstances exist. Because, 
absent special or extraordinary circumstances, a hearing could still be 
conducted by telephone if VTC technology were unavailable, we proposed 
that the standard for an in-person hearing be revised to state that VTC 
or telephone technology is not available or special or extraordinary 
circumstances exist, and the determination would be characterized as 
finding good cause for an in-person hearing, to align with current 
Sec.  405.1020(i)(5), which provides for granting a request for an in-
person hearing on a finding of good cause. We also proposed in 
Sec. Sec.  405.1020(b)(1) and 405.1020(i)(5) to replace the reference 
to obtaining the concurrence of the ``Managing Field Office ALJ'' with 
the ``Chief ALJ or designee.'' We stated in the proposed rule that the 
position of the Managing Field Office ALJ became what is now an 
Associate Chief ALJ, see

[[Page 5046]]

80 FR 2708, and using ``Chief ALJ or designee'' would provide OMHA with 
the flexibility to designate the appropriate individual regardless of 
future organizational changes. We proposed to adopt these revisions in 
proposed Sec.  423.2020(b)(1) for appearances by unrepresented 
enrollees and Sec.  423.2020(i)(5), for when an ALJ may grant a request 
for an in-person hearing. We also proposed in Sec.  405.1020(b)(1) to 
replace ``videoteleconferencing,'' with ``video-teleconferencing,'' for 
consistency with terminology used in Sec. Sec.  405.1000, 405.1036, 
423.2000, 423.2020 and 423.2036.
    Section 405.1020(b)(2), as proposed, addresses appearances by an 
individual other than an unrepresented beneficiary who files a request 
for hearing. We proposed in Sec.  405.1020(b)(2) that the ALJ would 
direct that those individuals appear by telephone, unless the ALJ finds 
good cause for an appearance by other means. Further, we proposed in 
Sec.  405.1020(b)(2) that the ALJ may find good cause for an appearance 
by VTC if he or she determines that VTC is necessary to examine the 
facts or issues involved in the appeal. Also, we proposed that the ALJ, 
with the concurrence of the Chief ALJ or designee, may find good cause 
that an in-person hearing should be conducted if VTC and telephone 
technology are not available, or special or extraordinary circumstances 
exist. We proposed to adopt these revisions in Sec.  423.2020(b)(2) for 
appearances by represented enrollees, which is more specific than 
proposed Sec.  405.1020(b)(2) because only enrollees are parties to 
appeals under part 423, subpart U, and the provisions of subsection 
(b)(2) would apply only to appearances by represented enrollees.
    Current Sec.  405.1020(c)(1) states that the ALJ sends a notice of 
hearing. This has caused confusion as to whether the ALJ must 
personally sign the notice, or whether it can be sent at the direction 
of the ALJ. We believe that the notice may be sent at the direction of 
the ALJ, and requiring an ALJ signature adds an unnecessary step in the 
process of issuing the notice. Therefore, we proposed in Sec.  
405.1020(c)(1) that a notice of hearing be sent without further 
qualification, and to let other provisions indicate the direction that 
is necessary from the ALJ in order to send the notice, such as Sec.  
405.1022(c)(1), which provides that the ALJ sets the time and place of 
the hearing. We proposed to adopt these provisions in Sec.  
423.2020(a)(1).
    Current Sec.  405.1020(c)(1) also requires that the notice of 
hearing be sent to the parties who filed an appeal or participated in 
the reconsideration, any party who was found liable for the services at 
issue subsequent to the initial determination, and the QIC that issued 
the reconsideration. However, there are instances in which a party who 
does not meet the criteria may face liability because the ALJ may 
consider a new issue based on a review of the record. To address this, 
we proposed in Sec.  405.1020(c)(1) to add that a party that may be 
found liable based on a review of the record must be sent a notice of 
hearing. In addition, current Sec.  405.1020 does not address notices 
of hearing sent to CMS or a non-QIC contractor. We stated in the 
proposed rule that, currently, ALJs may also send a notice of hearing 
to CMS or a contractor when the ALJ believes their input as a 
participant or party may be beneficial. We proposed in Sec.  
405.1020(c)(1) that the notice of hearing also be sent to CMS or a 
contractor that the ALJ believes would be beneficial to the hearing. We 
did not propose any corresponding revisions to current Sec.  
423.2020(c)(1) because only enrollees are parties to appeals under part 
423, subpart U.
    OMHA ALJs have expressed concern that parties and representatives 
who appear at a hearing with multiple individuals and witnesses who 
were not previously identified, complicate and slow the hearing 
process. We stated that while a party or representative has 
considerable leeway in determining who will attend the hearing or be 
called as a witness, prior notice of those individuals is necessary for 
the ALJs to schedule adequate hearing time, manage their dockets, and 
conduct the hearing. To address these concerns, we proposed at Sec.  
405.1020(c)(2)(ii) to add a requirement to specify the individuals from 
the entity or organization who plan to attend the hearing if the party 
or representative is an entity or organization, and at subsection 
(c)(2)(iii) to add a requirement to list the witnesses who will be 
providing testimony at the hearing, in the response to the notice of 
hearing. We also proposed to consolidate the provisions in current 
Sec.  405.1020(c)(2)(i) and (c)(2)(ii) in proposed Sec.  
405.1020(c)(2)(i) to simplify the provisions related to the current 
requirements for replying to the notice of hearing. Thus, subsection 
(c)(2)(i) would require all parties to the ALJ hearing to reply to the 
notice by acknowledging whether they plan to attend the hearing at the 
time and place proposed in the notice of hearing, or whether they 
object to the proposed time and/or place of the hearing. We proposed at 
Sec.  423.2020(c)(2) to adopt corresponding revisions for an enrollee's 
reply to the notice of hearing.
    We also proposed in Sec.  405.1020(c)(2) to remove the provision 
for CMS or a contractor that wishes to participate in the hearing to 
reply to the notice of hearing in the same manner as a party because a 
non-party may not object to the proposed time and place of the hearing, 
or present witnesses. Instead, we proposed in Sec.  405.1020(c)(3) to 
require CMS or a contractor that wishes to attend the hearing as a 
participant to reply to the notice of hearing by acknowledging whether 
it plans to attend the hearing at the time and place proposed in the 
notice of hearing, and specifying who from the entity plans to attend 
the hearing. We proposed at Sec.  423.2020(c)(3) to adopt corresponding 
revisions for CMS's, the IRE's, or the Part D plan sponsor's reply to 
the notice of hearing when the entity requests to attend the hearing as 
a participant.
    In discussing a party's right to waive a hearing, current Sec.  
405.1020(d) states that a party may waive the right to a hearing and 
request that the ALJ issue a decision based on the written evidence in 
the record. In light of proposed Sec.  405.1038(b), which would allow 
attorney adjudicators to issue decisions in appeals that do not require 
hearings on the record without an ALJ conducting a hearing in certain 
situations, we proposed in Sec.  405.1020(d) to state that a party also 
may waive the right to a hearing and request a decision based on the 
written evidence in the record in accordance with Sec.  405.1038(b), 
but an ALJ may require the parties to attend a hearing if it is 
necessary to decide the case. We proposed at Sec.  423.2020(d) to adopt 
corresponding revisions for an enrollee to waive his or her right to a 
hearing and request a decision based on the written evidence in the 
record in accordance with Sec.  423.2038(b), but an ALJ could require 
the enrollee to attend a hearing if it is necessary to decide the case. 
We stated in the proposed rule that these references would direct 
readers to the section that provides the authority for a decision based 
on the written record, which would provide them with a complete 
explanation of when the authority may be used and notify them that an 
ALJ or attorney adjudicator may issue the decision.
    In addressing the ALJ's authority to change the time or place of 
the hearing if the party has good cause to object, current Sec.  
405.1020(e) requires a party to make the request to change the time or 
place of the hearing in writing. However, we stated that on occasion, a 
party may need to request a change on the day prior to, or the day of, 
a hearing due to an emergency, such as a sudden illness or injury, or 
inability to get to a

[[Page 5047]]

site for the hearing. In this circumstance, we stated in the proposed 
rule that we believed an oral request should be permitted. Therefore, 
we proposed in Sec.  405.1020(e)(3) that the request must be in 
writing, except that a party may orally request that a hearing be 
rescheduled in an emergency circumstance the day prior to or day of the 
hearing, and the ALJ must document the oral request in the 
administrative record. We proposed at Sec.  423.2020(e)(3) to adopt a 
corresponding provision for an enrollee to orally request a rescheduled 
standard hearing, and to modify the documentation requirement, which is 
currently limited to documenting oral requests made for expedited 
hearings, to include all oral objections.
    In addition, current Sec. Sec.  405.1020(e)(4) and 423.2020(e)(4), 
which explain the ALJ may change the time or place of the hearing if 
the party has good cause, contain a parenthetical that references the 
procedures that an ALJ follows when a party does not respond to a 
notice of hearing and fails to appear at the time and place of the 
hearing. The parenthetical does not appear to address or assist in 
understanding the circumstances covered by current Sec. Sec.  
405.1020(e)(4) and 423.2020(e)(4), and we, therefore, proposed to 
remove the parenthetical from the respective sections.
    Current Sec. Sec.  405.1020(g)(3) and 423.2020(g)(3) provide a list 
of examples of circumstances a party might give for requesting a change 
in the time or place of the hearing. We stated in the proposed rule 
that we have heard from ALJs and stakeholders that it would be helpful 
to also include the following two additional examples: (1) The party or 
representative has a prior commitment that cannot be changed without 
significant expense, in order to account for circumstances in which 
travel or other costly events may conflict with the time and place of a 
hearing, which the ALJ may determines warrants good cause for changing 
the time or place of the hearing; and (2) the party or representative 
asserts that he or she did not receive the notice of hearing and is 
unable to appear at the scheduled time and place, which the ALJ may 
determine warrants good cause for changing the time or place of the 
hearing. We proposed in Sec. Sec.  405.1020(g)(3)(vii) and (viii), and 
423.2020(g)(3)(vii) and (viii) to add these two examples to address 
these circumstances. We believe these additional examples will provide 
greater flexibility in the appeals process and better accommodate the 
needs of appellants.
    We proposed in Sec. Sec.  405.1020(h) and 423.2020(h) to revise the 
references to the adjudication ``deadline'' with references to the 
adjudication ``period,'' for consistency in terminology with the 
specified cross-references.
    We proposed revisions to Sec.  405.1020(i) to align the provision 
with proposed Sec.  405.1020(b). We proposed in Sec.  405.1020(i) that 
if an unrepresented beneficiary who filed the request for hearing 
objects to a VTC hearing or to the ALJ's offer to conduct a hearing by 
telephone, or if a party other than an unrepresented beneficiary who 
filed the request for hearing objects to a telephone or VTC hearing, 
the party must notify the ALJ at the earliest possible opportunity 
before the time set for the hearing and request a VTC or in-person 
hearing. The party would be required to state the reason for the 
objection and the time and/or place that he or she wants an in-person 
or VTC hearing to be held, and the request must be in writing. We 
proposed in Sec.  405.1020(i)(4) to incorporate the current Sec.  
405.1020(i)(4) provision that requires the appeal to be adjudicated 
within the time frame specified in Sec.  405.1016 if a request for an 
in-person or VTC hearing is granted unless the party waives the time 
frame in writing. However, we proposed at Sec.  405.1020(i)(4) to 
revise the language to more accurately state that the ALJ issues a 
``decision, dismissal, or remand to the QIC,'' rather than just a 
``decision,'' within the adjudication time frame specified in Sec.  
405.1016. We proposed revisions to Sec.  423.2020(i) to align the 
provision with proposed Sec.  423.2020(b). We proposed in Sec.  
423.2020(i) that if an unrepresented enrollee who filed the request for 
hearing objects to a VTC hearing or to the ALJ's offer to conduct a 
hearing by telephone, or if a represented enrollee who filed the 
request for hearing objects to a telephone or VTC hearing, the enrollee 
or representative must notify the ALJ at the earliest possible 
opportunity before the time set for the hearing and request a VTC or 
in-person hearing. The enrollee would be required to state the reason 
for the objection and the time and/or place that he or she wants an in-
person or VTC hearing to be held. We proposed in Sec.  423.2020(i)(4) 
to incorporate the current Sec.  423.2020(i)(4) provision with some 
modifications so that the appeal would be adjudicated within the time 
frame specified in Sec.  423.2016 if a request for an in-person or VTC 
hearing is granted unless the party waives the time frame in writing. 
We proposed at Sec.  423.2020(i)(4) to revise the language to more 
accurately state that the ALJ issues a ``decision, dismissal, or remand 
to the IRE,'' rather than just a ``decision,'' within the adjudication 
time frame specified in Sec.  423.2016 and to include requests for VTC 
hearings as well as requests for in-person hearings. In addition, we 
proposed at Sec. Sec.  405.1020(i)(5) and 423.2020(i)(5) to provide 
that upon a finding of good cause, a hearing would be rescheduled at a 
time and place when the party may appear in person or by VTC, to 
account for objections to VTC hearings as well as objections to 
telephone hearings or offers to conduct a hearing via telephone. We 
also proposed to replace ``concurrence of the Managing Field Office 
ALJ'' with ``concurrence of the Chief ALJ or a designee'' because the 
position of Managing Field Office ALJ was replaced by the position of 
Associate Chief ALJ (80 FR 2708) and providing a more general reference 
would provide greater flexibility in the future as position titles 
change.
    Current Sec. Sec.  405.1020 and 423.2020 do not address what occurs 
when the ALJ changes the time or place of the hearing. We proposed at 
Sec.  405.1020(j) to add a provision titled ``Amended notice of 
hearing'' to clarify that, if the ALJ changes or will change the time 
and/or place of the hearing, an amended notice of hearing must be sent 
to all of the parties who were sent a copy of the notice of hearing and 
CMS or its contractors that elected to be a participant or party to the 
hearing, in accordance with the procedures of Sec.  405.1022(a), which 
addresses issuing a notice of hearing. We proposed at Sec.  423.2020(j) 
to add a provision to clarify that, if the ALJ changes or will change 
the time and/or place of the hearing, an amended notice of hearing must 
be sent to the enrollee and CMS, the IRE, and/or the Part D plan 
sponsor in accordance with the procedures of Sec.  423.2022(a), which 
addresses issuing a notice of hearing. We stated that these revisions 
would help ensure that if changes are made to the time or place of the 
hearing, a new notice is issued or waivers are obtained in a consistent 
manner.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    We received ten comments on the proposed changes to time and place 
for a hearing before an ALJ. We received five comments on the proposal 
to make telephone the default method for conducting hearings, except 
when the appellant is an unrepresented beneficiary, unless an ALJ finds 
good cause for conducting a hearing by VTC or an in-person hearing. The 
remaining

[[Page 5048]]

comments addressed other aspects of the time and place for hearing 
before an ALJ and are discussed in further detail below.
    Comment: Three commenters on behalf of advocacy organizations and 
one individual commenter, opposed making telephone the default method 
for conducting hearings for appellants who are not unrepresented 
beneficiaries. Commenters generally argued that conducting a hearing by 
telephone reduces due process, but they appreciated the proposal to 
maintain VTC as the default method for conducting hearings for 
unrepresented beneficiaries. By contrast, one commenter supported the 
proposal.
    Response: We thank the commenter who supports the proposal. We 
disagree with opposing commenters that telephone hearings reduce due 
process. We believe that all ALJ hearings currently conducted by OMHA 
fully protect appellants' rights to procedural due process, and that 
our proposed changes do not compromise those rights. Furthermore, 
section 1869(b)(1)(A) of the Act does not specify the manner in which 
hearings must be held, and in legislation that led to the establishment 
of OMHA to administer the ALJ hearing program, Congress instructed HHS 
to explore the possibility of providing hearings using formats other 
than in-person hearings. Specifically, the MMA instructed HHS to 
consider the feasibility of conducting Medicare hearings ``using tele- 
or videoconference technologies.'' See section 931(a)(2)(G) of the MMA.
    Under both the current regulations and our proposed changes, 
procedural safeguards are in place that meet the due process 
requirements for administrative hearings such as the right to proper 
notice that a hearing has been scheduled, the right of a party to 
appear before the ALJ to present evidence and to state his or her 
position, the right to have a representative present at the hearing, 
the right to present witnesses and testimony, the right to cross 
examine witnesses, the right to object to the issues in the notice and/
or the hearing method, the right to request and receive a copy of all 
or part of the record from OMHA (including the hearing audio), and the 
right to appeal the ALJ's decision. Parties also have the same access 
to the audio hearing record when appearing by telephone as they would 
have if appearing by VTC or in-person. In addition, the proposal 
includes mechanisms in Sec.  405.1020(b) that permit a VTC or in-person 
hearing if there is a finding of good cause in a given appeal. Given 
the procedural safeguards existing in the regulations, we do not 
believe changing the default method of conducting hearings to telephone 
hearings for appellants other than unrepresented beneficiaries would 
compromise an appellant's due process or right to a hearing.
    However, while we do not believe that due process requires a 
hearing that includes a visual component as a matter of right in all 
cases, we acknowledge that those who are most unfamiliar with legal 
proceedings, specifically unrepresented beneficiaries, may benefit from 
the interaction with the ALJ and be more comfortable with a visual 
component. Thus, the proposal provides two standards for determining 
how hearings would be conducted, depending on whether appearances are 
by unrepresented beneficiaries or by individuals other than 
unrepresented beneficiaries. We have retained VTC as the default 
hearing method for unrepresented beneficiaries under Sec.  
405.1020(b)(1), unless the ALJ finds good cause for an in-person 
hearing (note that the ALJ also may offer a telephone hearing in 
certain circumstances). Under Sec.  405.1020(b)(2) (as discussed 
below), in appearances by individuals other than unrepresented 
beneficiaries, telephone hearings are the default hearing method, 
though the parties may obtain a VTC or in-person hearing if the ALJ 
finds good cause.
    Comment: One commenter indicated telephone hearings do not take 
appreciably less time than VTC hearings, and also OMHA is budgeted to 
provide VTC hearings and there is no evidence that the volume of VTC 
hearings in past years has exceeded this line item on OMHA's 
operational budget.
    Response: We disagree with the commenter's assertions.
    As we stated in the proposed rule (81 FR 43824), in FY2015 alone, 
over 98% of hearings before OMHA ALJs were conducted by telephone, and 
in FY2016 over 99% of hearings before OMHA ALJs were conducted by 
telephone. Contrary to the commenter's assertion, we have learned over 
eleven years of operation that telephone hearings take less time and 
are less costly for parties, representatives, and witnesses because 
telephone hearings do not require travel time or travel expenses for 
parties to a VTC site. Telephone hearings also provide parties with the 
opportunity to participate in the hearing process with minimal 
disruption to the day. Further, telephone hearings take less time for 
OMHA to schedule and conduct. When a VTC hearing room is reserved or 
unavailable, scheduling of the hearing is delayed. Support staff must 
also remain present during the entire duration of a VTC hearing to 
assist the ALJ in case the equipment does not operate properly. We 
believe this is inefficient and can result in wasted staff time and 
resources that could be redirected to scheduling additional appeals.
    Although we acknowledge the volume of VTC hearings in past years 
has not exceeded OMHA's operational budget, due in part to the fact 
that a majority of hearings were conducted by telephone, telephone 
hearings cost less to conduct, and would result in significant savings 
to the agency and ultimately to the taxpayers. We also believe the 
money budgeted to provide for the more expensive VTC hearings could 
instead be reallocated to hire additional support staff and resources 
to address the backlog. On balance, telephone hearings require less 
administrative burden to parties and OMHA, at a lower cost to 
taxpayers.
    Comment: Commenters who opposed the proposal to make telephone 
hearing the default method of conducting a hearing for individuals 
other than unrepresented beneficiaries and supported maintaining VTC as 
the default method of conducting a hearing argued: (1) VTC is 
beneficial to ALJs in lengthy hearing sessions ``due to the volume of 
appeals, issues, documentation, and complexity of the arguments being 
conveyed''; (2) VTC allows a party to show and discuss images of 
injuries, wounds, and other visual evidence; (3) it is unreasonable to 
require an appellant to make their case by telephone ``where millions 
of dollars are at stake, or perhaps the very existence of an 
appellant''; (4) VTC is beneficial where reference to the medical 
documentation can be cumbersome; and (5) VTC can be particularly 
valuable in facilitating communication when representatives of 
appellants have limited familiarity with the OMHA appeals process.
    Response: Although telephone hearings are the default hearing 
method under proposed Sec.  405.1020(b)(2), (which we are finalizing in 
this rule), parties still have the opportunity under that section for a 
VTC or in-person hearing in certain circumstances. Sections 
405.1020(b)(2) and 423.2020(b)(2), as finalized, state the ALJ will 
direct that the appearance of an individual, other than an 
unrepresented beneficiary who filed a request for hearing, be conducted 
by telephone unless the ALJ finds good cause for an appearance by other 
means. Specifically, the ALJ may find good cause for an appearance by 
VTC if the ALJ determines VTC is necessary to examine the facts or 
issues in an appeal. In addition, the ALJ, with the concurrence of the 
Chief ALJ or

[[Page 5049]]

designee, may find good cause for an in-person hearing if VTC and phone 
technology are not available or special or extraordinary circumstances 
exist. We believe the situations raised by the commenters who opposed 
the proposal could be examples where ``the ALJ may find good cause for 
an appearance by VTC if he or she determines that VTC is necessary to 
examine the facts or issues involved in the appeal,'' depending on the 
facts of a particular appeal. See Sec. Sec.  405.1020(b)(2)(i) and 
423.2020(b)(2)(i). For example, under Sec.  405.1020(b)(2)(i) and 
423.2020(b)(2)(i), an ALJ could find that visual interaction is 
necessary and that there is good cause for a VTC hearing where: (1) The 
ALJ or appellant raises an issue with an individual's credibility; (2) 
a party presents multiple witnesses to provide testimony; or (3) a 
party wishes to present video/visual evidence. An ALJ may also find 
good cause where the case presents complex, challenging, or novel 
issues, such as in appeals with a high volume of claims and a high 
dollar or overpayment amount. We believe our decision not to provide an 
exhaustive description of the good cause standard in the regulations 
would benefit parties by affording an ALJ the flexibility to grant a 
VTC or an in-person hearing based on factors or circumstances that may 
be relevant in a particular case, yet unforeseen at this time.
    Comment: Commenters who opposed the proposal to make telephone 
hearing the default method of conducting a hearing and supported 
maintaining VTC as the default method of conducting a hearing argued: 
(1) The face-to-face aspect of VTC hearings afford greater assurance 
that ALJs will hear and understand the testimony and arguments being 
presented; (2) VTC hearings assure ALJs fulfill the duty to provide a 
fair hearing; and (3) VTC hearings allow an appellant to observe if the 
ALJ is tired, disinterested, talking to someone else in the room, 
thumbing through the file, or not referring to the file at all, which 
cannot be readily observed on a telephone call.
    Response: A primary function of the ALJ hearing is to allow the 
parties to present arguments and testimony, and to allow the ALJ to ask 
questions in order to provide the ALJ with the necessary information to 
make the findings of fact and conclusions of law in rendering a 
decision consistent with the applicable authorities. We do not agree 
that the face-to-face aspect of VTC hearings afford greater assurance 
that ALJs will hear and understand the testimony and arguments being 
presented. While the commenters may prefer to see the ALJ during the 
hearing, we do not believe a visual connection with the ALJ is 
necessary in most cases, and in the circumstances in which it may be 
necessary, the rules being finalized provide for a mechanism to request 
a VTC or in-person hearing in Sec. Sec.  405.1020(i) and 423.2020(i). 
Regardless of how the hearing is conducted, ALJs have a responsibility 
pursuant to Sec. Sec.  405.1030(b) and 423.2030(b) to fully examine the 
issues on appeal and question the parties and other witnesses, ensuring 
that all necessary testimony is considered, which would continue under 
these rules as finalized. An appellant can also ascertain whether the 
ALJ understands the testimony and arguments being presented over 
telephone, by gauging the ALJ's reaction to the testimony and 
arguments, the ALJ's follow-up questions, and whether the ALJ has 
lingering questions. The appellant can then provide the ALJ with the 
necessary clarification to enable the ALJ to make the findings of fact 
and conclusions of law. Further, the written decision will reflect the 
testimony and arguments presented at the hearing, and if a party is 
dissatisfied with the ALJ's decision, the party may request a review by 
the Council and, if applicable, indicate what testimony or arguments 
presented at the hearing were not fully considered.
    In addition, we do not believe that visual interaction is necessary 
to assure appellants that ALJs are fulfilling their duty to provide a 
fair hearing. OMHA ALJs have a responsibility to ensure both a fully 
examined and fairly administered hearing, and must fulfill their duties 
with fairness and impartiality in accordance with section 205(b) of the 
Act. As discussed above, we believe that all ALJ hearings currently 
conducted by OMHA fully protect appellants' rights to procedural due 
process, including the right to a fair hearing, and that the changes we 
are finalizing do not compromise those rights. Further, we do not agree 
that visual interaction is necessary to observe whether the ALJ is 
tired, disinterested, or talking to someone else in the room, because 
an appellant can readily observe how the ALJ is acting during a 
telephone hearing by noting the ALJ's tone of voice, pauses, and 
reaction to arguments or responses to questions. Moreover, we note the 
visual component of the hearing is not recorded or subject to review. 
However, parties have the same access to the audio hearing record when 
appearing by telephone as they would have if appearing by VTC or in 
person. The ALJ and his or her staff may also review the audio hearing 
record after the hearing is conducted, which becomes part of the 
administrative record for other reviewers. Based on the foregoing, we 
believe that telephone hearings provide sufficient assurances addressed 
by the commenters.
    Comment: One commenter suggested that giving ALJs the discretion to 
find good cause for an appearance by VTC would almost never result in a 
VTC hearing, and in the commenter's opinion, the good cause provisions 
for VTC or in-person hearings is ``almost meaningless.''
    Response: We disagree with the commenter's assertion that the good 
cause provision for VTC or in-person hearings is ``almost 
meaningless.'' We believe the good cause provisions are meaningful 
because, as discussed above, an ALJ could find that visual interaction 
is necessary and that there is good cause for a VTC hearing where the 
ALJ or appellant raises an issue with an individual's credibility, a 
party presents multiple witnesses to provide testimony, or a party 
wishes to present video/visual evidence. An ALJ may also find good 
cause where the case presents complex, challenging, or novel issues, 
such as in appeals with a high volume of claims and a high dollar or 
overpayment amount. Given the volume of hearing requests and 
adjudication timeframes imposed by statute, we believe it is reasonable 
to use a good cause standard to determine when it is appropriate for an 
ALJ to conduct a VTC hearing for all appellants except unrepresented 
beneficiaries. In addition, as discussed above, we believe that 
telephone hearings adequately protect appellants' rights to procedural 
due process. In proposed Sec. Sec.  405.1020(b)(2) and 423.2020(b)(2), 
which we are finalizing in this rule, we provide for circumstances in 
which it may be appropriate for the ALJ to provide a VTC or in-person 
hearing on his or her own initiative, or to grant a request under 
Sec. Sec.  405.1020(i) and 423.2020(i) to change the type of hearing 
scheduled and permit a VTC or in-person hearing. For appellants other 
than unrepresented beneficiaries, ALJs will evaluate VTC and in-person 
hearing requests using the good cause standard established in 
Sec. Sec.  405.1020(b)(2) and 423.2020(b)(2), and when appropriate 
grant a request for a VTC or in-person hearing. If an individual 
appellant believes a request for a VTC or in-person hearing should have 
been granted and disagrees with the outcome of the appeal, the 
appellant can request review of the ALJ's decision by the Council and 
request that the Council remand the appeal for a new hearing if it 
believes that the method of conducting the hearing impacted the

[[Page 5050]]

outcome of the appeal such that a new hearing using the requested 
format is necessary.
    Comment: One commenter indicated the ``availability of live 
testimony distinguishes the ALJ process from the prior levels of 
appeal, which are limited to written arguments and evidence. The ALJ 
hearing should not be just another Reconsideration.''
    Response: We do not believe that Sec.  405.1020, as finalized in 
this rule, changes the ability to provide live testimony during the ALJ 
hearing. As discussed above, Sec.  405.1020(b)(2) provides that 
telephone hearings are the default hearing method for individuals other 
than unrepresented beneficiaries, but that VTC or in-person hearings 
may be provided if the ALJ finds good cause. In telephone hearings, as 
with VTC and in-person hearings, parties are able to provide live 
testimony, present evidence, and state their positions to an ALJ, as 
provided in Sec.  405.1036(a)(1), and witnesses are able to provide 
live testimony as provided under Sec.  405.1036(a)(3). In a telephone 
hearing, as in a VTC or in-person hearing, there is live interaction 
between the ALJ and the parties and participants, which is not the case 
in a reconsideration, which is a decision based solely on review of the 
record. Further, Sec. Sec.  405.1030(b) and 423.2030(b), as finalized 
in this rule, provide the ALJ will fully examine the issues on appeal 
and question the parties and other witnesses, ensuring that all 
necessary testimony is considered. We note that under Sec.  
405.1020(d), a party may waive the right to a hearing and request a 
decision based on written evidence in the record. The decision to waive 
the right to appear at a hearing before an ALJ, which would entail a 
waiver of the ability to present live testimony, is solely at the 
discretion of the party. By waiving the right to appear at a hearing, 
the party would be requesting that the ALJ or attorney adjudicator 
issue a decision based on the written evidence in the record.
    Comment: Three commenters requested that the final rule contain a 
provision to allow an appellant to request rescheduling of the ALJ 
hearing if the appellant's witness(es) are not available due to direct 
patient care duties that may conflict with the scheduled date and time.
    Response: Sections 405.1020(g)(3)(iv) and 423.2020(g)(3)(iv) 
already provide that a party may request a change in time and place of 
the hearing where ``a witness who will testify to facts material to a 
party's case is unavailable to attend the scheduled hearing and the 
evidence cannot be otherwise obtained.'' This covers the unavailability 
of a witness as a direct result of patient care responsibility and 
therefore provides flexibility to accommodate the needs of appellants.
    Comment: One commenter opposed the proposed changes to Sec.  
405.1020(i)(1) and (2), which provide that an unrepresented beneficiary 
must file their objection to the hearing method in writing and must 
include the reasons for their objection. The commenter suggested this 
could prove difficult for many beneficiaries and unrepresented 
beneficiaries should be afforded the convenience of being allowed to 
call the ALJ to orally request a change in the hearing method.
    Response: We disagree with the suggestion. Section Sec.  
405.1020(i)(2) and (3) indicate if a party objects to the hearing 
method, they ``must state the reason for the objection'' and the 
objection ``must be in writing.'' These provisions are not being 
changed in this final rule, and therefore, the requirement to include 
the reason for the objection and to file the objection in writing in 
proposed Sec.  405.1020(i)(2) and (3) would not place any additional 
burden on the unrepresented beneficiary. Further, OMHA sends a 
formatted ``Response to Notice of Hearing,'' to parties who are sent a 
notice of hearing, to facilitate their response to the notice of 
hearing, including making any objections. The parties may simply check 
the boxes in the response to notice of hearing to indicate if they will 
attend or if they object to the type of hearing. The response to notice 
of hearing also indicates the standard for changing the type of 
hearing, and provides examples of good cause for changing the type of 
hearing. We believe that using the response to hearing form that is 
sent with the notice of hearing makes the process of objecting to the 
type of hearing and providing the reasons for the objection relatively 
easy and convenient for an unrepresented beneficiary. In addition, a 
contact phone number for the ALJ's staff is provided in the notice of 
hearing and OMHA maintains a dedicated beneficiary help line, if a 
party needs assistance. Given this process, we do not believe it is 
necessary to allow oral requests to change the hearing method.
    Comment: One commenter suggested CMS or a contractor should be 
invited to an ALJ hearing ``when an issue in contention involves non-
adherence to or violation of a Medicare statute or policy by CMS or a 
contractor,'' in order for CMS or the contractor ``to be made aware of 
the appellant's concern and to be able to answer any allegations.''
    Response: Under the current regulations and the regulations as 
finalized in this rule, the ALJ has the discretion to make the 
determination of whether the appearance of CMS or a contractor would be 
beneficial to the hearing and to request that CMS or a contractor 
participate, and the ALJ will make such determination when warranted 
based on the facts of and the issues raised in a particular case. Under 
Sec. Sec.  405.1020(c) and 423.2020(c) as finalized in this rule, a 
notice of hearing is sent to CMS or a contractor ``that the ALJ 
believes would be beneficial to the hearing, advising them of the 
proposed time and place of the hearing.'' In addition, under Sec. Sec.  
405.1010 and 405.1012, the ALJ can request (but not require) CMS or a 
contractor to participate in or be a party to any proceedings before 
the ALJ, including the oral hearing. Under Sec.  423.2010, the ALJ can 
request (but not require) CMS, the IRE, and/or the Part D plan sponsor 
to participate in any proceedings before the ALJ, including the oral 
hearing. In no case is the ALJ permitted to draw any adverse inference 
if CMS, its contractor, the IRE and/or the Part D plan sponsor decline 
the request.
    Comment: One commenter indicated that although the proposed rule 
permits the ALJ to offer to conduct a telephone hearing if the request 
for hearing or administrative record suggests that a telephone hearing 
may be more convenient for the unrepresented beneficiary, nowhere does 
the request for hearing form elicit this information from the 
beneficiary. This commenter suggested OMHA should add a section or 
checkboxes to that effect on the hearing request form to facilitate the 
unrepresented beneficiary's preference for method of hearing.
    Response: Proposed Sec.  405.2010(b)(1), which we are finalizing in 
this rule, provides that the ALJ would direct that the appearance of an 
unrepresented beneficiary who filed a request for hearing be conducted 
by VTC, or the ALJ may also offer to conduct a telephone hearing if the 
request for hearing or administrative record suggests that a telephone 
hearing may be more convenient to the unrepresented beneficiary. We 
recognize that an unrepresented beneficiary may have an increased 
desire to visually interact with the ALJ, and therefore this section 
states the ALJ will direct that the appearance be conducted by VTC. 
However, this section also explicitly allows the ALJ to offer a 
telephone hearing if it may be more convenient for the beneficiary. In 
addition, by practice, OMHA support staff contacts an unrepresented

[[Page 5051]]

beneficiary prior to scheduling the hearing to ask for a time, place 
and/or method of hearing most convenient for the unrepresented 
beneficiary to facilitate determination of the beneficiary's 
preference. And, as indicated previously, the form for responding to 
the notice of hearing, which is sent to parties with the notice of 
hearing, contains checkboxes and instructions on which boxes to check 
if a party plans to attend the hearing or if a party objects to the 
type of hearing, for example, because the proposed method of hearing is 
not convenient for the party. The form for responding to notice of 
hearing also explains the standard for changing the time, place and/or 
method of the hearing, and provides examples of good cause for changing 
the time, place and/or method of the hearing. Beneficiaries and 
enrollees with questions or concerns, or who require additional 
assistance, can call the toll free OMHA beneficiary help line at (844) 
419-3358.
    Comment: One commenter indicated with respect to proposed Sec.  
405.1020(j) that there is no requirement that an ALJ notify the parties 
if they refuse to grant a request for a change in time and/or place of 
a hearing. The commenter suggested amending the language so that not 
only must a request for a change to the time and place of a hearing, or 
the type of hearing, be in writing but that the ALJ be required to 
respond to the request in writing, even if the ALJ is refusing to 
change the time and place of a hearing.
    Response: We believe the original notice of hearing serves as 
sufficient notice that the hearing will proceed as scheduled. If a 
party requesting a change to the time and/or place of hearing does not 
receive an amended notice of hearing granting the party's request, the 
party can contact the ALJ's staff to confirm that the hearing will 
proceed as scheduled in the original notice, but should presume that 
the ALJ did not grant the request for a change to the time and/or place 
of hearing. If the ALJ grants the request to change the time and/or 
place of the hearing, Sec.  405.1020(j), as finalized in this rule, 
provides ``an amended notice of hearing must be sent to all of the 
parties who were sent a copy of the notice of hearing and CMS or its 
contractors that elected to be a participant or party to the hearing in 
accordance with Sec.  405.1022(a),'' which would afford the receiving 
parties and participants with notice at least 20 calendar days before 
the rescheduled hearing date. This will help ensure that if changes are 
made to the time and/or place of the hearing, an amended notice is 
issued with sufficient time before the rescheduled hearing in a 
consistent manner, if waivers are not obtained.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1020 and 423.2020 as proposed, with the 
following modifications. For the reasons discussed in section 
II.B.3.f.i above, we are revising Sec.  405.1020(c)(1) to state that 
the notice of hearing is also sent to CMS or any contractor that has 
elected to participate in the proceedings in accordance with Sec.  
405.1010(b). In addition, in the proposed rule (81 FR 43790, 43825), we 
proposed to adopt in Sec.  423.2020(b)(2) the same revisions as in 
Sec.  405.1020(b)(2). Section 405.1020(b)(2)(ii)(A), as finalized in 
this rule, states ``VTC and telephone technology are not available.'' 
However, we inadvertently included in proposed Sec.  
423.2020(b)(2)(ii)(A) the following language: ``video-teleconferencing 
or telephone technology is not available.'' Consistent with our 
proposal to adopt the same revisions in Sec.  423.2020(b)(2) as we 
adopt in Sec.  405.1020(b)(2), we are revising Sec.  
423.2020(b)(2)(ii)(A) to state ``video-teleconferencing and telephone 
technology are not available.''
k. Notice of a Hearing Before an ALJ and Objections to the Issues 
(Sec. Sec.  405.1022, 405.1024, 423.2022, and 423.2024)
    As described below, we proposed a number of changes to Sec. Sec.  
405.1022, 405.1024, 423.2022, and 423.2024, concerning notice of a 
hearing before an ALJ and objections to the issues. 81 FR 43790, 43827-
43828. Current Sec.  405.1022(a) provides that a notice of hearing will 
be mailed or personally served to the parties and other potential 
participants, but a notice is not sent to a party who indicates in 
writing that it does not wish to receive the notice. Current Sec.  
423.2022(a) provides that a notice of hearing will be mailed or 
otherwise transmitted, or personally served, unless the enrollee or 
other potential participant indicates in writing that he or she does 
not wish to receive the notice. However, currently Sec.  405.1022(a) is 
limiting because it does not contemplate transmitting the notice by 
means other than mail or personal service even though technologies 
continue to develop and notice could be provided by secure email or a 
secure portal. Also, notices must be sent in accordance with any OMHA 
procedures that apply, such as procedures to protect personally 
identifiable information. In addition, the exception in current Sec.  
405.1022(a) does not contemplate a scenario in which a potential 
participant indicates that it does not wish to receive the notice, as 
is provided for in current Sec.  423.2022(a). We proposed in Sec. Sec.  
405.1022(a) and 423.2022(a) to address these issues and align the 
sections by providing that a notice of hearing would be mailed or 
otherwise transmitted in accordance with OMHA procedures, or personally 
served, except to a party or other potential participant who indicates 
in writing that he or she does not wish to receive the notice.
    Current Sec. Sec.  405.1022(a) and 423.2022(a) provide that a 
notice of hearing does not have to be sent to a party who indicates in 
writing that it does not wish to receive the notice and that the notice 
is mailed or served at least 20 calendar days (for Parts A and B and 
for non-expedited Part D hearings), or 3 calendar days (for expedited 
Part D hearings) before the hearing. The provisions do not address the 
situation where a party wishes to receive the notice, but agrees to the 
notice being mailed fewer than 20 calendar days (or 3 calendar days if 
expedited) before the hearing, which may be necessary to accommodate an 
appellant's request to conduct a hearing in fewer than 20 or 3 calendar 
days. We proposed to revise Sec. Sec.  405.1022(a) and 423.2022(a) to 
address this situation by providing the notice is mailed, transmitted, 
or served at least 20 calendar days (or 3 calendar days if expedited) 
before the hearing unless the recipient agrees in writing to the notice 
being mailed, transmitted, or served fewer than 20 calendar days (or 3 
calendar days if expedited) before the hearing. However, we note that 
like a recipient's waiver of receiving a notice of hearing, a 
recipient's waiver of the requirement to mail, transmit, or serve the 
notice at least 20 or 3 calendar days (as applicable) before the 
hearing would only be effective for the waiving recipient and does not 
affect the rights of other recipients.
    Current Sec.  405.1022(b)(1) requires a notice of hearing to 
contain a statement of the specific issues to be decided and inform the 
parties that they may designate a person to represent them during the 
proceedings. These statements of issues take time to develop, and 
current Sec.  405.1032, which addresses the issues before an ALJ, 
provides that the issues before the ALJ are all the issues brought out 
in the initial determination, redetermination, or reconsideration that 
were not decided entirely in a party's favor. Current Sec.  405.1032 
also permits an ALJ to consider a new issue at the hearing, if notice 
of the new issue is provided to all parties before the start of the 
hearing. To streamline the notice of hearing,

[[Page 5052]]

rather than require the notice of hearing to contain a statement of the 
specific issues to be decided, we proposed in Sec.  405.1022(b)(1) to 
require the notice of hearing to include a general statement putting 
the parties on notice that the issues before the ALJ include all of the 
issues brought out in the initial determination, redetermination, or 
reconsideration that were not decided entirely in a party's favor, for 
the claims specified in the request for hearing. This is consistent 
with the standard for determining the issues before the ALJ in proposed 
Sec.  405.1032(a). However, we also proposed in Sec.  405.1022(b)(1) 
that the notice of hearing also would contain a statement of any 
specific new issues that the ALJ will consider in accordance with Sec.  
405.1032 to help ensure the parties and potential participants are 
provided with notice of any new issues of which the ALJ is aware at the 
time the notice of hearing is sent, and can prepare for the hearing 
accordingly. For example, if in the request for hearing an appellant 
raises an issue with the methodology used to sample claims and 
extrapolate an overpayment, and that issue had not been brought out in 
the initial determination, redetermination, or reconsideration, the 
issue would be a new issue and the specific issue would be identified 
in the notice of hearing. To accommodate proposed Sec.  405.1022(b)(1), 
we proposed that the portion of current Sec.  405.1022(b)(1) that 
requires the notice of hearing to inform the parties that they may 
designate a person to represent them during the proceedings would be 
re-designated as Sec.  405.1022(b)(2), and current subsections (b)(2), 
(b)(3), and (b)(4) would be re-designated as subsections (b)(3), 
(b)(4), and (b)(5), respectively. We proposed at Sec.  423.2022(b) to 
adopt corresponding revisions for notice information in part 423, 
subpart U proceedings.
    Current Sec.  405.1022(c)(1) provides that if the appellant, any 
other party to the reconsideration to whom the notice of hearing was 
sent, or their representative does not acknowledge receipt of the 
notice of hearing, the ALJ hearing office attempts to contact the party 
for an explanation. We proposed to replace ``ALJ hearing office'' with 
``OMHA'' because OMHA is the responsible entity.
    Current Sec.  405.1022(c)(2) provides that if a party states that 
he or she did not receive the notice of hearing, an amended notice is 
sent to him or her. The reference to an amended notice has caused 
confusion, as the original notice does not need to be amended unless 
the hearing is rescheduled. We proposed in Sec.  405.1022(c)(2) to 
remove the reference to an ``amended'' notice of hearing and provide 
that a copy of the notice of hearing is sent to the party. However, if 
a party cannot attend the hearing, we proposed in new Sec.  
405.1022(c)(3) that the party may request that the ALJ reschedule the 
hearing in accordance with proposed Sec.  405.1020(e), which discusses 
a party's objection to the time and place of hearing. We proposed at 
Sec.  423.2022(c) to adopt corresponding revisions for providing a copy 
of the notice of hearing if the enrollee did not acknowledge it and 
states that he or she did not receive it in part 423, subpart U 
proceedings.
    Current Sec.  405.1022(c)(2) provides that if a party did not 
receive the notice of hearing, a copy of the notice may be sent by 
certified mail or email, if available. Current Sec.  423.2022(c)(2) 
provides an additional option to send the copy by fax. However, use of 
email to send documents that contain a beneficiary's or enrollee's 
personally identifiable information is not currently permitted by OMHA 
policy, and faxes must be sent in accordance with procedures to protect 
personally identifiable information. We proposed in Sec. Sec.  
405.1022(c)(2) and 423.2022(c)(2) to remove the references to using 
email and fax, and to add that a notice may be sent by certified mail 
or other means requested by the party and in accordance with OMHA 
procedures. This would provide the flexibility to develop alternate 
means of transmitting the request and allow OMHA to help ensure 
necessary protections are in place to comply with HHS information 
security policies. Finally, the parenthetical in current Sec. Sec.  
405.1022(c)(2) and 423.2022(c)(2) is not applicable. We believe it was 
attempting to cross-reference the provision related to requesting a 
rescheduled hearing. Therefore, we proposed in Sec. Sec.  
405.1022(c)(2) and 423.2022(c)(2) to remove the parenthetical. As 
discussed above, proposed Sec. Sec.  405.1022(c)(3) and 423.2022(c)(3) 
would address the option for a party to request a rescheduled hearing 
and contain the correct cross-reference.
    Current Sec.  405.1024 sets forth the provision regarding 
objections by a party to the issues described in the notice of hearing. 
Current Sec.  405.1024(b) requires a party to send a copy of its 
objection to the issues to all other parties to the appeal. We proposed 
to revise Sec.  405.1024(b) to provide that the copy is only sent to 
the parties who were sent a copy of the notice of hearing, and CMS or a 
contractor that elected to be a party to the hearing, because we 
believe sending a copy of the objection to additional parties is 
unnecessary and causes confusion for parties who were not sent a copy 
of the notice of hearing. No corresponding change was proposed in Sec.  
423.2024 because only the enrollee is a party.
    Current Sec.  405.1024(c) states that an ALJ makes a decision on 
the objection to the issues either in writing or at the hearing. We 
proposed to revise Sec.  405.1024(c) to add the option for an ALJ to 
make a decision on the objections at a prehearing conference, which is 
conducted to facilitate the hearing, as well as at the hearing. We 
believe this added flexibility would allow ALJs to discuss the 
objections with the parties and make a decision on the record before 
the hearing at the prehearing conference. However, we noted that the 
ALJ's decision on an objection to the issues at a prehearing conference 
pursuant to proposed Sec.  405.1024(c) would not be subject to the 
objection process for a prehearing conference order under Sec.  
405.1040(d). We stated in the proposed rule that a decision on an 
objection to the issues is not an agreement or action resulting from 
the prehearing conference, but rather the ALJ's decision on a 
procedural matter for which the ALJ has discretion, and we do not 
believe the parties should have a right of veto through the prehearing 
conference order objection process. We also proposed at Sec.  
423.2024(c) to adopt a corresponding revision for a decision on an 
objection to the issues in part 423, subpart U proceedings.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received three comments on this proposal. One commenter 
asked whether a corrected notice of hearing would be sent to all 
parties who received the initial notice if a mistake, such as a 
typographical error in the beneficiary's name or the appeal number, was 
corrected in the response to the notice of hearing submitted by one of 
the recipients.
    Response: Under OMHA's current practices, if OMHA staff is made 
aware of an error, such as a typographical error, in a notice of 
hearing, OMHA staff will contact the parties to notify them of the 
correction as soon as possible. This is generally accomplished through 
a corrected notice of hearing that is sent to all parties who received 
the initial notice, but may also be accomplished by contacting the 
parties and any CMS contractors that have elected to be participants or 
parties by telephone with appropriate documentation of the contact for 
the record, so that the hearing may proceed as scheduled.

[[Page 5053]]

However, we note that if it appears that a party's ability to prepare 
for the hearing was negatively affected by the error, it may be 
necessary to reschedule the time and/or place of the hearing and issue 
an amended notice of hearing, consistent with proposed Sec.  
405.1020(j).
    Comment: Another commenter indicated that the time frame for 
sending notice of a hearing is too short considering the burden of 
moving the hearing once it is scheduled, and suggested that OMHA 
reinstitute a policy of contacting the appellant's representative prior 
to sending the hearing notice.
    Response: We did not propose to change the current rule that a 
notice of hearing is mailed or served at least 20 calendar days before 
the hearing (or 3 calendar days before the hearing for Part D expedited 
appeals). These time frames are necessary for scheduling and conducting 
the hearing as quickly as possible. While some ALJ teams had a practice 
of contacting the appellant, or the appellant's representative if a 
representative was involved, before scheduling a hearing, OMHA has not 
had a policy that required them to do so. Further, we believe that 
adding a requirement to contact the parties before scheduling a hearing 
would add administrative burden and slow the hearing process at a time 
of record workload volume. Our experience is that there are not a large 
number of requests to reschedule hearings when hearings are scheduled 
without contacting the appellant, or the appellant's representative if 
a representative was involved, prior to scheduling the hearing. 
Moreover, we believe the current standard for mailing or serving a 
notice of hearing at least 20 calendar days before the hearing, or 3 
calendar days before the hearing for Part D expedited appeals, provides 
sufficient notice and time to prepare for the hearing, and if 
necessary, request to change the time or place of the hearing if there 
is good cause to do so, consistent with Sec. Sec.  405.1020(e) and 
423.2020(e).
    Comment: One commenter supported the proposal to include a 
generalized statement of the issues, as well as any specific new issues 
that the ALJ may consider, in the notice of hearing. The commenter 
suggested that the notice of hearing should include the dates of 
service and/or the QIC number to help identify the specific claim that 
is being scheduled for hearing, as well as the name, address, telephone 
number, and fax number of the OMHA point of contact for any questions.
    Response: We thank the commenter for its support of our proposal to 
include a generalized statement of the issues, as well as any specific 
new issues that the ALJ may consider, in the notice of hearing. 
However, we did not propose changing other content requirements for the 
notice of hearing, and thus we do not believe that it would be 
appropriate to include the suggested changes in this final rule. With 
respect to the dates of service of the claims being appealed, we note 
that under Sec.  405.1014, as finalized in this rule, the request for 
hearing must contain the dates of service for the claims being 
appealed, and a copy of the request must be sent to the other parties 
who were a sent a copy of the QIC's reconsideration. The parties who 
would receive a notice of hearing under Sec.  405.1020(c), as finalized 
in this rule, would generally also have received a copy of the QIC's 
reconsideration, and would thus be able to determine the dates of 
service by comparing the notice of hearing with the request for 
hearing. With respect to providing an OMHA point of contact, we note 
that the notices of hearing currently issued by OMHA include a mailing 
address, phone number, and fax number for the ALJ team assigned to the 
appeal. We also note that an appellant can find the QIC appeal number 
associated with an appeal by using AASIS, which provides public access 
to appeal status information and is accessed through the OMHA Web site 
(www.hhs.gov/omha).
    Comment: One commenter suggested that the requirement to send a 
copy of any objection to the issues to the other parties should be 
waived for unrepresented beneficiaries because it adds to the cost and 
burden of maintaining an appeal.
    Response: Consistent with our discussion of copy requirements in 
section II.B.3.g.v of this final rule above, we do not agree that 
unrepresented beneficiaries should be exempt from the regulatory 
requirement to send a copy of their objections to the issues to other 
parties; instead, we believe that unrepresented beneficiaries should be 
assisted with meeting this requirement. In the event that an 
unrepresented beneficiary does not fulfill the requirement, OMHA will 
forward a copy of any objections submitted by the unrepresented 
beneficiary to the other parties who were sent a copy of the notice of 
hearing.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1022, 405.1024, 423.2022, and 423.2024 as 
proposed without modification.
l. Disqualification of the ALJ or Attorney Adjudicator (Sec. Sec.  
405.1026 and 423.2026)
    As described below, we proposed several changes to Sec.  405.1026, 
which provides a process for a party to request that an ALJ disqualify 
himself or herself from an appeal, or for an ALJ to disqualify himself 
or herself from an appeal on the ALJ's own motion. 81 FR 43790, 43828. 
We proposed to revise Sec.  405.1026 to replace the current references 
to conducting a hearing with references to adjudicating an appeal, to 
make it is clear that disqualification is not limited to ALJs or cases 
where a hearing is conducted to help ensure that an attorney 
adjudicator, as proposed in section II.B of the proposed rule (and 
discussed in section II.A.2 above), also cannot adjudicate an appeal if 
he or she is prejudiced or partial to any party, or has any interest in 
the matter pending for decision. Current Sec.  405.1026(b) requires 
that, if a party objects to the ALJ who will conduct the hearing, the 
party must notify the ALJ within 10 calendar days of the date of the 
notice of hearing. The ALJ considers the party's objections and decides 
whether to proceed with the hearing or withdraw. However, the current 
rule does not address appeals for which no hearing is scheduled and/or 
no hearing will be conducted. Therefore, we proposed to revise Sec.  
405.1026(b) to require that if a party objects to the ALJ or attorney 
adjudicator assigned to adjudicate the appeal, the party must notify 
the ALJ within 10 calendar days of the date of the notice of hearing if 
a hearing is scheduled, or the ALJ or attorney adjudicator any time 
before a decision, dismissal order, or remand order is issued if no 
hearing is scheduled. We also proposed to revise Sec.  405.1026(c) to 
state that an ALJ or attorney adjudicator is ``assigned'' to adjudicate 
an appeal, rather than ``appointed,'' for consistency in terminology, 
and to replace ``hearing decision'' with ``decision or dismissal'' 
because not all decisions are issued following a hearing and an 
appellant may have objected in an appeal that was dismissed, for which 
review may also be requested from the Council. In addition, we proposed 
to add ``if applicable'' in discussing that the Council would consider 
whether a new hearing is held because not all appeals may have had or 
require a hearing. We proposed at Sec.  423.2026 to adopt corresponding 
revisions for disqualification of an ALJ or attorney adjudicator in 
part 423, subpart U proceedings.
    Section 405.1026 does not address the impact of a party's objection 
and adjudicator's withdrawal on an

[[Page 5054]]

adjudication time frame. We stated in the proposed rule that the 
withdrawal of an adjudicator and re-assignment of an appeal will 
generally cause a delay in adjudicating the appeal. We proposed in new 
Sec.  405.1026(d) that if the party objects to the ALJ or attorney 
adjudicator, and the ALJ or attorney adjudicator subsequently withdraws 
from the appeal, any applicable adjudication time frame that applies is 
extended by 14 calendar days. We stated that this would allow the 
appeal to be re-assigned and for the new adjudicator to review the 
appeal. We proposed at Sec.  423.2026(d) to adopt a corresponding 
provision for the effect of a disqualification of an adjudicator on an 
adjudication time frame in part 423, subpart U proceedings, but 
proposed that if an expedited hearing is scheduled, the time frame is 
extended by 2 calendar days, to balance the need for the newly assigned 
adjudicator to review the appeal, and the enrollee's need to receive a 
decision as quickly as possible.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment on these proposals. The commenter 
asked what recourse is available when, in the opinion of an appellant, 
an ALJ has not considered arguments, evidence, or testimony to the 
satisfaction of the appellant in its prior cases assigned to that ALJ. 
The commenter questioned whether the regulations should allow parties 
to enter a ``peremptory challenge'' to an assigned ALJ without 
explanation as to the reason for requesting that the ALJ withdraw from 
adjudicating an assigned appeal.
    Response: Proposed Sec. Sec.  405.1026 and 423.2026, which we are 
finalizing in this rule, extend the current provisions related to 
disqualifying an ALJ based on bias or a conflict of interest, to 
disqualifying an attorney adjudicator, to help ensure that the same 
standards and process for disqualifying an adjudicator at OMHA applies 
regardless of whether the adjudicator is an ALJ or attorney 
adjudicator. We believe that this is a necessary change to extend the 
safeguards in current Sec. Sec.  405.1026 and 423.2026 to cases 
assigned to an attorney adjudicator. In response to the commenter's 
question about the recourse available when an appellant believes an ALJ 
has not considered arguments, evidence, or testimony to the 
satisfaction of the appellant in its prior cases assigned to the ALJ, 
in such a situation, to the extent the appellant believes that the ALJ 
is prejudiced or partial to any party in the case at hand, the 
appellant could object to the assigned ALJ and request that the ALJ 
withdraw from an appeal using the procedures in Sec. Sec.  405.1026 or 
423.2026, as finalized in this rule. If the ALJ does not withdraw, the 
objection can be raised on appeal to the Council after the ALJ issues a 
disposition of the case. Similarly, any disagreement with the ALJ's 
decision, including the ALJ's consideration or analysis of the 
arguments, evidence, and testimony, could be raised in requesting a 
review of the decision by the Council.
    With regard to the commenter's suggestion that the regulations 
should allow a peremptory challenge by which a party can request 
reassignment to a different adjudicator without providing a specific 
objection, we disagree. We do not believe that preemptory challenges 
would be appropriate or necessary at the OMHA level. A peremptory 
challenge is generally a feature of a trial by jury that allows 
attorneys for each side to reject a limited number of jurors without 
stating a reason for the challenge and without the judge's approval. 
The concept of a peremptory challenge is to allow both sides to 
contribute to the jury's composition to help ensure an unbiased result. 
Under 5 U.S.C. 3105, ALJs must be assigned to cases in rotation so far 
as practicable, and current Sec. Sec.  405.1026 and 423.2026 help 
ensure an unbiased result by requiring the ALJ to withdraw if he or she 
is prejudiced or partial to any party or has any interest in the matter 
pending for decision.
    We believe allowing parties to request reassignment of an ALJ 
without explaining the basis for objecting to the ALJ is contrary to 
the principles of random rotational assignments and would be disruptive 
and inefficient in processing appeals. The recommendation would add a 
new administrative burden in reassigning appeals, resulting in an 
overall decrease in the efficient adjudication of appeals. Furthermore, 
we believe that the option of a peremptory challenge would further 
increase administrative burdens and inefficiencies in cases involving 
multiple parties, where the option of a preemptory challenge would need 
to be extended to all parties to the appeal. In addition, permitting an 
appellant to exercise a peremptory challenge in the manner suggested 
may lead to abuses such as forum shopping or retaliation against an ALJ 
or an attorney adjudicator for a prior decision with which the party 
did not agree, even if the ALJ's decision was supported by the evidence 
and affirmed on appeal to the Council. Also, peremptory challenges 
potentially used for reasons that have nothing to do with bias would go 
unrebutted and may undermine the public's confidence in the appeals 
process. We believe that the potential for abuse, and the 
administrative burdens and inefficiencies associated with allowing a 
peremptory challenge outweigh any potential benefit to the adjudication 
process. In addition, we believe that the disqualification process in 
Sec. Sec.  405.1026 and 423.2026 as finalized in this rule, and the 
opportunity to appeal to the Council any objection to an ALJ or the 
decision in a case if the ALJ does not withdraw, afford appellants and 
other parties with strong protections and remedies to address potential 
bias. The process outlined in Sec. Sec.  405.1026 and 423.2026 
contemplates that the party specify his or her reasons for objecting to 
the assigned adjudicator so that the adjudicator may consider the 
reasons and make an informed decision as to whether he or she is 
prejudiced or partial to any party, or has any interest in the matter 
pending for decision, and therefore whether to proceed with the appeal 
or withdraw as the adjudicator. If the adjudicator does not withdraw, 
the party may request review of the adjudicator's action by the 
Council. When a reason is provided for the party's objection, even if 
it is a cursory reason, it is preserved in the record and the Council's 
review will therefore be better informed. Because the regulations 
already provide a process by which a party can object to an assigned 
adjudicator, and an opportunity to have the Council review the 
objections in cases where an adjudicator does not withdraw, we do not 
believe a peremptory challenge is necessary.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1026 and 423.2026 as proposed without 
modification.
m. Review of Evidence Submitted by the Parties (Sec.  405.1028)
    As discussed below, we proposed several revisions to Sec.  
405.1028, which addresses the prehearing review of evidence submitted 
to the ALJ. 81 FR 43790, 43828-43830. We proposed to revise the title 
of Sec.  405.1028 to reflect that the regulation would more broadly 
apply to the review of evidence submitted by the parties because a 
hearing may not be conducted and an attorney adjudicator would review 
evidence in deciding appeals as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 of this final rule 
above).
    We proposed at Sec.  405.1028(a) to incorporate current Sec.  
405.1028(a) to address new evidence. Current

[[Page 5055]]

Sec.  405.1028(a) states that after a hearing is requested but before 
it is held, the ALJ will examine any new evidence submitted with the 
request for hearing (or within 10 calendar days of receiving the notice 
of hearing) as specified in Sec.  405.1018, by a provider, supplier, or 
beneficiary represented by a provider or supplier, to determine whether 
there was good cause for submitting evidence for the first time at the 
ALJ level. However, this provision and the other provisions in current 
Sec.  405.1028 do not address the review of new evidence when no 
hearing is conducted for an appeal. Therefore, we proposed to revise 
Sec.  405.1028(a) to add Sec.  405.1028(a)(1), (2), (3), and (4), and 
proposed in Sec.  405.1028(a)(1) that after a hearing is requested but 
before it is held by an ALJ (to reinforce that hearings are only 
conducted by ALJs), or a decision is issued if no hearing is held, the 
ALJ or attorney adjudicator would review any new evidence. In addition, 
we proposed in Sec.  405.1028(a)(1) to remove the duplicative statement 
indicating the review is conducted on ``any new evidence submitted with 
the request for hearing (or within 10 calendar days of receiving the 
notice of hearing) as specified in Sec.  405.1018,'' because Sec.  
405.1018 discusses when evidence may be submitted prior to a hearing 
and, as explained in section III.A.3.i of the proposed rule and 
II.B.3.i of this final rule above, proposed Sec.  405.1018 would revise 
the language that is duplicated in current Sec.  405.1028. We stated in 
the proposed rule that we believed that the better approach going 
forward is simply to reference Sec.  405.1018 by indicating that the 
review is conducted on ``any new evidence submitted in accordance with 
Sec.  405.1018.'' This would remind parties that evidence must be 
submitted in accordance with Sec.  405.1018, while minimizing confusion 
on which section is authoritative with regard to when evidence may be 
submitted.
    In a 2012 OIG report on the ALJ hearing process (OEI-02-10-00340), 
the OIG reported concerns regarding the acceptance of new evidence in 
light of the statutory limitation at section 1869(b)(3) of the Act on 
new evidence submitted by providers and suppliers. The OIG concluded 
that the current regulations regarding the acceptance of new evidence 
provide little guidance and only one example of good cause, and 
recommended revising the regulations to provide additional examples and 
factors for ALJs to consider when determining good cause.
    Section 1869(b)(3) of the Act states that a provider or supplier 
may not introduce evidence in any appeal that was not presented at the 
QIC reconsideration unless there is good cause which precluded the 
introduction of such evidence at or before that reconsideration. We 
stated in the proposed rule that this section presents a Medicare-
specific limitation on submitting new evidence, and therefore limits 
the authority of an ALJ to accept new evidence under the broader APA 
provisions (see 5 U.S.C. 556(c)(3) (``Subject to published rules of the 
agency and within its power, employees presiding at hearings may-- . . 
. receive relevant evidence . . . .'')). We also stated that section 
1869(b)(3) of the Act presents a clear intent by Congress to limit the 
submission of new evidence after the QIC reconsideration, which must be 
observed.
    In light of the OIG conclusion and recommendation and to more 
effectively implement section 1869(b)(3) of the Act, we proposed to 
incorporate current Sec.  405.1028(b) in proposed Sec.  405.1028(a)(2) 
on when an ALJ could find good cause for submitting evidence for the 
first time at the OMHA level, and to establish four additional 
circumstances in which good cause for submitting new evidence may be 
found. We also proposed to permit an attorney adjudicator to find good 
cause because attorney adjudicators would be examining new evidence in 
deciding appeals on requests for an ALJ hearing as proposed in section 
II.B of the proposed rule (and discussed in section II.A.2 of this 
final rule above), and we stated in the proposed rule that we believed 
the same standard for considering evidence should apply.
    We proposed in Sec.  405.1028(a)(2)(i) to adopt the example in 
current Sec.  405.1028(b) and provide that good cause is found when the 
new evidence is, in the opinion of the ALJ or attorney adjudicator, 
material to an issue addressed in the QIC's reconsideration and that 
issue was not identified as a material issue prior to the QIC's 
reconsideration.
    We proposed in Sec.  405.1028(a)(2)(ii) to provide that good cause 
is found when the new evidence is, in the opinion of the ALJ, material 
to a new issue identified in accordance with Sec.  405.1032(b). This 
would provide parties with an opportunity to submit new evidence to 
address a new issue that was identified after the QIC's 
reconsideration. We stated, however, that the authority is limited to 
ALJs because, as discussed in proposed Sec.  405.1032, only an ALJ may 
raise a new issue on appeal.
    We proposed in Sec.  405.1028(a)(2)(iii) to provide that good cause 
is found when the party was unable to obtain the evidence before the 
QIC issued its reconsideration and the party submits evidence that, in 
the opinion of the ALJ or attorney adjudicator, demonstrates that the 
party made reasonable attempts to obtain the evidence before the QIC 
issued its reconsideration. For example, if specific medical records 
are necessary to support a provider's or supplier's claim for items or 
services furnished to a beneficiary, the provider or supplier must make 
reasonable attempts to obtain the medical records, such as requesting 
records from a beneficiary or the beneficiary's physician when it 
became clear the records are necessary to support the claim, and 
following up on the request. We stated in the proposed rule that 
obtaining medical records, in some cases from another health care 
professional, and submitting those records to support a claim for 
services furnished to a beneficiary is a basic requirement of the 
Medicare program (see sections 1815(a) and 1833(e) of the Act, and 
Sec.  424.5(a)(6)), and we expect instances where records cannot be 
obtained in the months leading up to a reconsideration should be rare. 
We stated that if the provider or supplier was unable to obtain the 
records prior to the QIC issuing its reconsideration, good cause for 
submitting the evidence after the QIC's reconsideration could be found 
when the ALJ or attorney adjudicator determines that the provider or 
supplier submitted evidence that demonstrates the party made reasonable 
attempts to obtain the evidence before the QIC issued its 
reconsideration.
    We proposed at Sec.  405.1028(a)(2)(iv) to provide that good cause 
is found when the party asserts that the evidence was submitted to the 
QIC or another contractor and the party submits evidence that, in the 
opinion of the ALJ or attorney adjudicator, demonstrates that the new 
evidence was indeed submitted to the QIC or another contractor before 
the QIC issued the reconsideration. For example, if a provider or 
supplier submitted evidence to the QIC or another contractor and, 
through administrative error, the evidence was not associated with the 
record that is forwarded to OMHA, good cause may be found when the ALJ 
or attorney adjudicator determines that the provider or supplier 
submitted evidence that demonstrates the new evidence was submitted to 
the QIC or another contractor before the QIC issued the 
reconsideration.
    Finally, we proposed at Sec.  405.1028(a)(2)(v) to provide that in 
circumstances not addressed in proposed paragraphs (i) through (iv), 
the ALJ or attorney adjudicator may find good cause for new evidence 
when the

[[Page 5056]]

ALJ or attorney adjudicator determines the party has demonstrated that 
it could not have obtained the evidence before the QIC issued its 
reconsideration. We stated in the proposed rule that we expected 
proposed paragraphs (i) through (iv) to cover most circumstances in 
which a provider or supplier attempts to introduce new evidence after 
the QIC reconsideration, but we also stated that we believed this 
additional provision is necessary to allow for a good cause finding in 
any other circumstance that meets the requirements of section 
1869(b)(3) of the Act. We stated that paragraph (v) helps ensure that 
OMHA fulfills the statutory requirement by requiring that the ALJ or 
attorney adjudicator make a determination on whether the party could 
have obtained the evidence before the QIC issued its reconsideration.
    To accommodate the new structure of proposed Sec.  405.1028, we 
proposed that current paragraphs (c) and (d) be re-designated as 
paragraphs (a)(3) and (a)(4), respectively. In addition, we proposed at 
Sec.  405.1028(a)(4) that notification about whether the evidence would 
be considered or excluded applies only when a hearing is conducted, and 
notification of a determination regarding new evidence would be made 
only to parties and participants who responded to the notice of 
hearing, since all parties may not be sent a copy of the notice of 
hearing or attend the hearing. We noted that if a hearing is not 
conducted, whether the evidence was considered or excluded would be 
discussed in the decision, pursuant to proposed Sec.  405.1046(a)(1), 
as discussed in section III.A.3.v of the proposed rule and II.B.3.v of 
this final rule below. We also proposed at Sec.  405.1028(a)(4) that 
the ALJ would notify all parties and participants whether the new 
evidence would be considered or is excluded from consideration (rather 
than only whether the evidence will be excluded from the hearing) and 
that this determination would be made no later than the start of the 
hearing, if a hearing is conducted. We stated that if evidence is 
excluded, it is excluded from consideration at all points in the 
proceeding, not just the hearing, and evidence may be excluded from 
consideration even when no hearing is conducted. We stated that we 
believe that this would provide greater clarity to parties and 
participants regarding the ALJ's determination with respect to new 
evidence, and the effect of the exclusion of such evidence on the 
proceedings.
    Current Sec.  405.1028 does not address duplicative evidence. We 
stated in the proposed rule that duplicative evidence is a significant 
challenge for OMHA because appellants often submit copies of medical 
records and other submissions that were filed at prior levels of appeal 
and are in the record forwarded to OMHA. While we recognize that 
appellants want to ensure the evidence is in the record and considered, 
we are also mindful that the APA provides that as a matter of policy, 
an agency shall provide for the exclusion of unduly repetitious 
evidence (see 5 U.S.C 556(d)).
    We proposed in Sec.  405.1028(b) that the ALJ or attorney 
adjudicator may exclude from consideration any evidence submitted by a 
party at the OMHA level that is duplicative of evidence already in the 
record forwarded to OMHA. In addition to establishing a general policy 
for the exclusion of unduly repetitious evidence, we stated that this 
would reduce confusion as to which of the multiple copies of records to 
review, and would reduce administrative burden.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: One commenter expressed support for allowing providers to 
submit evidence that may have been unavailable at the lower levels of 
appeal.
    Response: We believe the commenter was referring to our proposal in 
Sec.  405.1028(a)(2)(iii) to allow for the submission of new evidence 
when a party was unable to obtain the evidence before the QIC issued 
its reconsideration and submits evidence that, in the opinion of the 
ALJ or attorney adjudicator, demonstrates the party made reasonable 
attempts to obtain the evidence before the QIC issued its 
reconsideration. We thank the commenter for its support.
    Comment: We received a comment recommending that the proposed 
language in Sec.  405.1028(a) be modified to give the ALJ or attorney 
adjudicator discretion to admit new evidence, despite a party's 
inability to satisfy one of the examples of ``good cause'' listed in 
the regulation, when the adjudicator determines that ``review of 
additional evidence is necessary in the interest of justice.''
    Response: We disagree with the recommendation. Section 1869(b)(3) 
of the Act establishes a specific prohibition on a provider or a 
supplier submitting evidence that was not presented at the 
reconsideration conducted by the QIC, unless there is good cause that 
precluded the evidence from being introduced at or before the QIC's 
reconsideration. This statutory provision limits the submission of new 
evidence by certain appellants late in the administrative appeals 
process, and provides an exception only if there is good cause which 
precluded the introduction of such evidence at or before the 
reconsideration. We believe that the standard suggested by the 
commenter could incorporate exceptions that are inconsistent with the 
good cause standard set forth in the statute. We believe that the 
enumerated examples in the regulations of when an ALJ or attorney 
adjudicator may find good cause for new evidence submitted by a 
provider or supplier for the first time at OMHA effectively implements 
section 1869(b)(3) of the Act and provides those parties with clearer 
guidance as to what is permissible under section 1869(b)(3). We believe 
that the enumerated good cause examples listed in Sec.  405.1028(a)(2) 
balance the interests of the parties in maintaining an avenue through 
which new evidence may be admitted for consideration while remaining 
faithful to the statutory requirement of section 1869(b)(3) of the Act.
    Comment: One commenter expressed concern with proposed Sec.  
405.1028(b), noting that the new language on duplicative evidence does 
not address the procedures that will be used to determine if a record 
is a duplicate or how a provider can request that a record omitted in 
error is placed back in the record. The commenter suggested that if 
records are removed, all parties to the appeal should have the 
opportunity to review the administrative record prior to a hearing to 
ensure that the record is complete.
    Response: Pursuant to the procedures outlined in Sec. Sec.  
405.1042(b) and 423.2042(b) as finalized in this rule, parties may 
request a copy of the administrative record to review at any time while 
the appeal is pending at OMHA, including prior to the hearing. In 
addition, parties are provided with an opportunity to reference and 
discuss specific records or other evidence at the hearing, to confirm 
that the exhibited portion of the administrative record contains all 
the evidence that the ALJ will consider. Section 405.1028(b), as 
finalized in this rule, only provides that documents that are 
duplicative may be identified as such and, on that basis, are not 
marked as exhibits and are excluded from consideration. This section 
does not permit duplicative evidence to be removed from the 
administrative record, thus the documents are preserved and may be re-
designated and placed back in the exhibited portion of the 
administrative record if it is determined that the document was 
identified as duplicative in error. The procedures for

[[Page 5057]]

identifying and handling duplicates are outlined in the OCPM, a 
reference guide outlining the day-to-day operating instructions, 
policies, and procedures of the agency. The OCPM describes OMHA case 
processing procedures in greater detail and provides frequent examples 
to aid understanding. This resource, which is available to the public 
on the OMHA Web site (www.hhs.gov/omha), includes a detailed chapter on 
the administrative record and provides instructions on identifying and 
handling duplicative evidence.
    Comment: Another commenter noted that the proposed changes allow 
attorney adjudicators to determine if a party has good cause for 
submitting evidence for the first time at the OMHA level or to exclude 
duplicative evidence from consideration. In the commenter's opinion, 
such judgments should be reserved for ALJs.
    Response: We disagree with the commenter and believe that attorney 
adjudicators will have the necessary skills and training to address 
procedural determinations regarding whether there is good cause for 
submitting evidence for the first time at the OMHA level, which will be 
aided by the additional guidance in proposed Sec.  405.1028, and to 
identify or confirm that evidence is duplicative of evidence already in 
the record. As discussed in section II.A.2 of this final rule above, 
well-trained attorneys can perform a review of the administrative 
record, identify the issues, and make the necessary findings of fact 
and conclusions of law when the regulations do not require a hearing to 
issue a decision on the matter. We believe that the procedural 
determinations regarding whether there is good cause for new evidence 
and whether evidence is duplicative are necessary for attorney 
adjudicators to establish the record upon which a decision will be 
made, and the determinations are not so complex as to require an ALJ. 
Moreover, allowing attorney adjudicators to make these procedural 
determinations on evidence in their cases will allow for ALJs to focus 
more of their time and attention on appeals that require a hearing, and 
the more complex procedural issues involved in those appeals.
    Comment: One commenter requested that health plans be allowed the 
opportunity to respond to the submission of new evidence and indicate 
whether the plan believes good cause does not exist, why the case may 
require a remand for consideration of the new evidence, or why the 
newly provided evidence should not be afforded any weight in the 
adjudicator's decision.
    Response: As discussed above (and section III.A.3.m of the proposed 
rule), the requirement that providers, suppliers, and beneficiaries 
represented by providers and suppliers, present any evidence for an 
appeal no later than the QIC reconsideration level, unless there is 
good cause for late submission, emanates from section 1869(b)(3) of the 
Act and is an existing regulatory requirement at Sec. Sec.  405.1018 
and 405.1028. Health plans are not parties to fee-for-service appeals 
conducted under section 1869 of the Act and, as explained in section 
II.A.3 of this final rule above (and section II.C of the proposed 
rule), we do not believe the part 405 regulatory requirements that 
implement section 1869(b)(3) of the Act are applicable to Part C MA 
appeals or cost plan appeals, because there is no similar requirement 
in section 1852(g) or 1876 of the Act. There is also no similar 
requirement in section1860-D4 of the Act, and the Part D appeals 
regulations at part 423, subparts M and U have not implemented such a 
requirement. Therefore, we do not believe there would be any situations 
where a party would be required to make a showing of good cause for the 
introduction of new evidence in a Part C or Part D appeal in which a 
health plan was also a party. We note that Sec.  423.2018(a)(2) does 
require an ALJ to remand an appeal to the Part D IRE when an enrollee 
wishes evidence on his or her change in condition after a coverage 
determination to be considered, but this is compulsory under the 
regulations and not subject to ALJ discretion. Furthermore, although 
parties are permitted to respond to new evidence that is admitted into 
the administrative record, making a determination of whether good cause 
exists, whether a case requires a remand to the lower level, or whether 
evidence submitted should or should not bear weight in the decision are 
all assessments that are the responsibility of the adjudicator and are 
not subject to party or participant input. We believe that adding party 
or participant input to these types of adjudicator actions undermines 
the adjudicator's role, and would result in unnecessary delays to an 
appeal, which is contrary to our goal of streamlining the appeals 
process.
    Comment: One commenter urged OMHA to firmly reinforce with all 
ALJs, attorney adjudicators, and other staff that the limitation on 
submitting new evidence for the first time at the OMHA level does not 
apply to unrepresented beneficiaries and Medicaid State agencies.
    Response: We agree with the commenter and note that the current 
regulation at Sec.  405.1028(a) states that the limitations apply only 
when new evidence is submitted by a provider, supplier, or a 
beneficiary represented by a provider or supplier. As discussed in 
section II.B.3.i of this final rule above, we are amending proposed 
Sec.  405.1018(d) to provide that the limitation on submitting new 
evidence for the first time at the OMHA level does not apply to 
evidence submitted by unrepresented beneficiaries, CMS or its 
contractors, a Medicaid State agency, an applicable plan, or 
beneficiaries represented by someone other than a provider or supplier. 
Current Sec.  405.1018(d) already explicitly states that the 
limitations on submitting evidence, including the limitations on the 
submission of new evidence, do not apply to an unrepresented 
beneficiary. In addition, OMHA provides training to its ALJs, 
attorneys, and other staff to help ensure understanding and compliance 
with all regulations applicable to processing appeals, and will provide 
training on all aspects of this final rule.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec.  405.1028 as proposed without modification.
n. ALJ Hearing Procedures (Sec. Sec.  405.1030 and 423.2030)
    The APA provides an ALJ with the authority to regulate the course 
of a hearing, subject to the rules of the agency (see 5 U.S.C. 
556(c)(5)). As discussed below, we proposed several revisions to 
Sec. Sec.  405.1030 and 423.2030, which address ALJ hearing procedures. 
81 FR 43790, 43830-43832. We stated in the proposed rule that in rare 
circumstances, OMHA ALJs have encountered a party or representative 
that makes it difficult or impossible for the ALJ to regulate the 
course of a hearing, or for other parties to present their side of the 
dispute. This may occur when a party or representative continues to 
present testimony or argument on a matter that is not relevant to the 
issues before the ALJ, or on a matter for which the ALJ believes he or 
she has sufficient information or on which the ALJ has already ruled. 
This may also occur when a party or representative is uncooperative, 
disruptive, or abusive during the course of the hearing. Sections 
405.1030 and 423.2030 set forth the rules that govern ALJ hearing 
procedures. We proposed to revise Sec. Sec.  405.1030(b) and 
423.2030(b) to add provisions to address these circumstances in a 
consistent manner that protects the interests of the parties

[[Page 5058]]

and the integrity of the hearing process. To accommodate these 
proposals, we proposed to re-designate paragraph (b) in both Sec. Sec.  
405.1030 and 423.2030 as paragraph (b)(1), and, to be consistent with 
proposed Sec. Sec.  405.1018 and 423.2018, to replace the current 
language stating that an ALJ may accept ``documents that are material 
to the issues'' with ``evidence that is material to the issues,'' 
because not all evidence that may be submitted is documentary evidence 
(for example, photographs).
    We proposed in Sec.  405.1030(b)(2) to address circumstances in 
which a party or representative continues with testimony and argument 
that are not relevant to the issues before the ALJ or that address a 
matter for which the ALJ believes he or she has sufficient information 
or on which the ALJ has already ruled. In these circumstances, the ALJ 
may limit testimony and/or argument at the hearing, and may, at the 
ALJ's discretion, provide the party or representative with an 
opportunity to submit additional written statements and affidavits on 
the matter in lieu of testimony and/or argument at the hearing, within 
a time frame designated by the ALJ. Proposed Sec.  405.1030(b)(2) would 
allow the ALJ to effectively regulate the course of the hearing by 
providing the ALJ with the clear authority to limit testimony and/or 
argument during the hearing, while providing an avenue for the ALJ to 
allow the testimony and/or argument to be entered into the record. We 
proposed at Sec.  423.2030(b)(2) to adopt a corresponding revision for 
limiting testimony and argument at a hearing, and at the ALJ's 
discretion, provide an opportunity to submit additional written 
statements and affidavits in part 423, subpart U proceedings.
    We proposed at Sec.  405.1030(b)(3) to address circumstances in 
which a party or representative is uncooperative, disruptive, or 
abusive during the course of the hearing. In these circumstances, we 
proposed that the ALJ would have the clear authority to excuse the 
party or representative from the hearing and continue with the hearing 
to provide the other parties and participants with the opportunity to 
offer testimony and/or argument. However, we stated in the proposed 
rule that in this circumstance, the ALJ would be required to provide 
the excused party or representative with an opportunity to submit 
written statements and affidavits in lieu of testimony and/or argument 
at the hearing. Further, we stated that the party also would be allowed 
to request a copy of the audio recording of the hearing in accordance 
with Sec.  405.1042 and respond in writing to any statements made by 
other parties or participants and/or testimony of the witnesses at the 
hearing, within a time frame designated by the ALJ. These proposals 
would allow the ALJ to effectively regulate the course of the hearing 
and balance the excused party's right to present his or her case, 
present rebuttal evidence, and cross-examine the witnesses of other 
parties with allowing the party to submit written statements and 
affidavits. We proposed at Sec.  423.2030(b)(3) to adopt a 
corresponding revision for excusing an enrollee or representative who 
is uncooperative, disruptive, or abusive during the hearing in part 
423, subpart U proceedings.
    Current Sec.  405.1030(c) addresses evidence that the ALJ 
determines is missing at the hearing, and provides that if the evidence 
is in the possession of the appellant, and the appellant is a provider, 
supplier, or a beneficiary represented by a provider or supplier, the 
ALJ must determine whether the appellant had good cause for not 
producing the evidence earlier. We proposed to revise Sec.  405.1030(c) 
to add that the ALJ must determine whether the appellant had good cause 
in accordance with Sec.  405.1028 for not producing the evidence. 
Section 1869(b)(3) of the Act applies to limit submission of all new 
evidence after the QIC reconsideration by a provider or supplier absent 
good cause, and the proposed addition would create consistent 
application of the standards for determining whether there is good 
cause to admit new evidence, regardless of when the evidence is 
submitted after the QIC reconsideration. We did not propose any 
corresponding changes to current Sec.  423.2030(c) because the 
limitation on new evidence does not apply in part 423, subpart U 
proceedings.
    Current Sec.  405.1030(d) and (e) discuss what happens if an ALJ 
determines there was or was not good cause for not producing the new 
evidence earlier. Current Sec.  405.1030(d) provides that if the ALJ 
determines that good cause exists, the ALJ considers the evidence in 
deciding the case, and the adjudication period is tolled from the date 
of the hearing to the date that the evidence is submitted. Current 
Sec.  405.1030(e) provides that if the ALJ determines that good cause 
does not exist, the evidence is excluded, with no impact on an 
applicable adjudication period. We stated in the proposed rule that 
current Sec.  405.1030(d) and (e) have caused confusion in light of 
Sec.  405.1018, which indicates that the adjudication period will be 
affected if evidence is submitted later than 10 calendar days after 
receipt of the notice of hearing, unless the evidence is submitted by 
an unrepresented beneficiary. We stated that it has also potentially 
created an incentive for appellants to disregard Sec.  405.1018 because 
current Sec.  405.1030(b) appears to allow evidence to be submitted at 
the hearing without affecting the adjudication time frame; and Sec.  
405.1030(c) allows the ALJ to stop a hearing temporarily if there is 
material evidence missing, with the effect of tolling the adjudication 
time frame (under Sec.  405.1030(d)) from the date of the hearing to 
the date the evidence is submitted, if the evidence is in the 
possession of an appellant who is a provider or supplier or beneficiary 
represented by a provider or supplier, and the ALJ finds good cause to 
admit the evidence. In addition, we stated that OMHA ALJs have 
expressed concern that current Sec.  405.1030(e) does not affect the 
adjudication period when an equal amount of time is spent reviewing 
evidence and making a good cause determination, regardless of whether 
good cause is found.
    Therefore, we proposed to revise Sec.  405.1030(d) to address the 
effect of an evidentiary submission on an adjudication period. We 
proposed in Sec.  405.1030(d) that any applicable adjudication period 
is extended in accordance with proposed Sec.  405.1018(b) if an 
appellant other than an unrepresented beneficiary submits evidence 
pursuant to proposed Sec.  405.1030(b), which generally allows for 
submission of evidence at the hearing, or proposed Sec.  405.1030(c), 
which specifically addresses evidence that the ALJ determines is 
missing at the hearing. Under proposed Sec.  405.1018(b), any 
adjudication period that applies to the appeal would be extended by the 
number of days starting 10 calendar days after receipt of the notice of 
hearing, and ending when the evidence is submitted, whether it is at 
the hearing pursuant to proposed Sec.  405.1030(b)(1), or at a later 
time pursuant to proposed Sec.  405.1030(c). We stated that proposed 
Sec.  405.1030(d) would provide appellants with an incentive to submit 
evidence they wish to have considered early in the adjudication 
process, allow the ALJ to consider the evidence and effectively prepare 
for the hearing, and minimize any delays in the adjudication process 
resulting from the late introduction of evidence during the hearing 
process. We further stated that proposed Sec.  405.1030(d) would also 
remove the potential incentive to disregard Sec.  405.1018, and 
reconcile any inconsistency in the effect of a late evidentiary 
submission on an applicable

[[Page 5059]]

adjudication period by incorporating the Sec.  405.1018 provisions by 
reference rather than establishing a different standard for evidence 
submitted during the course of or after a hearing. We proposed at Sec.  
423.2030(d) to adopt a corresponding provision for the effect on an 
adjudication time frame when new evidence is submitted by a represented 
enrollee in a standard appeal, or an unrepresented or represented 
enrollee in an expedited appeal, in accordance with current Sec.  
423.2018(b) or (c), as applicable.
    Continuing a hearing is referenced in current Sec.  405.1030(c), 
but is not otherwise addressed in part 405, subpart I. We proposed in 
Sec.  405.1030(e)(1) that a hearing may be continued to a later date 
and that the notice of the continued hearing would be sent in 
accordance with proposed Sec.  405.1022, except that a waiver of the 
notice of hearing may be made in writing or on the record, and the 
notice of continued hearing would be sent to the parties and 
participants who attended the hearing, and any additional parties or 
potential parties or participants the ALJ determines are appropriate. 
We stated in the proposed rule that the notice requirement would help 
ensure that the general hearing notice requirements are met for a 
continued hearing, but allow a waiver of the notice of hearing to be 
made in writing or on the record. We stated that we believe the added 
option of waiving the notice of hearing on the record in the context of 
a continued hearing would facilitate scheduling the continued hearing 
when all parties and participants who are in attendance at the hearing 
agree to the continued hearing date, or alternatively agree on the 
record to the notice being mailed, transmitted, or served fewer than 20 
calendar days before the hearing. In addition, proposed Sec.  
405.1030(e)(1) would only require that a notice of the continued 
hearing be sent to the participants and parties who attended the 
hearing, but would provide the ALJ with the discretion to also send the 
notice to additional parties, or potential parties or participants. We 
stated that we believe that a notice of the continued hearing to a 
party, or potential party or participant, who did not attend the 
hearing is not necessary unless the ALJ determines otherwise based on 
the circumstances of the case. In the event that the appellant 
requested the continuance and an adjudication period applies to the 
appeal, we proposed in Sec.  405.1030(e)(2) to provide that the 
adjudication period would be extended by the period between the initial 
hearing date and the continued hearing date. We stated that we believe 
an appellant's request for a continuance of the hearing is similar to 
an appellant's request to reschedule a hearing, and if the request is 
granted, the adjudication period for the appellant's request for 
hearing should be adjusted accordingly. We proposed at Sec.  
423.2030(e) to adopt corresponding provisions for continued hearings in 
part 423, subpart U proceedings.
    On occasion, after a hearing is conducted, ALJs find that 
additional testimony or evidence is necessary to decide the issues on 
appeal, or a procedural matter needs to be addressed. Current Sec.  
405.1030(f) allows an ALJ to reopen a hearing to receive new and 
material evidence pursuant to Sec.  405.986, which requires that the 
evidence (1) was not available or known at the time of the hearing, and 
(2) may result in a different conclusion. However, current Sec.  
405.1030(f) does not provide a mechanism to address procedural matters, 
or to obtain additional information through evidence or testimony that 
may have been available at the time of hearing and may result in a 
different outcome but the importance of which was not recognized until 
after a post-hearing review of the case. We proposed in Sec.  
405.1030(f)(1) to remove the ``reopen'' label and provide for a 
``supplemental'' hearing rather than reopening the hearing to 
distinguish it from reopening a decision and the standards for 
reopening a decision. We also proposed that a supplemental hearing may 
be conducted at the ALJ's discretion at any time before the ALJ mails a 
notice of decision in order to receive new and material evidence, 
obtain additional testimony, or address a procedural matter. We stated 
in the proposed rule that the ALJ would determine whether a 
supplemental hearing is necessary, and if one is held, the scope of the 
supplemental hearing, including when evidence is presented and what 
issues are discussed. In addition, we proposed at Sec.  405.1030(f)(1) 
that a notice of the supplemental hearing be sent in accordance with 
Sec.  405.1022 to the participants and parties who attended the 
hearing, but would provide the ALJ with the discretion to also send the 
notice to additional parties, or potential parties or participants the 
ALJ determines are appropriate. Similar to the proposed notice of a 
continued hearing explained above, we stated that we believe that a 
notice of the supplemental hearing to a party, or potential party or 
participant, who did not attend the hearing is not necessary unless the 
ALJ determines otherwise based on the circumstances of the case. In the 
event that the appellant requested the supplemental hearing and an 
adjudication period applies to the appeal, we proposed at Sec.  
405.1030(f)(2) to provide that the adjudication period would be 
extended by the period between the initial hearing date and the 
supplemental hearing date. We stated that we believe an appellant's 
request for a supplemental hearing is similar to an appellant's request 
for a continuance or to reschedule a hearing, and if the request is 
granted, the adjudication period for the appellant's request for 
hearing should be adjusted accordingly. We proposed at Sec.  
423.2030(f) to adopt corresponding provisions for supplemental hearings 
in part 423, subpart U proceedings.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received two comments opposed to the language in 
proposed Sec. Sec.  405.1030(b)(2) and 423.2030(b)(2) permitting an ALJ 
to limit the testimony and argument at the hearing. The commenters 
believed that the proposals undercut an appellant's ability to get a 
full and fair hearing, and expressed concern that the language gives 
too much discretion to ALJs in allowing an ALJ to limit testimony and/
or argument if the ALJ determines that he or she has sufficient 
information and in permitting the ALJ to decide whether to allow 
additional written submissions. The commenters also noted that an ALJ 
hearing is the first, and in some appeals only, time where an appellant 
can provide oral argument, and the commenters urged that under no 
circumstances should an appellant be prevented from presenting what the 
appellant deems to be a full argument to the ALJ.
    Response: We believe our proposal strikes a necessary balance 
between protecting the interests of the parties and protecting the 
integrity of the hearing process. OMHA ALJs have sometimes encountered 
a party or representative that continues to present testimony or 
argument at a hearing that is not relevant to the issues before the 
ALJ, that is repetitive of evidence or testimony already in the record, 
or that relates to an issue that has been sufficiently developed or on 
which the ALJ has already ruled. When the testimony or argument is 
unrelated to an issue on appeal or an ALJ determines that additional 
evidence or testimony on the issue would be repetitive of evidence or 
testimony already in the record, or relates to an issue that has been 
sufficiently developed or on which he or she has already ruled, the

[[Page 5060]]

continued testimony or argument becomes repetitive or unnecessarily 
cumulative, and adds nothing of value to the proceedings. This 
continued testimony and argument is not only an inefficient use of time 
and resources for the ALJ and the parties, it may have the effect of 
monopolizing the time set for a hearing and causing other parties to 
limit their presentations because they have only allowed for the 
scheduled hearing time in their schedules.
    We do not believe that limiting testimony that is unrelated, 
repetitive, or related to an issue that has been sufficiently developed 
or upon which the ALJ has already ruled prejudices a party's right to a 
full and fair hearing. ALJs have a responsibility pursuant to current 
Sec. Sec.  405.1030(b) and 423.2030(b) to fully examine the issues on 
appeal, ensuring that all necessary testimony is considered, which 
would continue under the these rules as finalized. The proposals at 
Sec. Sec.  405.1030(b) and 423.2030(b), which we are finalizing in this 
rule, would only limit the introduction of repetitive or unrelated 
evidence. Moreover, the proposal is based on the APA at 5 U.S.C. 
556(c)(5), which provides that subject to the published rules of the 
agency, an ALJ may regulate the course of the hearing. We believe that 
ALJs, who have a responsibility to ensure both a fully examined and 
fairly administered hearing, will use these provisions only in the 
limited situations that the proposals are intended to address.
    With regard to the concern that the proposed regulations give too 
much discretion to the ALJ, we believe such discretion is consistent 
with and authorized by the APA. As we stated above, we believe the ALJ 
needs to be able to effectively regulate the course of the hearing, 
including the exercise of discretion as outlined in the Sec. Sec.  
405.1030(b) and 423.2030(b), as finalized, in order to effectively 
protect the interest of parties and to preserve the integrity of the 
hearing process.
    Comment: The same two commenters noted that limiting testimony 
could negatively impact appeals to the Council since the Council limits 
its review to the evidence in the record of the proceedings before the 
ALJ.
    Response: We disagree that the proposals at Sec. Sec.  
405.1030(b)(2) and 423.2030(b)(2) will negatively impact appeals to the 
Council. Although the commenters refer to the language in Sec.  
405.1122(a)(1) stating that when the Council is reviewing an ALJ's 
decision, the Council limits its review to the evidence contained in 
the record of the proceedings before the ALJ, that regulation goes on 
to say in Sec.  405.1122(a)(2) that if the Council 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 Council may remand the case to an 
ALJ to obtain the evidence and issue a new decision. A party that feels 
that certain evidence was not duly entered into the record because of 
an ALJ's decision to limit testimony at the hearing pursuant to the 
proposed regulations may appeal that issue to the Council. The hearing 
is preserved on audio recording and is available for review on appeal, 
and the Council may remand a case if the record shows that the party is 
entitled to a new hearing.
    Comment: Another commenter specifically objected to the language in 
proposed Sec. Sec.  405.1030(b)(2) and 423.2030(b)(2) permitting an ALJ 
to limit testimony or argument on the basis that ``the ALJ believes he 
or she has sufficient information.'' The commenter stated that limiting 
testimony and argument on that basis is dangerous precedent, 
potentially interrupts the logical flow of an argument, precludes an 
appellant from knowing what the ALJ understands and prevents the 
appellant from being able to build a rational case upon a common 
knowledge base. The commenter noted that some fields of medicine change 
rapidly and even though an ALJ may have recently heard and decided a 
similar case for a similar condition, due to the evolving information 
in the field, ALJs may not come into the hearing with sufficiently up-
to-date information.
    Response: We disagree with the commenter's suggestion that proposed 
Sec. Sec.  405.1030(b)(2) and 423.2030(b)(2) could be used to limit 
argument or testimony related to new or updated information relevant to 
an issue on appeal. The language in the proposed regulations that the 
commenter specifically opposes is focused on testimony or argument that 
is unnecessarily repetitive because the ALJ has determined that he or 
she has sufficient information to make an informed decision or has 
already ruled on the issue. As we stated above, an ALJ is responsible 
for fully examining the issues on appeal and therefore an ALJ cannot 
limit testimony or argument in the situation described by the commenter 
where a full examination requires additional updated or new 
information. However, we understand that the passage stating, ``ALJ 
determines he or she has sufficient information'' may not be widely 
understood and may be subject to varying interpretations, and we are 
therefore finalizing proposed Sec. Sec.  405.1030(b)(2) and 
423.2030(b)(2) with modification to clarify the intent of the provision 
as discussed above. Specifically, we are modifying Sec. Sec.  
405.1030(b)(2) and 423.2030(b)(2) to provide that the ALJ may limit 
testimony and/or argument at the hearing that are not relevant to an 
issue before the ALJ, that are repetitive of evidence or testimony 
already in the record, or that relate to an issue that has been 
sufficiently developed or on which the ALJ has already ruled. We 
believe this modification clarifies the intent of this provision and 
will mitigate the possibility that the provision would be used to limit 
argument or testimony related to new or updated information relevant to 
an issue on appeal.
    With regard to the commenter's concern that limiting testimony or 
argument would interrupt the logical flow of an argument or make it 
difficult for the party to present a coherent or rational case, we note 
that these concerns appear to relate mainly to a party being able to 
present its case in the manner that he or she believes is most logical, 
coherent, or rational and do not adequately recognize the ALJ's role in 
the process. When an ALJ limits testimony or argument at the hearing, 
it is because the ALJ believes the testimony or argument was not 
relevant to an issue before the ALJ, was repetitive of evidence or 
testimony already in the record, or related to an issue that was 
sufficiently developed, and the ALJ has heard all necessary testimony, 
understands the arguments being made, and is able to logically, 
rationally, and fully analyze the issue to make a decision. Moreover, 
we believe these concerns about being able to present a case in the 
order and manner an individual desires are outweighed by the ALJ's 
broader responsibilities to protect the interests of all parties and 
preserve the integrity of the hearing process. As we discuss above, 
allowing a party to continue presenting testimony and argument when the 
testimony or argument is not relevant to an issue before the ALJ, is 
repetitive of evidence or testimony already in the record, or relates 
to an issue that has been sufficiently developed, is not only an 
inefficient use of time and resources, it may have the effect of 
monopolizing the time set for a hearing and causing other parties to 
limit their presentations because they have only allowed for the 
scheduled hearing time in their schedules.
    Comment: Another commenter noted that ALJs may improperly use the 
discretion afforded in proposed Sec. Sec.  405.1030(b)(2) and 
423.2030(b)(2) to

[[Page 5061]]

get through hearings faster or set unreasonably short periods of time 
for hearings that involve large numbers of cases.
    Response: While efficient use of time and resources is an important 
interest, Sec. Sec.  405.1030(b)(2) and 423.2030(b)(2), as finalized, 
do not provide authority to curtail hearings or limit appellants' 
presentations of evidence, argument, or testimony solely for the 
purpose of keeping the duration of a hearing within a specified time 
parameter. Given the ALJ's responsibility to examine the issues fully 
at the hearing, as discussed above, we do not believe that Sec. Sec.  
405.1030(b)(2) and 423.2030(b)(2) would be abused by ALJs as suggested 
by this comment, and to the extent that a party believes that 
inadequate time was provided and the ALJ did not provide additional 
time, that issue could be raised on appeal to the Council.
    Comment: One commenter recommended modifying the proposed changes 
in Sec. Sec.  405.1030(b)(3) and 423.2030(b)(3) to clarify that a party 
will only be excused from a hearing after an initial admonishment of 
the party's conduct by the ALJ.
    Response: We agree that the recommended modification would provide 
better clarity to parties regarding the expectations or concerns of an 
ALJ during the course of a hearing and would provide a fair warning to 
parties that they must adjust their behavior or risk being excused from 
the hearing. We have therefore further modified proposed Sec. Sec.  
405.1030(b)(3) and 423.2030(b)(3) to state that an ALJ may excuse the 
party, enrollee, or representative from the hearing if that party, 
enrollee, or representative remains uncooperative, disruptive to the 
hearing, or abusive during the course of the hearing after the ALJ has 
given a warning.
    Comment: One commenter expressed concern that the proposed 
regulations allowing an ALJ to excuse a party that is uncooperative, 
disruptive, or abusive during the hearing will be misconstrued to limit 
the ability of appellants to make their arguments and curtail due 
process. The commenter stressed that a high bar therefore should be 
imposed on the use of proposed Sec. Sec.  405.1030(b)(3) and 
423.2030(b)(3). The commenter argued that proposed Sec. Sec.  
405.1030(b)(3) and 423.2030(b)(3) would permit an ALJ to excuse a party 
or representative when a hearing becomes ``spirited or contentious'' 
and that parties and representatives may refrain from objecting to 
certain hearing procedures set by the ALJ because they do not want to 
risk alienating the ALJ and/or being excused from the hearing. The 
commenter also argued that even though proposed Sec. Sec.  
405.1030(b)(3) and 423.2030(b)(3) require that the ALJ provide the 
excused party or representative with an opportunity to submit written 
statements in lieu of testimony and/or argument at hearing, it would be 
impossible for an appellant to effectively present a case or cross 
examine witnesses in writing when the hearing continues without him or 
her.
    Response: We anticipate that ALJs would rarely find the need to use 
the rules at proposed Sec. Sec.  405.1030(b)(3) and 423.2030(b)(3) to 
excuse someone from the hearing but believe that the proposals are 
necessary to protect the integrity of the hearing process. An ALJ has 
authority to regulate the course of the hearing, consistent with Sec.  
556(c) of the APA and Sec. Sec.  405.1030 and 423.2030, which we 
believe includes excusing any party or representative that is being 
disruptive to the adjudication process. Especially with the additional 
modification discussed above requiring an initial warning by the ALJ, 
we believe Sec. Sec.  405.1030(b)(3) and 423.2030(b)(3), as finalized, 
satisfactorily balance the excused party's right to present his or her 
case with the ALJ's authority to regulate the course of the hearing. As 
we note above, ALJs have a responsibility under current Sec. Sec.  
405.1030(b) and 423.2030(b) (and Sec. Sec.  405.1030(b)(1) and 
423.2030(b)(1) as finalized in this rule) to fully examine the issues 
on appeal. We believe that ALJs, who have a responsibility to ensure 
both a fully examined and fairly administered hearing, will use these 
provisions infrequently and only when necessary to support a full and 
fair hearing.
    We note that any party that is excused from the hearing pursuant to 
proposed Sec. Sec.  405.1030(b)(3) and 423.2030(b)(3) would be 
permitted to submit written statements and affidavits in lieu of 
testimony and/or argument at the hearing. Although the commenter noted 
that written statements would limit an excused party's or 
representative's ability to present a case or cross examine witnesses 
and other parties at the hearing, we believe that the required warning 
would effectively put the excused entity or individual on notice of the 
consequences of continued uncooperative, disruptive, or abusive 
behavior, and therefore the excused individuals or entities would have 
knowingly limited their own argument and testimony to written 
statements by continuing such behavior. While the format of the 
argument and testimony would be changed, we disagree with the commenter 
that written statements and affidavits are necessarily less effective 
or persuasive than oral argument or testimony or that they curtail due 
process. The ALJ would give the same weight to argument or testimony 
that is presented in writing as to argument or testimony that is 
presented orally at the hearing. Moreover, any excused party would be 
able to request a copy of the audio recording of the hearing in 
accordance with Sec. Sec.  405.1042 and 423.2042 so that the party 
could respond in writing to any statements or testimony made at the 
hearing, including the submission of rebuttal argument and evidence.
    Finally, we disagree with the commenter's characterization that the 
type of behavior addressed in Sec. Sec.  405.1030(b)(3) and 
423.2030(b)(3) is synonymous with ``spirited or contentious'' or that 
parties or their representatives would refrain from objecting to 
certain hearing procedures set by the ALJ because they do not want to 
risk being excused from the hearing. The language used in the 
regulations--uncooperative, disruptive, or abusive--was specifically 
chosen to describe a certain degree of behavior that makes it difficult 
or impossible for an ALJ to regulate the course of a hearing or for 
other parties to present their side of the dispute. We believe that 
Sec. Sec.  405.1030(b)(3) and 423.2030(b)(3) are necessary in order to 
allow the ALJ to effectively regulate the course of the hearing, 
including providing the other parties with their opportunity to offer 
testimony and/or argument. To the extent that a party believes it was 
inappropriately excused from a hearing, that issue could be raised on 
appeal to the Council.
    Comment: We received one comment that supported the authority given 
in proposed Sec. Sec.  405.1030(b)(3) and 423.2030(b)(3) allowing an 
ALJ to excuse a party or representative that is disruptive or abusive 
during the course of the hearing, but requested clarification of the 
term ``uncooperative'' as used in the proposed regulations. The 
commenter asked if it would be seen as ``uncooperative'' if a party 
disagrees with an ALJ's interpretation of the law.
    Response: We thank the commenter for its support of Sec. Sec.  
405.1030(b)(3) and 423.2030(b)(3) and agree that ALJs need to have 
authority to excuse parties or representatives if they are being 
disruptive or abusive during the course of the hearing. We also believe 
that ALJs should have the authority to excuse parties or 
representatives who are uncooperative because uncooperative behavior 
can similarly disrupt the course of the hearing and/or negatively

[[Page 5062]]

impact the integrity of the hearing process. While uncooperative 
behavior may take a range of forms, generally we believe that, in the 
context of Sec. Sec.  405.1030(b)(3) and 423.2030(b)(3), 
``uncooperative'' is behavior that has risen to a level that is 
impeding the ALJ's ability to regulate the hearing or the other 
parties' ability to present their side of the dispute. If a party 
disagrees with an ALJ, as suggested by the commenter's question, even 
if the disagreement is spirited or contentious as another commenter 
suggested, such behavior would not rise to the level of 
``uncooperative'' if it does not impede the ALJ's ability to regulate 
the hearing or the other parties' ability to present their case. We 
believe that the additional modification discussed above, adding that a 
party or representative may only be excused after the ALJ has warned 
the party or representative to stop the disruptive, abusive, or 
uncooperative behavior, will assist in providing clarity to parties 
regarding the expectations or concerns of an ALJ during the course of a 
hearing, and would provide a fair warning to parties and 
representatives that they must adjust their behavior or risk being 
excused from the hearing.
    Comment: We received one request that CMS prepare basic 
informational documents that may be furnished to or accessed by any 
party whose testimony has been limited or who has been excused from a 
hearing, explaining their rights and options under the regulations.
    Response: Any party who believes that his or her testimony has been 
unduly limited or who has been excused from a hearing pursuant to 
proposed Sec.  405.1030(b)(2) or (3), or Sec.  423.2030(b)(2) or (3) 
may appeal the issue to the Council for review after the ALJ's decision 
has been issued. The hearing is preserved on audio recording and is 
available for review on appeal and the Council may remand a case if the 
record shows that the party is entitled to a new hearing. We intend to 
issue additional sub-regulatory guidance in the OCPM, but do not 
believe that a written document outlining a party's rights under Sec.  
405.1030(b)(2) or (3) or an enrollee's rights under Sec.  
423.2030(b)(2) or (3) is necessary because the party, enrollee, or the 
party's or enrollee's representative, would be informed prior to being 
excused from the hearing of the right under Sec.  405.1030(b)(3) or 
Sec.  423.2030(b)(3) to submit written statements and affidavits in 
lieu of testimony or argument at the hearing. Furthermore, when an ALJ 
limits testimony and/or argument at the hearing under Sec.  
405.1030(b)(2) or Sec.  423.2030(b)(2) because the testimony and/or 
argument is not relevant to an issue before the ALJ, is repetitive of 
evidence or testimony already in the record, or relates to an issue 
that has been sufficiently developed or on which the ALJ has already 
ruled, no additional rights or options extend to the party or enrollee 
other than to appeal the ALJ's action to the Council. Rather, the ALJ 
may, but is not required to, provide the party, enrollee, or 
representative with an opportunity to submit additional written 
statements and affidavits on the matter.
    Comment: One commenter asked for additional clarification regarding 
the statement that ``[w]e are not proposing any corresponding changes 
to current Sec.  423.2030(c) because the limitation on new evidence 
does not apply in part 423, subpart U proceedings.''
    Response: Part 423, subpart U includes detailed procedures for 
requesting and adjudicating a request for hearing or a request for 
review of a dismissal under Medicare Part D (the Voluntary Medicare 
Prescription Drug Benefit). The preamble to the final rule establishing 
the Medicare Part D claims appeals process issued in the Federal 
Register on December 9, 2009 (74 FR 65340) sets forth that the 
provisions of part 423, subpart U generally follow the part 405, 
subpart I procedures. However, there are some specific differences 
between the part 405, subpart I rules governing Medicare Part A and B 
appeals and the part 423, subpart U rules governing Medicare Part D 
appeals, including the absence of good cause limitations for the 
introduction of new evidence in Medicare Part D proceedings as 
discussed in the proposed and final Part D appeals rules (73 FR 14345, 
74 FR 65345). In the final Medicare Part D appeals rule (74 FR 65345), 
we decided that the full and early presentation of evidence provisions 
of part 405 subpart I, including Sec.  405.1028, would not apply in 
Part D appeals. As discussed above, section 1869(b)(3) of the Act 
states that a provider or supplier may not introduce evidence in any 
appeal that was not presented at the reconsideration, unless there is 
good cause which precluded the introduction of evidence at or before 
the reconsideration. 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. In the proposed and final Part D appeals rules (73 FR 
14345, 74 FR 65345), we noted our desire to provide enrollees with as 
much flexibility as possible concerning the evidence that may be 
presented for an ALJ hearing and Council review, and stated that 
because an enrollee is the only party to the appeal in Medicare Part D 
cases, and because an enrollee would not be represented by a provider 
or supplier attempting to circumvent this rule, we were not including 
in the part 423, subpart U rules any provisions from part 405, subpart 
I on the full and early presentation of evidence. This flexibility 
extends to the submission of any written evidence about an enrollee's 
condition at the time of the coverage determination. However, the 
subpart U rules do provide that if 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 Council will remand the case to 
the Part D IRE. Accordingly, although the Medicare Part A and Part B 
regulations (part 405, subpart I) contain language limiting the 
submission of new evidence after the QIC reconsideration (see, for 
example, Sec. Sec.  405.1018, 405.1028, and 405.1030), the 
corresponding Medicare Part D regulations (part 423, subpart U) do not 
contain that language.
    The only proposed change to Sec.  405.1030(c)--the provision 
regarding procedures when an ALJ determines that there is material 
evidence missing at the hearing in Medicare Part A and Part B cases--is 
to add a reference to Sec.  405.1028 for consistency regarding the 
application of the standards for determining whether there is good 
cause to admit new evidence regardless of when the evidence is 
submitted after the QIC reconsideration. No changes were proposed for 
Sec.  423.2030(c)--the corresponding provision regarding procedures 
when an ALJ determines that there is material evidence missing at the 
hearing in Medicare Part D cases--because there is no corresponding 
language requiring good cause for the admission of new evidence in the 
Medicare Part D regulations as explained above.
    Comment: We received one comment on proposed Sec.  405.1030(d) 
requesting that Medicaid State agencies be explicitly exempted, similar 
to unrepresented beneficiaries, from any extension of the adjudication 
period if new evidence is submitted at the hearing.
    Response: Medicaid State agencies, in addition to unrepresented 
beneficiaries, CMS and its contractors, applicable plans, and 
beneficiaries represented by someone other than providers or suppliers, 
are not subject to the same limitations on the submission of new

[[Page 5063]]

evidence after the QIC reconsideration as providers and suppliers are 
under section 1869(b)(3) of the Act. As discussed in section II.B.3.i 
above, we have modified language in Sec.  405.1018(d) to provide that 
those individuals and entities are exempt from the requirement to show 
good cause for the late submission of evidence. We do not agree, 
however, that because individuals and entities other than unrepresented 
beneficiaries are not subject to the good cause requirements for the 
submission of late evidence that they should also be afforded the same 
treatment as unrepresented beneficiaries with respect to exemption from 
extension of the adjudication period when new evidence is submitted. We 
believe that individuals and entities other than unrepresented 
beneficiaries are generally more familiar with the appeals process than 
unrepresented beneficiaries, and are generally aware that evidence to 
be considered in deciding an appeal should be submitted as early in the 
process as possible (see also Sec. Sec.  405.946 and 405.966). Further 
exempting individuals and entities--other than unrepresented 
beneficiaries--who are already exempt from the requirement to show good 
cause for the introduction of new evidence after the QIC 
reconsideration from an extension of the adjudication period could 
incentivize these individuals and entities to delay the submission of 
evidence until after a hearing has been scheduled, and possibly 
conducted. We believe this could have a detrimental effect on an ALJ's 
ability to issue a timely decision. Furthermore, we note that 
Sec. Sec.  405.946 and 405.966 provide for extensions to the time 
frames for issuing a redetermination and reconsideration, respectively, 
when a party submits additional evidence after filing the request for 
redetermination or reconsideration. Our modification in Sec.  
405.1018(d) makes it clear that although those entities are exempt from 
the requirement of submitting a statement and demonstrating good cause 
for new evidence, they are still subject to an extension on the 
applicable adjudication period pursuant to Sec.  405.1018(b), as they 
are under current Sec.  405.1018(b) and (d). To be consistent with the 
rules in Sec.  405.1018 regarding new evidence, we decline to make the 
commenter's suggested change to Sec.  405.1030(d).
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1030 and 423.2030 as proposed, with the 
following modifications. We are revising Sec. Sec.  405.1030(b)(2) and 
423.2030(b)(2) to provide that the ALJ may limit testimony and/or 
argument at the hearing that are not relevant to an issue before the 
ALJ, are repetitive of evidence or testimony already in the record, or 
that relate to an issue that has been sufficiently developed or on 
which the ALJ has already ruled. In addition, we are revising 
Sec. Sec.  405.1030(b)(3) and 423.2030(b)(3) to add language that a 
party or party's representative (or enrollee or enrollee's 
representative in the context of Sec.  423.2030(b)(3)) may be excused 
from a hearing if that individual remains uncooperative, disruptive to 
the hearing, or abusive during the course of the hearing after the ALJ 
has warned the party or representative to stop such behavior.
o. Issues Before an ALJ or Attorney Adjudicator (Sec. Sec.  405.1032, 
405.1064 and 423.2032)
    As described below, we proposed several changes to Sec. Sec.  
405.1032 and 423.2032, which address the issues that are before the 
ALJ. 81 FR 43790, 43832-43834. We proposed to revise the title of the 
section to indicate that the proposed provision also would apply to 
issues before an attorney adjudicator, as proposed in section II.B of 
the proposed rule (and discussed in section II.A.2 of this final rule 
above), if an attorney adjudicator is assigned to an appeal.
    Current Sec.  405.1032(a) states that the issues before the ALJ 
include all of the issues brought out in the initial determination, 
redetermination, or reconsideration that were not decided entirely in a 
party's favor. However, we stated in the proposed rule that when a 
request for hearing involves a reconsideration of multiple claims and 
the appellant does not identify one or more of the claims that were not 
decided entirely in the party's favor at initial determination, 
redetermination, or reconsideration, it is unclear whether the ALJ 
should review all of the claims that were not decided entirely in the 
party's favor at initial determination, redetermination, or 
reconsideration, or just those claims specified by the appellant in the 
request for hearing. An appellant is required to identify the dates of 
service for the claims that it wishes to appeal in its request for 
hearing under Sec.  405.1014, and some appellants have indicated that 
they do not specify a denied claim in a request for hearing when they 
agree that the record does not support coverage of the claim. To 
address the ambiguity, and in the interest of efficiency and 
consistency with Sec.  405.1014, we proposed in Sec.  405.1032(a) that 
the issues before the ALJ or attorney adjudicator include all the 
issues for the claims or appealed matter (for example, for appeals that 
do not involve a claim for items or services furnished to a 
beneficiary, such as Medicare Secondary Payer appeals and terminations 
of coverage) specified in the request for hearing that were brought out 
in the initial determination, redetermination, or reconsideration that 
were not decided entirely in a party's favor. We proposed at Sec.  
423.2032(a) to adopt a corresponding revision for issues in part 423, 
subpart U proceedings, except the term claims is not used because part 
423, subpart U appeals do not involve claims.
    Current Sec.  405.1032(a) also notes that if evidence presented 
before the hearing causes the ALJ to question a favorable portion of 
the determination, the ALJ notifies the parties before the hearing and 
may consider it an issue at the hearing. As explained in the 2005 
Interim Final Rule (70 FR 11462), this provision relates to the 
favorable portion of an appealed claim, and that the favorable issue is 
a new issue that must meet the requirements of current paragraph (b). 
However, in practice, this provision has been read to allow 
consideration of separate claims that were decided in a party's favor 
at lower appeal levels in multiple-claim appeals, and at times read 
independently from paragraph (b). To address this confusion, we 
proposed to move this language in Sec.  405.1032(a) to proposed Sec.  
405.1032(b), with the revisions discussed below. We proposed at Sec.  
423.2032(a) and (b) to adopt corresponding revisions for new issues in 
part 423, subpart U proceedings.
    Current Sec.  405.1032(b) allows new issues to be considered at the 
hearing if: (1) The ALJ notifies the parties about the new issue before 
the start of the hearing; (2) the resolution of the new issue could 
have a material impact on the claim or claims that are the subject of 
the request for hearing; and (3) its resolution is permissible under 
the rules governing reopening of determinations and decisions. We 
proposed at Sec.  405.1032(b) to incorporate these provisions, with the 
revisions discussed below, as well as the language regarding 
consideration of favorable issues moved from current Sec.  405.1032(a), 
in a revised structure.
    We proposed in Sec.  405.1032(b)(1) to address when a new issue may 
be considered. Specifically, we proposed that the ALJ may only consider 
the new issue, including a favorable portion of a determination on a 
claim or appealed matter specified in the request for hearing, if its 
resolution could have a material impact on the claim or

[[Page 5064]]

appealed matter, and (1) there is new or material evidence that was not 
available or known at the time of the determination and which may 
result in a different conclusion, or (2) the evidence that was 
considered in making the determination clearly shows on its face that 
an obvious error was made at the time of the determination. We stated 
in the proposed rule that this would consolidate the current provisions 
to better convey when a new issue may be considered, clarify that a new 
issue relates to a claim or appealed matter specified in the request 
for hearing, and provide the applicable standards from the reopening 
rules referenced in current Sec.  405.1032(b)(1)(ii). We proposed in 
Sec.  405.1032(b)(1) to continue to provide that the new issue may be 
raised by the ALJ or any party and may include issues resulting from 
the participation of CMS, but also to correct the language so that it 
also references participation of CMS contractors. We proposed at Sec.  
423.2032(b)(1) to adopt corresponding revisions for when new issues may 
be considered in part 423, subpart U proceedings.
    We proposed at Sec.  405.1032(b)(2) to continue to provide that 
notice of the new issue must be provided before the start of the 
hearing, but would limit the notice to the parties who were or will be 
sent the notice of hearing, rather than the current standard to notice 
``all of the parties.'' Because notice of the new issue may be made in 
the notice of hearing or after the notice of hearing, and parties 
generally have 10 calendar days after receipt of the notice of hearing 
to submit evidence, we proposed at Sec.  405.1032(b)(3) to also provide 
that if notice of the new issue is sent after the notice of hearing, 
the parties would have at least 10 calendar days after receiving the 
notice of the new issue to submit evidence regarding the issue. As 
provided in proposed Sec.  405.1028(a)(2)(ii), the ALJ would then 
determine whether the new evidence is material to the new issue 
identified by the ALJ. We also stated in the proposed rule that if an 
adjudication time frame applies to the appeal, the adjudication period 
would not be affected by the submission of evidence. Further, we 
proposed at Sec.  405.1032(b)(3) that if the hearing is conducted 
before the time to submit evidence regarding the issue expires, the 
record would remain open until the opportunity to submit evidence 
expires to provide the parties sufficient time to submit evidence 
regarding the issue. We proposed at Sec.  423.2032(b)(2) and (b)(3) to 
adopt corresponding provisions for providing notice of new issues to 
enrollees and an opportunity to submit evidence, and to add that an 
enrollee will have 2 calendar days after receiving notice of the new 
issue in an expedited appeal to submit evidence, which corresponds to 
the length of time permitted under proposed Sec.  423.2018(c) to submit 
evidence after receiving a notice of expedited hearing.
    Current Sec.  405.1032(c) states that an ALJ cannot add any claim, 
including one that is related to an issue that is appropriately before 
an ALJ, to a pending appeal unless the claim has been adjudicated at 
the lower appeal levels and all parties are notified of the new issues 
before the start of the hearing. However, in practice, we are unaware 
that this provision is used, and to the extent it may be used, we 
believe it would be disruptive to the adjudication process, result in 
filing requirements not being observed, and risk adjudication of the 
same claim by multiple adjudicators. Therefore, we proposed to maintain 
the topic of adding claims to a pending appeal, but replace the 
language of current Sec.  405.1032(c), as explained below.
    A reconsideration may be appealed for an ALJ hearing regardless of 
the number of claims involved in the reconsideration. However, we 
recognize that a party may not specify all of the claims from a 
reconsideration that he or she wishes to appeal in the party's request 
for hearing. We proposed in Sec.  405.1032(c)(1) to address this 
circumstance by providing that claims that were not specified in a 
request for hearing may only be added to a pending appeal if the claims 
were adjudicated in the same reconsideration that is appealed in the 
request for hearing, and the period to request an ALJ hearing for that 
reconsideration has not expired, or an ALJ or attorney adjudicator 
extends the time to request an ALJ hearing on those claims to be added 
in accordance with proposed Sec.  405.1014(e). We stated in the 
proposed rule that we believe that this would result in less disruption 
to the adjudication process, greater adherence to filing requirements, 
and reduce the risk of adjudication of the same claim by multiple 
adjudicators. To help ensure that the copy requirement of proposed 
Sec.  405.1014(d) is observed, we proposed at Sec.  405.1032(c)(2) to 
require that before a claim may be added to a pending appeal, the 
appellant must submit evidence that demonstrates that the information 
that constitutes a complete request for hearing in accordance with 
Sec.  405.1014(b) and other materials related to the claim that the 
appellant seeks to add to the pending appeal were sent to the other 
parties to the claim in accordance with Sec.  405.1014(d). We proposed 
at Sec.  423.2032(c) to adopt a provision corresponding to proposed 
Sec.  405.1032(c)(1), but we did not propose to adopt a provision 
corresponding to Sec.  405.1032(c)(2) because there is no Sec.  
423.2014 requirement for an enrollee to send a copy of his or her 
request to others.
    Current Sec.  405.1032 does not address issues related to an appeal 
that involves a disagreement with how a statistical sample and/or 
extrapolation was conducted. When an appeal involves a statistical 
sample and an extrapolation and the appellant wishes to challenge how 
the statistical sample and/or extrapolation was conducted, as discussed 
previously, we proposed at Sec.  405.1014(a)(3)(iii) to require the 
appellant to assert the reasons the appellant disagrees with how the 
statistical sampling and/or extrapolation was conducted in the request 
for hearing. We proposed at Sec.  405.1032(d)(1) to reinforce this 
requirement by excluding issues related to how the statistical sample 
and/or extrapolation were conducted if the appellant does not comply 
with Sec.  405.1014(a)(3)(iii). In addition to reinforcing the proposed 
requirement at Sec.  405.1014(a)(3)(iii), we stated in the proposed 
rule that we believed that excluding the issue is appropriate because 
an appellant should reasonably be aware of whether it disagrees with 
how the statistical sampling and/or extrapolation was conducted at the 
time it files a request for hearing, and raising the issue later in the 
adjudication process or at the hearing can cause significant delays in 
adjudicating an appeal because the ALJ may need to conduct additional 
fact finding, find it necessary to request participation of CMS or one 
of its contractors, and/or call expert witnesses to help address the 
issue.
    Related to the issues that an ALJ must consider, the 2005 Interim 
Final Rule (70 FR 11466) explained that current Sec.  405.1064 was 
added to set forth a general rule regarding ALJ decisions that are 
based on statistical samples because a decision that is based on only a 
portion of a statistical sample does not accurately reflect the entire 
record. As discussed in the 2009 Final Rule (74 FR 65328), current 
Sec.  405.1064 explains that when an appeal from the QIC involves an 
overpayment, and the QIC used a statistical sample in reaching its 
reconsideration, the ALJ must base his or her decision on a review of 
all claims in the sample. However, we stated in the proposed rule that 
while a review of the claims selected for the sample is necessary to 
review issues related to a

[[Page 5065]]

contested sample and extrapolation, for example to determine whether 
the sample claims were appropriately selected for a representative 
sample of the universe, current Sec.  405.1064 has been read more 
broadly to also require adjudication of each sample claim, regardless 
of whether the sample claim was adjudicated favorably at lower appeal 
levels. We further stated in the proposed rule that we do not believe 
adjudicating sample claims that were decided favorably at lower levels 
of appeal, or sample claims that are not appealed by a party, is 
necessary to adjudicate broader issues with how sampling and 
extrapolation was conducted, and that the broader reading of current 
Sec.  405.1064 results in unnecessary adjudications of claims that were 
not appealed.
    To clarify what is at issue and what must be considered in appeals 
involving statistical sampling and extrapolations, we proposed to 
remove current Sec.  405.1064, and address the matter in Sec.  
405.1032(d)(2). We proposed in Sec.  405.1032(d)(2) that if a party 
asserts a disagreement with how the statistical sampling methodology 
and extrapolation were conducted in the request for hearing, in 
accordance with proposed Sec.  405.1014(a)(3)(iii), Sec.  405.1032(a) 
through (c) would apply to the adjudication of the sample claims. The 
result of applying proposed Sec.  405.1032(a) and (b) would be that 
only the sample units that were specified in the request for hearing 
are individually adjudicated, subject to a new issue being identified 
for an appealed claim. However, proposed Sec.  405.1032(c) would permit 
adding sample claims to a pending appeal if they were adjudicated in 
the appealed reconsideration and the time to request a hearing on the 
reconsideration has not expired, or the ALJ or attorney adjudicator 
extends the time to request an ALJ hearing on those claims in 
accordance with Sec.  405.1014(e). To incorporate the principle 
embodied in current Sec.  405.1064, we proposed in Sec.  405.1032(d)(2) 
that in deciding issues related to how a statistical sample and/or 
extrapolation was conducted, the ALJ or attorney adjudicator would base 
his or her decision on a review of the entire sample to the extent 
appropriate to decide the issue. We stated in the proposed rule that we 
believed this more clearly conveys the intent of the rule and 
recognizes that an individual adjudication of each claim in the sample 
is not always necessary to decide an issue related to how a statistical 
sample and/or extrapolation was conducted, such as whether there is 
documentation so that the sampling frame can be re-created, as required 
by the Medicare Program Integrity Manual (Internet-Only Manual 100-08) 
(see chapter 8, section 8.4.4.4.1). We did not propose any 
corresponding changes in Sec.  423.2030 because statistical sampling 
and extrapolation are not currently used for matters that are subject 
to part 423, subpart U proceedings.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment on these proposals. The commenter 
noted that there were numerous changes proposed in part 405, subpart I 
concerning standards for ALJs to consider new issues, notice 
requirements for new issues, the submission and admissibility of 
evidence related to new issues, and rules governing whether claims may 
be added to a pending appeal. The commenter suggested that, if the 
proposals were finalized, OMHA publish ``an expanded beneficiary 
handbook (online and elsewhere) that explains these provisions in 
`practical, understandable terms for the layperson.' ''
    Response: We thank the commenter for the suggestion, and will 
consider providing beneficiaries with enhanced or additional tools to 
help them understand the appeals process in the future. Although we 
proposed many revisions to the existing rules in part 405, subpart I 
and other provisions that apply to benefit appeals, one of the stated 
goals of this rulemaking was to streamline and improve the efficiency 
of the appeals process. We believe many of the proposed changes add 
clarity to the rules and resolve areas of longstanding confusion for 
appellants, adjudicators, and other stakeholders in the appeals 
process. Wherever possible, we have used plain language and have 
defined terms that may be unfamiliar to beneficiaries or other 
appellants. However, because the rules sometimes involve complex 
procedures that require precise terminology (more often associated with 
provider and supplier appeals), there are instances where 
oversimplification of a stated rule could have the unintended 
consequence of introducing further areas of ambiguity and frustrating 
one of the primary purposes of this rulemaking.
    In addition to existing CMS resources like the Medicare & You 
Handbook, 1-800 Medicare, chapter 29 of the Medicare Claims Processing 
Manual (Internet-Only Manual 100-4), and the Medicare claims appeals 
Web site at www.medicare.gov/claims-and-appeals/file-an-appeal/appeals.html, OMHA is currently in the process of developing and 
releasing the OCPM. The OCPM provides day-to-day operating 
instructions, policies, and procedures based on statutes, regulations, 
and OMHA directives. Development is ongoing, and although the OCPM is 
primarily intended to be a resource used by OMHA adjudicators and 
staff, chapters are made publicly available on the OMHA Web site 
(www.hhs.gov/omha) soon after they are published. The instructions and 
guidance in the OCPM describe many policies and procedures in greater 
detail and provide frequent examples to aid understanding.
    OMHA also has a toll free beneficiary help line for Medicare 
beneficiaries and Part C or Part D plan enrollees who have questions 
about or need assistance with a request for an ALJ hearing, as well as 
a separate OMHA national toll free assistance line for other 
appellants. Information about both help lines can be found on the 
``Contact OMHA'' portion of the OMHA Web site (www.hhs.gov/omha).
    After review and consideration of the comment received, for the 
reasons discussed above and in the proposed rule, we are finalizing our 
proposals to revise Sec. Sec.  405.1032 and 423.2032 and to remove 
Sec.  405.1064 without modification.
p. Requesting Information From the QIC or IRE, and Remanding an Appeal 
(Sec. Sec.  405.1034, 405.1056, 405.1058, 423.2034, 423.2056, and 
423.2058)
    Current Sec. Sec.  405.1034 and 423.2034 describe when an ALJ may 
request information from, or remand a case to a QIC or IRE. When the 
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 or its contractors, including an IRE, or the Part 
D plan sponsor, current Sec. Sec.  405.1034(a) and 423.2034(a) allow an 
ALJ to remand the case to the QIC or IRE that issued the 
reconsideration, or retain jurisdiction of the case and request that 
the entity forward the missing information to the appropriate hearing 
office. The 2005 Interim Final Rule (70 FR 11465) explained that in the 
rare instance in which the file lacks necessary technical information 
that can only be provided by CMS or its contractors, it was believed 
that the most effective way of completing the record is to return the 
case, via remand, to the contractor; however, the ALJ also had the 
option of asking the entity to forward the missing information to the 
ALJ hearing office. We stated in the proposed rule that, in practice, 
stakeholders have expressed frustration and concern with the remand 
provisions

[[Page 5066]]

because in accordance with the definition of a remand in Sec.  405.902, 
a remand vacates the lower level appeal decision and therefore may 
require a QIC or IRE to issue a new reconsideration, for which the 
appellant must submit a new request for hearing, which causes 
additional delay in reaching finality on the disputed claims. In 
addition, current Sec. Sec.  405.1034 and 423.2034 do not address 
providing notice of a remand or the effects of a remand.
    To address stakeholders' concerns with the current remand 
provisions, and areas not addressed in current Sec. Sec.  405.1034 and 
423.2034, we proposed to revise the sections to cover obtaining 
information that can be provided only by CMS or its contractors, or the 
Part D plan sponsor, and establishing new Sec. Sec.  405.1056 and 
405.1058 to address remands to a QIC, and new Sec. Sec.  423.2056 and 
423.2058 to address remands to an IRE. 81 FR 43790, 43834-43836.
    We proposed in Sec.  405.1034(a) to maintain the current standards 
for requesting information that is missing from the written record when 
that information can be provided only by CMS or its contractors, but 
limit the action to a request for information directed to the QIC that 
conducted the reconsideration or its successor (if a QIC contract has 
been awarded to a new contractor). In addition, we proposed to review 
Sec.  405.1034(a) to include attorney adjudicators because attorney 
adjudicators would be authorized to adjudicate appeals, as proposed in 
section II.B of the proposed rule (and discussed in section II.A.2 of 
this final rule above). Also, while we proposed to retain the 
definition of ``can be provided only by CMS or its contractors'' in 
Sec.  405.1034(a)(2), we proposed at Sec.  405.1034(a)(1) to specify 
that official copies of redeterminations and reconsiderations that were 
conducted on the appealed claims can be provided only by CMS or its 
contractors. The redetermination and reconsideration are important 
documents that establish the issues on appeal, and while the parties 
often have copies of them, we stated in the proposed rule that we 
believed the record should include official copies from the 
contractors. In addition, we proposed at Sec.  405.1034(b) to specify 
that the ALJ or attorney adjudicator would retain jurisdiction of the 
case, and the case would remain pending at OMHA. We proposed at Sec.  
423.2034(a) and (b) to adopt corresponding provisions for when 
information may be requested from an IRE and that jurisdiction is 
retained at OMHA in part 423, subpart U proceedings.
    We proposed in Sec.  405.1034(c) that the QIC would have 15 
calendar days after receiving the request for information to furnish 
the information or otherwise respond to the request for information, 
either directly or through CMS or another contractor. We stated that 
this would provide the ALJ or attorney adjudicator, the QIC, and the 
parties with a benchmark for obtaining the information and determining 
when adjudication of the case can resume. We proposed in Sec.  
405.1034(d) that, if an adjudication period applies to the appeal in 
accordance with Sec.  405.1016, the adjudication period would be 
extended by the period between the date of the request for information 
and the date the QIC responds to the request or 20 calendar days after 
the date of the request, whichever is less. We stated that we recognize 
that other provisions that extend an applicable adjudication period 
generally involve an appellant's action or omission that delays 
adjudicating an appeal within an applicable time frame, but we stated 
in the proposed rule that we believed that an extension is also 
warranted to fully develop the record when the written record is 
missing information that is essential to resolving the issues on 
appeal, and that 20 calendar days (5 calendar days for the request to 
be received by the QIC and 15 calendar days for the QIC to respond) is 
a relatively modest delay in order to obtain missing information that 
is essential to resolving the appeal. We proposed at Sec.  423.2034(c) 
and (d) to adopt corresponding provisions for the IRE to furnish the 
information or otherwise respond to the request for information, either 
directly or through CMS or the Part D plan sponsor, and the effect on 
any applicable adjudication time frame in part 423, subpart U 
proceedings. In addition, we proposed at Sec.  423.2034(c) and (d) to 
provide for an accelerated response time frame for expedited appeals 
because of the urgency involved. For expedited appeals, we proposed 
that the IRE would have 2 calendar days after receiving a request for 
information to furnish the information or otherwise respond to the 
request, and the extension to the adjudication time frame would be up 
to 3 calendar days, to allow for time to transmit the request to the 
IRE and for the IRE to respond.
    We proposed to add new Sec.  405.1056 to describe when a request 
for hearing or request for review of a QIC dismissal may be remanded, 
and new Sec.  405.1058 to describe the effect of a remand. We proposed 
in Sec.  405.1056(a)(1) to permit a remand if an ALJ or attorney 
adjudicator requests an official copy of a missing redetermination or 
reconsideration for an appealed claim in accordance with proposed Sec.  
405.1034, and the QIC or another contractor does not furnish the copy 
within the time frame specified in Sec.  405.1034. We also proposed in 
Sec.  405.1056(a)(2) to permit a remand when the QIC does not furnish a 
case file for an appealed reconsideration. The remand under both 
provisions would direct the QIC or other contractor (such as a Medicare 
Administrative Contractor that made the redetermination) to reconstruct 
the record or initiate a new appeal adjudication. We stated in the 
proposed rule that we expected this type of remand to be very rare, but 
we also stated that we believed it was necessary to help ensure a 
complete administrative record of the administrative adjudication of a 
claim. To address the possibility that the QIC or another contractor is 
able to reconstruct the record for a remanded case, we proposed in 
Sec.  405.1056(a)(3) to provide that in the situation where a record is 
reconstructed by the QIC, the reconstructed record would be returned to 
OMHA, the case would no longer be remanded and the reconsideration 
would no longer be vacated, and if an adjudication period applies to 
the case, the period would be extended by the time between the date of 
the remand and the date the case is returned to OMHA (because OMHA was 
unable to adjudicate the appeal between when it was remanded and when 
it was returned to OMHA). We stated that this would help ensure that 
appellants are not required to re-start the ALJ hearing or dismissal 
review process in the event that the QIC or another contractor is able 
to reconstruct the record. We proposed at Sec.  423.2056(a) to adopt 
corresponding provisions for remanding cases in which there is a 
missing appeal determination or the IRE is unable to furnish the case 
file in part 423, subpart U proceedings.
    On occasion, an ALJ finds that a QIC issued a reconsideration that 
addresses coverage or payment issues related to the appealed claim when 
a redetermination was required and no redetermination was conducted, or 
the contractor dismissed the request for redetermination and the 
appellant appealed the contractor's dismissal. We stated in the 
proposed rule that, in either circumstance, the reconsideration was 
issued in error because the appellant did not have a right to the 
reconsideration in accordance with current Sec.  405.960, which only 
provides a right to a reconsideration when a redetermination is made by 
a contractor.

[[Page 5067]]

We stated that we do not believe that an administrative error made by 
the QIC conveys rights that are not afforded under the rules. We 
proposed in Sec.  405.1056(b) to address these circumstances so that, 
if an ALJ or attorney adjudicator finds that the QIC issued a 
reconsideration that addressed coverage or payment issues related to 
the appealed claim and no redetermination of the claim was made (if a 
redetermination was required) or the request for redetermination was 
dismissed (and not vacated), the reconsideration would be remanded to 
the QIC that issued the reconsideration, or its successor, to re-
adjudicate the request for reconsideration. We again stated in the 
proposed rule that we expected this type of remand to be rare, but 
believed it was necessary to correct administrative errors in the 
adjudication process. We proposed at Sec.  423.2056(b) to adopt a 
corresponding provision for when an IRE issues a reconsideration that 
addresses drug coverage when no redetermination was conducted or a 
request for redetermination was dismissed and is appealed to OMHA under 
part 423, subpart U.
    OMHA ALJs sometimes receive requests for remands from CMS or a 
party because the matter can be resolved by a CMS contractor if 
jurisdiction of the claim is returned to the QIC. Current Sec.  
405.1034 does not address this type of request. We proposed at Sec.  
405.1056(c)(1) to provide a mechanism for these remands. Specifically, 
we proposed that at any time prior to an ALJ or attorney adjudicator 
issuing a decision or dismissal, the appellant and CMS or one of its 
contractors, may jointly request a remand of the appeal to the entity 
that conducted the reconsideration. We proposed that the request 
include the reasons why the appeal should be remanded and indicate 
whether remanding the case would likely resolve the matter in dispute. 
Proposed Sec.  405.1056(c)(2) would allow the ALJ or attorney 
adjudicator to determine whether to grant the request and issue the 
remand, based on his or her determination of whether remanding the case 
would likely resolve the matter in dispute. We stated that we believe 
this added flexibility would allow appellants and CMS and its 
contractors to expedite resolution of a disputed claim when there is 
agreement to do so. We proposed at Sec.  423.2056(c) to adopt 
corresponding provisions for requested remands in part 423, subpart U 
proceedings.
    Current Sec.  405.1034(b) provides that if, consistent with current 
Sec.  405.1004(b), the ALJ determines that a QIC's dismissal of a 
request for reconsideration was in error, the case will be remanded to 
the QIC. We proposed at Sec.  405.1056(d) to incorporate this provision 
and to adopt a corresponding provision in Sec.  423.2056(d) to 
incorporate current Sec.  423.2034(b)(1) for remanding cases in which 
an IRE's dismissal of a request for reconsideration was in error, in 
part 423, subpart U proceedings. In addition, we proposed at Sec.  
423.2056(e) to incorporate current Sec.  423.2034(b)(2), which provides 
that if an enrollee wants evidence of a change in his or her condition 
to be considered in the appeal, the appeal would be remanded to the IRE 
for consideration of the evidence on the change in condition.
    Current Sec.  405.1034(c) provides that the ALJ remands an appeal 
to the QIC that made the reconsideration if the appellant is entitled 
to relief pursuant to 42 CFR 426.460(b)(1), 426.488(b), or 
426.560(b)(1), and provides that unless the appellant is entitled to 
such relief, the ALJ applies the LCD or NCD in place on the date the 
item or service was provided. We proposed to incorporate these 
provisions at Sec.  405.1056(e). We did not propose any corresponding 
provision for Sec.  423.2056 because there is not a similar current 
provision for part 423, subpart U proceedings.
    As noted above, current Sec.  405.1034 does not address providing a 
notice of remand. We proposed at Sec.  405.1056(f) to provide that OMHA 
mails or otherwise transmits a written notice of the remand of the 
request for hearing or request for review to all of the parties who 
were sent a copy of the request at their last known address, and CMS or 
a contractor that elected to be a participant to the proceedings or a 
party to the hearing. The notice would state that, as discussed below, 
there is a right to request that the Chief ALJ or a designee review the 
remand. We stated in the proposed rule that we believed this would help 
ensure that the parties and CMS and its contractors receive notice that 
the remand order has been issued. We proposed at Sec.  423.2056(f) to 
adopt a corresponding provision for a notice of remand in part 423, 
subpart U proceedings, except that only the enrollee receives notice 
because only the enrollee is a party, and CMS, the IRE, and the Part D 
plan sponsor only receive notice if they requested to participate and 
the request was granted.
    Stakeholders have recounted instances in which they believe a 
remand was not authorized by the regulations, but were unable to take 
any action to correct the perceived error because a remand is not an 
appealable action and current Sec.  405.1034 does not provide a review 
mechanism. We stated that we do not believe that remands should be made 
appealable actions, but recognize that stakeholders need a mechanism to 
address remands that they believe are not authorized by the regulation. 
We proposed in Sec.  405.1056(g) to provide a mechanism to request a 
review of a remand by allowing a party or CMS, or one of its 
contractors, to file a request to review a remand with the Chief ALJ or 
a designee within 30 calendar days of receiving a notice of remand. If 
the Chief ALJ or designee determines that the remand is not authorized 
by Sec.  405.1056, the remand order would be vacated. We also proposed 
that the determination on a request to review a remand order is binding 
and not subject to further review so adjudication of the appeal can 
proceed. We proposed at Sec.  423.2056(g) to adopt a corresponding 
provision for reviewing a remand in part 423, subpart U proceedings.
    Current Sec.  405.1034 does not discuss the effect of a remand. We 
proposed at Sec.  405.1058, similar to current Sec. Sec.  405.1048 and 
405.1054 which describe the effects of a decision and dismissal, 
respectively, that a remand of a request for hearing or request for 
review is binding unless it is vacated by the Chief ALJ or a designee 
in accordance with proposed Sec.  405.1056(g). We stated in the 
proposed rule that we believed the provision would add clarity for the 
parties and other stakeholders on the effect of a remand order. We 
proposed at Sec.  423.2058 to adopt a corresponding provision for the 
effect of a remand in part 423, subpart U proceedings.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received one comment requesting clarification on why 
proposed Sec. Sec.  405.1034(a)(1) and 423.2034(a)(1) require that 
official copies of redeterminations and reconsiderations that were 
conducted on the appealed issues can only be provided by CMS and its 
contractors or by CMS, the IRE, and/or the Part D Plan Sponsor, 
respectively, when the appellant can also furnish a copy of the same 
documents. The commenter believes that it is unnecessary and unfair to 
extend the adjudication period 15 days or more to obtain the ``official 
copy.''
    Response: Because OMHA is tasked with compiling the official 
administrative record, it is necessary that OMHA obtain official 
versions of the redetermination decision and the reconsideration 
decision directly from the contractors if they are missing on appeal. 
These documents establish the

[[Page 5068]]

issues on appeal and are therefore important evidence in the 
administrative record. Although parties often have copies of these 
documents as well, copies may be altered or edited and there is no way 
to verify their authenticity unless they come directly from the 
contractor.
    We do not believe that proposed Sec. Sec.  405.1034(a)(1) and 
423.2034(a)(1) place any unnecessary burden on the parties or that they 
will cause significant delays in the adjudication of appeals. First, we 
note that in many cases the lower levels decisions are available on a 
CMS case processing system that is accessible to OMHA. If the missing 
lower level decision is uploaded to an official system of record 
(generally the case processing system used by the contractor and 
accessible to OMHA), then OMHA could accept that document as the 
official copy. In these cases, no information request would be 
necessary under Sec. Sec.  405.1034(a) or 423.2034(a). We are modifying 
the language in Sec. Sec.  405.1034(a)(1) and 423.2034(a)(1) to clarify 
that prior to submitting an information request, OMHA must first check 
the system of record to confirm whether a copy of the missing lower 
level decision is available there. In the extremely small number of 
cases where official copies were not provided in the record and were 
not uploaded by the contractor to the case processing system, then the 
ALJ or attorney adjudicator would use the proposed regulations to 
request an official copy of the missing lower level decision. In these 
cases, the adjudication period may be extended pursuant to Sec. Sec.  
405.1034(d) or 423.2034(d). However, given the ready availability of 
such evidence in the contractor's system, it should take minimal time 
for the contractor to produce the necessary documents, and we would 
anticipate that the extension also would be minimal.
    Comment: One commenter expressed support for the sections in 
proposed Sec.  405.1056 and Sec.  405.1058 that describe when a request 
for hearing or a request for review of a QIC dismissal may be remanded 
and the effects of a remand. The commenter specifically appreciated the 
revisions that state that when a record has been reconstructed by the 
QIC on remand that it would be returned to OMHA, stating that this 
procedure helps ensure that appellants are not required to restart the 
whole review process. The commenter did have concerns, however, about 
proposed Sec.  405.1056(b), which requires a remand where the QIC 
issued a reconsideration decision but no redetermination decision had 
been made or the request for redetermination was dismissed, because the 
commenter felt that provision would result in the appellant 
unnecessarily having to start over at the first level of appeal. The 
commenter provided an example in which a redetermination decision was 
issued upholding a technical denial and then the appellant submitted 
evidence at the reconsideration level that cured the technical defect. 
In the example, the commenter argued that if the QIC proceeded to issue 
a reconsideration decision that addressed availability of coverage and 
payment issues and the reconsideration were appealed to OMHA, it would 
be a waste of time and resources for the ALJ or attorney adjudicator to 
remand the matter back to the QIC under Sec.  405.1056(b) to have the 
QIC remand the case back to the Medicare administrative contractor for 
a redetermination decision addressing coverage and payment. The 
commenter requested additional examples of how Sec.  405.1056(b) may 
impact appeals brought on behalf of Medicare beneficiaries and Medicaid 
State agencies.
    Response: We thank the commenter for its support and agree that the 
proposals streamline the process for remands and will benefit 
appellants in instances when an appeal can be returned to the OMHA 
level of review without having to re-file an appeal, when the QIC or a 
contractor is able to reconstruct the record. We disagree, however, 
that proposed Sec.  405.1056(b) would result in appellants having to 
re-file appeals unnecessarily or result in a waste of time and 
resources. Proposed Sec.  405.1056(b) is intended to address two 
situations where a necessary redetermination was not issued but is 
required before the QIC can issue a reconsideration addressing coverage 
and payment issues. In the first situation, the contractor did not 
issue any redetermination. Pursuant to Sec.  405.972(b)(6), the QIC 
must dismiss the reconsideration request in this situation and does not 
have authority to issue a reconsideration decision addressing coverage 
or payment issues. In the second situation, the contractor dismissed 
the redetermination request. Pursuant to Sec.  405.974(b), a party to a 
contractor's dismissal of a request for redetermination has a right to 
have the dismissal reviewed by the QIC. The QIC, however, does not have 
authority to issue a reconsideration decision addressing coverage and 
payment issues in this situation. As outlined in Sec.  405.974(b)(2) 
and (3), the QIC may either determine that the dismissal was in error 
and vacate the dismissal and remand the case to the contractor for a 
redetermination, or the QIC may affirm the dismissal as correct and the 
party is bound by that determination and has no further appeal review 
options. Because the QIC does not have authority to issue a 
reconsideration decision that addresses coverage and payment issues in 
either of the situations, if the QIC issues such a reconsideration 
decision it has done so in error. If the reconsideration decision was 
issued in error, the request for hearing must be remanded to the QIC 
pursuant to Sec.  405.1056(b). Although we believe that this type of 
remand will be rare, we believe it is necessary to correct 
administrative errors in the adjudication process. We do not believe 
that an administrative error made by the QIC conveys rights that are 
not afforded under the rules and, therefore, believe that proposed 
Sec.  405.1056(b) is a necessary revision.
    We do not believe that proposed Sec.  405.1056(b) would apply to 
the facts that were outlined in the commenter's example. In the example 
presented in the comment, the contractor did issue a redetermination, 
albeit a denial on technical grounds. The part 405, subpart I 
regulations do not make a distinction between redeterminations based on 
a technical denial and redeterminations based on other reasons, such as 
a denial because the item or service was not medically reasonable and 
necessary. Both redeterminations would give the party a right to 
request a QIC reconsideration on the coverage and payment issues. The 
party would then have a right to appeal the QIC's reconsideration for 
an ALJ hearing, provided the amount in controversy and other filing 
requirements were met, and the remand provisions of proposed Sec.  
405.1056(b) would not apply.
    Further, proposed Sec.  405.1056(b) applies to any request for 
hearing on a QIC reconsideration where the QIC issued a coverage and 
payment decision in error as discussed above. We do not believe there 
are any special considerations regarding the proposal that would apply 
differently based on the party appealing the claim, and therefore do 
not believe adding examples of how the proposal impacts an appeal filed 
by a beneficiary or a Medicaid State agency will be helpful.
    Comment: The same commenter also had reservations about proposed 
Sec.  405.1056(c), which would allow the appellant and CMS or its 
contractor to jointly request a remand to the QIC or IRE at any time 
before the ALJ or attorney adjudicator issues a decision or dismissal. 
The commenter suggested that such ``joint request'' would likely

[[Page 5069]]

be initiated and facilitated by CMS or its contractor and that those 
entities would have greater knowledge and bargaining power than 
appellants, especially appellants who are unrepresented beneficiaries. 
The commenter suggested that ALJs should be required to hold pre-
hearing conferences to confirm both parties' understanding of the 
possible ramifications if the remand is granted and requested 
additional information on how beneficiaries' interests would be 
protected under Sec.  405.1056(c).
    Response: We disagree with the commenter that proposed Sec.  
405.1056(c) would operate to place appellants, including appellants who 
are unrepresented beneficiaries, into a disadvantaged position. 
Proposed Sec.  405.1056(c) requires that any request for remand under 
this provision must be a joint request between the appellant and CMS or 
its contractors. We believe there is little incentive for an appellant 
to agree to a remand unless his or her claim will be paid in part or 
full or the resolution offered by CMS and its contractors on remand 
would be otherwise acceptable to the appellant, such as the review of 
new evidence in the appeal. We also see little advantage to CMS or its 
contractors in requesting remands unless they believe that they are 
able to effectively resolve a dispute in such a way that the resolution 
is mutually acceptable and the appellant will not appeal again. 
Although the commenter was concerned that appellants, and especially 
unrepresented beneficiaries, may have insufficient knowledge or 
bargaining power to protect themselves from entering joint remand 
requests that are not to their benefit, we believe that the 
requirements regarding a statement of the reasons for the remand, the 
likely resolution of the dispute, and the ALJ's or attorney 
adjudicator's review of these statements is a significant and 
sufficient safeguard. We believe that the adjudicator's review of the 
joint request and submitted statements will help ensure that the remand 
is truly jointly requested and that all individuals and entities 
involved are in agreement regarding the reasons for and likely 
resolutions of the remand. Although the commenter recommended a pre-
hearing conference instead to determine that the parties understand the 
ramifications of a remand, we believe that requiring written reasons 
and a statement indicating whether the remand will likely resolve the 
matter in dispute is sufficient. Further, under proposed Sec.  
405.1056(c)(2), the ALJ or attorney adjudicator would have discretion 
in granting the remand request and may only grant the request if he or 
she determines that remanding the case will likely resolve the matter 
in dispute. If the appellant is not going to be favorably treated on 
remand, then the appellant is likely to appeal the issue again to the 
OMHA level and the dispute will not be resolved. Therefore, the 
requested remands will only be granted where the likely resolution is 
favorable and/or unlikely to lead to subsequent appeal. We believe that 
proposed Sec.  405.1056(c) provides a valuable tool to appellants that 
will allow expedited resolution of a disputed claim when there is 
agreement between the appellant and CMS and its contractors, and that 
the regulation contains sufficient safeguards to protect the 
appellants, including unrepresented beneficiaries.
    Comment: We received one comment opposing the new review mechanisms 
for remand orders proposed in Sec. Sec.  405.1056(g) and 423.2056(g). 
The commenter believes that these proposals result in an unprecedented 
authorization of power in the Chief ALJ or a designee to reverse the 
decisions of ALJs, and unnecessarily raise issues of ex parte 
communication and the appearance of impropriety. The commenter also 
suggested that the proposed review mechanism was problematic because 
the Chief ALJ's ability to delegate is not limited and the commenter 
believes the proposal conflicts with the APA concepts of an ALJ's 
qualified decisional independence and rotational assignment of appeals. 
The commenter stated that remands are rarely issued under the current 
rules, and recommended that a preferable alternative to the proposals 
would be to substantially limit the ALJs' remand authority.
    Response: We proposed the review mechanisms in Sec. Sec.  
405.1056(g) and 423.2056(g) to give stakeholders, including appellants 
and CMS contractors, a means of recourse if an appeal is remanded and 
they believe the remand is outside of the scope of the remand 
regulations. As we state above, although we do not believe that remands 
should be made appealable actions, we believe some mechanism to 
challenge remands is necessary to be responsive to stakeholders who, in 
the past, believed that some remands were not authorized by the 
regulations and who felt that they did not have any way to address or 
correct the perceived error. Because a remand likely adds additional 
adjudication time and delay to the appeals process, we believe that 
providing a review mechanism to stakeholders is fair and will help 
ensure that remands that are outside of the scope of the remand 
regulations do not derail appeals in error.
    The review mechanisms proposed in Sec. Sec.  405.1056(g) and 
423.2056(g) also are intended to help ensure consistency in processing 
appeals. Previously, if an appeal was remanded to the QIC or IRE and 
that level of review did not agree that there was jurisdiction for the 
remand under current Sec. Sec.  405.1034 or 423.2034, there was no 
clear guidance on how to proceed. Some QICs or IREs would reopen the 
previous decision while others would respond to the remand via a 
different mechanism. When ALJs issued remand orders outside of the 
scope of Sec. Sec.  405.1034 or 423.2034, it created inconsistencies 
and confusion not only for CMS and its contractors regarding how to 
proceed, but also for appellants regarding the status and handling of 
their appeal. The proposed review mechanisms will help ensure that the 
procedural remand rules are applied in a consistent manner and that the 
processing of the remands at lower levels is also more uniform.
    We limited the review authority to the Chief ALJ or a designee so 
that limited individuals within the agency will be tasked with this new 
review responsibility, which is a limited-scope review of a discrete 
procedural question. In this way, we believe that the requested reviews 
can be completed both consistently and efficiently. We added the 
ability for the Chief ALJ to designate other individuals to assist with 
the review of remands, if necessary, to ensure that there will be 
adequate resources to complete the reviews as expeditiously as 
possible, so the appeal can proceed as remanded, or with the ALJ.
    We disagree with the commenter that the proposed review mechanisms 
may be used to reverse ALJ decisions or to override the qualified 
decisional independence that ALJs have when making decisions. We 
believe that remands are distinct from the decisions described in 
sections 554 and 556 of the APA because the permitted remands are 
generally procedural mechanisms that do not resolve the issues on 
appeal, but rather return the appeal to the second level of the appeals 
process without a resolution of the appealed matter. The one exception 
to this distinction is when the remand is issued on a request for 
review of a QIC's or IRE's dismissal of a request for reconsideration. 
In Sec. Sec.  405.1056(d) and 423.2056(d) as finalized in this rule, an 
ALJ or attorney adjudicator issues a remand to the appropriate QIC or 
IRE if the ALJ or attorney adjudicator determines that the dismissal of 
a request for reconsideration was in error. We

[[Page 5070]]

recognize that remands issued on review of a QIC's or IRE's dismissal 
of a request for reconsideration are more akin to a determination than 
a purely procedural mechanism. Therefore, we are modifying the language 
in Sec. Sec.  405.1056(g) and 423.2056(g) to specifically exempt 
remands that are issued under Sec. Sec.  405.1056(d) and 423.2056(d) 
from potential review by the Chief ALJ or designee. The remaining 
remands, however, are issued on procedural grounds. We do not agree 
that creating a review mechanism for remands issued on procedural 
grounds impinges on an ALJ's qualified decisional independence with 
respect to his or her decisions. Further, we do not agree that the 
proposal interferes with rotational assignments of appeals because 
there is no right to an ALJ hearing when a request for review of an ALJ 
remand is made, thus the rotational assignment principle of 5 U.S.C 
3105 does not apply.
    We also do not agree with the commenter that this review mechanism 
will result in ex parte communications or the appearance of 
impropriety. Ex parte communications involve communications that are 
not on the record between an individual involved in the decisional 
process and an interested party outside of the agency about the merits 
of the proceedings. See 5 U.S.C. 557(d). The proposed review mechanisms 
in Sec. Sec.  405.1056(g) and 423.2056(g) permit either a party or CMS, 
or one of its contractors, to file a request to review a remand within 
30 calendar days of receiving the notice of remand, which would be made 
part of the record. The proposed regulation provides for the same 
procedure regardless of the entity or individual requesting the review.
    Finally, with respect to the suggested alternative of substantially 
limiting the ALJs' remand authority, we disagree with the commenter 
that the stakeholders' concerns that prompted this proposal would be 
sufficiently addressed by that alternative. The current regulations 
already substantially limit the ALJs' authority to remand and yet there 
have been instances, despite those limitations, where stakeholders 
still felt that remands were issued that were not authorized by the 
regulations. In addition, Sec. Sec.  405.1056 and 423.2056, as 
finalized in this rule, do not expand the ALJs' remand authority 
compared to the current remand regulations in Sec. Sec.  405.1034 and 
423.2034, but rather they set forth the limited circumstances in which 
a remand may be issued. Although Sec. Sec.  405.1056 and 423.2056 list 
specific situations where a remand may be issued, these provisions are 
narrower than the current provisions at Sec. Sec.  405.1034 and 
423.2034 because they do not include the general language at Sec. Sec.  
405.1034 and 423.2034 providing for a remand when the ALJ believes the 
written record is missing information that is essential to resolving 
the issues on appeal and that information can be provided only by CMS 
or its contractors. Instead, Sec. Sec.  405.1034(a) and 423.2034(a), as 
finalized in this rule, require that the ALJ or attorney adjudicator 
first request that information from the QIC or IRE. Although the ALJ or 
attorney adjudicator may still remand a case under Sec. Sec.  
405.1056(a) and 423.2056(a) if the QIC or IRE fail to provide an 
official copy of a missing redetermination or reconsideration or fail 
to provide the case file after a request for information under 
Sec. Sec.  405.1034(a) and 423.2034(a),, the specific circumstances in 
which remands can occur have been narrowed as compared to the broader 
remand authority set forth in current Sec. Sec.  405.1034 and 423.2034. 
Because remands are only available in limited and narrowly defined 
circumstances in Sec. Sec.  405.1056 and 423.2056, we anticipated that 
the review mechanisms created by this proposal will be used 
infrequently. We agree with the commenter that remands are rarely used 
today and, therefore, believe that the use of the review mechanisms 
proposed in Sec. Sec.  405.1056(g) and 423.2056(g) would be even rarer.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing 
Sec. Sec.  405.1058 and 423.2058 as proposed without modification, and 
we are finalizing the changes to Sec. Sec.  405.1034, 405.1056, 
423.2034, and 423.2056 as proposed, with the following modifications. 
We are amending Sec. Sec.  405.1034(a)(1) and 423.2034(a)(1) to provide 
that prior to issuing a request for information to the QIC or IRE, OMHA 
will confirm whether an electronic copy of the missing redetermination 
or reconsideration is available in the official system of record, and 
if so, will accept the electronic copy as an official copy. In 
addition, we are amending Sec. Sec.  405.1056(g) and 423.2056(g) to add 
language to specifically exempt remands that are issued under 
Sec. Sec.  405.1056(d) and 423.2056(d) (on a review of a QIC's or IRE's 
dismissal of a request for reconsideration) from potential review by 
the Chief ALJ or designee. Finally, we are replacing ``can only be 
provided by CMS, the IRE, and/or the Part D plan sponsor'' in proposed 
Sec.  423.2034(a)(1), which was a drafting error, with ``can be 
provided only by CMS, the IRE, and/or the Part D plan sponsor,'' for 
consistency with the definition in Sec.  423.2034(a)(2).
q. Description of the ALJ Hearing Process and Discovery (Sec. Sec.  
405.1036, 405.1037, and 423.2036)
    As described below, we proposed a number of changes to Sec. Sec.  
405.1036 and 423.2036, which describe the ALJ hearing process, 
including the right to appear and present evidence, waiving the right 
to appear at the hearing, presenting written statements and oral 
arguments, waiver of the adjudication period, what evidence is 
admissible at the hearing, subpoenas, and witnesses at a hearing. 81 FR 
43790, 43836-43837. Current Sec.  405.1037 describes the discovery 
process in part 405, subpart I proceedings, which is permitted when CMS 
or a contractor elects to be a party to the ALJ hearing; there is no 
corresponding provision for part 423, subpart U proceedings because 
CMS, the IRE, and the Part D plan sponsor may not be made parties to 
the hearing.
    Current Sec.  405.1036(b)(1) states that a party may ``send the 
ALJ'' a written statement indicating that he or she does not wish to 
appear at the hearing. We proposed at Sec.  405.1036(b)(1) to revise 
this provision to state that a party may ``submit to OMHA'' a written 
statement indicating that he or she does not wish to appear at the 
hearing. We stated in the proposed rule that while the written 
statement could still be sent to an ALJ who is assigned to a request 
for hearing, we proposed that the statement could be submitted to OMHA 
(for example, the statement could be submitted with the request for 
hearing), or to the ALJ or attorney adjudicator, as proposed in section 
II.B of the proposed rule (and discussed in section II.A.2 of this 
final rule above), after the request is assigned, to provide more 
flexibility and to accommodate situations where an ALJ or attorney 
adjudicator has not been assigned a request for hearing. We proposed at 
Sec.  423.2036(b)(1) to adopt a corresponding revision for submitting a 
waiver of the right to appear in part 423, subpart U proceedings. In 
addition, we proposed at Sec.  423.2036(b)(1)(ii) to revise the current 
requirement for the ``ALJ hearing office'' to document oral requests to 
require ``OMHA'' to document oral requests, to help ensure that 
applicability of the requirement is clear regardless of whether the 
oral request is received by an adjudicator in an OMHA field office 
after the appeal is assigned to an ALJ or attorney adjudicator, or the 
oral request is received in the OMHA central office before the appeal 
is assigned to an ALJ or attorney adjudicator.

[[Page 5071]]

    As discussed in section III.A.3.h of the proposed rule and II.B.3.h 
of this final rule above, we proposed to move the provision for waiving 
the adjudication period from current Sec.  405.1036(d) to proposed 
Sec.  405.1016(d) because proposed Sec.  405.1016 addresses 
adjudication time frames and we believe the section is a better place 
for discussing adjudication time frame waivers. To accommodate moving 
current Sec.  405.1036(d) to proposed Sec.  405.1016(d), we proposed to 
re-designate current Sec.  405.1036(g), which describes witnesses at 
the hearing, as Sec.  405.1036(d), because it more logically follows 
the discussion of presenting witnesses and oral arguments in current 
Sec.  405.1036(c). For the same reasons, we proposed to move the 
provisions at Sec.  423.2036(d) to Sec.  423.2016(c), and proposed at 
Sec.  423.2036(d) to re-designate current Sec.  423.2036(g) as Sec.  
423.2036(d) to describe witnesses at a hearing in part 423, subpart U 
proceedings.
    Current Sec.  405.1036(f) discusses subpoenas. Current Sec.  
405.1036(f)(5)(i) states that an ALJ ruling on a subpoena request is 
not subject to immediate review by the Council and may be reviewed 
solely during the course of the Council's review specified in Sec.  
405.1102 (for requests for Council review when an ALJ issues a decision 
or dismissal), Sec.  405.1104 (for requests for escalation to the 
Council), or Sec.  405.1110 (for referrals for own motion review by the 
Council). As discussed in section III.A.3.h.ii of the proposed rule and 
II.B.3.h.ii of this final rule above, we proposed to remove section 
Sec.  405.1104 and relocate provisions dealing with escalation to the 
Council to Sec.  405.1016. Because the process for requesting 
escalation to the Council is now described in proposed Sec.  
405.1016(e) and (f), we proposed at Sec.  405.1036(f)(5)(i) to replace 
the reference to Sec.  405.1104 with a reference to Sec.  405.1016(e) 
and (f). Current Sec.  405.1036(f)(5)(ii) discusses CMS objections to a 
``discovery ruling'' in the context of a paragraph on reviewability of 
subpoena rulings and current Sec.  405.1037(e)(2)(i) separately 
addresses CMS objections to a discovery ruling. We proposed to revise 
Sec.  405.1036(f)(5)(ii) to replace the current reference to a 
``discovery ruling'' with ``subpoena ruling'' so it is consistent with 
the topic covered by Sec.  405.1036(f). No corresponding revisions are 
necessary in Sec.  423.2036(f) because there is no reference to a 
``discovery ruling.''
    Current Sec.  405.1037(a)(1) provides that discovery is permissible 
only when CMS or its contractors elects to participate in an ALJ 
hearing as a party. We stated in the proposed rule that, while the 
intent is generally clear, the use of ``participate'' is potentially 
confusing given that CMS or one of its contractors can elect to be a 
participant in the proceedings, including the hearing, in accordance 
with current and proposed Sec.  405.1010, or elect to be a party to the 
hearing in accordance with current and proposed Sec.  405.1012. We 
proposed to revise Sec.  405.1037(a)(1) to state that discovery is 
permissible only when CMS or its contractor elects to be a party to an 
ALJ hearing, in accordance with proposed Sec.  405.1012. As noted 
above, there are no provisions for discovery in part 423, subpart U 
proceedings because CMS, the IRE, or the Part D plan sponsor are not 
permitted to be a party to the hearing.
    Current Sec.  405.1037(e)(1) states that an ALJ discovery ruling or 
disclosure ruling is not subject to immediate review by the Council and 
may be reviewed solely during the course of the Council's review 
specified in Sec.  405.1100 (for Council review in general), Sec.  
405.1102 (for requests for Council review when an ALJ issues a decision 
or dismissal), Sec.  405.1104 (for requests for escalation to the 
Council), or Sec.  405.1110 (for referrals for own motion review by the 
Council). For the reasons discussed above with regard to similar 
proposed changes in Sec.  405.1036, we proposed at Sec.  405.1037(e)(1) 
to replace the reference to Sec.  405.1104 with a reference to Sec.  
405.1016(e) and (f).
    Current Sec.  405.1037(f) describes the effect of discovery on an 
adjudication time frame, and provides that the time frame is tolled 
until the discovery dispute is resolved. However, we stated in the 
propose rule that it does not clearly state when the effect on an 
adjudication time frame begins, and ``discovery dispute'' is not used 
elsewhere in the section. In addition, we stated that current Sec.  
405.1037(f) does not contemplate that an adjudication time frame may 
not apply (for example, when the adjudication time frame is waived in 
accordance with proposed Sec.  405.1016(d)). Therefore, we proposed to 
revise Sec.  405.1037(f) to state that if an adjudication period 
applies to the appeal in accordance with Sec.  405.1016, and a party 
requests discovery from another party to the hearing, the adjudication 
period is extended for the duration of discovery, from the date a 
discovery request is granted until the date specified for ending 
discovery. We stated in the proposed rule that we believed this 
revision would provide a clearer standard for how an adjudication 
period is affected by discovery proceedings.
    We received no comments on these proposals, other than comments 
discussed in section II.A.4 above related to our general proposal to 
reference OMHA or an OMHA office, in place of current references to an 
unspecified entity, ALJs, and ALJ hearing offices, when a reference to 
OMHA or an OMHA office provides a clearer explanation of a topic. 
Accordingly, for the reasons discussed above and in the proposed rule, 
we are finalizing the changes to Sec. Sec.  405.1036, 405.1037, and 
423.2036 as proposed without modification.
r. Deciding a Case Without a Hearing Before an ALJ (Sec. Sec.  405.1038 
and 423.2038)
    As described below, we proposed several changes to Sec. Sec.  
405.1038 and 423.2038, concerning when a case may be decided without a 
hearing before an ALJ. 81 FR 43790, 43837-43838. Current Sec.  
405.1038(a) provides authority to issue a ``wholly favorable'' decision 
without a hearing before an ALJ and without giving the parties prior 
notice when the evidence in the hearing record supports a finding in 
favor of the appellant(s) on every issue. We proposed in Sec.  405.1038 
that if the evidence in the administrative record supports a finding in 
favor of the appellant(s) on every issue and no other party to the 
appeal is liable for claims at issue, an ALJ or attorney adjudicator, 
as proposed in section II.B of the proposed rule (and discussed in 
section II.A.2 above), may issue a decision without giving the parties 
prior notice and without an ALJ conducting a hearing, unless CMS or a 
contractor has elected to be a party to the hearing in accordance with 
Sec.  405.1012. Proposed Sec.  405.1038(a) would replace ``wholly 
favorable'' with ``fully favorable'' in the subsection heading to align 
with language in Sec.  405.1000(g), which addresses a fully favorable 
decision being made on the record, and the nomenclature used in OMHA's 
day to day operations. Proposed Sec.  405.1038(a) would also replace 
``hearing record'' with ``administrative record'' for consistency with 
other references to the record, and replace ``hearing decision'' with 
``decision,'' for consistency with other references to a decision. We 
proposed at Sec.  423.2038(a) to adopt corresponding revisions to align 
with language in Sec.  423.2000(g) and to make references to the record 
and decisions consistent in part 423, subpart U proceedings.
    Proposed Sec.  405.1038(a) would also add two new limitations on 
issuing a decision without a hearing before an ALJ when the evidence in 
the administrative record supports a finding in favor of the 
appellant(s) on every

[[Page 5072]]

issue. First, a decision could not be issued pursuant to proposed Sec.  
405.1038(a) if another party to the appeal is liable for the claims at 
issue. Second, a decision could not be issued pursuant to proposed 
Sec.  405.1038(a) if CMS or a contractor elected to be a party to the 
hearing in accordance with Sec.  405.1012. We stated in the proposed 
rule that we recognized that this may limit decisions that may be 
issued pursuant to Sec.  405.1038(a); however, we also stated that we 
believed only a small number of appeals would be affected, and the new 
limitations would mitigate the impact of such a decision on the other 
parties to the appeal and the likelihood of an appeal to, and remand 
from, the Council. No corresponding changes were proposed in Sec.  
423.2038(a) because only the enrollee is a party in part 423, subpart U 
proceedings.
    Current Sec.  405.1038(b)(1) permits the ALJ to decide a case on 
the record and not conduct a hearing if: (1) All the parties indicate 
in writing that they do not wish to appear before the ALJ at a hearing, 
including a hearing conducted by telephone or video-teleconferencing, 
if available; or (2) an appellant lives outside of the United States 
and does not inform the ALJ that he or she wants to appear, and there 
are no other parties who wish to appear. We proposed to retain this 
structure in proposed Sec.  405.1038(b) but did propose some changes. 
Current Sec.  405.1038(b)(1)(i) requires all parties to indicate in 
writing that they do not wish to appear before the ALJ at a hearing, 
and as indicated above, current Sec.  405.1038(b)(1)(ii) is contingent 
on no other parties wishing to appeal. However, the requirement to 
obtain a writing from all parties or determine the wishes of the non-
appellant parties has limited the utility of the provisions. While all 
parties have a right to appear at the hearing, a notice of hearing is 
not sent to parties who did not participate in the reconsideration and 
were not found liable for the items or services at issue after the 
initial determination, in accordance with current Sec.  405.1020(c). We 
proposed at Sec.  405.1038(b)(1)(i) and (b)(1)(ii) to modify the 
requirements so writings only need to be obtained from, or wishes 
assessed from, parties who would be sent a notice of hearing, if a 
hearing were to be conducted. We stated that using the notice of 
hearing standard protects the interests of potentially liable parties, 
while making the provisions a more effective option for the efficient 
adjudication of appeals. In addition, proposed Sec.  405.1038(b)(1) 
would reinforce that only an ALJ conducts a hearing by indicating an 
ALJ or attorney adjudicator may decide a case on the record without an 
ALJ conducting a hearing. Proposed Sec.  405.1038(b)(1)(ii) also would 
indicate that an appellant who lives outside of the United States would 
inform ``OMHA'' rather than ``the ALJ'' that he or she wants to appear 
at a hearing before an ALJ, so an appellant could make that indication 
before an appeal is assigned to an ALJ or attorney adjudicator. We 
proposed at Sec.  423.2038(b)(1) and (b)(1)(ii) to adopt corresponding 
revisions to reinforce that only an ALJ conducts a hearing and an 
enrollee who lives outside of the United States would inform OMHA that 
he or she wishes to appear at a hearing before an ALJ, but the other 
changes in proposed Sec.  405.1038(b) were not proposed in Sec.  
423.2038(b) because only the enrollee is a party in part 423, subpart U 
proceedings. We also proposed in Sec.  405.1038(b)(1)(i) to replace 
``videoteleconferencing,'' and in Sec.  423.2038(b)(1)(i) to replace 
``video teleconferencing,'' with ``video-teleconferencing,'' for 
consistency with terminology used in Sec. Sec.  405.1000, 405.1036, 
423.2000, 423.2020, and 423.2036.
    On occasion, CMS or one of its contractors indicates that it 
believes an item or service should be covered or payment made on an 
appealed claim, either before or at a hearing. However, there are no 
current provisions that address this circumstance, and we stated in the 
proposed rule that it is one that is ideal for a summary decision in 
favor of the parties based on the statement by CMS or its contractor, 
in lieu of a full decision that includes findings of fact, conclusions 
of law, and other decision requirements. We proposed to add Sec.  
405.1038(c) to provide a new authority for a stipulated decision, when 
CMS or one of its contractors submits a written statement or makes an 
oral statement at a hearing indicating the item or service should be 
covered or paid. In this situation, an ALJ or attorney adjudicator may 
issue a stipulated decision finding in favor of the appellant or other 
liable parties on the basis of the statement, and without making 
findings of fact, conclusions of law, or further explaining the reasons 
for the decision. We proposed at Sec.  423.2038(c) to adopt a 
corresponding authority for stipulated decisions in part 423, subpart U 
proceedings.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received ten comments on the proposed limitations to 
issuing a decision without a hearing before an ALJ when the evidence in 
the administrative record supports a finding in favor of the 
appellant(s) on every issue. Six commenters opposed adding that a 
decision cannot be issued pursuant to proposed Sec.  405.1038(a) if CMS 
or a contractor elects to be a party to the hearing in accordance with 
Sec.  405.1012. The commenters stated that the position of CMS and its 
contractors will be well established in the administrative record by 
the time the appeal reaches OMHA, and the record will contain all of 
the information available to the contractor at the time of its 
determination. The commenters stated that CMS and its contractors 
should not be allowed to delay the ALJ's or attorney adjudicator's 
decision if the evidence in the administrative record supports a 
finding in favor of the appellant(s) on every issue. Two of the 
commenters stated that this limitation could result in CMS contractors 
electing party status to force a hearing even when the record supports 
a fully favorable decision.
    Response: As discussed above, we believe only a small number of 
appeals will be affected by the limitation in proposed Sec.  
405.1038(a) on issuing fully favorable decisions without a hearing 
before an ALJ when CMS or its contractor has elected to be a party to 
the hearing in accordance with Sec.  405.1012. In accordance with 
proposed Sec.  405.1012(a)(1), CMS or a contractor cannot elect to be a 
party to a hearing if the request for hearing was filed by an 
unrepresented beneficiary. Further, CMS or a contractor can only elect 
to be a party to a hearing in response to the notice of hearing 
pursuant to Sec.  405.1012(b), or at the ALJ's request. Currently, very 
few decisions are issued under Sec.  405.1038(a) after a hearing is 
scheduled and the notice of hearing is sent to the parties and 
potential parties and participants. We expect that to continue to be 
true, but under current Sec.  405.1038(a) there have been occasions 
when an ALJ has issued a decision in an appellant's favor without 
conducting a hearing, after a hearing has been scheduled and CMS or its 
contractor has elected to be a party to the hearing.
    If CMS or its contractor has properly elected to be a party, it has 
a right to appear at an ALJ hearing. As the claims payor, CMS and its 
contractors have an interest in the outcome of the case, similar to any 
other party to the appeal that is or may be liable for the claims at 
issue. Regardless of whether CMS's position may be apparent from the 
administrative record by the time an appeal reaches the OMHA level, CMS 
or a contractor that has properly elected party status has the right to 
present its

[[Page 5073]]

arguments before the ALJ at the hearing. That right continues even if a 
fully favorable decision is issued under Sec.  405.1038(a) as finalized 
in this rule, which provides that the notice of decision informs the 
parties that they have a right to a hearing. Thus, issuing a decision 
in the appellant's favor after CMS or its contractor has elected to be 
a party and without conducting the scheduled hearing would be an 
appealable issue to the Council and possibly result in a remand to OMHA 
to conduct the hearing, resulting in wasted resources at the Council to 
process the appeal and remand, and further delaying finality of the 
appeal for the parties. We do not agree that the proposal will result 
in CMS or its contractors electing party status to ``force a hearing'' 
because a hearing would already have to be scheduled for CMS or its 
contractors to elect party status. As noted above, very few decisions 
are currently issued under Sec.  405.1038(a) after a hearing has been 
scheduled and CMS and its contractors have had the opportunity to elect 
party status. Therefore, we do not believe that Sec.  405.1038(a), as 
finalized in this rule, will create a significant incentive for CMS or 
its contractors to elect party status just to force a hearing in those 
few cases where a decision might otherwise be issued on the record 
after a hearing has been scheduled. For the reasons discussed above, we 
believe that limiting decisions that can be issued under proposed Sec.  
405.1038(a) when CMS or a contractor has elected to be a party will 
only affect a small number of cases, and will reduce the number of 
those cases that are appealed to, and remanded from, the Council.
    Comment: Two commenters stated that limiting decisions that can be 
made without a hearing will weaken the effectiveness of attorney 
adjudicators by reducing the number of appeals they can decide.
    Response: We do not agree that this proposal will weaken the 
effectiveness of attorney adjudicators. As noted above, these 
limitations will not affect a significant number of cases and will 
prevent attorney adjudicators from making decisions that would likely 
be subject to appeal to the Council by non-appellant parties seeking 
their right to a hearing, and possible remand back to OMHA for an ALJ 
to conduct the hearing.
    Comment: One commenter suggested clarifying the procedure for 
transferring a case from an ALJ to an attorney adjudicator when the 
case is appropriate for a decision without conducting a hearing.
    Response: As discussed in section II.A.2 above, OMHA's business 
practice is to assign appeals to ALJs in rotation so far as 
practicable, and appeals will be assigned to attorney adjudicators in 
the same manner. If an appeal is initially assigned to an ALJ but is 
deemed appropriate for a decision by an attorney adjudicator, the 
appeal would be reassigned to an attorney adjudicator in the same 
manner as a new appeal assignment to an attorney adjudicator. More 
information on the appeal assignment process is available in the OCPM, 
which is accessible to the public at the OMHA Web site (www.hhs.gov/omha).
    Comment: One commenter requested clarification regarding the time 
frame for requesting a hearing after a fully favorable decision is 
issued pursuant to Sec.  405.1038(a) or Sec.  423.2038(a), as the 
regulation states the parties have the right to a hearing but is silent 
regarding the time frame for requesting a hearing.
    Response: The language in proposed Sec. Sec.  405.1038(a) and 
423.2038(a) stating that the parties have the right to a hearing is 
carried over from current Sec. Sec.  405.1038(a) and 423.2038(a). As 
discussed in section II.A.2 above, parties to an appeal that is decided 
without a hearing may pursue their right to a hearing by requesting a 
review of the decision by the Council, which can remand the case for an 
ALJ to conduct a hearing and issue a new decision. The request for 
review by the Council must be filed in accordance with proposed 
Sec. Sec.  405.1102 and 423.2102.
    Comment: One commenter stated that an ALJ should be allowed to 
issue a decision that is fully favorable to the appellant without 
conducting a hearing even if another party is liable for the claims at 
issue, as long as the party that is liable for the claims at issue 
waives its right to appear at a hearing.
    Response: If all of the parties who would be sent a notice of 
hearing, which under proposed Sec.  405.1020(c)(1) would include, among 
others, the appellant and any other party who is or may be liable for 
the claims at issue, indicate in writing that they do not wish to 
appear at a hearing, an ALJ or attorney adjudicator may decide a case 
on the record pursuant to Sec.  405.1038(b).
    Comment: Two commenters stated that if an appellant waives the 
right to a hearing before an ALJ under Sec. Sec.  405.1038 and 
405.1020, and the case is decided by an attorney adjudicator rather 
than an ALJ, the administrative record must demonstrate that the waiver 
was valid and informed. One commenter expressed concern that appellants 
may be motivated to waive a hearing in order to avoid the delay of 
waiting for an ALJ hearing, and stated that appellants should be 
assured that a decision will generally be made by an ALJ or attorney 
adjudicator in the same time frame.
    Response: As finalized in this rule, Sec. Sec.  405.1038(b) and 
405.1020(d) provide that a decision may be issued by an attorney 
adjudicator or an ALJ if all the parties that would be sent a notice of 
hearing in accordance with Sec.  405.1020(c) waive a hearing before an 
ALJ in writing. Publication of this final rule will inform appellants 
of the possibility that an attorney adjudicator may decide a case if 
the parties waive the right to a hearing. Accordingly, we do not 
believe that any further documentation of a party's understanding is 
necessary to demonstrate a valid waiver. However, we will review the 
current optional HHS form for waiving an ALJ hearing (Form HHS-723, 
Waiver of Right to an Administrative Law Judge (ALJ) Hearing), and 
consider making changes to reinforce this provision of the rule for 
those who choose to use that form.
    ALJs and attorney adjudicators will be subject to the same time 
frames for issuing a decision, dismissal, or remand, as discussed in 
section II.B.3.h above, including when decisions are issued under 
Sec. Sec.  405.1038(b) and 423.2038(b) as finalized in this rule. 
However, we note that if all of the parties waive a hearing and a 
decision can be issued pursuant to Sec.  405.1038(b) or Sec.  
423.2038(b) without conducting a hearing, the decision may be issued 
sooner than if a hearing were scheduled and conducted, regardless of 
whether an ALJ or attorney adjudicator issues the decision under Sec.  
405.1038(b) or Sec.  423.2038(b). Scheduling a hearing requires the ALJ 
to determine an available hearing date and time and give the parties 
sufficient advance notice (at least 20 calendar days under Sec.  
405.1022(a) and for non-expedited Part D hearings under Sec.  
423.2022(a)). Sections 405.1020(e)(4) and 423.2020(e)(4) allow for 
hearings to be rescheduled if a party or the enrolle objects to the 
scheduled date and/or time and the ALJ finds good cause to reschedule 
the hearing, which could result in even longer delays. Appellants who 
wish to avoid the additional time it takes to schedule and conduct a 
hearing before a decision can be issued may choose to waive the 
hearing.
    Comment: Three commenters strongly supported our proposal to allow 
stipulated decisions in favor of the parties based on a statement by 
CMS or its contractor that an item or service should be covered or 
payment made on an appealed claim. One commenter questioned whether 
there may be

[[Page 5074]]

circumstances in which it may be in a party's interest to obtain a full 
decision with findings of fact or conclusions of law regarding a 
specific policy, eligibility, or coverage issue, instead of a 
stipulated decision.
    Response: We thank the commenters for their support. If CMS or its 
contractor agrees that an item or service should be covered or payment 
made on an appealed claim and an ALJ or attorney adjudicator issues a 
decision in accordance with proposed Sec.  405.1038(c), we do not 
believe that the decision will be detrimental to the parties' interests 
given that an ALJ's or attorney adjudicator's decision is limited to 
the appealed claims and binding only on the parties to the appeal, and 
is not precedential. However, we note that proposed Sec.  405.1038(c) 
does not require the ALJ or attorney adjudicator to issue a stipulated 
decision, but rather makes it an option. If a party believes that it 
has an interest in a full decision that includes findings of fact, 
conclusions of law, and the reasons for the decision, the party could 
express its desire for a full decision to the ALJ during the hearing if 
CMS or the contractor makes an oral statement at the hearing; to the 
assigned ALJ or attorney adjudicator if CMS or the contractor files a 
written statement and provides a copy to the parties; or in a request 
for review to the Council if a stipulated decision has already been 
issued.
    Comment: One commenter stated that it would be insufficient to 
issue a stipulated decision based on a statement from CMS that the item 
or service would be covered, without first disclosing the amount of 
payment that would be made on the claim and allowing the appellant to 
accept or reject the payment, because often the amounts paid by CMS 
contractors for certain items of durable medical equipment do not 
accurately reflect the cost of the items.
    Response: We do not believe adding a requirement for all cases in 
which a stipulated decision may be issued that CMS disclose the amount 
of payment that would be made, and that the appellant be allowed to 
accept or reject the payment before a stipulated decision could be 
issued, would be necessary, and we believe it would waste resources and 
negate the intended efficiency of the proposal when CMS or a contractor 
believes an item or service should be covered or payment may be made. 
Section 405.1046(a)(3), as finalized in this rule, incorporates current 
Sec.  405.1046(c), which provides that an ALJ or attorney adjudicator 
may make a finding as to the amount of payment due for an item or 
service when the payment amount is at issue. However, under these 
regulations, such a finding is not binding on a CMS contractor for 
purposes of determining the amount of payment due and the amount of 
payment determined by the contractor in effectuating an ALJ's or 
attorney adjudicator's decision is a new initial determination under 
Sec.  405.924, which may be appealed. These rules would apply to a 
stipulated decision, and as such, if a payment amount is included in a 
stipulated decision, it does not guarantee that amount will be paid. 
Further, allowing an appellant to veto a stipulated decision by 
rejecting the payment that would be made on the claim would require the 
ALJ or attorney adjudicator to issue a full decision, including 
findings of fact, and conclusions of law, and comply with other 
decision requirements in Sec.  405.1046, which would be subject to the 
same limitations of proposed Sec.  405.1046(a)(3) regarding payment 
amounts.
    However, we agree that it would not be appropriate for an ALJ or 
attorney adjudicator to issue a stipulated decision when the amount of 
payment is specifically at issue before the ALJ or attorney 
adjudicator, if the statement from CMS or its contractor does not agree 
to the amount of payment the party believes should be made. If the 
amount of payment on a claim is at issue before the ALJ or attorney 
adjudicator, a general statement from CMS or its contractor that the 
item or service should be covered or payment may be made would not 
address the issue on appeal. We are therefore amending Sec.  
405.1038(c) to provide that if the amount of payment is an issue before 
the ALJ or attorney adjudicator, a stipulated decision may be made if 
the statement from CMS or its contractor agrees to the amount of 
payment the party believes should be made. We are making a 
corresponding change to Sec.  423.2038(c) for stipulated decisions in 
part 423, subpart U proceedings.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1038 and 423.2038 as proposed with the 
following modification. We are amending Sec. Sec.  405.1038(c) and 
423.2038(c) to provide that if the amount of payment is an issue before 
an ALJ or attorney adjudicator, the statement upon which a stipulated 
decision is based must agree to the amount of payment the parties 
believe should be made.
s. Prehearing and Posthearing Conferences (Sec. Sec.  405.1040 and 
423.2040)
    As described below, we proposed a number of changes to Sec. Sec.  
405.1040 and 423.2040 with respect to prehearing and posthearing 
conferences. 81 FR 43790, 43838-43839. Current Sec.  405.1040 discusses 
prehearing and posthearing conferences and permits the ALJ to hold 
these conferences to facilitate the hearing or hearing decision. 
Current Sec.  405.1040(b) requires an ALJ to inform ``the parties'' of 
the time, place, and purpose of the prehearing or posthearing 
conference, unless a party indicates in writing that it does not wish 
to receive a written notice of the conference. In accordance with 
current Sec.  405.1020(c), the notice of hearing is not sent to a party 
who did not participate in the reconsideration and was not found liable 
for the services at issue after the initial determination. Therefore, 
we proposed to modify Sec.  405.1040(b) to state that the ALJ would 
inform parties who would be or were sent a notice of hearing in 
accordance with Sec.  405.1020(c). In addition, current Sec.  
405.1040(b) does not provide for conference notice to be sent to CMS or 
a contractor that elected to be a participant in the proceedings or a 
party to the hearing at the time the conference notice is sent, which 
has caused confusion when CMS or a contractor has made an election 
before or after a conference. Therefore, we proposed at Sec.  
405.1040(b) that a conference notice be sent to CMS or a contractor 
that has elected to be a participant in the proceedings or a party to 
the hearing at the time the conference notice is sent. We stated in the 
proposed rule that we believed these changes would help ensure the 
appropriate parties and participants are provided with notice of, and 
have an opportunity to attend, a conference. We proposed at Sec.  
423.2040(b) and (c) to adopt corresponding revisions for prehearing 
conference notices in non-expedited and expedited hearings respectively 
to state that a conference notice is sent to CMS, the IRE, and/or the 
Part D plan sponsor if the ALJ has granted their request(s) to be a 
participant in the hearing, but we did not propose to make other 
changes in proposed Sec.  405.1040(b) to Sec.  423.2040 because only 
the enrollee is a party in part 423, subpart U proceedings. In 
addition, because an oral request not to receive a notice of the 
conference is permitted for expedited hearings, we proposed at Sec.  
423.2040(d) to revise the requirement for an ``ALJ hearing office'' to 
document such an oral request to provide more generally that oral 
requests must be documented,

[[Page 5075]]

which is generally done by the ALJ's support staff, rather than other 
office staff. In addition, we proposed at Sec.  423.2040(d) that 
documentation of an oral request not to receive written notice of the 
conference must be added to the administrative record for consistency 
in how the record is referenced.
    Current Sec.  405.1040(c) states that, at the conference, the ALJ 
may consider matters in addition to those stated in the notice of 
hearing, if the parties consent in writing. However, OMHA ALJs have 
indicated that providing them with the discretion to delegate 
conducting a conference to an attorney would add efficiency to the 
process. OMHA attorneys are licensed attorneys who support ALJs in 
evaluating appeals and preparing appeals for hearing, as well as 
drafting decisions, and are well versed in Medicare coverage and 
payment policy, as well as administrative procedure. Therefore, we 
proposed at Sec.  405.1040(c)(1) that, at the conference, the ALJ or an 
OMHA attorney designated by the ALJ may conduct the conference, but 
only the ALJ conducting a conference may consider matters in addition 
to those stated in the conference notice if the parties consent to 
consideration of the additional matters in writing. We stated in the 
proposed rule that this revision would allow an OMHA attorney 
designated by the ALJ assigned to an appeal to conduct a conference, 
but would only allow an ALJ conducting the conference to consider 
matters in addition to those stated in the conference notice. We stated 
that we believe allowing ALJs to delegate the task of conducting a 
conference (consistent with the conference notice stating the purpose 
of the conference, in accordance with Sec.  405.1040(b)) would provide 
ALJs with the flexibility to use OMHA attorneys and provide ALJs with 
more time to devote to hearings and decisions. We also stated that we 
believe using attorneys to conduct conferences is appropriate because 
conferences are informal proceedings to facilitate a hearing or 
decision, and do not involve taking testimony or receiving evidence, 
both of which occur at the hearing. We also noted that the results of 
the conference embodied in a conference order are subject to review and 
approval by the ALJ, and ultimately subject to an objection by the 
parties, under the provisions of current Sec.  405.1040, which are 
carried over in proposed Sec.  405.1040. We proposed at Sec.  
423.2040(e)(1) to adopt corresponding revisions for allowing an ALJ to 
delegate conducting a conference to an OMHA attorney in part 423, 
subpart U proceedings.
    Current Sec.  405.1040(c) references the notice of hearing in 
discussing the matters that are considered at a conference. However, a 
notice of hearing may not have been issued at the time a prehearing 
conference is scheduled, and the matters being addressed in the appeal 
may have evolved since a notice of hearing was issued by the time a 
posthearing conference is scheduled, resulting in confusion on the 
permissible scope of the matters discussed at a conference. Therefore, 
Sec.  405.1040(c)(1) would state that the matters that are considered 
at a conference are those stated in the conference notice (that is, the 
purpose of the conference, as discussed in current Sec.  405.1040(b)).
    Current Sec.  405.1040(c) states that a record of the conference is 
made. However, that requirement has been read and applied differently 
by adjudicators. We proposed at Sec.  405.1040(c)(2) to require that an 
audio recording of the conference be made to establish a consistent 
standard and because the audio recording is the most administratively 
efficient way to make a record of the conference. We proposed at Sec.  
423.2040(e)(1) and (e)(2) to adopt corresponding revisions to reference 
a conference notice and clarify that an audio recording of the 
conference is made in part 423, subpart U proceedings.
    Current Sec.  405.1040(d) requires the ALJ to issue an order 
stating all agreements and actions resulting from the conference. If 
the parties do not object, the agreements and actions become part of 
the hearing record and are binding on all parties. It does not state to 
whom a conference order is issued, and again broadly references parties 
in indicating who may object to the order. In addition, current Sec.  
405.1040(d) does not establish a time period within which an objection 
must be made before the order becomes part of the record and binding on 
the parties. Therefore, we proposed to revise Sec.  405.1040(d) to 
state that the ALJ issues an order to all parties and participants who 
attended the conference stating all agreements and actions resulting 
from the conference. We proposed that if a party does not object within 
10 calendar days of receiving the order, or any additional time granted 
by the ALJ, the agreements and actions become part of the 
administrative record and are binding on all parties. Proposed Sec.  
405.1040(d) would provide that the order is issued to the parties and 
participants who attended the conference to help ensure the appropriate 
parties and participants receive the order, but as in current Sec.  
405.1040(d), only a party could object to the order. Proposed Sec.  
405.1040(d) would also establish that an objection must be made within 
10 calendar days of receiving the order to establish a consistent 
minimum standard for making an objection to a conference order, but 
would also provide the ALJ with the discretion to grant additional 
time. In addition, proposed Sec.  405.1040(d) would replace ``hearing 
record'' with ``administrative record'' for consistency with other 
references to the record. Further, proposed Sec.  405.1040(d) would 
continue to only allow the ALJ to issue a conference order, because we 
believe the ALJ should review and approve the actions and agreements 
resulting from the conference, and only an ALJ should issue an order 
that would be binding on the parties, if no objection is made. We 
proposed at Sec.  423.2040(f) to adopt corresponding revisions to 
clarify to whom a conference order is sent and the time frame to object 
to the order, and to specify that agreements and actions resulting from 
the conference become part of the ``administrative record'' (rather 
than ``hearing record'') in part 423, subpart U proceedings. However, 
we proposed to add that an enrollee must object to a conference order 
within 1 calendar day of receiving the order for expedited hearings 
because of the abbreviated time frame under which an expedited hearing 
and decision must be completed.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: One commenter stated that audio recordings, while 
administratively efficient, may be incompatible with a party's playback 
equipment, and transcription costs are prohibitively expensive. The 
commenter recommended that the format and medium of the recorded file 
be restricted and a typed transcript be provided on request if the file 
is incompatible with a party's equipment.
    Response: While we acknowledge that there may be playback 
compatibility concerns when dealing with any digital medium, we do not 
believe that it would be appropriate to constrain the audio recording 
of the oral proceedings to a particular format by regulation. OMHA 
makes audio recordings of conferences and hearings using electronic 
audio file formats that can be played using widely available and free 
software. If a party is unable to play the audio recording using his or 
her own equipment, OMHA will work with the party to help ensure that he 
or she has adequate access to the administrative record, and possibly 
provide the recording in a different format.

[[Page 5076]]

However, we believe that this process is more appropriate for sub-
regulatory guidance and the audio recordings should not be restricted 
to a specific format by regulation, as technology standards and 
software changes rapidly. We believe that the more general reference to 
audio recordings will accommodate future changes in recording formats 
and allow for more flexibility in responding to appellants' requests.
    Comment: Another commenter questioned whether it was an acceptable 
practice for an ALJ to substitute a prehearing conference for a full 
hearing as long as the other parties had already waived their 
appearances, no taking of testimony or receiving of additional evidence 
was required, only argument would be presented, and the conference was 
being recorded. The commenter expressed concern that this approach may 
catch unrepresented beneficiaries unprepared, and suggested publishing 
a handbook or other guidance for beneficiaries on what to expect at a 
conference.
    Response: The purpose of a prehearing conference is to facilitate 
the hearing and it is not a substitute for a full hearing. If, after 
conducting a prehearing conference, the ALJ determines that a hearing 
is no longer necessary because a decision can be issued without 
conducting a hearing in accordance with Sec. Sec.  405.1038 or 
423.2038, the ALJ may issue the decision on the record without 
conducting a subsequent hearing, or may issue a dismissal or remand in 
accordance with applicable authorities. However, a prehearing 
conference is not a substitute for a full ALJ hearing and the rules do 
not provide for taking testimony or evidence at a conference, or for 
the ALJ to fully examine the issues and to question the parties and 
witnesses, as is done at a hearing in accordance with Sec. Sec.  
405.1030 and 423.2030. In addition, we note that the notice of a pre-
hearing conference does not contain the same information as a notice of 
hearing, and does not have to be sent in the same time frame. With 
respect to what an appellant can expect at the conference, proposed 
Sec. Sec.  405.1040(b) and 423.2040(b) provide that a conference notice 
will explain the matters to be discussed at the conference. There are 
also a number of resources available to provide beneficiaries with 
information and guidance regarding what to expect throughout the 
appeals process, as discussed in section II.B.3.o of this final rule 
above, including existing CMS resources like the Medicare & You 
Handbook, 1-800 Medicare, chapter 29 of the Medicare Claims Processing 
Manual (Internet-Only Manual 100-4), and the Medicare claims appeals 
Web site at www.medicare.gov/claims-and-appeals/file-an-appeal/appeals.html. OMHA is also currently in the process of developing and 
releasing the OCPM. The OCPM provides day-to-day operating 
instructions, policies, and procedures based on statutes, regulations, 
and OMHA directives. Development is ongoing, and although the OCPM is 
primarily intended to be a resource used by OMHA adjudicators and 
staff, chapters are made publicly available on the OMHA Web site 
(www.hhs.gov/omha) soon after they are published. The instructions and 
guidance in the OCPM describe many policies and procedures in greater 
detail and provide frequent examples to aid understanding. We plan to 
address prehearing and posthearing conference procedures in a future 
OCPM chapter.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1040 and 423.2040 as proposed without 
modification.
t. The Administrative Record (Sec. Sec.  405.1042 and 423.2042)
    The administrative record is HHS's record of the administrative 
proceedings, and is initially established by OMHA ALJs and built from 
the records of CMS contractors that adjudicated the claim, or from 
records maintained by SSA in certain circumstances. After adjudication 
by OMHA, the Council may include more documents in the administrative 
record, if a request for Council review is filed or a referral to the 
Council is made. If a party then seeks judicial review, the 
administrative record is certified and presented to the Court as the 
official agency record of the administrative proceedings. The record is 
returned to the custody of CMS contractors or SSA after any 
administrative and judicial review is complete. We stated in the 
proposed rule that current practices in creating the administrative 
record in accordance with current Sec. Sec.  405.1042 and 423.2042 vary 
widely. Given the importance of the administrative record, we proposed 
to revise Sec. Sec.  405.1042 and 423.2042 to provide for more 
consistency and to clarify its contents and other administrative 
matters. 81 FR 43790, 43839-43841.
    Current Sec.  405.1042(a)(1) provides that the ALJ makes a complete 
record of the evidence, including the hearing proceedings, if any. 
However, we stated in the proposed rule that this provision has been 
limiting and causes confusion in developing procedures to ensure the 
completeness of the record and in bringing consistency to how the 
record is structured because individual adjudicators organize the 
record differently. We proposed to revise Sec.  405.1042(a)(1) to 
require OMHA to make a complete record of the evidence and 
administrative proceedings on the appealed matter, including any 
prehearing and posthearing conferences, and hearing proceedings that 
were conducted. Proposed Sec.  405.1042(a)(1) would vest OMHA, rather 
than the ALJ, with the responsibility of making a complete record of 
the evidence and administrative proceedings in the appealed matter, 
including any prehearing and posthearing conferences and hearing 
proceedings. We stated that this would provide OMHA with more 
discretion to develop polices and uniform procedures for constructing 
the administrative record, while preserving the role of the ALJ or 
attorney adjudicator, as proposed in section II.B of the proposed rule 
(and discussed in section II.A.2 of this final rule above), to identify 
the evidence that was used in making the determinations below and the 
evidence that was used in making his or her decision. We proposed at 
Sec.  423.2042(a)(1) to also adopt corresponding revisions to indicate 
OMHA makes a complete record of the evidence and administrative 
proceedings in the appealed matter in part 423, subpart U proceedings.
    Current Sec.  405.1042(a)(2) discusses which documents in the 
record are marked as exhibits, and provides a non-exhaustive list of 
documents that are marked to indicate that they were considered in 
making the decisions under review or the ALJ's decision. It further 
states that in the record, the ALJ also must discuss any evidence 
excluded under Sec.  405.1028 and include a justification for excluding 
the evidence. We proposed to revise Sec.  405.1042(a)(2) to state that 
the record would include marked as exhibits, the appealed 
determinations, and documents and other evidence used in making the 
appealed determinations and the ALJ's or attorney adjudicator's 
decision, including, but not limited to, claims, medical records, 
written statements, certificates, reports, affidavits, and any other 
evidence the ALJ or attorney admits. We proposed that attorney 
adjudicators could mark exhibits because as proposed in section II.B of 
the proposed rule (and discussed in section II.A.2 of this final rule 
above), attorney adjudicators would be adjudicating requests for 
hearing and requests for review of a QIC dismissal,

[[Page 5077]]

and should indicate the portions of the record that he or she 
considered in making the decision in the same manner as an ALJ. 
Proposed Sec.  405.1042(a)(2) would continue to require certain 
evidence to be marked as exhibits, but would clarify what would be 
marked, replacing ``the documents used in making the decision under 
review,'' with ``the appealed determinations, and documents and other 
evidence used in making the appealed determinations and the ALJ's or 
attorney adjudicator's decision.'' We stated in the proposed rule that 
we believed this would clarify that the exhibited portion of the record 
includes, at minimum, the appealed determinations, documents and other 
evidence used in making the appealed determinations, and documents and 
other evidence used in making the ALJ's or attorney adjudicator's 
decision. The illustrative list of documents that may be marked as 
exhibits pursuant to the rule in current Sec.  405.1042(a)(2) would be 
incorporated in proposed Sec.  405.1042(a)(2) without change. We also 
proposed to clarify at Sec.  405.1042(a)(2) that the record would 
include any evidence excluded or not considered by the ALJ or attorney 
adjudicator, including, but not limited to, new evidence submitted by a 
provider or supplier, or beneficiary represented by a provider or 
supplier, for which no good cause was established, and duplicative 
evidence submitted by a party. We stated in the proposed rule that all 
evidence presented should be included in the record, even if excluded 
from consideration, in order to help ensure a complete record of the 
evidence. However, we stated that such excluded evidence would not be 
marked as an exhibit because the evidence was not considered in making 
the ALJ's or attorney adjudicator's decision. We proposed at Sec.  
423.2042(a)(2) to adopt corresponding revisions to clarify what would 
be exhibited in part 423, subpart U proceedings, except the reference 
to new evidence submitted by a provider or supplier, or beneficiary 
represented by a provider or supplier, for which no good cause was 
established as an example of evidence excluded or not considered by the 
ALJ or attorney adjudicator, because there is no such limitation on new 
evidence in part 423, subpart U proceedings.
    As stated previously, current Sec.  405.1042(a)(2) includes 
requirements to discuss any evidence excluded under current Sec.  
405.1028 and include a justification for excluding the evidence. We 
proposed in Sec.  405.1042(a)(2) to remove these requirements. We 
stated in the proposed rule that we believed the requirement to justify 
excluding the evidence is not necessary and is in tension with the 
requirement for a provider or supplier, or beneficiary represented by a 
provider or supplier, to establish good cause for submitting new 
evidence before it may be considered. Section 1869(b)(3) of the Act 
establishes a general prohibition on new evidence that must be 
overcome, and proposed Sec.  405.1028 would implement the statute by 
requiring the party to explain why the evidence was not submitted prior 
to the QIC reconsideration, and the ALJ or attorney adjudicator to make 
a finding of good cause to admit the evidence. In place of the current 
Sec.  405.1042(a)(2) requirement, as we discuss later, we proposed at 
Sec.  405.1046(a)(2)(ii) to require that if new evidence is submitted 
for the first time at the OMHA level and subject to a good cause 
determination pursuant to proposed Sec.  405.1028, the new evidence and 
good cause determination would be discussed in the decision. We also 
stated in the proposed rule that we believed the decision is the 
appropriate place to discuss the new evidence and document the good 
cause determination, and the discussion should focus on the good cause 
determination required by proposed Sec.  405.1028, regardless of 
whether good cause was found. We did not propose any corresponding 
changes to Sec.  423.2042 because there is no provision equivalent to 
the current Sec.  405.1042(a)(2) requirement to discuss any excluded 
evidence.
    Current Sec.  405.1042(a)(3) provides that a party 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. However, this is rarely 
done in practice. More often, a party requests a copy of the record 
prior to the hearing, in accordance with current Sec.  405.1042(b). We 
proposed to revise Sec.  405.1042(a)(3) to state that a party may 
request and review the record prior to or at the hearing, or if a 
hearing is not held, at any time before the notice of decision is 
issued. This revision would allow a party to request and review a copy 
of the record ``prior to or at the hearing'' to more accurately reflect 
the practices of parties. In addition, proposed Sec.  405.1042(a)(3) 
would remove the reference to an ``ALJ's'' decision in explaining that 
if a hearing is not held, a party may request and review the record at 
any time before the notice of decision is issued, because in that 
circumstance an ALJ or attorney adjudicator, as proposed in section 
II.B of the proposed rule (and discussed in section II.A.2 of this 
final rule above), may issue the decision. We proposed at Sec.  
423.2042(a)(3) to adopt corresponding revisions for part 423, subpart U 
proceedings.
    Current Sec.  405.1042(a)(4) provides for the complete record, 
including any recording of the hearing, to be forwarded to the Council 
when a request for review is filed or the case is escalated to the 
Council. However, in noting that the record includes recordings, only a 
recording of the hearing is mentioned. We proposed at Sec.  
405.1042(a)(4) to add that the record includes recordings of prehearing 
and posthearing conferences in addition to the hearing recordings, to 
reinforce that recordings of conferences are part of the complete 
record. We proposed at Sec.  423.2042(a)(4) to adopt corresponding 
revisions for part 423, subpart U proceedings.
    Current Sec.  405.1042(b)(1) describes how a party may request and 
receive copies of the record from the ALJ. However, after a case is 
adjudicated, OMHA releases custody of the record and forwards it to a 
CMS contractor or SSA, and the record may go on to the Council for 
another administrative proceeding. We stated in the proposed rule that 
this results in confusion for parties when they request a copy of the 
record and OMHA is unable to provide it. We proposed at Sec.  
405.1042(b)(1) that a party may request and receive a copy of the 
record from OMHA while an appeal is pending at OMHA. We also proposed 
at Sec.  405.1042(b)(1) to replace the reference to an ``exhibit list'' 
with a reference to ``any index of the administrative record'' to 
provide greater flexibility in developing a consistent structure for 
the administrative record. We also proposed to change the parallel 
reference to ``the exhibits list'' in Sec.  405.1118 to ``any index of 
the administrative record.'' In addition, proposed Sec.  405.1042(b)(1) 
would replace the reference to a ``tape'' of the oral proceeding with 
an ``audio recording'' of the oral proceeding because tapes are no 
longer used and a more general reference would accommodate future 
changes in recording formats. We also proposed to replace a parallel 
reference at Sec.  405.1118 to a copy of the ``tape'' of the oral 
proceedings with a copy of the ``audio recording'' of the oral 
proceedings. We proposed at Sec. Sec.  423.2042(b)(1) and 423.2118 to 
adopt corresponding revisions for part 423, subpart U proceedings, but 
note that current Sec.  423.2118 refers to a ``CD'' of the oral 
proceedings.
    Current Sec.  405.1042(b)(2) provides that if a party requests all 
or part of the record from an ALJ and an opportunity

[[Page 5078]]

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 party's 
response does not count toward the 90 calendar day adjudication period. 
We proposed to revise Sec.  405.1042(b)(2) to state, if a party 
requests a copy of all or part of the record from OMHA or the ALJ or 
attorney adjudicator and an opportunity to comment on the record, any 
adjudication period that applies in accordance with Sec.  405.1016 is 
extended by the time beginning with the receipt of the request through 
the expiration of the time granted for the party's response. This 
proposed revision would clarify that a party may request a ``copy of'' 
all or part of the record, and would add that the request may be made 
to OMHA, or the ALJ or attorney adjudicator, because a party may 
request a copy of the record before it is assigned to an ALJ or 
attorney adjudicator. In addition, proposed Sec.  405.1042(b)(2) would 
revise the discussion of the effect of requesting an opportunity to 
comment on the record on an adjudication period to remove the specific 
reference to a 90 calendar day adjudication period, because in 
accordance with proposed Sec.  405.1016, an adjudication period may be 
90 or 180 calendar days, or alternatively may be waived by the 
appellant and therefore not apply. We proposed at Sec.  423.2042(b)(2) 
to adopt corresponding revisions for part 423, subpart U proceedings.
    Current Sec.  405.1042 does not address the circumstance in which a 
party requests a copy of the record but is not entitled to receive some 
of the documents in the record. For example, when an appeal involves 
multiple beneficiaries and one beneficiary requests a copy of the 
record, the records related to other beneficiaries may not be released 
to the requesting beneficiary unless he or she obtains consent from the 
other beneficiaries to release the records that pertain to them. 
Proposed Sec.  405.1042(b)(3) would address the possibility that a 
party requesting a copy of the record is not entitled to receive the 
entire record. Specifically, we proposed in Sec.  405.1042(b)(3) that 
if a party requests a copy of all or part of the record and the record, 
including any audio recordings, contains information pertaining to an 
individual that the requesting party is not entitled to receive (for 
example, personally identifiable information or protected health 
information), those portions of the record would not be furnished 
unless the requesting party obtains consent from the individual. For 
example, if a beneficiary requests a copy of the record for an appeal 
involving multiple beneficiaries, the portions of the record pertaining 
to the other beneficiaries would not be furnished to the requesting 
beneficiary unless he or she obtains consent from the other 
beneficiaries. We stated in the proposed rule that we believed proposed 
Sec.  405.1042(b)(3) would help ensure that parties are aware that they 
may not be entitled to receive all portions of the record. We proposed 
at Sec.  423.2042(b)(3) to adopt corresponding revisions for part 423, 
subpart U proceedings.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received several comments requesting that parties be 
provided with a mechanism to request a copy of the administrative 
record after a notice of decision or dismissal is issued at the OMHA 
level but prior to requesting review of that determination by the 
Council. The commenters noted that parties may need to review the 
record after a decision or dismissal is issued to determine whether to 
pursue a subsequent appeal.
    Response: After a case is adjudicated, OMHA releases custody of the 
administrative record and forwards it to a CMS contractor or SSA, at 
which time OMHA no longer has possession of the record to provide 
copies. If a request for review is filed with the Council, the 
regulations at Sec. Sec.  405.1118 and 423.2118 address requesting and 
receiving a copy of the record from the Council. If a party wishes to 
request a copy of the record after a decision or dismissal is issued by 
an ALJ or attorney adjudicator and prior to filing a request for review 
with the Council, however, the requesting party may contact CMS or SSA 
to obtain a copy of the record.
    Comment: We received one comment that expressed general support for 
the proposed changes, but requested that the agency clarify in the 
regulation that marking evidence as an exhibit does not create a legal 
presumption that the adjudicator actually considered it in rendering a 
decision. The commenter also requested that the agency reinforce that 
the good cause requirement for the submission of new evidence for the 
first time at the OMHA level does not apply to new evidence submitted 
by unrepresented beneficiaries and Medicaid state agencies.
    Response: We thank the commenter for its support, but disagree that 
the regulation should incorporate the language suggested by the 
commenter, that marking evidence as an exhibit does not create a legal 
presumption that the adjudicator considered it. The rules that we are 
finalizing require that evidence in the administrative record that the 
ALJ or the attorney adjudicator considers in making a decision is 
marked as an exhibit, and specifies certain evidence that is considered 
and therefore is marked as an exhibit. Because the rules already convey 
certain evidence will be considered, and in accordance with Sec. Sec.  
405.1046 and 423.2046, the notice of decision contains a summary of the 
clinical or scientific evidence used in making the determination, we 
believe what the ALJ or attorney adjudicator considered or did not 
consider will be evident from the record and decision. Further, adding 
the suggested language could cause confusion given that the rules 
prescribe that certain evidence will be considered and marked as 
evidence. In addition, if a party believes that certain evidence was 
marked as an exhibit but not appropriately considered by the ALJ or 
attorney adjudicator, or was not given appropriate weight in the 
decision or dismissal, the matter may be appealed to the Council and 
the Council will undertake a de novo review of the record. Under de 
novo review, the Council is not bound by the findings of the lower 
levels of adjudication and does not give deference to the 
determinations of the prior adjudicators. Given this standard of review 
and the clarification above, we do not believe that it is necessary or 
appropriate to specify in the regulations that marking an exhibit does 
not create a legal presumption that it was considered.
    With respect to the commenter's second suggestion, as discussed in 
section II.B.3.i above, we are amending the language in Sec.  
405.1018(d) to clarify that the limitation on submitting new evidence 
for the first time at the OMHA level (as set forth in Sec.  
405.1018(c)) does not apply to evidence submitted by an unrepresented 
beneficiary, CMS or its contractors, a Medicaid State agency, an 
applicable plan, or a beneficiary represented by someone other than a 
provider or supplier.
    Comment: One commenter requested clarification on the form that an 
individual's consent should take, and clarification on where the 
consent should be sent, under proposed Sec. Sec.  405.1042(b)(3) and 
423.2042(b)(3), regarding situations in which the party requesting a 
copy of the record is not entitled to receive some of the documents or 
information in the record because they pertain to another individual, 
and the requirement to obtain consent from the individual before OMHA 
will furnish a copy of the requested information.

[[Page 5079]]

    Response: The proposed language does not specify a required form of 
individual consent; however, we recommend that parties use Form HHS-721 
(Individual Appellant's Consent to Third-Party for Copies of the 
Individual Appellant's Record(s)), which is available on the HHS Web 
site at www.hhs.gov. Any individual consents obtained may be sent to 
OMHA, the assigned ALJ, or the assigned attorney adjudicator along with 
the party's request for a copy of the record consistent with Sec. Sec.  
405.1042(b) or 423.2042(b).
    Comment: We received two comments suggesting that the proposed 
regulations did not sufficiently address the level of detail required 
in the index of the administrative record. One commenter noted that the 
lack of detail results in confusion about what evidence is actually 
before the adjudicator. The commenter recommended that seven days prior 
to a hearing OMHA should provide all parties with a detailed exhibit 
list identifying the following elements: The exhibit number, the 
exhibit range of pages, the subject of each exhibit, the author of each 
exhibit, the total number of pages in each exhibit, and the date(s) 
appearing on each exhibit. Another commenter stated that because the 
regulations provide no requirements on the level of detail to be used 
in the index of the administrative record, parties that want to request 
only a part of a record are unable to do so due to the general nature 
of the indexes.
    Response: One of the proposed revisions to Sec. Sec.  405.1042 and 
423.2042 is to vest OMHA, rather than the ALJ, with the responsibility 
of making a complete record of the evidence and administrative 
proceedings in the appealed matter. This change would allow OMHA to 
develop and implement agency-wide policies and uniform procedures for 
constructing the administrative record, including preparing and 
distributing the index of the administrative record, which we believe 
will help address both commenters' concerns.
    We do not agree with the commenters that the regulations are the 
appropriate place for specific agency instructions on creating the 
index of the administrative record. OMHA is in the process of 
developing the OCPM, a reference guide outlining the day-to-day 
operating instructions, policies, and procedures of the agency. The 
OCPM describes OMHA case processing procedures in greater detail than 
generally is included in regulation and provides frequent examples to 
aid understanding. This resource, which is available to the public on 
the OMHA Web site (www.hhs.gov/omha), includes a detailed chapter on 
the administrative record and guidance on creating and distributing an 
index of the administrative record, which the OCPM currently refers to 
as exhibit lists. Current policy, as outlined in the OCPM, requires 
that a typed exhibit list be created. This standardized form is 
organized by categories of evidence and each exhibit number contains 
required minimum descriptions for some of the information recommended 
by the first commenter, including an exhibit number for each category, 
a description of the subject of each exhibit number, and the range of 
pages within each exhibit number. The OCPM does not require that the 
exhibit list contain a specific description of each document within a 
category or detailed information about individual exhibits within a 
category such as the dates of each exhibit or the author of each 
exhibit. It would be a significant burden on the staff assembling the 
record and creating the exhibit list to review each document and index 
information to the level of specificity suggested by the commenter. We 
believe that this administrative burden outweighs the limited potential 
benefits to the parties of having more specific information such as 
dates and authors of individual exhibits listed on an index. We also 
believe that by using standard categories for exhibits we are providing 
parties with useful information about the documents that will be 
considered by the adjudicator. For example, by placing all medical 
records in one exhibit category and providing a range of pages for that 
category, a party has information on the volume of records received to 
determine if it is likely that the record contains all of the necessary 
medical record evidence. While we understand that providing more 
specific descriptions, such as individual dates and authors for each 
exhibit, may further assist parties in confirming that certain evidence 
is in the record, we believe that there are other ways for parties to 
confirm that information, such as reviewing the total number of pages 
in each category, or by discussing the specific evidence at a hearing, 
or, if there are specific concerns regarding the evidence, by 
requesting a copy of all or any part of the record pursuant to 
Sec. Sec.  405.1042(b) and 423.2042(b).
    We are also not adopting the commenter's recommendation that OMHA 
send the exhibit list to all the parties seven days prior to the 
hearing. The OCPM already requires that an initial copy of the exhibit 
list be provided with the notice of hearing to the parties and 
potential parties and participants who receive the notice, or at the 
first available opportunity before the hearing to the parties and 
potential parties and participants who responded to the notice of 
hearing. Under Sec. Sec.  405.1022(a)(1) and 423.2022(a)(2), as 
finalized in this rule, the notice of hearing is mailed, transmitted, 
or served at least 20 calendar days before the hearing (except for 
expedited part D hearings, where notice is mailed, transmitted, or 
served at least 3 calendar days before the hearing), unless a party or 
participant agrees to fewer than 20 calendar days' or 3 calendar days' 
notice, as applicable. Therefore, the OCPM already requires that 
parties and potential parties and participants receive the exhibit list 
earlier than the commenter's recommendation of seven days prior to the 
hearing, or at the first available opportunity. (After the effective 
date of this final rule, we anticipate that revisions will be made to 
the OCPM to refer to an index of the administrative record, rather than 
an exhibit list.) In addition, proposed Sec. Sec.  405.1042(b)(1) and 
423.2042(b)(1) state that at any time while an appeal is pending at 
OMHA, a party may request and receive a copy of all or part of the 
record, including a copy of the index of the administrative record. 
Finally, with regard to the second comment, we believe that if the 
exhibit lists are consistent across adjudicators, there will be 
improved clarity as to the types of documents within the specific 
exhibit categories. While it is not administratively possible given 
OMHA's docket and staffing constraints to create exhaustive lists of 
each document or item on an exhibit list, the implementation of uniform 
exhibiting procedures by OMHA, including the use of consistent exhibit 
categories, should make it easier for parties who only require certain 
documents or portions of a record to determine which exhibit number to 
request.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1042 and 423.2042 as proposed without 
modification.
u. Consolidated Proceedings (Sec. Sec.  405.1044 and 423.2044)
    Current Sec. Sec.  405.1044 and 423.2044 explain that a 
consolidated hearing may be held at the request of an appellant or on 
the ALJ's own motion, 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, and CMS is 
notified of an ALJ's

[[Page 5080]]

intention to conduct a consolidated hearing. If a consolidated hearing 
is conducted, current Sec. Sec.  405.1044 and 423.2044 further provide 
that the ALJ may make a consolidated decision and record for the claims 
involved in the consolidated hearing, or may make a separate decision 
and record for each claim involved in the consolidated hearing. We 
stated in the proposed rule that this authority is useful in allowing 
an ALJ and the appellant to conduct a single proceeding on multiple 
appealed claims or other determinations that are before the ALJ, 
reducing time and expense for the appellant and the government to 
resolve the appealed matter. However, we stated that the current 
provisions have caused confusion, and have been limiting in 
circumstances in which no hearing is conducted, and proposed a number 
of revisions. 81 FR 43790, 43841-43842.
    Current Sec.  405.1044 uses the terms ``requests for hearing,'' 
``cases,'' and ``claims'' interchangeably, and we stated in the 
proposed rule that this has resulted in confusion because an appeal, or 
``case,'' before an ALJ may involve multiple requests for hearing if an 
appellant's requests were combined into one appeal for administrative 
efficiency prior to being assigned to the ALJ. In addition, a request 
for hearing may involve one or more claims. We proposed in Sec.  
405.1044 to use the term ``appeal'' to specify that appeals may be 
consolidated for hearing, and a single decision and record may be made 
for consolidated appeals. We proposed to use ``appeal'' because an 
appeal is assigned a unique ALJ appeal number, for which a unique 
decision and record is made. We also proposed to move current Sec.  
405.1044(b) to new subsection (a)(2), and to also replace the term 
``combined'' with ``consolidated'' for consistent use in terminology. 
Further, we proposed at Sec.  423.2044 to adopt corresponding revisions 
to use consistent terminology in part 423, subpart U proceedings.
    Current Sec.  405.1044(a) through (d) describes when a consolidated 
hearing may be conducted, the effect on an adjudication period that 
applies to the appeal, and providing notice of the consolidated hearing 
to CMS. Proposed Sec.  405.1044(a) would incorporate current Sec.  
405.1044(a) through (c) to combine the provisions related to a 
consolidated hearing. In addition, proposed Sec.  405.1044(a)(4) would 
replace the current requirement to notify CMS that a consolidated 
hearing will be conducted in current Sec.  405.1044(d) with a 
requirement to include notice of the consolidated hearing in the notice 
of hearing issued in accordance with Sec. Sec.  405.1020 and 405.1022. 
We stated that this would help ensure notice is provided to the parties 
and CMS, as well as its contractors, in a consistent manner, and reduce 
administrative burden on ALJs and their staff by combining that notice 
into the existing notice of hearing. We proposed at Sec.  423.2044(a) 
to adopt corresponding revisions for part 423, subpart U proceedings.
    Current Sec.  405.1044(e) explains that when a consolidated hearing 
is conducted, the ALJ may consolidate the record and issue a 
consolidated decision, or the ALJ may maintain separate records and 
issue separate decisions on each claim. It also states that the ALJ 
ensures that any evidence that is common to all claims and material to 
the common issue to be decided is included in the consolidated record 
or each individual record, as applicable. However, there has been 
confusion on whether separate records may be maintained and a 
consolidated decision can be issued, as well as what must be included 
with the records when separate records are maintained. Proposed Sec.  
405.1044(b) would incorporate some of current Sec.  405.1044(e) and add 
provisions for making a consolidated record and decision. We proposed 
at Sec.  405.1044(b)(1) that 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 appeal. This proposed 
revision would maintain the current option to make a consolidated 
record and decision, or maintain separate records and issue separate 
decisions, but restructures the provision to highlight that these are 
two mutually exclusive options. This proposal is important because 
issuing a consolidated decision without also consolidating the record, 
or issuing separate decisions when a record has been consolidated, 
complicates effectuating a decision and further reviews of the 
appeal(s). We proposed in Sec.  405.1044(b)(2) that, if a separate 
decision and record on each appeal is made, the ALJ is responsible for 
making sure that any evidence that is common to all appeals and 
material to the common issue to be decided, and audio recordings of any 
conferences that were conducted and the consolidated hearing, are 
included in each individual administrative record. We stated that 
proposed Sec.  405.1044(b)(2) would address the confusion that 
sometimes results in a copy of the audio recording of a consolidated 
hearing not being included in the administrative records of each 
constituent appeal when separate records are maintained, by clarifying 
that if a separate decision and record is made, audio recordings of any 
conferences that were conducted and the consolidated hearing are 
included in each individual record. We stated that this proposal is 
important because the record for each individual appeal must be 
complete. We proposed at Sec.  423.2044(b)(1) and (b)(2) to adopt 
corresponding revisions for part 423, subpart U proceedings.
    Current Sec.  405.1044 does not contemplate a consolidated record 
and decision unless a consolidated hearing was conducted, which is 
limiting when multiple appeals for an appellant can be consolidated in 
a decision issued on the record without a hearing. We proposed to add 
Sec.  405.1044(b)(3), which would provide that, if a hearing would not 
be conducted for multiple appeals that are before the same ALJ or 
attorney adjudicator as proposed in section II.B of the proposed rule 
(and discussed in section II.A.2 above), and the appeals involve one or 
more of the same issues, the ALJ or attorney adjudicator may make a 
consolidated decision and record at the request of the appellant or on 
the ALJ's or attorney adjudicator's own motion. We stated that this 
would provide authority for an ALJ or attorney adjudicator to make a 
consolidated decision and record on the same basis that a consolidated 
hearing may be conducted. We stated in the proposed rule that we 
believed this authority would add efficiency to the adjudication 
process when multiple appeals pending before the same adjudicator can 
be decided without conducting a hearing. We proposed at Sec.  
423.2044(b)(3) to adopt a corresponding provision for part 423, subpart 
U proceedings.
    Current Sec.  405.1044 also does not clearly address consolidating 
hearings for multiple appellants, including situations in which a 
beneficiary files a request for hearing on the same claim appealed by a 
provider or supplier, and the provider or supplier has other pending 
appeals that could be consolidated pursuant to current Sec.  405.1044. 
We stated that the general practice is that a consolidated hearing is 
conducted for the appeals of a single appellant. This is supported by 
the reference to ``an'' appellant in current Sec.  405.1044(b), and 
helps ensure the hearing and record is limited to protected information 
that the appellant is authorized to receive. Therefore, we proposed to 
add Sec.  405.1044(c) to provide that consolidated proceedings may only 
be conducted for appeals filed by the same appellant, unless multiple 
appellants aggregated claims to meet the

[[Page 5081]]

amount in controversy requirement in accordance with Sec.  405.1006, 
and the beneficiaries whose claims are at issue have all authorized 
disclosure of their protected information to the other parties and any 
participants. We stated that this would help ensure that beneficiary 
information is protected from disclosure to parties who are not 
authorized to receive it, including when a beneficiary requests a 
hearing for the same claim that has been appealed by a provider or 
supplier, and appeals of other beneficiaries' claims filed by the 
provider or supplier are also pending before the same ALJ or attorney 
adjudicator. We proposed at Sec.  423.2044(c) to adopt a corresponding 
provision for part 423, subpart U proceedings.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received one comment asking whether a decision by 
OMHA's central docket to combine appeals prior to assignment to an ALJ 
can be challenged by the appellant if the appeals involve different 
disputed items, different bases for denial, and different issues, and, 
if so, what the process for that challenge is. The commenter had 
multiple questions about tracking the status and progress of individual 
appeals throughout the appeals process, the ability to separately 
appeal one or more of the individual claims, and rules regarding the 
administrative record in combined cases.
    Response: Proposed Sec.  405.1044 addresses the circumstances under 
which the proceedings for multiple ALJ appeals may be consolidated into 
one hearing, as well as the option for an ALJ or attorney adjudicator 
to make a consolidated decision and record, whether or not a hearing 
was conducted. Both of these actions would occur after assignment of 
the individual appeals to an ALJ or attorney adjudicator, either at the 
request of the appellant with the ALJ's or attorney adjudicator's 
approval or on the ALJ's or attorney adjudicator's own motion. However, 
we believe the commenter's question relates to the combination--not 
consolidation--of appealed reconsiderations under one ALJ appeal number 
prior to assignment to an ALJ or attorney adjudicator. OMHA internal 
case processing guidance permits the combination of appealed 
reconsiderations under a single ALJ appeal number prior to assignment 
for administrative efficiency when certain criteria are met. The 
commenter may review Chapter II-2 of the OCPM, which is available to 
the public on the OMHA Web site (www.hhs.gov/omha), for more 
information on docketing and assignment of appeals, including combining 
appeals prior to assignment. Because the proposed changes to Sec.  
405.1044 relate to consolidation rather than combination of appeals 
prior to assignment, the commenters specific questions regarding the 
combination of appeals are outside of the scope of the proposed rule.
    Comment: We received two comments suggesting that the proposals go 
further and permit consolidation of all of an appellant's pending 
appeals at OMHA on the same issue, at the appellant's request, 
regardless of whether they are assigned to the same ALJ.
    Response: We believe that proposed Sec. Sec.  405.1044 and 
423.2044, which we are finalizing in this rule, strike the appropriate 
balance between promoting administrative efficiency and maintaining 
rotational assignments, as well as allowing OMHA to balance workload 
among its ALJs and attorney adjudicators. Sections 405.1044 and 
423.2044 contemplate that consolidation of proceedings is only 
available with respect to appeals pending before the same ALJ. We 
believe that allowing parties to request consolidation of proceedings 
that have been assigned to multiple adjudicators would be contrary to 
the concept of rotational assignment, disrupt the workflow of 
adjudicators, cause delays for other appellants, and add inefficiency 
to the process by requiring additional administrative resources to 
process such requests and reassign the appeals. However, as discussed 
previously, an appellant may request combination of multiple appealed 
reconsiderations on its request for hearing and, if the criteria for 
combination are met, OMHA accommodates such a request to the extent 
feasible by combining the appealed reconsiderations under a single ALJ 
appeal number. If OMHA is unable to accommodate the request and 
multiple appeals are established and assigned to a single adjudicator, 
the adjudicator can then consider consolidation of the appeals.
    Comment: We received multiple comments that discussed the desire 
for uniform procedures for creating records in consolidated 
proceedings, conducting consolidated hearings, and creating audio 
recordings of consolidated appeals, as well as requested additional 
guidance for adjudicators on issuing consolidated decisions that 
contain separate factual findings, legal authorities, and legal 
analysis for each appeal at issue. One commenter urged the agency to 
provide additional training and oversight on consolidated proceedings 
and requested that the agency make available a public resource 
regarding consolidated proceedings.
    Response: The proposed revisions to Sec. Sec.  405.1044 and 
423.2044 were intended to reduce confusion and provide more consistent 
procedures for conducting consolidated hearings, and creating and 
maintaining records for consolidated appeals. OMHA is also in the 
process of developing the OCPM, a reference guide outlining the day-to-
day operating instructions, policies, and procedures of the agency for 
adjudicating appeals under the rules. The OCPM describes OMHA case 
processing procedures in greater detail and provides frequent examples 
to aid understanding. This resource, which is available to the public 
on the OMHA Web site (www.hhs.gov/omha), includes detailed information 
on creating the administrative record both when an ALJ decides to make 
a consolidated decision and record, and when the ALJ decides to issue 
separate decisions and records. OMHA provides training to its ALJs, 
attorneys, and other staff to help ensure understanding and compliance 
with all regulations applicable to processing appeals, and will provide 
training on all aspects of this final rule.
    Comment: One commenter expressed concern that the proposed language 
in Sec.  405.1044(c) would complicate the consolidation of proceedings 
involving multiple appellants. The commenter noted that a provider's 
ability to consolidate proceedings will be hindered if it is unable to 
secure the necessary permissions from beneficiaries and asked for 
clarification on whether one of the HIPAA exceptions permitting 
providers to release protected health information in certain 
circumstances, even absent consent, may apply in this situation. 
Finally, the commenter recommended that the proposed regulation be 
revised to require only that a provider take ``reasonable'' steps to 
obtain such consent but that if consent cannot be obtained, that the 
parties will enter into a protective order to prohibit the unauthorized 
release of information and to require that the records be redacted as 
much as possible by removing, for example, the beneficiary's name, 
address, date of birth, and social security number. The commenter 
argued that by modifying Sec.  405.1044(c) to allow for consolidation 
in proceedings involving multiple appellants subject to protective 
orders and redacted documentation, if necessary, the appeals process 
would be even more efficient while still ensuring beneficiary

[[Page 5082]]

information is as protected as possible in those circumstances.
    Response: We believe the commenter is confusing an ``appellant'' 
with a ``party'' and we do not agree that Sec.  405.1044(c) places 
unnecessary limits on the ability to consolidate proceedings for 
appeals filed by multiple appellants. An appellant is the party that 
files a request for hearing or request for review of a dismissal. For 
example, a provider that is a party may file a request for hearing for 
a service that it furnished to the beneficiary, who is also a party; in 
that instance, the provider is then also the appellant. In addition, if 
the provider files multiple requests for hearing for services that it 
furnished to different beneficiaries, the provider is the appellant in 
those appeals and proposed Sec.  405.1044(c) would not apply because a 
single appellant is involved. However, proposed Sec.  405.1044(c) would 
apply if multiple providers filed requests for hearing that were being 
consolidated because, in this case, there would be multiple appellants. 
In this situation, the providers may not have the necessary permissions 
from the beneficiaries to whom an individual provider did not furnish a 
service. We have a responsibility to protect individuals' personally 
identifiable information and protected health information, and that 
responsibility takes priority over any potential gains in 
administrative efficiency. As we note in the summary above, the purpose 
of the consolidation rules is to reduce time and expense for appellants 
and the government. While the commenter suggests that there would be 
even greater administrative efficiencies gained if appeals from 
multiple appellants were also subject to consolidation without the 
limitations of Sec.  405.1044(c), we believe that the limitations of 
Sec.  405.1044(c) are necessary in order to protect personally 
identifiable information and protected health information. Moreover, we 
believe that the commenter's alternative suggestions for safeguarding 
protected health information--entering protective orders and redacting 
certain information--would require additional administrative time and 
energy and, therefore, are contrary to the stated goal of 
administrative efficiency.
    Although there may be rare and unusual circumstances where it may 
be permissible to release the protected health information of an 
individual to other parties (for example, a court order expressly 
authorizing such disclosure to litigants), we do not believe there are 
any generally applicable exceptions to the HIPAA privacy rules that 
would apply or be appropriate in this case to permit the consolidation 
of proceedings involving multiple appellants where the appellants are 
unable to obtain authorization from the beneficiaries whose claims are 
at issue to disclose their protected information to the other parties 
and any participants. Consolidation of proceedings where multiple 
appellants are involved may result in disclosure of an individual's 
protected health information to other individuals, including other 
involved beneficiaries, who do not have a right to receive the 
information and have no use for the information.
    Comment: We received one comment in support of proposed Sec.  
405.1044(c) and the language that limits consolidated proceedings to 
appeals filed by the same appellant, unless multiple appellants have 
aggregated claims to meet the amount in controversy and the 
beneficiaries whose claims are at issue have authorized disclosure of 
protected information to other parties and any participants.
    Response: We thank the commenter for its support.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1044 and 423.2044 as proposed without 
modification.
v. Notice of Decision and Effect of an ALJ's or Attorney Adjudicator's 
Decision (Sec. Sec.  405.1046, 405.1048, 423.2046, and 423.2048)
    Current Sec. Sec.  405.1046 and 423.2046 describe the requirements 
for a decision and providing notice of the decision, the content of the 
notice, the limitation on a decision that addresses the amount of 
payment for an item or a service, the timing of the decision, and 
recommended decisions. Current Sec. Sec.  405.1048 and 423.2048 
describe the effects of an ALJ's decision. However, the current 
sections only apply to a decision on a request for hearing, leaving 
ambiguities when issuing a decision on a request for review of a QIC or 
IRE dismissal. We proposed to consolidate the provisions of each 
section that apply to a decision on a request for hearing under 
proposed Sec. Sec.  405.1046(a), 405.1048(a), 423.2046(a) and 
423.2048(a), with further revisions discussed below, and introduce new 
Sec. Sec.  405.1046(b), 405.1048(b), 423.2046(b) and 423.2048(b) to 
address a decision on a request for review of a QIC or IRE dismissal, 
as well as to revise the titles and provisions of the sections to 
expand their coverage to include decisions by attorney adjudicators, as 
proposed in section II.B of the proposed rule (and discussed in section 
II.A.2 above). We also proposed to remove current Sec.  405.1046(d), 
which addresses the timing of a decision on a request for hearing 
because it is redundant with Sec.  405.1016 and could lead to confusion 
if a different adjudication period applies, such as a 180-calendar day 
period for an escalated request for QIC reconsideration, or if no 
adjudication period applies, such as when the period is waived by the 
appellant. Similarly, we proposed to remove current Sec. Sec.  
423.2046(a)(1) and (d) because the adjudication time frames discussed 
in the provisions are redundant with provisions in proposed Sec.  
423.2016. In addition, we proposed to re-designate current Sec. Sec.  
405.1046(e) and 423.2046(e), as proposed Sec. Sec.  405.1046(c) and 
423.2046(c) respectively, to reflect the revised structure of proposed 
Sec. Sec.  405.1046 and 423.2046. 81 FR 43790, 43842-43843.
    Current Sec.  405.1046 states that an ALJ will issue a decision 
unless a request for hearing is dismissed. We proposed to revise Sec.  
405.1046(a) to state that an ALJ or attorney adjudicator would issue a 
decision unless the request for hearing is dismissed or remanded in 
order to accommodate those situations where the ALJ or attorney 
adjudicator remands a case to the QIC. We stated in the proposed rule 
that there has been confusion regarding the content requirements of the 
decision itself, as well as whether the findings or conclusions in a 
QIC reconsideration or the arguments of the parties may be referenced 
or adopted in the decision by reference. We stated that we believe that 
while the issues that are addressed in a decision are guided by the 
reconsideration, as well as the initial determination and 
redetermination, and a party may present arguments in a framework that 
reflects recommended findings and conclusions, the concept of a de novo 
review requires an ALJ or attorney adjudicator to make independent 
findings and conclusions. To address this confusion, we proposed in 
Sec.  405.1046(a) to require that the decision include independent 
findings and conclusions to clarify that the ALJ or attorney 
adjudicator must make independent findings and conclusions, and may not 
merely incorporate the findings and conclusions offered by others, 
though the ALJ or attorney adjudicator may ultimately make the same 
findings and conclusions. As discussed in and for the reasons stated in 
section III.A.3.t of the proposed rule and II.B.3.t of this final rule 
above, proposed Sec.  405.1046(a)(2)(ii) would also require that if new 
evidence was submitted for the first time at the

[[Page 5083]]

OMHA level and subject to a good cause determination pursuant to 
proposed Sec.  405.1028, the new evidence and good cause determination 
would be discussed in the decision. We proposed at Sec.  423.2046(a) to 
adopt corresponding revisions for decisions on requests for hearing 
under part 423, subpart U, except the proposals related to discussing 
new evidence and good cause determinations related to new evidence 
because there are no current requirements to establish good cause for 
submitting new evidence in part 423, subpart U proceedings.
    Current Sec.  405.1046(a) requires that a decision be mailed. As 
OMHA transitions to a fully electronic case processing and adjudication 
environment, new options for transmitting a decision to the parties and 
CMS contractors may become available, such as through secure portals 
for parties or through inter-system transfers for CMS contractors. We 
proposed in Sec.  405.1046(a) to revise the requirement that a decision 
be mailed to state that OMHA ``mails or otherwise transmits a copy of 
the decision,'' to allow for additional options to transmit the 
decision as technologies develop. We proposed to revise Sec.  
423.2046(a) to adopt a corresponding revision for sending a decision 
under part 423, subpart U.
    Current Sec.  405.1046(a) also requires that a copy of the decision 
be sent to the QIC that issued the reconsideration. However, if the 
decision is issued pursuant to escalation of a request for a 
reconsideration, no reconsideration was issued. To address this 
circumstance, we proposed in Sec.  405.1046(a) that the decision would 
be issued to the QIC that issued the reconsideration or from which the 
appeal was escalated. In addition, we proposed in Sec.  405.1046(a) to 
replace ``reconsideration determination'' with ``reconsideration'' for 
consistency in referencing the QIC's action. Current Sec.  405.1046(a) 
also requires that a copy of the decision be sent to the contractor 
that made the initial determination. However, this requirement adds to 
the administrative burden on OMHA and we stated in the proposed rule we 
believed it was unnecessary in light of the requirement that a copy of 
the decision be sent to the QIC and the original decision is forwarded 
as part of the administrative record to another CMS contractor to 
effectuate the decision. Thus, we proposed in Sec.  405.1046(a) to 
remove the requirement to send a copy of the decision to the contractor 
that issued the initial determination. In addition, we proposed in 
Sec.  423.2046(a) to replace ``reconsideration determination'' with 
``reconsideration'' for consistency in referencing the IRE's action in 
part 423, subpart U proceedings, but we did not propose to incorporate 
other changes proposed for Sec.  405.1046(a) in proposed Sec.  
423.2046(a) because: (1) Escalation is not available in part 423, 
subpart U proceedings; and (2) the Part D plan sponsor, which makes the 
initial coverage determination, has an interest in receiving and 
reviewing ALJ and attorney adjudicator decisions related to an 
enrollee's appeal of drug coverage.
    As discussed above, we proposed to revise Sec.  405.1046(b) to 
explain the process for making a decision on a request for review of a 
QIC dismissal. In accordance with proposed Sec.  405.1004, we proposed 
in Sec.  405.1046(b)(1) that unless the ALJ or attorney adjudicator 
dismisses the request for review of a QIC's dismissal or the QIC's 
dismissal is vacated and remanded, the ALJ or attorney adjudicator 
issues a written decision affirming the QIC's dismissal. We proposed in 
Sec.  405.1046(b)(1) that OMHA would mail or otherwise transmit a copy 
of the decision to all the parties that received a copy of the QIC's 
dismissal because, as we stated in the proposed rule, we believe that 
the QIC would appropriately identify the parties who have an interest 
in the dismissal, and that notice of the decision on a request for 
review of a QIC dismissal to any additional parties is unnecessary. We 
also stated that we believe that notice to the QIC is not necessary 
when its dismissal is affirmed because it has no further obligation to 
take action on the request for reconsideration that it dismissed. We 
proposed in Sec.  405.1046(b)(2)(i) that the decision affirming a QIC 
dismissal must describe the specific reasons for the determination, 
including a summary of the evidence considered and applicable 
authorities, but did not propose to require a summary of clinical or 
scientific evidence because such evidence is not used in making a 
decision on a request for a review of a QIC dismissal. In addition, we 
proposed that Sec.  405.1046(b)(2)(ii) and (iii) would explain that the 
notice of decision would describe the procedures for obtaining 
additional information concerning the decision, and would provide 
notification that the decision is binding and not subject to further 
review unless the decision is reopened and revised by the ALJ or 
attorney adjudicator. We proposed to revise Sec.  423.2046(b) to adopt 
corresponding provisions for a decision on requests for review of an 
IRE dismissal under part 423, subpart U, except that the notice of 
decision will only be sent to the enrollee because only the enrollee is 
a party.
    We proposed to revise the title of current Sec.  405.1048 to read 
``The effect of an ALJ's or attorney adjudicator's decision'' and to 
replace the current introductory statement in Sec.  405.1048(a) that 
``The decision of the ALJ is binding on all parties to the hearing'' 
with ``The decision of the ALJ or attorney adjudicator is binding on 
all parties'' to make the subsection applicable to decisions by 
attorney adjudicators and because the parties are parties to the 
decision regardless of whether a hearing was conducted. We also 
proposed in Sec.  405.1048(b) that the decision of the ALJ or attorney 
adjudicator on a request for review of a QIC dismissal is binding on 
all parties unless the decision is reopened and revised by the ALJ or 
attorney adjudicator under the procedures explained in Sec.  405.980. 
We proposed to revise Sec.  423.2048 to adopt corresponding provisions 
for the effects of ALJ and attorney adjudicator decisions under part 
423, subpart U.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: One commenter suggested that the contents of the notice of 
decision should include an explanation of why any evidence was excluded 
from the record, especially in the absence of any contradictory 
evidence. The commenter also suggested that OMHA should continue to 
send the notice of decision to the CMS contractor that made the initial 
determination because the decision provides feedback that can assist 
the contractor in making quality claim decisions.
    Response: As discussed above and as provided for in proposed Sec.  
405.1046(a)(2)(ii), any new evidence submitted for the first time at 
the OMHA level and subject to a good cause determination pursuant to 
proposed Sec.  405.1028 will be discussed in the ALJ's or attorney 
adjudicator's decision. The decision will include a discussion of the 
good cause determination, regardless of whether good cause was found. 
We disagree that the presence or absence of contradictory evidence in 
the record would have any bearing on the ALJ's or attorney 
adjudicator's decision as to whether the party had good cause to submit 
evidence for the first time at the OMHA level. The absence of 
contradictory evidence would not explain why a party was unable to 
obtain and submit the evidence before the QIC issued its 
reconsideration, and would not fall under any of the other situations 
specified in Sec.  405.1028(a)(2) for when an ALJ may find good cause

[[Page 5084]]

for the submission of evidence for the first time at the OMHA level.
    With respect to sending a copy of the decision to the contractor 
that made the initial determination, as stated above and in the 
proposed rule, we believe that sending the ALJ's or attorney 
adjudicator's decision to a CMS contractor to effectuate the decision 
and a copy to the QIC will be sufficient to inform CMS and its 
contractors of the decision. We believe that in the majority of cases 
the benefit of sending an additional copy to the contractor that made 
the initial determination is outweighed by the administrative burden 
and costs, and CMS is in the best position to determine how decisions 
are shared among its contractors and whether or how those decisions 
should be used by its contractors.
    Comment: Two commenters recommended explicitly prohibiting ALJs and 
attorney adjudicators from incorporating findings or conclusions 
offered by others in their decisions.
    Response: We appreciate the commenters' support for our effort to 
clarify that the ALJ or attorney adjudicator must make independent 
findings and conclusions, and may not merely incorporate the findings 
and conclusions offered by others. However, we do not believe it is 
necessary to rephrase this provision as a prohibition on incorporating 
the findings or conclusions of others. We believe that our proposal, to 
require that the decision include independent findings and conclusions, 
adequately expresses the requirement for de novo review, and are 
concerned that the language suggested by the commenter would 
unnecessarily preclude an ALJ or attorney adjudicator from including 
discussion of others' findings and conclusions in his or her decision 
for the purpose of discussing or analyzing them in the process of 
making his or her independent findings and conclusions. We believe the 
proposed language at Sec.  405.1046(a), which we are finalizing in this 
rule, would preclude an ALJ or attorney adjudicator from merely 
adopting findings and conclusions offered by others, while providing 
the ALJ or attorney adjudicator with the flexibility to discuss or 
analyze the findings and conclusions offered by others, if appropriate 
in a specific appeal, in the process of making his or her independent 
findings and conclusions.
    Comment: Two commenters urged HHS to ensure that beneficiaries 
always receive a written decision by regular mail, even when other 
methods of transmittal are available.
    Response: The proposal to revise the current requirement in 
Sec. Sec.  405.1046(a) and 423.2046(a)(3) that a decision be mailed, to 
require that OMHA ``mails or otherwise transmits a copy of the 
decision,'' will help ensure that OMHA has the flexibility to work with 
appellants to take advantage of developing technologies. However, these 
added flexibilities will be based on appellants, including 
beneficiaries, opting into receiving notices and correspondences by 
means other than regular mail. For example, if a beneficiary 
affirmatively chooses to receive a decision via a secure internet 
portal instead of by mail, it would waste resources and be inefficient 
to require OMHA to also send a paper copy of the decision to the 
beneficiary by mail. The flexibility to work with developing 
technologies will allow OMHA to increase efficiency as we transition to 
a fully electronic case processing and adjudication environment, and 
provide all appellants with new options for receiving notices and other 
correspondence.
    Comment: One commenter suggested adding a provision to Sec. Sec.  
405.1046(b)(2) and 423.2046(b)(2) explaining that appellants have the 
right to appeal a decision affirming a QIC or IRE dismissal to the 
Council, including instructions on how to initiate an appeal under this 
section and how to request a copy of the administrative record.
    Response: We do not believe that it is appropriate to add a 
provision to Sec. Sec.  405.1046(b)(2) and 423.2046(b)(2) explaining 
how to appeal a decision affirming a QIC or IRE dismissal to the 
Council because a decision affirming a QIC or IRE dismissal is not 
appealable to the Council. Incorporating provisions from current 
Sec. Sec.  405.1004(c) and 423.2004(c) that make a decision on a QIC or 
IRE dismissal not subject to further review, proposed Sec. Sec.  
405.1046(b)(2)(iii) and 423.2046(b)(2)(iii) explain that a decision 
affirming a QIC or IRE dismissal is binding and not subject to further 
review, unless the decision is reopened and revised by the ALJ or 
attorney adjudicator. We explained in the preamble to the 2005 Interim 
Final Rule implementing current Sec.  405.1004(c) that limiting review 
of dismissals to one level of appeal balances the need for review with 
the need for finality. 70 FR 11420, 11444. Because dismissals are based 
on procedural circumstances involved with the appeal request rather 
than the merits of whether the claim is payable, we determined that 
further review was not necessary, and we did not propose any changes to 
the limitation on review of dismissals in this final rule.
    With respect to the commenter's suggestion to include instructions 
on how to obtain a copy of the administrative record in a notice of 
decision, we note that Sec. Sec.  405.1046(a)(2)(iii), (b)(2)(ii), 
423.2046(a)(2)(ii), and (b)(2)(ii), as finalized, require that a notice 
of decision must include the procedures for obtaining additional 
information concerning the decision, which would include information on 
how to obtain a copy of the administrative record. As discussed in 
section II.B.3.t of this final rule above, after a case is adjudicated, 
OMHA releases custody of the administrative record and forwards it to a 
CMS contractor or SSA. We will explore the possibility of adding 
contact information for the CMS contractor or SSA to the notice of 
decision; however, we believe that this would best be managed through 
internal policy at OMHA and not as part of this final rule.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1046, 405.1048, 423.2046, and 423.2048 as 
proposed without modification.
w. Removal of a Hearing Request From an ALJ to the Council (Sec. Sec.  
405.1050 and 423.2050)
    Current Sec. Sec.  405.1050 and 423.2050 explain the process for 
the Council to assume responsibility for holding a hearing if a request 
for hearing is pending before an ALJ. We proposed to replace ``an ALJ'' 
with ``OMHA'' in the section title, and to replace ``pending before an 
ALJ'' with ``pending before OMHA,'' and ``the ALJ send'' with ``OMHA 
send'' in the section text. In accordance with section II.B of the 
proposed rule and II.A.2 of this final rule above, these proposed 
revisions would provide that a request for hearing may be removed to 
the Council regardless of whether the request is pending before an ALJ 
or an attorney adjudicator. We did not propose to replace the last 
instance of ``ALJ'' in the section text because it refers specifically 
to hearings conducted by an ALJ. 81 FR 43790, 43843.
    We received no comments on these proposals, other than: (1) 
Comments discussed in section II.A.2 of this final rule above related 
to our general proposals to provide authority for attorney adjudicators 
to issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or

[[Page 5085]]

appealed in the same manner as equivalent decisions and dismissals 
issued by ALJs; and (2) comments discussed in section II.A.4 of this 
final rule above related to our general proposal to reference OMHA or 
an OMHA office, in place of current references to an unspecified 
entity, ALJs, and ALJ hearing offices, when a reference to OMHA or an 
OMHA office provides a clearer explanation of a topic. Accordingly, for 
the reasons discussed above and in the proposed rule, we are finalizing 
the changes to Sec. Sec.  405.1050 and 423.2050 as proposed without 
modification.
x. Dismissal of a Request for Hearing or Request for Review and Effect 
of a Dismissal of a Request for Hearing or Request for Review 
(Sec. Sec.  405.1052, 405.1054, 423.2052 and 423.2054)
    Current Sec. Sec.  405.1052 and 423.2052 describe the circumstances 
in which a request for hearing may be dismissed and the requirements 
for a notice of dismissal, and current Sec. Sec.  405.1054 and 423.2054 
describe the effect of a dismissal of a request for hearing. However, 
both current sections apply to a dismissal of a request for hearing, 
leaving ambiguities when issuing a dismissal of a request for review of 
a QIC or IRE dismissal. We proposed to maintain the provisions of each 
section that apply to a dismissal of a request for hearing in proposed 
Sec. Sec.  405.1052(a), 405.1054(a), 423.2052(a) and 423.2054(a), with 
further revisions discussed below. 81 FR 43790, 43843-43845. We 
proposed to introduce new Sec. Sec.  405.1052(b), 405.1054(b), 
423.2052(b) and 423.2054(b) to address a dismissal of a request for 
review of a QIC or IRE dismissal. However, we proposed to re-designate 
and revise Sec. Sec.  405.1052(a)(1) and 423.2052(a)(1), as discussed 
below, and re-designate the remaining paragraphs in Sec. Sec.  
405.1052(a) and 423.2052(a) accordingly. We also proposed to remove the 
introductory language to current Sec. Sec.  405.1052 and 423.2052 
because it is unnecessary to state that a dismissal of a request for 
hearing is in accordance with the provisions of the section, as the 
provisions are themselves binding authority and state in full when a 
request for hearing may be dismissed. In addition, we proposed to 
revise the titles of the sections to expand their coverage to include 
dismissals of requests to review a QIC or IRE dismissal. Furthermore, 
we proposed to re-designate and revise current Sec. Sec.  405.1052(b) 
and 423.2052(b), which describe notices of dismissal, as proposed 
Sec. Sec.  405.1052(d) and 423.2052(d) respectively, to reflect the 
revised structure of proposed Sec. Sec.  405.1052 and 423.2052. We also 
proposed to remove current Sec.  423.2052(a)(8) and (c) because current 
Sec.  423.2052(a)(8) restates current Sec.  423.1972(c)(1), which 
already provides that a request for hearing will be dismissed if the 
request itself shows that the amount in controversy is not met, and 
current Sec.  423.2052(c) restates current Sec.  423.1972(c)(2), which 
already provides that if after a hearing is initiated, the ALJ finds 
that the amount in controversy is not met, the ALJ discontinues the 
hearing and does not rule on the substantive issues raised in the 
appeal. We noted that a dismissal would be warranted in these 
circumstances pursuant to current Sec.  423.2052(a)(3), which is 
carried over as proposed Sec.  423.2052(a)(2) because the enrollee does 
not have a right to a hearing if the amount in controversy is not met.
    We proposed to re-designate and revise current Sec. Sec.  
405.1052(a)(1) and 423.2052(a)(1) as proposed Sec. Sec.  405.1052(c) 
and 423.2052(c) to separately address dismissals based on a party's 
withdrawal. We proposed in Sec. Sec.  405.1052(c) and 423.2052(c) to 
include withdrawals of requests to review a QIC dismissal because we 
also proposed to add provisions to address other dismissals of those 
requests at Sec. Sec.  405.1052(b) and 423.2052(b). We also proposed 
that an ALJ or attorney adjudicator may dismiss a request for review of 
a QIC dismissal based on a party's withdrawal of his or her request 
because as proposed in section II.B of the proposed rule (and discussed 
in section II.A.2 above), both ALJs and attorney adjudicators would be 
able to adjudicate requests to review a QIC dismissal. In addition, we 
proposed that an ALJ or attorney adjudicator may dismiss a request for 
hearing based on a party's withdrawal of his or her request. As 
discussed in section II.B of the proposed rule and II.A.2 of this final 
rule above, we believe that well-trained attorneys can efficiently 
perform a review of these requests and issue dismissals. We stated in 
the proposed rule that we believe using attorney adjudicators to the 
maximum extent possible would help OMHA be more responsive to 
appellants and allow ALJs to focus on conducting hearings and issuing 
decisions. We also proposed to revise the language in current 
Sec. Sec.  405.1052(a)(1) and 423.2052(a)(1) (as re-designated in 
proposed Sec. Sec.  405.1052(c) and 423.2052(c)) to (1) replace 
``notice of the hearing decision'' with ``notice of the decision, 
dismissal or remand'' to reflect that a decision may be issued without 
a hearing, and to reflect other possible outcomes of the proceeding 
(dismissal and remand), and (2) clarify that a request to withdraw a 
request for hearing may be made orally at a hearing before the ALJ 
because only an ALJ may conduct a hearing.
    Current Sec.  405.1052(a)(2) describes three possible alternatives 
for dismissing a request for hearing when the party that requested the 
hearing, or the party's representative, does not appear at the time and 
place set for the hearing. We stated in the proposed rule that the 
current alternatives have caused confusion for appellants in 
understanding whether they are required to submit a statement 
explaining a failure to appear. Further, current provisions do not 
require evidence in the record to document an appellant was aware of 
the time and place of the hearing, and we stated that this has resulted 
in remands from the Council. We proposed to simplify the provision to 
provide two alternatives, and to require that contact has been made 
with an appellant and documented, or an opportunity to provide an 
explanation for failing to appear has been provided before a request 
for hearing is dismissed for failing to appear at the hearing. We 
proposed at Sec.  405.1052(a)(1)(i) to set forth the first alternative 
which would provide that a request for hearing may be dismissed if the 
party that filed the request was notified before the time set for 
hearing that the request for hearing might be dismissed for failure to 
appear, the record contains documentation that the party acknowledged 
the notice of hearing, and the party does not contact the ALJ within 10 
calendar days after the hearing or does contact the ALJ but does not 
provide good cause for not appearing. We proposed at Sec.  
405.1052(a)(1)(ii) to set forth the second alternative which would 
provide that a request for hearing may be dismissed if the record does 
not contain documentation that the party acknowledged the notice of 
hearing, but the ALJ sends a notice to the party at his or her last 
known address asking why the party did not appear, and the party does 
not respond to the ALJ's notice within 10 calendar days after receiving 
the notice or does respond but does not provide good cause for not 
appearing. In either circumstance, we proposed to maintain in Sec.  
405.1052(a)(1) the current standard that in determining whether good 
cause exists, the ALJ considers any physical, mental, educational, or 
linguistic limitations that the party may have identified. We stated in 
the proposed rule that we believed

[[Page 5086]]

proposed Sec.  405.1052(a)(1) would help ensure that appellants have 
consistent notice of a possible dismissal for failure to appear and an 
opportunity to provide a statement explaining why they did not appear 
before a dismissal is issued. We proposed to revise Sec.  
423.2052(a)(1) to adopt corresponding revisions for dismissing a 
request for hearing under part 423, subpart U.
    Current OMHA policy provides that a request for hearing that does 
not meet the requirements of current Sec.  405.1014 may be dismissed by 
an ALJ after an opportunity is provided to the appellant to cure an 
identified defect (OCPM, division 2, chapter 3, section II-3-6 D and 
E). We stated that a dismissal is appropriate because as an 
administrative matter, the proceedings on the request do not begin 
until the information necessary to adjudicate the request is provided 
and the appellant sends a copy of the request to the other parties. 
Additionally, a request cannot remain pending indefinitely once an 
appellant has demonstrated that he or she is unwilling to provide the 
necessary information or to send a copy of the request to the other 
parties. Therefore, we proposed at Sec.  405.1052(a)(7) to explain that 
a request for hearing may be dismissed if the request is not complete 
in accordance with proposed Sec.  405.1014(a)(1) or the appellant did 
not send copies of its request to the other parties in accordance with 
proposed Sec.  405.1014(d), after the appellant is provided with an 
opportunity to complete the request and/or send copies of the request 
to the other parties. We stated in the proposed rule that we believed 
adding this provision would emphasize the importance of following the 
requirements for filing a request for hearing, and clarify the outcome 
if the requirements are not met and the appellant does not cure 
identified defects after being provided with an opportunity to do so. 
We proposed at Sec.  423.2052(a)(7) to adopt a corresponding provision 
for dismissing a request for hearing under part 423, subpart U.
    As discussed above, we proposed to add Sec.  405.1052(b) to explain 
when a request for review of a QIC dismissal would be dismissed. Under 
proposed Sec.  405.1052(b), a request for review could be dismissed in 
the following circumstances: (1) The person or entity requesting the 
review has no right to the review of the QIC dismissal under proposed 
Sec.  405.1004; (2) the party did not request a review within the 
stated time period and the ALJ or attorney adjudicator has not found 
good cause for extending the deadline; (3) a beneficiary or 
beneficiary's representative filed the request for review and the 
beneficiary passed away while the request for review is pending and all 
of the following criteria apply: (i) a surviving spouse or estate has 
no remaining financial interest in the case, (ii) no other individuals 
or entities have a financial interest in the case and wish to pursue an 
appeal, and (iii) no other individual or entity filed a valid and 
timely request for a review of the QIC dismissal; and (4) the 
appellant's request for review is not complete in accordance with 
proposed Sec.  405.1014(a)(1) or the appellant does not send a copy of 
the request to the other parties in accordance with proposed Sec.  
405.1014(d), after being provided with an opportunity to complete the 
request and/or send a copy of the request to the other parties. We 
stated in the proposed rule that we believed these provisions would 
encompass the reasons for dismissing a request for a review of a QIC 
dismissal, and are necessarily differentiated from dismissing a request 
for hearing because, as explained in section III.A.3.c of the proposed 
rule and II.B.3.c of this final rule above, we also stated that we did 
not believe there is a right to a hearing for requests for a review of 
a QIC dismissal. We proposed at Sec.  423.2052(b) to adopt 
corresponding provisions for dismissing requests for a review of an IRE 
dismissal under part 423, subpart U proceedings.
    As discussed above, current Sec.  405.1052(b) describes the 
requirements for providing notice of the dismissal and we proposed to 
re-designate the paragraph as proposed Sec.  405.1052(d). For the same 
reasons discussed in section III.A.3.v of the proposed rule and 
II.B.3.v of this final rule above for allowing a notice of a decision 
to be provided by means other than mail, we proposed in Sec.  
405.1052(d) that OMHA may mail or ``otherwise transmit'' notice of a 
dismissal. We proposed to revise Sec.  423.2052(d) to adopt a 
corresponding revision for notices of dismissal under part 423, subpart 
U.
    Current Sec.  405.1052(b) requires notice of the dismissal to be 
sent to all parties at their last known address. However, we stated in 
the proposed rule that we believed that requirement is overly inclusive 
and causes confusion by requiring notice of a dismissal to be sent to 
parties who have not received a copy of the request for hearing or 
request for review that is being dismissed. Thus, we proposed to revise 
Sec.  405.1052(d) to state that the notice of dismissal is sent to the 
parties who received a copy of the request for hearing or request for 
review because only those parties are on notice that a request was 
pending. In addition, we proposed at Sec.  405.1052(d) that if a 
party's request for hearing or request for review is dismissed, the 
appeal would proceed with respect to any other parties who also filed a 
valid request for hearing or review regarding the same claim or 
disputed matter. This would address the rare circumstance in which more 
than one party submits a request, but the request of one party is 
dismissed. In that circumstance, the appeal proceeds on the request 
that was not dismissed, and the party whose request was dismissed 
remains a party to the proceedings but does not have any rights 
associated with a party that filed a request, such as the right to 
escalate a request for hearing. We did not propose a corresponding 
revision to Sec.  423.2052(c) because only the enrollee is a party to 
an appeal under part 423, subpart U.
    Current Sec.  405.1052 does not include authority for an ALJ to 
vacate his or her own dismissal, and instead requires an appellant to 
request the Council review an ALJ's dismissal. As explained in the 2005 
Interim Final Rule (70 FR 11465), the authority for an ALJ to vacate 
his or her own dismissal was not regarded as an effective remedy 
because the record was no longer in the ALJ hearing office, and the 
resolution was complicated when appellants simultaneously asked the ALJ 
to vacate the dismissal order and asked the Council to review the 
dismissal. However, we stated that in practice, the lack of the 
authority for an ALJ to vacate his or her own dismissal has constrained 
ALJs' ability to correct erroneous dismissals that can be easily 
remedied by the ALJ, and has caused unnecessary work for the Council. 
We proposed to add Sec.  405.1052(e) to provide the authority for an 
ALJ or an attorney adjudicator, as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 above), to vacate his or 
her own dismissal within 6 months of the date of the notice of 
dismissal, in the same manner as a QIC can vacate its own dismissal. We 
stated in the proposed rule that we believed that this authority would 
reduce unnecessary appeals to the Council and provide a more timely 
resolution of dismissals for appellants, whether the dismissal was 
issued by an ALJ or attorney adjudicator. We also noted that the 
coordination for obtaining the administrative record and addressing 
instances in which an appellant also requests a review of the dismissal 
by the Council can be addressed through operational coordination among 
CMS, OMHA, and the DAB. We proposed in

[[Page 5087]]

Sec.  423.2052(e) to adopt a corresponding provision for vacating a 
dismissal under part 423, subpart U.
    To align the effects of a dismissal with proposed Sec.  
405.1052(e), we proposed to add Sec.  405.1054(a) to state that the 
dismissal of a request for hearing is binding unless it is vacated by 
the ALJ or attorney adjudicator under Sec.  405.1052(e), in addition to 
the current provision that allows the dismissal to be vacated by the 
Council under Sec.  405.1108(b). To explain the effect of a dismissal 
of a request for review of a QIC dismissal, consistent with Sec.  
405.1004, we proposed in Sec.  405.1054(b) to provide that the 
dismissal of a request for review of a QIC dismissal of a request for 
reconsideration is binding and not subject to further review unless it 
is vacated by the ALJ or attorney adjudicator under Sec.  405.1052(e). 
We proposed in Sec.  423.2054 to adopt corresponding revisions for the 
effect of dismissals of request for hearing and requests for review of 
an IRE dismissal under part 423, subpart U.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment on this proposal. The commenter 
suggested that additional leeway should be allowed for unrepresented 
beneficiaries to complete a request for hearing and/or send copies of 
the request to the other parties before the request is dismissed, and 
dismissals for failing to meet these requirements should be used 
sparingly. The commenter also stated that the notice of dismissal 
should always be provided to beneficiaries by regular mail in addition 
to any other method of transmission that is used.
    Response: As discussed above and in the proposed rule, we believe 
that the provision allowing for dismissal of an incomplete request for 
hearing or review of a QIC or IRE dismissal is necessary to emphasize 
the importance of the information required for filing a complete 
request, and to clarify the outcome if the required information is not 
provided after an opportunity to complete the request is provided. This 
provision will bring efficiencies to the appeals process by helping to 
ensure that appellants furnish all information necessary to adjudicate 
the request to the adjudicator and the other parties as early in the 
process as possible and preventing appeals from remaining pending 
indefinitely if an appellant has demonstrated an unwillingness to 
complete the request. If there is information missing in a 
beneficiary's request for hearing or review of a QIC or IRE dismissal, 
the beneficiary will receive a letter explaining what information is 
missing, and providing the address and phone number of the OMHA field 
office to contact with any questions. In addition, OMHA maintains a 
dedicated beneficiary help line to assist beneficiaries with questions 
they may have about the appeals process at OMHA, including helping them 
to understand what information is necessary to complete the request.
    However, as discussed in section II.B.3.g.v of this final rule 
above, we agree that unrepresented beneficiaries may have difficulty 
meeting the copy requirement of proposed Sec.  405.1014(d), and should 
be exempt from the consequence of failing to provide a copy of a 
request for hearing or review of a dismissal to the other parties. 
Consequently, we are revising Sec.  405.1052(a)(7) and (b)(4) to 
provide that a request filed by an unrepresented beneficiary will not 
be dismissed if the appellant fails to send a copy of the request to 
the other parties in accordance with proposed Sec.  405.1014(d).
    With respect to the commenter's suggestion to always provide 
beneficiaries with the notice of dismissal by regular mail, we refer 
the commenter to our response to a similar comment in section II.B.3.v 
of this final rule above, where we explain why we do not believe a 
notice of decision sent to a beneficiary under Sec.  405.1046(a) and 
Sec.  423.2046(a) should always be sent by mail in addition to any 
other method of transmission that is used. We believe this explanation 
responds to the commenter's same suggestion with regard to a notice of 
dismissal.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1052, 405.1054, 423.2052 and 423.2054 as 
proposed, with the following modification. We are amending Sec.  
405.1052(a)(7) and (b)(4) to state that a request filed by an 
unrepresented beneficiary will not be subject to dismissal if the 
appellant fails to send a copy of the request to the other parties in 
accordance with Sec.  405.1014(d).
4. Applicability of Medicare Coverage Policies (Sec. Sec.  405.1060, 
405.1062, 405.1063, 423.2062, and 423.2063)
    Current Sec.  405.1060 addresses the applicability of national 
coverage determinations (NCDs) to claim appeals brought under part 405, 
subpart I and provides that an ALJ and the Council may not disregard, 
set aside, or otherwise review an NCD, but may review the facts of a 
particular case to determine whether an NCD applies to a specific claim 
for benefits and, if so, whether the NCD was applied correctly to the 
claim. Current Sec.  405.1062 addresses the applicability of local 
coverage determinations (LCDs) and other policies, and specifies that 
ALJs and the Council are not bound by LCDs, local medical review 
policies (LMRPs), or 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, and if an ALJ or 
the Council declines to follow a policy in a particular case, the ALJ 
or the Council must explain the reasons why the policy was not 
followed. Similarly, current Sec.  423.2062 states that ALJs and the 
Council are not bound by CMS program guidance but will give substantial 
deference to these policies if they are applicable to a particular 
case, and if an ALJ or the Council declines to follow a policy in a 
particular case, the ALJ or the Council must explain the reasons why 
the policy was not followed. Current Sec. Sec.  405.1062 and 423.2062 
also provide that an ALJ or Council decision to disregard a policy 
applies only to the specific claim being considered and does not have 
precedential effect. Further, Sec.  405.1062 states that an ALJ or the 
Council may not set aside or review the validity of an LMRP or LCD for 
purposes of a claim appeal. Current Sec. Sec.  405.1063 and 423.2063 
address the applicability of laws, regulations, and CMS Rulings, and 
provide that all laws and regulations pertaining to the Medicare 
program (and for Sec.  405.1063 the Medicaid program as well), 
including but not limited to Titles XI, XVIII, and XIX of the Act and 
applicable implementing regulations, are binding on ALJs and the 
Council, and consistent with Sec.  401.108, CMS Rulings are binding on 
all HHS components that adjudicate matters under the jurisdiction of 
CMS.
    We proposed to revise Sec. Sec.  405.1060, 405.1062, 405.1063, 
423.2062, and 405.2063 to replace ``ALJ'' or ``ALJs'' with ``ALJ or 
attorney adjudicator'' or ``ALJs or attorney adjudicators'' except in 
the second sentence of Sec.  405.1062(c). 81 FR 43790, 43846. We stated 
that an attorney adjudicator would issue certain decisions and 
dismissals and therefore would apply the authorities addressed by these 
sections. We stated in the proposed rule that requiring the attorney 
adjudicators to apply the authorities in the same manner as an ALJ 
would provide consistency in the adjudication process, regardless of 
who

[[Page 5088]]

is assigned to adjudicate a request for an ALJ hearing or request for 
review of a QIC or IRE dismissal. We did not propose to revise the 
second sentence in current Sec.  405.1062(c) because attorney 
adjudicators would not review or set aside an LCD (or any part of an 
LMRP that constitutes an LCD) in accordance with part 426 (part 426 
appeals are currently heard by ALJs in the Civil Remedies Division of 
the DAB).
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec. Sec.  405.1060, 405.1062, 405.1063, 423.2062, and 423.2063 as 
proposed without modification.
5. Council Review and Judicial Review
a. Council Review: General (Sec. Sec.  405.1100, 423.1974 and 423.2100)
    As described below, we proposed a number of changes to Sec. Sec.  
405.1100, 423.1974 and 423.2100 with respect to Council review, 
generally. 81 FR 43790, 43846-43847. Current Sec.  405.1100 discusses 
the Council review process. Current Sec.  405.1100(a) states that the 
appellant or any other party to the hearing may request that the 
Council review an ALJ's decision or dismissal. We proposed to revise 
Sec.  405.1100(a) to replace ``the hearing'' with ``an ALJ's or 
attorney adjudicator's decision or dismissal,'' and ``an ALJ's decision 
or dismissal,'' with ``the ALJ's or attorney adjudicator's decision or 
dismissal'' because the parties are parties to the proceedings and the 
resulting decision or dismissal regardless of whether a hearing is 
conducted, and as proposed in section II.B of the proposed rule (and 
discussed in section II.A.2 above), an attorney adjudicator would be 
able to issue certain decisions or dismissals for which Council review 
may be requested.
    Current Sec.  423.1974 states that an enrollee who is dissatisfied 
with an ALJ hearing decision may request that the Council review the 
ALJ's decision or dismissal as provided in Sec.  423.2102, and current 
Sec.  423.2100(a) states that consistent with Sec.  423.1974, the 
enrollee may request that the Council review an ALJ's decision or 
dismissal. We proposed to revise Sec.  423.1974 to replace ``ALJ 
hearing decision'' with ``an ALJ's or attorney adjudicator's decision 
or dismissal,'' and to revise Sec. Sec.  423.1974 and 423.2100(a) to 
replace ``ALJ's decision or dismissal'' with ``an ALJ's or attorney 
adjudicator's decision or dismissal'' because the parties are parties 
to the proceedings and resulting decision or dismissal regardless of 
whether a hearing is conducted, and as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 above), an attorney 
adjudicator may issue a decision or dismissal for which Council review 
may be requested.
    Current Sec.  405.1100(b) provides that under the circumstances set 
forth in Sec. Sec.  405.1104 and 405.1108, an appellant may request 
escalation of a case to the Council for a decision even if the ALJ has 
not issued a decision or dismissal in his or her case. We proposed to 
revise Sec.  405.1100(b) to provide that under circumstances set forth 
in Sec. Sec.  405.1016 and 405.1108, the appellant may request that a 
case be escalated to the Council for a decision even if the ALJ or 
attorney adjudicator has not issued a decision, dismissal, or remand in 
his or her case. We stated in the proposed rule that these revisions 
would reference Sec.  405.1016, which, as discussed in section 
III.A.3.h of the proposed rule and II.B.3.h of this final rule above, 
would replace the current Sec.  405.1104 provisions for escalating a 
case from the OMHA level to the Council. We stated that they would also 
provide that in addition to potentially issuing a decision or 
dismissal, an ALJ or attorney adjudicator, as proposed in section II.B 
of the proposed rule (and discussed in section II.A.2 above), may issue 
a remand--this would present a complete list of the actions that an ALJ 
or attorney adjudicator could take on an appeal.
    Current Sec. Sec.  405.1100(c) and 423.2100(b) and (c) state in 
part that when the Council reviews an ALJ's decision, it undertakes a 
de novo review, and the Council issues a final decision or dismissal 
order or remands a case to the ALJ. We proposed to revise Sec. Sec.  
405.1100(c) and 423.2100(b) and (c) to state that when the Council 
reviews an ALJ's or attorney adjudicator's decision, it undertakes a de 
novo review and may remand a case to an ALJ or attorney adjudicator, so 
that the same standard for review is applied to ALJ and attorney 
adjudicator decisions. We also proposed to revise Sec. Sec.  
405.1100(c) and 423.2100(c) to state that the Council may remand an 
attorney adjudicator's decision to the attorney adjudicator so that 
like an ALJ, the attorney adjudicator can take the appropriate action 
ordered by the Council (however, if the Council were to order that a 
hearing must be conducted, the case would be transferred to an ALJ upon 
remand to the attorney adjudicator because only an ALJ may conduct a 
hearing).
    Current Sec.  423.2100(c) and (d) provide that the Council issues a 
final decision, dismissal order, or remand no later than the period of 
time specified in the respective paragraph, beginning on the date that 
the request for review is received by the entity specified in the ALJ's 
written notice of decision. We proposed to revise Sec.  423.2100(c) and 
(d) to state that the period of time begins on the date that the 
request for review is received by the entity specified in the ALJ's or 
attorney adjudicator's written notice of decision because an attorney 
adjudicator may also issue a decision, as proposed in section II.B of 
the proposed rule (and discussed in section II.A.2 above). We also 
proposed to revise Sec.  423.2100(c) to correct a typographical error 
by inserting ``day'' into the current ``90 calendar period,'' so it is 
clear to enrollees that the period of time being referenced is the 90 
calendar day period.
    Current Sec.  405.1100(d) states in part that when deciding an 
appeal that was escalated from the ALJ level to the Council, the 
Council will issue a final decision or dismissal order or remand order 
within 180 calendar days of receipt of the appellant's request for 
escalation. A remand from the Council after an appeal is escalated to 
it is exceedingly rare and done in circumstances in which the Council 
must remand to an ALJ so that the ALJ may obtain information under 
current Sec.  405.1034 that is missing from the written record and 
essential to resolving the issues on appeal, and that information can 
only be provided by CMS or its contractors, because the Council does 
not have independent authority to obtain the information from CMS or 
its contractors. In addition, an appeal may have not yet have been 
assigned to an ALJ, or could be assigned to an attorney adjudicator as 
proposed in section II.B of the proposed rule (and discussed in section 
II.A.2 above), when the appeal was escalated by the appellant. We 
proposed to revise Sec.  405.1100(d) to state that if the Council 
remands an escalated appeal, the remand is to the OMHA Chief ALJ 
because the rare and unique circumstances in which an escalated appeal 
is remanded by the Council require immediate attention that the OMHA 
Chief ALJ is positioned to provide to minimize delay for the appellant, 
and to minimize confusion if the case was not assigned to an ALJ or

[[Page 5089]]

attorney adjudicator when it was escalated.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received one comment that supported the proposal that 
the Council remand escalated appeals to the Chief ALJ to minimize 
confusion and delay for appellants. The commenter also requested that 
language be added to the regulation requiring the Council to 
acknowledge receipt of an appellant's request for review due to the 
Council's considerable backlog and delay in issuing decisions.
    Response: We thank the commenter for its support and agree that the 
Council should acknowledge receipt of an appellant's request for 
review. Since 2009, it has been and will continue to be, the practice 
of the Council to issue acknowledgment letters to appellants when a 
request for review is received and docketed. In addition, the Council 
has started accepting electronically filed requests for review, using 
the Medicare Operations Divisions Electronic Filing (MOD E-File) 
system, located at https://dab.E-File.hhs.gov/mod. An appellant that 
electronically files a request for review will receive an automated 
email response that acknowledges receipt of the request for review as 
well as provides the docket number assigned to the case. Finally, 
appellants may also use MOD E-File to check the status of appeals, 
regardless of whether the request for review was electronically filed. 
Appellants can check the status of an appeal by the docket number 
stated in the acknowledgment letter or email or by the ALJ appeal 
number. Because of the Council's continued commitment to issuing 
acknowledgments, as well as electronic enhancements that allow parties 
to check the status of appeals pending before the Council, we find it 
unnecessary to modify the proposed regulation.
    Comment: One commenter questioned the current rule granting the 
Council, which is comprised of Administrative Appeals Judges (AAJs), 
the authority to conduct de novo reviews of ALJ decisions. The 
commenter was concerned that AAJs lack the independence of ALJs and are 
beholden to the agency for their positions and, therefore, AAJs are not 
best suited to review ALJ decisions. Accordingly, the commenter 
suggested various revisions to the current rule to address this concern 
that are unrelated to the proposed rule.
    Response: We appreciate the commenter's opinion and suggestion, but 
its comment is beyond the scope of the proposed rule, and thus we are 
not addressing it in this final rule.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1100, 423.1974 and 423.2100 as proposed 
without modification.
b. Request for Council Review When ALJ Issues Decision or Dismissal 
(Sec. Sec.  405.1102 and 423.2102)
    As described below, we proposed a number of changes to Sec. Sec.  
405.1102 and 423.2102, which discuss requests for Council review when 
an ALJ issues a decision or dismissal. 81 FR 43790, 43847. Current 
Sec. Sec.  405.1102(a)(1) and 423.2102(a)(1) provide that a party or 
enrollee, respectively, to ``the ALJ hearing'' may request a Council 
review if the party or enrollee files a written request for a Council 
review within 60 calendar days after receipt of the ALJ's decision or 
dismissal, which is in accordance with the criteria specified in 
current Sec. Sec.  405.1102 and 423.2102. However, we stated in the 
proposed rule that a party or enrollee is a party to the proceedings 
and resulting decision or dismissal, and may appeal the decision or 
dismissal regardless of whether a hearing was conducted in the appeal, 
and as proposed in section II.B of the proposed rule (and discussed in 
section II.A.2 of this final rule above), an attorney adjudicator may 
issue a decision or dismissal for which Council review may be 
requested. To help ensure there is no confusion that a party or 
enrollee may seek Council review even if a hearing before an ALJ is not 
conducted or if an attorney adjudicator issues the decision or 
dismissal, we proposed to revise Sec. Sec.  405.1102(a)(1) and 
423.2102(a)(1) to state a party or enrollee to a decision or dismissal 
issued by an ALJ or attorney adjudicator may request Council review if 
the party or enrollee files a written request for a Council review 
within 60 calendar days after receipt of the ALJ's or attorney 
adjudicator's decision or dismissal.
    Current Sec. Sec.  405.1102(c) and 423.2102(c) provide that a party 
or enrollee, respectively, does not have a right to seek Council review 
of an ALJ's remand to a QIC or IRE, or an ALJ's affirmation of a QIC's 
or IRE's dismissal of a request for reconsideration. However, under 
current Sec. Sec.  405.1004(c) and 423.2004(c), a party or enrollee, 
respectively, may currently seek Council review of a dismissal of a 
request for review of a QIC or IRE dismissal because, as discussed in 
section III.A.3.x of the proposed rule and II.B.3.x of this final rule 
above, an ALJ does not currently have the authority to vacate his or 
her own dismissal. As proposed in section II.B of the proposed rule 
(and discussed in section II.A.2 of this final rule above), an attorney 
adjudicator could adjudicate requests for a review of a QIC or IRE 
dismissal. In addition, proposed Sec. Sec.  405.1052(e) and 423.2052(e) 
would establish the authority for an ALJ or attorney adjudicator to 
vacate his or her own dismissal, and in accordance with the policy that 
a review of a dismissal is only reviewable at the next level of appeal, 
as discussed in section III.A.3.c of the proposed rule and II.B.3.c of 
this final rule above, proposed Sec. Sec.  405.1102(c) and 423.2102(c) 
would be revised to indicate that a party does not have the right to 
seek Council review of an ALJ's or attorney adjudicator's dismissal of 
a request for review of a QIC dismissal. Therefore, we proposed at 
Sec. Sec.  405.1102(c) and 423.2102(c) to add that a party does not 
have the right to seek Council review of an ALJ's or attorney 
adjudicator's remand to a QIC or IRE, affirmation of a QIC's or IRE's 
dismissal of a request for reconsideration, or dismissal of a request 
for review of a QIC or IRE dismissal.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment supporting the revised language 
that Council review may be sought even if a hearing before an ALJ is 
not conducted or if an attorney adjudicator issues the decision or 
dismissal.
    Response: We thank the commenter for its support.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1102 and 423.2102 as proposed without 
modification.
c. Where a Request for Review or Escalation May Be Filed (Sec. Sec.  
405.1106 and 423.2106)
    As discussed below, we proposed a number of changes to Sec. Sec.  
405.1106 and 423.2106 with respect to where a request for review or 
escalation may be filed. 81 FR 43790, 43847-43848. Current Sec. Sec.  
405.1106(a) and 423.2106 provide that when a request for a Council 
review is filed after an ALJ has issued a decision or dismissal, the 
request for review must be filed with the entity specified in the 
notice of the ALJ's action, and under Sec.  405.1106, the appellant 
must also send a copy of the request for review to the other parties to 
the ALJ decision or dismissal who received a copy of the hearing 
decision or notice of dismissal. The sections also

[[Page 5090]]

explain that 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 
Council'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, and upon receipt of a request for review 
from an entity other than the entity specified in the notice of the 
ALJ's action, the Council sends written notice to the appellant of the 
date of receipt of the request and commencement of the adjudication 
time frame. In addition, current Sec.  405.1106(b) discusses that if an 
appellant files a request to escalate an appeal to the Council because 
the ALJ has not completed his or her action on the request for hearing 
within the adjudication deadline under Sec.  405.1016, the request for 
escalation must be filed with both the ALJ and the Council, and the 
appellant must also send a copy of the request for escalation to the 
other parties and failure to copy the other parties tolls the Council's 
adjudication deadline set forth in Sec.  405.1100 until all parties to 
the hearing receive notice of the request for Council review.
    We proposed in Sec. Sec.  405.1106 and 423.2106 to replace all 
instances of ``ALJ'' with ``ALJ or attorney adjudicator,'' and ``ALJ's 
action'' with ``ALJ's or attorney adjudicator's action,'' to provide 
that the sections apply to decisions and dismissals issued by an 
attorney adjudicator as well, as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 above), and therefore 
appellants would have the same right to seek Council review of the 
attorney adjudicator's decision or dismissal, and the Council would 
have the authority to take the same actions in reviewing an attorney 
adjudicator's decision or dismissal. We also proposed to replace ``a 
copy of the hearing decision under Sec.  405.1046(a) or a copy of the 
notice of dismissal under Sec.  405.1052(b)'' in Sec.  405.1106(a) with 
``notice of the decision or dismissal,'' because Sec. Sec.  405.1046 
and 405.1052 provide for notice of a decision or dismissal, 
respectively, to be sent, and a decision or dismissal may be issued by 
an ALJ or attorney adjudicator without conducting a hearing. In 
addition, in describing the consequences of failing to send a copy of 
the request for review to the other parties, we proposed to replace 
``until all parties to the hearing'' in Sec.  405.1106(a) to ``until 
all parties to the ALJ or attorney adjudicator decision or dismissal,'' 
to align the language with the preceding sentences.
    We proposed to revise Sec.  405.1106(b) to align the paragraph with 
the revised escalation process proposed at Sec.  405.1016 (see section 
III.A.3.h.i of the proposed rule and II.B.3.h.i of this final rule 
above). Specifically, we proposed to revise Sec.  405.1106(b) to state 
that if an appellant files a request to escalate an appeal to the 
Council level because the ALJ or attorney adjudicator has not completed 
his or her action on the request for hearing within an applicable 
adjudication period under Sec.  405.1016, the request for escalation 
must be filed with OMHA and the appellant must also send a copy of the 
request for escalation to the other parties who were sent a copy of the 
QIC reconsideration. This proposed revision would align this section 
with the revised process in proposed Sec.  405.1016 by specifying that 
the request for escalation is filed with OMHA and removing the 
requirement for an appellant to also file the request with the Council. 
In addition, proposed Sec.  405.1106(b) would specify that the request 
for escalation must be sent to the other parties who were sent a copy 
of the QIC reconsideration, which would align with the parties to whom 
the appellant is required to send a copy of its request for hearing. 
Proposed Sec.  405.1106(b) would also refer to ``an applicable 
adjudication period'' under Sec.  405.1016, to align the terminology 
and because an adjudication period may not apply to a specific case 
(for example, if the appellant waived an applicable adjudication time 
frame). Finally, proposed Sec.  405.1106(b) would provide that failing 
to copy the other parties would toll the Council's adjudication 
deadline until all parties who were sent a copy of the QIC 
reconsideration receive notice of the request for escalation, rather 
than notice of the request for Council review as is currently required, 
because the revised escalation process proposed at Sec.  405.1016 would 
remove the requirement to file a request for Council review when 
escalation is requested from the OMHA to the Council level.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec. Sec.  405.1106 and 423.2106 as proposed without modification.
d. Council Actions When Request for Review or Escalation Is Filed 
(Sec. Sec.  405.1108 and 423.2108)
    As described below, we proposed a number of changes to Sec. Sec.  
405.1108 and 423.2108, which describe the actions the Council may take 
upon receipt of a request for review or, for Sec.  405.1108, a request 
for escalation. 81 FR 43790, 43848. We proposed at Sec.  405.1108(d) 
introductory text to replace ``ALJ level'' with ``OMHA level'' to 
provide that the Council's actions with respect to a request for 
escalation are the same regardless of whether the case was pending 
before an ALJ or attorney adjudicator, or unassigned at the time of 
escalation. We also proposed at Sec.  405.1108(d)(3) to replace 
``remand to an ALJ for further proceedings, including a hearing'' with 
``remand to OMHA for further proceedings, including a hearing'' because 
we stated in the proposed rule that we believed the Council could 
remand an escalated case to an ALJ or attorney adjudicator for further 
proceedings, but if the Council ordered that a hearing be conducted, 
the case would need to be remanded to an ALJ. We did not propose any 
corresponding changes to Sec.  423.2108 because escalation is not 
available for Part D coverage appeals.
    We also proposed in Sec. Sec.  405.1108(b) and 423.2108(b), to 
provide that the dismissal for which Council review may be requested is 
a dismissal of a request for a hearing, because as discussed in section 
III.A.3.x of the proposed rule and II.B.3.x of this final rule above, 
proposed Sec. Sec.  405.1054(b) and 423.2054(b) would provide that a 
dismissal of a request for a review of a QIC or IRE dismissal of a 
request for reconsideration is binding and not subject to further 
review. Finally, we proposed to replace all remaining references in 
Sec. Sec.  405.1108 and 423.2108 to ``ALJ'' with ``ALJ or attorney 
adjudicator'' and ``ALJ's'' with ``ALJ's or attorney adjudicator's'' to 
further provide that the Council's actions with respect to a request 
for review or escalation are the same for cases that were decided by or 
pending before an ALJ or an attorney adjudicator.
    We received no comments on these proposals, other than: (1) 
Comments discussed in section II.A.2 of this final rule above related 
to our general proposals to provide authority for attorney adjudicators 
to issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals

[[Page 5091]]

issued by ALJs; and (2) comments discussed in section II.A.4 of this 
final rule above related to our general proposal to reference OMHA or 
an OMHA office, in place of current references to an unspecified 
entity, ALJs, and ALJ hearing offices, when a reference to OMHA or an 
OMHA office provides a clearer explanation of a topic. Accordingly, for 
the reasons discussed above and in the proposed rule, we are finalizing 
the changes to Sec. Sec.  405.1108 and 423.2108 as proposed without 
modification.
e. Council Reviews on Its Own Motion (Sec. Sec.  405.1110 and 423.2110)
    As described below, we proposed several changes to Sec. Sec.  
405.1110 and 423.2110, which discuss Council reviews on its own motion. 
81 FR 43790, 43848-43849. Current Sec. Sec.  405.1110(a) and 
423.2110(a) state the general rule that the Council may decide on its 
own motion to review a decision or dismissal issued by an ALJ, and CMS 
or its contractor, including the IRE, may refer a case to the Council 
within 60 calendar days after the date of the ALJ's decision or 
dismissal (for Sec.  405.1110(a)) or after the ALJ's written decision 
or dismissal is issued (for Sec.  423.2110(a)). Current Sec. Sec.  
405.1110(b) and 423.2110(b) provide the standards for CMS or its 
contractors to refer ALJ decisions and dismissals to the Council for 
potential review under the Council's authority to review ALJ decisions 
and dismissals on the Council's own motion, and require that a copy of 
a referral to the Council be sent to the ALJ whose decision or 
dismissal was referred, among others. Current Sec. Sec.  405.1110(c) 
and 423.2110(c) explain the standards of review used by the Council in 
reviewing the ALJ's action. Current Sec. Sec.  405.1110(d) and 
423.2110(d) explain the actions the Council may take, including 
remanding the case to the ALJ for further proceedings, and state that 
if the Council does not act on a referral within 90 calendar days after 
receipt of the referral (unless the 90 calendar day period has been 
extended as provided in the respective subpart), the ALJ's decision or 
dismissal is binding (Sec.  405.1110(d) further specifies that the 
decision or dismissal is binding on the parties to the decision).
    We proposed at Sec. Sec.  405.1110 and 423.2110 to replace each 
instance of ``at the ALJ level'' with ``at the OMHA level'' and ``ALJ 
proceedings'' with ``OMHA proceedings.'' We stated in the proposed rule 
that we believe the standards for referral to the Council by CMS or its 
contractor would be the same regardless of whether the case was decided 
by an ALJ or an attorney adjudicator, and that ``at the OMHA level'' 
and ``OMHA proceedings'' would reduce confusion in situations where the 
case was decided by an attorney adjudicator. We proposed at Sec.  
405.1110(b)(2) to replace the references to current Sec.  405.1052(b) 
with references to Sec.  405.1052(d) to reflect the structure of 
proposed Sec.  405.1052, and also proposed to revise Sec. Sec.  
405.1110(b)(2) and 423.2110(b)(2)(ii) to state that CMS (in Sec.  
405.1110(b)(2)) or CMS or the IRE (in Sec.  423.2110(b)(2)(ii)) sends a 
copy of its referral to the OMHA Chief ALJ. We stated that the current 
requirement to send a copy of the referral to the ALJ is helpful in 
allowing OMHA ALJs to review the positions that CMS is advocating 
before the Council, but at times has caused confusion as to whether the 
ALJ should respond to the referral (there is no current provision that 
allows the Council to consider a statement in response to the 
referral). In addition, we stated that the proposed revision would 
allow OMHA to collect information on referrals, assess whether training 
or policy clarifications for OMHA adjudicators are necessary, and 
disseminate the referral to the appropriate ALJ or attorney adjudicator 
for his or her information. We also proposed at Sec.  405.1110(b)(2) to 
replace ``all other parties to the ALJ's decision'' with ``all other 
parties to the ALJ's or attorney adjudicator's action'' and at Sec.  
405.1110(d) to replace ``ALJ decision'' with ``ALJ or attorney 
adjudicator action'' to encompass both decisions and dismissals issued 
by an ALJ or an attorney adjudicator, as proposed in section II.B of 
the proposed rule (and discussed in section II.A.2 above). We stated in 
the proposed rule that we believe that parties to an ALJ's dismissal or 
an attorney adjudicator's decision or dismissal have the same right to 
receive a copy of another party's written exceptions to an agency 
referral as the parties to an ALJ's decision, and that an ALJ's or 
attorney adjudicator's decision or dismissal is binding on the parties 
to the action. We proposed to replace each remaining instance in 
Sec. Sec.  405.1110 and 423.2110 of ``ALJ'' with ``ALJ or attorney 
adjudicator,'' ``ALJ's decision or dismissal'' with ``ALJ's or attorney 
adjudicator's decision or dismissal,'' ``ALJ's decision'' with ``ALJ's 
or attorney adjudicator's decision or dismissal,'' and ``ALJ's action'' 
with ``ALJ's or attorney adjudicator's action.'' We stated that these 
proposed revisions would provide that the sections apply to decisions 
and dismissals issued by an attorney adjudicator, as proposed in 
section II.B of the proposed rule (and discussed in section II.A.2 
above), and therefore CMS and its contractors would have the same right 
to refer attorney adjudicator decisions and dismissals to the Council, 
and the Council would have the authority to take the same actions and 
have the same obligations in deciding whether to review an attorney 
adjudicator's decision or dismissal on its own motion.
    Finally, we proposed at Sec.  423.2110(b)(1) to replace ``material 
to the outcome of the claim'' with ``material to the outcome of the 
appeal'' because unlike Part A and Part B, no ``claim'' is submitted 
for drug coverage under Part D.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received two comments on these proposals. The 
commenters both objected to the proposal to revise Sec. Sec.  
405.1110(b)(2) and 423.2110(b)(2)(ii) to state that CMS (in Sec.  
405.1110(b)(2)) or CMS or the IRE (in Sec.  423.2110(b)(2)(ii)) sends a 
copy of its referral for own motion review by the Council to the OMHA 
Chief ALJ, rather than the ALJ who issued the decision, as provided 
under current Sec. Sec.  405.1110(b)(2) and 423.2110(b)(2)(ii). The 
commenters felt it would be more appropriate for notice of the 
Council's action to be provided to the Chief ALJ, as the Council may 
not accept the referral for own motion review, or may not agree with 
the reason(s) for the referral, and therefore the referral itself is 
not necessarily evidence of a training or policy clarification need.
    Response: Current Sec. Sec.  405.1110(b)(2) and 423.2110(b)(2)(ii) 
contain a requirement for CMS, or CMS or the IRE, to send a copy of its 
referral to the ALJ. As we explained above (and in section III.A.5.e of 
the proposed rule), we proposed to instead require that the copy of the 
referral be sent to the Chief ALJ because the current requirement has 
at times caused confusion about whether a response is required from the 
ALJ. The current requirement also makes it difficult to identify trends 
and training opportunities, because copies of the referrals are sent to 
individual ALJs rather than to one individual at OMHA or a centralized 
location. We stated in the proposed rule that sending copies of the 
referrals to the Chief ALJ would allow OMHA to collect information on 
referrals, assess whether training or policy clarifications for OMHA 
adjudicators are necessary, and disseminate the referral to the 
appropriate ALJ or attorney adjudicator for his or her information. We 
also believe sending a copy of the referral to the Chief ALJ would be 
administratively simpler for CMS or the IRE.

[[Page 5092]]

    We understand the commenter's suggestion that the notice of the 
Council's action is a better measure to assess the need for possible 
training or policy clarifications. In practice, OMHA has a process in 
place to receive and review copies of all Council actions, such as 
decisions remanding, reversing, modifying, or affirming ALJ decisions 
and dismissals, and dismissals of requests for review and declinations 
of referrals for own motion review, and OMHA makes those available to 
all staff. However, due to the time lag between when a request for own 
motion review is filed and when the Council issues its action (which 
may be up to 90 days), we believe requiring CMS (under Sec.  405.1110), 
or CMS or the IRE (under Sec.  423.2110), to send a copy of its 
referral to OMHA, and specifically to the Chief ALJ, will help ensure 
OMHA is aware of any trends that may necessitate action or further 
research for possible training or policy clarifications as early as 
possible, with the understood caveat that a referral in and of itself 
is not a basis for training or policy clarification because, as the 
commenter suggests, the Council's action on the referral is needed to 
fully assess any needed training or policy clarifications.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec.  405.908 as proposed with the following modification. 
We are correcting a drafting error in proposed Sec.  405.1110(b)(2) by 
removing two references to a ``hearing decision'' issued under Sec.  
405.1046(a) and replacing them with ``decision,'' because Sec.  
405.1046(a) as finalized in this rule also addresses decisions issued 
by an ALJ or attorney adjudicator when a hearing is not held.
f. Content of Request for Review (Sec. Sec.  405.1112 and 423.2112)
    As described below, we proposed a number of changes to Sec. Sec.  
405.1112 and 423.2112, which discuss the content of a request for 
Council review. 81 FR 43790, 43849. Current Sec.  405.1112(a) requires 
a request for Council review to contain the date of the ALJ's decision 
or dismissal order, if any, among other information. Current Sec.  
423.2112(a)(1) states that the request for Council review must be filed 
with the entity specified in the notice of the ALJ's action. Current 
Sec. Sec.  405.1112(b) and 423.2112(b) state that the request for 
review must identify the parts of the ALJ action with which the party 
or enrollee, respectively, requesting review disagrees and explain why 
he or she disagrees with the ALJ's decision, dismissal, or other 
determination being appealed. Current Sec.  405.1112(b) provides an 
example that if the party requesting review believes that the ALJ's 
action is inconsistent with a statute, regulation, CMS Ruling, or other 
authority, the request for review should explain why the appellant 
believes the action is inconsistent with that authority. Current 
Sec. Sec.  405.1112(c) and 423.2112(c) state that the Council will 
limit its review of an ALJ's action to those exceptions raised by the 
party or enrollee, respectively, in the request for review, unless the 
appellant is an unrepresented beneficiary or the enrollee is 
unrepresented.
    We proposed at Sec. Sec.  405.1112 and 423.2112 to replace ``ALJ's 
decision or dismissal'' with ``ALJ's or attorney adjudicator's decision 
or dismissal,'' ``ALJ action'' with ``ALJ's or attorney adjudicator's 
action,'' and ``ALJ's action'' with ``ALJ's or attorney adjudicator's 
action.'' These revisions would provide that the sections apply to 
decisions and dismissals issued by an attorney adjudicator, as proposed 
in section II.B of the proposed rule (and discussed in section II.A.2 
above), and therefore information on the attorney adjudicator's 
decision and dismissal must be included in the request for Council 
review, and the scope of the Council's review would be the same as for 
an ALJ's decision or dismissal.
    Current Sec.  405.1112(a) states that a request for Council review 
must be filed with the Council or appropriate ALJ hearing office. 
However, we stated in the proposed rule that this provision may cause 
confusion when read with current Sec.  405.1106(a), which states that a 
request for review must be filed with the entity specified in the 
notice of the ALJ's action. In practice, OMHA notices of decision and 
dismissal provide comprehensive appeal instructions directing requests 
for Council review to be filed directly with the Council, and provide 
address and other contact information for the Council. Therefore, we 
proposed to revise Sec.  405.1112(a) to state that the request for 
Council review must be filed with the entity specified in the notice of 
the ALJ's or attorney adjudicator's action, which would align Sec.  
405.1112(a) with current Sec.  405.1106(a), and reaffirm that a request 
for Council review must be filed with the entity specified in the 
notice of the ALJ's or attorney adjudicator's action.
    Current Sec.  405.1112(a) also states that the written request for 
review must include the hearing office in which the appellant's request 
for hearing is pending if a party is requesting escalation from an ALJ 
to the Council. In light of the proposed revisions to the escalation 
process discussed in section III.A.3.h.i of the proposed rule and 
II.B.3.h.i of this final rule above, we proposed to remove this 
requirement from Sec.  405.1112(a) because proposed Sec.  405.1016 
would provide that a request for escalation is filed with OMHA. In 
accordance with proposed Sec.  405.1016, if the request for escalation 
meets the requirements of Sec.  405.1016(f)(1) and a decision, 
dismissal, or remand cannot be issued within 5 calendar days after OMHA 
receives the request, the appeal would be forwarded to the Council.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment on these proposals. The commenter 
requested clarification as to whether the criteria specified in Sec.  
405.1110 for agency referrals are also appropriate bases for requests 
for review.
    Response: We clarify that appellants may file requests for Council 
review for any reason they disagree with the ALJ's decision or 
dismissal, including if they believe that the ALJ abused his or her 
discretion or that the decision or dismissal is not supported by the 
evidence. On the other hand, CMS or its contractors may refer cases to 
the Council only for the reasons specified in Sec.  405.1110(b) and 
Sec.  423.2110(b) (if CMS or a contractor believes that the ALJ's or 
attorney adjudicator's 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 public interest; or, where CMS or 
its contractor participated (or requested to participate, for Part D 
appeals) in the appeal at the OMHA level, then CMS is also permitted to 
refer cases to the Council on the additional bases that it believes the 
ALJ's or attorney adjudicator's decision or dismissal is not supported 
by the preponderance of the evidence or the ALJ or attorney adjudicator 
abused his or her discretion).
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1112 and 423.2112 as proposed without 
modification.
g. Dismissal of Request for Review (Sec. Sec.  405.1114 and 423.2114)
    We proposed at Sec.  405.1114(c)(3) to replace ``ALJ hearing'' with 
``ALJ's or attorney adjudicator's action.'' This proposed revision 
would provide that the paragraph applies to decisions and dismissals 
issued by an attorney adjudicator, as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 above), and therefore a

[[Page 5093]]

valid and timely request for Council review filed by another party to 
an attorney adjudicator's decision or dismissal would preclude 
dismissal of a request for Council review under Sec.  405.1114(c). We 
did not propose any corresponding changes to Sec.  423.2114 (which we 
inadvertently referenced as Sec.  423.1114 in the proposed rule) 
because there is no provision equivalent to current Sec.  
405.1114(c)(3). 81 FR 43790, 43849.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec.  405.1114 as proposed without modification.
h. Effect of Dismissal of Request for Council Review or Request for 
Hearing (Sec. Sec.  405.1116 and 423.2116)
    Current Sec. Sec.  405.1116 and 423.2116 describe the effect of a 
dismissal by the Council of a request for Council review or a request 
for hearing. We proposed to replace ``ALJ'' with ``ALJ or attorney 
adjudicator'' to provide that the denial of a request for Council 
review of a dismissal issued by an attorney adjudicator is binding and 
not subject to judicial review in the same manner as the denial of a 
request for Council review of a dismissal issued by an ALJ. We stated 
in the proposed rule that we believe the Council's denial of a request 
to review an attorney adjudicator's dismissal would be subject to the 
same general rules described in sections III.A.3.c and III.A.3.x of the 
proposed rule and sections II.B.3.c and II.B.3.x of this final rule 
above pertaining to reviews of dismissals at the next adjudicative 
level, and that further review of the attorney adjudicator's dismissal 
in Federal district court would be unavailable. 81 FR 43790, 43849-
43850.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec. Sec.  405.1116 and 423.2116 as proposed without modification.
i. Obtaining Evidence From the Council (Sec. Sec.  405.1118 and 
423.2118)
    As described below, we proposed several changes to Sec. Sec.  
405.1118 and 423.2118, which provide that a party or an enrollee, 
respectively, may request and receive a copy of all or part of the 
record of the ALJ hearing. 81 FR 43790, 43850. We proposed to replace 
``ALJ hearing'' with ``ALJ's or attorney adjudicator's action.'' We 
stated in the proposed rule that this proposed revision would provide 
that a party to an attorney adjudicator action, or to an ALJ decision 
that was issued without a hearing, may request and receive a copy of 
all or part of the record to the same extent as a party to an ALJ 
hearing. We also proposed to replace the reference to an ``exhibits 
list'' with a reference to ``any index of the administrative record'' 
to provide greater flexibility in developing a consistent structure for 
the administrative record. In addition, we proposed at Sec.  405.1118 
to replace the reference to a ``tape'' of the oral proceeding with an 
``audio recording'' of the oral proceeding because tapes are no longer 
used and a more general reference would accommodate future changes in 
recording formats. We proposed a parallel revision to Sec.  423.2118 to 
replace the reference to a ``CD'' of the oral proceeding with an 
``audio recording'' of the oral proceeding.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: One commenter asked that Sec.  405.1118 be revised to 
clarify exactly where parties should direct their requests for a copy 
of all or part of the record of the ALJ hearing. The commenter stated 
that it has had difficulty obtaining copies of the record from the ALJ 
who conducted the hearing once OMHA had released custody of the record. 
The commenter thought it would be helpful if the notice of decision 
issued by OMHA contained language that informed the appellant where to 
send such requests.
    Response: Proposed Sec.  405.1118 is titled ``Obtaining evidence 
from the Council,'' and deals with requests for copies of all or part 
of the record of the ALJ hearing. After a party requests review by the 
Council, the entire administrative record, including audio recordings, 
documentary evidence, and any index of the administrative record, is 
transferred to the Council. Thus, parties who are requesting a copy of 
all or part of the record of the ALJ hearing after a request for review 
has been filed with the Council may direct their requests directly to 
the Council. For requests that are made prior to a request for review 
being filed with the Council, see the discussion in section II.B.3.t of 
this final rule above. With respect to the commenter's suggestion 
regarding including language in the notice of an ALJ's decision, we may 
consider the suggestion in future revisions to the standard notice.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec. Sec.  405.1118 and 423.2118 as proposed without 
modification.
j. What Evidence May Be Submitted to the Council (Sec. Sec.  405.1122 
and 423.2122)
    As described below, we proposed several changes to Sec. Sec.  
405.1122 and 423.2122, which describe the evidence that may be 
submitted to and considered by the Council, the process the Council 
follows in issuing subpoenas, the reviewability of Council subpoena 
rulings, and the process for seeking enforcement of subpoenas. 81 FR 
43790, 43850. Current Sec.  405.1122(a)(1) provides that the Council 
will limit its review of the evidence to the evidence contained in the 
record of the proceedings before the ALJ, unless the hearing decision 
decides a new issue that the parties were not afforded an opportunity 
to address at the ALJ level. We proposed at Sec.  405.1122(a) 
introductory text and (a)(1) to replace each instance of ``ALJ's 
decision'' with ``ALJ's or attorney adjudicator's decision,'' ``before 
the ALJ'' with ``before the ALJ or attorney adjudicator,'' and ``the 
ALJ level'' with ``the OMHA level.'' We stated in the proposed rule 
that we believe the standard for review of evidence at the Council 
level would be the same regardless of whether the case was decided by 
an ALJ or attorney adjudicator, as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 above), at the OMHA 
level. We also proposed corresponding revisions to Sec.  423.2122(a) 
introductory text and (a)(1). Also, to help ensure it is clear that the 
exception for evidence related to new issues raised at the OMHA level 
is not limited to proceedings in which a hearing before an ALJ was 
conducted, we proposed at Sec. Sec.  405.1122(a)(1) and Sec.  
423.2122(a)(1) to replace ``hearing decision'' with ``ALJ's or attorney 
adjudicator's decision.''

[[Page 5094]]

Current Sec.  405.1122(a)(2) provides that if the Council 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 Council may remand the case 
to an ALJ to obtain the evidence and issue a new decision. For the 
reasons described above, we proposed at Sec.  405.1122(a)(2) to replace 
``ALJ'' with ``ALJ or attorney adjudicator'' and ``hearing record'' 
with ``administrative record,'' along with corresponding revisions to 
Sec.  423.2122(a)(2). Current Sec.  405.1122(b)(1) describes the 
evidence that may be considered by the Council when a case is escalated 
from the ALJ level. For the reasons described above, we proposed to 
replace ``ALJ level'' with ``OMHA level.'' We did not propose any 
corresponding changes to Sec.  423.2122 because escalation is not 
available for Part D coverage appeals. Finally, we proposed to replace 
all remaining instances of ``ALJ'' in Sec.  405.1122(b)(1), (b)(2), 
(c)(2), (c)(3) introductory text, (c)(3)(i), and (c)(3)(ii) with ``ALJ 
or attorney adjudicator,'' as we believe the Council's authority to 
consider evidence entered in the record by an attorney adjudicator and 
to remand a case to an attorney adjudicator for consideration of new 
evidence would be the same as the Council's current authority to 
consider evidence entered in the record by an ALJ and remand a case to 
an ALJ. We did not propose any corresponding changes to Sec.  423.2122 
because there are no remaining references to ``ALJ.''
    We received no comments on these proposals, other than: (1) 
Comments discussed in section II.A.2 of this final rule above related 
to our general proposals to provide authority for attorney adjudicators 
to issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs; and (2) comments discussed in 
section II.A.4 of this final rule above related to our general proposal 
to reference OMHA or an OMHA office, in place of current references to 
an unspecified entity, ALJs, and ALJ hearing offices, when a reference 
to OMHA or an OMHA office provides a clearer explanation of a topic. 
Accordingly, for the reasons discussed above and in the proposed rule, 
we are finalizing the changes to Sec. Sec.  405.1122 and 423.2122 as 
proposed without modification.
k. Case Remanded by the Council (Sec. Sec.  405.1126 and 423.2126)
    As described below, we proposed a number of changes to the 
regulations at Sec. Sec.  405.1126 and 423.2126 concerning cases that 
are remanded by the Council. 81 FR 43790, 43850-43851. Current 
Sec. Sec.  405.1126(a) and (b) explain the Council's remand authority. 
We proposed to replace each instance of ``ALJ'' with ``ALJ or attorney 
adjudicator'' to provide that the Council may remand a case in which 
additional evidence is needed or additional action is required by the 
ALJ or attorney adjudicator, as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 of this final rule 
above). Proposed Sec.  405.1126(b) would also provide that an ALJ or 
attorney adjudicator would take any action that is ordered by the 
Council, and may take any additional action that is not inconsistent 
with the Council's remand order. We stated in the proposed rule that we 
believe it is necessary for the Council to have the same authority to 
remand an attorney adjudicator's decision to the attorney adjudicator 
as the Council currently has to remand an ALJ's decision to the ALJ, 
and that the attorney adjudicator's actions with respect to the 
remanded case should be subject to the same requirements as an ALJ's 
actions under the current provisions. We also proposed corresponding 
revisions to Sec.  423.2126(a)(1) and (a)(2). Current Sec. Sec.  
405.1126(c) and (d) describe the procedures that apply when the Council 
receives a recommended decision from the ALJ, including the right of 
the parties to file briefs or other written statements with the 
Council. Because we proposed in Sec.  405.1126(a) for the Council to 
have the same authority to order an attorney adjudicator to issue a 
recommended decision on remand as the Council currently has to order an 
ALJ to issue a recommended decision, we also proposed at Sec.  
405.1126(c) and (d) to replace ``ALJ'' with ``ALJ or attorney 
adjudicator'' to provide that the provisions apply to attorney 
adjudicators to the same extent as the provisions apply to ALJs, along 
with corresponding revisions to Sec.  423.2126(a)(3) and (a)(4). 
Finally, current Sec.  405.1126(e)(2) provides that if the Council 
determines more evidence is required after receiving a recommended 
decision, the Council may again remand the case to an ALJ for further 
development and another decision or recommended decision. Because we 
believe the Council should have the same authority to remand a case to 
an attorney adjudicator following receipt of a recommended decision, we 
proposed at Sec.  405.1126(e)(2) to replace ``ALJ'' with ``ALJ or 
attorney adjudicator,'' along with a corresponding revision to Sec.  
423.2126(a)(5)(ii), and to insert ``if applicable'' after rehearing 
because a rehearing may not be applicable in every circumstance (for 
example, where an attorney adjudicator issued a recommended decision 
and the Council does not remand with instructions to transfer the 
appeal to an ALJ for a hearing).
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec. Sec.  405.1126 and 423.2126 as proposed without modification.
l. Action of the Council (Sec. Sec.  405.1128 and 423.2128)
    Current Sec. Sec.  405.1128 and 423.2128 explain the actions the 
Council may take after reviewing the administrative record and any 
additional evidence (subject to the limitations on Council 
consideration of additional evidence). We proposed at Sec. Sec.  
405.1128(a) and 423.2128(a) to replace ``ALJ'' with ``ALJ or attorney 
adjudicator,'' which would provide that the Council may make a decision 
or remand a case to an ALJ or to an attorney adjudicator, as proposed 
in section II.B of the proposed rule (and discussed in section II.A.2 
of this final rule above). We stated in the proposed rule that we 
believe the Council should have the same authority to remand a case to 
an attorney adjudicator as the Council currently has to remand a case 
to an ALJ. Also, to help ensure there is no confusion that Council 
actions are not limited to proceedings in which a hearing before an ALJ 
was conducted, we proposed at Sec. Sec.  405.1128(b) and 423.2128(b) to 
replace ``the ALJ hearing decision'' with ``the ALJ's or attorney 
adjudicator's decision.'' 81 FR 43790, 43851.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and

[[Page 5095]]

to revise the rules so that decisions and dismissals issued by attorney 
adjudicators may be reopened and/or appealed in the same manner as 
equivalent decisions and dismissals issued by ALJs. Accordingly, for 
the reasons discussed above and in the proposed rule, we are finalizing 
the changes to Sec. Sec.  405.1128 and 423.2128 as proposed without 
modification.
m. Request for Escalation to Federal Court (Sec.  405.1132)
    Current Sec.  405.1132 explains the process for an appellant to 
seek escalation of an appeal (other than an appeal of an ALJ dismissal) 
from the Council to Federal district court if the Council does not 
issue a decision or dismissal or remand the case to an ALJ within the 
adjudication time frame specified in Sec.  405.1100, or as extended as 
provided in subpart I. We proposed at Sec.  405.1132 to replace each 
instance of ``ALJ'' with ``ALJ or attorney adjudicator.'' We stated in 
the proposed rule that these revisions would provide that the appellant 
may request that escalation of a case, other than a dismissal issued by 
an ALJ or attorney adjudicator, as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 of this final rule 
above), to Federal district court if the Council is unable to issue a 
decision or dismissal or remand the case to an ALJ or attorney 
adjudicator within an applicable adjudication time frame, and that 
appellants may file an action in Federal district court if the Council 
is not able to issue a decision, dismissal, or remand to the ALJ or 
attorney adjudicator within 5 calendar days of receipt of the request 
for escalation or 5 calendar days from the end of the applicable 
adjudication time period. We did not propose any corresponding changes 
to part 423, subpart U, as there is no equivalent provision because 
there are no escalation rights for Part D coverage appeals. 81 FR 
43790, 43851.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec.  405.1132 as proposed without modification.
n. Judicial Review (Sec. Sec.  405.1136, 423.1976, and 423.2136)
    Current Sec. Sec.  405.1136, 423.1976, and 423.2136 set forth the 
right to file a request for judicial review in Federal district court 
of a Council decision (or of an ALJ's decision if the Council declines 
review as provided in Sec.  423.1976(a)(1)). Current Sec.  405.1136 
also provides that judicial review in Federal district court may be 
requested if the Council is unable to issue a decision, dismissal, or 
remand within the applicable time frame following an appellant's 
request for escalation. In addition, current Sec. Sec.  405.1136 and 
423.2136 specify the requirements and procedures for filing a request 
for judicial review, the Federal district court in which such actions 
must be filed, and describe the standard of review. We proposed at 
Sec. Sec.  405.1136, 423.1976, and 423.2136 to replace each instance of 
``ALJ'' with ``ALJ or attorney adjudicator,'' and ``ALJ's'' with 
``ALJ's or attorney adjudicator's'' to help ensure that there is no 
confusion that appellants may file a request for judicial review in 
Federal district court of actions made by an attorney adjudicator, as 
proposed in section II.B of the proposed rule (and discussed in section 
II.A.2 of this final rule above) (or by the Council following an action 
by an attorney adjudicator), to the same extent that judicial review is 
available for ALJ actions (or Council actions following an action by an 
ALJ). 81 FR 43790, 43851.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec. Sec.  405.1136, 423.1976, and 423.2136 as proposed without 
modification.
o. Case Remanded by a Federal Court (Sec. Sec.  405.1138 and 423.2138)
    Current Sec. Sec.  405.1138 and 423.2138 set forth the actions the 
Council may take when a Federal district court remands a case to the 
Secretary for further consideration. We proposed at Sec. Sec.  405.1138 
and 423.2138 to replace ``ALJ'' with ``ALJ or attorney adjudicator'' to 
provide that when a case is remanded by a Federal district court for 
further consideration by the Secretary, the Council may remand the case 
to an ALJ or attorney adjudicator, as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 of this final rule 
above), to issue a decision, take other action, or return the case to 
the Council with a recommended decision. 81 FR 43790, 43851.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec. Sec.  405.1138 and 423.2138 as proposed without modification.
p. Council Review of ALJ Decision in a Case Remanded by a Federal 
District Court (Sec. Sec.  405.1140 and 423.2140)
    Current Sec. Sec.  405.1140 and 423.2140 set forth the procedures 
that apply when a case is remanded to the Secretary for further 
consideration, and the Council subsequently remands the case to an ALJ, 
including the procedures for the Council to assume jurisdiction 
following the decision of the ALJ on its own initiative or upon receipt 
of written exceptions from a party or the enrollee. We proposed to 
replace each instance of ``ALJ'' throughout Sec. Sec.  405.1140 and 
423.2140 with ``ALJ or attorney adjudicator'' and to replace the 
reference to ``ALJ's'' at Sec. Sec.  405.1140(d) and 423.2140(d) with 
``ALJ's or attorney adjudicator's.'' We stated in the proposed rule 
that these revisions would provide that the Council may remand these 
cases to the ALJ or attorney adjudicator, as proposed in section II.B 
of the proposed rule (and discussed in section II.A.2 above), following 
remand from a Federal district court, and that the decision of the ALJ 
or attorney adjudicator becomes the final decision of the Secretary 
after remand unless the Council assumes jurisdiction. We stated that 
these revisions would further apply the rules set forth in this section 
to cases reviewed by an attorney adjudicator as well as an ALJ. As 
described above in relation to the Council's general remand authority 
under Sec. Sec.  405.1126 and 423.2126, we stated that we believe it is 
necessary for the Council to have the same authority to remand an 
attorney

[[Page 5096]]

adjudicator's decision to the attorney adjudicator as the Council 
currently has to remand an ALJ's decision to the ALJ, and that would 
include cases that are remanded by a Federal district court to the 
Secretary for further consideration. 81 FR 43790, 43851-43852.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec. Sec.  405.1140 and 423.2140 as proposed without modification.

C. Specific Provisions of Part 405, Subpart J Expedited 
Reconsiderations

    In accordance with section 1869(b)(1)(F) of the Act, current Sec.  
405.1204 provides for expedited QIC reconsiderations of certain QIO 
determinations related to provider-initiated terminations of Medicare-
covered services and beneficiary discharges from a provider's facility. 
Current Sec.  405.1204(c)(4)(iii) explains that the QIC's initial 
notification may be done by telephone followed by a written notice that 
includes information about the beneficiary's right to appeal the QIC's 
reconsideration decision to an ALJ, and current Sec.  405.1204(c)(5) 
provides that if the QIC does not issue a decision within 72 hours of 
receipt of the request for a reconsideration, the case can be escalated 
to the ``ALJ hearing level.'' For consistency with part 405, subpart I, 
and to explain the rules that apply to an ALJ hearing, we proposed at 
Sec.  405.1204(c)(4)(iii) and (c)(5) to amend these references to 
convey that a QIC reconsideration can be appealed to, or a request for 
a QIC reconsideration can be escalated to OMHA for an ALJ hearing in 
accordance with part 405, subpart I. We stated in the proposed rule 
that we believed these revisions would explain where a request for an 
ALJ hearing is directed from a subpart J proceeding, and the rules that 
would be applied to the request for an ALJ hearing following the QIC's 
reconsideration or escalation of the request for a QIC reconsideration. 
81 FR 43790, 43852.
    Current Sec.  405.1204(c)(5) states that the beneficiary has a 
right to escalate a request for a QIC reconsideration if the amount 
remaining in controversy after the QIO determination is $100 or more. 
However, this is inconsistent with the amount in controversy specified 
in section 1869(b)(1)(E) of the Act. We proposed to revise Sec.  
405.1204(c)(5) to provide that there is a right to escalate a request 
for a QIC reconsideration if the amount remaining in controversy after 
the QIO determination meets the requirements for an ALJ hearing under 
Sec.  405.1006. We stated in the proposed rule that we believed that 
this is more consistent with section 1869(b)(1)(E) of the Act, which 
provides that a hearing by the Secretary shall not be available to an 
individual if the amount in controversy is less than $100, as adjusted 
annually after 2004, which is implemented in Sec.  405.1006, and would 
bring consistency to the amounts in controversy required for an 
escalation under subpart J and subpart I. 81 FR 43790, 43852.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment on this proposal The commenter 
supported the revision of Sec.  405.1204(c)(5) to align the amount in 
controversy with section 1869(b)(1)(E) of the Act and Sec.  405.1006.
    Response: We thank the commenter for its support.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec.  405.1204 as proposed without modification.

D. Specific Provisions of Part 422, Subpart M

1. General Provisions (Sec.  422.562)
    Current Sec.  422.562(c)(1)(ii) states that if an enrollee receives 
immediate QIO review of a determination of non-coverage of inpatient 
hospital care, the QIO review decision is subject only to the appeal 
procedures set forth in parts 476 and 478 of title 42, chapter IV. 
However, we stated in the proposed rule that we believe this provision 
is an outdated reference that has been superseded by current Sec.  
422.622, which provides for requesting immediate QIO review of the 
decision to discharge an enrollee from an inpatient hospital setting 
and appeals of that review as described under part 422, subpart M. The 
regulatory provisions at Sec.  422.622 describe the processes for QIO 
review of the decision to discharge an MA enrollee from the inpatient 
hospital setting. Section 422.622 also explains the availability of 
other appeals processes if the enrollee does not meet the deadline for 
an immediate QIO review of the discharge decision. These part 422, 
subpart M provisions govern the review processes for MA enrollees 
disputing discharge from an inpatient hospital setting. As noted above, 
we stated in the proposed rule that we believe the references to the 
procedures in parts 476 and 478 at Sec.  422.562(c)(1)(ii) are 
obsolete. Therefore, we proposed to delete Sec.  422.562(c)(1) to 
remove the outdated reference in current Sec.  422.562(c)(1)(ii) and 
consolidate current (c)(1) and (c)(1)(i) into proposed (c)(1). 81 FR 
43790, 43852.
    We received no comments on these proposals. Accordingly, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec.  422.562 as proposed above without modification.
    In addition to the revisions discussed above, as discussed in 
section II.A.3 of this final rule, we are also finalizing revisions to 
Sec.  422.562(d). In section II.A.3 of this final rule above, we 
discuss our proposal to revise Sec.  422.562(d), the comments we 
received related to this proposal, and the revisions we are finalizing 
to Sec.  422.562(d) in this rule.
2. Notice of Reconsidered Determination by the Independent Entity 
(Sec.  422.594)
    Current Sec.  422.594(b)(2) requires the notice of the 
reconsideration determination by an IRE to inform the parties of their 
right to an ALJ hearing if the amount in controversy is $100 or more, 
if the determination is adverse (does not completely reverse the MAO's 
adverse organization determination). We proposed at Sec.  422.594(b)(2) 
to amend this requirement so that the notice informs the parties of 
their right to an ALJ hearing if the amount in controversy meets the 
requirements of Sec.  422.600, which in turn refers to the part 405 
computation of the amount in controversy. We stated in the proposed 
rule that we believed this would increase accuracy in conveying when a 
party has a right to an ALJ hearing, and would be more consistent with 
section 1852(g)(5) of the Act, which provides that a hearing by the 
Secretary shall not be available to an individual if the amount in 
controversy is less than $100, as adjusted annually in accordance with 
section 1869(b)(1)(E)(iii) of the Act, which is implemented in part 405 
at Sec.  405.1006. 81 FR 43790, 43852.We discuss our proposed changes 
to Sec.  405.1006 in section III.A.3.d of the proposed rule and 
II.B.3.d of this final rule above.
    We received no comments on these proposals. Accordingly, for the 
reasons discussed above and in the proposed

[[Page 5097]]

rule, we are finalizing the changes to Sec.  422.594 as proposed 
without modification.
3. Request for an ALJ Hearing (Sec.  422.602)
    Current Sec.  422.602(b) provides that a party must file a request 
for an ALJ hearing within 60 days of the date of the notice of the 
IRE's reconsidered determination. However, in similar appeals brought 
under Medicare Part A and Part B at Sec.  405.1002, and Part D at Sec.  
423.2002, a request for an ALJ hearing must be filed within 60 calendar 
days of receipt of a notice of reconsideration. We proposed at Sec.  
422.602(b)(1) to align the part 422 time frame for filing a request for 
an ALJ hearing with provisions for similar appeals under Medicare Part 
A and Part B, and Part D. We proposed that a request for an ALJ hearing 
would be required to be filed within 60 calendar days of receiving the 
notice of a reconsidered determination, except when the time frame is 
extended by an ALJ or, as proposed, attorney adjudicator, as provided 
in part 405. To provide consistency for when a notice of a reconsidered 
determination is presumed to have been received, we proposed at Sec.  
422.602(b)(2) that the date of receipt of the reconsideration is 
presumed to be 5 calendar days after the date of the notice of the 
reconsidered determination, unless there is evidence to the contrary, 
which is the same presumption that is applied to similar appeals under 
Medicare Part A and Part B at Sec.  405.1002, and Part D at Sec.  
423.2002. 81 FR 43790, 43852-43853.
    Provided below are summaries of the specific comments received and 
responses to these comments:
    Comment: We received two comments on this proposal. One commenter 
supported revising Sec.  422.602(b) to state in paragraph (b)(1) that a 
request for hearing must be filed within 60 calendar days of receipt of 
the notice of a reconsidered determination, rather than 60 calendar 
days of the date of the notice. The other commenter also supported this 
proposed revision, as well as the proposal to create a presumption at 
Sec.  422.602(b)(2) that the date of receipt of the reconsideration is 
5 calendar days after the date of the notice of the reconsidered 
determination, unless there is evidence to the contrary. The commenter 
expressed that the current inconsistency between Sec.  422.602(b) and 
the part 405, subpart I rules has caused problems for beneficiaries, 
providers, and ALJs, and supported our efforts to standardize the time 
frames for requesting an ALJ hearing.
    Response: We thank both commenters for their support.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec.  422.602 as proposed without modification.
4. Medicare Appeals Council (Council) Review (Sec.  422.608)
    Current Sec.  422.608 provides that any party to the hearing, 
including the MAO, who is dissatisfied with the ALJ hearing decision 
may request that the Council review the ALJ's decision or dismissal. We 
stated in the proposed rule that we believed that the reference to a 
``hearing'' or ``hearing decision,'' in the first instance, then 
``decision or dismissal'' in the second instance, may cause confusion 
regarding a party's right to request Council review. We proposed at 
Sec.  422.608 that any party (including the MAO) to the ALJ's or, as 
proposed in section II.B of the proposed rule (and discussed in section 
II.A.2 of this final rule above), attorney adjudicator's decision or 
dismissal, who is dissatisfied with the decision or dismissal, may 
request that the Council review that decision or dismissal. We stated 
in the proposed rule that we believed this would resolve any potential 
confusion regarding a party's right to request Council review of a 
decision when a hearing was not conducted and a dismissal of a request 
for hearing, and further provide that the section applies to decisions 
and dismissals issued by an attorney adjudicator. Therefore, we 
proposed to revise Sec.  422.608 to provide that a request for Council 
review may be filed by a party (including the MAO) if he or she is 
dissatisfied with an ALJ's or attorney adjudicator's decision or 
dismissal. 81 FR 43790, 43853.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing these 
changes to Sec.  422.608 as proposed above without modification.
    In addition to the revisions discussed above, as discussed in 
section II.A.3 of this final rule, we also are revising Sec.  422.608 
to include a cross reference to Sec.  422.562(d)(2).
5. Judicial Review (Sec.  422.612)
    Current Sec.  422.612 provides the circumstances under which a 
party may request judicial review of an ALJ or Council decision, and 
directs appellants to the procedures in part 405 for filing a request 
for judicial review. We proposed at Sec.  422.612(a) to replace each 
instance of ``ALJ's'' with ``ALJ's or attorney adjudicator's''. Thus, 
we proposed in Sec.  422.612(a) that appellants would be able to file a 
request for judicial review in Federal district court of actions made 
by an attorney adjudicator, as proposed in section II.B of the proposed 
rule (and discussed in section II.A.2 above) (or by the Council 
following an action by an attorney adjudicator), to the same extent 
that judicial review is available under Sec.  412.622(a) for ALJ 
actions (or Council actions following an action by an ALJ). 81 FR 
43790, 43853.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec.  422.612 as proposed without modification.
6. Reopening and Revising Determinations and Decisions (Sec.  422.616)
    Current Sec.  422.616(a) provides that the determination or 
decision of an MA organization, independent entity, ALJ, or the Council 
that is otherwise final and binding may be reopened and revised by the 
entity that made the determination or decision, subject to the rules in 
part 405. We proposed at Sec.  422.616(a) to replace ``ALJ'' with ``ALJ 
or attorney adjudicator.'' As described in section III.A.2.l of the 
proposed rule and II.B.2.l of this final rule above with respect to 
Sec. Sec.  405.980, 405.982, 405.984, 423.1980, 423.1982, and 423.1984, 
we believe it is necessary for an attorney adjudicator to have the 
authority to reopen the attorney adjudicator's decision on the same 
bases as an ALJ may reopen the ALJ's decision under the current rules, 
and the action should be subject to the same limitations and 
requirements, and have the same effects

[[Page 5098]]

as an ALJ's action under these provisions. 81 FR 43790, 43853.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec.  422.616 as proposed without modification.
7. How an MA Organization Must Effectuate Standard Reconsideration 
Determinations and Decisions, and Expedited Reconsidered Determinations 
(Sec. Sec.  422.618 and 422.619)
    Current Sec.  422.618(c)(1) and (c)(2) provide instructions for 
effectuation of decisions issued by an ALJ, or at a higher level of 
appeal, that reverse an IRE's decision on a standard reconsidered 
determination or decision. We proposed to replace ``ALJ'' with ``ALJ or 
attorney adjudicator'' at Sec.  422.618(c)(1) and to make corresponding 
changes to Sec.  422.619(c)(1) for decisions that reverse an IRE's 
decision on an expedited reconsidered determination or decision. We 
stated in the proposed rule that we believe the process for 
effectuating the decision of an attorney adjudicator, as proposed in 
section II.B of the proposed rule (and discussed in section II.A.2 of 
this final rule above), should be the same as the process for 
effectuating the decision of an ALJ. 81 FR 43790, 43853.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec. Sec.  422.618 and 422.619 as proposed without modification.
8. Requesting Immediate QIO Review of the Decision To Discharge From 
the Inpatient Hospital and Fast-Track Appeals of Service Terminations 
to Independent Review Entities (IREs) (Sec. Sec.  422.622 and 422.626)
    In accordance with section 1852(g)(3) and (g)(4) of the Act, 
current Sec. Sec.  422.622 and 422.626 provide for reviews of QIO 
determinations and expedited IRE reconsiderations of certain QIO 
determinations related to terminations of covered provider services 
furnished by home health agencies (HHAs), skilled nursing facilities 
(SNFs), and comprehensive outpatient rehabilitation facilities (CORFs) 
to an MA enrollee, and MA enrollee discharges from an inpatient 
hospital. Current Sec.  422.622(g) provides that if an enrollee is 
still an inpatient in the hospital after a QIO determination reviewing 
a provider discharge from a hospital, the enrollee may request an IRE 
reconsideration of the QIO determination in accordance with Sec.  
422.626(g); and if an enrollee is no longer an inpatient in the 
hospital, the enrollee may appeal the QIO determination to an ALJ. 
Current Sec.  422.626(g)(3) provides that if the IRE reaffirms its 
decision to terminate covered provider services furnished by an HHA, 
SNF, or CORF in whole or in part, the enrollee may appeal the IRE's 
reconsidered determination to an ALJ. We proposed at Sec. Sec.  
422.622(g)(2) and 422.626(g)(3) to amend these references to provide 
that the appeal is made to OMHA for an ALJ hearing. We stated in the 
proposed rule that we believed these revisions would clarify where a 
request for an ALJ hearing is directed. 81 FR 43790, 43853.
    We received no comments on these proposals, other than comments 
discussed in section II.A.4 of this final rule above related to our 
general proposal to reference OMHA or an OMHA office, in place of 
current references to an unspecified entity, ALJs, and ALJ hearing 
offices, when a reference to OMHA or an OMHA office provides a clearer 
explanation of a topic. Accordingly, for the reasons discussed above 
and in the proposed rule, we are finalizing the changes to Sec. Sec.  
422.622 and 422.626 as proposed without modification.

E. Specific Provisions of Part 478, Subpart B

1. Applicability and Beneficiary's Right to a Hearing (Sec. Sec.  
478.14 and 478.40)
    Current Sec.  478.14(c)(2) explains that for the purposes of part 
478 reconsideration and appeals, limitation of liability determinations 
on excluded coverage of certain services are made under section 1879 of 
the Act, and initial determinations under section 1879 of the Act and 
further appeals are governed by the reconsideration and appeal 
procedures in part 405, subpart G for determinations under Medicare 
Part A, and part 405, subpart H for determinations under Medicare Part 
B. In addition, current Sec.  478.40 states that an ALJ hearing may be 
obtained from the SSA Office of Hearings and Appeals, and the 
provisions of subpart G of 42 CFR part 405 apply unless they are 
inconsistent with the specific provisions of subpart B of 42 CFR part 
478. We stated in the proposed rule that these references are outdated. 
Since Sec. Sec.  478.14 and 478.40 were last updated in 1999, section 
931 of the MMA transferred responsibility for the ALJ hearing function 
from SSA to HHS, and HHS established OMHA in 2005, to administer the 
ALJ hearing function, including ALJ hearings conducted under titles XI 
and XVIII of the Act (see 70 FR 36386). In addition, BIPA and the MMA 
established new appeal procedures that were implemented in 2005, at 42 
CFR part 405, subpart I (70 FR 11420), and the portions of subparts G 
and H that previously applied to part 478, subpart B appeals were 
removed in 2012 (77 FR 29002). We proposed in Sec. Sec.  478.14 and 
478.40 to replace the current outdated references to part 405, subparts 
G and H, with references to part 405, subpart I. We also proposed in 
Sec.  478.40 to update the reference to the entity with responsibility 
for the ALJ hearing function by replacing the SSA Office of Hearings 
and Appeals with OMHA. 81 FR 43790, 43854.
    We received no comments on these proposals. Accordingly, for the 
reasons discussed above and in the proposed rule, we are finalizing 
these changes to Sec. Sec.  478.14 and 478.40 as proposed above without 
modification.
    In addition to the revisions discussed above, as discussed in 
section II.A.3 of this final rule, we are also finalizing revisions to 
Sec.  478.40(c). In section II.A.3 of this final rule above, we discuss 
our proposal to revise Sec.  478.40(c), the comments we received 
related to this proposal, and the revisions we are finalizing to Sec.  
478.40(c) in this rule.
2. Submitting a Request for a Hearing (Sec.  478.42)
    Similar to current Sec.  478.40, as discussed above, current Sec.  
478.42(a) has outdated references to SSA offices that are no longer 
involved in the Medicare claim appeals process. In addition, current 
Sec.  478.42(a) permits beneficiaries to file requests for an ALJ 
hearing with other entities, which could cause significant delays in 
obtaining a hearing

[[Page 5099]]

before an OMHA ALJ. We proposed in Sec.  478.42(a) to direct 
beneficiaries to file a request for an ALJ hearing with the OMHA office 
identified in the QIO's notice of reconsidered determination. This 
revision would be clearer for beneficiaries, who are provided with 
appeal instructions by the QIOs, and reduce delays in obtaining a 
hearing by an OMHA ALJ. 81 FR 43790, 43854.
    Current Sec.  478.42(b) requires that a request for hearing is 
filed within 60 calendar days of receipt of the notice of the QIO 
reconsidered determination and the date of receipt is assumed to be 5 
days after the date on the notice unless there is a reasonable showing 
to the contrary. Current Sec.  478.42(b) also provides that a request 
is considered filed on the date it is postmarked. To align part 478, 
subpart B with procedures for requesting an ALJ hearing under part 405, 
subpart I; part 422, subpart M; and part 423, subpart U, we proposed in 
Sec.  478.42(b) to provide that the request for hearing must be filed 
within 60 ``calendar'' days of receiving notice of the QIO reconsidered 
determination and that the notice is presumed to be received 5 
``calendar'' days after the date of the notice. In addition, to further 
align the part 478, subpart B procedures for requesting an ALJ hearing 
with the other parts, we proposed in Sec.  478.42(c) to amend the 
standard to demonstrate that notice of QIO reconsidered determination 
was not received within 5 calendar days by requiring ``evidence'' 
rather than the current ``reasonable showing,'' and also to revise when 
a request is considered filed, from the date it is postmarked to the 
date it is received by OMHA. These changes would create parity with 
requests for hearing filed by beneficiaries and enrollees for similar 
services but under other parts of title 42, chapter IV. 81 FR 43790, 
43854.
    Provided below is a summary of the specific comment received and 
our response to this comment:
    Comment: We received one comment on these proposals. The commenter 
asked whether there was an inconsistency in calculating time for 
transport of mail from the QIO to the appellant, as compared to mail 
from the appellant to OMHA. The commenter questioned why five calendar 
days were allowed for transport from the date on the QIO notice, while 
zero days were allowed on top of the statutory 60-day filing period for 
transport of the request for hearing from the appellant.
    Response: Proposed Sec.  478.42(b) revises when a request is 
considered filed, from the date it is postmarked to the date it is 
received by OMHA, to create parity with requests for hearing and 
reviews of dismissals filed by beneficiaries and enrollees for similar 
services but under part 405, subpart I; part 422, subpart M; and part 
423, subpart U, all of which consider a request to be filed on the date 
it is received by OMHA. For notices sent from the QIO to the appellant, 
the regulation presumes a mailing time of five calendar days to account 
for the time it takes to receive the notice through regular mail. 
However, as is currently required for appellants under part 405, 
subpart I; part 422, subpart M; and part 423, subpart U, we proposed 
that appellants filing requests for hearing and reviews of dismissals 
under part 478, subpart B would now be required to mail requests with 
sufficient time for the requests to be received by OMHA no later than 
the 60th day after receiving the QIO's reconsidered determination.
    After review and consideration of the comments received, for the 
reasons discussed above and in the proposed rule, we are finalizing the 
changes to Sec.  478.42 as proposed without modification.
3. Determining the Amount in Controversy (Sec.  478.44)
    Current Sec.  478.44(a) explains how the amount in controversy for 
an ALJ hearing is determined in part 478, subpart B hearings. Current 
Sec.  478.44(a) has outdated references to Sec. Sec.  405.740 and 
405.817 from part 405, subparts G and H respectively, for calculating 
the amount in controversy for an individual appellant or multiple 
appellants. In 2012, subpart G was removed and subpart H was 
significantly revised and no longer applies to Medicare claim appeals 
(77 FR 29002). To update these reference to the current part 405 rules, 
we proposed in Sec.  478.44(a) to replace the outdated cross-references 
for calculating the amount in controversy with references to Sec.  
405.1006(d) and (e), which describe the calculation for determining the 
amount in controversy and the standards for aggregating claims by an 
individual appellant or multiple appellants. 81 FR 43790, 43854. We 
discuss our proposed changes to Sec.  405.1006 in section III.A.3.d of 
the proposed rule and II.B.3.d of this final rule above.
    Current Sec.  478.44(b) and (c) explain that if an ALJ determines 
the amount in controversy is less than $200, the ALJ, without holding a 
hearing, notifies the parties to the hearing, and if a request for 
hearing is dismissed because the amount in controversy is not met, a 
notice will be sent to the parties to the hearing. However, when a 
request for hearing is dismissed because the amount in controversy is 
not met, no hearing is conducted and the parties to the proceedings are 
the same regardless of whether a hearing was conducted. To prevent 
potential confusion, we proposed in Sec.  478.44(b) and (c) to replace 
``parties to the hearing'' with ``parties'' so it is understood that 
they are parties regardless of whether a hearing is conducted. Because 
an attorney adjudicator would have to determine whether appeals 
assigned to him or her, as proposed in section II.B of the proposed 
rule (and discussed in section II.A.2 of this final rule above), meet 
the amount in controversy requirement, we also proposed at Sec.  
478.44(a) and (b) that an attorney adjudicator may determine the amount 
in controversy, and may determine that the amount in controversy is 
less than $200 and notify the parties to submit additional evidence to 
prove that the amount in controversy is at least $200. However, because 
we did not propose authority for an attorney adjudicator to dismiss a 
request for an ALJ hearing because the amount in controversy is not 
met, we proposed in Sec.  478.44(c) that in cases where an attorney 
adjudicator has requested that the parties submit additional evidence 
related to the amount in controversy, an ALJ would dismiss the request 
for hearing if at the end of the 15-day period to submit additional 
evidence to prove that the amount in controversy is at least $200, the 
ALJ determines that the amount in controversy is less than $200. 81 FR 
43790, 43854.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec.  478.44 as proposed without modification.
4. Medicare Appeals Council and Judicial Review (Sec.  478.46)
    Current Sec.  478.46(a) states that the Council will review an 
ALJ's hearing decision or dismissal under the same circumstances as 
those set forth at 20 CFR 404.970, which is now an outdated reference 
to SSA Appeals Council procedures for Council review. We proposed at 
Sec.  478.46(a) to replace the outdated reference to 20 CFR 404.970

[[Page 5100]]

with references to current Sec. Sec.  405.1102 (``Request for Council 
review when ALJ or attorney adjudicator issued a decision or 
dismissal'') and 405.1110 (``Council reviews on its own motion''). In 
addition, we proposed in Sec.  478.46(a) and (b) to replace ``hearing 
decision'' with ``decision,'' and ``ALJ'' with ``ALJ or attorney 
adjudicator'' because hearings are not always conducted and a decision 
can generally be appealed regardless of whether a hearing was 
conducted, and attorney adjudicators may issue decisions or dismissals 
for which Council review may be requested, as proposed in section II.B 
of the proposed rule (and discussed in section II.A.2 above). 81 FR 
43790, 43855.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec.  478.46 as proposed without modification.
5. Reopening and Revision of a Reconsidered Determination or a Decision 
(Sec.  478.48)
    The title of current Sec.  478.48 references reopenings and 
revisions of reconsidered determinations and hearing decisions, and 
current Sec.  478.48 has an outdated reference to subpart G of 42 CFR 
part 405 for the procedures for reopening a decision by an ALJ or the 
DAB.
    We proposed to revise the title of Sec.  478.48 to replace 
``hearing decision'' with ``decision,'' and in proposed paragraphs (b) 
and (c) to replace ``ALJ'' with ``ALJ or attorney adjudicator'' so the 
provision is understood to apply to decisions by ALJs, regardless of 
whether a hearing was conducted, or, as proposed in section II.B of the 
proposed rule (and discussed in section II.A.2 above), attorney 
adjudicators, as well as review decisions, which are conducted by the 
Council at the DAB. We also proposed at Sec.  478.48(b) to replace the 
outdated reference to Sec.  405.750(b), which was part of the now 
removed part 405, subpart G (77 FR 29016 through 29018), with Sec.  
405.980, which is the current part 405, subpart I reopening provision. 
81 FR 43790, 43855.
    We received no comments on these proposals, other than comments 
discussed in section II.A.2 of this final rule above related to our 
general proposals to provide authority for attorney adjudicators to 
issue certain decisions, dismissals and remands, and to revise the 
rules so that decisions and dismissals issued by attorney adjudicators 
may be reopened and/or appealed in the same manner as equivalent 
decisions and dismissals issued by ALJs. Accordingly, for the reasons 
discussed above and in the proposed rule, we are finalizing the changes 
to Sec.  478.48 as proposed without modification.

F. Effective Date and Applicability of the Provisions of the Final Rule

    In accordance with 5 U.S.C. 553(d) and section 1871 of the Act, 
publication of a final rule may be made not less than 30 days before 
its effective date. We are making this final rule effective 60 days 
after publication in the Federal Register to provide appellants, other 
parties and potential parties and participants, and those who 
adjudicate appeals with additional time to make any necessary changes 
to comply with the provisions of the final rule.
    Although we did not solicit comment on the effective date of the 
final rule, we did receive one comment on the subject. Provided below 
is a summary of that comment, along with our response to the comment 
and further details about the effective date and applicability of the 
final appeals provisions.
    Comment: One commenter requested that the final rule not be made 
effective for Part D plan sponsors prior to the next contract year that 
is at least six months after the published effective date of the final 
rule. The commenter believed this additional time would be necessary to 
allow time for CMS to issue implementation guidance and for plans and 
pharmacy benefit managers to revise policies and documentation to 
describe the revised appeals procedures to enrollees.
    Response: We do not believe further delaying the effective date of 
this rule for Part D plan sponsors is necessary. Part D plan sponsors 
will have 60 days from publication before the provisions of the final 
rule become effective. In addition, the changes we are finalizing 
relate primarily to the OMHA level of appeal. We proposed no changes to 
the part 423, subpart M rules governing Part D plan sponsor coverage 
determinations, redeterminations, or reconsiderations by an IRE, other 
than minor conforming edits associated with our attorney adjudicator 
proposal and the proposal to replace references to ``MAC'' with 
``Council.'' We expect that enrollees will continue to receive 
information about the OMHA level of appeal in the notice of the IRE's 
reconsideration, and therefore we believe it is unnecessary to allow 
additional time for Part D plan policies and documentation to be 
updated to inform beneficiaries of the changes in the final rule.
    While the provisions of this final rule are effective with the 
effective date of this final rule, we recognize that there is currently 
a large volume of pending appeals at the OMHA and Council levels that 
were filed before the effective date of the final rule and are at 
various stages of the adjudication process, and it may be unclear how 
these final provisions will apply in those instances--and in a manner 
that avoids retroactive application. The provisions of this final rule 
will apply prospectively to all appeals, but specific provisions will 
not be applied to pending appeals filed before the effective date of 
the final rule in which certain actions or stages of the appeals 
process have already taken place prior to the effective date. For 
example, a revised requirement regarding the contents of a request for 
hearing is effective with the effective date of this final rule, but 
the requirement would not be applicable in a pending appeal if the 
hearing request was already filed prior to the effective date of this 
final rule (that is, the hearing request would not have to be re-filed 
to include the new contents of the request finalized in this rule). But 
for other appeals that are pending prior to the effective date of this 
final rule, provisions of this final rule may be applicable if a 
particular action or procedural step in those appeals has not yet taken 
place (for example, a revised final requirement regarding scheduling 
and sending notice of a hearing would apply if the hearing has not yet 
been scheduled and the notice of hearing has not yet been sent in a 
pending appeal).
    Accordingly, the revised appeal procedures of this final rule are 
effective on the effective date of the final rule for all appeals filed 
on or after the effective date of the final rule, and appeals that were 
filed, but not decided, dismissed or remanded, prior to the effective 
date of the final rule. However, with regard to appeals that were 
filed, but not decided, dismissed or remanded, prior to the effective 
date of the final rule, we have provided a list of provisions in the 
table below as examples to help clarify how the revised rules will 
apply depending upon whether certain actions or procedures in such 
appeals have taken place as of the effective date of the

[[Page 5101]]

final rule. This guidance clarifying the application of certain 
provisions will help ensure pending appeals continue to move forward in 
the appeals process, and avoid retroactive application of the revised 
appeal provisions when certain actions or stages of the appeals process 
took place prior to the effective date of this final rule. We will 
provide additional guidance in the future, as necessary, to assist 
appellants and other parties, as well as OMHA and the Council, in 
regards to the application of the revised appeals procedures for 
appeals that were pending prior to the effective date of the final 
rule.

  Application of Certain Final Appeals Provisions for Appeals That Were
  Filed But Not Decided, Dismissed, or Remanded Prior to the Effective
                           Date of Final Rule
------------------------------------------------------------------------
                Section(s)                          Applicability
------------------------------------------------------------------------
Sec.   405.910(d)(3)......................  Not applicable (any
                                             applicable time frame will
                                             not be impacted if an
                                             appointment of
                                             representative is
                                             defective).
Sec.   405.910(l).........................  Applicable to delegations of
                                             an appointment of
                                             representation that are
                                             made on or after the
                                             effective date of the final
                                             rule.
Sec.   405.990............................  Applicable to requests for
                                             expedited access to
                                             judicial review filed on or
                                             after the effective date of
                                             the final rule.
Sec.   405.1000(e)........................  Applicable to for waivers of
                                             the right to appear filed
                                             on or after the effective
                                             date of the final rule.
Sec.   405.1006(e)........................  Not applicable (the
                                             provisions of the rules
                                             related to aggregating
                                             claims to meet the amount
                                             in controversy in effect at
                                             the time the request for
                                             hearing or request for
                                             review of a QIC dismissal
                                             was filed (current Sec.
                                             405.1006(e)) continue to
                                             apply).
Sec.   405.1010, Sec.   405.1012..........  Applicable to elections to
                                             participate in the
                                             proceedings on a request
                                             for an ALJ hearing and
                                             elections for party status
                                             made on or after the
                                             effective date of the final
                                             rule.
Sec.   405.1014(a)........................  Not applicable (the
                                             provisions of the rules
                                             related to the content of
                                             the request in effect at
                                             the time the request for
                                             hearing was filed (current
                                             Sec.   405.1014(a))
                                             continue to apply).
Sec.   405.1016(f)........................  Applicable to requests for
                                             escalation filed on or
                                             after the effective date of
                                             the final rule.
Sec.   405.1020-Sec.   405.1024...........  Applicable to hearings that
                                             are scheduled or re-
                                             scheduled on or after the
                                             effective date of the final
                                             rule, regardless of when
                                             the hearing is scheduled to
                                             occur.
Sec.   405.1028...........................  Applicable to reviews of
                                             evidence submitted by
                                             parties that occur on or
                                             after the effective date of
                                             the final rule.
Sec.   405.1030...........................  Applicable to hearings that
                                             occur on or after the
                                             effective date of the final
                                             rule.
Sec.   405.1032(a)-(c)....................  Applicable unless a hearing
                                             was scheduled or re-
                                             scheduled before the
                                             effective date of the final
                                             rule, regardless of when
                                             the hearing is scheduled to
                                             occur.
Sec.   405.1032(d)........................  Not applicable (the
                                             provisions of the rules
                                             related to appeals
                                             involving statistical
                                             sampling and extrapolations
                                             in effect at the time the
                                             request for hearing was
                                             filed (current Sec.
                                             405.1064) continue to
                                             apply).
Sec.   405.1038(b)(1)(i)..................  Applicable to waivers of the
                                             right to appear filed on or
                                             after the effective date of
                                             the final rule.
Sec.   405.1038(b)(1)(ii).................  Not applicable (the
                                             provisions of the rules
                                             related to whether the ALJ
                                             may decide a case on the
                                             record and not conduct a
                                             hearing when the appellant
                                             lives outside of the United
                                             States in effect at the
                                             time the request for
                                             hearing was filed (current
                                             Sec.   405.1038(b)(1)(ii))
                                             continue to apply).
Sec.   405.1040...........................  Applicable to conferences
                                             scheduled on or after the
                                             effective date of the final
                                             rule, regardless of when
                                             the conferences are
                                             scheduled to occur.
Sec.   405.1042(a)........................  Applicable to requests for
                                             an ALJ hearing assigned to
                                             an ALJ or attorney
                                             adjudicator on or after the
                                             effective date of the final
                                             rule.
Sec.   405.1056(g)........................  Applicable to remands issued
                                             on or after the effective
                                             date of the final rule.
Sec.   405.1104...........................  Applicable to requests for
                                             escalation filed on or
                                             after the effective date of
                                             the final rule.
Sec.   423.1970(c)........................  Not applicable (the
                                             provisions of the rules
                                             related to aggregating
                                             claims to meet the amount
                                             in controversy in effect at
                                             the time the request for
                                             hearing or request for
                                             review of a QIC dismissal
                                             was filed (current Sec.
                                             423.1970(c)) continue to
                                             apply).
Sec.   423.1990...........................  Applicable to requests for
                                             expedited access to
                                             judicial review filed on or
                                             after the effective date of
                                             the final rule.
Sec.   423.2000(e)........................  Applicable to waivers of the
                                             right to appear filed on or
                                             after the effective date of
                                             the final rule.
Sec.   423.2010...........................  Applicable to requests to
                                             participate in the
                                             proceedings on a request
                                             for an ALJ hearing made on
                                             or after the effective date
                                             of the final rule.
Sec.   423.2014(a)........................  Not applicable (the
                                             provisions of the rules
                                             related to the content of
                                             the request in effect at
                                             the time the request for
                                             hearing was filed (current
                                             Sec.   423.2014(a))
                                             continue to apply).
Sec.   423.2020-Sec.   423.2024...........  Applicable to hearings that
                                             are scheduled or re-
                                             scheduled on or after the
                                             effective date of the final
                                             rule, regardless of when
                                             the hearing is scheduled to
                                             occur.
Sec.   423.2030...........................  Applicable to hearings that
                                             occur on or after the
                                             effective date of the final
                                             rule.
Sec.   423.2032...........................  Applicable unless a hearing
                                             was scheduled or re-
                                             scheduled before the
                                             effective date of the final
                                             rule, regardless of when
                                             the hearing is scheduled to
                                             occur.
Sec.   423.2038(b)(1)(i)..................  Applicable to waivers of the
                                             right to appear filed on or
                                             after the effective date of
                                             the final rule.
Sec.   423.2038(b)(1)(ii).................  Not applicable (the
                                             provisions of the rules
                                             related to whether the ALJ
                                             may decide a case on the
                                             record and not conduct a
                                             hearing when the appellant
                                             lives outside of the United
                                             States in effect at the
                                             time the request for
                                             hearing was filed (current
                                             Sec.   423.2038(b)(1)(ii))
                                             continue to apply).
Sec.   423.2040...........................  Applicable to conferences
                                             scheduled on or after the
                                             effective date of the final
                                             rule, regardless of when
                                             the conferences are
                                             scheduled to occur.
Sec.   423.2042(a)........................  Applicable to requests for
                                             an ALJ hearing assigned to
                                             an ALJ or an attorney
                                             adjudicator on or after the
                                             effective date of the final
                                             rule.
Sec.   423.2056(g)........................  Applicable to remands issued
                                             on or after the effective
                                             date of the final rule.
Sec.   478.40(a)..........................  Applicable to requests for
                                             an ALJ hearing filed on or
                                             after the effective date of
                                             the final rule.
Sec.   478.42.............................  Applicable to requests for
                                             an ALJ hearing filed on or
                                             after the effective date of
                                             the final rule.
------------------------------------------------------------------------


[[Page 5102]]

III. Comments Beyond the Scope of the Final Rule

    In response to the proposed rule, some commenters chose to raise 
issues that are beyond the scope of our proposals. In this final rule, 
we are generally not summarizing or responding to those comments in 
this document. However, we will review the comments and consider 
whether to take other actions, such as revising or clarifying CMS 
program operating instructions or procedures, based on the information 
or recommendations in the comments. In a few instances, commenters 
captioned their comments indicating they were submitted in response to 
a particular proposal, but the comment was nevertheless outside the 
scope of the proposed rule. In these instances, we briefly summarized 
the comments in section II of this final rule above, in the appropriate 
subsection addressing the particular proposal.

IV. Provisions of the Final Rule

    For the most part, this final rule incorporates the provisions of 
the proposed rule. The provisions of this final rule that differ from 
the proposed rule are as follows:
     In response to public comment, we added the following 
language to Sec.  401.109(a) to include the general criteria the DAB 
Chair may consider when selecting a Council decision as precedential: 
``In determining which decisions should be designated as precedential, 
the DAB Chair may take into consideration decisions that address, 
resolve, or clarify recurring legal issues, rules or policies, or that 
may have broad application or impact, or involve issues of public 
interest.'' We also added a parenthetical to indicate that the term 
``DAB Chair'' is short for the Chair of the Department of Health and 
Human Services Departmental Appeals Board.
     For consistency with the rest of part 405, subpart I, and 
because the terms ``ALJ'' and ``Council'' are already defined in Sec.  
405.902, we removed ``Administrative Law Judge (ALJ)'' and ``Medicare 
Appeals Council (Council)'' from Sec.  405.904(a)(1) and added ``ALJ'' 
and ``Council'' in their place, respectively.
     For consistency with Sec.  405.1038, we removed language 
that we inadvertently included in Sec.  405.1000(g) that is not 
consistent with the language in Sec.  405.1038(a) as finalized in this 
rule. We revised Sec.  405.1000(g) to state that ``An ALJ or attorney 
adjudicator may also issue a decision on the record on his or her own 
initiative if the evidence in the administrative record supports a 
fully favorable finding for the appellant, and no other party to the 
appeal is liable for the claims at issue, unless CMS or a contractor 
has elected to be a party to the hearing in accordance with Sec.  
405.1012.''
     In response to public comment, we did not finalize our 
proposal at Sec.  405.1006(d)(2)(i)(A) to use the Medicare allowable 
amount to calculate the amount in controversy for items and services 
that are priced based on a published Medicare fee schedule or published 
contractor-priced amount. In addition, we did not finalize Sec.  
405.1006(d)(2)(i)(B) because, given that we did not finalize Sec.  
405.1006(d)(2)(i)(A), there was no longer a need to distinguish between 
items and services with and without a published Medicare fee schedule 
or contractor-priced amount. We also did not finalize proposed Sec.  
405.1006(d)(2) and (d)(2)(i) introductory text or proposed Sec.  
405.1006(d)(1) introductory text. Accordingly, we maintained the text 
of current Sec.  405.1006(d)(1), except that we: (1) Added ``In 
general'' as a paragraph heading, as proposed; (2) replaced ``for the 
items and services in question'' with ``for the items and services in 
the disputed claim'' in Sec.  405.1006(d)(1) introductory text, as 
proposed; and (3) replaced ``Any deductible and coinsurance amounts 
applicable in the particular case'' in current Sec.  405.1006(d)(1)(ii) 
with ``Any deductible and/or coinsurance amounts that may be collected 
for the items or services,'' as proposed. In addition, we also did not 
finalize our proposal to revise and re-designate current Sec.  
405.1006(d)(2) as Sec.  405.1006(d)(3), except for the proposal to add 
``Limitation on liability'' as a paragraph heading. However, for 
consistency with paragraph (d)(1)(ii), as finalized, we replaced ``any 
deductible and coinsurance amounts applicable in the particular case'' 
in current Sec.  405.1006(d)(2) with ``any deductible and/or 
coinsurance amounts that may be collected for the items or services.'' 
We also did not finalize proposed Sec.  405.1006(d)(2)(ii) and (iii).
     We finalized proposed Sec.  405.1006 paragraphs (d)(4), 
(5), (6), and (7) with the modifications discussed below, but re-
designated them as paragraphs (d)(3), (4), (5), and (6), respectively, 
because we did not finalize proposed Sec.  405.1006(d)(2) or re-
designate current Sec.  405.1006(d)(2) as Sec.  405.1006(d)(3). We 
replaced ``in accordance with paragraphs (d)(1) and (d)(2)(ii) of this 
section, except that the basis for the amount in controversy'' in 
paragraph (d)(3) (proposed paragraph (d)(4)) with ``in accordance with 
paragraph (d)(1) of this section, except that the amount charged to the 
individual.'' In addition, we replaced ``Notwithstanding paragraphs 
(d)(1) and (2) of this section'' in paragraphs (d)(4), (5), and (6) 
(proposed paragraphs (d)(5), (6), and (7)) with ``Notwithstanding 
paragraph (d)(1) of this section.''
     We corrected a drafting error in the text of proposed 
Sec.  405.1010(c)(3)(i) by replacing ``by within 14 calendar days'' 
with ``within 14 calendar days.''
     In response to public comment, we added a requirement in 
Sec. Sec.  405.1010(c)(3)(ii), 405.1012(c)(2)(ii) and 
423.2010(d)(3)(ii) that copies of position papers and/or written 
testimony (and for purposes of Sec.  405.1012(c)(2)(ii), any evidence) 
submitted to OMHA must be sent to the other parties within the same 
time frames that apply to the submissions to OMHA.
     We added language to Sec.  405.1010(d)(3) to provide that 
CMS or a contractor that is precluded from participating in the oral 
hearing may still be called as a witness by CMS or a contractor that is 
a party to the hearing in accordance with Sec.  405.1012. In light of 
this change, we also made a corresponding revision to Sec.  
405.1010(c)(2) to state that when CMS or its contractor participates in 
an ALJ hearing, CMS or its contractor may not be called as a witness 
during the hearing and is not subject to examination or cross-
examination by the parties, except as provided in Sec.  405.1010(d)(3).
     We clarified in Sec.  405.1012(a)(2) that an ALJ may not 
request that CMS and/or one or more of its contractors be a party to 
the hearing if the request for hearing was filed by an unrepresented 
beneficiary.
     In response to public comment, we did not finalize our 
proposals at Sec. Sec.  405.1014(a)(1)(vii) and 423.2014(a)(1)(vii), 
which would have required that the request for hearing contain a 
statement of whether the filing party is aware that it or the claim is 
the subject of an investigation or proceeding by OIG or other law 
enforcement agencies.
     In response to public comment, we did not finalize our 
proposal at Sec.  405.1014(a)(1)(viii), which would have required that, 
for requests filed by providers, suppliers, Medicaid State agencies, 
applicable plans, or a beneficiary who is represented by a provider, 
supplier or Medicaid State agency, the request for hearing must include 
the amount in controversy applicable to the disputed claim determined 
in accordance with Sec.  405.1006, unless the matter involves a 
provider or supplier termination of

[[Page 5103]]

Medicare-covered items or services that is disputed by a beneficiary, 
and the beneficiary did not elect to continue receiving the items or 
services.
     We removed the term ``entity office,'' which was a 
drafting error, from proposed Sec.  405.1014(c)(2) and added ``office'' 
in its place.
     We clarified Sec. Sec.  405.1014(c)(2) and 
423.2014(d)(2)(i) to state that if the request for hearing is timely 
filed with an office other than the office specified in the QIC's 
reconsideration, the request is not treated as untimely.
     We revised 405.1014(d)(3) to state that unrepresented 
beneficiaries are exempt from the potential consequences of failing to 
send a copy of the request, materials, and/or evidence or summary 
thereof to the other parties.
     We corrected a drafting error by adding a missing comma to 
Sec.  423.2018(b)(1) and (c)(1) for consistency with Sec.  405.1018(a) 
and to clarify that there are three time frames when a represented 
enrollee may submit written or other evidence he or she wishes to have 
considered: (1) With the request for hearing; (2) by the date specified 
in the request for hearing in accordance with Sec.  423.2014(a)(2); or 
(3) if a hearing is scheduled, within 10 calendar days (or 3 calendar 
days for expedited Part D appeals) of receiving the notice of hearing.
     We revised Sec.  405.1018(d) to provide in paragraph 
(d)(1) that the requirements in paragraphs (a) and (b) do not apply to 
oral testimony given at a hearing or to evidence submitted by 
unrepresented beneficiaries, and in (d)(2) that the requirement in 
paragraph (c) to support new evidence with a statement of good cause 
does not apply to oral testimony given at a hearing or to evidence 
submitted by an unrepresented beneficiary, CMS or any of its 
contractors, a Medicaid State agency, an applicable plan, or a 
beneficiary represented by someone other than a provider or supplier.
     We revised Sec.  405.1020(c)(1) to state that the notice 
of hearing is also sent to CMS or any contractor that has elected to 
participate in the proceedings in accordance with Sec.  405.1010(b).
     Because we proposed to adopt in Sec.  423.2020(b)(2) the 
same revisions as in Sec.  405.1020(b)(2), we revised Sec.  
423.2020(b)(2)(ii)(A) to state ``video-teleconferencing and telephone 
technology are not available,'' rather than ``video-teleconferencing or 
telephone technology is not available,'' for consistency with Sec.  
405.1020(b)(2)(ii)(A) as finalized.
     In response to public comment, we revised Sec. Sec.  
405.1030(b)(2) and 423.2030(b)(2) to provide that the ALJ may limit 
testimony and/or argument at the hearing that are not relevant to an 
issue before the ALJ, that are repetitive of evidence or testimony 
already in the record, or that relate to an issue that has been 
sufficiently developed or on which the ALJ has already ruled.
     In response to public comment, we revised Sec. Sec.  
405.1030(b)(3) and 423.2030(b)(3) to clarify that a party or party's 
representative (or enrollee or enrollee's representative in the context 
of Sec.  423.2030(b)(3)) may be excused from a hearing if that 
individual remains uncooperative, disruptive to the hearing, or abusive 
during the course of the hearing after the ALJ has warned the party or 
representative to stop such behavior.
     We revised Sec. Sec.  405.1034(a)(1) and 423.2034(a)(1) to 
provide that OMHA will confirm whether an electronic copy of the 
redetermination or reconsideration is available in the official system 
of record prior to issuing a request for that information to the QIC or 
IRE and if so, will accept the electronic copy as the official copy. We 
also replaced ``can only be provided by CMS, the IRE, and/or the Part D 
plan sponsor'' in proposed Sec.  423.2034(a)(1), which was a drafting 
error, with ``can be provided only by CMS, the IRE, and/or the Part D 
plan sponsor,'' for consistency with the definition in Sec.  
423.2034(a)(2).
     We revised Sec.  405.1038(c) to provide that if the amount 
of payment is an issue before the ALJ or attorney adjudicator, a 
stipulated decision may be made if the statement from CMS or its 
contractor agrees to the amount of payment the party believes should be 
made. We made a corresponding change to Sec.  423.2038(c) for 
stipulated decisions in part 423, subpart U proceedings.
     We revised Sec.  405.1052(a)(7) and (b)(4) to provide that 
a request for hearing or a request for review of a QIC dismissal filed 
by an unrepresented beneficiary will not be dismissed if the appellant 
fails to send a copy of the request to the other parties in accordance 
with proposed Sec.  405.1014(d).
     We revised Sec. Sec.  405.1056(g) and 423.2056(g) to add 
language to specifically exempt remands that are issued on a review of 
a QIC's or IRE's dismissal of a request for reconsideration from 
potential review by the Chief ALJ or designee.
     We corrected a drafting error in proposed Sec.  
405.1110(b)(2) by removing two references to a ``hearing decision'' 
under Sec.  405.1046(a) and replacing them with ``decision,'' because 
Sec.  405.1046(a) as finalized in this rule also addresses decisions 
issued by an ALJ or attorney adjudicator when a hearing is not held.
     We revised Sec. Sec.  422.562(d) and 478.40(c) to specify 
in greater detail those part 405 provisions that implement specific 
sections of section 1869 of the Act that are not also included in 
sections 1852 and 1155 of the Act, and that we do not believe apply to 
part 422, subpart M or part 478, subpart B adjudications. Specifically, 
we are revising these regulations to provide that the following 
regulations in part 405, and any references thereto, do not apply to 
proceedings under part 422, subpart M or part 478, subpart B: (1) Sec.  
405.950 (time frames for making a redetermination); (2) Sec.  405.970 
(time frames for making a reconsideration following a contractor 
redetermination, including the option to escalate an appeal to the OMHA 
level); (3) Sec.  405.1016 (time frames for deciding an appeal of a QIC 
reconsideration or escalated request for a QIC reconsideration, 
including the option to escalate an appeal to the Council); (4) The 
option to request that an appeal be escalated from the OMHA level to 
the Council as provided in Sec.  405.1100(b) and the time frame for the 
Council to decide an appeal of an ALJ's or attorney adjudicator's 
decision or an appeal that is escalated from the OMHA level to the 
Council as provided in Sec.  405.1100(c) and (d); (5) Sec.  405.1132 
(request for escalation to Federal court); and (6) Sec. Sec.  
405.956(b)(8), 405.966(a)(2), 405.976(b)(5)(ii), 405.1018(c), 
405.1028(a), and 405.1122(c), and any other references to requiring a 
determination of good cause for the introduction of new evidence by a 
provider, supplier, or a beneficiary represented by a provider or 
supplier.
     We revised the second sentence of Sec.  422.608 to 
reference Sec.  422.562(d), such that this sentence states, ``The 
regulations under part 405 of this chapter regarding Council review 
apply to matters addressed by this subpart to the extent they are 
appropriate, except as provided in Sec.  422.562(d)(2).''
     For consistency with the title of part 423, subpart U as 
finalized, the revisions finalized related to attorney adjudicator 
reviews, and the revisions finalized to replace references to ``MAC'' 
with ``Council,'', we made technical conforming revisions to Sec.  
423.558(b) replace the reference to ``MAC'' with ``Council'' and the 
reference to ``ALJ hearings'' with ``ALJ hearings and ALJ and attorney 
adjudicator decisions.'' We also made a technical edit to replace 
``Judicial review'' with ``judicial review.''

[[Page 5104]]

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We solicited public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):
    The PRA exempts most of the information collection activities 
referenced in this final rule. In particular, the implementing 
regulations of the PRA at 5 CFR 1320.4 exclude collection activities 
during the conduct of a civil action to which the United States or any 
official or agency thereof is a party. Civil actions include 
administrative actions such as redeterminations, reconsiderations, and/
or appeals. Specifically, these actions are taken after the initial 
determination or a denial of payment, or MAO organization determination 
or Part D plan sponsor coverage determination. However, one requirement 
contained in this final rule is subject to the PRA because the burden 
is imposed prior to an administrative action or denial of payment. This 
requirement is discussed below.
    In summary, Sec.  405.910 requires that when a provider or supplier 
is the party appointing a representative, the appointment of 
representation would include the Medicare National Provider Identifier 
(NPI) of the provider or supplier that furnished the item of service. 
Although this is a new regulatory requirement, the current Medicare 
Claims Processing Manual already states that the NPI should be included 
when a provider or supplier appoints a representative. The standardized 
form for appointing a representative, Form CMS-1696, currently provides 
a space for the information in question. Importantly, this form is 
currently approved under OMB control number 0938-0950 and expires June 
30, 2018.
    The burden associated with this requirement is the time and effort 
of an individual or entity who is a provider or supplier to prepare an 
appointment of representation containing the NPI. As stated earlier, 
this requirement and the related burden are subject to the PRA; 
however, because we believe that this information is already routinely 
being collected, we estimate there would be no additional burden for 
completing an appointment of representative in accordance with Sec.  
405.910.
    If you wish to view the standardized form and the supporting 
documentation, you can download a copy from the CMS Web site at https://www.cms.gov/medicare/cms-forms/cms-forms/cms-forms-list.html.
    We have submitted a copy of this final rule to OMB for its review 
of the information collection requirements described above.
    If you wish to comment on these information collection, that is, 
reporting, recordkeeping or third-party disclosure requirements, please 
submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: CMS Desk Officer, 
HHS-2016-79, Fax: (202) 395-6974; or Email: 
[email protected].

VI. Regulatory Impact Statement

    We have examined the impacts of this final rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), the Regulatory Flexibility Act (RFA) 
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social 
Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 
(March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism 
(August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct 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). 
We have determined that the effect of this final rule does not reach 
this economic threshold and thus is not considered a major rule. As 
detailed above, this final rule would only make minimal changes to the 
existing Medicare appeals procedures for claims for benefits under or 
entitlement to the original Medicare programs, and coverage of items, 
services, and drugs under the MA and voluntary Medicare prescription 
drug programs. Thus, this final rule would have negligible financial 
impact on beneficiaries and enrollees, providers or suppliers, Medicare 
contractors, MAOs, and Part D plan sponsors, but would derive benefits 
to the program and appellants.
    HHS recognizes that the current appeals backlog is a matter of 
great significance, and it has made it a priority to adopt measures 
that are designed to reduce the backlog and improve the overall 
Medicare appeals process. To that end, HHS has initiated a series of 
measures, including this final regulation, that are aimed at both 
reducing the backlog and creating a more efficient Medicare appeals 
system.
    We believe the changes in this regulation will help address the 
Medicare appeals backlog and create efficiencies at the ALJ level of 
appeal by allowing OMHA to reassign a portion of workload to non-ALJ 
adjudicators and reduce procedural ambiguities that result in 
unproductive efforts at OMHA and unnecessary appeals to the Medicare 
Appeals Council. In addition, the other changes, including precedential 
decisions and generally limiting CMS and CMS contractor participation 
or party status at the OMHA level unless the ALJ determines 
participation by additional entities is necessary for a full 
examination of the matters at issue (as provided in proposed Sec. Sec.  
405.1010(d) and 405.1012(d)), will collectively make the ALJ hearing 
process more efficient through streamlined and standardized procedures 
and more consistent decisions, and reduce appeals to the Medicare 
Appeals Council.
    In particular, we are able to estimate the impact from one of the 
changes--the expansion of the pool of adjudicators. Based on FY 2016, 
and an assumption that future years are similar to FY 2016, we estimate 
that the expansion of the pool of adjudicators at OMHA could redirect 
approximately 24,500 appeals per year to attorney adjudicators who 
would be able to process these appeals at a lower cost than would be 
required if only ALJs were used to address the same workload. If in 
future years the number of requests for hearing, waivers of oral 
hearing, requests for review of a contractor dismissal, or appellant

[[Page 5105]]

withdrawals of requests for hearing vary from FY 2016 data, then the 
number of appeals potentially addressed by attorney adjudicators would 
likely also vary.
    In the proposed rule, we also estimated that the proposed 
modifications to calculating the amount in controversy required for an 
ALJ hearing could potentially remove appeals related to over 2,600 Part 
B low-value claims per year from the ALJ hearing process, after 
accounting for the likelihood of appellants aggregating claims to meet 
the AIC. 81 FR 43790, 43856. However, as discussed in section II.B.3.d 
of this final rule above, we are not finalizing our proposal under 
Sec.  405.1006(d)(2)(i)(A) to use the Medicare allowable amount as the 
basis for the amount in controversy for items and services that are 
priced based on a published Medicare fee schedule or published 
contractor-priced amount. Although we are finalizing separate 
calculations of the amount in controversy to address the situations in 
proposed Sec.  405.1006(d)(3) through (7), we do not expect these 
provisions will have a meaningful effect on the number of appeals 
eligible for an ALJ hearing.
    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) 
requires agencies to prepare a final regulatory flexibility analysis to 
describe the impact of the proposed rule on small entities, unless the 
head of the agency can certify that the rule would not have a 
significant economic impact on a substantial number of small entities. 
The RFA generally defines a ``small entity'' as: (1) A proprietary firm 
meeting the size standards of the Small Business Administration (SBA); 
(2) a not-for-profit organization that is not dominant in its field; or 
(3) a small government jurisdiction with a population of less than 
50,000. States and individuals are not included in the definition of 
``small entity.'' HHS uses as its measure of significant economic 
impact on a substantial number of small entities a change in revenues 
of more than 3 to 5 percent.
    For purposes of the RFA, most providers and suppliers are small 
entities, either by nonprofit status or by having revenues of less than 
$7.5 million to $38.5 million in any one year. In addition, a number of 
MAOs and Part D plan sponsors (insurers) are small entities due to 
their nonprofit status; however, few if any meet the SBA size standard 
for a small insurance firm by having revenues of $38.5 million or less 
in any one year. Individuals and States are not included in the 
definition of a small entity. We have determined and we certify that 
this final rule would not have a significant economic impact on a 
substantial number of small entities because as noted above, this final 
rule makes only minimal changes to the existing appeals procedures. 
Therefore, we did not prepare an analysis for the RFA.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis (RIA) if a rule may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. For final rules, this analysis must conform to the 
provisions of section 604 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 for Medicare payment 
regulations and has fewer than 100 beds. We have determined that this 
final rule would not have a significant effect on the operations of a 
substantial number of small rural hospitals. As noted above, this final 
rule makes only minimal changes to the existing appeals procedures and 
thus, would not have a significant impact on small entities or the 
operations of a substantial number of small rural hospitals. Therefore, 
we did not prepare an analysis for section 1102(b) of the Act.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that would include any Federal mandate that may result 
in expenditure in any one year by State, local, or Tribal governments, 
in the aggregate, or by the private sector, of $100 million in 1995 
dollars, updated annually for inflation. Currently, that threshold is 
approximately $146 million. This final rule would not impose spending 
costs on State, local, or tribal governments in the aggregate, or on 
the private sector in the amount of $146 million in any one year, 
because as noted above, this final rule makes only minimal changes to 
the existing appeals procedures.

VII. Federal Analysis

    Executive Order 13132 on Federalism establishes certain 
requirements that an agency must meet when it publishes 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 final rule does not impose 
substantial direct requirement costs on State or local governments, 
preempt State law, or otherwise implicate Federalism.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 401

    Claims, Freedom of information, Health facilities, Medicare, 
Privacy.

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, X-rays.

42 CFR Part 422

    Administrative practice and procedure, Health facilities, Health 
maintenance organizations (HMO), Medicare, Penalties, Privacy, and 
Reporting and recordkeeping requirements.

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.

42 CFR Part 478

    Administrative practice and procedure, Health care, Health 
professions, Peer Review Organizations (PRO), Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, the Department of Health 
and Human Services amends 42 CFR chapter IV as set forth below:

PART 401--GENERAL ADMINISTRATIVE REQUIREMENTS

0
1. The authority citation for part 401 continues to read as follows:

    Authority:  Secs. 1102, 1871, and 1874(e) of the Social Security 
Act (42 U.S.C. 1302, 1395hh, and 1395w-5).

0
2. Section 401.109 is added to read as follows:


Sec.  401.109  Precedential Final Decisions of the Secretary.

    (a) The Chair of the Department of Health and Human Services 
Departmental Appeals Board (DAB Chair) may designate a final decision 
of the Secretary issued by the Medicare Appeals Council in accordance 
with part 405, subpart I; part 422, subpart M; part 423, subpart U; or 
part 478, subpart B, of this chapter as precedential. In determining 
which decisions should be designated as precedential, the DAB Chair may 
take into consideration

[[Page 5106]]

decisions that address, resolve, or clarify recurring legal issues, 
rules or policies, or that may have broad application or impact, or 
involve issues of public interest.
    (b) Precedential decisions are made available to the public, with 
personally identifiable information of the beneficiary removed, and 
have precedential effect from the date they are made available to the 
public. Notice of precedential decisions is published in the Federal 
Register.
    (c) Medicare Appeals Council decisions designated in accordance 
with paragraph (a) of this section have precedential effect and are 
binding on all CMS components, on all HHS components that adjudicate 
matters under the jurisdiction of CMS, and on the Social Security 
Administration to the extent that components of the Social Security 
Administration adjudicate matters under the jurisdiction of CMS.
    (d) Precedential effect, as used in this section, means that the 
Medicare Appeals Council's--
    (1) Legal analysis and interpretation of a Medicare authority or 
provision is binding and must be followed in future determinations and 
appeals in which the same authority or provision applies and is still 
in effect; and
    (2) Factual findings are binding and must be applied to future 
determinations and appeals involving the same parties if the relevant 
facts are the same and evidence is presented that the underlying 
factual circumstances have not changed since the issuance of the 
precedential final decision.

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
3. The authority citation for part 405 continues to read as follows:

    Authority:  Secs. 205(a), 1102, 1861, 1862(a), 1869, 1871, 1874, 
1881, and 1886(k) of the Social Security Act (42 U.S.C. 405(a), 
1302, 1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 
1395ww(k)), and sec. 353 of the Public Health Service Act (42 U.S.C. 
263a).

0
4. Section 405.902 is amended by adding the definitions of ``Attorney 
Adjudicator'', ``Council'', and ``OMHA'' in alphabetical order and 
removing the definition of ``MAC''
    The additions read as follows:


Sec.  405.902  Definitions.

* * * * *
    Attorney Adjudicator means a licensed attorney employed by OMHA 
with knowledge of Medicare coverage and payment laws and guidance, and 
authorized to take the actions provided for in this subpart on requests 
for ALJ hearing and requests for reviews of QIC dismissals.
* * * * *
    Council stands for the Medicare Appeals Council within the 
Departmental Appeals Board of the U.S. Department of Health and Human 
Services.
* * * * *
    OMHA stands for the Office of Medicare Hearings and Appeals within 
the U.S. Department of Health and Human Services, which administers the 
ALJ hearing process in accordance with section 1869(b)(1) of the Act.
* * * * *

0
5. Section 405.904 is amended by revising paragraphs (a)(1) and (2) to 
read as follows:


Sec.  405.904  Medicare initial determinations, redeterminations and 
appeals: General description.

    (a) * * *
    (1) Entitlement appeals. The SSA makes an initial determination on 
an application for Medicare benefits and/or entitlement of an 
individual to receive Medicare benefits. A beneficiary who is 
dissatisfied with the initial determination may request, and SSA will 
perform, a reconsideration in accordance with 20 CFR part 404, subpart 
J if the requirements for obtaining a reconsideration are met. 
Following the reconsideration, the beneficiary may request a hearing 
before an ALJ under this subpart (42 CFR part 405, subpart I). If the 
beneficiary obtains a hearing before an ALJ and is dissatisfied with 
the decision of the ALJ, or if the beneficiary requests a hearing and 
no hearing is conducted, and the beneficiary is dissatisfied with the 
decision of an ALJ or an attorney adjudicator, he or she may request 
the Council to review the case. Following the action of the Council, 
the beneficiary may be entitled to file suit in Federal district court.
    (2) Claim appeals. The Medicare contractor makes an initial 
determination when a claim for Medicare benefits under Part A or Part B 
is submitted. A beneficiary who is dissatisfied with the initial 
determination may request that the contractor perform a redetermination 
of the claim if the requirements for obtaining a redetermination are 
met. Following the contractor's redetermination, the beneficiary may 
request, and the Qualified Independent Contractor (QIC) will perform, a 
reconsideration of the claim if the requirements for obtaining a 
reconsideration are met. Following the reconsideration, the beneficiary 
may request a hearing before an ALJ. If the beneficiary obtains a 
hearing before the ALJ and is dissatisfied with the decision of the 
ALJ, or if the beneficiary requests a hearing and no hearing is 
conducted, and the beneficiary is dissatisfied with the decision of an 
ALJ or attorney adjudicator, he or she may request the Council to 
review the case. If the Council reviews the case and issues a decision, 
and the beneficiary is dissatisfied with the decision, the beneficiary 
may file suit in Federal district court if the amount remaining in 
controversy and the other requirements for judicial review are met.
* * * * *


Sec.  405.906  [Amended]

0
6. Section 405.906(b) introductory text is amended by--
0
a. Removing from the paragraph heading the phrase ``hearing and MAC'' 
and adding ``proceedings on a request for hearing, and Council review'' 
in its place.
0
b. Removing the phrase ``hearing, and MAC review'' and adding 
``proceedings on a request for hearing, and Council review'' in its 
place.


Sec.  405.908   [Amended]

0
7. Section 405.908 is amended by removing the term ``ALJ'' and adding 
``OMHA'' in its place and by removing the term ``MAC'' and adding 
``Council'' in its place.
0
8. Section 405.910 is amended by--
0
a. Revising paragraph (c)(5).
0
b. Adding paragraph (d)(3).
0
c. Revising paragraphs (f)(1) and (i)(2) and (3).
0
d. Revising paragraph (l).
0
e. Adding paragraph (m)(4).
    The additions and revisions read as follows:


Sec.  405.910  Appointed representatives.

* * * * *
    (c) * * *
    (5) Identify the beneficiary's Medicare health insurance claim 
number when the beneficiary is the party appointing a representative, 
or identify the Medicare National Provider Identifier number of the 
provider or supplier that furnished the item or service when the 
provider or supplier is the party appointing a representative;
* * * * *
    (d) * * *
    (3) If an adjudication time frame applies, the time from the later 
of the date that a defective appointment of representative was filed or 
the current appeal request was filed by the prospective appointed 
representative, to

[[Page 5107]]

the date when the defect was cured or the party notifies the 
adjudicator that he or she will proceed with the appeal without a 
representative does not count towards the adjudication time frame.
* * * * *
    (f) * * *
    (1) General rule. An appointed representative for a beneficiary who 
wishes to charge a fee for services rendered in connection with an 
appeal before the Secretary must obtain approval of the fee from the 
Secretary. Services rendered below the OMHA level are not considered 
proceedings before the Secretary.
* * * * *
    (i) * * *
    (2) Appeals. When a contractor, QIC, ALJ or attorney adjudicator, 
or the Council takes an action or issues a redetermination, 
reconsideration, or appeal decision, in connection with an initial 
determination, it sends notice of the action to the appointed 
representative.
    (3) The contractor, QIC, ALJ or attorney adjudicator, or Council 
sends any requests for information or evidence regarding a claim that 
is appealed to the appointed representative. The contractor sends any 
requests for information or evidence regarding an initial determination 
to the party.
* * * * *
    (l) Delegation of appointment by appointed representative. (1) An 
appointed representative may not designate another individual to act as 
the appointed representative of the party unless--
    (i) The appointed representative provides written notice to the 
party of the appointed representative's intent to delegate to another 
individual, which contains the name of the designee and the designee's 
acceptance to be obligated by and comply with the requirements of 
representation under this subpart; and
    (ii) The party accepts the designation as evidenced by a written 
statement signed by the party. The written statement signed by the 
party is not required when the appointed representative and designee 
are attorneys in the same law firm or organization and the notice 
described in paragraph (l)(1)(i) of this section so indicates.
    (2) A delegation is not effective until the adjudicator receives a 
copy of the acceptance described in paragraph (l)(1)(ii) of this 
section, unless the appointed representative and designee are attorneys 
in the same law firm or organization, in which case the notice 
described in paragraph (l)(1)(i) of this section may be submitted even 
though the acceptance described in paragraph (l)(1)(ii) of this section 
is not required.
    (3) A party's or representative's failure to notify the adjudicator 
that an appointment of representative has been delegated is not good 
cause for missing a deadline or not appearing at a hearing.
    (m) * * *
    (4) A party's or representative's failure to notify the adjudicator 
that an appointment of representative has been revoked is not good 
cause for missing a deadline or not appearing at a hearing.

0
9. Section 405.926 is amended by revising paragraphs (l) and (m) to 
read as follows:


Sec.  405.926  Actions that are not initial determinations.

* * * * *
    (l) A contractor's, QIC's, ALJ's or attorney adjudicator's, or 
Council's determination or decision to reopen or not to reopen an 
initial determination, redetermination, reconsideration, decision, or 
review decision.
    (m) Determinations that CMS or its contractors may participate in 
the proceedings on a request for an ALJ hearing or act as parties in an 
ALJ hearing or Council review.
* * * * *


Sec.  405.956   [Amended]

0
10. Section 405.956(b)(8) is amended by removing the phrase ``an ALJ 
hearing'' and adding ``the OMHA level'' in its place.

0
11. Section 405.968 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  405.968  Conduct of a reconsideration.

* * * * *
    (b) * * *
    (1) National coverage determinations (NCDs), CMS Rulings, Council 
decisions designated by the Chair of the Departmental Appeals Board as 
having precedential effect under Sec.  401.109 of this chapter, and 
applicable laws and regulations are binding on the QIC.
* * * * *

0
12. Section 405.970 is amended by revising the section heading and 
paragraphs (a) introductory text, (b), (c) introductory text, (e)(1), 
(e)(2)(i) and (ii) to read as follows: