Medicare Program; Aggregation of Medicare Claims for Administrative Appeals

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 405, 417, and 473

[BPD-694-F]

RIN 0938-AE93

Medicare Program; Aggregation of Medicare Claims for

Administrative Appeals

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Medicare beneficiaries and, under certain circumstances,

providers, physicians and other entities furnishing health care

services may appeal adverse determinations regarding certain claims for

benefits payable under part A and part B of Medicare. For

administrative appeals at the carrier or intermediary hearing level or

administrative law judge (ALJ) level and for any subsequent judicial

review, the amount remaining in dispute must meet or exceed threshold

amounts set by statute. Section 1869(b)(2) of the Social Security Act

permits claims to be aggregated to reach the ALJ hearing threshold

amounts. This final rule establishes a system of aggregation under

which individual appellants have one set of requirements for

aggregating claims and two or more appellants have a different set of

requirements for aggregating claims.

EFFECTIVE DATE: April 15, 1994.

FOR FURTHER INFORMATION CONTACT: Paul Olenick, (410) 966-4472.

SUPPLEMENTARY INFORMATION:

Background

Statutory Basis

Section 1869(b) of the Social Security Act (the Act) grants

Medicare beneficiaries who are dissatisfied with certain Medicare

determinations the right to a hearing before an administrative law

judge (ALJ) and the right to judicial review. The Social Security

Administration (SSA) makes determinations concerning entitlement to

Medicare. Other determinations concerning payment are made initially by

Medicare contractors. Fiscal intermediaries make most part A and some

part B determinations; carriers make most part B determinations. Our

regulations generally address appeals of claims arising under part A at

42 CFR part 405, subpart G, and appeals of claims under part B at 42

CFR part 405, subpart H.

Utilization and quality control peer review organizations (PROs)

also make certain types of part A and part B determinations. Section

1155 of the Act establishes beneficiary rights to hearings and judicial

review of certain Medicare issues (mostly inpatient hospital service

denials) adjudicated initially by PROs. Our regulations address this

subject at 42 CFR part 473, subpart B.

For enrollees of health maintenance organizations (HMOs),

competitive medical plans (CMPs), and health care prepayment plans

(HCPPs), the HMO, CMP or HCPP is responsible for making initial

determinations. Section 1876(c)(5)(B) of the Act establishes

beneficiary rights to ALJ hearings and judicial review of certain part

A and part B claims submitted by or on behalf of enrollees of HMOs,

CMPs or HCPPs. Our regulations address this subject at 42 CFR 417.600

to 417.638.

For the following discussion, the term ``provider'' refers to a

hospital, skilled nursing facility, home health agency, hospice program

or comprehensive outpatient rehabilitation facility that has in effect

an agreement to participate in Medicare. See section 1861(u) of the Act

and 42 CFR 400.202.

The term ``supplier'' is defined in 42 CFR 400.202 and means a

physician or other practitioner, or an entity other than a provider,

who furnishes health care services under Medicare. Although

``supplier'' encompasses physicians, our usual phraseology is

``physician or supplier.''

Under section 1879(d) of the Act, a physician or supplier who

accepted assignment or a provider of services has the same appeal

rights as that of an individual beneficiary under certain limited

circumstances when the issue in dispute involves medical necessity,

custodial care, or home health denials involving the failure to meet

homebound or intermittent skilled nursing care requirements. Moreover,

by regulation, we have provided that a physician or supplier that has

taken assignment of a Medicare claim under part B has the same appeal

rights as the beneficiary.

Under section 1842(l) of the Act, a physician who does not accept

assignment must refund to the beneficiary any amounts collected for

services found to be not reasonable and necessary. A refund is not

required if the physician did not know and could not reasonably have

been expected to know that Medicare would not pay for the services, or

if the beneficiary was appropriately informed in advance that Medicare

would not pay for the services and agreed to pay for them. With respect

to a physician who is subject to the refund requirement, our

regulations at 42 CFR 411.408 provide that if payment is denied for

unassigned claims because the services are found to be not reasonable

and necessary, the physician who does not accept assignment has the

same appeal rights as the physician who submits claims on an

assignment-related basis, as detailed in subpart H of part 405 and

subpart B of part 473. (See 55 FR 24561, June 18, 1990.)

Omnibus Budget Reconciliation Act of 1986

Before the enactment of the Omnibus Budget Reconciliation Act of

1986 (OBRA '86) (Public L. 99-509), section 1869 of the Act provided

for ALJ hearings and judicial review of claims for entitlement to

Medicare parts A and B and of disputes over claims for benefits under

part A. There was no provision for ALJ hearings or judicial review for

disputes over the amount of part B benefits, except under section 1876

of the Act pertaining to HMO, CMP and HCPP denials, and concerning

certain PRO matters as authorized by section 1155 of the Act. Instead,

as specified in section 1842(b)(3)(C) of the Act, Medicare carriers

(or, if appropriate, intermediaries) provided fair hearings on claims

for part B benefits when the amount remaining in controversy was $100

or more. (Before receiving a fair hearing, beneficiaries must receive

an initial determination and review of their claims. Carriers perform

initial determinations and reviews of claims for part B benefits in

accordance with 42 CFR part 405, subpart H.)

Section 9341 of OBRA '86 amended section 1869 of the Act to permit

hearings before ALJs and judicial review of claims for benefits under

part B. The law provided that, for a part B ALJ hearing, the amount in

controversy must be at least $500 and, for judicial review, the amount

in controversy must be at least $1000. It did not change the existing

amount in controversy requirements ($100 and $1000, respectively, under

the Medicare part A provisions and $200 and $2000, respectively, under

the PRO provisions) for ALJ hearings and judicial review.

Section 9341 of OBRA '86 further provided that in determining the

amount in controversy, the Secretary, by regulations, must permit

claims to be aggregated if the claims involve the delivery of similar

or related services to the same individual or involve common issues of

law and fact arising from services furnished to two or more

individuals. This aggregation provision applies to requests for ALJ

hearings of both part A and part B claims brought under section 1869 of

the Act.

Under OBRA '86, the right to an ALJ hearing and judicial review for

part B claims as well as the right to aggregate under section

1869(b)(2) of the Act apply to claims for items and services furnished

on or after January 1, 1987.

The Omnibus Budget Reconciliation Act of 1990

The Omnibus Budget Reconciliation Act of 1990 (OBRA '90) (Public L.

101-508) provided that the Secretary would carry out a study of the

effects of permitting the aggregation of claims that involve common

issues of law and fact furnished in the same carrier area to two or

more individuals by two or more physicians within the same 12-month

period for purposes of appeals provided for under section 1869(b)(2).

The study would be conducted in at least four carrier areas. The

Secretary would report on the results of the study and any

recommendations to the Senate Finance Committee and the Committees on

Energy and Commerce and Ways and Means of the House of Representatives

by December 31, 1992.

Aggregation Before OBRA '86

Before OBRA '86, the statute was silent on the issue of aggregating

claims to meet the threshold amounts to establish a right to part A or

part B hearings. We had, however, provided for beneficiaries to

aggregate certain part A claims in our regulations at 42 CFR 405.740

and 405.745. Our regulations at 42 CFR 405.741 also provide that the

presiding officer at the hearing (that is, the ALJ) determines whether

the $100 threshold is met. The current regulations for part A claims do

not allow a provider to aggregate claims involving more than one

beneficiary.

Before OBRA '86, we had also provided for the aggregation of part B

claims to reach the amount in controversy required for a hearing before

a carrier hearing officer. In 42 CFR 405.820(b) (redesignated as

Sec. 405.817 in this rule), we permit a beneficiary to aggregate any

and all part B claims for treatment or medical equipment or supplies

(or both) furnished to him or her. A physician or supplier may

aggregate any and all claims accepted on an assignment-related basis

for services or supplies he or she provided to one or more

beneficiaries. Each such claim must have completed all prior levels of

appeal and the request for subsequent appeal of each such claim must be

timely filed. The regulations do not address whether claims may be

aggregated together by two or more appellants to meet the minimum

amount in controversy needed for appeal.

Proposed Rule

On June 20, 1991, we published a proposed rule that described how

we would implement the OBRA '86 provision amending section 1869(b)(2)

of the Act concerning aggregation of claims (56 FR 28353). In the

absence of specific legislative history, we concluded at that time that

the OBRA '86 aggregation provision did not provide a basis for

permitting two or more appellants to aggregate their claims to meet the

threshold amount in controversy for administrative or judicial appeal.

We based our conclusion, in part, on our assessment that section 1869

of the Act in all respects applies to claims filed by individuals.

Because the OBRA '86 aggregation provision amended section 1869 of the

Act, it was our view that individual appeals alone were affected.

Therefore, we proposed that only an individual appellant could

aggregate his or her own claims to reach the jurisdictional minimums

for appeal. Moreover, in our view, the OBRA '90 provision, in which the

Congress directed the Secretary to conduct a pilot study to investigate

the effect of permitting aggregation of claims by two or more

appellants, suggested that the Congress had not yet decided to provide

for aggregation of claims by multiple appellants.

The specific statutory language of the OBRA '86 aggregation

provision directs the Secretary to issue regulations to permit

aggregation under the limited circumstances specified (that is, if the

claims involve the delivery of similar or related services to the same

individual or involve common issues of law and fact arising from

services furnished to two or more individuals) to reach the threshold

amounts in controversy for ALJ hearings. Upon initial consideration of

this provision, we believed it would be appropriate to have a uniform

aggregation policy for all levels of administrative appeal. Therefore,

we proposed to rescind our current regulations governing carrier

hearings under part B to conform them with the more narrow aggregation

rules contained in OBRA '86. We also proposed minor revisions to our

current part A aggregation rules, to make them consistent with the OBRA

'86 aggregation requirements. We devised procedural rules to be

followed for determining the amount in controversy and we described

what actions were required of individuals and providers to aggregate

claims to meet the amount in controversy threshold. We also proposed

definitions of: ``Delivery of similar or related services,''

``services,'' ``common issues of law and fact,'' ``common issues of

law,'' ``common issues of fact,'' and ``mutually exclusive bases for

appeal.''

Comments and Responses

We received comments from 21 commenters on our proposed rule. The

commenters included an intermediary/carrier association, a carrier,

seven provider associations or their legal counsel, five medical

associations or their legal counsel, five beneficiary advocacy

organizations, one PRO and one provider. Below we discuss the comments

and our responses.

Comment: A number of commenters expressed direct opposition to our

assertion that the Congress did not intend for more than one appellant

to aggregate their claims. The commenters presented various reasons why

they believed that the Congress intended to permit aggregation by

groups of individuals and providers.

Response: We reexamined our proposed aggregation policy in light of

the public comments submitted in response to the proposed rule and are

revising our position to take the comments into account. Our revised

position also takes into account a February 5, 1992, district court

decision in favor of a group of anesthesiologists who contended that

they should be able to aggregate their claims on the basis of ``common

issues of law and fact arising from services furnished to two or more

individuals'' (Moore v. Sullivan, 785 F. Supp. 44 (S.D.N.Y. 1992)).

Section 1869(b)(2) of the Act states, in pertinent part, that

``(i)n determining the amount in controversy, the Secretary, under

regulations, shall allow * * *'' claims to be aggregated under the

criteria outlined in that section (emphasis added). Thus, although the

plain wording of the statute makes it clear that the Secretary will

provide for aggregation of claims in the situations provided in the

statute, it does not limit the Secretary's authority to allow

aggregation in additional, unspecified circumstances as well. Thus, we

believe that the statute affords the Secretary considerable discretion

in devising an aggregation policy, as long as she allows aggregation in

the circumstances outlined in the statute.

Consistent with this interpretation, we have concluded that in

drafting section 1869(b)(2) of the Act, the Congress did not

necessarily mean to overhaul the current aggregation system for appeals

raised by individual beneficiaries and providers. Rather, we believe

that the Congress intended to provide an additional avenue for reaching

the amount in controversy to provide for group adjudication of issues

arising from claims that, because they involve fairly small amounts,

may never be adjudicated beyond the intermediary or carrier level.

However, in providing for this additional access to the appeals process

by two or more appellants, the Congress recognized that such appeals

would only be an efficient use of the administrative and judicial

appeals process if the underlying claims presented common issues that,

if resolved, would be decisive for all the claims included in the

appeal. Therefore, the Congress required that such appeals involve

``similar or related services'' or ``common issues of law and fact.''

As a result of our reexamination of this issue, we have decided to

permit aggregation of claims by two or more appellants at the ALJ

level. In order for two or more appellants to aggregate their claims,

the claims must involve the delivery of similar or related services to

the same individual or involve common issues of law and fact arising

from services furnished to two or more individuals. Although the

Congress expanded the part B appeals process to also include judicial

review of part B claims, the statute does not require the courts to

follow the administrative aggregation rules established by the

Secretary for determining the amount in controversy. However, the

courts may wish to use the administrative rules as a reference point

for determining the amount in controversy at the judicial level.

Therefore, we are providing in our regulations that, when a civil

action is filed, the Secretary may assert that the aggregation

provisions contained in 42 CFR part 405, subparts G and H, may be

applied to determine the amount in controversy for judicial review.

(We note that under our interpretation of section 1869(b)(2) of the

Act, two or more beneficiaries will not be able to aggregate their

claims under the criterion involving ``delivery of similar or related

services to the same individual,'' because the provision describes

services to only one individual. Moreover, two or more providers/

suppliers may avail themselves of this provision only if they are

providing similar or related services to the same patient. However,

this limitation is of little practical consequence, since, under the

first prong of the bifurcated system of aggregation we are establishing

with this regulation, an individual appellant (either a beneficiary or

a provider/supplier) may aggregate all claims relating to the same

patient without having to demonstrate that the services provided are

either similar or related.)

In order to effectuate this interpretation we are establishing one

set of requirements for aggregating claims for individual appellants

and another set of requirements for aggregating claims when two or more

appellants together seek to aggregate their claims. The system will

work as follows:

Individual Appellants

Our approach for individual part A appellants (including individual

HMO, CMP, HCPP or PRO appellants (hereafter, references to HMOs will

include CMPs and HCPPs)) will permit an individual who files an appeal

to aggregate two or more part A claims (in a specified time period),

regardless of issue, to meet the requisite jurisdictional minimum for

an ALJ hearing. Also, an individual who files a part B appeal will be

permitted to aggregate two or more part B claims (in a specified time

period), regardless of issue, to meet the jurisdictional minimums for a

carrier hearing and ALJ hearing.

This approach expands the existing aggregation policy currently

applied to part A appellants. (Existing aggregation policy for

individual part A appellants is limited to the following circumstances:

Items or services furnished to a patient of a provider arising from a

single continuous period of treatment and any series of posthospital

home health visits.) It is also consistent with the aggregation policy

currently existing for part B appellants in that it allows appellants

to aggregate two or more claims regardless of issue. (However,

consistent with the provision in the proposed rule dated June 20, 1991

(56 FR 28355), we are requiring in the final rule that, for all claims

to be aggregated, the request for appeal must be timely filed; see

Secs. 405.740(a) and 405.817(a).)

Two or More Appellants

Two or more part A appellants will be permitted to aggregate their

part A claims together (in a specified time period) to meet the

requisite jurisdictional minimum for an ALJ hearing. Similarly, two or

more part B appellants will be permitted to aggregate their part B

claims together (in a specified time period) to meet the jurisdictional

minimum for an ALJ hearing. However, two or more appellants may

aggregate their claims only if the claims involve the delivery of

similar or related services to the same individual or common issues of

law and fact arising from services furnished to two or more

individuals.

To reflect these changes, we are revising the text of

Secs. 405.740, 405.742, 405.820 (redesignated as Sec. 405.815), and

405.827 that we proposed in our June 20, 1991 rule. Sections 405.740

and 405.817 contain our procedures for determining the amount in

controversy and for aggregating claims. We are not making final

Secs. 405.742 and 405.827 that we included in the proposed rule (the

relevant contents have been incorporated elsewhere) and we are removing

current Sec. 405.741.

Comment: Because section 1869(b)(2) of the Act applies only to

aggregation for ALJ hearings, the current liberal rules for individual

appellants to aggregate claims at carrier fair hearings should be

retained.

Response: As stated in our previous response, we will permit

individual part A or part B appellants to aggregate their claims

regardless of issue to reach the minimum amounts in controversy needed

for a carrier hearing or ALJ hearing. (However, consistent with the

provision in the proposed rule dated June 20, 1991 (56 FR 28355), we

are requiring in the final rule that, for all claims to be aggregated,

the request for appeal must be timely filed; see Secs. 405.740(a) and

405.817(a).)

Although we are essentially retaining the current aggregation rules

for individual part B appellants, we are not allowing two or more

appellants to aggregate their claims together at the carrier hearing

level. Rather, we are providing in the final rule that two or more

appellants may aggregate their claims together beginning at the ALJ

hearing level. We are adopting this approach because, as noted by the

commenters, the statute does not require that proceedings conducted

under section 1842(b)(3)(C) of the Act (carrier hearings) utilize the

aggregation provisions in section 1869(b)(2) of the Act. For this

reason, we are also not making final the provision in Sec. 405.832(d)

of the proposed regulation text. That provision would have authorized

an ALJ to review a carrier hearing officer's dismissal of a hearing

request based on the section 1869(b)(2) aggregation criteria to

determine whether those criteria had been properly applied.

Comment: The definitions of ``common issues of law and fact'' and

``delivery of similar or related services'' are inconsistent with the

statute and unnecessarily restrictive and burdensome.

Response: We have reevaluated the definitions of ``common issues of

law and fact'' and ``delivery of similar or related services'' in light

of the comments received and the general lack of practical experience

in applying these criteria.

Many of the public comments received on this issue persuasively

demonstrated that the proposed definitions were too narrow to encompass

many case scenarios that present common decisional issues. For example,

one of the commenters noted that the requirement that similar services

may only be those ``with the same procedural terminology and code'' is

excessively strict. For instance, claims for echocardiography services

such as standard echocardiography (CPT 93307), doppler echocardiography

(CPT 93320) and doppler color-flow echocardiography (CPT 93321) may be

``similar or related services'' that could be aggregated under the

statute. This same commenter believed that ``common issues of law and

fact'' should be defined to permit aggregation on the basis of broad

categorical issues such as level of care, the type of action taken by

the contractor (for example, downcoding), or the involvement of one or

more physicians in the patient's care even though CPT codes, sites of

service, and diagnoses may differ. While we agree that the definition

of common issues of law and fact published in our proposed rule was

overly restrictive, we do not agree with this suggestion.

Aggregation on the basis of broad categorical issues would render

the aggregation requirements virtually meaningless in many instances.

We believe that the key concept in determining ``common issues of law

and fact'' is the materiality of the alleged common facts. For example,

a group of claims denied under section 1862(a)(1) of the Act as not

medically reasonable and necessary because a certain procedure is

considered experimental would present ``common issues of law and fact''

if the procedure had been performed for the same reason for each

patient but not if it had been performed for different purposes. A

procedure may be considered experimental for purposes of treating one

particular condition or diagnosis but not for the treatment of a second

condition or diagnosis. Facts establishing medical necessity in the

first instance would not establish medical necessity in the second

instance. Consequently, although the situation might present common

issues of law, common issues of fact would not be present.

In our view, both ``similar or related services'' and ``common

issues of law and fact'' require that the appeal present common issues,

which when resolved will have some decisional impact on the aggregated

claims. In order to further this statutory goal and rather than attempt

to anticipate every situation that would warrant aggregation, we have

decided to provide more general definitions for these terms, which are

as follows: ``Delivery of similar or related services,'' with respect

to the aggregation of claims by two or more appellants to meet the

minimum amount in controversy needed for an ALJ hearing, means like or

coordinated services or items provided to the same beneficiary by the

appellants. ``Common issues of law and fact,'' with respect to the

aggregation of claims by two or more appellants to meet the minimum

amount in controversy needed for an ALJ hearing, occur when the claims

sought to be aggregated arise from a similar fact pattern material to

the reason the claims are denied and the claims are denied or reduced

for similar reasons.

This approach will provide adjudicators with more flexibility and

discretion to decide if the criteria for aggregation under section

1869(b)(2) of the Act have been met in a particular case. (Some

commenters suggested that the proposed regulations did not give

adjudicators enough discretion in applying the statutory terms.) In any

event, we intend to monitor in the future the application of these

definitions by adjudicators and we will consider providing more precise

definitions via rulemaking if experience shows this is warranted.

Comment: The procedural rules for aggregating claims, requiring

appellants to identify claims by type of item or service and to explain

the basis for the aggregation, go beyond the capacity of the average

appellant and represent an impediment to appeal.

Response: We agree that the documentation requirements should be

modified. Sections 405.742(a) and 405.827(a) of the proposed rule

imposed strict documentation requirements on an appellant seeking to

aggregate claims. For instance, we proposed to require an appellant to

identify each claim by the type of item or service, the person or

entity that furnished the item or service and the amount being

contested. Also, we proposed to require the appellant to describe why

claims are either ``similar or related'' or involve ``common issues of

law and fact.'' In light of the comments received, we are not making

final the stringent documentation requirements and are establishing the

following standard procedural requirements:

The appellant(s) must specify the claims that he or she

seeks to aggregate. The burden is clearly on the appellant in this

situation to identify the claims sought for aggregation. Otherwise, the

appellant risks having his case dismissed for failure to meet the

amount in controversy. In other words, in considering a request for

hearing or review, carrier hearing officers, ALJs and the Appeals

Council must consider claims identified by the appellant to determine

whether the requisite amount in controversy is met, but they need not

aggregate other pending cases not included in the appellant's request

for hearing. In addition, although we are not requiring that appellants

describe in their requests for hearing why the claims they seek to

aggregate involve ``similar or related services'' or ``common issues of

law and fact,'' we note that it is in the appellant's interest to

address these issues in the appeal, as well as any other aspects of the

case he or she believes were decided incorrectly.

In order for all claims to be aggregated, the request for

appeal must be timely filed with respect to all claims included in the

appeal. For example, a carrier hearing officer issues an adverse

hearing decision that is received by the beneficiary on June 5. As a

result of this decision, $300 remains in controversy. On a separate

matter, the hearing officer issues an adverse decision, which is

received by a different beneficiary on July 10. As a result of the July

decision, $400 remains in controversy. The beneficiaries believe that

their decisions involve common issues and because, individually,

neither of their cases meet the $500 minimum required for an ALJ

hearing, they seek to aggregate their claims together ($300+$400=$700)

to obtain jurisdiction before an ALJ. In this hypothetical situation, a

request for an ALJ hearing that includes these two claims may be made

no later than August 4. A request for ALJ hearing filed, for example,

on September 1, would fail because the 60-day appeal period for the

June 5 decision would have lapsed and there would only be $400

remaining in controversy. Therefore, when individual appellants seek to

aggregate their claims under Sec. 405.740(a) or Sec. 405.817(a), or

when two or more appellants seek to aggregate their claims together

under section 1869(b)(2) of the Act, they must be aware of the

appropriate timeframe for appealing to an ALJ (60 days from the

previous administrative determination) and proceed accordingly.

In order for claims to be aggregated at a carrier hearing

or an ALJ hearing, the claims must have completed all prior levels of

appeal. For example, two beneficiaries seek to aggregate their part B

claims in a request for ALJ hearing under section 1869(b)(2) of the

Act. The ALJ may aggregate only those claims for which a beneficiary or

other party has received an initial determination, a review

determination and a carrier hearing decision. This requirement is

consistent with the general rule contained throughout subparts G and H

of part 405 that appellants must complete all prior steps in the

appeals process before proceeding to the next level.

In general, an appellant may not aggregate part A and part

B claims together to meet the requisite amount in controversy for a

carrier hearing or ALJ hearing. Section 1869(b)(2) of the Act

recognizes a distinct appeals process for part A and for part B and

provides different rules for each. Part A and part B claims are

processed independently of one another and follow different appeals

processes. As such, we think it is clearly impermissible for an

appellant to aggregate part A and part B claims together.

There is one notable exception to the general rule described above.

HMO determinations may involve a combination of part A and part B

services; the part A and part B claims involved in such determinations

are not processed independently of one another. Therefore, an HMO

appellant is permitted to aggregate part A and part B claims together.

We are revising Sec. 417.630 of the regulations to provide that HMO

appellants may combine both part A and part B services in their appeals

to reach the amount in controversy. (This provision was previously

codified at Sec. 417.260(b)(4), a regulation that was obsoleted on

October 17, 1991 (56 FR 51985).)

Comment: The proposed rule implements a statutory change to section

1869 of the Act and, as such, should not apply to: (1) The separate and

distinct appeals process for HMOs under section 1876 of the Act, or (2)

the appeals process involving PRO determinations under section 1155 of

the Act.

Response: We agree with this comment to the extent that the

aggregation criteria under section 1869(b)(2) of the Act should not

apply to the HMO appeals process. For enrollees of HMOs, the HMO is

responsible for making the initial determinations. Section

1876(c)(5)(B) of the Act establishes beneficiary rights to ALJ hearings

and judicial review of certain part A and part B claims submitted by or

on behalf of HMO enrollees. HCFA regulations address this subject at 42

CFR 417.600 to 417.638.

The Congress specifically amended section 1869 of the Act to

provide for the aggregation of claims by two or more appellants in very

specific circumstances; that is, if the claims involve the delivery of

similar or related services to the same individual or common issues of

law and fact. The Congress did not similarly amend section 1876 of the

Act to provide for such aggregation in the HMO setting. Accordingly, we

do not believe that HMO appellants should be afforded the aggregation

rights specified in section 1869 of the Act. We are modifying the

regulation text in Sec. 417.630(b) to state specifically that the

aggregation provisions contained in section 1869(b)(2) do not apply to

HMO appeals.

On the other hand, we believe that the aggregation criteria under

section 1869(b)(2) of the Act should apply to the PRO appeals process.

PROs issue determinations under title XI of the Act relating to quality

of care, medical necessity and appropriateness of setting and the

appeals process for these determinations is governed by section 1155 of

the Act. The PROs also issue limitation of liability determinations

under section 1879 of the Act and the appeals process for such

determinations is governed by section 1869(b) of the Act. Given this

policy, a case decided by a PRO may involve, in essence, two separate

determinations, one for the substantive coverage issue under section

1155 of the Act and the other for the limitation of liability issue

under section 1869(b) of the Act. Having an adjudicator apply different

aggregation rules to each issue in a case would make the situation

unnecessarily complex. Therefore, we are revising the regulation to

allow multiple appellants to aggregate claims decided by PROs under the

criteria in section 1869(b)(2), regardless of whether the claim is

decided under title XI or title XVIII. However, we also note that PRO

appellants may only aggregate those claims under section 1869(b)(2)

that they have standing to appeal under the rules provided in part 473.

In the HMO regulations at 42 CFR 417.630 and in the PRO regulations

at Sec. 473.44, we are also specifying in the final rule (by cross-

reference to the appropriate provisions in part 405, subparts G and H)

that individual HMO and PRO appellants (as opposed to group appellants)

are permitted to aggregate their claims in the same manner provided to

individual appellants who appeal claims under section 1869 of the Act.

Thus, an individual appellant challenging a determination by an HMO or

a PRO may aggregate two or more claims regardless of the issues

involved. We are making these changes to provide a consistent, across-

the-board procedure for an individual appellant seeking to aggregate

his or her claims to reach the minimum amount in controversy needed for

an ALJ hearing. Because this is a liberalization of the current rules,

we do not anticipate any objections from any members of the

beneficiary/provider community concerning this policy.

Comment: Section 9341 of OBRA '86 does not provide that a carrier

hearing must always precede an ALJ hearing. Section 1842(b)(3)(C) of

the Act was amended to provide for carrier hearings when the amount in

controversy is ``at least $100, but less than $500.'' Therefore, for

amounts in controversy of $500 or more following a carrier's review

determination, a claimant should be able to appeal directly to an ALJ.

Response: As we announced in the preamble to the proposed rule (56

FR 28354 (June 20, 1991)), this rule was intended to establish criteria

for determining the amount in controversy thresholds for both Part A

and B ALJ hearings. Although we captioned Sec. 405.820 (now

redesignated Sec. 405.815) as ``Right to hearing,'' we did not intend

for this regulation to provide all of the procedural requirements

necessary to establish the right to an ALJ hearing. Those requirements

will be addressed in a separate regulation document. In the meantime,

to the extent not superseded by this or other regulations, Part B ALJ

hearings and Appeals Council review are conducted pursuant to the

procedures outlined in HCFA and SSA's Federal Register notice of June

1, 1988 (53 FR 20023).

In order to clarify the scope of Sec. 405.815, we have revised the

caption to read ``Amount in controversy for carrier hearing, ALJ

hearing and judicial review'' and have made other clarifying changes to

the regulation text. However, because, under current procedures, we

continue to require that appellants complete the carrier fair hearing

process before proceeding to an ALJ hearing, we briefly address the

commenters' concerns about the legality of this requirement.

We disagree with the commenters' conclusion concerning the

requirements of the statute. We believe that the Secretary has the

authority under the Medicare statute to require that claimants whose

claims exceed $500 complete all prior stages of the administrative

appeals process, including a carrier fair hearing, before obtaining an

ALJ hearing.

We note that the Secretary's position on this point is supported by

the decision of the U.S. Court of Appeals for the Second Circuit in

Isaacs v. Bowen, 865 F.2d 468 (2nd Cir. 1989), which considered the

effect of the statutory provision cited by the commenters. In 1987,

HCFA amended its Medicare Carriers Manual to require that a carrier

fair hearing must precede an ALJ hearing regardless of the amount in

controversy. Following this revision, the Congress held hearings

concerning the Medicare appeals process and enacted the Omnibus Budget

Reconciliation Act of 1987 (OBRA '87), Public Law 100-203, which

addressed the carrier fair hearing procedures in two respects. First,

the language of section 1842(b)(3)(C) of the Act describing the

monetary amounts for a carrier fair hearing was changed by substituting

the phrase ``less than $500'' for the phrase ``not more than $500.''

Second, the Congress authorized the General Accounting Office to

conduct a cost-effectiveness study of the Secretary's requirement for

carrier hearings before proceeding to an ALJ hearing. In light of these

provisions, which were enacted after the Congress had heard testimony

concerning HCFA's decision to require carrier hearings in all

circumstances, the Court of Appeals for the Second Circuit found that

the Congress by its actions had ratified the manual provision.

Comment: A single overpayment determination may involve a large

number of claims and several different issues. The overpayment in its

entirety should be considered as a ``common issue of law and fact'' and

therefore all claims contained therein should be aggregable.

Response: An overpayment determination made to an individual person

or entity will fall under the first prong of our bifurcated approach.

That is, an individual appellant may aggregate all appealable claims

included in a single overpayment determination regardless of the issues

involved. (However, the appellant may only aggregate those claims

included in the overpayment determination that the appellant has

standing to appeal under the rules provided in part 405, subparts G and

H, part 417 or part 473, as applicable.) Thus, the section 1869(b)(2)

criterion of ``common issues of law and fact,'' applicable to two or

more appellants who seek to aggregate their claims together, does not

apply in this situation.

Comment: Physicians in a multi-specialty group practice would be

prohibited from aggregating claims together. An exception to the

proposed rule should be made for physicians in the same group practice

whose claims are billed and paid in the name of the group.

Response: In light of the approach we are taking in the final rule,

we believe the concerns raised by the commenter no longer apply.

Physicians in a multi-specialty group practice would not be prohibited

from aggregating their claims together as long as those claims involve

``similar or related services'' or ``common issues of law and fact.''

As previously stated, the proposed rule did not permit two or more

appellants to aggregate their claims together and limited the rights of

individual appellants to aggregate their claims on the basis of

``similar or related services'' or ``common issues of law and fact.''

The final rule establishes a bifurcated system of aggregation whereby:

(1) Individual appellants may aggregate two or more claims regardless

of issue and (2) two or more appellants may aggregate their claims

together if the claims involve the delivery of similar or related

services to the same individual or involve common issues of law and

fact arising from services furnished to two or more individuals.

If a multi-specialty group of physicians: (1) Has one billing

number, (2) bills Medicare under that number, (3) uses a uniform charge

structure and (4) typically appeals as a single entity (rather than

having its physicians appeal individually), we believe that the

aggregation rules pertaining to individual appellants should apply.

Therefore, in this situation, the multi-specialty group would be able

to submit claims from two or more of its physicians in a single appeal

request (the filing time limit would have to be met for the particular

level of appeal) without having to demonstrate that the claims involve

common issues.

Comment: A non-participating physician may accept or reject

assignment on claims at his or her discretion. Because the proposed

rule permits a non-participating physician under section 1842(l) of the

Act to aggregate unassigned claims for appeal purposes, the non-

participating physician should be able to aggregate assigned claims

with his or her unassigned claims if ``common issues of law and fact''

or ``delivery of similar or related services'' are involved.

Response: We agree with this comment. The determining factor in the

situation posed is not whether a non- participating physician's claims

are assigned or unassigned, but whether the claims are appealable.

Under the first prong of our bifurcated approach, an individual

appellant may aggregate all appealable claims regardless of issue.

Therefore, a non-participating physician may aggregate assigned claims

with unassigned claims providing that he or she has standing to appeal

the claims under the rules in part 405, subpart H, part 417 or part

473, as applicable. The section 1869(b)(2) criteria of ``common issues

of law and fact'' and ``delivery of similar or related services,''

applicable to two or more appellants who seek to aggregate their claims

together, do not apply in this situation.

Comment: One commenter suggested that the regulations should afford

adjudicators more discretion to determine whether ``common issues of

law and fact'' exist based upon evidence presented by the entity

seeking a hearing.

On the other hand, another commenter believed that giving the

carrier hearing officer the power to determine the criteria for

aggregation gives too much discretion to these officials.

Response: As stated in a previous response, we have reevaluated the

definition of ``common issues of law and fact'' in light of the

comments received and the general lack of practical experience in

applying this criterion. In our view, the statute requires commonality

of law and fact so that the appeal will present common issues, which,

when resolved, will have some decisional impact on aggregated claims.

In order to further this statutory goal and rather than attempt to

anticipate every situation that would warrant aggregation, we have

decided to provide a more general definition for this term. This

approach will provide adjudicators with more flexibility and discretion

to determine if the criteria for aggregation under section 1869(b)(2)

of the Act have been met in a particular case.

The concern raised by the second commenter is no longer an issue

because carrier hearing officers will not be applying the criteria in

section 1869(b)(2) of the Act to determine whether the bases for

aggregation have been met.

Comment: If the hearing officer dismisses the request to aggregate

claims to meet the $100 requirement, then certainly the $500

requirement would not be met for a Part B ALJ appeal. A dismissal by a

carrier hearing officer should not be subject to further appeal rights.

Response: Under the proposed rule, the only issue in a carrier

hearing officer dismissal that the ALJ could review was the

applicability of the criteria in section 1869(b)(2) of the Act; that

is, ``delivery of similar or related services'' and ``common issues of

law and fact.'' In light of the approach to aggregation that we are

taking in the final rule, carrier hearing officers will not be

considering section 1869(b)(2) criteria. Therefore, we are not making

final the proposed regulation text that would have allowed ALJ review

of a carrier hearing officer's dismissal of a hearing request.

Comment: One commenter believes the requirement that ``at each

review level the filing time limit must be met for all claims to be

aggregated'' creates a chilling effect on the ability of home health

agencies (HHAs) to aggregate claims.

Response: As stated in previous responses, the proposed rule

provided for aggregation only by individual appellants and only under

the circumstances described in section 1869(b)(2) of the Act, that is,

if the claims involve the delivery of similar or related services to

the same individual or common issues of law and fact arising from

services furnished to two or more individuals. Accordingly, the

proposed rule might have significantly limited an HHA's ability to

aggregate claims. However, the final rule permits an individual

appellant, such as an HHA, to aggregate two or more claims regardless

of issue. (However, the HHA, like all appellants, may only aggregate

those claims that it has standing to appeal under the rules provided in

part 405, subparts G and H, part 417 or part 473, as applicable.) As a

result, the effect of the new bifurcated approach should be to

facilitate aggregation of claims by HHAs such that the time limits for

appeal will not be significant barriers.

Section 1869(b)(1) of the Act incorporates by reference the

provisions of section 205(b) of the Act relating to hearings under the

Medicare program. Section 205(b)(1) of the Act mandates that an

individual must request an ALJ hearing within 60 days after receipt of

the previous decision. Therefore, Part A and Part B Medicare appellants

are obliged to appeal claims within this timeframe. We believe that

allowing appellants to aggregate claims beyond this timeframe would

dilute this requirement.

Comment: Three commenters had concerns about our proposed

requirement that claims with mutually exclusive bases for appeal could

not be aggregated. One thought that this requirement could prohibit a

supplier from aggregating claims denied or only partially paid because

of carrier error; another thought that ``mutually exclusive'' means

incompatible and that our examples do not show incompatibility. The

latter commenter also thought the definition to be unclear, invalid and

unnecessary because of our definition of ``common issues of law.'' The

third commenter thought the requirement should be relaxed if not

eliminated and that at the very least physicians should not be

prohibited from appealing claims denied for more than one reason.

Response: We agree with the commenters that the definition for

``mutually exclusive bases for appeal'' is overly restrictive and

difficult to apply. Upon further review, we have decided to eliminate

this term to provide more flexibility to an ALJ in applying the

criteria for multiple appellant aggregation under section 1869(b)(2) of

the Act.

Comment: The proposed rule sets forth a definition of ``delivery of

similar or related services'' to mean, among other things, services

provided to a single beneficiary during the same continuous course of

treatment or continuous period of medical care. One commenter believes

we should develop more precise definitions of ``continuous course of

treatment'' and ``continuous period of medical care'' to avoid

inconsistent carrier application of the aggregation rule.

Response: In light of the comments received questioning the

definition of ``delivery of similar or related services'' and our lack

of practical experience in applying it (and other terms), we have

decided to provide a more general definition for this term. This

approach will provide adjudicators with more flexibility and discretion

to decide if this criterion for aggregation by multiple appellants

under section 1869(b)(2) of the Act has been met in a particular case.

As stated previously, we intend to monitor in the future the

application of this definition by adjudicators and we will consider

providing more precise definitions via rulemaking if experience shows

this is warranted.

Comment: As recommended by the House Budget Committee in its Report

accompanying OBRA '86 (H.R. Rep. No. 727, 99th Cong., 2nd Sess., 95-96

(1986)), ALJs with specific knowledge of the Medicare program should be

assigned to review carrier hearing decisions. Also, HCFA should issue a

new set of aggregation rules to enhance physician access to appropriate

due process through fair hearings and administrative appeals.

Response: The portion of this comment that addresses who will hear

Medicare cases is beyond the scope of this regulation. With respect to

the second portion of the comment, the commenter believes that the

proposed rule places undue burdens on physicians who want to appeal

Medicare claims and suggests generally that physicians are being placed

at a disadvantage under the aggregation rules. Although we disagree

with the commenter's assessment of the proposed rule, in light of the

bifurcated approach to aggregation that we are taking in the final

rule, we believe the commenter no longer should have any concerns in

this regard. An individual physician who accepts assignment has the

same appeal rights as a beneficiary; he or she is able to aggregate two

or more assigned claims from one or more beneficiaries without having

to demonstrate that the claims involve common issues. Moreover, two or

more physicians may aggregate their claims together to meet the minimum

amount needed for appeal if the claims involve ``common issues of law

and fact'' or, if the claims involve services to a single beneficiary,

they involve ``similar or related services.''

Comment: Section 4113 of OBRA '90 directed the Secretary to conduct

a study of the ``effects of permitting the aggregation of claims that

involve common issues of law and fact furnished * * * to two or more

individuals by two or more physicians within the same 12-month

period.'' The proposed rule stated that the study mandated by the

Congress confirms, for the present, that the Congress did not require

the Secretary to provide for aggregation by two or more appellants. One

commenter believed that the Congress had already accepted the premise

that two or more appellants could aggregate their claims together and

the study was merely a response to a proposed House bill that would

have extended the period in which claims could be aggregated from 60

days to 12 months.

Response: In the absence of specific legislative history, we took

the position in the proposed rule that the OBRA '86 aggregation

provision did not provide a basis for permitting two or more appellants

to aggregate their claims together to meet the minimum amount in

controversy needed for a particular level of appeal. It was our view

that the OBRA '90 provision, in which the Congress directed the

Secretary to conduct a pilot study to investigate the effect of

permitting aggregation by two or more appellants, suggested that the

OBRA '86 aggregation provision should apply only to individual

appellants.

As discussed previously, we have changed our position from the

proposed rule to provide for aggregation by two or more appellants

under the statutory criteria for aggregation specified in section

1869(b)(2) of the Act. The study itself has been completed and a report

is being prepared.

Comment: The proposed rule provides that a single provider may

combine claims from several different beneficiaries if common issues of

law and fact are involved. The commenter, a PRO, is concerned that this

could place an added and unnecessary burden on the PRO appeals system.

Response: As we stated in a previous response, we are applying the

section 1869(b)(2) aggregation provision to the PRO appeals process.

Therefore, two or more PRO appellants will be permitted to aggregate

their appealable claims together on the basis of ``similar or related

services'' or ``common issues of law and fact.'' However, any

aggregation under section 1869(b)(2) will take place in connection with

a request for an ALJ hearing or judicial review and, consequently,

should not result in any significant burden on PROs.

In the final rule we are expanding the aggregation rights for

individual appellants under part A. As a result, an individual provider

appellant would be able to aggregate two or more claims of one or more

beneficiaries. However, it has been our experience that the amount in

controversy ($200) for an ALJ hearing has not been a particular

obstacle in PRO appeals even when a single claim is being adjudicated.

Comment: One commenter noted that the proposed rule did not address

whether claims of several different beneficiaries, each meeting the

minimum amount in controversy needed for appeal, could be consolidated

into a single hearing for reasons of economy and efficiency.

Response: This comment is beyond the announced scope of this

regulation. In the second full paragraph on p. 28357 of the preamble to

the proposed rule, we state that ``We emphasize that the purpose of

these regulations is to provide criteria for aggregation of claims in

order to meet the amount in controversy requirements (that is, the

jurisdictional threshold) for appealing Medicare claims. These rules

are not meant to address procedures (or alter existing provisions)

concerning the conduct of hearings once the required amount in

controversy is established or to address the discretion of the

presiding officer to join claims in a single hearing for administrative

purposes'' (emphasis supplied).

Summary of Revisions

Below we describe changes we are making, as discussed above in the

responses to comments, to both the regulations as they currently appear

in the Code of Federal Regulations and to the rules we proposed on June

20, 1991.

A. Definitions (Secs. 405.701 and 405.802)

1. We are adding a definition of ``appellant'', to designate the

beneficiary, provider or other person or entity appealing a

determination of benefits under part A (Sec. 405.701) or part B

(Sec. 405.802), to facilitate the implementation of our bifurcated

system of aggregation by providing a single, consistent term

identifying the person or entity that has filed the appeal in a part A

or part B claim. The term merely identifies the individual that filed

the appeal; designation as an ``appellant'' does not convey the right

to appeal the issue in question.

2. We are not making final the proposed definitions of ``common

issues of * * * fact'' and ``common issues of law'' because they are

overly restrictive and difficult to apply. We are revising the proposed

definition of ``common issues of law and fact'' to provide a more

general application of this term and to provide ALJs with more

flexibility in applying this criterion for aggregation.

3. We are revising the proposed definition of ``delivery of similar

or related services'' to provide a more general application of this

term and to provide ALJs with more flexibility in applying this

criterion for aggregation.

4. We are not making final the proposed definition of ``mutually

exclusive bases of appeal'' because it is overly restrictive and

difficult to apply.

5. We are not making final the proposed definition of ``services''

because we believe that the definition of services in Sec. 400.202 is

sufficient.

B. Principles for Determining the Amount in Controversy (Sec. 405.740)

We are modifying the proposed principles for determining the amount

in controversy and revising the current rules to say specifically that

two or more appellants may aggregate their claims together to meet the

amount in controversy requirements if the claims at issue are appealed

on time and involve common issues of law and fact. Further, two or more

providers may aggregate their claims together if the claims involve the

delivery of similar or related services to the same individual. We are

also providing that individual appellants may aggregate their claims

without having to demonstrate that the claims involve common issues.

C. Determinations of Amount in Controversy (Sec. 405.741)

We are not making final the proposed section. The proposed

provisions are no longer relevant because of our revised policy, and we

have incorporated the current provision--that the presiding officer

will determine whether the amount in controversy is $100 or more--into

Sec. 405.740.

D. Procedural Rules for Aggregating Claims (Proposed Sec. 405.742)

This section is not included in the final rule as the now relevant

portions are in Sec. 405.740. The provision at proposed

Sec. 405.742(c), which would have required a reconsideration by the

appropriate entity before a hearing, is not included because the

concept is repeated elsewhere in the subpart.

E. Definitions (Sec. 405.802)

1. We are adding the definition of ``appellant'' for the reasons

explained above under the discussion of Sec. 405.701.

2. The definition of ``carrier'' is revised to include

intermediaries authorized to make determinations with respect to part B

provider services, obviating our need to add the phrase

``intermediaries where appropriate'' everywhere we proposed.

F. Notice of Review Determination and Effect of Review Determination

(Secs. 405.811 and 405.812)

We are revising these sections to update the cross-references. We

are also specifying that the hearing referred to is a carrier hearing

and changing the tense of the sentences to present tense in accordance

with our current style.

G. Amount in Controversy for Carrier Hearing, ALJ Hearing and Judicial

Review (Proposed Sec. 405.820)

We are revising the proposed Sec. 405.820 by redesignating it as

Sec. 405.815, changing its heading, and moving the contents of

paragraphs (b) and (d) with appropriate changes to Secs. 405.820 and

405.821, respectively. Paragraph (c) of the current Sec. 405.820 will

be Sec. 405.821(b).

H. Principles for Determining the Amount in Controversy (Sec. 405.817)

We are adding this new section. It contains, as does Sec. 405.740,

our procedures and policies for determining the amount in controversy

and for aggregating claims. Most of this section was derived from

proposed Sec. 405.827, which is not included in this final rule.

I. Request for a Carrier Hearing (Sec. 405.821)

We are revising the current contents of this section to include

those portions of proposed Sec. 405.827 that remain relevant; that is,

Sec. 405.827 (c) and (d).

J. Procedural Rules for Aggregating Claims (Proposed Sec. 405.827)

We are not including this section in the final rule as we have

revised our policy and placed that policy as well as unrevised

procedures in other sections, as explained above. Paragraph (d),

concerning exhaustion of administrative remedies, is covered elsewhere

in the subpart.

K. Dismissal of Request for Carrier Hearing (Sec. 405.832)

We are not revising paragraph (d) as proposed because carrier

hearing officers will not be making determinations concerning

aggregation on the basis of ``delivery of similar or related services

or ``common issues of law and fact.''

L. Right to a Hearing (Sec. 417.630)

We are revising the cross-references in this section because of

changes in this final rule. We are also adding a provision that members

of HMOs who are appellants may combine both part A and part B services

in their appeals. We are also specifying in a new paragraph (b) that

the criteria for aggregating claims under section 1869(b)(2) of the Act

do not apply to appeals under part 417.

M. Determining the Amount in Controversy (Sec. 473.44)

We are updating cross-references in this section. We are also

specifying that the criteria for aggregating claims under section

1869(b)(2) of the Act, as implemented at Secs. 405.740(b) and

405.817(b), apply to appeals under part 473.

N. We Are Revising the Headings of the Following Sections To Include

the Word ``Carrier''

Secs. 405.822, 405.823, 405.824, 405.825, 405.830, 405.831,

405.832, 405.833, 405.834, 405.835, 405.841 and 405.860.

Paperwork Burden

This document does not impose information collection and

recordkeeping requirements. Consequently, it need not be reviewed by

the Office of Management and Budget under the authority of the

Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

Regulatory Impact Statement

We generally prepare a regulatory flexibility analysis that is

consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612) unless the Secretary certifies that a final rule will not

have a significant economic impact on a substantial number of small

entities. For purposes of the RFA, all physicians, providers, and

suppliers are considered to be small entities. Individuals and States

are not included in the definition of a small entity.

Also, section 1102(b) of the Act requires the Secretary to prepare

a regulatory impact analysis if a final rule may have a significant

impact on the operations of a substantial number of small rural

hospitals. This analysis must conform to the provisions of section 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 and has fewer than 50 beds.

This final rule establishes in Medicare regulations an approach for

aggregating Medicare claims by two or more appellants to obtain the

right to an ALJ hearing. It also provides easier access to the appeals

process for an individual part A appellant, by providing these

individuals with essentially the same aggregation rights that an

individual part B appellant now has.

We believe that the system for aggregating claims by two or more

appellants will provide for easier access to hearings but we do not

expect it to be widely used. This is because an individual appellant

(who is permitted to combine claims without having to demonstrate a

basis for the aggregation) should usually be able to meet the

appropriate jurisdictional thresholds on his or her own behalf without

having to combine the claims of other appellants. We also believe that

individuals concerned with privacy of their records or proceedings, or

individuals not inclined to locate other potential appellants might

choose not to avail themselves of this opportunity. For whatever

reasons, only a few requests for hearing involving the aggregation of

claims by multiple appellants have been submitted in response to the

decision in Moore vs. Sullivan. Nor do we expect that the changes to

the aggregation rules for individual part A appellants will

significantly increase the volume of part A hearings. The Secretary

certifies that this final rule will not result in a significant

economic impact on a substantial number of small entities and will not

have a significant impact on the operations of a substantial number of

small rural hospitals. This regulation was reviewed by the Office of

Management and Budget.

List of Subjects

42 CFR Part 405

Administrative practice and procedure, Health facilities, Health

maintenance organizations (HMO), Health professions, Kidney diseases,

Laboratories, Medicare, Reporting and recordkeeping requirements, Rural

areas, X-rays.

42 CFR Part 417

Administrative practice and procedure, Grant programs--health,

Health care, Health facilities, Health insurance, Health maintenance

organizations (HMO), Loan programs--health, Medicare, Reporting and

recordkeeping requirements.

42 CFR Part 473

Administrative practice and procedure, Health care, Health

professions, Peer Review Organizations (PRO), Reporting and

recordkeeping requirements.

42 CFR chapter IV is amended as follows:

A. Part 405 is amended as set forth below:

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

1. Subpart G is amended as follows:

Subpart G--Reconsiderations and Appeals Under Medicare Part A

a. The authority citation for subpart G is revised to read as

follows:

Authority: Secs. 1102, 1151, 1154, 1155, 1869(b), 1871, 1872,

and 1879 of the Social Security Act (42 U.S.C. 1302, 1320c, 1320c-3,

1320c-4, 1395ff(b), 1395hh, 1395ii and 1395pp).

b. In Sec. 405.701, the section heading is revised and a new

paragraph (d) is added to read as follows:

Sec. 405.701 Basis, purpose and definitions.

* * * * *

(d) Definitions. As used in subpart G of this part, the term--

Appellant designates the beneficiary, provider or other person or

entity that has filed an appeal concerning a particular determination

of benefits under Medicare part A. Designation as an appellant does not

in itself convey standing to appeal the determination in question.

Common issues of law and fact, with respect to the aggregation of

claims by two or more appellants to meet the minimum amount in

controversy needed for a hearing, occurs when the claims sought to be

aggregated are denied or reduced for similar reasons and arise from a

similar fact pattern material to the reason the claims are denied.

Delivery of similar or related services, with respect to the

aggregation of claims by two or more provider appellants to meet the

minimum amount in controversy needed for a hearing, means like or

coordinated services or items provided to the same beneficiary by the

appellants.

c. Section 405.740 is revised to read as follows:

Sec. 405.740 Principles for determining the amount in controversy.

(a) Individual appellants. For the purpose of determining whether

an individual appellant meets the minimum amount in controversy needed

for a hearing ($100), the following rules apply:

(1) The amount in controversy is computed as the actual amount

charged the individual for the items and services in question, less any

amount for which payment has been made by the intermediary and less any

deductible and coinsurance amounts applicable in the particular case.

(2) A single beneficiary may aggregate claims from two or more

providers to meet the $100 hearing threshold and a single provider may

aggregate claims for services provided to one or more beneficiaries to

meet the $100 hearing threshold.

(3) In either of the circumstances specified in paragraph (a)(2) of

this section, two or more claims may be aggregated by an individual

appellant only if the claims have previously been reconsidered and a

request for hearing has been made within 60 days after receipt of the

reconsideration determination(s).

(4) When requesting a hearing, the appellant must specify in his or

her appeal request the specific claims to be aggregated.

(b) Two or more appellants. As specified below, under section

1869(b)(2) of the Act, two or more appellants may aggregate their

claims together to meet the minimum amount in controversy needed for a

hearing ($100). The right to aggregate under this statutory provision

applies to claims for items and services furnished on or after January

1, 1987.

(1) The aggregate amount in controversy is computed as the actual

amount charged the individual(s) for the items and services in

question, less any amount for which payment has been made by the

intermediary and less any deductible and coinsurance amounts applicable

in the particular case.

(2) In determining the amount in controversy, two or more

appellants may aggregate their claims together under the following

circumstances:

(i) Two or more beneficiaries may combine claims representing

services from the same or different provider(s) if the claims involve

common issues of law and fact;

(ii) Two or more providers may combine their claims if the claims

involve the delivery of similar or related services to the same

beneficiary; or

(iii) Two or more providers may combine their claims if the claims

involve common issues of law and fact with respect to services

furnished to two or more beneficiaries.

(iv) In any of the circumstances specified in paragraphs (b)(2)(i)

through (b)(2)(iii) of this section, the claims may be aggregated only

if the claims have previously been reconsidered and a request for

hearing has been made within 60 days after receipt of the

reconsideration determination(s). Moreover, in the request for hearing,

the appellants must specify the claims that they seek to aggregate.

(c) The determination as to whether the amount in controversy is

$100 or more is made by the administrative law judge (ALJ).

(d) In determining the amount in controversy under paragraph (b) of

this section, the ALJ also makes the determination as to what

constitutes ``similar or related services'' or ``common issues of law

and fact.''

(e) When a civil action is filed by either an individual appellant

or two or more appellants, the Secretary may assert that the

aggregation principles contained in this subpart may be applied to

determine the amount in controversy for judicial review ($1000).

(f) Notwithstanding the provisions of paragraphs (a)(1) and (b)(1)

of this section, when payment is made for certain excluded services

under Sec. 411.400 of this chapter or the liability of the beneficiary

for those services is limited under Sec. 411.402 of this chapter, the

amount in controversy is computed as the amount that would have been

charged the beneficiary for the items or services in question, less any

deductible and coinsurance amounts applicable in the particular case,

had such expenses not been paid pursuant to Sec. 411.400 of this

chapter or had such liability not been limited pursuant to Sec. 411.402

of this chapter.

(g) Under this subpart, an appellant may not combine part A and

part B claims together to meet the requisite amount in controversy for

a hearing. HMO, CMP and HCPP appellants under part 417 of this chapter

may combine part A and part B claims together to meet the requisite

amounts in controversy for a hearing.

Sec. 405.741 [Removed]

d. Section 405.741 is removed.

2. Subpart H is amended as follows:

Subpart H--Appeals Under the Medicare Part B Program

a. The authority citation for subpart H is revised to read as

follows:

Authority: Secs. 1102, 1842(b)(3)(C), and 1869(b) of the Social

Security Act (42 U.S.C. 1302, 1395u(b)(3)(C), 1395ff(b)).

b. The heading for subpart H is revised as set forth above.

c. Section 405.802 is revised to read as follows:

Sec. 405.802 Definitions.

As used in subpart H of this part, the term--

Appellant designates the beneficiary, assignee or other person or

entity that has filed an appeal concerning a particular determination

of benefits under Medicare part B. Designation as an appellant does not

in itself convey standing to appeal the determination in question.

Assignee means a physician or supplier who furnishes services to a

beneficiary under Medicare part B and who has accepted a valid

assignment executed by the beneficiary.

Assignment means the transfer by the assignor of his or her claim

for payment to the assignee in return for the latter's promise not to

charge more for his or her services than the carrier finds to be the

reasonable charge or other approved amount.

Assignor means a beneficiary under Medicare part B whose physician

or supplier has taken assignment of a claim.

Carrier means an organization which has entered into a contract

with the Secretary pursuant to section 1842 of the Act and which is

authorized to make determinations with respect to part B of title XVIII

of the Act. For purposes of this subpart, the term carrier also refers

to an intermediary that has entered into a contract with the Secretary

under section 1816 of the Act and is authorized to make determinations

with respect to part B provider services, as specified in Sec. 421.5(c)

of this chapter.

Common issues of law and fact, with respect to the aggregation of

claims by two or more appellants to meet the minimum amount in

controversy needed for an ALJ hearing, occurs when the claims sought to

be aggregated are denied or reduced for similar reasons and arise from

a similar fact pattern material to the reason the claims are denied.

Delivery of similar or related services, with respect to the

aggregation of claims by two or more physician/supplier appellants to

meet the minimum amount in controversy needed for an ALJ hearing, means

like or coordinated services or items provided to the same beneficiary

by the appellants.

Representative means an individual meeting the conditions described

in Secs. 405.870 through 405.871.

d. Section 405.811 is revised to read as follows:

Sec. 405.811 Notice of review determination.

Written notice of the review determination is mailed to a party at

his or her last known address. The review determination states the

basis of the determination and advises the party of his or her right to

a carrier hearing when the amount in controversy is $100 or more as

determined in accordance with Sec. 405.817. The notice states the place

and manner of requesting a carrier hearing as well as the time limit

under which a hearing must be requested (see Sec. 405.821).

e. Section 405.812 is revised to read as follows:

Sec. 405.812 Effect of review determination.

The review determination is final and binding upon all parties to

the review unless a carrier hearing decision is issued pursuant to a

request for hearing made in accordance with Sec. 405.821 or is revised

as a result of reopening in accordance with Sec. 405.841.

f. Section 405.820 is redesignated as Sec. 405.815 and is revised

to read as follows:

Sec. 405.815 Amount in controversy for carrier hearing, ALJ hearing

and judicial review.

Any party designated in Sec. 405.822 is entitled to a carrier

hearing after a review determination has been made by the carrier if

the amount remaining in controversy is $100 or more and the party meets

the requirements of Sec. 405.821 of this subpart. To be entitled to a

hearing before an ALJ following the carrier hearing, the amount

remaining in controversy must be $500 or more, and for judicial review

following the ALJ hearing and Appeals Council Review, the amount

remaining in controversy must be $1000 or more.

g. A new Sec. 405.817 is added as follows:

Sec. 405.817 Principles for determining amount in controversy.

(a) Individual appellants. For the purpose of determining whether

an individual appellant meets the minimum amount in controversy needed

for a carrier hearing ($100) or ALJ hearing ($500), the following rules

apply:

(1) The amount in controversy is computed as the actual amount

charged the individual for the items and services in question, less any

amount for which payment has been made by the carrier and less any

deductible and coinsurance amounts applicable in the particular case.

(2) A single beneficiary may aggregate claims from two or more

physicians/suppliers to meet the $100 or $500 thresholds. A single

physician/supplier may aggregate claims from two or more beneficiaries

to meet the $100 or $500 threshold levels of appeal.

(3) In either of the circumstances specified in paragraph (a)(2) of

this section, two or more claims may be aggregated by an individual

appellant to meet the amount in controversy for a carrier hearing only

if the claims have previously been reviewed and a request for hearing

has been made within six months after the date of the review

determination(s).

(4) In either of the circumstances specified in paragraph (a)(2) of

this section, two or more claims may be aggregated by an individual

appellant to meet the amount in controversy for an ALJ hearing only if

the claims have previously been decided by a carrier hearing officer

and a request for an ALJ hearing has been made within 60 days after

receipt of the carrier hearing officer decision(s).

(5) When requesting a carrier hearing or an ALJ hearing, the

appellant must specify in his or her appeal request the specific claims

to be aggregated.

(b) Two or more appellants. As specified in this paragraph, under

section 1869(b)(2) of the Act, two or more appellants may aggregate

their claims together to meet the minimum amount in controversy needed

for an ALJ hearing ($500). The right to aggregate under this statutory

provision applies to claims for items and services furnished on or

after January 1, 1987.

(1) The aggregate amount in controversy is computed as the actual

amount charged the individual(s) for the items and services in

question, less any amount for which payment has been made by the

carrier and less any deductible and coinsurance amounts applicable in

the particular case.

(2) In determining the amount in controversy, two or more

appellants may aggregate their claims together under the following

circumstances:

(i) Two or more beneficiaries may combine claims representing

services from the same or different physician(s) or supplier(s) if the

claims involve common issues of law and fact;

(ii) Two or more physicians/suppliers may combine their claims if

the claims involve the delivery of similar or related services to the

same beneficiary;

(iii) Two or more physicians/suppliers may combine their claims if

the claims involve common issues of law and fact with respect to

services furnished to two or more beneficiaries.

(iv) In any of the circumstances specified in paragraphs (b)(2)(i)

through (b)(2)(iii) of this section, the claims may be aggregated only

if the claims have previously been decided by a carrier hearing

officer(s) and a request for ALJ hearing has been made within 60 days

after receipt of the carrier hearing officer decision(s). Moreover, in

a request for ALJ hearing, the appellants must specify the claims that

they seek to aggregate.

(c) The determination as to whether the amount in controversy is

$100 or more is made by the carrier hearing officer. The determination

as to whether the amount in controversy is $500 or more is made by the

ALJ.

(d) In determining the amount in controversy under paragraph (b) of

this section, the ALJ will also make the determination as to what

constitutes ``similar or related services'' or ``common issues of law

and fact.''

(e) When a civil action is filed by either an individual appellant

or two or more appellants, the Secretary may assert that the

aggregation principles contained in this subpart may be applied to

determine the amount in controversy for judicial review ($1000).

(f) Notwithstanding the provisions of paragraphs (a)(1) and (b)(1)

of this section, when payment is made for certain excluded services

under Sec. 411.400 of this chapter or the liability of the beneficiary

for those services is limited under Sec. 411.402 of this chapter, the

amount in controversy is computed as the amount that would have been

charged the beneficiary for the items or services in question, less any

deductible and coinsurance amounts applicable in the particular case,

had such expenses not been paid under Sec. 411.400 of this chapter or

had such liability not been limited under Sec. 411.402 of this chapter.

(g) Under this subpart, an appellant may not combine part A and

part B claims together to meet the requisite amount in controversy for

a carrier hearing or ALJ hearing. HMO, CMP and HCPP appellants under

part 417 of this chapter may combine part A and part B claims together

to meet the requisite amount in controversy for a hearing.

h. Section 405.821 is revised to read as follows:

Sec. 405.821 Request for carrier hearing.

(a) A request for a carrier hearing is any clear expression in

writing by a claimant asking for a hearing to adjudicate a claim when

not acted upon with reasonable promptness or by a party to a review

determination who states, in effect, that he or she is dissatisfied

with the carrier's review determination and wants further opportunity

to appeal the matter to the carrier.

(b) The hearing request must be filed at an office of the carrier

or at an office of SSA or HCFA.

(c) Except when a carrier hearing is held because the carrier did

not act upon a claim with reasonable promptness (see Sec. 405.801), a

party to the review determination may request a carrier hearing within

six months after the date of the notice of the review determination.

The carrier may, upon request by the party affected, extend the period

for filing the request for hearing.

Secs. 405.822, 405.823, 405.824, 405.825, 405.826, 405.830, 405.832,

405.833, 405.834, 405.835, 405.841, and 405.860 [Amended]

i. The headings of Secs. 405.822, 405.823, 405.824, 405.825,

405.826, 405.830, 405.832, 405.833, 405.834, 405.835, 405.841, and

405.860 are amended by adding the word ``carrier'' before the word

``hearing''.

B. Part 417 is amended as set forth below:

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL

PLANS, AND HEALTH CARE PREPAYMENT PLANS

1. The authority citation for part 417 continues to read as

follows:

Authority: Secs. 1102, 1833(a)(1)(A), 1861(s)(2)(H), 1871, 1874

and 1876 of the Social Security Act as amended (42 U.S.C. 1302,

1395l(a)(1)(A), 1395x(s)(2)(H), 1395hh, 1395kk, and 1395mm); section

114(c) of Public Law 97-248 (42 U.S.C. 1395mm note); section 9312(c)

of Public Law 99-509 (42 U.S.C. 1395mm note); and section 1301 of

the Public Health Service Act (42 U.S.C. 300e) and 31 U.S.C. 9701.

2. Section 417.630 is revised to read as follows:

Sec. 417.630 Right to a hearing.

(a) Any party to the reconsideration who is dissatisfied with the

reconsidered determination has a right to a hearing if the amount in

controversy is $100 or more. The amount in controversy for an

individual claimant, which can include any combination of part A and

part B services, is computed in accordance with Sec. 405.740(a) of this

chapter for part A services and Sec. 405.817(a) of this chapter for

part B services. When the basis for the appeal is the refusal of

services, the projected value of those services must be used in

computing the amount in controversy.

(b) The criteria for aggregating claims available to two or more

appellants under section 1869(b)(2) of the Act do not apply to appeals

under this part.

PART 473--RECONSIDERATIONS AND APPEALS

C. Part 473 is amended to read as follows:

1. The authority citation for part 473 continues to read as

follows:

Authority: Secs. 1102, 1154, 1155, 1866, 1871, and 1879 of the

Social Security Act (42 U.S.C. 1302, 1320c-3, 1320c-4, 1395cc,

1395hh, and 1395pp).

2. In Sec. 473.44, paragraph (a) is revised to read as follows:

Sec. 473.44 Determining the amount in controversy for a hearing.

(a) After an individual appellant has submitted a request for a

hearing, the ALJ determines the amount in controversy in accordance

with Sec. 405.740(a) of this chapter for Part A services or

Sec. 405.817(a) of this chapter for Part B services. When two or more

appellants submit a request for hearing, the ALJ determines the amount

in controversy in accordance with Sec. 405.740(b) of this chapter for

Part A services and Sec. 405.817(b) of this chapter for Part B

services.

* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance; and Program No. 93.774, Medicare--

Supplementary Medical Insurance Program)

Dated: November 3, 1993.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: January 24, 1994.

Donna E. Shalala,

Secretary.

[FR Doc. 94-5791 Filed 3-15-94; 8:45 am]

BILLING CODE 4120-01-P