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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 423

[CMS-4127-F]

RIN 0938-AO87

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

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

This final rule will implement the procedures that the Department of Health and Human Services will follow at the Administrative Law Judge and Medicare Appeals Council levels in deciding appeals brought by individuals who have enrolled in the Medicare prescription drug benefit program. In addition, it will implement the reopening procedures that will be followed at all levels of appeal.

DATES:

Effective date:

This final rule is effective on January 8, 2010.

FOR FURTHER INFORMATION CONTACT:

Arrah Tabe-Bedward, (410) 786-7129 (for issues related to reopenings and expedited access to judicial review).

Peggy McFadden-Elmore, (703) 235-0126 (for issues related to ALJ level appeals policies).

Mary Peltzer, (202) 565-0169 (for issues related to MAC level appeals).

SUPPLEMENTARY INFORMATION:

Abbreviations

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

ALJ Administrative Law Judge

CMS Centers for Medicare & Medicaid Services

DAB Departmental Appeals Board

EAJR Expedited Access to Judicial Review

IRE Independent Review Entity

LCD Local Coverage Determination

MAC Medicare Appeals Council

NCD National Coverage Determination

QIC Qualified Independent Contractor

I. Background

The voluntary prescription drug benefit program (“Part D”) was enacted into law by section 101 of Title I of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). The MMA specified that the prescription drug benefit would become available on January 1, 2006 for individuals entitled to benefits under Medicare Part A or enrolled under Medicare Part B. On January 28, 2005, the final rule (70 FR 4194) implementing the Part D program appeared in the

Federal Register

(hereinafter “Part D rule”). This rule became effective on March 22, 2005.

Section 1860D-4(h) of the Social Security Act (the Act) provides that Part D plan sponsors follow appeals procedures specified in section 1852(g)(5) of the Act in a manner similar to the manner such requirements apply to Medicare Advantage (MA) organizations for Part C appeals. Part D plan sponsors include a prescription drug plan sponsor, an MA organization offering a Medicare Advantage prescription drug plan (MA-PD plan), a Program of All-Inclusive Care for Elderly (PACE) organization offering a PACE plan, and a cost plan offering qualified prescription drug coverage.

Section 1852(g)(5) of the Act provides that enrollees in MA plans who are dissatisfied with determinations regarding their Part C benefits are entitled, if they meet the amount in controversy requirement, to a hearing before the Secretary to the same extent as is provided in section 205(b) of the Act and judicial review of the Secretary's final decision as provided in section 205(g) of the Act.

Section 1869(b)(1)(A) of the Act, which sets forth the requirements for Part A and Part B appeals, contains similar language to that set forth in section 1852(g)(5) of the Act and also refers to sections 205(b) and (g) of the Act.

These statutory concepts are reflected in the Part D rule and a closely related rule concerning MA organizations that also appeared in the

Federal Register

on January 28, 2005 (70 FR 4588), and became effective March 22, 2005 (hereinafter “Part C rule”). The Part D rule is codified at 42 CFR part 423, and addresses grievances, coverage determinations, reconsiderations, and appeals in subpart M. The Part C rule is codified at 42 CFR part 422, and similarly addresses grievances, organization determinations, and appeals in subpart M. The Part D rule states that, unless otherwise provided, the Part C rules regarding appeals and reopenings will apply “to the extent they are appropriate.” (

See

42 CFR 423.562(c).) Likewise, the Part C rule governing appeals at the Administrative Law Judge (ALJ) and Medicare Appeals Council (MAC) levels of appeal provides that adjudicators apply the Part A and Part B appeals and reopening procedures specified in 42 CFR part 405 “to the extent they are appropriate.” (

See

42 CFR 422.562(d).)

Based on this statutory and regulatory framework, CMS stated in the preamble to the interim final rule entitled “Changes to the Medicare Claims Appeal Procedures,” which established new procedures for appeals under Medicare Part A and Part B, the differences in the appeals procedures for Part D enrollees would be addressed in a future Part D rulemaking document (70 FR 11420), (hereinafter, “Part 405, subpart I rule”). The purpose of this final appeals rule is to provide guidance on the differences in appeals procedures for Part D enrollees by implementing more detailed regulations to govern Part D appeals (requests for drug benefits and payment) to the ALJ, MAC, and Federal District Court and reopenings of determinations and decisions.

II. Highlights and Organization of Final Rule

This final appeals rule contains revisions to Part 423, subpart M of title 42 of the CFR. We renamed, reorganized, and consolidated similar requirements into one section, and added a new subpart “U”. We believe that these changes will maintain or clarify our original intent, making the revised regulation easier to read and understand. Specifically, we renamed subpart M, “Grievances, Coverage Determinations, Redeterminations, and Reconsiderations”. This subpart will continue to set forth the requirements for Part D plan sponsors with respect to grievances, coverage determinations, redeterminations, and reconsiderations. We also added a new subpart U, “Reopenings, ALJ Hearings, MAC Review, and Judicial Review” that will set forth the requirements for Part D plan sponsors, the Part D Independent Review Entity (IRE), ALJs, and the MAC with respect to reopenings, ALJ hearings, and MAC review of Part D appeals. In addition, we redesignated and reserved § 423.610, § 423.612, § 423.620, § 423.630, and § 423.634. We note that while we made conforming changes to the language of some of these redesignated sections, we did not make any substantive changes to the policies established by those provisions.

Below we are providing a crosswalk table that enables the reader to easily locate where the requirements have been relocated. The crosswalk lists the former subparts and former sections along with the new subparts and new sections as they appear in this final appeals rule.

Table—Crosswalk

Former subpart

Former section

New subpart

New section

Subpart M—Grievances, Coverage Determinations, and Appeals

423.610 Right to an ALJ hearing

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

423.1970 Right to an ALJ hearing.

Subpart M—Grievances, Coverage Determinations, and Appeals

423.612 Request for an ALJ hearing

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

423.1972 Request for an ALJ hearing.

Subpart M—Grievances, Coverage Determinations, and Appeals

423.620 Medicare Appeals Council (MAC) review

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

423.1974 Medicare Appeals Council (MAC) review.

Subpart M—Grievances, Coverage Determinations, and Appeals

423.630 Judicial review

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

423.1976 Judicial review.

Subpart M—Grievances, Coverage Determinations, and Appeals

423.634 Reopening and revising determinations and decisions

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

423.1978 Reopening determinations and decisions.

III. Technical Changes Based on Finalization of the Part 405, Subpart I Rule

As indicated above, the purpose of this final appeals rule is to provide guidance on the differences between the Part D appeals procedures and the appeals procedures for Medicare Part A and Part B found in the Part 405, subpart I rule. The final rule for Medicare Part A and Part B claims appeals (referenced above as the Part 405, subpart I rule) published elsewhere in this

Federal Register

, and therefore, for this final rule, it is necessary based on statutory and regulatory framework discussed above in section I, and below in section IV.A., to make a number of technical changes to this final Part D appeals rule in order to be consistent with the provisions contained in the final rule for Part 405, subpart I. These changes are discussed and explained in greater detail in the final Medicare Parts A and B claims appeals rule, and thus, we will not include an extensive discussion of these technical corrections in this preamble. Rather we discuss generally the technical corrections being made in this final appeals rule, and provide references to the sections within the final Parts A and B claims appeals rule preamble for more in depth discussions on these changes.

The technical corrections being made in this final Part D appeals rule include the following:

• Technical corrections to clarify the terms “final” and “binding,” by reserving the term “final” to describe those actions or decisions for which judicial review may be immediately sought.”

See

§§ 423.1978, 423.1980(a)(1) and (a)(4), 423.2004(c), 423.2046(c), 423.2052(a)(6), 423.2126(a)(1), and 423.2130. For a more detailed discussion on these technical changes, please reference section II.B.5.b. contained in the final rule entitled “Medicare Program: Changes to the Medicare Claims Appeals Procedures,” published elsewhere in this issue of the

Federal Register

.

• A number of technical changes are also being made to clarify the decisions or actions issued by adjudicators, and to further clarify the effect of a specific action issued by an adjudicator, and when judicial review may be available; similar technical corrections to clarify which actions, if taken by the ALJ or the MAC, may preclude a party from seeking EAJR, and to clarify that the decision of the review entity to certify or deny a request for EAJR is not subject to further review. These are technical corrections where the terms “final action” or “final decision” had been used.

See

§§ 423.1990(b)(1)(i), (b)(1)(ii), and (e)(3), 423.2048(a), 423.2100(c) and (d), 423.2048(a), and 423.2110(d)(5). For a more detailed discussion on these technical changes, please reference section II.B.5.b. contained in the final rule entitled “Medicare Program: Changes to the Medicare Claims Appeals Procedures,” published elsewhere in this issue of the

Federal Register

.

• A technical correction clarifying that the reopening time frames apply to the reopening of a determination or decision and not to the revision of a determination or decision.

See

§ 423.1980(b). For a more detailed discussion on these technical changes, please reference section II.B.7.a. contained in the final rule entitled “Medicare Program: Changes to the Medicare Claims Appeals Procedures,” published elsewhere in this issue of the

Federal Register

.

• A technical revision to clarify that ALJs conduct de novo reviews.

See

§ 423.2000(d). For a more detailed discussion on these technical changes, please reference section II.B.9.b. contained in the final rule entitled “Medicare Program: Changes to the Medicare Claims Appeals Procedures,” published elsewhere in this issue of the

Federal Register

.

• A technical correction regarding the adjudication timeframe when a request for an in-person hearing is granted.

See

§ 423.2020(i)(4). For a more detailed discussion on these technical changes, please reference section II.B.9.e. contained in the final rule entitled “Medicare Program: Changes to the Medicare Claims Appeals Procedures,” published elsewhere in this issue of the

Federal Register

.

• Technical corrections to the remand provisions to clarify when an ALJ can remand a case to the IRE based on missing information.

See

§ 423.2034(a). For a more detailed discussion on these technical changes, please reference section II.B.9.h. contained in the final rule entitled “Medicare Program: Changes to the Medicare Claims Appeals Procedures,” published elsewhere in this issue of the

Federal Register

.

• Technical corrections to clarify the appropriate use of subpoenas by an ALJ or the MAC.

See

§§ 423.2036(f)(1), 423.2122(b). For a more detailed discussion on these technical changes, please reference sections II.B.9.i. and II.B.10.b. contained in the final rule entitled “Medicare Program: Changes to the Medicare Claims Appeals Procedures,” published elsewhere in this issue of the

Federal Register

.

• A technical correction to clarify the applicability of laws, regulations, and CMS rulings to ALJs and the MAC.

See

§ 423.2063(a). For a more detailed discussion on these technical changes, please reference section II.B.9.m. contained in the final rule entitled “Medicare Program: Changes to the Medicare Claims Appeals Procedures,”

published elsewhere in this issue of the

Federal Register

.

Also, the reader can easily refer to section VI., Provisions of the Final Rule, in this document to see a comprehensive review of the modifications being made to this final rule, most of which are technical corrections made to ensure consistency between this final appeals rule, and the Medicare Part A and Part B claims appeals rule, upon which this rule is modeled.

IV. Summary of the Proposed Provisions and Response to Comments on the March 17, 2008 Proposed Rule

Discussed below are the comments and technical corrections to the proposed rule. We include a brief explanation of each 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 22 public comments on the proposed rule published in the

Federal Register

on March 17, 2008. Most of the comments received were from beneficiary advocacy organizations. Summaries of the public comments and our responses to those comments are set forth below.

On January 12, 2009, we published CMS-4131-FC (74 FR 1494). In that final rule, we added a definition for “other prescriber” in § 423.560. We also inserted “or other prescriber” after “prescribing physician” or “physician” throughout subpart M of part 423 in order to authorize non-physician prescribers to carry out the same functions that prescribing physicians currently perform with respect to the coverage determination and appeals processes for the prescription drug program. To ensure consistency with CMS-4131-FC and current CMS policy, we revised §§ 423.2014, 423.2016, 423.2102, and 423.2108 of CMS-4127-F to include “or other prescriber” after “prescribing physician” or “physician” where appropriate.

A. General Appeals Provisions

Section 1860D-4(h)(1) of the Act, which sets forth the statutory requirements for Part D appeals, requires the Secretary to establish an appeals process that is “similar” to the process used for MA organizations under section 1852(g)(5) of the Act. Section 1852(g)(5) of the Act provides the right to a hearing “before the Secretary to the same extent as is provided in section 205(b)” of the Act, and to judicial review “of the Secretary's final decision as provided in section 205(g)” of the Act. Thus, an enrollee dissatisfied by reason of the enrollee's failure to receive a Part D drug to which the enrollee believes he or she is entitled, and at no greater charge than the enrollee believes he or she is required to pay, is entitled to a hearing and may also request judicial review of the final decision of the Secretary.

Section 1852(g)(5) of the Act also specifies the amount in controversy needed to pursue a hearing and judicial review. Like section 1852(g)(5) of the Act, section 1869(b)(1)(A) of the Act, which sets forth the statutory requirements for Part A and Part B appeals, provides the right to a hearing “by the Secretary to the same extent as is provided in section 205(b)” and the right to judicial review “of the Secretary's final decision after such hearing as is provided in section 205(g)” of the Act. Under this authority, we believe that Congress gave us discretion in designing procedural rules for appeals under Part D.

Section 423.562(c) of the Part D rule states that “[u]nless this subpart provides otherwise, the regulations in part 422, subpart M of this chapter (concerning administrative review and hearing processes under titles II and XVIII, and representation of parties under title XVIII of the Act) and any interpretive rules or CMS rulings issued under these regulations, apply under this subpart to the extent they are appropriate.” Section 422.562(d) of the Part C rule states that “[u]nless this subpart provides otherwise, the regulations in part 405 of this chapter (concerning the administrative review and hearing processes and representation of parties under titles II and XVIII of the Act), apply under this subpart to the extent they are appropriate.” Therefore, as discussed in the preamble to the Part D rule, since § 423.562(c) incorporates part 422, and since part 422 incorporates part 405, the provisions of part 405 apply to Part D appeals to the extent that they are appropriate. (70 FR at 4343).

For these reasons, we are providing a similar appeals process for Part D appeals at the ALJ, MAC and judicial review levels as applies to Part A and Part B appeals, to the extent it is appropriate.

The part 405 regulations at subparts G and H, which continue to apply to certain pending Medicare claims appeals under Medicare Part A and Part B, respectively, were issued before the enactment of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), Public Law 106-554. BIPA made significant changes to Medicare claims appeals procedures. The MMA made further changes to these procedures. Part 405, subpart I, contains the new BIPA and MMA appeals procedures. Part 405, subpart I, applies to initial determinations issued by Medicare fiscal intermediaries on or after May 1, 2005, and to initial determinations issued by carriers on or after January 1, 2006. Part 405, subpart I, is tailored to the Medicare Part A and Part B claims appeals process, unlike the provisions in subparts G and H, which, in large part, follow the Social Security Administration's procedures for disability claims. For this reason, we have concluded that it is appropriate to apply the provisions of Part 405, subpart I, to Part D appeals at the ALJ and MAC levels with appropriate modifications to meet the needs of Part D appeals.

Specific comments and our responses to those comments are as follows:

Comment:

We received a comment related to the statement in the preamble of the proposed rule that the Social Security Administration (SSA) does not process appeals related to enrollment in or entitlement to Part D. The commenter inquired about the responsible entity and applicable process when a beneficiary has an issue related to Part D enrollment, including eligibility for a special enrollment period.

Response:

There currently is no formal appeals process that applies with respect to an application for Part D enrollment. Consistent with §§ 1860D-4(g)(1) and (h)(1) of the Act, only issues involving coverage of Part D benefits can be resolved through the Part D coverage determination and appeals processes. Enrollment disputes are distinct from disputes related to coverage of Part D benefits and therefore, cannot be resolved through the Part D coverage determination and appeals processes. However, beneficiaries not currently enrolled in a Part D plan, or who otherwise have problems related to eligibility and enrollment, may contact 1-800-Medicare and/or a CMS Regional Office (RO) caseworker for assistance in resolving the matter. Customer service representatives and RO caseworkers can resolve a wide range of enrollment issues, including matters related to eligibility for a special enrollment period.

Comment:

Commenters believe that the following statement in the preamble's “Highlights and Organization of the Proposed Rule” section is misleading and disingenuous: “We note while we are proposing to make conforming changes to the language of some of the redesignated

sections, we are not proposing to make any substantive changes to the policies established by those provisions.” The commenters stated that while some of the changes can be appropriately classified as nonconforming, many more of the general appeals provisions changes, especially those to the timeframes, submission of evidence, ALJ remand criteria and participants at a hearing, are definitely substantive.

Response:

We believe that the commenters may have misinterpreted our statement. Our characterization of the changes as non-substantive applies only to the redesignated sections that are specifically referenced in the statement, which include sections 423.610, 423.612, 423.620, 423.630, and 423.634. These provisions have previously gone through the notice of proposed rulemaking process and are now only being redesignated to be included in the new subpart U. These provisions are also being cross-referenced in the new ALJ and MAC provisions that have been drafted to parallel Part 405, subpart I, as appropriate. For example, section 423.612, Request for an ALJ Hearing, has been redesignated as section 423.1972 and is cross-referenced in the new section 423.2014, Request for an ALJ Hearing. Section 423.2014 contains the requirements of § 423.1972 as well as new provisions that parallel Part 405, subpart I, such as specifying the required content of a request for an ALJ hearing.

We agree with the commenters that the new provisions of this rule are substantive in nature and, accordingly, we provided the public an opportunity to comment on these provisions through the notice of proposed rulemaking process. Accordingly, we are finalizing §§ 423.1968, 423.1970, 423.1972, 423.1974, 423.1976, and 423.1978 as noted above, and as discussed in subsection III.

B. Parties to the ALJ Hearing and MAC Review

Section 1860D-4(h) of the Act largely incorporates section 1852(g)(5) of the Act. We interpret that section as providing the right to a hearing and to judicial review for an enrollee dissatisfied by reason of the enrollee's failure to receive a Part D drug to which the enrollee believes he or she is entitled, and at no greater charge than the enrollee believes he or she is required to pay. Section 1860D-4(h)(1) of the Act specifies that “only the Part D eligible individual” is entitled to bring an appeal. Section 423.560 of the Part D rule states that an enrollee is a Part D eligible individual who has elected or has been enrolled in a Part D plan.

Former § 423.610 (now at § 423.1970) and former § 423.612 (now at § 423.1972) explain that, if an enrollee is dissatisfied with the reconsideration determination by an IRE, the enrollee may request a hearing before an ALJ, if the amount remaining in controversy meets the threshold requirement established annually by the Secretary. Consistent with § 1869(b)(1)(E)(iii) of the Act, the threshold amounts for ALJ hearings and judicial review must be adjusted annually by the Secretary, beginning in January of 2005, 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 the July of the preceding year involved and rounded to the nearest multiple of $10. The amounts are published annually in the

Federal Register

.

Under former § 423.620 (now at § 423.1974), if an enrollee is dissatisfied with the ALJ's action, the enrollee may request that the MAC review the ALJ's decision or dismissal. Having the enrollee as the only party to an appeal differs from the Part A and B processes where the term “party” includes a beneficiary, a provider, a supplier, a Medicaid State agency, and CMS and/or its contractors, and from the Part C appeals process where the term “party” includes an enrollee, a provider, an entity with rights with respect to the organization determination, or an MA organization. In light of the Part D statutory and regulatory provisions, this final appeals rule makes clear that only the enrollee may request and be a party to an ALJ hearing or MAC review. (We note that an enrollee may appoint a representative to act on his or her behalf as discussed in § 423.560 and as set forth in § 422.561 and § 405.910. A representative could include an enrollee's physician or other prescriber.)

We proposed not to make the Part D plan sponsor, the IRE, or CMS a party to an ALJ hearing or the MAC review in a Part D case. The statute and Part D rule do not explicitly provide these entities with party status, unlike Part C where the statute provides that the Secretary shall make an MA organization a party to ALJ hearings. Further, the preamble to the Part D rule (70 FR 4360) states that “[t]he plan is not a party to the ALJ hearing.” As discussed later in the preamble, we recognize that the involvement of CMS, the IRE, and/or the Part D plan sponsor may be necessary to resolve the issue(s) on appeal and we will allow these entities to participate in ALJ hearings at the ALJ's discretion. The participation of Part D plan sponsors in ALJ hearings was also contemplated in the preamble to the proposed Part D rule (69 FR 46632, 46722), which noted that “[a]lthough a PDP sponsor generally is not a party to the IRE appeal and may not request a hearing before an ALJ, the sponsor is considered a party to the ALJ hearing for the limited purpose of participation in the hearing.” We received a few comments relating to the participation of plan sponsors, the IRE, and CMS at ALJ hearings. Those comments are discussed in the section of the preamble relating to participation in an ALJ hearing (§ 423.2010).

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

Part 405, subpart I implements the provisions of section 1869 of the Act that require ALJs and the MAC to complete their actions within 90 days of the date an appeal is timely filed. The Part D statute and rule do not establish timeframes for an ALJ or the MAC to issue a decision. However, we recognize the need to ensure that Part D enrollees receive timely actions on their requests for hearing and review, particularly in cases where the enrollee has not obtained the drug and a delayed decision may seriously jeopardize the enrollee's life or health or ability to regain maximum function.

We proposed to apply a 90-day adjudicatory timeframe to Part D appeals with an expedited process for certain types of appeals. Specifically, we proposed that an ALJ and the MAC must provide an expedited decision in situations where the appeal involves one of the issues specified in § 423.566(b), but does not include solely a request for payment of Part D drugs already furnished, and when the enrollee's prescribing physician indicates, or the ALJ or the MAC determines that applying the standard timeframe for making a decision may seriously jeopardize the enrollee's life or health or ability to regain maximum function. In these situations, the ALJ and the MAC must issue a decision, dismissal order, or remand as expeditiously as the enrollee's health condition requires, but no later than the end of the 10-day period beginning on the date the request for hearing or request for review is received.

In order to meet the shortened timeframes established for expedited appeals, we also proposed to allow certain requests, objections, decisions, orders, and notices to be conducted orally with written follow-up or documentation and to shorten certain timeframes for receiving certain notices, such as the notice of hearing. We note

that all time periods in this final appeals rule refer to calendar days.

We also proposed to not include provisions regarding escalation, but rather, to address the timeliness concerns of Part D enrollees by providing for an expedited process, discussed in greater detail below.

Specific comments received and responses to those comments are as follows:

Comment:

A number of commenters stated that Part D plan sponsors and the IRE routinely fail to issue timely coverage and payment decisions. To help improve this situation, these commenters suggest the proposed rule be revised to state that any ALJ or MAC request that is not responded to within the applicable timeframe is deemed approved.

Response:

Clearly, it is important that both Part D plan sponsors and subsequent adjudicators meet the applicable decision making timeframes for Part D appeals. CMS monitors Part D plan sponsor performance on meeting timeliness standards and although we do not believe timeliness issues are widespread, compliance action is taken when systemic problems are identified. Further, we note that the IRE's performance in this regard has been outstanding with a timeliness rate that is consistently close to 100 percent, based on calendar year 2007 data.

However, even in cases where Part D plan sponsors or adjudicators do not meet timeframes, we do not believe the commenters' recommendation is an appropriate remedy. There is no precedent in Part D, or anywhere in the Medicare program, for covering items and services solely on the grounds that a coverage or appeal determination was not made on a timely basis. Furthermore, if the request for coverage or reimbursement were to be deemed favorable solely because the adjudicator missed the decision making timeframe, the request would be covered without receiving any type of review, and possibly lead to the inappropriate coverage of drugs under the Medicare Part D drug benefit program. Instead, in cases where Part D plan sponsors do not meet the applicable timeframes, we have established, under both Parts C and D, a policy that an initial determination or plan-level appeal decision that is not made within the applicable timeframe is deemed unfavorable and the request is forwarded by the plan to the IRE for review.

See

42 CFR 422.568(f), 422.572(f), 422.590(c) and (f), 423.568(e), 423.572(d), and 423.590(c) and (e). This approach puts in place a mechanism for moving appeals forward when decision making timeframes are missed, and ensures that all requests for Medicare Part D benefits or payment receive review as soon as possible. Under Part D, such review will ensure that payment is appropriate (for example, the drug is not an excluded drug). As noted above, the data we have collected thus far indicates that the IRE is meeting the applicable adjudication timeframes in the overwhelming majority of cases, and we do not expect missed timeframes to be a problem at the ALJ or MAC level. We will continue to monitor timeliness at all levels of appeal, but we do not believe the commenter's suggested approach is appropriate.

Comment:

Some commenters recommended that the ALJ and MAC automatically expedite a decision if it was expedited at a lower level of appeal. Given the documentation needed to support a request to expedite an appeal, these commenters felt that requiring enrollees to demonstrate the need for an expedited appeal at each level of the process would be burdensome for enrollees and their physicians.

Response:

Although we appreciate the commenters' interest in streamlining the appeals process, we disagree with the recommendation to require ALJs and the MAC to automatically expedite an appeal request if it was expedited at a lower level. If an enrollee's health status improves during the course of an appeal, or an enrollee purchases the drug in dispute while an appeal is pending, expedited status may no longer be warranted. Thus, we believe it is more appropriate for each adjudicator to make an independent determination about whether to expedite a request. In doing so, adjudicators may take into consideration a previous adjudicator's decision to expedite an appeal request. Under § 423.2016(b) and § 423.2108(d) of this rule the decision will be expedited if the appeal involves an issue specified in § 423.566(b), but is not solely a request for payment of Part D drugs already furnished, and the enrollee's prescribing physician or other prescriber indicates, or the ALJ or the MAC determines, that applying the standard timeframe may seriously jeopardize the enrollee's life, health, or ability to regain maximum function.

Comment:

Several commenters noted that the preamble of the proposed rule stated that all time periods refer to calendar days. The commenters requested that the use of “calendar days” be explicitly stated in the applicable regulatory provisions.

Response:

We agree with the commenters and have revised all “days” references in the regulatory provisions to “calendar days.” We note that where the regulations provide for a time frame and that time frame ends on a Saturday, Sunday, legal holiday, or any other federal nonwork day, we apply a rollover period that extends the time frame within which an act must be done to the first day after the Saturday, Sunday, legal holiday, or other federal nonwork day.

We are also making a conforming change to the Part D grievance, plan sponsor, and IRE provisions to ensure consistency throughout the Part D appeals process, by changing “days” references to “calendar days” in 42 CFR 423.564(d)(2), (e)(1), and (e)(2); 423.582(c)(2); 423.584(d)(1) and (d)(2)(i); and 423.600(a).

Comment:

Commenters indicated that a provision similar to § 405.1104 and 42 CFR 405.1132 should be added, allowing an enrollee's appeal before an ALJ to be escalated to the MAC and an appeal before the MAC to be escalated to Federal district court if an enrollee does not receive a timely decision from an ALJ or the MAC.

Response:

The regulations referenced by the commenters are the result of explicit statutory provisions for appeals under Part A and Part B and there are no parallel statutory requirements for Part C and Part D appeals. We note also that the adjudication timeframes associated with escalated cases would be considerably longer than the decision making timeframes proposed in this rule. [Place holder] As we noted in the Part A and Part B final rule published elsewhere in the

Federal Register

, Part 405, subpart I implemented a 180-day adjudicatory timeframe for reviewing escalated appeals in light of the substantial additional burden on the adjudicator, including locating and acquiring relevant information, performing additional procedural and jurisdictional reviews, and organizing evidence in the case file. Thus, setting the adjudication timeframe by regulation at 180 days for escalated appeals balances the interests of the appellant in timely resolving the disputed appeal and an adjudicator's duty to collect the evidence and perform the administrative tasks necessary to fully and fairly adjudicate an appeal that has not been addressed at the prior level of appeal. However, given the lack of similar statutory direction with respect to Part D appeals, we believe the concerns of enrollees seeking timely decisions from an ALJ and the MAC for Part D appeals are better met by establishing a 90-day adjudicatory timeframe accompanied by an expedited process, similar to the process established at the coverage

determination, redetermination, and reconsideration levels.

D. Evidence

We proposed to provide enrollees with as much flexibility as possible concerning the evidence that may be presented for an ALJ hearing and MAC review. We also proposed that the entity that is best suited to review and evaluate the evidence be the entity that receives the evidence for review. We proposed that an enrollee may submit any written evidence about his or her condition at the time of the coverage determination that he or she wishes to have considered at the hearing. However, we proposed that in instances where an enrollee wishes to have evidence on changes in his or her condition since the coverage determination considered in the appeal, an ALJ or the MAC will remand the case to the Part D plan sponsor.

We proposed not to follow the full and early presentation of evidence provisions in Part 405, subpart I, including § 405.1028. For Part D appeals, we proposed that only the enrollee would be a party to the appeal and because the enrollee would not be represented by a provider or supplier we did not propose to include any provisions from Part 405, subpart I, on the full and early presentation of evidence. We proposed, as discussed above, that an enrollee may present new evidence at any time during the appeal.

Specific comments received and responses to those comments are as follows:

Comment:

Numerous commenters expressed nonsupport of an ALJ and/or the MAC remanding the appeal to the Part D plan sponsor when an enrollee wishes to have evidence of a change in his or her condition since the coverage determination considered. Commenters suggested that where an enrollee wishes to have such evidence considered, the appeal should be remanded to the Part D IRE instead of to the Part D plan sponsor for a new determination. The commenters expressed concern that the proposal would result in further delays in the adjudication process and force unrepresented beneficiaries to make a strategic decision about whether to forfeit the right to consideration of all evidence, including evidence of a worsening condition, in order to get review by an ALJ or the MAC.

Response:

Similar to the regulations found in Part 405, subpart I, an enrollee has been provided under the proposed regulations with as much flexibility as possible to submit evidence throughout the appeals process. We appreciate the commenters' concerns about the impact on the enrollee if the ALJ and the MAC remand a case to the Part D plan sponsor to consider evidence of a change in condition. After further consideration, we agree that remanding these types of cases back to the Part D plan sponsors may prolong the appeals process because the enrollee, if dissatisfied with a Part D plan sponsor's new coverage determination, would have to go through the entire Part D appeals process a second time. Thus, while both the Part D plan sponsor and the Part D IRE have the appropriate medical expertise to provide an effective and efficient review of the evidence related to an enrollee's change in condition, we believe that it is more appropriate for the ALJ and the MAC to remand these cases to the Part D IRE. This approach will ensure that an enrollee who is dissatisfied with the Part D IRE's new decision can immediately appeal that decision to an ALJ without having to navigate the Part D plan sponsor and IRE appeals levels a second time. As the IRE's new decision can immediately be appealed to an ALJ, we also believe that remanding to the Part D IRE instead of to the Part D plan sponsor will aid unrepresented enrollees when making decisions on whether to have evidence of a change in his or her condition since the coverage determination considered. Accordingly, § 423.2034(c) and § 423.2126(b) have been modified to state that the ALJ and the MAC, respectively, will remand a case to the Part D IRE if an enrollee wishes to have the ALJ or MAC consider evidence of a change in condition after the coverage determination was made.

E. Claims and Overpayment

We proposed not to include any references to claims, overpayment, or underpayment since the Part A and Part B appeals process may involve claims for reimbursement from the Medicare Trust Fund made by parties to the appeal and issues of over- or underpayment by the Federal Government.

A specific comment received and response to comment is as follows:

Comment:

One commenter expressed concern about the statements in the preamble to the proposed rule that the Part D appeals process does not involve overpayments or underpayments because, unlike Part A and Part B appeals, Part D appeals do not involve claims against the Medicare Trust Fund by enrollees. The commenter believes that this statement overlooks how the Part D program is funded and the statutory obligations of Part D plan sponsors because subsidy payments made by CMS to Part D plan sponsors to pay for covered Part D drugs and low-income qualifying enrollees are Trust Fund dollars.

Response:

We continue to believe that the Part D beneficiary appeals process does not involve disputes about claims for reimbursement from the Medicare Trust Fund by enrollees and issues of overpayments or underpayments by the Federal Government. The Part A and Part B appeals process frequently involves claims for direct reimbursement from the Trust Fund by parties to the appeal and issues of large overpayments or underpayments by the Federal Government. Part D plan sponsors cannot be parties under the Part D appeals process and any claim for reimbursement by the enrollee would be made against the Part D plan sponsor, not the Medicare Trust Fund.

F. Other General Provisions

We proposed not to include language similar to that in § 405.990(j) and § 405.1006 regarding amount in controversy requirements for Part A and Part B appeals since the Part D rule already contains provisions in former § 423.610 (now at § 423.1970), former § 423.612 (now at § 423.1972), and former § 423.630 (now at § 423.1976) regarding the amount in controversy requirements for ALJ hearings and judicial review. Similarly, we did not see a reason to include Part 405, subpart I, references to the applicability of national coverage determinations (NCDs) and local coverage determinations (LCDs). Because neither of these types of coverage policies applies to Part D, we proposed not to include any reference to NCDs and LCDs and not to include any provision that applies solely to the application of NCDs and/or LCDs from Part 405, subpart I (for example, language from § 405.1060).

Part 405, subpart I, also refers to SSA rules for entitlement and enrollment appeals performed by SSA. We proposed not to include similar references to SSA because SSA does not perform appeals regarding enrollment in or entitlement to Part D.

Finally, Part 405, subpart I includes a provision at § 405.1064 regarding ALJ decisions involving statistical samples. We are not including similar language for Part D appeals because, as discussed above, Part D appeals do not involve overpayment issues.

We did not receive any comments related to these proposals. Accordingly, we are finalizing § 423.1972 subject to the modification discussed in section III, which changes the word “days” to

“calendar days,” and are finalizing the other provisions without modification.

G. Reopenings (§ 423.1980 Through § 423.1986)

As revised (based on technical corrections discussed above in section III), § 423.1978(a) (former § 423.634(a)) states that a coverage determination, a redetermination, a reconsideration or a decision of an ALJ or the MAC “that is otherwise binding may be reopened and revised by the entity that made the determination or decision, under the rules in part 422, subpart M of this chapter.” Section 422.616 of subpart M discusses reopenings and states that a determination or decision “that is otherwise binding may be reopened and revised by the entity that made the determination or decision, under the rules in part 405 of this chapter.” Therefore, we proposed reopening regulations that generally track the Part A and Part B reopening provisions in § 405.980, § 405.982, § 405.984, and § 405.986. We note that these regulations define reopening, explain who may initiate and revise determinations and decisions and when, and the effect of a revised determination or decision. We proposed at § 423.1980(a)(1), (a)(3), and (a)(4), and § 423.1984(g) to add language that is consistent with former § 423.634 (now at § 423.1978) on Part D reopenings. Since Part D appeals differ in part from Part A and Part B appeals, we proposed not to include several provisions from § 405.980, § 405.982, and § 405.986.

Specific comments received and responses to those comments are as follows:

Comment:

Many commenters asked that CMS acknowledge a Part D enrollee's right to request a reopening of an unfavorable decision. Additionally, these same commenters recommended that we revise the proposed rule to include a provision stating that a request to reopen extends the 60-day timeframe to appeal an unfavorable decision. The commenters argue this regulatory change is necessary because many enrollees believe the deadline to appeal an unfavorable decision is extended when a reopening request is filed.

Response:

While enrollees do have a right to request that an unfavorable decision be reopened, reopenings are at the discretion of the adjudicator and an adjudicator's decision about whether to reopen is not subject to appeal. This policy is consistent with the reopening provisions contained in Part 405, subpart I of the regulations. The deadlines for requesting appeals are clearly explained in the decision letters, including the ALJ hearing decisions. While we understand the commenters' concerns regarding the potential effect a denied reopening request may have on appeal rights, we believe that allowing additional time to file an appeal once a reopening is requested would provide an inappropriate extension of the appeals filing time frames. If an enrollee misses the filing deadline for an appeal while awaiting a decision on a reopening request, he or she may request the adjudicator consider granting an extension to the filing time limit consistent with § 423.2014(d). Thus, we are not adopting the commenters' suggestion to extend appeals filing time limits when a reopening is requested.

1. Reopenings of Coverage Determinations, Redeterminations, Reconsiderations, Hearings, and Reviews (§ 423.1980)

We proposed in this section to track the language of § 405.980 on the general rules and timeframes for reopening determinations and decisions, except as discussed above and below. We proposed to define reopenings in § 423.1980(a)(1), without referring to overpayments and underpayments because these terms do not apply to Part D appeals, as discussed above. We also proposed in § 423.1980 not to include the provision in § 405.980(a)(2) that involves situations where a fiscal intermediary or carrier denies a claim because it did not receive information that it requested about a claim during medical review. In addition, we proposed not to include §§ 405.980(a)(3), (b)(4), and (c)(3), as these sections refer to clerical errors related to claims submissions by providers to fiscal intermediaries and carriers, which is not applicable to Part D.

In this final appeals rule, we are clarifying in § 423.1980 that a Part D plan sponsor may request a reopening of a reconsideration, hearing decision, or MAC review decision. Though not explicitly stated, nothing in the proposed rule prevented a Part D plan sponsor from asking an adjudicator to reopen a decision on its own motion. Thus, this option existed for Part D plan sponsors under the proposed rule. To make this option more clear, § 423.1980 of this final appeals rule has been revised to explicitly state that a Part D plan sponsor may ask an adjudicator to reopen a decision on its own motion. We received no public comments on § 423.1980. Accordingly, we are finalizing it subject to this clarification and the modifications discussed in section III, which include removing the term “final” and replacing it with “binding,” removing the words “and revise,” and changing the term “days” to “calendar days.”

2. Notice of a Revised Determination or Decision (§ 423.1982)

We proposed in § 423.1982 to follow the process established for Part A and Part B reopenings regarding notification of revised determinations or decisions. However, unlike § 405.982, proposed § 423.1982 does not refer to revised electronic or paper remittance for full or partial reversals. We are not incorporating this language because revised electronic or paper remittance advice notices are not issued for Part D appeals. Further, we proposed language requiring the IRE, ALJ, or the MAC to mail revised determinations or decisions to the Part D plan sponsor. We did not receive any public comments on the proposed provision, and accordingly, are finalizing this provision without modification.

3. Effect of a Revised Determination or Decision (§ 423.1984)

In section 423.1984, we proposed that the revision of a coverage determination or appeal decision is binding unless the determination or decision is appealed and the appeal request is accepted and processed in accordance with the appropriate regulatory provisions. We also proposed to allow only the portion of the coverage determination or appeal decision revised by reopening to be appealed. We did not receive any comments on this section. Therefore, we are finalizing § 423.1984 without modification.

4. Good Cause for Reopening (§ 423.1986)

We proposed in § 423.1986 language similar to § 405.986 regarding good cause for reopening a determination or decision. We believe it is appropriate where possible for Part D reopenings to have the same good cause standards as Part A and Part B reopenings. We proposed in § 423.1986(b)(1), to include the requirement in § 405.986(b) regarding good cause for reopening a determination or decision based on a change in substantive law or interpretive policy for appeals. However, many Part D appeals involve drug benefit appeals, where an enrollee has not received the drug. With respect to these appeals, we proposed in § 423.1986(b)(2) that an adjudicator may reopen a determination or decision to apply the current law or CMS or Part D plan sponsor policy (rather than the law or CMS or Part D plan sponsor policy at the time the original coverage

determination was made). Because the enrollee has not received the drug, any change to the law or CMS or Part D plan sponsor policies since the initial coverage determination may affect whether the drug should be received.

A specific comment received and response to comment is as follows:

Comment:

We received one comment suggesting the proposed good cause standards for reopening should be revised to allow an ALJ to reopen a decision when third party payor error occurs or there is a change in substantive law or interpretive policy. The commenter believes the ALJ should reopen the decision and review it in light of the third party payor error or new law or policy.

Response:

As with other Medicare programs, coverage policies in Part D are applied prospectively. Therefore, the coverage policy that applies for purposes of making a coverage determination is the policy that is in place at the time the drug is purchased. If there is a change in substantive law or interpretive policy and the enrollee is requesting benefits (not reimbursement), § 423.1986(b)(2) allows reopenings to consider such changes. With respect to the commenter's request to amend the proposed rule to allow ALJs to reopen decisions in order to consider third party payor error, we note that the rules in part 405, subpart I, upon which the provisions in question are modeled, do not permit reopenings for this reason. Moreover, we do not believe it is necessary to establish a different policy in the Part D program.

Accordingly, we are finalizing § 423.1986 without modification.

H. Expedited Access to Judicial Review (EAJR) (§ 423.1990)

Section 1869(b)(2) of the Act requires the Secretary to establish a process for Part A and Part B appeals where a provider, supplier or a beneficiary may obtain expedited access to judicial review in situations where the Departmental Appeals Board (DAB) does not have authority to decide the question of law or regulation relevant to the matters in controversy and where there is no material issue of fact in dispute.

Unlike Part A and Part B appeals, there is no statutory requirement for enrollees to have access to an EAJR process for Part D appeals. However, we believe that it is appropriate to provide Part D enrollees with an EAJR process that mirrors the process established for Part A and Part B appeals. Under the Part A and Part B appeal process, a review entity determines whether the DAB has the authority to decide the question of law or regulation relevant to the matters in controversy after finding that there is no material issue of fact in dispute.

If the review entity certifies that the requirements for expedited access to judicial review are met, a party may appeal directly to the United States District Court. Even though the Part D statute does not require this process for Part D, we believe that Part D enrollees would benefit from this process because it provides access to judicial review more quickly in cases where the DAB does not have the authority to decide the question of law or regulation relevant to the matters in controversy and there is no material issue of fact in dispute, resulting in a more efficient appeals process. We proposed in § 423.990 to provide Part D enrollees the opportunity to seek EAJR and requested specific comments on this proposal.

Specific comments received and responses to those comments are as follows:

Comment:

Commenters stated that providing expedited access to judicial review will benefit many enrollees. The commenters suggested that for those enrollees whose claims do not raise issues that can only be resolved by a federal court, a provision similar to 42 CFR 405.1104 and 42 CFR 405.1132 allowing escalation to the MAC or to federal court should be added for instances when an enrollee has not received a decision in a timely manner from an appeal to an ALJ or the MAC.

Response:

As discussed previously, we believe that in addition to providing for expedited access to judicial review, providing a 90-day adjudicatory timeframe with an expedited process similar to the process established at the coverage determination, redetermination, and reconsideration levels more appropriately addresses the concerns of enrollees seeking timely decisions from an ALJ and the MAC. Therefore, we are finalizing § 423.1990 with modifications as discussed in section III of this preamble, which include adding additional regulation text language to specify the various actions that may be taken by the ALJ, removing the words “final and,” and changing the word “days” to “calendar days.”

I. Appeals to an ALJ (§ 423.2000 Through § 423.2063)

1. General

The Part D rule contains two specific provisions that apply to appeals before an ALJ. Former § 423.610 (now at § 423.1970) describes an enrollee's right to an ALJ hearing and explains how the amount in controversy requirements may be satisfied. Former § 423.612 (now at § 423.1972) describes when and where to file a request for hearing, specifies that the time and place of the hearing will be set in accordance with the regulation governing Part A and Part B appeals at § 405.1020, and explains when the ALJ will dismiss a request for hearing because it does not meet the amount in controversy requirement.

We proposed to follow the process set forth under Part A and Part B for appeals to an ALJ, except as noted above and below. We tracked the language in the Part 405 rule for proposed § 423.2000, § 423.2004, § 423.2008, § 423.2030, § 423.2032, § 423.2042, § 423.2044, § 423.2048, § 423.2050, § 423.2054, § 423.2062, and § 423.2063. We believe that it is appropriate for Part D appeals to follow the Part A and Part B appeals procedures set forth in these provisions.

2. Hearing Before an ALJ (§ 423.2000) and Right to an ALJ Hearing (§ 423.2002)

Section 423.2000 provides an overview of the ALJ hearing process. Former § 423.610(a) (now at § 423.1970(a)) provides that an enrollee who is dissatisfied with the IRE reconsideration and meets the remaining amount in controversy threshold has a right to a hearing before an ALJ. We proposed to include this provision in § 423.2002. We also proposed to include in this section language similar to that in § 405.1002 on how to request an ALJ hearing, what is the date of receipt of the reconsideration, and when a request is considered filed.

We believe it is appropriate to include this information (now at § 423.2002) because it would be helpful to the enrollee and any representative of the enrollee to understand how to file a request, how we would determine the date of receipt of the reconsideration, and when a request would be considered filed.

We also proposed in § 423.2002(b) that an enrollee may request an expedited ALJ hearing, if the enrollee meets the amount in controversy threshold and submits a request for an ALJ hearing within 60 days after receipt of the written notice of the IRE's reconsideration where the appeal involves an issue specified in § 423.566(b) but is not solely a request for payment of Part D drugs already furnished, as discussed previously. However, we proposed in § 423.2016(b) that the ALJ grant the request only if the enrollee's prescribing physician indicates or the ALJ determines that

applying the standard timeframe for making a decision may seriously jeopardize the enrollee's life or health or ability to regain maximum function.

In addition, we proposed at § 423.2002(b)(2) a more informal process for requesting an expedited hearing by proposing to permit an enrollee to make a request for hearing orally. We believe that the oral request would make the initiation of the ALJ appeals process faster and easier for the enrollee. However, for the reasons stated below, an enrollee may only file an oral request for an expedited hearing after receiving the written IRE reconsideration notice. We also proposed to require the ALJ hearing office to document and maintain documentation of any oral request.

Specific comments received and responses to those comments are as follows:

Comment:

Some commenters stated that provisions of the rule are inconsistent. They pointed out that § 423.1972 requires an enrollee to file a request for a hearing within 60 days of the date of the notice of an IRE decision, while § 423.2002(a) requires an enrollee to file a written request for an ALJ hearing within 60 days after receipt of the written notice of the IRE's reconsideration. Commenters also pointed out that while § 423.2002(a) requires an enrollee to file a written request for an ALJ hearing, § 423.2002(b) allows an enrollee to submit a written or oral request for an expedited ALJ hearing. The commenters ask that the regulations be made consistent so to minimize enrollee confusion. The commenters also asked that enrollees be allowed to file oral requests for expedited hearings before receipt of a written IRE reconsideration when the IRE has not issued the written reconsideration notice within the regulatory timeframes and to be allowed to file oral requests for hearings and MAC review for non-expedited appeals.

Response:

We do not believe that these regulations are inconsistent, but rather may require additional explanation. Sections 423.2002(a) and (b)(2) as well as § 423.2014(b) and (c) provide more specificity for the requirement in § 423.1972. Section 423.1972, that is, redesignated section 423.612, was drafted consistent with part 405. At the time of the implementation of § 423.612 there were no regulatorily established adjudication timeframes at the ALJ level. In particular, a regulatorily implemented expedited process that includes oral requests for hearings and a 10-day adjudication timeframe did not exist. In §§ 423.2002(a) and (b) and §§ 423.2014(b) and (c) we clarify that a request for hearing must be filed within 60 days after receipt of a written notice of an IRE reconsideration. We require an enrollee to have a written decision because in some instances the IRE will issue an oral notice of reconsideration before issuing the written notice of reconsideration. The Office of Medicare Hearings and Appeals cannot process a request for an ALJ hearing without a written IRE reconsideration, especially under the constraints of a 10-day adjudication period. This also holds true for review by the Medicare Appeals Council. In both circumstances, a written decision from the lower level is necessary to further process the appeal.

In §§ 423.2002(a)(2) and 423.2014(b), we provide an exception to the provision in § 423.2002(a)(1) that requires an enrollee to file a written request for an ALJ hearing. We permit the enrollee to either file a written or oral request for an expedited ALJ hearing. The ability to submit an oral request for an expedited hearing should help preserve time during the expedited process. We do not believe that the filing of oral requests is necessary in non-expedited appeals because there is not the same urgency with respect to an enrollee's health or function that would necessitate the appeals process to move more swiftly.

Comment:

Commenters recommended that the filing timeframe begin with the date of receipt of the IRE decision with the date of receipt presumed to be 5 days after the date of the notice, absent evidence to the contrary. The commenters also called for the regulations to be consistent with part 405 by providing for an extension of the filing timeframe when good cause is shown for a late filing.

Response:

The timeframe for submitting a request for an ALJ hearing will begin with receipt of the written notice of the IRE reconsideration. As specified in § 423.2002(c), the date of receipt will be presumed to be 5 days after the date of written reconsideration, unless there is evidence to the contrary.

Section 423.2014(d) provides the enrollee the opportunity to request an extension of the 60-day filing timeframe for good cause. This provision is consistent with § 423.1972(b) and Part 405, subpart I. We did not receive any comments on § 423.2000, and thus, are finalizing this provision consistent with the modifications described in section III of this preamble to clarify that the ALJ conducts a

de novo

review. With respect to § 423.2002, we are finalizing this provision subject to the modification discussed in section III, which changes the word “days” to “calendar days,” and with a technical revision to § 423.2002(b)(3). The inclusion of the ALJ documentation requirement in subsection (b)(3) was a technical error and the requirement has now been placed in a separate subsection. The requirement that the ALJ must document all oral request for expedited hearings in writing and maintain documentation is now specified in § 423.2002(c) and the proposed subsections § 423.2002(c) and (d) have been redesignated as subsections § 423.2002(d) and (e), respectively.

3. Right to ALJ Review of an IRE Dismissal (§ 423.2004) and Parties to the ALJ Hearing (§ 423.2008)

Section 423.2004 describes the process for obtaining ALJ review of a QIC dismissal of a reconsideration request. Section 423.2008 states who may request an ALJ hearing and who is considered a party to the ALJ hearing. We received no comments on these sections. Accordingly, we are finalizing § 423.2004 with the modifications discussed in section III of this preamble to make a technical correction clarifying an ALJ's dismissal action is binding and not subject to further review unless vacated by the MAC, and changing the word “days” to “calendar days.” We are finalizing § 423.2008 without modification.

4. Participation in an ALJ Hearing (§ 423.2010)

In Part D appeals all requests for an ALJ hearing are brought by enrollees. Even if an enrollee is represented by a provider or supplier, that provider or supplier will not have a direct financial interest in the appeal. Therefore, we proposed that CMS, the IRE, and the Part D plan sponsor not be a party with a right to request a hearing under Part D. As noted above, this proposed policy is consistent with the applicable statutory and regulatory provisions. Moreover, this proposal is consistent with the preamble to the Part D rule (70 FR at 4360) where we explicitly state that the Part D plan sponsor is not a party to the appeal.

In an effort to reduce the administrative burden and to assist the ALJ in resolving the issue(s) in an appeal more appropriately, we introduced specific procedures in Part 405, subpart I, to allow CMS and/or its contractors to participate in, or be a party to, an ALJ hearing. As explained in the preamble to the Part 405, subpart I rule (70 FR 11459 through 11460), if CMS and/or its contractors participate in an appeal, ALJs may be able to resolve issues of fact and law more

quickly and reduce the need for remands for additional factual development. CMS participation would also assist in creating a more complete record. Section 1860D-4(h) of the Act and the Part D rule neither require nor prohibit participation by CMS and/or its contractors in an ALJ hearing.

We proposed in § 423.2010, to allow CMS, the IRE, and/or the Part D plan sponsor to participate in an ALJ hearing at the ALJ's discretion, in a manner similar to § 405.1010 for Part A and Part B appeals. Participation in an ALJ hearing does not give the entities “party” status. We proposed in § 423.2010(c) to give the ALJ discretion about whether to allow CMS, the IRE, and/or the Part D plan sponsor to participate in situations where any of these entities requests participation. The ALJ would be precluded from drawing any adverse inference if CMS, the IRE, and/or the Part D plan sponsor elected not to participate under proposed § 423.2010(g).

We believe that this proposal would allow an ALJ to decide when an appeal would benefit from participation by one or more of these entities. An ALJ, however, would also have the flexibility to balance the interests of the enrollee with the interests of these other entities and to deny a request to participate. We believe this proposal is consistent with the preamble language to the Part D rule (70 FR 4360, 4361), with respect to the role of the Part D plan sponsor, which states, “[t]he plan is not considered a party to the ALJ hearing, but may participate in the hearing at the discretion of the ALJ * * * [u]nlike under MA, the plans do not have the right to request an appeal of an ALJ decision with which the plan disagrees.” We noted in the Part D rule that “[e]ven though plans are not parties to ALJ hearings, we continue to believe that it is important to give plans the ability to participate in ALJ hearings. Therefore, plans may participate in hearings at the ALJ's discretion.”

Further, if these entities do wish to participate, we proposed in § 423.2010(b) to require that the request to participate be made within a shorter timeframe. For expedited appeals, any request by CMS, the IRE, and/or the Part D plan sponsor to participate must be made within 1 day of receipt of the notice of hearing (5 days for non-expedited hearings). The ALJ must then notify the entity, the enrollee, and the Part D plan sponsor, if applicable, of his or her decision on the request to participate within 1 day of receipt of the request (5 days for non-expedited appeals). We proposed these limitations due to the very tight timeframes for expedited appeals.

Specific comments received and responses to those comments are as follows:

Comment:

Commenters stated that the regulations provide insufficient time for notification to the enrollee of the participation of CMS, the IRE, and/or the Part D plan sponsor. Some commenters also believe that section 423.2010(a) should include a set timeframe by which the ALJ may request the participation of CMS, the IRE, or a Part D plan sponsor, preferably within 5 days of receipt of the hearing request for a non-expedited appeal.

Response:

We believe that the regulations provide sufficient notification to the enrollee of any participation by CMS, the IRE, and/or the Part D plan sponsor and that the ALJ should not be subjected to a timeframe for requesting participation by these entities. Section 423.2010(b)(2) requires an ALJ, in a non-expedited appeal, to notify the enrollee of his or her decision on a request to participate by CMS, the IRE, and/or the Part D plan sponsor within 5 days of receipt of the request. Section 423.2010(b)(4) requires an ALJ, in expedited appeals, to notify the enrollee of his or her decision on a request to participate by CMS, the IRE, and/or the Part D plan sponsor within 1 day of receipt of the request. In both instances, an enrollee will know whether CMS, the IRE, and/or the Part D plan sponsor will be participating prior to the hearing.

The ALJ hearing process is a fluid process. ALJs and their staff conduct reviews of the case file, make requests for additional information and accept additional evidence up to and through the date of the hearing. It would not be beneficial to the hearing process to preclude an ALJ from obtaining valuable information due to a timeframe that has no apparent connection to the preservation of enrollee's rights or the appropriate resolution of an appeal.

We believe that participation by CMS, the IRE, and/or the Part D plan sponsor in ALJ hearings for Part D appeals has been constructed in a manner that allows for the resolution of an appeal more efficiently and appropriately while giving proper consideration to the interests of an enrollee. The participation of CMS, the IRE, and/or the Part D plan sponsor may allow the ALJ to resolve issues of fact and law more quickly, reduce the need for remands for additional factual development, and develop a more complete record. However, keeping with the interests of efficiency and fairness, participation is limited to filing position papers or providing written testimony to clarify factual or policy issues in a case. CMS, the IRE, and/or the Part D plan sponsor cannot be called as a witness, cannot call their own witnesses, and cannot cross-examine the witnesses of an enrollee at the hearing. Additionally, under § 423.2042, an enrollee can review and comment on the record, which would include any position papers and written testimony by CMS, the IRE, and/or the Part D plan sponsor, at the hearing or any time before the ALJ's notice of decision is issued. Finally, under the regulations, the ALJ maintains the flexibility to balance the interests of the enrollee with the interests of CMS, the IRE, and/or the Part D plan sponsor to deny a request to participate.

Comment:

A commenter expressed concern about the 1-day timeframe provided to CMS, the IRE, and/or the Part D plan sponsor for requesting to participate in an expedited hearing. The commenter believes that the timeframe is too short and that meeting the timeframe will increase expenses because the only way to meet the timeframe with a written response would be by a process more expensive than regular mail.

Response:

Under the expedited process, all applicable timeframes have been significantly reduced to facilitate meeting the 10-day adjudication timeframe. Section 423.1010(b)(3) provides CMS, the IRE, and/or Part D plan sponsor, upon receipt of the notice of hearing, 1 day to request to participate in the hearing. We believe that one day is sufficient time to review the notice of hearing, make a determination on whether to participate, and notify the ALJ. We want to emphasize that § 423.2010(b)(3) allows for requests to participate to be made orally or submitted by facsimile to the ALJ hearing office. Therefore, a request to participate, including a written request, should be able to be submitted timely and without any increased costs.

Comment:

Some commenters stated that allowing the ALJ to request CMS, IRE, or Part D plan sponsor participation in an ALJ hearing is inappropriate given that the statute did not provide party status to these entities. The commenters stated that it is unclear why participation by these entities would be necessary or valuable. The commenters believe that such participation will add unnecessary confusion to the hearing, blindside the enrollee, and afford these entities a greater role than they are entitled to under the statute, including the opportunity to behave like a party. The commenters urge CMS to deny these entities the right to participate at

the ALJ hearing. If they are allowed to participate, the commenters believe the regulations should more clearly state that ALJs may not rely on statements made by representatives of CMS, the IRE, or a Part D plan sponsor.

Response:

We continue to believe that affording the ALJ the discretion to request and allow participation in a hearing by CMS, the IRE, and/or the Part D plan sponsor provides significant benefit to the appeals process by promoting the efficient and accurate resolution of factual and legal issues and by creating a more complete administrative record in the case. These entities cannot be parties to the proceeding, thus we believe that ALJ's should retain the discretion to determine when requesting or allowing CMS, the IRE, or Part D plan sponsor participation in a hearing would be helpful in resolving the issues involved in the appeal. We disagree with the commenters' suggestion that, even if these entities are allowed to participate in the hearing, the regulations should prescribe that the ALJ may not rely on statements made by representatives of these entities. Establishing such a policy would impede an ALJ's ability to make an independent assessment about the information and evidence presented at the hearing. We also disagree that allowing participation gives these entities the ability to behave like a party to the proceedings. These rules specifically prohibit participants from calling witnesses or cross-examining the witnesses of an enrollee. Participation by CMS, the IRE, or the Part D plan sponsor is intended to be non-adversarial and for the purpose of aiding in the clarification of factual or policy issues.

Accordingly, we are finalizing § 423.2010 subject to the modification discussed in section III, which changes the word “days” to “calendar days.”

5. Request for an ALJ Hearing (§ 423.2014)

The Part D rule formerly at §§ 423.612(a) and (b) (now at §§ 423.1972(a) and (b)) describes how, where, and when to file a request for an ALJ hearing. We proposed to include this requirement in § 423.2014. We also proposed to include in this section language similar to that in § 405.1014 on requests for an ALJ hearing, including the content of a request, where and when to file a request and any extension of time to request a hearing. We believe these provisions appropriately apply to Part D appeals.

Former § 423.612(b) (now at § 423.1978(b)) states that “[e]xcept when an ALJ extends the timeframe as provided in part 422, subpart M of this chapter, the enrollee must file a request for a hearing within 60 days of the date of the notice of an IRE reconsideration determination.” Similarly, § 422.602(b) of the Part C rule states that “[e]xcept when an ALJ extends the timeframe as provided in part 405 of this chapter, a party must file a request for a hearing within 60 days of the date of the notice of a reconsidered determination.” Therefore, we proposed in § 423.2014 to closely track the language of § 405.1014 regarding the time in which to request a hearing. Additionally, we proposed in §§ 423.2014(a)(1) and (a)(2) to require the telephone number of the enrollee and the appointed representative, if any, in any request for an ALJ hearing. This information would assist the ALJ in quickly contacting the enrollee or the appointed representative, particularly for expedited appeals. Because we proposed to adopt a specific provision to govern requests for ALJ hearings in Part D appeals, we proposed to revise former § 423.612 (now at § 423.1972) to replace the reference to the regulations in part 422, subpart M, with a cross reference to § 423.2014.

Furthermore, we proposed to require the plan name and the enrollee's Medicare health insurance claim number. This information would assist the ALJ in identifying the relevant plan and formulary involved in the appeal. We also proposed in § 423.2014(a)(7) that an enrollee who seeks an expedited hearing indicate that in his or her request.

As discussed previously, we proposed in § 423.2014(b), a more informal process for requesting an expedited hearing by proposing to permit an enrollee to make a request for an expedited hearing orally. We believe that the oral request would make the initiation of the ALJ appeals process faster and easier for the enrollee. However, as explained above in the discussion of § 423.2002(b)(2), an enrollee may only file an oral request for an expedited hearing after receiving the written IRE reconsideration notice. This requirement is reflected in § 423.2014(b). A prescribing physician may also provide oral or written support for an enrollee's request for expedited hearing by an ALJ. In the same section, we also proposed to require the ALJ hearing office to document and maintain documentation of this oral request.

Similarly, in § 423.2014(d)(2), we proposed that an enrollee requesting an expedited hearing be permitted to request orally an extension of time for filing the hearing request and that such request be documented in writing and maintained in the case file by the ALJ hearing office.

Specific comments received and responses to those comments are as follows:

Comment:

We received several comments pertaining to oral requests for an expedited ALJ hearing. One commenter expressed concern about the potential of oral requests for hearing to become lost, and therefore suggested that the ALJ be required to provide prompt written confirmation within two business days that the oral request has been received, along with a consumer friendly explanation of the ALJ appeals process and the enrollee's rights and obligations.

Response:

While we agree with the commenter's concern that it is possible for oral requests for hearing to become misplaced; we believe that we have sufficiently addressed this concern in § 423.2002(c) and § 423.2014(b) by requiring the ALJ hearing office to document all oral requests in writing and maintain the documentation in the case files. This procedure is similar to the expedited process established at the coverage determination, redetermination and reconsideration levels.

Considering the expedited timeframe, we do not believe that issuing a notice acknowledging receipt of the oral request will add any benefit to the process. Rather, such a notice may cause confusion because the enrollee will receive notices on whether the request for an expedited hearing was granted or denied and/or a notice of hearing shortly after submission of the request for an expedited ALJ hearing. As to the request for a beneficiary-friendly explanation of the process and notification of the enrollee's right and obligations, we believe that the enrollee will be provided with all the necessary information through the notice of IRE reconsideration, the ALJ hearing notice, and interaction with ALJ staff. Accordingly, we are finalizing our proposals subject to the modification discussed in section III, which changes the word “days” to “calendar days.”

6. Timeframes for Deciding an Appeal Before an ALJ (§ 423.2016)

As discussed above, we proposed to apply a 90-day adjudicatory timeframe to Part D appeals with an expedited process for certain types of appeals. Specifically, we proposed in § 423.2016(b)(1), that an ALJ would provide an expedited decision in situations where the enrollee requests an expedited hearing, the appeal involves an issue specified in § 423.566(b), but does not include solely

a request for payment of Part D drugs already furnished and the enrollee's prescribing physician indicates, or the ALJ determines that applying the standard timeframe for making a decision may seriously jeopardize the enrollee's life or health or ability to regain maximum function. We also proposed that the ALJ may consider this standard as met if a lower level adjudicator has granted a request for an expedited appeal. The expedited appeals process is similar to the process established at the Part D plan sponsor and IRE levels under the Part D rule at § 423.570, § 423.584, and § 423.600.

In § 423.2016(b), we proposed that the ALJ rule on a request for expedited hearing within 5 days of receiving the request. If the ALJ grants the request for expedited hearing, the ALJ will promptly provide the enrollee with oral notice of the decision and subsequently provide written notice of the decision, likely through the notice of hearing. We proposed in § 423.2016(b)(5), that in a granted expedited hearing, the ALJ must issue a written decision, dismissal order, or remand as expeditiously as the enrollee's health condition requires, but no later than the end of the 10-day period beginning on the date the request for hearing is received.

If the ALJ denies a request for an expedited hearing, the ALJ will provide prompt oral notice explaining that the appeal would be processed using the 90-day timeframe, and send an equivalent written notice within 3 days of issuance of the oral notice to the enrollee and to the Part D plan sponsor. We proposed in § 423.2016(b)(4), that a decision on a request for an expedited hearing cannot be appealed to the MAC.

Although the standard and expedited timeframes for the issuance of a written decision are somewhat longer than at the lower levels, we believe they are appropriate. The ALJ hearing is more complicated than the IRE reconsideration because it involves the scheduling and conducting of a hearing. The hearing entails the presentation of evidence including testimony by the enrollee and witnesses, which necessitates a longer adjudication period.

Specific comments received and responses to those comments are as follows:

Comment:

Many commenters appreciated the establishment of regulatory adjudication timeframes for Part D appeals at the ALJ and MAC levels. One commenter, however, requested shorter timeframes for both standard and expedited appeals, proposing 45- to 60-day timeframes for standard appeals and 72 hour timeframes for expedited appeals. One entity stated that it supported the proposed 5-day adjudication timeframe for expedited appeals, but noted that the timeframe conflicted with the 10-day expedited adjudication timeframe stated in the preamble.

Response:

The 90-day adjudication timeframe for standard appeals is consistent with the statutory and regulatory instruction to apply Part 405, subpart I to Part D appeals, as appropriate. Part 405, subpart I establishes a 90-day adjudication period for Parts A and B appeals. Standard Part D appeals do not have characteristics that would justify deviating from the statutory and regulatory guidance or that would justify treating them differently than standard Parts A and B appeals relative to the adjudication timeframe.

We have established an expedited adjudication timeframe for Part D appeals in situations where the appeal involves an issue specified in § 423.566(b), but does not include solely a request for payment of Part D drugs already furnished, and the enrollee's prescribing physician or other prescriber indicates, or the ALJ or the MAC determines that applying the standard timeframe for making a decision may seriously jeopardize the enrollee's life or health or ability to regain maximum function. In these situations, the ALJ or the MAC must issue a decision, dismissal order, or remand as expeditiously as the enrollee's health condition requires, but no later than the end of the 10-day period beginning on the date the request for hearing or request for review is received.

An ALJ or the MAC will always strive to resolve an appeal as expeditiously as the enrollee's health requires. The 10-day timeframe, which is the maximum time period for expedited appeals, takes into account such factors as federal agencies operating only on business days, receiving the case file from the previous adjudicating entity, complying with all notice requirements, scheduling and holding a hearing, and issuing a written decision.

The 5-day timeframe alluded to by one of the commenters is for ruling on a request for an expedited hearing. The timeframe provides an ALJ with sufficient time to review all the evidence and render an appropriate decision. As a practical matter, the timeframe is truly inconsequential to the enrollee because an ALJ must issue a decision as expeditiously as the enrollee's health condition requires or no later than within the applicable adjudication period. The 10-day expedited adjudication period and 90-day standard adjudication period begin on the day the request for hearing is received.

See

§§ 423.2016(a)(1), (2) and (b)(5)(i) and (ii). Therefore, the time it takes for an ALJ to issue a decision on a request for an expedited hearing will always count towards the applicable adjudication period. For instance, if an ALJ took 5 days to grant a request for an expedited hearing, then the ALJ would only have 5 more days to issue a decision before the applicable 10-day adjudication period expired. This would similarly hold true if the request for an expedited hearing is denied. If the request was denied on the 5th day, then there would be 85 days left in the standard adjudication period.

Accordingly, we are finalizing our proposals subject to the modification discussed in section III, which changes the term “days” to “calendar days.”

7. Submitting Evidence Before the ALJ Hearing (§ 423.2018)

We proposed in § 423.2018 to adopt concepts from § 405.1018 regarding when an enrollee must submit written evidence. However, we also proposed in this section to permit an enrollee to submit any written evidence that he or she wishes to have considered at the hearing. An ALJ will not consider any evidence submitted regarding a change in the enrollee's condition after the coverage determination was made. As explained above in section IV., D., under the provisions of this final appeals rule, if an enrollee wishes such evidence to be considered, the ALJ will remand the case to the Part D IRE.

See

§§ 423.2034(c), 423.2126(b).

Specific comments received and responses to those comments are as follows:

Comment:

We received several comments regarding the timeframes proposed for the enrollee to submit all written evidence to be considered at the hearing. These timeframes require the enrollee to submit evidence within 10 days, for standard appeals, and 2 days, for expedited appeals, of receiving the notice of hearing. Several commenters advised that the proposed regulations are supposed to, but do not mirror the regulations in part 405, which state that the timeframes for admission of evidence do not apply to oral testimony given at a hearing or to evidence submitted by an unrepresented beneficiary. The commenters contend that “unrepresented beneficiary” includes beneficiary advocates, who are often not contacted by the beneficiary soon enough to enable compliance. The commenters believe that there should be

no time constraints on the enrollee's ability to submit evidence.

Response:

We disagree with the comments that the proposed provisions must be exactly the same as the parallel provisions in part 405. As contained in § 423.562(c) and as discussed in the proposed rule, we will apply the provisions of Part 405 to Part D appeals at the ALJ level with appropriate modifications to meet the needs of Part D appeals.

In § 423.2018 we are adopting concepts from § 405.1018 regarding when an enrollee must submit written evidence. We have proposed that an enrollee must submit all written evidence that he or she wishes to have considered at the hearing within 2 days of receiving the notice of hearing for expedited appeals and 10 days for non-expedited appeals. We believe that requiring evidence to be submitted within the 2-day timeframe provides the adjudicator sufficient time to review all evidence submitted before the hearing and issue a decision as expeditiously as the enrollee's health condition requires or within the 10-day adjudication period.

In response to the comment, we have modified the 10-day timeframe in non-expedited appeals to apply to only represented enrollees. We believe this is more appropriately consistent with part 405. As the commenter noted, the timeframe requirements for the submission of evidence do not apply to unrepresented beneficiaries in part 405. We agree with the commenter that the same exception should apply to unrepresented enrollees in non-expedited appeals. Accordingly, we have revised § 423.2018(b) to include this exception and to make clear that the 10-day timeframe only applies to represented enrollees.

Finally, we also note that “unrepresented beneficiary” does not include beneficiary “advocates.” Section 423.560 states that an enrollee may have an appointed or authorized representative act on his or her behalf, but does not provide any role or rights for an “advocate” in the appeals process.

Therefore, § 423.2018 is finalized with the modification exempting unrepresented enrollees from the 10-day evidence submission timeframe for non-expedited appeals, and subject to the modification discussed in section III, which changes the word “days” to “calendar days.”

8. Time and Place for a Hearing Before an ALJ (§ 423.2020)

Former § 423.612(b) (now at § 423.2020(a)) describes the time and place for a hearing before an ALJ and requires that it be set in accordance with § 405.1020. Therefore, we proposed to include in § 423.2020 language similar to that set forth in § 405.1020, including information on the determination of how appearances are made, the notice of a hearing, an enrollee's right to waive a hearing, an enrollee's objection to the time and place of hearing, good cause for changing the time and place of the hearing, the effect of rescheduling a hearing, and an enrollee's request for an in-person hearing.

As discussed previously, we proposed a more informal process for expedited hearings by proposing in §§ 423.2020(e)(3) and (i)(3) to allow objections to the time and place for a hearing and requests for in-person hearings to be made orally, and to require the ALJ hearing office to document all oral objections or requests and maintain such documentation in the case files. We also proposed in § 423.2020(i)(4) to not waive the adjudication period for expedited hearings when an enrollee's request for an in-person hearing is granted because a waiver of the adjudication period under the circumstances of an expedited appeal could be detrimental to the enrollee's health condition.

Specific comments received and responses to comments are as follows:

Comment:

We received several comments regarding the rescheduling of hearings. The commenters stated that, although the good cause examples listed in § 423.2020(g)(3) for requesting the rescheduling of a hearing are not all-inclusive, experience has shown that the examples are often regarded as all-inclusive. The commenters suggested that the provision be more explicit in stating that the examples listed are not the only acceptable situations in which good cause can be found.

Response:

Section 423.2020(g)(3) is consistent with the parallel provision in Part 405, § 405.1020(g)(3). Further, the provision clearly states that the good cause examples are not an all-inclusive list. Accordingly, we do not believe the provision requires additional clarification.

Accordingly, § 423.2020 is finalized consistent with the modifications discussed in section III of this preamble, which change the term “days” to “calendar days,” and provide clarification that when an enrollee's request for an in-person hearing is granted, the ALJ must issue a decision within the adjudication timeframe specified in § 423.2016 (including any applicable extension provided in this subpart), unless the enrollee agrees to waive the adjudication timeframe in writing.

9. Notice of a Hearing Before an ALJ (§ 423.2022)

We proposed to mirror the language in § 405.1022 regarding notice of hearing before an ALJ in § 423.2022. We believe that it is appropriate to apply to Part D appeals procedures similar to the Part A and Part B procedures regarding notice of a hearing. We also proposed a more informal process with respect to expedited hearings by proposing in § 423.2022(a) to allow ALJs to transmit the notice of the hearing to the enrollee and other potential participants orally followed by an equivalent written notice within one day of the oral notice. Additionally, we proposed in the same provision that expedited hearing notices be mailed or served at least 3 days before the hearing.

A specific comment received and response to comment is as follows:

Comment:

A commenter suggested that the ALJ hearing office be required to notify potential hearing participants by fax and/or telephone of an ALJ hearing, particularly in the event of an expedited appeal.

Response:

Section 423.2022(a)(1) requires the notice of hearing to be either mailed or otherwise transmitted, or given by personal service. For expedited appeals, § 423.2022(a)(2) provides that notice may also be provided orally followed by an equivalent written notice within one day of the oral notice. If a party or participant indicates a preference for receipt of the notice of hearing by a particular method, we believe that section 423.2022 provides sufficient flexibility for the notice of hearing to be mailed or served by various means, including facsimile and e-mail. We believe that the inherent flexibility of § 423.2022 allows the ALJ hearing process to appropriately adapt to technological advancements and enrollee and participant preferences. Requiring the notice of hearing to be provided in a limited manner would be contrary to our goal of providing flexibility to this process and would not be conducive to an efficient and beneficiary-friendly hearing process.

We are making a technical correction to clarify that other potential participants may also indicate in writing that he or she does not wish to receive notice of a hearing before an ALJ. We are finalizing this provision with this technical correction, and subject to the modification discussed in section III, which changes the term “days” to “calendar days.”

10. Objections to the Issues and Disqualification of the ALJ (§ 423.2024 and § 423.2026)

We proposed to follow in § 423.2024 and § 423.2026 the language in § 405.1024 and § 405.1026, which discusses the process for objecting to issues in the notice of hearing and disqualification of the ALJ. We believe it is appropriate to allow enrollees to object to the issues described in the notice of hearing and to maintain the processes set forth for Part A and Part B appeals for disqualification of the ALJ for Part D appeals.

Additionally, for expedited hearings, we proposed in § 423.2024(a) and § 423.2026(b), that an enrollee may submit oral or written notice of objections to issues described in the notice of hearing no later than 2 days before the hearing and orally notify the ALJ no later than 2 days after the date of the notice of hearing about any objections to the ALJ who will conduct the hearing. Further, in the same sections, we proposed that the ALJ document all oral objections or requests in writing and maintain the documentation in the case files.

We received no comments on §§ 423.2024 and 423.2026, and therefore, are finalizing them subject to the modification discussed in section III, which changes the word “days” to “calendar days.”.

11. ALJ Hearing Procedures (§ 423.2030) and Issues Before an ALJ (§ 423.2032)

Section 423.2030 establishes general procedures for ALJ hearings, including the procedures that apply when an ALJ determines that there is material evidence missing at the hearing. In § 423.2032 we discuss the types of issues that an ALJ may consider at a hearing, the conditions under which an ALJ may consider new issues at a hearing, and the restrictions imposed on adding new claims to pending appeals. We received no comments on these sections and, therefore are finalizing them without modification.

12. When an ALJ May Remand a Case (§ 423.2034)

We proposed to include language in § 423.2034 similar to that in § 405.1034 regarding when an ALJ may remand a case. This language is appropriate for Part D appeals because, like Part A and Part B appeals, it may be necessary for an ALJ to remand a case to a lower level. We proposed at § 423.2034(c), to require the ALJ to remand a case to the Part D plan sponsor if the ALJ determines that the enrollee wishes to have evidence on his or her change in condition after the coverage determination considered in the appeal. However, as discussed in greater detail above in section IV.D., we have revised § 423.2034(c) to require the ALJ to remand a case to the appropriate Part D IRE if the enrollee wishes to have evidence of a change in condition considered. Accordingly, § 423.2034 is finalized with the modifications specified above and that discussed in section III of this preamble, which clarifies when an ALJ can remand a case to the IRE based on missing information.

13. Description of an ALJ Hearing Process (§ 423.2036)

We reviewed the language in § 423.1036 to determine whether to incorporate similar language in proposed § 423.2036. In general, we follow the procedures set forth in Part A and Part B appeals regarding the right to appear and present evidence, waiver of the right to appear, presenting written statements and oral arguments, wavier of the adjudication period, what evidence is admissible at a hearing, and witnesses at a hearing. With respect to waiver of the right to appear for expedited hearings, we proposed at § 423.2036(b), to allow an enrollee to indicate orally that he or she does not wish to appear at a hearing (with appropriate documentation of this request and maintenance of this documentation by the ALJ hearing office). At § 423.2036(b)(2), we proposed to allow an enrollee to withdraw his or her waiver in writing. We also proposed that by withdrawing his or her waiver, the enrollee agrees to an extension of the adjudication period as specified in § 423.2016 that may be necessary to schedule and hold a hearing. We proposed in § 423.2036(e) (what evidence is admissible at a hearing) that an ALJ may not consider evidence on any change in condition of the enrollee after the coverage determination by the Part D plan sponsor is made. We have finalized this provision, but have modified proposed § 423.2036(e) by requiring the ALJ to remand the case to the appropriate Part D IRE as set forth in § 423.2034(b)(2).

We also proposed not to include language similar to that in § 405.1036(f) on requests for subpoenas by a party. In Part 405, subpart I, requests for subpoena by a party are limited to instances where discovery has been sought. Discovery is permissible under Part 405, subpart I only when CMS and/or its contractors participate in an ALJ hearing as a party, because it is appropriate to permit discovery when an ALJ hearing is adversarial (that is, whenever CMS and/or its contractor is a party).

For Part D appeals, however, section 1860D-4(h)(1) of the Act states “only the Part D eligible individual” is entitled to bring an appeal under Part D. We believe this statutory language prohibits CMS, the IRE, and the Part D plan sponsors from obtaining party status at an ALJ hearing. Thus, we proposed that only an enrollee may be a party, and therefore, Part D appeals will not be adversarial in nature. Accordingly, we also proposed not to apply to Part D appeals the provisions in § 405.1036(f), which address subpoenas issued at the request of a party, and § 405.1037, which address discovery. However, in the limited circumstances described in section 423.2036(f), we proposed to allow an ALJ to issue a subpoena on his or her own initiative for the appearance and testimony of witnesses, and for the enrollee and/or the Part D plan sponsor to make books, records, correspondence, papers, or other documents that are material to an issue at the hearing available for inspection and copying. We believe this policy will ensure that an ALJ is able to obtain information relevant to an appeal because these entities have access to the documents and records, such as medical records and plan formularies and marketing materials, that are needed in Part D appeals.

In instances when an ALJ issues a subpoena, we intend to follow similar procedures regarding the reviewability and enforcement of subpoenas as outlined in § 405.1036(f).

Specific comments received and responses to those comments are as follows:

Comment:

We received several comments regarding an ALJ's authority to request expert testimony. Commenters suggested that the regulations should provide an ALJ with the authority to request expert testimony from outside medical professionals who are not connected in any way with CMS, the IRE, or the Part D plan sponsor. Numerous commenters also disagreed with our decision not to allow a party to request that the ALJ issue a subpoena in a Part D appeal. The commenters advised that some physicians are reluctant to provide medical records or to participate in the hearing because of the already burdensome nature of the appeals process in Part D cases. Therefore, the ability to request a subpoena may be necessary in order to protect a beneficiary's right to present evidence and state his or her position at the hearing.

Response:

The regulations clearly provide an ALJ with authority to request

expert testimony, including medical expert testimony from individuals unassociated with CMS, the IRE, or Part D plan sponsors. As mentioned in § 423.2000(f), if an ALJ determines that it is necessary to obtain testimony from a person other than the enrollee, he or she may hold a hearing to obtain the testimony. This authority is made even more clear under § 423.2036(f)(1). Section 423.2036(f)(1) states that, “when it is reasonably necessary for the full presentation of a case, an ALJ may, on his or her own initiative, issue subpoenas for the appearance and testimony of witnesses and for the enrollee and/or the Part D plan sponsor to make books, records, correspondence, papers, or other documents that are material to an issue at the hearing available for inspection and copying.” This provision grants an ALJ the authority to subpoena medical experts to testify, and addresses the commenters' concerns about physicians reluctant to provide records or testify.

In the event that a physician or other prescriber is reluctant to provide medical records or is unwilling to participate in a hearing, an ALJ has the authority to subpoena the records or the testimony of the physician or other prescriber. Of course, the issuance of a subpoena in such circumstances can only be done by the ALJ on his or her own initiative and only when the ALJ has determined that the information is reasonably necessary for the full presentation of the case.

We continue to believe that the ability for an enrollee to request that the ALJ issue a subpoena is not appropriate in Part D appeals. As set forth in § 405.1036(f), requests for subpoenas by a party are limited to instances where discovery has been sought. Discovery is permissible under part 405 only when CMS and/or its contractors are a party to the ALJ hearing. In Part D appeals, only an enrollee may be a party to the hearing. As such, Part D appeals will not be adversarial in nature, and therefore, the ability for a party to request a subpoena is unnecessary.

Therefore, § 423.2036 is finalized consistent with the modifications described in section III of this preamble, which change the term “days” to “calendar days,” and make a technical correction to clarify that the ALJ may not issue a subpoena to CMS or the IRE to compel an appearance, testimony, or the production of evidence, or to the Part D plan sponsor to compel an appearance or testimony.

14. Deciding a Case Without a Hearing Before an ALJ and Prehearing and Posthearing Conferences (§ 423.2038 and § 423.2040)

We proposed in § 423.2038 and § 423.2040 to follow the language set forth in § 405.1038 and § 405.1040, which discusses the process for deciding a case without a hearing before an ALJ and prehearing and posthearing conferences. We believe it is appropriate to use these processes for Part D appeals. Additionally, for expedited hearings, we proposed in § 423.2038(b)(1)(i) and § 423.2040(c), that an enrollee may orally notify the ALJ that he or she does not wish to appear before the ALJ at a hearing and may also orally indicate that he or she does not wish to receive a written notice of the conference.

Further, we proposed that the ALJ document all objections or requests in writing and maintain the documentation in the case files.

Finally, we proposed in § 423.2040(c) that, for expedited hearings, the ALJ inform the enrollee of the time, place, and purpose of the conference within a shorter timeframe (at least 2 days before the conference date) than for non-expedited appeals (at least 7 days before the conference date). We received no comments on these provisions. Therefore, we finalize § 423.2038 without modification, and § 423.2040 subject to the modification discussed in section III, which changes the word “days” to “calendar days.”

15. The Administrative Record (§ 423.2042)

Section 423.2042 explains the requirements applicable to the creation of the administrative record of the ALJ proceedings, and for requesting and receiving copies of the administrative record.

Specific comments received and responses to those comments are as follows:

Comment:

One commenter stated that the costs for obtaining a copy of the administrative record unfairly impact enrollees who cannot afford to pay for a copy of the record. The commenter suggests revising the proposed regulation to allow each enrollee to receive one free copy of his or her administrative record. As an alternative, the commenter suggests adding regulatory language allowing any enrollee who can show he or she is unable to afford a copy of the administrative record to receive one free copy.

Response:

The requirements contained in proposed § 423.2042 were carried over from, and are consistent with, the requirements contained in § 405.1042. As the commenter notes, there may be a cost associated with producing a copy of the administrative record for parties who request it. As a general matter we do not believe that a regulatory change to direct this cost to the appeals adjudicators is necessary or appropriate. The regulations do not require an ALJ to charge an enrollee a fee to copy the record, but rather state that the enrollee may be asked to pay the costs of providing such copies. Thus, an enrollee may ask an ALJ to waive any suggested fee based on financial hardship or for any other reason. Also, we do not have any evidence suggesting enrollees are encountering any difficulties requesting copies of case files.

Comment:

We received a related comment asking us to amend the regulation to allow Part D plan sponsors, the Part D IRE, or CMS to request a copy of the administrative record. The commenter suggests that receipt of the case file would assist Part D plan sponsors, the IRE, and CMS in making requests for own motion review by the MAC and would also afford participants an opportunity to review the record for accuracy.

Response:

We agree with the commenter's assessment that entities making referrals for own motion review should have access to case files when making these determinations. However, we believe the suggested revision is unnecessary. CMS and the IRE are the only entities that may refer cases to the MAC for own motion review under § 423.2110. The Part D IRE is able to access Part D appeals case files because it is the final repository for all such files. In addition, CMS has access to Part D case files as a result of its contracting relationship with the Part D IRE. Thus, the entities responsible for referring cases to the MAC currently have access to any Part D case file that may be referred to the MAC for own motion review. Additionally, § 423.2046(a)(4) requires ALJs to send a copy of the decision to both the IRE that issued the reconsideration and the Part D plan sponsor that issued the coverage determination. To the extent a Part D plan sponsor wants additional information related to the ALJ hearing, it may contact the IRE to request such information. For these reasons, we believe it is unnecessary to revise the proposed regulations to allow Part D plan sponsors, the Part D IRE, or CMS to request a copy of the administrative record.

Accordingly, we are finalizing § 423.2042 without modification.

16. Consolidation of a Hearing Before an ALJ (§ 423.2044)

Section 423.2044 describes the requirements applicable to holding a consolidated hearing before the ALJ. We received no comments on this section and, therefore are finalizing it subject to the modification discussed in section III, which changes the term “days” to “calendar days.”

17. Notice of an ALJ Decision (§ 423.2046) and the Effect of an ALJ's Decision (§ 423.2048)

We proposed in § 423.2046 to follow the procedures in § 405.1046 regarding notice of an ALJ decision. We believe it is appropriate to provide a similar notice process in Part D appeals. We did not propose to include language from § 405.1046(a) regarding overpayment cases involving multiple beneficiaries because Part D appeals do not involve overpayments. We proposed in § 423.2046(d), that an ALJ issue a decision, as expeditiously as the enrollee's health condition requires, but no later than the end of the 10-day period for expedited hearings.

In § 423.2048, we also proposed to follow the policy established in § 405.1048 which explains the effect of an ALJ decision on all parties to the hearing.

Specific comments received and responses to those comments are as follows:

Comment:

We received several comments concerning the notice of an ALJ decision. The commenters suggested that § 423.2046(a)(3) include a requirement that a copy of the ALJ decision also be mailed to the enrollee's representative, if one has been appointed. The commenters advised that including this requirement will allow advocates to better assist beneficiaries, saving time and potential confusion.

Response:

We believe that the commenters' concern has already been adequately addressed. Section 423.560 defines the rights and responsibilities of an appointed representative. This provision provides an individual either appointed or authorized by State law or other applicable law with all the rights and responsibilities of an enrollee in obtaining a coverage determination and in dealing with any of the levels of the appeals process, including the right to receive a copy of the ALJ decision. Moreover, it has been the standard practice of OMHA and the MAC to send copies of decisions to all appropriately appointed representatives.

Accordingly, we finalize §§ 423.2046 and 423.2048 consistent with the modifications described in section III of this preamble. With respect to § 423.2046, the modifications replace the term “final” with “binding on the Part D plan sponsor,” and change the word “days” to “calendar days.” In § 423.2048, the modification replaces the phrase “issues a final action” with “issues a final decision or remand order.”

18. Removal of a Hearing Request From an ALJ to the MAC (§ 423.2050)

In § 423.2050 we explained the process for the MAC to assume responsibility for holding a hearing if a request for hearing is pending before an ALJ. We did not receive any comments on this section. Therefore, we are finalizing § 423.2050 without modification.

19. Dismissal of a Request for Hearing Before an ALJ (§ 423.2052) and Effect of a Dismissal of a Request for a Hearing Before an ALJ (§ 423.2054)

We proposed in § 423.2052, to follow the language in § 405.1052 regarding dismissal of a request for an ALJ hearing because we believe that it is appropriate for an ALJ to dismiss Part D appeals for the same reasons as an ALJ would dismiss Part A and Part B appeals. We also proposed to shorten the timeframes for expedited appeals in two instances.

First, we proposed at § 423.2052(a)(2)(ii), that an ALJ may dismiss a request for expedited hearing when the enrollee (or his or her representative) does not appear at the time and place set for the hearing and has not contacted the ALJ hearing office within 2 days (instead of the standard 10 days for non-expedited appeals) and provided good cause (as determined by the ALJ) for not appearing.

Second, we proposed at § 423.2052(a)(2)(iii), that an ALJ may dismiss a request for hearing when the enrollee (or his or her representative) does not appear at the time and place set for the hearing and if the ALJ sends a notice to the enrollee asking why the enrollee did not appear, the ALJ does not receive a response to the notice from the enrollee within 2 days for expedited hearings (and 10 days for non-expedited hearings) or the enrollee does not provide good cause for failing to appear.

We also proposed at § 423.2052(a)(5), that a request for hearing may be dismissed if the enrollee dies while the request for hearing is pending and the enrollee's representative has no remaining financial interest in the case and does not continue the appeal. Unlike Medicaid State agencies in Part A and Part B appeals, State Pharmaceutical Assistance Programs (SPAPs) do not have an independent right to appeal. While a SPAP may have a financial interest and may wish to pursue an appeal, the SPAP would have authority to do so only if the SPAP was appointed as the enrollee's representative. Therefore, we proposed that if an SPAP has been appointed as the enrollee's representative, the SPAP could continue an appeal after an enrollee dies provided that the appointment continues to be valid.

Additionally, we proposed at § 423.2052(b) to follow the language of § 405.1052(b), which requires the ALJ to mail a written notice of dismissal to the enrollee. In proposed § 423.2054 we explained the effect of a dismissal of a request for ALJ hearing.

Section 423.2052 is therefore finalized consistent with the modifications discussed in section III of this preamble, which replace the word “final” with “binding,” and change the term “days” to “calendar days.” We did not receive any comments on § 423.2054 and therefore finalize it without modification.

20. Applicability of Policies Not Binding on the ALJ and MAC (§ 423.2062) and Applicability of Laws, Regulations, and CMS Rulings (§ 423.2063)

In § 423.2062, we proposed that ALJs and the MAC give substantial deference to CMS program guidance, and if they decline to follow such guidance provide an explanation for why the policy is inapplicable. We also proposed that such a determination had no precedential effect.

In § 423.2063, consistent with § 405.1063, we proposed that CMS Rulings be binding on all CMS components and on all HHS components that adjudicate matters under CMS' jurisdiction.

We received no comments on these sections. Therefore, we finalize § 423.2062 without medication and § 423.2063 consistent with the modifications described in section III of this preamble, which clarify the additional authorities that are binding on ALJs and the MAC.

J. Appeals to the MAC (§ 423.2100 Through § 423.2134)

1. General

The Part D rule includes one provision concerning MAC review. Former § 423.620 (now at § 423.1974) provides that an enrollee who is dissatisfied with an ALJ's hearing decision may request that the MAC review the ALJ decision or dismissal. Further, it states that “[t]he regulations

under part 422, subpart M of this chapter regarding MAC review apply to matters addressed by this subpart, to the extent applicable.” Section 422.608 of the Part C rule states that “[t]he regulations under part 405 of this chapter regarding MAC review apply to matters addressed by this subpart to the extent that they are appropriate.” Therefore, we proposed in the provisions regarding MAC review to follow the language in Part 405, subpart I, as appropriate and have tracked the language in the Part 405, subpart I, for proposed § 423.2106, § 423.2116, § 423.2118, § 423.2120, § 423.2128, and § 423.2130. In addition, because we proposed to adopt a specific provision to govern requests for MAC review in Part D appeals, we proposed to revise former § 423.620 (now at § 423.1974) to replace the reference to the regulations in part 405, subpart I, with a cross reference to § 423.2102.

2. Medicare Appeals Council Review: General (§ 423.2100)

Former § 423.620 (now at § 423.1970) provides that an enrollee who is dissatisfied with an ALJ's hearing decision may request that the MAC review the ALJ decision or dismissal. We proposed to include this requirement in § 423.2100. We proposed in § 423.2100 to follow the language of § 405.1100, which describes who may request MAC review, the de novo standard of MAC review, and timeframes for issuing a decision or remand because we believe that Part D appeals should not differ from Part A and Part B appeals with respect to these provisions, except as discussed above. We further proposed language in § 423.2100(c) establishing the 10 day adjudicatory timeframe for expedited reviews.

We received no comments on this section. Therefore, we have finalized § 423.2100 consistent with the modifications described in section III of this preamble, which clarify the specific types of actions that may be taken by the MAC, and change the word “days” to “calendar days.”

3. Request for MAC Review When ALJ Issues Decision or Dismissal (§ 423.2102)

We proposed to include in § 423.2102 language similar to that set forth in § 405.1102 on requests for MAC review when the ALJ issues a decision or dismissal. We believe it is appropriate to include this information at § 423.2102 because it would help the enrollee and any representative of the enrollee to understand how to file a request for MAC review, how the date of receipt of the request would be determined, and when a request would be considered filed. We also proposed at § 423.2102(a)(2), that an enrollee may request expedited review if the enrollee submits a written request for MAC review within 60 days after receipt of the ALJ's decision or dismissal and the appeal involves an issue specified in § 423.566(b) but does not include solely a request for payment of Part D drugs already furnished.

We proposed at § 423.2102(a)(2)(i), a more informal process for requesting an expedited review by proposing to permit an enrollee to make a request for review orally. We believe that the oral request would make the initiation of the MAC appeals process faster and easier for the enrollee. A prescribing physician may also provide oral or written support for an enrollee's request for expedited review by the MAC. We also proposed in § 423.2102(a)(2)(ii) to require the MAC to document and maintain documentation of this oral request.

Similarly, in § 423.2102(b)(1), we proposed that an enrollee requesting an expedited review be permitted to orally request an extension of time for filing the request, and that the request be documented in writing and maintained in the case file by the MAC.

We received no comments on this section. Therefore we are finalizing our proposed policies subject to the modification discussed in section III, which changes the word “days” to “calendar days.”

4. Where a Request for Review May Be Filed (§ 423.2106)

In § 423.2106 we proposed to follow similar requirements in § 405.1106(a). We received no comments on this section. Therefore we are finalizing § 423.2106 without modification.

5. MAC Actions When Request for Review Is Filed (§ 423.2108)

We proposed to follow the requirements in § 405.1108 regarding MAC actions when a request for review is filed, including

de novo

review of an ALJ's decision.

Specifically, we proposed in § 423.2108(d) an expedited process for certain types of appeals. We proposed in § 423.2108(d)(1), to require the MAC to provide an expedited decision where an enrollee requests the review, the appeal involves an issue specified in § 423.566(b), but does not include solely a request for payment of Part D drugs already furnished, and the enrollee's prescribing physician indicates, or the MAC determines that applying the standard timeframe for making a decision may seriously jeopardize the enrollee's life or health or ability to regain maximum function. We also proposed that the MAC may consider this standard as met if a lower level of adjudicator has granted a request for an expedited appeal.

We proposed in § 423.2108(d)(3)(i) that the MAC deny a request for expedited review, because the standard for expedited review is not met, within 5 days after receiving the request for expedited review. We also proposed in § 423.2108(d)(3)(ii) that the MAC would send the enrollee and Part D plan sponsor written notice of the denial within 5 days after receiving the request that explains that the appeal will be processed using the 90-day timeframe. Instead of notifying the enrollee and Part D plan sponsor that the MAC has granted the request for expedited review, we proposed to use these resources to process the expedited appeal.

If the MAC accepts the request for expedited review, we proposed in § 423.2108(d)(2), that the MAC issue a decision, dismissal order, or remand, as expeditiously as the enrollee's health condition requires, but no later than the end of the 10-day period beginning on the date the request for review is received by the entity specified in the ALJ's written notice of decision. This process is similar to the process established at the coverage determination, redetermination, and reconsideration levels under the Part D rule at § 423.570, § 423.584, and § 423.600.

We received no comments on this section. Therefore, we are finalizing these proposals subject to the modification discussed in section III, which changes the term “days” to “calendar days.”

6. MAC Review on Its Own Motion (§ 423.2110)

On March 23, 2007, CMS published a CMS Ruling (CMS-4083-NR) in the

Federal Register

. The CMS ruling established an interim process for referring Part D cases to the MAC for review under its own motion authority. This ruling permits CMS and its IRE to refer cases to the MAC for own motion review and largely applies the provisions of § 405.1110, with the notable exception of the standard of review.

We proposed to largely follow this Ruling and the requirements set forth in § 405.1110 regarding MAC own motion reviews, with certain modifications. Proposed § 423.2110, reflects our proposal that the enrollee is the only party to an ALJ hearing and that CMS and/or the Part D IRE may participate as

a non-party in the ALJ hearing. Proposed § 423.2110 differs from § 405.1110 in that § 423.2110 applies the same standard of review to such requests whether CMS or IRE simply requested to participate in the ALJ hearing or actually participated in the ALJ hearing. This proposed difference is due to the ALJ having the discretion under proposed § 423.2010 not to allow CMS or the Part D IRE to participate as a non-part in the ALJ hearing. Because ALJs have discretion to deny a CMS or IRE request to participate in an ALJ hearing, we believe it is appropriate under § 423.2110 to apply the same standard of review to requests for MAC own motion review whether CMS or IRE requested to participate or actually participated in the ALJ hearing.

For administrative efficiency, we proposed to limit to CMS and the Part D IRE the ability to refer a case to the MAC for review under its own motion authority. We expect that most of the referrals would be made through the Part D IRE, because it is responsible for monitoring plan effectuation of favorable decisions and serves as a repository for all completed Part D ALJ case files.

The Part D IRE does not have a financial or business interest in the outcome of the case. Therefore, we believe that the Part D IRE is in the best position to objectively examine whether an ALJ decision warrants review by the MAC. While Part D plan sponsors would not be permitted to refer a Part D case to the MAC for review under its own motion authority, Part D plan sponsors would have the opportunity to communicate with, and provide input to, CMS or the Part D IRE on ALJ decisions that may warrant a referral to the MAC. Given the large number of Part D plan sponsors, we believe that limiting own motion referrals to CMS and the Part D IRE is a more streamlined and efficient approach.

We also note that CMS Ruling (CMS-4083-NR) is superseded by these final regulations.

Specific comments received and responses to comments are as follows:

Comment:

One commenter is opposed to the proposed language in § 423.2110(a) that precludes Part D plan sponsors from referring cases to the MAC for review on its own motion. The commenter strongly believes that the Part D plan sponsor should be allowed to refer cases to the MAC. It is the commenter's experience that the Part D plan sponsor is more likely than the IRE to participate in the ALJ hearing and in the best position to challenge the evidence considered by the ALJ. Finally, the commenter believes the Part D plan sponsor should be given due process to defend its coverage determination decisions through the ability to refer cases to the MAC.

Response:

We do not agree with the commenter's assertion that Part D plan sponsors should be given the ability to refer cases to the MAC in order to properly defend its coverage determination decisions. The Part D plan sponsors make coverage determinations and adjudicate the first level of appeals, redeterminations of coverage determinations. An enrollee dissatisfied with a redetermination decision has a right to a reconsideration by the IRE, and possibly, to higher levels of appeal. As we have explained earlier in our discussion about party status, we believe that only the enrollee may be a party to a Part D appeal. Part D plan sponsors do not have a right to party status at the ALJ level, nor do they have the right to appeal a decision of the IRE to the ALJ level. Rather, those rights lie solely with the enrollee. However, as the administrators of the Part D drug benefit program, we believe the Part D appeals process is designed to provide Part D plan sponsors the ability to protect their interests. In conducting coverage determinations and redeterminations, Part D plan sponsors are afforded an opportunity to provide detailed explanations of the rationale used to support their decisions. Moreover, the Part D plan sponsors are afforded the opportunity to request to participate at the ALJ hearing level. Part D plan sponsors may also communicate with, and provide input to, CMS or the Part D IRE on ALJ decisions that may warrant a referral to the MAC. Further, in this final appeals rule we are clarifying in § 423.1980 that a Part D plan sponsor may request a reopening of a reconsideration, hearing or review. Thus, for the reasons set forth above, we believe the level of participation afforded to Part D plan sponsors is appropriate and adequate to protect their interests.

Comment:

Commenters noted that the IRE is the repository of MAC decisions and the decisions are not available to enrollees or their representatives. Commenters expressed concern over the IRE discussing prior MAC decisions in its request for MAC review and making substantive arguments based on those opinions. The commenters urged a provision be added, which requires CMS or the IRE to provide a redacted copy of any prior MAC decision to which the entity cites with a referral memorandum.

Response:

We do not agree that § 423.2110 should be revised to include a provision for redacted copies of prior MAC decisions to be included with referral memorandum submitted to the MAC and copied to the enrollee. MAC decisions are not precedential and are unpublished. While the commenters expressed feelings of unfairness that the IRE, as the repository of official administrative records, has access to unpublished MAC decisions, any legal arguments submitted by CMS or the IRE for review by the MAC are contained in the referral memorandum.

Comment:

Commenters proposed that requiring the enrollee submitting comments to the MAC in response to an IRE referral memorandum to send the comments to CMS or the IRE is burdensome to unrepresented enrollees who are unlikely to understand their responsibilities and that the regulation should instead provide that the MAC will send copies of comments submitted by unrepresented enrollees to CMS or the IRE.

Response:

We do not believe that the regulations preclude the MAC from assisting an unrepresented enrollee by providing CMS or the IRE with a copy of any submitted comments. However, we believe that shifting responsibility to the MAC to provide CMS or the IRE with a copy of comments submitted by any unrepresented enrollee will add to the time it takes to adjudicate the referral for review. We believe that this added administrative processing time to cases of all unrepresented enrollee claims subject to referral is counter to the interest of the enrollee to receive a decision, as expeditiously as possible, from the MAC.

Accordingly, we are finalizing this section consistent with the modifications described in section III of this preamble, which replace the phrase “remains the final action in the case” with the phrase “is binding,” and change the word “days” to “calendar days.”

7. Content of Request for Review (§ 423.2112)

We proposed to include in § 423.2112 language similar to that in § 405.1112 on content of a request for review. However, we proposed at § 423.2112(a)(4), to require the telephone number of the enrollee to be included in any request for MAC review. This information will assist the MAC in contacting the enrollee, particularly for expedited appeals. Additionally, we proposed in § 423.2112(a)(4) to require the plan name and the enrollee's Medicare health insurance claim number. We also proposed at § 423.2112(a)(4), that an enrollee who seeks an expedited review

indicate that his or her request is for an expedited review.

As discussed previously, we proposed in § 423.2112(a)(2) a more informal process for requesting an expedited review by proposing to permit an enrollee to make a request for review orally. We believe that the oral request would make the initiation of the MAC appeals process faster and easier for the enrollee. We also proposed to require the MAC to document and maintain documentation of this oral request.

Specific comments received and responses to those comments are as follows:

Comment:

Numerous commenters expressed belief that the content requirements of the request for review are overly rigid for unrepresented enrollees and enrollees represented by family, friends or other untrained advocates. Commenters urged that if the information is incomplete the MAC must be required to contact the enrollee or representative to obtain missing information and not be permitted to dismiss the appeal unless reasonable inquiries have failed. Commenters also suggested that an enrollee should be allowed to amend a MAC request for review to add missing information, as appropriate, as well as a provision allowing liberal leave to amend the request for review to add issues as appropriate when the enrollee subsequently obtains assistance from a trained advocate.

Response:

We disagree with the commenters' characterization of the review request content requirements as being overly rigid. The proposed regulation is similar to the requirements at § 405.1112, which have been used successfully since 2005. As a practical matter, we believe the information required by the regulations is important for the efficient and complete retrieval of the ALJ administrative record by the MAC. We note that the standard review request form is included as an enclosure with every ALJ decision or dismissal, and the instructions for this form direct enrollees to submit a copy of the ALJ decision or dismissal with the request for review. In doing so, enrollees can satisfy most of the content requirements for the request for review. Additionally, we believe it is important to state these requirements in the regulations to ensure that if enrollees or appointed representatives choose not to use the standard form, they will nevertheless know up front what information must be included in the request for review.

Finally, we note that the regulation does not preclude the MAC from contacting an enrollee to obtain missing information to correct any defects, which may impede the MAC from obtaining the administrative record or adjudicating the request for review. As for additional listed requirements for the request for review, § 423.2112(c) clearly indicates that if an enrollee is unrepresented, the MAC will not limit its review to the exceptions raised by the enrollee. Also, if an enrollee subsequently obtains assistance from a trained advocate, we believe that § 423.2120 addresses the commenters' concerns that the subsequently obtained advocate be allowed to amend the request for review and add issues by providing the opportunity for an enrollee or representative to file a brief or other written statements.

Accordingly, we are finalizing this section without modification.

8. Dismissal of Request for Review (§ 423.2114)

In § 423.2114, we proposed the process for dismissing a request for review for Part D appeals. The process tracks the Part A and Part B process, except for dismissals involving deceased enrollees. We proposed at § 423.2114(c), that a request for review may be dismissed if the enrollee dies while the request for review is pending and the enrollee's representative, if any, either has no remaining financial interest in the case or does not continue the appeal. As discussed above, unlike Medicaid State agencies in Part A and Part B appeals, SPAPs do not have an independent right to appeal. While an SPAP may have a financial interest and may wish to pursue an appeal, the SPAP would have authority to do so only if the SPAP was appointed as the enrollee's representative. Therefore, we proposed that an SPAP that has been appointed as the enrollee's representative could continue an appeal after an enrollee dies provided that the appointment continues to be valid.

Specific comments received and responses to those comments are as follows:

Comment:

Commenters stated that if an enrollee dies while the request for review is pending, the current construction of the regulations does not protect the financial interests of the estate of a deceased beneficiary who paid for prescriptions drugs and was seeking reimbursement for those payments. Commenter suggested that the proceedings may be stayed for up to 90 days to provide time for the estate to review the matter and determine whether to continue the appeal. One commenter suggested that any entity with a financial interest, such as if a nonprofit organization advanced money to purchase necessary medications, should be able to pursue the enrollee's appeal upon the death of the enrollee.

Response:

As only an enrollee may request review by the MAC, we disagree that any entity should be able to decide to continue the enrollee's appeal. We believe additional entities without appeal rights are protected by allowing a representative appointed by the enrollee to continue the appeal if the representative has a financial interest in the case. We agree with the commenters that an estate of an enrollee who was seeking reimbursement for paid prescription drugs should also be able to continue the enrollee's appeal. Therefore, in response to comments we are finalizing this provision with a revision to § 423.2114(c) to allow for an appeal to continue if the enrollee died while the request for review is pending and the enrollee's estate or representative, if any, has a remaining financial interest and wants to continue the appeal.

9. Effect of Dismissal of Request for MAC Review or Request for Hearing (§ 423.2116), Obtaining Evidence From the MAC (§ 423.2118), and Filing Briefs With the MAC (§ 423.2120)

Section 423.2116 details the effect of the MAC's dismissal of an enrollee's request for review or request for hearing. Section 423.2118 discusses the evidence an enrollee may request from the MAC, while § 423.2120 informs the enrollee how to file a brief. Both of these proposed sections indicated that the opportunities to comment on the requested evidence and to submit a brief do not count towards the MAC's adjudication deadline. The proposed language is similar to language in §§ 405.1116, 405.1118, and 405.1120. We received no comments on these sections. Therefore, we are finalizing §§ 423.2116, 423.2118 and 423.2120 without modification.

10. What Evidence May Be Submitted to the MAC (§ 423.2122)

We reviewed the language in § 405.1122 to determine whether to incorporate similar language in proposed § 423.2122. In general, we proposed to follow the procedures for Part A and Part B appeals regarding what evidence may be submitted to the MAC. We proposed in § 423.2122(a)(3) that the MAC would not consider evidence on any change in condition after a coverage determination by the Part D plan sponsor that the enrollee wishes to have considered and would remand such a case to the Part D plan sponsor. We have finalized this provision but, as discussed above, modified the rule to require the MAC to

remand the case to the Part D IRE. Like in § 405.1122, we proposed in § 423.2122 to allow the MAC to issue a subpoena when it determines certain information is reasonably necessary for a full presentation of a case. We also proposed in § 423.2122(b) not to include language similar to that in § 405.1122(d) on party requests for subpoenas, as only the enrollee is a party to a Part D appeal, and as a result, there will be no discovery in these appeals. For the reasons set forth above, we proposed to allow the MAC to issue a subpoena only on its own initiative. In addition, if necessary, the MAC may request enforcement of a subpoena by the Secretary. The time period for the MAC to issue a final decision, dismissal order, or remand the case would be stayed for 15 days or until the Secretary makes a decision with respect to the enforcement request, whichever occurs first.

A specific comment and our response to the comment is as follows:

Comment:

One commenter suggested that, if a participant at the ALJ hearing, CMS, the IRE, or the Part D plan sponsor should be afforded the opportunity to provide written submissions to the MAC.

Response:

We believe that since the Part D plan sponsor is not a party to a request for review, it is appropriate to limit submissions by CMS, the IRE and/or the Part D plan sponsor of briefs or position papers to when the MAC determines it is necessary to resolve the issues in the case as proposed under § 423.2120.

Accordingly, we are finalizing this section consistent with the modifications described in section III of this preamble, which clarify that the MAC may not issue a subpoena to CMS or the IRE to compel the production of evidence, and change the word “days” to “calendar days.”

9. Oral Argument (§ 423.2124)

We proposed in § 423.2124, to follow the language similar to that in § 405.1124 because we believe that oral arguments may be necessary in some Part D appeals. We also proposed in § 423.2124(b) that, for expedited appeals, the enrollee be informed of the time and place of the oral argument at least 2 days before the scheduled date of the oral argument, which is shorter than our proposed 10-day timeframe for non-expedited appeals. We believe that providing notice of an oral argument within these timeframes provides the enrollee sufficient time to prepare for the oral argument. We received no comments on this section. Therefore we are finalizing § 423.2124 subject to the modification described in section III of this preamble, which changes the term “days” to “calendar days.”

11. Case Remanded by the MAC (§ 423.2126)

We proposed in § 423.2126, to mirror the language in § 405.1126 regarding when the MAC may remand a case. This language is appropriate for Part D appeals because it may be necessary for the MAC to remand a case to a lower level. Additionally, we proposed in § 423.2126(a)(4), that when an ALJ has issued a recommended decision, an enrollee may file with the MAC briefs or other written statements about the facts and law relevant to the case within 20 days of the date on the recommended decision or with the request for review for expedited appeals. We also proposed in § 423.2126(b), to require the MAC to remand a case to the Part D plan sponsor if the MAC determines that the enrollee wishes to have evidence on his or her change in condition after the coverage determination by the Part D plan sponsor considered in the appeal. We are finalizing this provision consistent with the modifications discussed in sections III and IV of the preamble, which remove the word “final,” require the MAC to remand the case to the Part D IRE, and change the word “days” to “calendar days.”

12. Action of the MAC (§ 423.2128), Effect of the MAC's Decision (§ 423.2130), and Extension of Time To File Action in Federal District Court (§ 423.2134)

Section 423.2128 informs the enrollee of the actions the MAC will take when reviewing the administrative record, while § 423.2130 informs the enrollee that the MAC's decision is binding unless reopened or if the decision is modified by a Federal district court. Section 423.2130 also notifies the enrollee that he or she may file an action in a Federal district court within 60 days of receipt of the MAC decision. Section 423.2134 details the requirements for filing for an extension of time to file a civil action. The proposed language is similar to language in §§ 405.1128, 405.1130, and 405.1134. We received no comments on these sections. Therefore, we are finalizing §§ 423.2128, and 423.2134 without modification. We are finalizing § 423.2130 subject to the modifications discussed in section III of the preamble, which add the words “final and” before the word “binding,” and change the term “days” to “calendar days.”

K.

Judicial Review (§ 423.2136 Through § 423.2140)

The Part D rule includes one provision concerning judicial review. Former § 423.630(a) (now at § 423.1976(a)) provides that an enrollee may request judicial review of an ALJ's decision if the MAC denied the enrollee's request for review and the amount in controversy threshold is met. Former § 423.630(b) (now at § 423.1976(b)) also states that an enrollee may request judicial review of the MAC decision if it is the final agency decision and the mount in controversy threshold is met. To request judicial review, this section states that an enrollee must file a civil action in a District Court of the United States in accordance with section 205(g) of the Act. Finally, former § 423.630(c) (now at § 423.1976(c)) tells the reader to “[s]ee part 422, subpart M of this chapter, for a description of the procedures to follow in requesting judicial review.”

Section 422.612 explains that part 405 contains a description of the procedures to follow in requesting judicial review. Therefore, we proposed to follow the language of the Part 405, subpart I, as appropriate. Thus, we tracked the language in the Part 405, subpart I, for proposed § 423.2134, § 423.2138, and § 423.2140. We believe that it is appropriate for Part D appeals to follow the Part A and Part B appeals procedures set forth in these provisions. Because we proposed to adopt specific procedures for requesting judicial review of final Part D decisions, we proposed to delete the cross-reference to Part 422, subpart M, from former § 423.620(c) (now at § 423.1976(c)) and replace it with a cross-reference to the procedures for requesting judicial review in proposed § 423.2136. We received no comments on these sections. Therefore we are finalizing § 423.2138 without modification, and §§ 423.2136 and 423.2140 subject to the modification discussed in section III of the preamble, which changes the term “days” to “calendar days.”.

L. Miscellaneous

Specific comments to this section and our responses to those comments are as follows:

Comment:

One commenter stated that neither existing regulations nor the proposed rule adequately address appeals that may arise when the Part D plan makes a conditional payment under the MSP rules and subsequently demands repayment from the enrollee if the enrollee is subsequently reimbursed by automobile or liability insurance or by worker's compensation. The

commenter also noted that the proposed rule does not adequately address the process to be followed when an enrollee wishes to appeal or reopen a determination that affects both Part C and Part D benefits. The example cited is a situation where an individual is injured in an automobile accident and requires medical care and prescription drugs and the plan makes conditional payments and subsequently determines that Medicare is the secondary payer and demands repayment. The commenter believes the regulations should clarify whether these appeals can be consolidated or whether the enrollee must pursue separate appeals with the possibility of inconsistent decisions.

The commenter further stated that a determination by a Part D plan that a drug is not covered because another payer is or should be the primary payer should be considered an adverse coverage determination subject to appeal by the enrollee. The commenter believes there is a gap in the regulations on the applicability of the enrollee appeals regulations to determinations by Part D plan sponsors under the MSP rules.

Response:

If a Part D plan sponsor makes a decision not to provide or pay for a Part D drug, this action is an adverse coverage determination that is subject to the Part D appeals process. If an adverse coverage determination is made based on the Part D plan sponsor's determination that Medicare is not the primary payer under the MSP rules, we agree with the commenter that this adverse decision is subject to the Part D appeals process. We believe the current Part D regulations are sufficiently clear about the application of the MSP rules. Section 423.462 cross-references the MSP provisions of § 422.108 and provides that the MSP procedures apply to Part D sponsors and Part D plans with respect to the offering of qualified prescription drug coverage in the same way they apply to MA organizations and plans.

With respect to the commenter's example of a plan making conditional payments for medical care and prescription drugs and then demanding repayment, we assume that the commenter is referring to this scenario arising in the context of an MA-PD enrollee. We disagree with the commenter's remark that the rules do not adequately address the process to be followed when an enrollee wishes to appeal or reopen a determination that affects both Part C and Part D benefits. The regulations at part 422 and part 423 clearly establish separate, but similar, appeals processes for Part C and Part D benefits, respectively. Since different adjudication timeframes apply based on whether it is a Part C or a Part D benefit, the appeals need to be processed under the applicable procedure and consolidation would not be appropriate.

Comment:

One commenter stated that CMS should require the IRE to provide information on the right to request an ALJ hearing in a consumer-friendly format at a 5th grade reading level in multiple languages. This commenter also believes there should be a standard form for the enrollee to use to request review by an ALJ.

Response:

All of the IRE's reconsideration decision notices that are not fully favorable to the enrollee contain an explanation of the enrollee's right to request further appeal before an ALJ and describe the process for obtaining an ALJ hearing. These notices are developed by the IRE in a manner calculated to be understood by the enrollee. We will consider the commenter's specific suggestions for future changes to the IRE's contractual obligations in terms of preparing reconsideration notices, although we do not believe this is an appropriate subject for rulemaking. We agree with the commenter's suggestion that a form should be made available for use by enrollees when requesting an ALJ hearing. The Office of Medicare Hearings & Appeals (OMHA) is developing such a form. However, even after such a form is available, any written request for an ALJ hearing that contains the information set out in § 423.2014(a) of this rule will be accepted as a valid request.

V. 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 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.

VI. Provisions of the Final Rule

For the most part, this final appeals rule incorporates the provisions of the proposed appeals rule. The provisions of the final appeals rule that differ from the proposed appeals rule are as follows:

• In response to a public comment requesting that the use of “calendar days” be explicitly stated in the applicable regulatory provisions, we revised the regulatory text to include the word “calendar” as appropriate.

• We are also making conforming revisions to the Part D grievance, plan sponsor, and IRE provisions to ensure consistency throughout the Part D appeals process, by changing the word “days” to “calendar days” in 42 CFR 423.564(d)(2), (e)(1), and (e)(2); 423.582(c)(2); 423.584(d)(1) and (d)(2)(i); and 423.600(a).

• In § 423.1978, § § 423.1980(a)(1) and (a)(4), § 423.2004(c), and § 423.2052(a)(6), we made technical clarifications by removing the term “final” or “final and binding” and replacing it with “binding” to clarify that the actions taken by an adjudicator described in the above sections are not considered final decisions of the Secretary for the purposes of exhausting administrative remedies when seeking judicial review in federal court.

• In § 423.1980(b), we made a technical correction by removing the words “and revise” from the introductory sentence, so the sentence will now read: “A Part D plan sponsor may reopen its coverage determination or redetermination on its own motion—* * *”. As discussed in greater detail in the final Part 405, subpart I rule, published elsewhere in this

Federal Register

, this provision, as revised, reflects our longstanding policy that the timeframes for reopening a determination or decision are measured by the date of the reopening, and not the date of the revision of the determination or decision.

• In § 423.1980(e) we are making a technical correction to clarify that a Part D plan sponsor may request that an IRE reopen its reconsideration, or an ALJ or the MAC reopen the hearing decision within 180 days from the date of the reconsideration or hearing decision for good cause in accordance with § 423.1986.

• In § 423.1990(b)(1)(i), we made a technical correction to replace the phrase “final decision” with “decision, dismissal order, or remand order” to specify the types of actions that if taken by an ALJ, preclude a request for EAJR and to be consistent with our clarification regarding the term “final”.

• In § 423.1990(b)(1)(ii), we made a technical correction by adding the phrase “dismissal order, or remand order” after “final decision” to specify the types of action that, if taken by the MAC, preclude a request for EAJR and to be consistent with our clarification regarding the term “final”.

• In § 423.1990(e)(3), we made a technical correction by removing the words “final and” to make clear that the decision of the review entity to certify

or deny a request for EAJR is not subject to further review.

• In § 423.2000(d), we made a technical revision to clarify that the ALJ conducts a de novo review.

• In § 423.2002(b)(3), we made a technical correction separating out the requirement for the ALJ to document oral hearing requests as subsection (c) and redesignated subsections (c) and (d) as subsections (d) and (e) respectively.

• In § 423.2004(c), we made a technical correction to clarify that an ALJ's dismissal action is binding and not subject to further review unless vacated by the MAC under § 423.2108(b).

• We modified § 423.2018(b) in response to public comments to exempt unrepresented enrollees from the 10-day evidence submission timeframe for non-expedited appeals.

• We clarified § 423.2020(i)(4) to state that when an enrollee's request for an in-person hearing is granted, the ALJ must issue a decision within the adjudication timeframe specified in § 423.2016 (including any applicable extension provided in this subpart), unless the enrollee agrees to waive the adjudication timeframe in writing.

• In § 423.2022(a) we made a technical correction to clarify that other potential participants may also indicate in writing that he or she does not wish to receive notice of a hearing before an ALJ.

• In § 423.2034(a) we clarified when an ALJ can remand a case to the IRE based on missing information.

• In § 423.2034(b)(2) and § 423.2126(b) we modified the final appeals rule in response to public comment to direct an ALJ and the MAC to remand a case to the appropriate Part D IRE when the enrollee wants evidence of a change in condition after the coverage determination is made considered.

• In § 423.2036(f)(1) we made technical corrections to clarify that the ALJ may not issue a subpoena to CMS or the IRE to compel an appearance, testimony, or the production of evidence, or to the Part D plan sponsor to compel an appearance or testimony. Similarly, in § 423.2122(b) we made a technical correction to clarify that the MAC may not issue a subpoena to CMS or the IRE to compel the production of evidence.

• In § 423.2046(c), we made a technical correction by replacing the term “final” with “binding on the Part D plan sponsor” consistent with our clarification regarding the term “final.”

• In § 423.2048(a), we made a technical correction by replacing the phrase “issues a final action” with “issues a final decision or remand order” to clarify the types of actions issued by the MAC that cause an ALJ decision to not become binding, and to be consistent with our clarification regarding the term “final”.

• We added § 423.2063(a) to clarify the additional authorities that are binding on ALJs and the MAC. The original paragraph is reassigned to subsection (b).

• In § § 423.2100(c) and (d), we made technical corrections by replacing the phrase “final action” with “final decision, dismissal order” to specify the types of actions that may be taken by the MAC and to be consistent with our clarification regarding the term “final”.

• In § 423.2110(d)(5), we made a technical correction by replacing the phrase “remains the final action in the case” with the phrase “is binding” to be consistent with our clarification regarding the term “final”.

• We modified § 423.2114(c) in response to public comments asking us to allow an appeal to continue when the enrollee dies while the request for review is pending and the enrollee's estate has a remaining financial interest and wants to continue the appeal.

• In § 423.2126(a)(1), we made a technical correction by removing the word “final” consistent with our clarification regarding the term “final”.

• In § 423.2130, we made a technical correction by adding the words “final and” before the word “binding” consistent with our clarification regarding the term “final”.

VII. Collection of Information Requirements

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

VIII. Regulatory Impact Statement

A. Overall Impact

We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), 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 (Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). As explained in the analysis that follows, we have determined that this final appeals rule is not a major rule since it will impose no consequential costs and will not have an economic effect of $100 million or more. Accordingly, it is not a major rule.

The RFA requires agencies to analyze options for regulatory relief of small businesses, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, we estimate that a number of Part D plan sponsors (insurers) are small entities as that term is used in the RFA (include small businesses, nonprofit organizations, and small governmental jurisdictions). As indicated above, a number of Part D plan sponsors (insurers) are small entities due to their nonprofit status. Few if any of the Part D plans sponsors meet the SBA size standard for a small insurance firm by having revenues of $7 million or less in any 1 year. Individuals and States are not included in the definition of a small entity.

This final appeals rule will affect primarily individual's enrolled in Part D plans who appeal Part D plan decisions. It makes no substantive changes in the Part D benefit and deals directly only with appeals procedures administered by Federal employees or Federal contractors. To date, the volume of Part D appeals is small and the amounts of money involved, although substantial to many of these individuals, are a very small percentage of aggregate Part D plan costs. Accordingly, we do not believe that there will be significant economic impacts on Part D plans. Therefore, the Secretary has determined that this final appeals rule would not have a significant economic impact on a substantial number of small entities.

In addition, section 1102(b) of the Act requi

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