Detailed Information on the
Office of Medicare Hearings and Appeals Assessment

Improving upon internal hearing and review processes in order to meet the 90-day statutory timeline for processing cases.

Developing intranet and internet sites to improve communication within the agencies and with the public.

Finalized a strategic plan and integrated it into the program's performance management system and everyday processes.

Measure: Increase percentage of BIPA cases closed within 90 days.

Explanation:The SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) mandates that Administrative Law Judge Medicare cases be proceed within 90 days. This level must be maintained in order to be within statutory guidelines.

Measure: Increase percentage of non BIPA cases closed within 90 days.

Explanation:To assure OMHA meets or exceeds all mandated case processing timelines throughout the Medicare appeals process. Case data are entered into the Medicare Appeals System which is a controlled-access database, with case-specific information. Data used for this performance measure are validated by generating weekly and monthly reports from the database. At the end of the fiscal year, the weekly and monthly report totals are cross-checked with the annual figures.

Measure: For cases that go to hearings, increase the percentage of decisions rendered within 30 days of the hearing. (New measure, added August 2007)

Explanation:To assure OMHA meets or exceeds all mandated case processing timelines throughout the Medicare appeals process. Case data are entered into the Medicare Appeals System which is a controlled-access database, with case-specific information. Data used for this performance measure are validated by generating weekly and monthly reports from the database. At the end of the fiscal year, the weekly and monthly report totals are cross-checked with the annual figures.

Measure: Reduce the percentage of appealed decisions reversed or remanded by the Medicare Appeals Council (as a percentage of all ALJ decisions issued). (New measure, added August 2007)

Explanation:To assure decisional accuracy for Administrative Law Judge (Level III) Medicare Appeals Council case tracking information. Data used for this performance measure are validated by generating weekly and monthly reports from the database. At the end of the fiscal year, the weekly and monthly report totals are cross-checked with the annual figures.

Measure: Average survey results from appellants reporting good customer service on a scale 1-5 at the ALJ Medicare appeals level. (New measure, added Augsut 2007)

Explanation:To assure appellants and related parties are satisfied with their Level II appeals experience based upon beneficiary survey results. Survey results will be reviewed on a biannual basis.

Measure: Decrease the cost per claim adjudicated each year by target percentage. (New measure, added August 2007)

Explanation:To assure efficient operations in all aspects of the Medicare Level III appeals process. Case data are entered into the Medicare Appeals System which is a controlled-access database, with case-specific information. Information from the Medicare Appeals System and the Unified Financial Management System will be used to calculate the cost per claim for each fiscal year.

Measure: Increase number of claims processed per ALJ Team over each year by target percentage. (New measure, added August 2007)

Explanation:To assure efficient operations in all aspects of the Medicare Level III appeals process. Case data are entered into the Medicare Appeals System which is a controlled-access database, with case-specific information. Data used for this performance measure are validated by generating weekly and monthly reports from the database. At the end of the fiscal year, the weekly and monthly report totals are cross-checked with the annual figures.

Is the program purpose clear?

Explanation: The mission of the Office of Medicare Hearings and Appeals (OMHA) is to provide a mechanism through which individuals and organizations dissatisfied with Medicare determinations affecting their rights to or their participation in the Medicare program may administratively appeal these determinations in accordance with the requirements of the Administrative Procedure Act and Social Security Act. As required by the Medicare Prescription Drug, Improvement, and Modernization Act (MMA), OMHA is organizationally and functionally separate from the Centers for Medicare and Medicaid Services (CMS). Under direct delegation from the Secretary, OMHA administers the hearings and appeals program nationwide for the Medicare program.

Evidence: The creation of OMHA was mandated by Section 931 of Public Law 108-173, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA). MMA transferred the responsibility for hearing Medicare Appeals at the Administrative Law Judge (ALJ) level - the third level of Medicare claims appeals - from the Social Security Administration to the Office of the Secretary at HHS. The mission statement is available at the "OMHA Fact Sheet" located at www.hhs.gov/OMHA.

Does the program address a specific and existing problem, interest, or need?

Explanation: On an annual basis, carriers and intermediaries process approximately 1 billion claims for Medicare payment. Of this total, payment is approved for approximately 90%, and payment is denied for approximately 10%. Beneficiaries, providers, and suppliers have the right to appeal denied claims. Appeals claims submitted for Medicare items and services are denied for a variety of reasons. The most common reasons for denying a claim are: the services provided were determined to not have been medically necessary for the beneficiary; Medicare did not cover the services; or the beneficiary was not eligible for services. OMHA hears cases at the third level of appeal, the Administrative Law Judge (ALJ) level.

Evidence: In FY 2004, a total of 106,312 million claims were appealed to the ALJ level. (This represents less than 1 percent of Part B claims denied at the the initial level, and less than .06 percent of PART A claims denied at the initial level (per FY 2006 Congressional Justification).) Over the past year, OMHA has received 16,905 appeals containing 69,712 claims. Of those 16,905 appeals, 7,529 have been closed. Nearly 65 % of Parts A,B, & C cases were rendered Favorable or Partially Favorable Decisions; For Part D cases, that number is over 40%.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The Office of Medicare Hearings and Appeals is the only entity which hears Medicare ALJ level (3rd level) of appealed Medicare cases. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 transferred responsibility for Medicare Appeals cases from the Social Security Administration to the Department of Health and Human Services. It operates in conjunction with the other hearing levels, without being redundant or duplicative. The hearings process specifies a clear distinction between the types of Medicare cases being adjudicated at each agency, and at each level of appeal.

Evidence: There exist four distinct and unique appeal levels. The first level of appeal, called a redetermination, is heard by the appropriate Medicare carrier or intermediary. If the carrier or intermediary renders a decision upholding the denial of payment, the provider, supplier, or beneficiary may then request a second level of appeal. This second level, called a reconsideration, is conducted by a Qualified Independent Contractors (QIC). If a QIC upholds the denial, the provider, supplier, or beneficiary may then submit a third level of appeals process, the ALJ level. If the appellant is not satisfied with the decision at the ALJ level of appeal, the appellant may appeal to the fourth level, the Medicare Appeals Council (MAC). If the appellant is not satisfied with the decision by the MAC, the final level of appeal is a lawsuit through the Federal District Court.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: There are no major design flaws that limit OMHA's effectiveness and efficiency. OMHA's program effectiveness is demonstrated by its ability to process Medicare appeals within the 90-day timeframe, as specified in law. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), mandates that ALJ-level Medicare appeals be heard within 90 days after receipt of a request from a Medicare appellant for such an appeal. As mentioned in Question 1.3, the ALJ level is the third level of appeal in the appeals process. The Office of Medicare Hearings and Appeals (OMHA) has been open and processing cases since July 1, 2005.

Evidence: Section 521 of the SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) included major revisions to appeals procedures at the ALJ level for the original Medicare plan beneficiaries. It imposed a 90-day time limit for conducting ALJ appeals, lowered the amount in controversy, and allowed appellants to escalate an appeal from the Qualified Independent Contractor (QIC) to the ALJ level if the QIC did not meet its 30-day timeframe for issuing a determination. OMHA is charged with implementing these changes in order to improve the appeals process by significantly reducing the number of days it takes to adjudicate an appeal case.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: The program's resources are effectively targeted so that intended beneficiaries' cases could be processed within the legislatively mandated time frames. In establishing the headquarters and field offices for the Office of Medicare Hearings and Appeals (OMHA), there was careful review of historical data from the Social Security Administration to identify the optimum locations for these offices. The new OMHA office locations are organized around HHS Regional Offices since Medicare contractors and providers are familiar with the HHS regional structures. The office locations receive case workloads from their respective HHS Regions. With the legislatively-mandated 90-day timeframes, an extraordinary large number of ALJs would be required to travel from location to location to hear cases, thus OMHA has effectively implemented a video-teleconferencing (VTC) infrastructure to further provide beneficiaries with expedited hearings at sites across the nation.

Evidence: Section 931 of the MMA requires the Secretary of HHS to "provide for an appropriate geographic distribution of administrative law judges...throughout the United States, to ensure timely access to such judges." In addition, the legislation directed HHS to consider the feasibility of "conducting hearings using tele-or video-conference technologies." Information supporting the OMHA office locations and business processes can be found in: The Transition Plan as reported in the Report to Congress, "Plan for the Transfer of Responsibility for Medicare Appeals," March 2004; as well as the FY 2007 Congressional Justification.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) mandates that Administrative Law Judge Medicare cases be processed within 90 days for initial determinations made on or after October 1, 2002. As such, OMHA's long term measure is to maintain a 90-day adjudication rate for all cases. This measure is the overarching goal of OMHA and is the primary consideration and driving force for operational and management decisions. (OMHA intends to establish additional measures as a part of its strategic planning process.)

Evidence: SCHIP Benefits Improvement and Protection Act of 2000 - Pub.L. No. 106-554, 114 Stat. 2763 (2000). Congressional justifications detail the overarching 90-day goal and how this measure drives the operational and adminsitrative decisions.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: Adjudicating cases within 90 days is a daunting undertaking. Cases, previously heard by the Social Security Administration, could take a year or more to adjudicate. Thus, this ambitious statutory timeline is the underlying reason for OMHA's operation plan, geographic locations, and use of video-teleconferencing.

Evidence: SCHIP Benefits Improvement and Protection Act of 2000 - Pub.L. No. 106-554, 114 Stat. 2763 (2000). OMHA Transition Plan and caseload statistics within Congressional justification materials detail case load.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The Office of Medicare Hearings and Appeals will develop additional annual performance measures during its strategic planning process beginning in May 2006.

Evidence: The Strategic Plan Request for Quote (RFQ) outlines plans for measure development.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: OMHA will develop additional annual performance and measures during its strategic planning process beginning in May 2006.

Evidence: The Strategic Plan RFQ outlines plans for measurement development.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: The Office of Medicare Hearing and Appeals has established a memorandum of understanding with the Centers for Medicare and Medicaid Services (CMS) and its affiliated contractors outlining the roles and responsibilities of all parties in the appeals process. All parties are aware of the overarching goal of the 90-day timeframes associated with adjudicating Medicare cases which drives the office operations and processes and have committed the necessary resources to achieve that goal. In addition, the agency tracks case information received from the level 2 appeal offices to anticipate workload increases at the ALJ level.

Evidence: MOU with CMS establishes the roles and responsibilities of coordinating efforts, including OMHA, QICs and CMS. The MOU provides appropriate time frames and processes for moving cases through the appeals process, in order to expedite the Medicare Appeals process flow. The MOU presents standards of performance, including specified calendar days for hearing notifications, waiver notifications, and, evidence submissions.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: The Office of Medicare Hearings and Appeals is currently participating in an evaluation by the HHS Office of Inspector General (OIG) to assess the use of video-teleconferencing, telephone, and in-person hearings to adjudicate Medicare appeals. The evaluation will look at the impact of of these processes on the appeals process, and examine their usefulness in adjudicating appeals cases in a timely manner. In addition, the OIG will evaluate timeliness issues related to both scheduling hearings and issuing decisions. This evaluation is currently underway and not yet completed.

Evidence: The OIG Request for Entrance Conference describes the study and assessment. As part of its oversight responsibility, the OIG has determined the need for this short-term evaluation, based on the Senate Finance Committee's request for such an evaluation. In conducting its evaluation, OIG will be examining: OMHA policies and procedures related to scheduling and holding ALJ hearings; OMHA hearings notification documents; the VTC sites available for hearings; and, OMHA staff in each OMHA office.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: Performance measures will be included in the FY 2008 budget submission, once the Strategic Plan is completed in July 2006. Information on direct and indirect costs, as well as marginal costs will also be included. Currently, only the 90-day deadline measure is included in the FY 2007 budget submission.

Evidence: FY 2007 Congressional Budget Submission. Strategic Plan Request for Quote.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The Office of Medicare Hearings and Appeals (OMHA) has begun its strategic planning process, including measures setting. The initial kick-off meeting with the strategic planning partner was held in June, 2006. The plan will include performance and efficiency measures to support OMHA's mission and long-term goals.

Evidence: Strategic Plan Request For Quote for professional consulting services to assist in the development and implementation of a Strategic Plan, Performance Measures, and a Communication Plan. The contract has been awarded and meetings and planning are underway.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The Office of Medicare Hearings and Appeals (OMHA) currently collects and reviews daily caseload information from the Medicare Appeals System to ensure that cases are being processed in a timely manner across all sites. In addition, the agency tracks case information received from the level 2 appeal offices to anticipate workload increases at the Administrative Law Judge level. Resources are adjusted accordingly to effectively process incoming cases.

Evidence: OMHA routinely reallocates resources in order to meet the mandatory 90-day processing timeframes. For example, when it received a complex "big box" case (one containing 40 or more beneficiaries with multiple claims) in its Irvine, California, office, it realigned the paralegal resources to expedite the procedural review and exhibiting of the file to keep the case moving through the appeals process. This type of change can reduce processing times by several weeks. Additional evidence includes OMHA Case Tracking Results.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: Performance measures are included in the managers' performance plans to ensure accountability. In addition, the Office of Medicare Hearings and Appeals has in place a Memorandum of Understanding with the Centers for Medicare and Medicaid Services to outline respective roles, responsibilities, and required service levels and timeframes for work performed by the level 2 and administrative contractors in support of the Medicare appeals process.

Evidence: Sample Attorney Performance Plan which includes metrics to support 90-day timeframe, such as processing times, cases resolved, and notification needs if additional staffing is required to adhere to 90-day timeframe. The MOU for level 2 appeals at the Qualified Independent Contractor (QIC) level describes roles and responsibilities of QIC/OMHA coordinated efforts, including timeliness of notification, and appeals process flow.

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: FY 2006 is the first year that the Office of Medicare Hearings and Appeals (OMHA) received its own appropriation. In FY 2005, start-up funds were received from the Centers for Medicare & Medicaid Services. OMHA is utilizing appropriate financial reporting mechanisms, including monthly reports to track expenditures against obligations, to ensure that funds are being obligated appropriately and for their intended purpose.

Evidence: The FY 2007 Congessional Justification outlines the intended purposes of expenses. Estimated obligations are apportioned by quarter, with obligation rates tracked monthly by the Office of the Secretary Executive Office (OSEO). Also, Monthly Status of Funds Reports present the yearly operating plan, spending to date, projected obligations through the end of the year, and total obligations through the end of the year. The Credit Card Audit Template outlines the purpose and intention of planned spending and procurement activities, providing appropriate procedures and supporting documentation.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: Office of Medicare Hearings and Appeals (OMHA) does not have a measure of efficiency and is currently developing one. Currently, OMHA is utilizing internal procurement and auditing processes. Additionally, OMHA is a new organization, having recently completed its first year of operation. It is the organization's intent to include efficiency and performance measures in its strategic plan. OMHA has begun its strategic planning process.

Evidence: Strategic Plan Request for Quote and contract award. Audit checklist and procedures document procurement and auditing processes.

Does the program collaborate and coordinate effectively with related programs?

Explanation: The Office of Medicare Hearings and Appeals collaborates with the Centers for Medicare & Medicaid Services (CMS) and the Departmental Appeals Board (DAB) in its efforts to adjudicate cases within the 90-day timeframes. Coordination of regulatory changes, public outreach/education initiatives, and implementation of the Medicare Appeals System (MAS) are examples of the cross-coordination among the three organizations.

Evidence: FY 2007 Congressional Justification details collaborative efforts between OMHA, Qualified Independent Contractors (QICs), the DAB, and IREs (Independent Review Entities, for PART C appeals) with regard to hearing processes. Also, the MAS system is jointly used by OMHA, CMS, and the DAB to track cases. This system tracks cases from initial redetermination to final disposition. OMHA outreach efforts include presentation to level 2 contractors, QICs, on OMHA's objectives and purpose. Also, the MOU between CMS and OMHA details reponsibilities for accurate and timely disposition of Medicare appeals.

Does the program use strong financial management practices?

Explanation: The Office of Medicare Hearings and Appeals (OMHA) has been proactive in implementing appropriate financial practices to manage program funds. OMHA tracks obligations on a monthly basis and provides updated reports to all field office managers to assist them in managing their spending levels. The HHS Program Support Center (PSC) is responsible for ensuring compliance with the Prompt Payment Act. Also, all purchase card holders are audited on a quarterly basis to ensure compliance with the Federal Acquisition Regulations and simplified purchasing procedures. Audit documentation includes: organization and completeness of supporting documentation; completion of necessary forms; and adequate purchasing procedures.

Evidence: OMHA receives invoices based on the services or goods received, then provides a receiving report to the PSC. Based on this report, the PSC disburses payment to the vendor. The PSC has provided read-only access to the Office of the Secretary Executive Office (OSEO), to allow OSEO to verify whether or not a payment has been made. Additional evidence includes Monthly Status of Funds report (which includes updates of funds spent to date and projected obligations at EOY), and Credit Card Audit Template. No material internal control weaknesses have been found.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The Office of Medicare Hearings and Appeals in HHS was established with the underlining principle that deficiencies in the case hearings process would be addressed. The Office of Medicare Hearings and Appeals has implemented a number of changes to significantly reduce the number of days it takes to process Medicare Appeals claims. As part of the transition to OMHA from SSA, HHS implemented a robust Video Teleconferencing infrastructure and reduced the number of physical offices required to process cases. OMHA's Administrative Law Judges are also performing as supervisors for their legal teams, to provide guidance and accountability for the front line staff responsible for processing the cases. Cases are tracked nationwide, locally, and at the team level to monitor performance on a daily basis. Moreover, the overarching 90-day performance measure is included in all employee and managerial performance plans to ensure accountability at all levels in the organization. Effective April 1, 2006, all OMHA performance plans were revised to ensure consistency with the President's Management Agenda and the HHS Top 20 Management and Program Objectives.

Evidence: FY 2007 Cogressional Justification discusses OMHA processes and organization for hearing cases in a timely fashion. Also, perfomance plans include goals/measures for accomplishing OMHA goals (e.g., 90-day time-line for hearing cases). Additionally, the Transition Plan outlines rationale for OMHA office structure, use of VTC, and geographic locations of field offices.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: The Office of Medicare Hearings and Appeals (OMHA) is a new organization that has been in operation since July 2005. During that time, the organization has been successful in reducing the average case processing time to 90 days, as mandated by statute.

Evidence: OMHA Case Tracking Results (latest monthly report is through June 9, 2006). The average appeal processing timeframe is currently about 84 days.

Does the program (including program partners) achieve its annual performance goals?

Explanation: The Office of Medicare Hearings and Appeals is a new organization which has been in operation since July 2005. The Strategic planning process is underway, and OMHA is currently developing annual goals and measures.

Evidence: Contract for Strategic Plan.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: The Office of Medicare Hearings and Appeals is in its first year of operation. As such, there have been no cost savings initiatives implemented to date. OMHA is developing a measure of efficiency.

Evidence: Contract for Strategic Plan.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The Medicare appeals processing function was transferred from SSA to OMHA in July 2005. Since that time, OMHA has reduced the case processing time from an average of 295 days to less than 90 days.

Evidence: HHS case tracking results show an average of less than 90 days for processing cases. GAO report number GAO-05-03R, dated June 30, 2005, states that SSA ALJs took an average of 295 days to resolve appeals between October 2004 and March 2005. The increased use of VTC and phone hearings, as compared to the ALJ hearing function prior to its transfer to HHS, contribute to the achievement of hearing cases within the 90-day deadlines.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: No independent evaluation has been completed on the Medicare Appeals program. The Office of Medicare Hearings and Appeals (OMHA) is currently undergoing its first independent evaluation with the Office of the Inspector General (OIG). The OIG is evaluating OMHA's use of video teleconferencing, telephone, and in-person hearings to adjudicate Medicare appeals for their impact in facilitating and accelerating the hearing process.

Evidence: Office of the Inspector General Request for Entrance Conference.