March 19, 2003
The Honorable Tommy G. Thompson Dear Secretary Thompson: We are writing in response to an article published in the New York Times on Monday, March 17, 2003, entitled: "Bush Pushes Plan to Curb Appeals in Medicare Cases." The Department of Health and Human Services’ (HHS) reported proposal to transform the Medicare appeals process causes us grave concern. According to the article, HHS is planning to transfer the independent Administrative Law Judges (ALJs) who hear appeals from Medicare beneficiaries from the Social Security Administration (SSA), an agency outside of Medicare, to the Centers for Medicare and Medicaid Services (CMS), the same agency that runs the Medicare program. The article goes on to report that HHS intends to defer some appeals to lawyers or hearing officers at HHS instead of permitting a fair hearing by an ALJ. Finally, HHS’s reported proposal would introduce a new standard of review by requiring ALJs to defer to policies adopted by CMS and its contractors. These reported proposed changes go against Congress’s intent to ensure that beneficiaries receive an impartial hearing and contradict principles for a fair appeals process that both parties have incorporated in various versions of patients’ rights legislation. Congress has recognized the efficiencies of transferring ALJs from SSA to HHS, as this would allow these ALJs to focus exclusively on Medicare cases. Congress, however, never intended for the ALJs to become part of CMS, the same agency that would have denied the claim a beneficiary would be appealing. The Medicare Regulatory and Contracting Reform Act, which passed the House on a unanimous bipartisan vote in December 2001, and has been reintroduced this year in the 108th Congress, would permit such a transfer provided HHS ensured that the transferred ALJs would remain independent. Locating the ALJs within CMS does not ensure independence. Replacing a hearing before an ALJ with a hearing before an HHS attorney or benefits counselor is equally inappropriate. An HHS attorney or benefits counselor has an interest in assuring that the agency’s regulations and policies are not overturned on an appeal and cannot be expected to render a fair decision on a case. During the debate on a patients’ bill of rights, any suggestion by either party that an employee of a health plan substitute for a hearing by an independent entity would have been regarded as outrageous. Any proposal to substitute HHS personnel for ALJs or to substitute binding arbitration for a fair hearing would also deny Medicare beneficiaries their constitutional rights to due process. The fair, impartial hearing required under the Administrative Procedures Act guarantees that this right is upheld. Finally, the reported proposal to change the standard of review from a de novo standard to one that gives deference to the decisions and policies of CMS and its contractors would further erode beneficiaries’ rights. Instead of taking a fresh look at a case as a de novo standard requires, ALJs would be required to assume the decision of CMS is correct and ask the beneficiary to prove otherwise. A hearing cannot be considered truly impartial if deference is given to one party at the start of the proceedings. Furthermore, there is a good reason that ALJs are not required to defer to Medicare policies; these policies are not law, but the result of administrative decisionmaking. The entire point of the ALJ fair hearing is to determine whether the Administration’s decisions are within the scope of the law. We do not disagree that the Medicare appeals process needs improvement, but any improvements must not harm a beneficiaries’ rights to a fair, independent review. As it now stands, claims take far too long to resolve, and the backlog of claims continues to increase. HHS needs to examine the current appeals process from top to bottom and improve the efficiency of operations. And additional funds may be needed to solve these inefficiencies. Stripping Medicare beneficiaries of fundamental rights, however, is not an acceptable solution to this problem. Sincerely,
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