A report issued on Monday by the Government Accountability Office (GAO) confirms what Medicare advocates already know:  The plan to transfer administrative law judges (ALJs) from the Social Security Administration (SSA) to the Department of Health and Human Services (HSS) is not well thought out and could compromise service to beneficiaries who appeal denials of Medicare claims.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) mandated that ALJs who hear Medicare appeals be transferred from SSA to HHS between July 1 and October 1, 2005.  The MMA also required SSA and HHS to develop a transfer plan which was to be reviewed by the GAO.  The transfer plan was submitted to Congress at the end of March 2004.  The GAO, in its review, determined that the transfer plan, while addressing each of 13 elements specified in the statute, lacks important information on how the elements are to be implemented.

Among the findings of most relevance to beneficiaries:

• The plan contains few milestones for completing tasks, such as developing training materials for ALJs, and does not assign responsibility to any group or office to oversee the tasks.  In addition, failure to specify details about key elements, such as geographic location of ALJs, makes it difficult to determine when tasks such as renting and furnishing office space will be completed.
   

• The plan lacks a contingency component to be used if the transfer cannot occur as scheduled.  Both SSA and HHS said in comments to the GAO report that HHS would continue to use SSA ALJs, but they did not provide details to the GAO about how this would be accomplished.
   

• The plan does not adequately explain its workload, staffing, and cost estimates. Since SSA has no formal timekeeping system for ALJs, each local office estimated the time its ALJs spend each month on Medicare cases.  In addition, the plan does not consider the future impact of changes made to the appeals process by the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) that have not yet been implemented.  For example, ALJs averaged 327 days to complete a Medicare appeal in fiscal year 2003, but BIPA requires ALJS to issue decisions within 90 days.
   

• The plan bases its estimate of the costs for processing appeals on the amount SSA is paid; however, the actual costs exceed this amount.  The plan contains no criteria or other measures to justify future requests for increased funding.
   

• The plan discusses electronic filing of appeals and the use of video-conferences instead of in-person hearings.  However, it does not discuss an anticipated time frame for issuing regulations to implement these new procedures. Without regulations, the GAO states, “…it is not clear how appellants will be assured of having sufficient access to ALJs…..what forum will be used to provide information to beneficiaries and providers, how access to this information will be provided, and what will be used as the basis for this information.”
   

• BIPA created a new level of review before the ALJ level, the Qualified Independent Contractor (QIC). According to the GAO, the Centers for Medicaid & Medicare Services (CMS) says they will have to delay implementation of the QIC level of review if final appeals regulations to implement BIPA are not issued by November 2004.  As a result, the GAO believes that HHS ALJs might operate under different regulations and processing systems, one following current rules and one following BIPA, depending on whether the claim under review has gone through the QIC process.
   

• The GAO states that the plan’s lack of specificity of geographic distribution of ALJs by itself threatens to undermine the timely transfer of ALJs.  Appellants cannot be assured of timely access to ALJs across the country without a geographic distribution plan. The location and size of offices affects hiring staff, including the transfer to HHS from SSA of current ALJs with Medicare expertise.
   

• SSA and HHS have not done any analysis concerning the use and establishment of videoconference sites. HHS does not discuss whether it will follow SSA guidance that beneficiaries should not travel more than 75 miles to a hearing, and it is unlikely that videoconference sites will be available within that radius in remote areas. Further, while ALJs told the GAO that beneficiaries prefer face-to-face hearings over videoconferences or teleconferences, HHS and SSA have not analyzed what proportion of appellants would be willing to use the new mechanisms.  The GAO acknowledges that “hearings by ALJs will provide an appellant’s sole opportunity to be heard in person, making access to them all the more important.”
   

• The plan lacks details concerning the content of training for new Medicare ALJs.  It also does not discuss who will be responsible for developing the materials or for presenting the training, or include steps to ensure the objectivity of ALJ training.  The GAO questions whether the time frame for hiring and training ALJs will be sufficient to allow HHS ALJs to begin hearing appeals in July 2005.
   

• The plan provides no specifics concerning how independence of ALJs will be maintained, and merely repeats the statutory requirements.  It contains no information about organization structure, management, or standards to evaluate whether independence is achieved.

The GAO recommends that SSA and HHS provide a more substantive and detailed transfer plan that includes milestones for implementation, identifies geographic distribution for both offices and videoconferencing sites, develops strategies for handling two separate processing systems if BIPA regulations are not implemented, and define the relationship of HHS ALJs to other organizations in HHS to ensure decisional independence.

The GAO report, Medicare:  Incomplete Plan to Transfer Appeals Workload from SSA to HHS Threatens Service to Appellants (GAO-05-45, Oct. 2004), is available at www.gao.gov.

Comments filed by the Center for Medicare Advocacy, Inc. to the ALJ transfer plan are available HERE.