[Federal Register: November 7, 2003 (Volume 68, Number 216)]
[Rules and Regulations]               
[Page 63691-63731]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07no03-21]                         


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Part IV





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 400, 405, and 426



Medicare Program: Review of National Coverage Determinations and Local 
Coverage Determinations; Final Rule


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 400, 405, and 426

[CMS-3063-F]
RIN 0938-AK60

 
Medicare Program: Review of National Coverage Determinations and 
Local Coverage Determinations

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

ACTION: Final rule.

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SUMMARY: This final rule will create a new process to allow certain 
Medicare beneficiaries to challenge national coverage determinations 
(NCDs) and local coverage determinations (LCDs). It will implement 
portions of section 522 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000. The right to challenge NCDs and 
LCDs will be distinct from the existing appeal rights that Medicare 
beneficiaries have for the adjudication of Medicare claims.

EFFECTIVE DATE: The provisions set forth in this final rule are 
effective December 8, 2003.

FOR FURTHER INFORMATION CONTACT: Vadim Lubarsky, 410-786-0840 for 
National Coverage Determinations. Misty Whitaker, 410-786-3087 for 
Local Coverage Determinations.

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.

    Note: The former name of the Centers for Medicare & Medicaid 
Services (CMS) was the Health Care Financing Administration (HCFA). 
The terms CMS and HCFA can be used interchangeably.

    In addition, because of the many terms to which we refer by acronym 
in this final rule, we are listing these acronyms and their 
corresponding terms in alphabetical order below.

ALJ--Administrative Law Judge
CAC--Carrier Advisory Committee
CMP--Comprehensive Medical Plan
DMERC--Durable Medical Equipment Regional Carrier
FI--Fiscal Intermediary
HCPP--Health Care Prepayment Plan
HMO--Health Maintenance Organization
LCD--Local Coverage Determination
LMRP--Local Medical Review Policy
M+C--Medicare+Choice
MCAC--Medical Coverage Advisory Committee
NCD-National Coverage Determination
QIO--Quality Improvement Organization
RHHI--Regional Home Health Intermediary

I. Background

A. Background of Rulemaking

    On August 22, 2002, we issued a proposed rule (67 FR 54534) 
implementing certain provisions of section 522 of the Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA), proposing a process for the review of local coverage 
determinations (LCDs) and national coverage determinations (NCDs). The 
notice and comment period closed on October 21, 2002. We received 31 
timely comments, which were quite useful in identifying issues and 
concerns. We have made significant changes to this final rule to 
address the public comments. We believe that these changes will 
contribute to a fairer and more efficient process. Significant changes 
to the proposed rule based on public comments, which are discussed in 
section III, below, include:
    [sbull] More broadly defining beneficiaries ``in need.''
    [sbull] Reducing the burden for physician certification 
requirements.
    [sbull] Allowing for participation in the BIPA section 522 
adjudicatory process as an amicus curiae (friend of the court) for NCD 
appeals.
    [sbull] Creating a mechanism to allow new evidence to be received 
subject to time-limited remands.
    [sbull] Expanding the effect of a final decision by the 
Administrative law judge (ALJ) or the HHS Departmental Appeals Board 
(Board).

B. Overview of Existing Statutes, Regulations, and Policies

    Medicare is the nation's largest health insurance program covering 
approximately 41 million Americans. Beneficiaries consist primarily of 
individuals 65 years of age or older, some disabled people under 65 
years of age, and people with end-stage renal disease (permanent kidney 
failure treated with dialysis or a transplant).
    The original Medicare program consists of two parts. Part A, known 
as the hospital insurance program, covers certain care provided to 
inpatients in hospitals, critical access hospitals, skilled nursing 
facilities, as well as hospice care and some home health care. Part B, 
the supplementary medical insurance program, covers certain physicians' 
services, outpatient hospital care, and other medical services that are 
not covered under Part A. While the original Medicare program covers 
many health care items and services, it does not cover all health care 
expenses. The Medicare statute specifically excludes from coverage 
certain items and services under section 1862(a) of the Social Security 
Act (the Act).
    In addition to the original Medicare program, beneficiaries may 
elect to receive health care coverage under the Medicare+Choice (M+C) 
program under Part C of the Medicare program. This program provides 
beneficiaries with various options, including the right to choose a 
Medicare managed care plan or a Medicare private fee-for-service plan. 
Under the M+C program, an individual is entitled to those items and 
services (other than hospice care) for which benefits are available 
under Part A and Part B. An M+C plan may provide additional health care 
items and services that are not covered under the original Medicare 
program.
    The Act gives beneficiaries specific rights to challenge particular 
types of decisions. We are committed to providing beneficiaries an 
opportunity to fully exercise these statutory rights. Moreover, we are 
committed to resolution of these disputes in a fair and efficient 
manner.

C. Claims Appeal Process

    Under the original Medicare program, a beneficiary may generally 
obtain health services from any institution, agency, or person 
qualified to participate in the Medicare program that undertakes to 
provide the service to the individual. Assuming that a qualified 
provider or supplier has furnished medical care, the health care 
provider or supplier, or, in some cases, a beneficiary would submit a 
claim for benefits under

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the Medicare program. If the claim is for an item or service that falls 
within a Medicare benefit category, is reasonable and necessary for the 
individual, and is not otherwise statutorily excluded, a government 
contractor (either a fiscal intermediary for claims under Part A or 
Part B, or a carrier for claims under Part B) would pay the claim. 
However, if the Medicare contractor determines that the medical care is 
not covered under the Medicare program, the Medicare contractor would 
deny the claim.
    This final rule does not seek to significantly alter the existing 
claims appeal process. Nor does this rule significantly alter our 
existing regulations for M+C beneficiaries as established at Sec.  
422.560 through Sec.  422.622. However, it does create an expanded 
definition of aggrieved party to include a beneficiary who received a 
service, but whose claim for the service was denied, extending an 
opportunity to that beneficiary to file a complaint under Sec.  426.400 
or Sec.  426.500. For further discussion of the claims appeal process 
please consult the proposed rule.

D. National Coverage Determinations (NCDs)

    Section 1869(f)(1) of the Act defines national coverage 
determination as ``a determination by the Secretary with respect to 
whether or not a particular item or service is covered nationally under 
title XVIII, but does not include a determination of what code, if any, 
is assigned to a particular item or service covered under this title or 
a determination with respect to the amount of payment made for a 
particular item or service so covered.'' For the full discussion of 
NCDs please consult our proposed rule at 67 FR 54535 published on 
August 22, 2002.

E. Local Medical Review Policy (LMRP)

    As explained in the preamble to the proposed rule, Local Medical 
Review Policies are contractor-specific policies that identify the 
circumstances under which particular items or services will be (or will 
not be) considered covered and correctly coded. An LMRP is not 
controlling authority for ALJs or the Board in the claims appeals 
process. These guidelines simply help to ensure that similar claims are 
processed in a consistent manner within those jurisdictions. LMRPs may 
not conflict with an NCD, but may be written in the absence of, or as 
an adjunct to, an NCD.
    An LMRP may contain any or all of the following:
    [sbull] Coding provisions.
    [sbull] Benefit category provisions.
    [sbull] Statutory exclusion provisions.
    [sbull] Provisions related to the authority under section 
1862(a)(1)(A) of the Act, which prohibits payment for any expenses 
incurred for services that are not reasonable and necessary for the 
diagnosis or treatment of illness or injury, or to improve the 
functioning of a malformed body member.
    Some LMRPs contain only a single type of provision, while other 
LMRPs contain all four types. The provisions described in bullets two 
through four above constitute coverage provisions.
    For further information on LMRPs please consult our proposed rule 
at 67 FR 54535.

F. Local Coverage Determinations

    Section 522 of BIPA does not use the term ``LMRP,'' but uses the 
term ``Local Coverage Determination'' (LCD). Section 522 of BIPA amends 
section 1869(f)(2)(B) of the Act, to define LCD as ``a determination by 
a fiscal intermediary or a carrier under part A or part B, as 
applicable, respecting whether or not a particular item or service is 
covered on an intermediary-or carrier-wide basis under such parts, in 
accordance with section 1862(a)(1)(A).''
    An LMRP may contain four different types of provisions (coding, 
benefit category, statutory exclusion, and reasonable and necessary). 
Section 1869(f)(2)(B) of the Act limits an LCD as a determination only 
under section 1862(a)(1)(A) of the Act's ``reasonable and necessary 
provision.'' For the purposes of this regulation, we will use the term 
``reasonable and necessary provision'' to describe section 
1862(a)(1)(A) of the Act. We intend to work with contractors to divide 
LMRPs into separate LCD and non-LCD documents; however, it is likely 
that LMRPs will continue to exist for the next several years. During 
this time, the term LCD will refer to both of the following:
    [sbull] Separate, stand-alone documents entitled ``LCDs'' that 
contain only reasonable and necessary language; and
    [sbull] The reasonable and necessary provisions of an LMRP.

G. Differences Between NCDs and LMRPs/LCDs

    Under our claims appeals process, ALJs may consider, but are not 
bound by, LMRPs or LCDs. Thus, an ALJ may rule that Medicare payment is 
due on a particular item or service received by a beneficiary, based on 
the particular circumstances represented by the case, even if the 
contractor's LMRP or LCD clearly prohibits payment for the particular 
service. (We note that a regulation which may impact ALJ consideration 
of LCDs in claims appeal cases has been proposed. See 67 FR 69328, 
69351.) On the other hand, contractors and ALJs are bound by NCDs. ALJs 
may not review an NCD.

H. Individual Claim Determinations

    In addition to policy determinations, contractors may make 
individual claim determinations, even in the absence of an NCD, LMRP, 
or LCD. In circumstances when there is no published policy on a 
particular topic, decisions are made based on the individual's 
particular factual situation. See Heckler v. Ringer, 466 U.S. 602, 617 
(1984) (recognizing that the Secretary has discretion to either 
establish a generally applicable rule or to allow individual 
adjudication).

I. Impact of Section 522 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA)

1. Overview of the Legislation
    Section 522 of the BIPA created a new review process that enables 
certain beneficiaries to challenge LCDs and NCDs. These appeal rights 
are distinct from the existing appeal rights for the adjudication of 
Medicare claims. This section also creates additional avenues for 
beneficiaries to seek judicial review. Before BIPA, the statute did not 
provide an administrative avenue to challenge the facial validity of 
LCDs or NCDs.
2. Differences Between the Claims Appeal Process and the LCD/NCD Review 
Processes
    The existing claims appeal rights were not significantly changed by 
section 522 of the BIPA. Our claims appeal regulations will continue to 
provide detailed administrative appeal rights for beneficiaries whose 
claims are denied. These claims appeal procedures permit beneficiaries 
to challenge the initial claims denial and include de novo review by an 
independent ALJ. If still dissatisfied after exhausting all 
administrative remedies, a beneficiary has a right to seek judicial 
review in a Federal district court. This claim appeal system enables 
beneficiaries to submit any relevant information pertaining to an 
individual claim. Moreover, because LCDs are not controlling 
authorities for ALJs, when an ALJ does not find an LCD persuasive, an 
individual claim appeal could result in the claim being paid without 
the need to challenge the underlying LCD. We have proposed rules that 
would modify the claims appeals process at 67 FR 69312 (November 15, 
2002).
    Section 522 of the BIPA created a review process that is separate 
and

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independent from the claims appeal process. This process will be 
different, because the nature of the challenge and the relevant 
evidence is different. The procedures used in this process will be 
different from the claims appeals process. Review of an LCD or NCD 
requires examination of an entire policy, or specific provisions 
contained therein, and not just one claim denial. Therefore, such 
reviews may lead to changes that impact other beneficiaries if the 
policies are found to be unreasonable. A beneficiary, thus, may elect 
to pursue a claims denial through the claims appeal process, seek 
review of an LCD or NCD using the process in this final rule, or both. 
In no way does filing a 522 challenge, or a decision on a 522 
challenge, affect beneficiary appeal rights or other issues that may 
arise in the claims appeal process.
    Complaints under section 522 of the BIPA are subject to standing 
rules. Namely, under section 1869(f)(5) of the Act ``[a]n action under 
this subsection seeking review of a national coverage determination or 
local coverage determination may be initiated only by individuals 
entitled to benefits under part A, or enrolled under part B, or both, 
who are in need of the items or services that are the subject of the 
coverage determination.'' In this final rule, we are interpreting the 
standing provision to include individuals who have received the item or 
service and whose initial claim was denied based on an LCD or NCD and, 
thus, are in need of Medicare coverage. We will also permit the estates 
of certain individuals to have standing. Only individuals who have 
standing may bring a challenge under section 522 of the BIPA, and in 
this final rule, we refer to these individuals as ``aggrieved 
parties.''
    As discussed in the proposed rule, the aggrieved party may not 
assign the right to bring a challenge under section 522 of the BIPA to 
anyone else. However, the aggrieved party is permitted to obtain 
assistance from any individual in pursuing the challenge. (We discuss 
the difference between assigning rights and receiving assistance in 
section IV of this final rule.)
    The definition of an ``aggrieved party'' will permit an individual 
to bring a challenge to an LCD or NCD in advance of receiving an item 
or service, or after the LCD or NCD is applied to a claim causing the 
claim to be denied. As we discuss in greater detail in section IV.E of 
this preamble, a successful challenge would permit the individual to 
have his or her specific claim reviewed without reference to the 
challenged policy. Claims that are otherwise payable can be paid. In 
addition, a successful challenge to an LCD or NCD may result in the 
following:
    [sbull] The policy being retired/withdrawn in its entirety, or
    [sbull] The policy being revised to effectuate the Board decision, 
or the ALJ decision if it is not appealed to the Board.
3. The Reconsideration Process
    We previously established a procedure by which individuals could 
seek reconsideration of policies established in an LCD or NCD. The 
procedures for NCDs were set forth in the September 26, 2003 notice (68 
FR 55634, 55641). The procedures for LCDs were set forth in the Program 
Integrity Manual, Chapter 13, Section 11.
4. The Role of Other Interested Individuals or Entities
    The section 522 review process is intended to be initiated only by 
aggrieved parties. However, consistent with several public comments, we 
are expanding Sec.  426.510(f) to allow for limited participation in an 
NCD challenge by other individuals as amicus curiae when the 
individuals or entities meet the standards set forth in these 
regulations. Please note that the reconsideration process described in 
section I.I.3 of this preamble remains the appropriate process by which 
all other interested entities may submit new evidence pertaining to the 
review of current LCDs and NCDs.
5. Differences Between an LCD/NCD Review and an LCD/NCD Reconsideration
    The main difference between an LCD/NCD review under section 522 of 
the BIPA and an LCD/NCD reconsideration is the avenue an individual 
chooses to take to initiate a change to a coverage policy and who may 
initiate the review. All interested parties, including an aggrieved 
party, may request a reconsideration of an LCD or NCD, rather than 
filing a complaint to initiate the review of an LCD or NCD. Conversely, 
only an aggrieved party may file a complaint to initiate the review of 
an LCD or NCD. If the aggrieved party believes that we, or the 
contractor, misinterpreted evidence or excluded available evidence in 
making the coverage determination or has new evidence to submit, then 
the aggrieved party has the option to file a request for a 
reconsideration by the contractor or us, respectively, or to file a 
complaint to seek review by an adjudicator.
    In the reconsideration process, all interested parties, not just 
aggrieved parties, have the opportunity to submit new scientific and 
medical evidence for review by individuals with medical and scientific 
expertise. The reconsideration process permits experts to make 
judgments about those policies, rather than using an adjudicatory 
proceeding.

II. Provisions of the Proposed Rule

    For a discussion of the specific provisions of the proposed rule, 
please see 67 FR 54534-54563. The significant changes to the final 
rule, based on public comments, are reflected in section III, below.

III. Analysis of and Response to Public Comments

    We received 31 comments from the public on the proposed rule. 
Summaries of the major comments received and our responses to those 
comments are set forth below.

Definition of an NCD

    Comment: We received several comments on our interpretation of what 
qualifies as an NCD, and which policies are subject to review. Some 
public comments stated that we interpreted the statute too narrowly, 
and that additional policies should be subject to review; other public 
comments suggested that we interpreted the statute too broadly, and 
that benefit category determinations should not be defined as NCDs, and 
should not be subject to review before the Board.
    Response: Our definition of an NCD is consistent with the statutory 
language, and we are not accepting the public comments that suggest the 
definition is either too broad or too narrow. We continue to believe 
that the statute is clear, and that the Congress has created a new 
definition of NCD to include benefit category determinations. The 
Congress's definition of an NCD is now broader than the prior statute 
at section 1869(b)(3) of the Act. Moreover, it is broader than the 
definition of LCD that is specifically limited to determinations made 
in accordance with section 1862(a)(1)(A) of the Act. We presume that 
the Congress acted intentionally and precisely in defining an NCD, and 
we are following that definition in this final rule.

Definition of LCD

    Comment: One commenter suggested that an LCD should be synonymous 
with LMRP.
    Response: Because the statutory definition of an LCD is limited to 
the reasonable and necessary provisions in section 1862(a)(1)(A) of the 
Act, we could not make the definition of an LCD synonymous with the 
definition of an LMRP. As discussed earlier in this preamble, an LMRP 
may contain coding,

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benefit category, and statutory exclusion provisions that are not based 
on section 1862(a)(1)(A) of the Act.
    Comment: Several commenters suggested that both procedure codes and 
diagnosis codes be included within the definition of LCD. These 
commenters stated that the final regulation should not preclude an 
aggrieved party from challenging the reasonable and necessary 
provisions of an LCD that contain diagnosis codes.
    Response: An LCD or LMRP provision stating that a service is not 
reasonable and necessary for specified diagnoses (whether listed in 
text or listed by ICD-9 diagnosis code) is considered part of the LCD.

Definition of an Aggrieved Party

    Comments: We received two comments in support of our proposed 
definition of an aggrieved party as a beneficiary in need of a service 
and who has not yet received the service that is the subject of the 
coverage determination. While these commenters felt that it is correct 
to allow aggrieved parties to initiate the review of an LCD or NCD, 
they wrote that opening up the LCD/NCD review process to beneficiaries 
who have already received the service would result in unnecessarily 
complicated adjudications. However, over half of all commenters on the 
rule suggested that the definition was too narrow and should be 
expanded. Some commenters stated that the proposed definition was far 
too restrictive and suggested that we remove the requirement that the 
service not be received at the time the complaint is filed. One 
commenter pointed out that the proposed definition would insulate 
certain LCDs and NCDs from ever being challenged because some LCDs/NCDs 
address services that are only used in emergency or urgent situations 
where the beneficiary would be incapable of filing a challenge prior to 
receiving the service. Some commenters suggested that beneficiaries 
would lose their section 522 rights if they chose not to forego urgent 
treatment. One commenter suggested that we revise the definition to 
require that the beneficiary be in need of coverage for a service. One 
commenter specifically requested the establishment of an emergency 
appeals process.
    Response: In response to these comments, we have interpreted the 
statutory requirements more broadly and have expanded the definition of 
aggrieved party to require that the beneficiary be in need of coverage 
of a service. Therefore, the definition includes beneficiaries who have 
already received the service. We believe this change obviates the need 
for an emergency appeals process because a beneficiary can obtain an 
emergency service and then seek review without forgoing his or her 
rights. In order to define which beneficiaries have standing as 
aggrieved parties, we have added a requirement in Sec.  426.400(b)(2) 
and Sec.  426.500(b)(2) that aggrieved parties, who have received a 
service and have filed a claim, must file their section 522 challenge 
within 120 days of the date of the initial denial notice from the 
contractor.
    Comment: One commenter stated that beneficiaries should be allowed 
to challenge coverage NCDs as well as non-coverage NCDs.
    Response: We conclude in this final rule that a beneficiary is 
aggrieved by an NCD only if it denies coverage for a service which that 
beneficiary needs. Therefore, the ALJ/Board may accept a complaint 
regarding an NCD that limits coverage. Since the Congress provided for 
review upon the filing of a complaint by an aggrieved party, we believe 
that the Congress intended the process to be available only when the 
beneficiary is in need of coverage for an item or service that would be 
denied or has been denied, under an LCD or NCD.

Allowing a Beneficiary To Assign Appeal Rights

    Comment: We received a number of public comments suggesting that 
the aggrieved party should be able to assign LCD or NCD review rights 
under section 522 of the BIPA to another person or entity. Several of 
the comments suggested that the procedures were complex and that, by 
enabling a beneficiary to assign the rights to another person, it would 
relieve the beneficiary of the burden of participating in the process 
and would be more equitable, or, perhaps, more efficient. One commenter 
suggested that permitting providers to be aggrieved parties would have 
been consistent with an earlier proposal in a Senate bill. Some 
commenters suggested that allowing physicians or other interested 
parties to assist the beneficiary in requesting review would be useful 
to beneficiaries. Other commenters recognized that the Medicare program 
permitted the assignment of rights in other contexts.
    On the other hand, one commenter noted that the statute requires a 
beneficiary in need to initiate a review. Another commenter agreed with 
our proposal, and believed it would be inappropriate under the statute 
to permit the assignment of rights to request a review of an LCD or NCD 
to other interested parties. That commenter noted that the ``Medicare 
program is fundamentally a beneficiary, or patient, program designed to 
assure access to clinically sound services.''
    Response: We are retaining our position that an aggrieved party may 
not assign legal rights to request a review of an LCD or NCD to a third 
party, but are clarifying our rules to ensure that a challenger is not 
precluded from obtaining assistance or representation from individuals 
or entities who may assist the beneficiary in pursuing the individual's 
appeal.
    We agree with the commenter who suggested that the statute was 
clear in this regard. The standing provision in section 1869(f)(5) of 
the Act is precise. Moreover, as one commenter correctly observed, a 
broader standing provision, that would have enabled other interested 
parties to file complaints about LCDs and NCDs, existed in earlier 
drafts of the legislation. It appears that the Congress's narrowing of 
the language in the final bill was intentional and deliberate. We do 
not believe it would be consistent with this history to expand the 
scope of individuals who have a legal right to initiate and pursue a 
challenge to an LCD or NCD.
    We do, however, agree that beneficiaries may seek assistance from 
knowledgeable physicians, suppliers, providers, manufacturers, and 
attorneys in developing the individual's request for review. The 
individual is free to consult with these individuals and to follow 
those suggestions, recommendations, or advice. Thus, while these 
individuals may assist the beneficiary in navigating the adjudicatory 
process in an efficient manner, the beneficiary may not assign his or 
her legal right to request a review of an LCD or an NCD to a third 
party.
    Comment: A commenter suggests that dually eligible Medicare and 
Medicaid beneficiaries have already assigned rights to third party 
payment to Medicaid agencies by virtue of sections 1902(a)(45) and 1912 
of the Act, and Sec.  433.137 of the Medicaid regulations, and that 
States, therefore, should be allowed to participate in the process.
    Response: We disagree with the commenter. The provisions of the Act 
and regulations cited concern the assignment of rights to seek medical 
support or payments and in providing information to assist the State in 
pursuing financially liable third parties. In contrast, a person 
initiating a challenge to an LCD or NCD is seeking to have a coverage 
policy held invalid and is not establishing a right to medical support 
or payment. Should a dually eligible beneficiary prevail in a policy 
challenge, a State may benefit in the

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claims adjudication process if it is determined that the policy was 
invalid. Furthermore, although this adjudicatory process is not 
available to a State directly, a State may always request 
reconsideration of an LCD or NCD.

Dismissal of Complaint Upon Death of Beneficiary

    Comments: We received comments about the proposed policy that would 
have dismissed complaints if the beneficiary died after initiating a 
section 522 challenge. Approximately one third of the commenters were 
opposed to this policy, and only one supported it. That commenter 
concluded that since the deceased would no longer be considered ``in 
need,'' it would be appropriate to dismiss the claim. The majority of 
those who commented objected to permitting an estate to appeal a claim 
without permitting the estate to continue a challenge to the policy 
that could determine the outcome of the appeal, thereby denying 
meaningful relief. One commenter indicated that the policy of automatic 
dismissal of a complaint upon death runs contrary to Federal common law 
that allows for the survival of remedial, as distinguished from penal 
or punitive, claims. In describing the burdens created by an automatic 
dismissal, the commenters referred to the potential for delay, the 
requirement to seek meaningful redress in Federal court rather than 
through the administrative appeals process, wasted resources expended 
prior to the death of the beneficiary in LCD/NCD challenges, and the 
potential for devastating financial burdens on the estates of deceased 
beneficiaries.
    Response: We have revised the final rule to permit the estate of a 
beneficiary, as a successor in interest, to continue a challenge in 
those cases where the aggrieved party received the service and filed a 
timely complaint prior to death. In addition, we will allow an estate 
to initiate a challenge within 120 days of the issuance of a denial 
notice.

Acceptability of Complaints

    Comments: Some commenters stated their belief that the complaint 
filing process in the proposed rule was overly complex. One commenter 
suggested that complaints should be deemed acceptable if sent to the 
ALJ, the local Social Security office, carrier or fiscal intermediary 
(FI), or the Board.
    Response: We have revised the final rule to simplify and clarify 
the complaint filing procedures and to make them more beneficiary-
friendly. We have eliminated a number of requirements that we believe 
are unnecessary. However, it is the duty of the beneficiary to file the 
complaint correctly under these regulations. Nevertheless, we will 
issue instructions advising our contractors of procedures for a 
misdirected LCD/NCD complaint. These instructions will inform the 
contractor that it should forward the complaint to the proper location 
and notify the beneficiary.

Physician Certification

    Comment: Some commenters stated that physician documentation of 
medical need is a reasonable way of determining whether beneficiaries 
have a basis for challenging LCDs/NCDs. However, other commenters felt 
that the physician certification requirements imposed unnecessary new 
paperwork burdens on physicians. Some commenters argued that it was 
unrealistic to require physicians to be certain of the intricacies of 
Medicare policies. Others felt these requirements would prove to be a 
significant impediment to the process and suggested that the original 
physician order for the service suffice as certification that the 
beneficiary needed the service. Finally, a number of commenters 
suggested that non-physician practitioners should be allowed to 
document the beneficiary's need.
    Response: We have revised the certification requirements at Sec.  
426.400(c) and Sec.  426.500(c) in this final regulation by clarifying 
that the certification of need can be in the form of a written order 
for the service in question or other documentation in the medical 
record, thus significantly simplifying the certification requirements. 
We have also removed the requirement that the practitioner predict that 
payment would be denied. However, we continue to believe that the 
beneficiary's treating physician--not any treating practitioner--is 
best situated to determine ``in need'' status, both because he or she 
is the primary caregiver and also is responsible for the beneficiary's 
overall care.

Joint Complaints

    Comments: We proposed permitting multiple parties to file a single 
complaint. We received one comment in support of the joint complaint 
option noting that it permits more effective resource utilization in 
addressing complaints. One commenter recommended that the criterion for 
joint complaints should not require ``a similar medical condition,'' 
rather that the adverse impact created by the LCD or NCD should create 
standing. Another commenter asserted that requiring a similar medical 
condition was unnecessary and inconsistent with the Federal Rules of 
Civil Procedure and that requiring a challenge to the same provisions 
of the same policy should be sufficient.
    Response: In response to the comments concerning the requirement of 
a ``similar medical condition'' for the filing of a joint complaint, we 
believe that this requirement is reasonable, given the specific focus 
of these adjudications. Moreover, the Federal Rules of Civil Procedure 
are not controlling on our administrative proceedings. We believe that 
these procedures appropriately fit the specific requirements for LCD 
and NCD adjudications and are consistent with the Secretary's authority 
(42 U.S.C. 405(a)). Moreover, we do not eliminate the possibility of 
combining actions based upon different medical conditions if a party 
believes, and the ALJ/Board finds, that there are other bases for 
consolidating complaints.

Adjudicator Consolidation of Complaints

    Comment: We received three comments on adjudicator authority to 
consolidate complaints. One commenter recommended merging the 
provisions for joint and consolidated complaints or, alternatively, 
having the provisions cross-reference one another. Another commenter 
objected to the consolidation of complaints without the aggrieved party 
having reviewed the other complaint(s) to determine whether or not the 
consolidation might negatively impact the individual's specific issue 
with the LCD or NCD. Another commenter questioned whether the 
consolidation might result in lengthening the process if an adjudicator 
combined a later complaint with an earlier one.
    Response: We believe that preserving the procedures for aggrieved 
parties to file joint complaints and for adjudicators to consolidate 
complaints promotes efficiency in adjudicating challenges to LCDs and 
NCDs. While we recognize that the two procedures support a common goal, 
we note that they are separate and distinct and therefore should remain 
in their respective sections. With respect to the comments concerning 
the possibility that a party might find consolidation adverse or 
burdensome, we believe it is appropriate for the adjudicator to 
determine whether consolidation is appropriate under the specific 
circumstances. We will allow any aggrieved party who feels 
disadvantaged by consolidation to raise these issues to the ALJ/Board. 
We have added language to Sec.  426.410(e) and Sec.  426.510(e) to

[[Page 63697]]

clarify that the ALJ/Board may not consolidate complaints if doing so 
would unduly delay the ALJ/Board decision.

Amending a Complaint

    Comment: Several commenters indicated that they were concerned that 
the proposed rule allowed a beneficiary to amend a complaint only once 
and then required the ALJ/Board to dismiss the challenge if the 
aggrieved party failed to submit an acceptable amended complaint.
    Response: The statute requires that the section 522 challenge begin 
with the filing of a complaint. We believe that it would be inefficient 
if an aggrieved party had an unlimited number of attempts to file an 
acceptable complaint. A complaint is a significant document in 
identifying issues on appeal and leads to the production of the record. 
The final rule continues to allow the aggrieved party one opportunity 
to amend an unacceptable complaint before a time penalty is imposed.

Withdrawal of Complaint--Six-Month Limit on Refiling

    Comment: We received two comments in support of our proposal to 
establish a six-month limitation if an aggrieved party withdraws a 
complaint. One commenter was opposed, stating that if the aggrieved 
party has new evidence, he or she should be allowed to file another 
complaint regardless of the timeframe. We received two additional 
comments suggesting that, if the aggrieved party has new evidence, he 
or she should be allowed to file another complaint without a time 
limitation.
    Response: We continue to believe that the six-month time limit is 
necessary to ensure the efficient use of scarce resources. If the 
aggrieved party withdraws a complaint, that aggrieved party must still 
wait six months before filing a new complaint on the same LCD/NCD. 
However, we have clarified that, once an acceptable complaint has been 
filed, if the aggrieved party identifies new evidence that was not 
available at the filing of the original complaint, the aggrieved party 
may submit that new evidence at any time without withdrawing and 
resubmitting the complaint.

Aggrieved Party Submitting a Brief

    Comment: We received one comment suggesting that an aggrieved party 
should have the opportunity to submit a brief after the aggrieved party 
has had the opportunity to review the record upon which the LCD or NCD 
was based.
    Response: We agree that an aggrieved party should have an 
opportunity to make his or her case. In seeking to make this process 
accessible to Medicare beneficiaries, who may or may not have legal 
representation, we did not want to mandate that parties submit legal 
briefs in support of their claims. However, in view of the changes we 
have made to the review process in this final rule, particularly for 
the introduction and use of new evidence, we are clarifying that, while 
briefs are not required in all cases, the adjudicator may request or 
permit the parties to submit written briefs and that the aggrieved 
party has the option to retain representation and to submit these 
written briefs.

Educating Beneficiaries and Providers About the Process

    Comment: Many commenters stressed the importance of having a well-
constructed and advertised educational campaign for providers and 
beneficiaries. Some commenters suggested that a template for an 
acceptable complaint, a physician's certification, and an acceptable 
appeal of an ALJ's decision be available on the CMS Web site to assist 
beneficiaries in filing an acceptable complaint. Another commenter 
suggested that beneficiaries should be informed of their rights in the 
LCD or NCD review process and that one means of providing this might be 
to include it with advanced beneficiary notice (ABN) forms. Another 
commenter encouraged us to inform beneficiaries clearly as to their 
financial obligations while the complaint is pending. Several other 
commenters suggested that we provide model language for use by Medicare 
managed care organizations to use in their evidence of coverage 
documents.
    Response: In the proposed rule (67 FR 54547), we explained our 
intent to produce a user-friendly guide that beneficiaries may use in 
accessing the section 522 process. We will work with the ALJs and Board 
to develop educational materials to inform the public of--
    (1) The elements of an acceptable complaint;
    (2) The standards for treating physician certifications; and
    (3) The elements of an acceptable appeal of an ALJ decision. We 
intend to prepare this educational material (including templates) and 
make it publicly available, but we will not delay implementation of the 
final rule to wait for these materials to be developed. We will work 
with ALJs and the Board to make available to Medicare managed care 
organizations and Medicaid State agencies, relevant information on 
complaints and decisions. We do not intend to revise ABNs as part of 
this educational program.

Allowing Participation by Interested Entities

    Comment: Several commenters believed that we should allow for more 
public participation of interested entities in the process, along with 
submission of evidence by those parties.
    Response: The LCD and NCD reconsideration processes currently exist 
to give all interested entities the right to request and participate in 
reconsiderations of these policies. These processes will continue to 
exist to provide an avenue for all interested entities to submit 
evidence that they consider pertinent. In contrast, the adjudicatory 
process created by section 522 is initiated only by a beneficiary in 
need of coverage, and not by all interested individuals. We are 
concerned that allowing any member of the public to submit evidence 
would make these adjudicatory proceedings unwieldy. We are modifying 
this final rule at Sec.  426.513, however, to permit participation as 
amicus curiae, in the NCD process. We recognize that NCD reviews may 
impact a large number of stakeholders apart from the aggrieved parties 
initiating the review. We believe that the nationwide effect of an NCD 
review decision requires public notice and opportunities for input in a 
way that LCD reviews do not. In addition, this impact may be 
significant, even where no change to existing policy results from the 
review, such as when the Board concludes that an NCD record is complete 
and contains adequate information to support the validity of the NCD.
    Anyone who has information that can assist the Board in reviewing 
an NCD challenge is permitted to request participation as an amicus 
curiae. Given the nationwide effect of an NCD review decision, the 
process must strike a careful balance between providing reasonable 
opportunities for input by those who may ultimately be substantially 
affected by any decision, and creating a workable process to address 
the issues presented by the aggrieved party seeking review. Because of 
the regional nature and high number of LCDs, allowing the opportunity 
for amicus curiae participation in the review of LCDs would create an 
inefficient process. However, at any time, any party within the 
contractor's jurisdiction who wishes to bring forward new evidence 
relating to a policy may do so through the contractor's LCD 
reconsideration process. This process is frequently used

[[Page 63698]]

and is an efficient method to bring new evidence to the contractor's 
attention.

Making NCD Complaints and Documentation Available and Announcing the 
Proceedings

    Comments: A number of commenters suggested that all interested 
parties should have notice of an LCD/NCD complaint and have the 
opportunity to participate in the proceedings. One commenter 
recommended the use of an on-line docketing system whereby the public 
could learn of LCD/NCD challenges and determinations made by the ALJs 
and Board in these cases.
    Response: The statute does not require that we develop such a 
nationwide online docketing system. While the concept is interesting, 
an online docketing system is beyond the scope of this regulation. 
Currently, we are exploring options for the best way to docket and 
track challenges.
    Changes in NCDs may determine the health care services, 
technologies, and treatments to which beneficiaries have access. The 
denial of coverage for a service that is allegedly reasonable and 
necessary may have an adverse impact on others across the nation. 
Hence, it is important that the review decisions are based on a 
comprehensive and well-developed record.
    In addition, the general public may have a substantial interest in 
the outcome of some NCD reviews. NCD review decisions will constitute a 
legal precedent with respect to the outcome. Board decisions will 
clarify the extent of available Medicare coverage.
    Therefore, under the final rule, the Board will make available to 
the public information about all NCD complaints by means of posting on 
the Internet. This method will provide the broadest possible public 
notice, without unreasonably delaying review of the complaint already 
filed. Any request to participate as an amicus must then generally be 
filed within the timeframes set by the Board.
    Although LCDs are also important, LCDs are regional in nature. 
Because LCD reviews generally impact only a limited geographic area, we 
will not require the ALJs to make public all LCD complaints.

Notice to Managed Care Organizations (MCOs) and State Agencies

    Comment: Several commenters suggested that Medicare managed care 
organizations (MCOs) and State agencies receive timely notification 
when a challenge is filed at each stage of review, when an ALJ/Board 
decision is made, and when a revised LCD/NCD is effective. One 
commenter suggested that the regulation be revised to require the ALJ 
or the Board to notify MCOs when an enrollee challenges an LCD/NCD.
    Response: We will work with the ALJs and the Board to make 
available to MCOs and State agencies, relevant information about 
complaints and decisions.

Mediation

    Comment: We received one comment for and one comment against using 
mediation in an evidence-based review process.
    Response: We have added a provision authorizing the Board to stay 
the review proceedings for a reasonable time when all parties 
voluntarily engage in settlement negotiations, with or without the 
assistance of an impartial mediator. In general, we do not consider it 
appropriate to negotiate about clinical issues that affect the health 
or safety of Medicare beneficiaries. In some instances, however, it may 
be worthwhile to explore alternative and less costly means of resolving 
a dispute. Mediation may be useful to narrow the issues in dispute in 
order to make the review process more efficient. Using alternative 
means of resolving disputes is consistent with the Federal 
Administrative Dispute Resolution Act and HHS policy. Under this final 
rule, the ALJ or the Board could not compel mediation. Where the 
parties consent to mediation, the ALJ or the Board may provide an 
impartial mediator or assist the parties in finding an impartial 
mediator acceptable to them.

Automatic Dismissal When a Contractor Retires an LCD or CMS Withdraws 
an NCD

    Comments: One commenter agreed that, if an NCD is withdrawn, the 
purpose for the review has been eliminated and the claims can be 
adjudicated without consideration of the repealed NCD, but objected to 
the statement that the repeal will have the same effect as a decision 
under Sec.  426.560(b). The commenter, however, interpreted section 
Sec.  426.560(b) as permitting a contractor to continue to rely on a 
withdrawn NCD.
    Response: Retiring an LCD or withdrawing an NCD would result in the 
retired/withdrawn policy no longer applying in the claims adjudication 
process for services rendered on or after the date that the policy is 
retired/withdrawn. Moreover, the aggrieved party would be granted 
individual claim review. Since a claimant would receive the same relief 
that would have been available had the adjudicator found that the 
relevant LCD or NCD was not valid, there would be no reason to continue 
the appeal.
    Comment: One commenter recommended against automatic dismissal if a 
policy were retired or withdrawn. As an alternative, the commenter 
suggested giving the adjudicator discretion to dismiss ``where the 
decision normally occurs'' and opined that since a retired or withdrawn 
policy may be reconsidered or reaffirmed, the automatic dismissal 
provision effectively nullifies the entire policy appeal process.
    Response: When we retire/withdraw an LCD/NCD we will not apply 
those policies for services furnished after the retirement/withdrawal 
date and we will reprocess the aggrieved party's affected claims 
without applying the retired/withdrawn policy. If, in the future, the 
contractor or CMS issues a new LCD/NCD on that subject the change would 
be adopted after an opportunity for public comment. Any such change 
would be prospective in nature, and a new LCD/NCD would be subject to 
challenge under this final rule.
    Comment: Two commenters indicated that automatic dismissal would 
not permit an ALJ's or the Board's findings to be used in the appeal of 
claims decisions based upon the invalidated policy.
    Response: Because the ALJ or the Board would not be required to 
make a decision in a case where the contractor/CMS retired/withdrew the 
LCD/NCD, there would be no Board decision with precedential effect. 
However, we believe our approach conserves resources for all parties 
and adjudicators.

Timeline for Beneficiary Getting the LCD/NCD Record

    Comment: We received one comment on the timing of the LCD/NCD 
record production requirement. That commenter suggested that we should 
create a 45-day response timeframe to ensure that the review process 
proceeds without inordinate delays.
    Response: We agree that the establishment of timeframes will 
promote the efficiency of the BIPA 522 process. However, we believe 
that the time required will vary with the size and scope of the record 
requested. Therefore, we have revised the final rule at Sec.  
426.410(d) and Sec.  426.510(d) to state that the contractor or CMS 
must generally produce the record within 30 days, subject to extension 
for good cause shown.

Timeline for an Aggrieved Party to Review the LCD or NCD Record

    Comment: One commenter suggested that 30 days might not be enough 
time

[[Page 63699]]

for the aggrieved party to review the record, particularly for an 
individual pursuing a complaint with minimal outside assistance. The 
commenter recommended a 45-to-60-day timeframe for the aggrieved party 
to respond.
    Response: We accept the commenter's suggestion to increase the time 
for review of the record. While we have maintained the 30-day 
timeframe, we have added an exception for good cause shown, for review 
and response to the relevant LCD or NCD record, if additional time is 
required.

No Evidence To Support an LCD/NCD

    Comment: We received several comments stating that where no record 
exists to support an LCD/NCD, the beneficiary should not have to 
introduce new evidence.
    Response: We expect it would be a rare event that no record exists. 
In that rare event, we agree with the commenter. We have made changes 
to clarify that, in the rare event that no evidence exists to support 
an LCD or NCD, we will either voluntarily retire/withdraw the policy, 
or request the ALJ/Board to strike down the applicable provision(s) of 
the policy, whichever is the more expeditious option.

New Evidence

    Comment: Approximately half of the commenters made comments on the 
issue of new evidence. Most of the comments stated that allowing us to 
have an automatic stay, coupled with the absence of specific deadlines, 
would unduly delay the review process. Other commenters suggested that 
the stay should be a matter of ALJ/Board discretion. Numerous comments 
specifically requested that the ALJ or Board review all evidence, 
including new evidence, to allow for a more efficient process.
    Response: We agree that a more efficient and time-sensitive 
adjudicatory process is important, and we have addressed several 
aspects of these comments in the final rule. We have taken considerable 
steps to create an efficient adjudicatory process that still preserves 
the important role of the clinical and scientific experts in making 
LCDs and NCDs.
    We have eliminated the proposed automatic stay when new evidence is 
submitted. Instead, our final rule will require that, if new evidence 
has been received by the ALJ/Board that would otherwise be admissible, 
the ALJ/Board will review the new evidence after the period for 
discovery and the taking of evidence is complete, and decide if it has 
the potential to significantly affect the LCD/NCD provision in 
question. If not, the review will continue. If the ALJ/Board determines 
that the new evidence has the potential to significantly affect the 
validity of the LCD/NCD, the ALJ/Board will stay the proceedings and 
forward the material to the contractor or to us for a brief review. The 
contractor/CMS will have 10 days to provide a statement indicating 
whether or not: (1) A reconsideration will be initiated, or (2) the 
policy will be revised or retired/withdrawn. If the Agency undertakes a 
reconsideration, it must be completed within a period set by the ALJ/
Board that is not more than 90 days. We believe this 90-day timeframe 
is reasonable due to the potentially large body of evidence that must 
be reviewed. Following a reconsideration, the contractor/CMS will 
prepare and submit the new LCD/NCD record, and the ALJ/Board 
proceedings will continue on the revised LCD/NCD. If the contractor/CMS 
chooses not to initiate a reconsideration, the ALJ/Board proceedings 
will continue on the original LCD/NCD as supplemented with the new 
evidence. The aggrieved party will have an opportunity to submit a 
statement about whether the record still fails to support the validity 
of the LCD/NCD. The contractor/CMS will have an opportunity to respond. 
No further evidence will be taken at this stage, and the ALJ/Board will 
proceed to make a determination on the merits.
    We have also made changes to the definition of ``new evidence'' to 
clarify that new evidence means evidence that was not considered by the 
contractor or CMS.

When Does the Review Stop?

    Comments: In the proposed rule, we specifically asked for comments 
on alternatives for structuring the review process. We proposed to 
divide the decision making process for cases at the ALJ/Board level 
into two stages and thereby establish the prerequisites for discovery 
under the statutory framework set forth at section 
1869(f)(1)(A)(iii)(I) and section 1869(f)(2)(A)(i)(I) of the Act. Under 
the proposed regulation, in order to obtain discovery, a challenger was 
required to first file a motion with the Board or ALJ alleging that the 
record was incomplete or lacked adequate information to support the 
validity of the determination. Only if the record was incomplete or 
otherwise inadequate would an aggrieved party be able to pursue 
discovery. Even if the challenger did not file such a discovery motion, 
however, a beneficiary could seek a decision on whether the 
determination was based on reasonable findings of fact, reasonable 
interpretations of law, and reasonable applications of fact to law.
    We outlined another possible approach in our proposed rule at 67 FR 
54542. That approach would require a party to file a statement 
regarding whether that party considers the record complete and 
adequate, and an ``offer of proof'' supporting factual allegations 
about incompleteness. The adjudicator would then decide whether the 
record is complete and adequate to support the decision and would 
prepare a written decision. If the adjudicator found that the record 
was complete and adequate, this decision would be a final Agency action 
appealable to the court.
    There were two public comments on this issue. One commenter 
suggested that, if the adjudicator found that the record was incomplete 
or inadequate, the Board would be legally required to determine that 
the ``NCD is not reasonable.'' This commenter believed that the Board 
would be precluded from allowing discovery or any other new evidence at 
this point, but must automatically rule against CMS. A commenter 
appeared to prefer the following approach: ``If, upon review of the 
record, the aggrieved party does not have objections to the 
completeness or adequacy of the LCD or NCD record, then what is the 
basis of the aggrieved parties complaint? Presumably the coverage 
policy would be challenged on the basis that it is inconsistent with 
current clinical or scientific evidence. In such case, a motion by the 
aggrieved party would appear to be a necessary part of the complaint 
process and an appropriate step given the limited time and resources of 
adjudicators, CMS and contractors.'' The commenter ``believed that the 
aggrieved party should challenge the completeness or adequacy of the 
record before an adjudicator should make a determination with respect 
thereto.''
    Response: We have re-examined our proposed procedures in light of 
the public comments and the unique statutory language in section 
1869(f)(1)(A)(iii)(I) and section 1869(f)(2)(A)(i)(I) of the Act. In 
this final rule, we clarify at Sec.  426.400 and Sec.  426.500, the 
procedural and substantive steps involved in the appeal. The revised 
procedures incorporate approaches from both alternatives discussed in 
the proposed rule. We believe that the revised procedures are fair, 
consistent with the statutory framework, and will enable the ALJs and 
Board to fairly resolve challenges to LCDs and NCDs in an expeditious 
manner.
    The administrative review provisions in BIPA section 522 are 
unique. While

[[Page 63700]]

the reviews are, at the outset, based on the medical and scientific 
evidence that the contractor/CMS considered in issuing the LCD/NCD, and 
the statute requires that the adjudicator ``shall review the record,'' 
it does permit discovery in some limited circumstances and also permits 
that adjudicator to consult with ``appropriate scientific and clinical 
experts.'' Obviously, new evidence obtained through discovery or 
testimony could not have been considered by the agency when the policy 
predates the new evidence. Thus, the procedures are not entirely based 
on the record, but new evidence and testimony may influence the ALJ's/
Board's decision in some cases.
    It is possible that an aggrieved party would attempt to challenge 
an LCD/NCD for several reasons. For instance, a challenger may believe 
that a policy that was correct when it was issued has become outdated 
and is no longer valid in light of advances in medicine. Those 
challengers may be most interested in presenting new medical evidence 
in support of changing the policy rather than challenging the original 
factual basis for the policy. As noted previously, we are modifying our 
procedures to allow a party to submit new evidence to the ALJ/Board. We 
have modified the procedures at Sec.  426.340 to allow the ALJ/Board to 
make a preliminary determination on whether the new evidence submitted 
would have a significant bearing on the validity of the LCD/NCD. If the 
evidence is found significant, it would be sent to the contractor/CMS 
to determine whether the contractor/CMS agrees that the evidence 
warrants a formal reconsideration. As mentioned earlier, the 
reconsideration process would be time limited but would allow the 
public to submit medical and scientific evidence and allow the agency 
to fully develop the record in light of advances in medical science. 
Following the time-limited reconsideration, a supplemental record would 
be filed and the adjudication could continue, if necessary.
    This approach will provide the contractor/CMS the initial 
opportunity to permit medical and scientific experts to examine the new 
evidence and to make findings of fact concerning the new evidence. 
Among other things, the statute requires that the ALJ/Board ``shall 
defer only to the reasonable findings of fact'' and it was impossible 
for the agency to have made findings on evidence that did not yet exist 
or that had not been furnished to the agency for consideration. We 
believe this approach is necessary to ensure that the medical and 
scientific opinions of the agency experts illuminate the record, since 
these appeals could involve very technical medical and scientific 
material related to the new evidence.
    While it is possible that the challenger may submit credible 
medical and scientific studies that warrant a formal reconsideration, 
it is also possible that the evidence submitted would not be either 
relevant or persuasive, or that a challenger may seek to challenge the 
policy on other grounds. Because the public comments have highlighted 
the different types of disputes that may be presented, we have modified 
our procedures in attempt to fairly, yet expeditiously, resolve any 
type of challenge that may be presented. Our revised approach would 
allow the ALJ or the Board to resolve some cases without need for a 
reconsideration and would also allow the review proceedings to be 
resolved in a more expeditious manner. To resolve any confusion, we 
will describe the significant procedural and substantive steps of the 
review.
    Under the revised procedures at Sec.  426.425 and Sec.  426.525, 
all aggrieved parties, after reviewing the LCD or NCD record, will be 
able to file a statement that includes the challenger's arguments as to 
why the record is not complete, or not adequate to support the validity 
of the LCD/NCD under the reasonableness standard. This may be the most 
important step in the review process from the aggrieved party's 
perspective because this is the opportunity to present any arguments 
for the LCD/NCD being held invalid. (See Sec.  426.425(a), Sec.  
426.525(a)). CMS or the contractor will have 30 days to submit a 
response to this statement. (See Sec.  426.425(b), Sec.  426.525(b)).
    After evaluating the materials and the record, our revised 
procedures will permit the ALJ/Board to make a prompt decision in the 
nature of a summary judgment if the case warrants this approach. For 
instance, if applying the reasonableness standard, the adjudicator 
finds that record is complete and has adequate information to support 
the validity of the LCD or NCD, the ALJ or the Board may issue a 
decision that ``the record is complete and adequate'' to support the 
policy. (See Sec.  426.425(c)(1), and Sec.  426.525(c)(1)). For cases 
involving an NCD, the aggrieved party would have the right to challenge 
this final agency action in Federal court. (Section 1869(f)(1)(A)(v) of 
the Act). For cases involving an LCD, the aggrieved party would have 
the right to challenge the ALJ's decision at the Board, and potentially 
in Federal Court. (Sec.  426.465).
    If, on the other hand, after evaluating the materials submitted by 
the parties and the record, the ALJ/Board determines that the record is 
not complete or not adequate to support the validity of the LCD/NCD, 
the adjudicator will permit discovery and the taking of evidence. 
Following discovery and the taking of evidence as set forth in these 
final rules, the ALJ/Board will issue a final decision. (See Sec.  
426.447, Sec.  426.547). Those final decisions may also be appealed in 
appropriate circumstances.
    Although we recognize that one commenter suggested that the ALJ or 
the Board would be legally required to hold invalid the LCD/NCD rather 
than allowing the agency to supplement the record, the case cited is 
not relevant given the unique language and history of BIPA section 522. 
The ALJs and the Board are not acting as a Federal court reviewing 
final agency action. The case relied on by the commenter concerned the 
scope of review under the judicial review provisions of the 
Administrative Procedure Act, 5 U.S.C. 706. Moreover, under prior 
provisions for court review of NCDs, even courts were required to 
permit us to supplement the record before declaring an NCD invalid. We 
believe our approach is consistent with the specific requirements of 
the statute.

Scope and Weight of Evidence

    Comment: One commenter believed that the proposed rule would have 
the effect of excluding highly relevant information such as physicians' 
standards of practice and their professional opinions from the review 
process. Another commenter believed that we should define the hierarchy 
of evidence strength to assure proper weighting by the ALJ or Board 
when considering scientific and clinical information.
    Response: We are not accepting the recommendation to include a 
hierarchy of evidence in order to allow flexibility in analyzing 
evidence. We recognize that many types of evidence have value, and will 
consider clinical experience, as well as other forms of medical, 
technical, and scientific evidence in making LCDs and NCDs. We note 
that the ALJ/Board may seek input from clinical and scientific experts 
at their discretion. There is no prohibition against the ALJ or the 
Board seeking the input of practicing physicians or considering 
standards of practice.

Discovery

    Comment: We received several comments on the nature and scope of 
discovery. One commenter supported the limitation upon discovery that

[[Page 63701]]

would allow contractors to produce existing records rather than 
requiring them to develop and produce new documentation.
    Response: We appreciate the commenter's support of our proposals 
and have taken its views into account in considering the comments of 
those commenters who recommended revisions.
    Comment: One commenter objected to our proposal not to initiate 
discovery between parties until after an adjudicator has made a 
determination about the adequacy of the record. The commenter suggested 
that discovery should be available any time after the complaint is 
filed.
    Response: We note that the statute establishes the timing of 
discovery. Section 1869(f)(1)(A)(iii)(I) and section 
1869(f)(2)(A)(i)(I) of the Act provide for discovery and the taking of 
evidence only in instances where an ALJ or the Board has reviewed the 
record and made a determination that it is incomplete or lacks adequate 
information to support the validity of the LCD or NCD at issue. 
Therefore, we believe that an initial determination regarding the 
completeness and adequacy of a record must precede the initiation of 
discovery between parties.
    Comment: Several commenters opposed our rule limiting discovery to 
requests for documents only. The commenters suggested that parties 
should be permitted to use interrogatories and other discovery means. A 
commenter also objected to the rules at Sec.  426.435 and Sec.  426.535 
setting forth the subpoena procedures on the basis that they are 
inconsistent with the Federal Rules of Civil Procedure, particularly 
with respect to the 30-day notice requirement. Finally, one commenter 
suggested that discovery should not be restricted to material relating 
to a specific LCD or NCD but should include other policies that might 
be relevant to an evaluation of whether a coverage policy is 
reasonable.
    Response: The BIPA gives a right to discovery, but does not specify 
permissible forms and does not require that these administrative 
proceedings follow the discovery or subpoena rules set forth in the 
Federal Rules of Civil Procedure or the rules of any other 
administrative proceedings. We proposed limiting discovery to requests 
for documents and believe this approach is consistent with other 
Departmental rules permitting discovery. (See, for example, 42 CFR 
1005.7). After consideration of the comments, however, we are expanding 
discovery under Sec.  426.432(c) and Sec.  426.532(c) to include the 
opportunity to submit 10 written interrogatory questions. This is 
intended to be a limited opportunity, available when needed to promote 
the overall efficiency of the review proceeding, that we expect ALJs 
and the Board to narrowly construe to minimize the burden on the 
agency. We are also revising Sec.  426.432(e) and Sec.  426.532(e) to 
exclude written interrogatories from the list of unavailable discovery. 
We are not allowing for depositions, requests for admissions, or other 
types of discovery because we view them as unnecessary for this kind of 
administrative proceeding and because this limitation will reduce the 
time and expense associated with these appeals. We believe that 
limiting discovery in this way will ensure the timely and efficient 
disposition of LCD and NCD challenges.
    Comment: A commenter objected to an adjudicator's issuance of a 
protective order without the employment of a balancing test to 
determine whether the moving party has a sufficient basis for 
requesting the order. Another commenter objected to the absence of any 
provision authorizing a beneficiary or the Board to compel disclosure 
of documents by us.
    Response: Sections 426.432(b)(2) and 426.532(b)(2) set forth 
criteria that adjudicators must utilize in determining whether to grant 
or deny protective orders. We believe that these criteria are 
sufficient to evaluate the merits of a request for a protective order 
without developing an additional balancing test. As a result, we will 
not be incorporating the commenter's suggestion into this final rule. 
Furthermore, we believe that a process for compelling disclosure of all 
documents by us is not necessary because these regulations already set 
forth and define the scope of what must be provided through discovery.

Expert Witness

    Comment: One commenter objected to the restrictions on the 
introduction of expert evidence, having interpreted them as permitting 
oral testimony by an expert witness only if written evidence were 
submitted.
    Response: Sections 426.440(e) and 426.540(e) do not require that a 
witness provide a written report, but rather require that any expert 
witness providing written testimony be available for oral cross 
examination. Under Sec.  426.440(d) and Sec.  425.540(d), the ALJ or 
the Board may require or permit expert witnesses to submit a written 
report. Moreover, it is common practice for expert witnesses to submit 
written reports in order to use hearing time efficiently and to focus 
questioning effectively.

Withholding Evidence Deemed To Be Proprietary

    In the proposed rule, we sought to limit disclosure of 
``proprietary data'' based on the parenthetical phrase included in 
section 1862(a) of the Act in the paragraph that follows. The provision 
in this paragraph establishes several procedural requirements that the 
Secretary must follow in making NCDs. The provision states:

    In making a national coverage determination (as defined in 
paragraph (1)(B) of section 1869(f)) the Secretary shall ensure that 
the public is afforded notice and an opportunity to comment prior to 
implementation by the Secretary of the determination; meetings of 
advisory committees established under section 1114(f) with respect 
to the determination are made on the record; in making the 
determination, the Secretary has considered the applicable 
information (including clinical experience and medical, technical, 
and scientific evidence) with respect to the subject matter of the 
determination; and in the determination, provide a clear statement 
of the basis for the determination (including responses to comments 
received from the public), the assumptions underlying that basis, 
and make available to the public the data (other than proprietary 
data) considered in making the determination.

    The reference to ``proprietary data'' reflects a limitation on 
disclosure to the public. We specifically invited public comments ``on 
the scope of proprietary data and the extent to which this material 
should not be disclosed'' (67 FR 54541). Comments we received on this 
issue follow.
    Comment: We received several public comments concerning proprietary 
data and information disclosure. Several commenters agreed with the 
proposal to limit disclosure of proprietary data. One commenter 
suggested that the record contain only the materials referenced in the 
LCD. One commenter indicated that it should apply to the studies and 
analysis purchased or performed by a contractor. Another commenter 
observed that patient specific information should also be protected and 
disseminated only with patient permission.
    Other commenters opposed the concept. One commenter asked that the 
regulation be revised to state that the record contains ``all the 
information presented to the Agency and/or the Medicare contractor when 
the coverage determination was being established[.]'' One commenter 
suggested that the record should be expanded to include relevant 
information that comes to CMS ``after a policy is published.'' Another 
commenter wrote that, ``a contractor or CMS can withhold from the 
reviewing body information it believes to be

[[Page 63702]]

proprietary, creating a huge loophole that allows the withholding of 
evidence in support of the beneficiary's claim. Because the proposed 
regulation provides for very limited discovery, a beneficiary will have 
very little opportunity to determine whether supporting documentation 
has been withheld.'' Other commenters suggested that ``these proposed 
regulations be revised to state that the record includes any document 
or materials that were presented to CMS or the contractor in the 
development of the LCD or NCD.''
    Another commenter suggested that when we compile the record of the 
LCD or NCD, we should also produce an index of all material that was 
excluded, and then seek a protective order from the adjudicator to 
exclude that material from the record. We would be required to state 
for each document the specific basis for a claim of privilege or the 
specific provisions of Federal statute authorizing the withholding or 
prohibiting disclosure. A beneficiary would be given an opportunity to 
respond and object.
    Response: In section 1862(a) of the Act, the Congress provided that 
the Secretary was not required to disclose ``proprietary data'' to the 
public when making available the data considered in making the 
determination. We believe it is likely that this exception serves to 
encourage manufacturers and others to submit evidence that would be 
useful in making LCDs/NCDs. Prior to this statute, manufacturers may 
have been reluctant to submit valuable business and commercial data if 
they believed it would be publicly disclosed as part of a record in a 
judicial proceeding. This provision enables the Secretary to receive 
and consider proprietary data and to assure that proprietary data would 
not be disclosed without the expressed consent of the individual or 
entity that submitted the documents. This may enable the contractor/CMS 
to make LCDs/NCDs, including determinations that may expand Medicare 
coverage, more rapidly and accurately.
    We are aware that there is tension in the statute between the 
specific right given to an aggrieved party to seek discovery during the 
appeal process (section 1869(f)(1)(A)(iii)(I) of the Act), and the 
opportunity that the Secretary is given to withhold from the public 
``proprietary data.'' The public comments include cogent views from 
both perspectives. The Secretary has the discretion and challenge to 
balance these competing interests, and must resolve this issue in order 
to implement the expanded appeal rights that the Congress has provided.
    We are resolving this tension by issuing this regulation to inform 
the public that we will withhold proprietary data from the public 
during the ALJ or the Board process. We do not expect to have 
proprietary data in our possession in most cases. In the rare instance 
that we obtain and consider proprietary data, this information will be 
presented to the ALJ or the Board under seal but will not be disclosed 
to any party or disclosed as part of the public record of the LCD/NCD 
proceedings. We believe that the Congress's concern about disclosure of 
proprietary information to the public in section 1862(a) of the Act 
suggests that the Congress did not intend to mandate disclosure of that 
same data during the LCD/NCD appeal. The limited assurance of 
maintaining confidentiality during the process of preparing an LCD/NCD, 
but not during the administrative appeal, would discourage 
manufacturers from submitting crucial confidential information.
    At Sec.  426.110, we are specifically defining ``proprietary data'' 
and ``privileged information'' as information from a source external to 
CMS or a contractor, or protected health information, that meets the 
following criteria: (1) It is ordinarily protected from disclosure 
pursuant to 45 CFR Part 164, under the Trade Secrets Act (18 U.S.C. 
1905) or under Exemptions 4 or 5 of the Freedom of Information Act (5 
U.S.C. 552) as specifically interpreted in our Departmental regulations 
at 45 CFR 5.65; and (2) the party who possesses the right to protection 
of the information from public release or disclosure has not provided 
its consent to the public release or disclosure of the information. Any 
information submitted by the public that is not marked as proprietary 
will not be considered proprietary. We may review this assertion in 
determining whether the information is proprietary data. Any 
information received that is not designated as ``proprietary data'' 
will not be considered ``proprietary data.'' In order for proprietary 
data to be considered and given weight in LCD or NCD reviews, any such 
proprietary data submitted by a manufacturer of a drug or device should 
contain true and complete records of all clinical and scientific data 
existent and, therefore, any submission must include an affidavit that 
the data consists of true and correct copies of all data submitted by 
the manufacturer to any other Federal or State agency or department in 
relation to that drug or device. This is to limit the possibility that 
review decisions are based on partial or biased presentations of 
available evidence. Consistent with this requirement, CMS will request 
such certifications when receiving proprietary data for its initial NCD 
analysis, and would anticipate a similar procedure by carriers or 
intermediaries in their LCD analysis.
    We believe this relatively narrow exception will still provide 
beneficiaries adequate access to all of the evidence that is typically 
considered in making LCDs/NCDs. There is a great deal of helpful and 
useful information available in publicly disclosable documents that are 
relevant to the subjects that we consider. In many cases the 
proprietary data may just reaffirm conclusions that are consistent with 
publicly available sources. While we recognize that this resolution may 
be somewhat awkward for a party challenging an LCD/NCD, we believe this 
result is in the best interests of the public. This approach will 
support more accurate and rapid coverage determinations through greater 
access to more data and may lead to faster and better LCDs/NCDs that 
may increase access to new advances in medicine and technology.
    For the comment that we provide an index of all excluded material, 
we are adopting this comment in part. In the rare event that we rely on 
proprietary and privileged data in formulating a coverage decision, 
these data will be given to the ALJ/Board under seal. In this rare 
event, these data will not be furnished to the aggrieved party; rather, 
we, or our contractors, will include an index that lists all of the 
excluded material as part of the LCD/NCD record. To implement the 
statutory protections for proprietary data and privileged information 
in section 1862(a) of the Act, we are not furnishing proprietary and 
privileged data as part of the public record, but the seal will be 
maintained on that information for use by a court in relation to an NCD 
review. In the event that a court seeks to obtain or requires 
disclosure of proprietary data or privileged information, CMS or the 
Department will seek to have a protective order applied to that 
information, to prohibit any recipients of the information from further 
disclosing the information or from using it for any purpose other than 
the challenge. The statutory protection accorded this data ensures the 
availability of the best relevant information whether proprietary or 
not, and maximizes flexibility in developing coverage determinations.

Consulting Scientific and Clinical Experts

    Comment: We received two comments requesting a clearer definition 
of who could be considered a scientific or

[[Page 63703]]

clinical expert, and requesting that those with conflicts of interest 
not be considered as experts. A related comment stated that the ALJs/
Board may solicit testimony from any expert on issues relevant to the 
LCD/NCD provision(s) in question.
    Response: We agree with these comments. We are clarifying that 
scientific and clinical experts consulted by the ALJ/Board must be 
independent and impartial and have significant experience and published 
work pertaining to the subject of the review to be considered experts.
    Comment: A commenter objected to the rule allowing the Board to 
call its own witnesses. The commenter suggested that the rule would 
compromise the role of the Board by placing it in an advocacy position.
    Response: While we appreciate the commenter's concern regarding the 
appropriate role of the Board, we are obligated to comply with 
statutory requirements, and section 1869(f)(1)(A)(iii)(II) of the Act 
specifically provides that the Board ``may, as appropriate, consult 
with appropriate scientific and clinical experts.'' Therefore, we 
believe it proper to interpret this statutory provision to permit 
adjudicators to call their own witnesses when reviewing LCDs or NCDs. 
Moreover, similar provisions exist in many administrative procedures, 
especially those involving public health or safety.

Witness and Legal Fees

    Comment: One commenter referred to Sec.  426.445 and questioned 
whether or not we would pay for witness fees for contractors' witnesses 
and legal fees incurred in connection with LCD review.
    Response: The compensation of Medicare contractors and their 
witnesses is an internal policy matter, which need not be resolved in 
this final rule.

Role of CAC/MCAC

    Comment: Two commenters suggested that members of the Contractor 
Advisory Committee (CAC) and members of the Medicare Coverage Advisory 
Committee (MCAC) should have substantial input into the LCD/NCD review 
process.
    Response: The CAC/MCAC members already serve an important role in 
developing certain Medicare policies. We believe it would be 
inappropriate for these individuals to serve as expert witnesses in 
these proceedings. Therefore, we are not revising the final rule in 
response to this comment.

Burden of Proof

    Comment: We received several comments regarding the proper burden 
of proof in the adjudicatory proceedings when an LCD or NCD is 
challenged. One commenter believed we should make it clearer that the 
burden of proof was on the challenger to show that an item or service 
is safe and effective for the proposed indication. Two commenters 
believed we should stop requiring proponents to show that Medicare 
coverage is appropriate. These commenters suggest that the Social 
Security Act places the burden of proof on us if it wishes to deny 
Medicare coverage and suggested that the contractor/CMS should have the 
burden of showing why evidence supports retention of an LCD or NCD.
    Response: We disagree with the commenters who suggest that the 
burden of proof should rest on the government. The Social Security Act 
contains no ``presumption that services are covered.'' Rather, the Act 
expressly provides that ``[n]otwithstanding any other provision of this 
title, no payment may be made * * * for expenses incurred for items or 
services * * * not reasonable and necessary * * *.'' (Section 
1862(a)(1)(A) of the Act (42 U.S.C. 1395y(a)(1)(A)). Courts have 
recognized that this language ``which bars benefits for services `not 
reasonable and necessary' for diagnosis or treatment, is not reasonably 
interpreted as an affirmative mandate to extend coverage to all 
necessary services.'' Goodman v. Sullivan, 891 F.2d 449, 450 (2d Cir. 
1989). Moreover, section 205(a) of the Social Security Act, 42 U.S.C. 
405(a), expressly incorporated in title XVIII by section 1872, 42 
U.S.C. 1395ii, permits the Secretary to adopt ``reasonable and proper 
rules and regulations to regulate and provide for the nature and extent 
of proofs and evidence'' and the method of furnishing that evidence. In 
light of this authority, we are clarifying our final rule at Sec.  
426.330 to more clearly place the burden of production and persuasion 
on the individual challenging an LCD or NCD.

Reasonableness Standard

    In the proposed rule, we adopted a reasonableness standard 
requiring the adjudicator to determine whether the findings of fact, 
interpretations of law, and applications of fact to law by CMS or the 
contractor were reasonable. Comments on this issue follow.
    Comment: One commenter supported the approach we had taken to 
define reasonableness. One commenter suggested that we need a better 
definition of reasonableness. Two commenters stated that the 
reasonableness standard is too ``soft'' or ``lax'' for a meaningful 
review, and instead, a substantial evidence or ``de novo'' standard 
should be used. One commenter suggested that a ``totality of the 
circumstances test'' should be used.
    Response: We proposed a standard of review that was consistent with 
the specific language of the statute. Therefore, we believe it would 
not be appropriate to use any other standard. We use the 
``reasonableness standard'' as the standard that an ALJ or the Board 
must apply when conducting an LCD or an NCD review. In determining 
whether LCDs or NCDs are valid, the adjudicator must uphold a 
challenged policy (or a provision or provisions of a challenged policy) 
if the findings of fact, interpretations of law, and applications of 
fact to law by the contractor or us are reasonable based on the LCD or 
NCD record and the record developed before the ALJ/Board. We are using 
the statutory language from sections 1869(f)(1)(A)(iii) and 
(f)(2)(A)(i) of the Act, which instructs adjudicators to defer only to 
the reasonable findings of fact, reasonable interpretations of law, and 
reasonable applications of fact to law by the Secretary.
    The logical corollary is that the ALJs and the Board must accord 
deference if the contractor's or CMS's findings of fact, 
interpretations of law, and application of fact to law are reasonable. 
The concept of deference is one that is generally applied by courts to 
administrative decisionmaking, in recognition of the expertise of a 
program agency. Thus, we view the statute as setting out a 
reasonableness standard that recognizes the expertise of the 
contractors and CMS in the Medicare program--specifically, in the area 
of coverage requiring the exercise of clinical or scientific judgment.
    So long as the outcome is one that could be reached by a rational 
person, based on the evidence in the record as a whole (including 
logical inferences drawn from that evidence), the determination must be 
upheld. This is not simply based on the quantity of the evidence 
submitted, but also includes an evaluation of the persuasiveness of the 
material. If the contractor or CMS has a logical reason as to why some 
evidence is given more weight than other evidence, the ALJs and the 
Board may not overturn the determination simply because they would have 
accorded more weight to the evidence in support of coverage. In some 
situations, different judgments by different contractors may be 
supportable, especially if explained by differences

[[Page 63704]]

such as the ready availability of qualified medical professionals in 
one contractor's area, but not in another. Moreover, an ALJ or the 
Board may not determine that an LCD is unreasonable solely on the basis 
that another Medicare contractor has issued an LCD that permits 
coverage of the service at issue, under the clinical circumstances 
presented by the complaint.
    For legal interpretations, the reasonableness standard would not be 
met if an interpretation is in direct conflict with the plain language 
of the statute or regulation being interpreted. Moreover, an 
interpretation in an LCD would not meet the reasonableness standard if 
it directly conflicts with an NCD or with a CMS Ruling. So long as an 
interpretation is one of the readings permitted by the plain language 
of the law and can be reconciled with relevant policy, however, it must 
be upheld, even if the ALJ or the Board might have reached a different 
result if interpreting the statute or regulation in the first instance.

Authority of ALJs and the Board

    Comment: Some comments supported the limited authority granted to 
the ALJs/Board in issuing decisions, and many comments requested that 
the ALJ/Board be granted greater authority in issuing decisions. A 
number of comments suggested that the proposed rule restricted ALJ/
Board authority so that the main outcome of a decision of 
unreasonableness would be contractor/CMS reconsideration, and that a 
decision of unreasonableness should result in the policy being null and 
void. Furthermore, numerous comments suggested that authority is not 
granted to the ALJ or the Board in the way that the Congress intended, 
and that the contractor/CMS retains too much authority over the 
process.
    Response: We have revised the final regulation to allow for greater 
authority for the adjudicators in several respects. In appropriate 
cases, the ALJ/Board may find a provision(s) of the LCD/NCD invalid and 
may limit that holding to a beneficiary's clinical indication (or 
similar condition). Furthermore, the contractor or CMS would effectuate 
the ALJ/Board decision within 30 days (if not sooner), by either 
retiring or withdrawing the policy or revising the policy that would be 
applied prospectively. This means that neither the contractor nor CMS 
will apply a policy that has been held invalid to a claim of the 
aggrieved party or to any other similar Medicare claim with date(s) of 
service beginning on or after 30 days of the adjudicatory decision. 
Even though we are giving broader effect to the ALJ/Board decision by 
extending the decision to others on a prospective basis, we continue to 
believe that the Congress intended that CMS or its contractors would 
have the authority to develop clinical policies. Thus, we will maintain 
in the final rule the prohibition against adjudicators developing new 
language for LCDs and NCDs.
    After a policy has been held invalid, it will not be applied to the 
beneficiary who raised the challenge or to others who receive services 
after the effective date of the invalidation. CMS or the contractor may 
issue a new or revised LCD/NCD that does not include the invalid 
provision(s). The new or revised LCD/NCD would be applied 
prospectively. The new/revised LCD/NCD would also be subject to 
challenge under this review process.
    Please note that whenever we discuss claim relief or dates of 
service in the context of an ALJ or DAB decision holding invalid an LCD 
or NCD, the references should be read to include pre-service requests 
denied by an M+C organization and the dates of pre-service requests. 
The application of this regulation in the M+C context is discussed 
further below.

Effective Dates

    Comment: Several commenters stated that timeframes should be set in 
this process to reflect the timeframes set in the NCD process notice.
    Response: We agree with the concept of timeframes, but do not 
reference the ``NCD process notice'' since that notice does not speak 
to this issue, and we have added language to Sec.  426.460 and Sec.  
426.560 requiring that contractors/CMS either--
    1. Retire/withdraw the LCD/NCD in its entirety within 30 days of 
the ALJ/Board decision; or
    2. Issue a revised LCD/NCD removing the invalid provisions, 
effective for claims with dates of service after the 30th day of the 
ALJ/Board decision.
    If the Board issues a decision finding an NCD provision invalid and 
the NCD is revised to reflect the Board's decision, all contractors 
must review and appropriately revise any related LCDs so as not to be 
in conflict with the revised NCD. If we choose to withdraw the entire 
NCD, the contractors must review and appropriately revise any LCDs so 
as not to rely on the withdrawn NCD as the basis for the LCD.

Precedential Value of ALJ/Board Decisions

    Comment: One commenter stated that previous ALJ/Board decisions 
should be controlling precedent. Another commenter recommended that 
ALJs/Board be bound by previous ALJ decisions on local policies in 
other jurisdictions.
    Response: We have revised the final rule at Sec.  426.431(a) to 
require ALJs to treat as precedential Board LCD and NCD decisions, and 
to require the Board to follow its own applicable precedents. We 
believe this will improve the efficiency of the review process. Because 
of differences in the local practice of medicine, we do not believe it 
would be prudent for ALJs to treat as precedential other ALJ decisions 
on an LCD challenge.

Appeals of Decisions Involving Joint Complaints and Consolidated 
Reviews

    Comment: One commenter requested that for joint appeals, aggrieved 
parties should be prohibited from appealing decisions to higher levels 
unless all parties to the initial appeal agree to appeal.
    Response: We will not require in this final rule that all parties 
must agree to appeal an ALJ decision as a prerequisite for the appeal 
to continue. Even if some individuals decide not to pursue an appeal, 
other parties in the case may exercise their appeal rights. Section 
426.470 of the regulation allows the Board to consolidate similar 
appeals.

Appeal of ALJ Decision/Board Review of ALJ Decisions

    Comment: One commenter suggested that we should not be allowed to 
appeal ALJ decisions to the Board due to conflicts of interest. Another 
commenter objected to having the Board overturn ALJ decisions that were 
favorable to the aggrieved party due to potential burdens on the 
beneficiary. Another commenter felt that the regulation should not 
require the Board to affirm or reverse the ALJ decision in its entirety 
and suggested that the Board should have the discretion to reverse a 
decision in part. We received one comment suggesting the Board should 
not support a policy based on a rationale that is not stated in the 
supporting documents that were submitted. We also received three 
comments requesting that the Board not be limited to fundamental rules 
of procedures, and that it have broader discretion in reviewing ALJ 
decisions.
    Response: Nothing in the statutory language of section 522 suggests 
that the Congress intended to bar the government from appealing an 
adverse decision of an ALJ. We believe that such an appeal is warranted 
as a mechanism to ensure that ALJs are applying the statute and 
regulations correctly, even if we rarely employ this strategy. Because 
the statute provides that ALJ decisions

[[Page 63705]]

may be reviewed by the Board, we have retained the language allowing 
either the contractor or CMS to seek Board review of ALJ decisions. 
Furthermore, our final rule provides flexibility in the Board's review 
of ALJ decisions.
    We have modified the final rule at Sec.  426.476(b) to provide that 
the Board will review an ALJ decision on appeal to determine whether it 
contains any material error, including any failure to properly apply 
the reasonableness standard. The Board will not reverse a decision for 
harmless error, but may remand if a prejudicial procedural error was 
made. Further, if the ALJ erred in determining that the LCD record was 
complete and adequate to support the validity of the LCD, the Board 
will reverse and remand the case to the ALJ to complete discovery and 
the taking of evidence. We believe that this standard of review 
provides appropriate discretion for Board review of ALJ decisions.

Impact on Medicare+Choice (M+C)

    Comment: One commenter suggested that we should clarify an M+C 
organization's obligations when a complaint is under review by both the 
section 522 process and the M+C organization's existing appeals 
process.
    Response: If an M+C enrollee files both an LCD/NCD review request 
and a request for reconsideration of an adverse organization 
determination for the same item or service, the M+C organization should 
adjudicate the reconsideration using the coverage policies in place on 
the date the service or item was requested (in the case of a pre-
service determination) or provided (in the case of a payment 
determination). If the LCD/NCD under review is subsequently found to be 
unreasonable, then the aggrieved party who sought review of the LCD/NCD 
is entitled to have the previously adjudicated organization 
determinations or reconsidered determinations reopened and adjudicated 
without consideration of the invalid LCD/NCD provision(s). M+C 
organizations would be responsible for reopening and adjudicating 
organization determinations, and the independent review entity (IRE) 
would be responsible for reopening and adjudicating reconsidered 
determinations.
    Comment: One commenter requested that we clarify the obligations of 
M+C organizations when an enrollee has an appeal pending at the time 
the revised LCD/NCD becomes effective.
    Response: The type of organization determination being reconsidered 
(payment or pre-service) will determine an M+C organization's 
obligations when an enrollee has a reconsideration pending at the time 
a revised LCD/NCD becomes effective. Consistent with original Medicare, 
LCD/NCD changes may only be applied prospectively to requests for 
payment. Therefore, when an enrollee requests reconsideration of a 
payment determination and the reconsideration is pending at the time a 
revised LCD/NCD becomes effective, the M+C organization should apply 
the LCD/NCD in place at the time the item or service was provided. In 
responding to a request for reconsideration of a pre-service 
determination that would be affected by a revised LCD/NCD, an M+C 
organization should dismiss the appeal and reopen the adverse 
organization determination on the basis of new and material evidence. 
The M+C organization should then apply the revised LCD/NCD in effect 
and issue a revised organization determination.
    We recognize the importance of ensuring timely transmission of ALJ/
Board decisions and intend to work closely with the Medicare managed 
care industry to make certain that an effective method of communicating 
LCD/NCD changes is in place.
    Comment: Another M+C-related comment stated that claims that were 
adjudicated using the invalidated LCD/NCD should be eligible for a new 
decision (so long as the appeals timeframes have not passed).
    Response: As noted in the comment above, LCD/NCD changes can only 
be applied prospectively to requests for payment, as was the case under 
original Medicare. Therefore, regardless of subsequent policy changes, 
for purposes of reconsidering a payment determination, the relevant 
LCD/NCD is the policy in effect at the time the item or service was 
provided.
    Comment: One commenter requested that we clarify whether a decision 
made under individual claim review is considered an ``organization 
determination,'' as defined under parts 417 and 422, giving rise to 
appeal rights.
    Response: When an M+C organization reopens and adjudicates an 
organization determination under Sec.  426.460(b)(1), the M+C 
organization must issue a revised organization determination, which 
gives rise to appeal rights under parts 417 and 422. An enrollee could 
benefit from a revised LCD/NCD by filing a new request for an 
organization determination.
    Comment: One commenter requested clarification as to whether our 
statutory obligation, under section 1852(a)(5) of the Act, to make fee-
for-service payments for a significant cost, midyear change in benefits 
would apply if a significant cost threshold for an NCD is met as a 
result of a decision by the Board to revise an NCD.
    Response: Section 1852(a)(5) of the Act provides that if an NCD or 
legislative change in benefits effective in the middle of an M+C 
contract year generates a significant change in the costs to a M+C 
organization of providing benefits that are the subject of the NCD, and 
if this significant change in costs was not incorporated into the M+C 
payment rates at the time the NCD becomes effective, the NCD does not 
apply to the M+C contracts until the first contract year after new M+C 
rates are published. Moreover, section 1853(c)(7) of the Act provides 
that, if there is a change in benefits resulting in a significant 
increase in costs to the M+C organization, we will adjust appropriately 
the M+C payment rates to reflect this change. The M+C organization must 
provide coverage of the NCD or legislative change in benefits by 
furnishing or arranging for the NCD service or legislative change in 
benefits. However, the M+C organization is not required to pay or 
assume risk for the costs of that service or benefit until the contract 
year for which payments are adjusted to take into account the cost of 
the NCD service or legislative change in benefits. Section 422.109 has 
been revised to define ``significant cost'' thresholds, and notes that, 
if the costs for new coverage or a change in benefits is significant, 
CMS will pay on a fee-for-service basis on behalf of the M+C 
organization for the new benefit until the M+C rates are appropriately 
adjusted. (These provisions do not apply if the change in benefits does 
not meet either significant cost threshold described at Sec.  422.109.)

Automatic Stay Upon Appeal

    Comment: Three commenters disagreed with the automatic stay of an 
ALJ decision when the contractor/CMS appeals a decision to the Board.
    Response: We disagree. We believe it would be disruptive to 
beneficiaries overall to have ALJ decisions implement policies only to 
have these policies reversed by the Board. This would create both an 
inefficient and confusing process. Furthermore, a contrary ruling would 
require the expenditure of significant resources to implement an ALJ 
decision only to have to change the decision if the Board reverses.

Dual Track Process

    Comment: We received one comment for and one comment against 
allowing aggrieved parties the option to pursue both a reconsideration 
and a review under these rules.

[[Page 63706]]

    Response: We believe that both options should be available to 
aggrieved parties, in order to allow for the parties to seek a decision 
in the most appropriate way possible, and to allow the most flexibility 
to these parties.

Expedited Judicial Review

    Comment: Several commenters suggested that the final regulations 
should address section 1869(f)(3) of the Act, which relates to 
circumstances where a challenger may seek expedited judicial review 
when there are no material issues of fact in dispute.
    Response: We are not adopting these comments. This section of the 
statute does not require regulatory action by CMS because it is related 
to the jurisdiction of the judicial branch of the government. The 
statute is self-implementing and does not require additional rulemaking 
by the Secretary.

IV. Provisions of the Final Rule

A. Overview

    We are establishing that a Medicare beneficiary who qualifies as an 
aggrieved party may challenge an LCD or an NCD (or specific provisions 
therein) by filing a complaint concerning an LCD with the office 
designated by CMS on the Medicare Web site, http://www.medicare.gov/coverage/static/appeals.asp
 (information on the designated office will 
be available by calling 1-800-Medicare) or by filing a complaint 
concerning an NCD with the Board of HHS. After a complaint is filed, 
the adjudicator determines whether the complaint is acceptable.
    In this final rule, we are adding in Sec.  400.202 a definition of 
``Local coverage determination (LCD)'' and revising the definition of 
``National coverage determination (NCD).'' The definitions are specific 
to Medicare and reflect the definitions for these terms found in 
section 522 of BIPA. With one exception described below, this final 
rule makes clear that a determination of the code assigned to a 
service, if any, or a determination with respect to the amount of 
payment to be made for the service is not included in the definition of 
an LCD or an NCD. We have clarified that diagnosis codes used in an 
LMRP to describe when a service is considered medically necessary are 
also part of the LCD. We use the term ``Services'' as defined in Sec.  
400.202 to include both ``items and services.''
    In Sec.  405.732, ``Review of a national coverage decision (NCD),'' 
we revise paragraph (a) regarding appeals of Part A cases, to state 
that an NCD is a determination by the Secretary with respect to whether 
or not a particular item or service is covered nationally under title 
XVIII. An NCD does not include a determination of what code, if any, is 
assigned to a particular item or service covered under title XVIII or a 
determination with respect to the amount of payment made for a 
particular item or service. NCDs are made under section 1862(a)(1) of 
the Act or other applicable provisions of the Act. An NCD is binding on 
all Medicare carriers, fiscal intermediaries, QIOs, HMOs, CMPs, HCPPs, 
the Medicare Appeals Council, and ALJs.
    This final rule revises Sec.  405.732(b) to specify that an ALJ may 
not disregard, set aside, or otherwise review an NCD. An ALJ may review 
the facts of a particular case to determine whether an NCD applies to a 
specific claim for benefits and, if so, whether the NCD has been 
applied correctly to the claim.
    We are revising Sec.  405.732(c) to specify that for initial 
determinations and NCD challenges under section 1862(a)(1) of the Act, 
arising before October 1, 2002, a court's review of an NCD is limited 
to whether the record is incomplete or otherwise lacks adequate 
information to support the validity of the decision, unless the case 
has been remanded to the Secretary to supplement the record regarding 
the NCD. In such cases, the court may not invalidate an NCD except upon 
review of the supplemental record. For Part B appeals, we are making 
similar changes.
    In Sec.  405.860, ``Review of a national coverage decision (NCD),'' 
we revise paragraph (a) regarding appeals of Part B cases to specify 
that an NCD is a determination by the Secretary with respect to whether 
or not a particular item or service is covered nationally under title 
XVIII. An NCD does not include a determination of what code, if any, is 
assigned to a particular item or service covered under title XVIII or a 
determination with respect to the amount of payment made for a 
particular item or service. NCDs are made under section 1862(a)(1) of 
the Act or other applicable provisions of the Act. An NCD is binding on 
all Medicare carriers, fiscal intermediaries, QIOs, HMOs, CMPs, HCPPs, 
Medicare Appeals Council, and ALJs.
    We are revising Sec.  405.860(b) to specify that an ALJ may not 
disregard, set aside, or otherwise review an NCD. An ALJ may review the 
facts of a particular case to determine whether an NCD applies to a 
specific claim for benefits and, if so, whether the NCD has been 
applied correctly to the claim.
    In Sec.  405.860(c), we specify that for initial determinations and 
NCD challenges under section 1862(a)(1) of the Act, arising before 
October 1, 2002, a court's review of an NCD is limited to whether the 
record is incomplete or otherwise lacks adequate information to support 
the validity of the decision, unless the case has been remanded to the 
Secretary to supplement the record regarding the NCD. The court may not 
determine that an item or service is covered except upon review of the 
supplemental record.
    We are also adding a new part 426, titled ``Reviews of Local and 
National Coverage Determinations,'' to title 42 of the CFR to include 
the following subparts:
    [sbull] Subpart A contains general provisions applicable to the 
entire part.
    [sbull] Subpart B is reserved.
    [sbull] Subpart C contains the general provisions applicable to the 
review of LCDs and NCDs.
    [sbull] Subpart D contains the provisions specific to the review of 
LCDs
    [sbull] Subpart E contains the provisions specific to the review of 
NCDs.

B. Subpart A (General Provisions)

    Subpart A of part 426 specifies the general provisions applicable 
to the entire part. Section 426.100, ``Basis and scope,'' sets forth 
the basis (under sections 1869(f)(1) and (f)(2) of the Act), and the 
scope specifies the requirements and procedures for the review of LCDs 
and NCDs. In Sec.  426.110, we define the terms used in part 426 whose 
definitions may not otherwise be implicit.
    Under section 522 of BIPA, only an ``aggrieved party'' may file a 
complaint to initiate the review of an LCD or an NCD. In this final 
rule, we define ``aggrieved party'' as a Medicare beneficiary who is 
entitled to benefits under Part A, enrolled under Part B, or both 
(including an individual enrolled in fee-for-service Medicare, in a 
Medicare+Choice plan, or in another Medicare managed care plan), and is 
in need of coverage for a service that is the subject of an applicable 
LCD (in the relevant jurisdiction) or an NCD as documented by the 
beneficiary's treating physician. We revised the final rule to include 
also as an aggrieved party a beneficiary who has already received the 
service and is in need of coverage, or the estate of a deceased 
beneficiary in need of coverage.
    Based on comments on our proposed rule, in this final rule we allow 
an aggrieved party's estate to pursue an LCD/NCD challenge if the 
aggrieved party died after filing a proper complaint and the aggrieved 
party received the service for which coverage is sought. We also allow 
the aggrieved

[[Page 63707]]

party's estate to file a complaint within 120 days of receipt of the 
denial notice.
    In Sec.  426.110 we define the following:
    [sbull] ``Board'' to mean the Departmental Appeals Board.
    [sbull] Clinical and scientific experts that are consulted by the 
ALJ or the Board as independent and impartial individuals, with 
significant experience and/or published work pertaining to the subject 
of the review.
    [sbull] ``Contractor'' as a carrier (including a DMERC) or a fiscal 
intermediary (FI) (including an RHHI) that has jurisdiction for the LCD 
at issue.
    [sbull] ``Deemed NCD'' as a determination that the Secretary makes 
in response to a request for an NCD by an aggrieved party under section 
1869(f)(4)(B) and (C) of the Act, that no national coverage or 
noncoverage determination is appropriate, or the Secretary's failure to 
meet the deadline under section 1869(f)(4)(A)(iv) of the Act. Section 
1869(f)(4)(C) of the Act deems certain decisions of the Secretary to be 
NCDs for purposes of administrative review. Please see our proposed 
rule for further discussion of deemed NCDs (67 FR 5434).
    [sbull] ``New evidence'' is clinical or scientific evidence that 
was not previously considered by the contractor or by us before the LCD 
or NCD was issued.
    [sbull] ``Party'' as an aggrieved party, which is an individual or 
estate who has the right to participate in the LCD or NCD review 
process, and, as appropriate, a contractor or CMS. In the case of an 
LCD review, we may choose whether to be a party in the review along 
with or instead of the contractor. These reviews involve challenges to 
important CMS policies that may impact many beneficiaries. We note that 
we are always a party to an NCD review and contractors would not 
participate in an NCD review.
    [sbull] ``Proprietary data'' and ``privileged information'' are 
information from a source external to CMS or a contractor, or protected 
health information that meets the following criteria: (1) It is 
ordinarily protected from disclosure pursuant to 45 CFR Part 164, under 
the Trade Secrets Act (18 U.S.C. 1905), or under Exemption 4 or 5 of 
the Freedom of Information Act (5 U.S.C. 552) as specifically 
interpreted in our Departmental regulations at 45 CFR 5.65, and (2) the 
party who possesses the right to protection of the information from 
public release or disclosure has not provided its consent to the public 
release or disclosure of that information. Members of the public that 
send us proprietary data must mark these documents as such, and include 
the legal basis for any such assertion. Any information received from 
the public that is not designated as ``proprietary data'' will not be 
considered ``proprietary.''
    [sbull] ``Reasonableness standard'' is the standard that an ALJ or 
the Board must apply when conducting an LCD or an NCD review. In 
determining whether LCDs or NCDs are valid, the adjudicator must uphold 
a challenged policy (or a provision or provisions of a challenged 
policy) if the findings of fact, interpretations of law, and 
applications of fact to law by the contractor or CMS are reasonable 
based on the LCD or NCD record and the relevant record developed before 
the ALJ/Board.
    [sbull] ``Supplemental LCD/NCD record'' is a record that the 
contractor/CMS provides to the ALJ/Board and any aggrieved party and 
consists of all materials received and considered during a 
reconsideration. Materials that are already in the record before the 
ALJ/Board (for example, new evidence presented in the taking of 
evidence or hearing) need not be provided but may be incorporated by 
reference in the supplement to the LCD/NCD record. The contractor/CMS 
may provide statements, evidence, or other submissions to the ALJ/Board 
during the proceedings, as provided elsewhere in these regulations, but 
such submissions are not considered as supplementing the LCD/NCD 
record.
    [sbull] ``Treating physician'' is the physician who is the 
beneficiary's primary clinician with responsibility for overseeing the 
beneficiary's care and either approving or providing the service at 
issue in the challenge.
    In Sec.  426.120, we explain how deadlines are calculated. In Sec.  
426.130, we explain that any documents submitted to the ALJ/Board after 
the initial challenge, excluding privileged or proprietary data, must 
also be served on all other parties simultaneously. These sections have 
been added to provide additional guidance in implementing the 
requirements of this final rule.

C. Subpart B (Reserved)

    We are reserving subpart B.

D. Subpart C (General Provisions for the Review of LCDs and NCDs)

    The general provisions common to both the review of LCDs and NCDs 
are established in subpart C. In Sec.  426.300(a), we state that the 
review of a challenged provision (or provisions) of an LCD is conducted 
by an ALJ only upon the receipt of an acceptable complaint as described 
in Sec.  426.400. We also state in Sec.  426.300(b) that the review of 
a challenged provision (or provisions) of an NCD is conducted by the 
Board only upon the receipt of an acceptable complaint as described in 
Sec.  426.500. An acceptable complaint must be filed with the 
applicable adjudicator by an aggrieved party. Additionally, Sec.  
426.300(c) would allow for the review of deemed NCDs, a process that 
would parallel the review of NCDs.
    In Sec.  426.310(a), we explain that LCD and NCD reviews are 
largely independent of the claims appeal processes set forth in part 
405, subparts F and G; part 417, subpart Q; and part 422, subpart M. In 
Sec.  426.310(b), we require the aggrieved party to notify the ALJ/
Board of any pending claim or appeal related to the LCD/NCD appeal.
    In Sec.  426.320(a), we explain that only an aggrieved party may 
initiate a review to challenge an LCD or NCD (including a deemed NCD), 
or an existing specific provision or provisions of an LCD or an NCD by 
filing an acceptable complaint. In Sec.  426.320(b), we explain that 
neither an ALJ nor the Board will recognize as valid any attempt to 
assign rights under section 1869(f) of the Act.
    In Sec.  426.325, we describe the policies that are, and are not, 
subject to this review. Under this requirement, an aggrieved party 
would be allowed only to challenge an LCD or NCD. Conversely, an 
aggrieved party may not use this process to challenge anything that 
does not meet the definition of an LCD or an NCD (see Sec.  426.325). 
For example, draft LCDs or NCDs, and coverage decision memos would be 
excluded from review as they are predecisional. LCD and NCD provisions 
that are no longer in effect are excluded from review. Other 
interpretive policies that are not LCDs or NCDs would also not be 
subject to review under this process. Provisions of contractor policies 
that are based on things other than the reasonable and necessary 
provision of section 1862(a)(1)(A) of the Act, such as benefit category 
determinations, statutory exclusion determinations, and HCPCS/Revenue 
Code coding determinations, would not be subject to review under this 
part. In addition, any M+C or other managed care plan policy, rule, or 
procedure is not subject to review under this process. Individual claim 
determinations by adjudicators are also not subject to review under 
this process.
    In Sec.  426.330, we state that the aggrieved party filing the 
complaint bears the burden of proof and the burden of persuasion for 
the issue or issues raised in the complaint. The burden of persuasion 
will be judged by a preponderance of the evidence.

[[Page 63708]]

    Section 426.340 provides procedures to be followed after discovery 
and the taking of evidence are complete. If an aggrieved party has 
submitted new evidence pertaining to an LCD or NCD which the ALJ or the 
Board finds admissible, the ALJ/Board must review the new evidence and 
decide if the new evidence has the potential to significantly affect 
the evaluation of the LCD/NCD provision(s) in question under the 
reasonableness standard. If the ALJ or the Board determines that the 
new evidence does not have the potential to significantly affect the 
ALJ's or the Board's evaluation of LCD/NCD provisions, the review shall 
go forward to a decision on the merits. If the ALJ or the Board decides 
that the new evidence has the potential to significantly affect the 
evaluation of the policy, the ALJ or the Board must stay the 
proceedings and send the new evidence to the contractor or CMS. The 
contractor or CMS has 10 days upon receiving the evidence from the ALJ 
or the Board to provide a statement indicating whether a revision/
reconsideration will be initiated. If the contractor or CMS informs the 
ALJ or the Board that a revision/ reconsideration has been or will be 
initiated, then the stay shall continue and the ALJ or the Board shall 
set appropriate timeframes (not more than 90 days) by which the 
revision/reconsideration will be completed. If the contractor or CMS 
chooses not to initiate a revision/reconsideration and does not retire/
withdraw the LCD/NCD, the ALJ or the Board proceedings will continue on 
the original LCD/NCD.

E. Subpart D (The Review of an LCD) and Subpart E (The Review of an 
NCD)

    In subparts D and E, we set forth the procedures for the review of 
LCDs and NCDs, respectively. The process for LCD and NCD reviews is 
largely the same with the exception of the following:
    [sbull] LCDs are based on section 1862(a)(1)(A) of the Act; NCDs 
may also be based on other statutory provisions.
    [sbull] LCD reviews are conducted by an ALJ; NCD reviews are 
conducted by the Board.
    [sbull] ALJs and contractors participate in an LCD review; there is 
no role for ALJs or contractors in an NCD review.
    [sbull] We are not always a party to an LCD review, but are always 
a party to an NCD review.
    [sbull] Amicus participation is not allowed when reviewing an LCD, 
but may be allowed when reviewing an NCD.
    [sbull] Board decisions regarding NCDs will be made available on 
the Medicare Internet site, without beneficiary-identifying 
information.
    For the purpose of this preamble, we consolidate the discussion of 
the requirements and policy decisions when possible. Sections 426.400 
and 426.500 contain the requirements for filing an acceptable complaint 
regarding a provision or provisions of an LCD and an NCD, respectively. 
In both cases, a complaint must be in writing and must be from an 
aggrieved party. In Sec.  426.400(a), we require that complaints 
regarding LCDs be submitted to the office designated by CMS on the 
Medicare Web site, http://www.medicare.gov/coverage/static/appeals.asp 
(information on the designated office will be available by calling 1-
800-Medicare) or by filing a complaint concerning an NCD with the Board 
of HHS (see Sec.  426.500(a)). Should the appropriate office change in 
the future, this regulation shall be read to conform to that change, 
and the information will be made publicly available. We have simplified 
and clarified the complaint-filing procedures.
    In Sec.  426.400(b) and Sec.  426.500(b), we explain the 
circumstances under which a complaint will be considered timely 
received. A complaint will not be considered timely unless it is 
received by the office designated by CMS/Board of HHS within--(1) 6 
months of the written statement from each aggrieved party's treating 
physician for aggrieved parties who choose to file an LCD/NCD challenge 
before receiving the service; or (2) 120 days of the initial denial 
notice for aggrieved parties who choose to file an LCD/NCD challenge 
after receiving the service.
    In Sec.  426.400(c)(1) and Sec.  426.500(c)(1), we require a valid 
complaint to contain beneficiary-identifying information and a written 
statement from the treating physician indicating that the beneficiary 
needs the service that is the subject of the LCD/NCD. We also require 
the information in Sec.  426.400(c)(2) and (c)(3) and Sec.  
426.500(c)(2) and (c)(3), which is necessary to identify the LCD or NCD 
(or the specific provision or provisions of the LCD or NCD) that is 
(are) adversely affecting the aggrieved party. In addition, we require 
a statement from the aggrieved party that explains the rationale for 
the complaint.
    In Sec.  426.400(c)(4) and Sec.  426.500(c)(4), we also allow the 
aggrieved party to submit copies of material clinical or scientific 
evidence that supports the complaint. We require that any proprietary 
data submitted be marked as ``proprietary data'' and include the legal 
basis for so identifying it. In addition, in Sec.  426.400(c)(4) and 
Sec.  426.500(c)(4), we require that, in order to be cons