State Bar of Michigan
Volume 6, Issue 2, July 2010

Disabilities Project Newsletter

Demystifying the Administrative Law-Medicaid Fair Hearings Process
by Lisa K. Gigliotti, Administrative Law Judge,
State Office of Administrative Hearings and Rules

Overview and Purpose

Executive Order 05-01 transferred administrative hearings for the Department of Human Services and Department of Community Health to the newly created State Office of Administrative Hearings and Rules (SOAHR) within the Department of Energy, Labor, and Economic Growth. Pursuant to E.O. 05-01 SOAHR became the new home for administrative hearings regarding denials of Medicaid benefits, and the termination, suspension, and reduction of authorized Medicaid services.

Astoundingly, in 2009 SOAHR received over 30,000 requests for hearings resulting from actions taken by the Department of Human Services and the Department of Community Health. Many of those requests for hearing were related to Medicaid applications or authorized Medicaid services. Examples of Medicaid-related hearings are a termination of Medicaid services authorized by community mental health (CMH), the denial of a requested medical treatment from a Medicaid health plan (MHP), denial of a Medicaid application, denial of payment for medication by a fee-for-service Medicaid beneficiary, or a reduction in Home Help Services payment authorization.

A Medicaid applicant or recipient may appear at hearing in pro per or by counsel. This article serves to provide an overview of the Medicaid Fair Hearings law and the administrative hearings process.

Executive Branch Administrative Hearings v. Judicial Branch Legal Proceedings

In a judicial branch proceeding the Michigan Court Rules and Michigan Rules of Evidence apply. The practitioner should be mindful that the Administrative Procedures Act (APA) governs administrative proceedings. Act 306 of 1969, MCL 24.201, et. al. While many principles of the Michigan Court Rules and Rules of Evidence are followed, there are differences with the APA. One example is that in APA-governed proceedings the rules of evidence are slightly relaxed; see MCL 24.277 language:

In a contested case the rules of evidence as applied in a nonjury civil case in circuit court shall be followed as far as practicable, but an agency may admit and give probative effect to evidence of a type commonly relied upon by reasonably prudent men in the conduct of their affairs.

An additional distinction is that in a case contesting a state agency action, the appellant must exhaust the state administrative hearing process before he can proceed to circuit court. The administrative hearing will be the depository of proofs; it is critical to present any issues, arguments, evidence, or proofs you desire to carry forward to a circuit or appellate court.

Differences Between a Non-Medicaid Administrative Hearing and a Medicaid Fair Hearing

Non-Medicaid state administrative law hearings often involve one section of state statute and the rules promulgated pursuant to state statute. With state statute tucked under one arm and the APA tucked under the other arm, the non-Medicaid practitioner confidently steps into the administrative hearing room.

Contrastingly, administrative fair hearings for Medicaid applicants or Medicaid beneficiaries is a fascinating interplay of federal law, federal regulations, state law, state administrative rules, and Department of Community Health and Department of Human Services policy. The complex interplay may appear mysterious and daunting! For this reason a practitioner may feel hesitant representing in this plentiful area. An easy method to assist the practitioner is to disentangle the legal bundle by working through the hierarchy of laws.

Federal law: The right to a Medicaid hearing has its origins in the Title XIX of the Social Security Act. The Code of Federal Regulations (CFR) contains the enforcement provisions for the federal statute.

An agency must grant an opportunity for a hearing to:

• a fee-for-service Medicaid applicant or recipient whose claim for services is denied or given limited authorization, not acted on with reasonable promptness, or whose previous authorized service is reduced, suspended, terminated, or denied. 42 CFR 431.200, 42 CFR 431.201.
• a capitated-managed care Medicaid recipient (community mental health enrollee or Medicaid managed care health plan enrollee) whose claim for services is denied or given limited authorization, not acted on with reasonable promptness, or whose previous authorized service is reduced, suspended, terminated, or denied. 42 CFR 431.400, 42 CFR 431.201.

The Code of Federal Regulations explicitly instruct that the Medicaid hearing follow the due process principles outlined in Goldberg v. Kelly, 397 U. S. 254 (1970), 42 CFR 431.205(d). Accordingly, a Medicaid applicant or recipient has a right to a full, evidentiary hearing in front of an impartial hearing officer, including the right to present witnesses, to confront and cross-examine adverse witnesses, to be provided the reason the action was taken as well as the documents used to make the determination, and the right to a timely decision. 42 CFR 438.242 for Medicaid fee-for-service enrollees. 42 CFR 438.406(3) for CMH or MHP enrollees.

Michigan specific law: There are three general variances to the Social Security Act unique to Michigan:

1. Michigan obtained waivers from specific Medicaid provisions of the Social Security Act.
   
   
2. The federal Code of Federal Regulations mandates each state participating in Medicaid to submit a state plan detailing how the state will implement its Medicaid program, including the Medicaid services it will provide. Michigan has a current Medicaid state plan approved by the federal Centers for Medicare and Medicaid (CMS).
   
   
3. Michigan obtained amendments to particular sections of its Medicaid state plan.

In addition, the Michigan Social Welfare Act and Mental Health Code also address the provision of Medicaid services. (Act 280 of 1939, MCL 400.1 et seq.; Act 258 of 1974, MCL 330.1100 et seq.)The Department of Community Health has been designated by CMS as the single state Medicaid agency. By memo of understanding the Department of Human Services (DHS) implements the application and continuing eligibility aspects of the Michigan Medicaid program for the Department of Community Health (DCH). While DCH is technically the single state Medicaid agency, Medicaid policy may be posted on either the DCH or DHS websites depending on whether the issue relates to Medicaid eligibility or services for an enrolled Medicaid beneficiary.

It is recommended the practitioner be familiar with these various legal sources when representing the Medicaid applicant or recipient.

An additional difference is that while many decisions issued by a hearing officer take the form of a recommended decision to a board or department director, pursuant to delegation by the Director of the Department of Community Health, Medicaid benefit decisions and orders are final decisions. MCL 24.285, the Department of Community Health Delegation of Authority.

Required Steps and Timelines

Medicaid practitioner prepare! A practical means to prepare for a Medicaid fair hearing is to ascertain what action was taken by a Medicaid provider, and to determine what federal and state laws, rules, and policies apply. Prepare a hearing summary that articulates your client’s position: state why the action may have been improper by applying the facts of the case to the various federal regulations and state policy criteria. Do not assume the hearing officer knows which of the various law and policies apply. Do not not proceed by assuming all that is necessary is to provide personal testimony. A well-prepared attorney will file a hearing summary with SOAHR and serve the opposing party at least 14 days in advance of the hearing. The hearing summary will list the federal regulations and state policy relied on, with evidentiary documents attached.

Medicaid practitioner beware! There are limitations on the right to a due process fair hearing; the Medicaid applicant or beneficiary must meet explicit requirements before achieving the right. A request for hearing must be made in writing. 42 CFR 438.221(a) for Medicaid fee-for-service enrollees. CFR 438.402(3)(ii) for CMH or MHP enrollees. Word-of-mouth or telephone calls do not suffice. The Code of Federal Regulations instructs that a state is required to provide a fair hearing only if the Medicaid applicant’s or beneficiary’s written request is received within 90 days. 42 CFR 438.221(d) for Medicaid fee-for-service enrollees. 42 CFR 438.402(2) for CMH or MHP enrollees. The 90-day clock starts the date of the Department’s, CMH’s, or MHP’s negative action notice.

Medicaid practitioner take heed! If an appellant fails to appear, MCL 24.272 and MCL 24.278 allow for default on the absent party and for the ALJ to proceed with hearing and issue a disposition in the matter.

Medicaid practitioner consider! A Medicaid applicant or beneficiary may request a SOAHR rehearing of an ALJ final decision. MCL 24.287. A rehearing is granted under specific conditions and only if the request is received within the timeline for rehearing. A Medicaid applicant or beneficiary may appeal an ALJ final decision to circuit court but it is critical the statutory timelines and conditions for appeal are met.

Conclusion

The complex federal and state laws and policies make representation of the Medicaid client appear daunting. By becoming familiar with hierarchical structure of applicable law and the administrative hearing process the mystery and intimidation is removed!

Previous editions of this newsletter are online.