WASHINGTON--Members of the Senate Finance Committee, which oversees Medicare, have raised concerns over plans to transfer Medicare claims appeals from the Social Security Administration to the Department of Health and Human Services.

Committee Chairman Sen. Charles Grassley, R-Iowa and Sen. Max Baucus, D-Mont., say that staffing may be an issue when the government transfers Administrative Law Judges--who handle Medicare claims appeals--from Social Security to HHS. The Medicare Modernization Act mandates the transfer no later than Oct. 1.

Social Security has about 950 judges working out of more than 100 offices nationwide. All spend at least some portion of their time on Medicare appeals, and altogether have a support staff of about 5,200.

HHS plans to bring on only 50 ALJs working out of only three field offices--Cleveland; Irvine, Calif.; and Miami--with a reduced support staff, though staff numbers could increase with additional funding, according to CMS.

"While we understand the need to design the process with an eye on controlling costs, we feel that three offices do not rise to the level of a geographic distribution as envisioned by Congress in enacting the MMA," the lawmakers stated in a March 25 letter to HHS Secretary Michael Leavitt and Social Security Commissioner Jo Anne Barnhart. They added that so few offices could limit beneficiary access to appeals judges.

The senators also brought up the fact that HHS has yet to hire any new ALJs. "While we realize that there is a lengthy hiring process, especially for ALJs, we are concerned that no staff, including management, is on board yet. In fact, we understand that several of the position descriptions and vacancy announcements have not even been written."

The transfer has raised concerns among providers as well. ALJs, who handle second-level appeals, have maintained impartiality because they work for Social Security, observers say, and moving them under the HHS umbrella could create a conflict of interest.

But HHS contends that other reform efforts in the claims appeals process should alleviate the problem. Medicare will soon be contracting out to new entities called Qualified Independent Contractors to handle first-level appeals. The QICs will reconsider all cases involving medical necessity issues. This, according to HHS, should drastically reduce the number of cases passed on to the ALJs.

Grassley and Baucus requested a response to their letter by April 8. For more on the ALJ transfer, visit the HHS Office of Medicare Hearings and Appeals Transition Web site, available by clicking here.