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CCH® Reimbursement Integrated Library
The Reimbursement Integrated Library delivers the key performance indicators for maximizing reimbursement. The Library includes three invaluable titles:

• Dennis Barry's Reimbursement Advisor - This monthly newsletter provides all the facts about reimbursement strategies to minimize the adverse effects of DRGs, RBRVs, APCs and capitation to optimize hospital reimbursement.
• Receivables Report - This monthly newsletter includes actual profit-improvement examples from facilities nationwide, secrets for successfully challenging denials, tips for using automation to increase cash flow, and strategies your colleagues are using now to prepare for health care reform.
• Hospital Accounts Receivable Analysis - This quarterly journal is a synopsis of statistical data related to hospital receivables.

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August 2008, Volume 23, No. 12

As the Centers for Medicare and Medicaid Services (CMS) continuously clarifies, amends and revises rules governing the myriad aspects of the Medicare regulations, so do the rules and their transformations continuously receive scrutiny. In the August 2008 issue, authors examine CMS’ final rule revising Provider Reimbursement Review Board (PRRB) appeals as well as the agency’s new additional criteria to define what is considered a new graduate medical education program. In addition, authors examine two recent federal district court decisions in which hospitals’ scrutiny of CMS policy results in rulings with favorable implications for providers.

• D.C. district court decision gives new life to Medicare bad debt moratorium: Foothill case compels CMS to confront its directly conflicting and irreconcilable positions. Less than a month after the Centers for Medicare and Medicaid Services (CMS) attempted to bury the Medicare bad debt moratorium, the U.S. District Court for the District of Columbia gave the moratorium new life. The court’s decision, in Foothill Hospital-Morris L. Johnston Memorial v. Leavitt, cuts the legs out from under a recently issued Joint Signature Memorandum (JSM) in which CMS asserted that longstanding policy is to require that accounts be returned from outside collection agencies before the accounts can be claimed as bad debts. In this article, the authors examine CMS’ contradictory and irreconcilable position on this issue and the implications of the Foothill decision.

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Fourth Quarter 2007, Volume 22, Number 1

• Gross Days Revenue Outstanding. US hospitals closed 2007 with a slight increase in the gross days revenue outstanding (GDRO) average. The fourth quarter GDRO average was 50.78, up 0.16 days from the third quarter. Nevertheless, the average GDRO continues to fall well within benchmark range, which is to hold the GDRO average to fewer than 60 days. The pages of the HARA Report on Fourth Quarter 2007 hold more details regarding this key indicator.

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The timing of the enactment of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (PubLNo 110-275) has caused CMS to delay the release of several tables and figures, including the wage index and standarized amounts, related to the inpatient hospital prospective payment system (IPPS) update for fiscal year (FY) 2009. The new law was enacted July 15 and CMS released the advance text of the IPPS final rule on August 1. Within the rule, CMS noted that the missing tables and figures would be published either in another final rule or on the CMS website before October 1, 2008, the beginning of FY 2009. Most of the delays are related to Sec. 124 of MIPPA, which extends wage index reclassifications for certain hospitals as well as extending certain special hospital exceptions. The extension made it impossible for CMS to recompute the wage index in time for publication of the final rule, and affected calculations in other tables, too. CCH Chicago Bureau, Aug. 7, 2008, ¶180,744.

CMS has begun a comprehensive review of the Medicare hospital cost report, and proposes to split the current cost center for Medical Supplies Charged to Patients into one line for “Medical Supplies Charged to Patients” and another line for “Implantable Devices Charged to Patients.” Hospitals should use revenue codes established by the National Uniform Billing Committee (NUBC) to determine what should be listed in each of these cost centers. While a device must be implantable to map to the new implantable device cost center, CMS does not require that the device remain in the patient at the time of discharge. CMS expects the proposed revision to the cost report to be issued after the publication of the final rule. The actual revised cost report and related software will not be available for hospitals to use, however, until spring 2009 at the earliest. CMS is phasing in over two years an adjustment to the average hourly wage comparison criteria that an individual hospital must meet to qualify for a geographic reclassification. For the first transitional year, FY 2010, the average hourly wage standards will be changed to 86 percent for urban and group reclassifications and to 84 percent for rural hospitals. In the second year, FY 2011, the average hourly wage standards will be changed to 88 percent for urban and group reclassifications and to 86 percent for rural hospitals. Currently, for rural hospitals, the reclassifying hospital’s average hourly wage must be equal to at least 82 percent of the average hourly wage of hospitals in the area in which it seeks reclassification; the rate is 84 percent for urban hospitals seeking reclassification. CMS is not proposing any changes to the current wage index for FY 2009. A wage index reform proposal is “anticipated to be included in the FY 2010 IPPS proposed rule,” according to CMS. CCH Chicago Bureau, Aug. 7, 2008, ¶180,744.

The use of telephone, video teleconferences, and in-person hearings to decide Medicare administrative law judge (ALJ) cases did not allow the Office of Medicare Hearings and Appeals (OMHA) to decide cases in a timely manner. In the 13 months since it was established, the OMHA conducted 78 percent of its appeals via telephone, 12 percent through a video teleconference, and 10 percent in-person. Although most appellants were satisfied with the hearing formats they were offered, OMHA's ability to manage its caseload is hampered by incomplete and inaccurate data. A review of OMHA's first 13 months in operation revealed that only 15 percent of cases with a 90-day requirement were not decided on time. The average decision time span for 90-day cases was 82 days. Of those cases without the 90-day requirement, the average decision time was 107 days. Both 90-day and non 90-day cases incurred delays early in the appeals process. It was recommended that OMHA offer the option of video teleconference to appellants, to continue to improve compliance with the 90-day limit on deciding certain cases, to improve telephone and video teleconference hearings, and to improve the quality of data in the appeals system. OIG Report , July 1, 2008, ¶52,320.

State Medicaid directors are advised that as of October 1, 2008, Medicare will no longer pay for the costs of care for certain conditions patients acquire during inpatient care. These conditions are caused by medical errors or other failures by providers and are referred to as “hospital-acquired conditions,” or “ never events.” An unintended result of this policy is that providers may attempt to bill Medicaid for the services furnished to dual eligibles. CMS does not intend for Medicaid funds to pay the costs of never events. States are encouraged to amend their Medicaid plans to avoid this possibility. Three amendments are suggested for the states' selection. States may: (1) adopt their own policies excluding payment for specific, listed never events; (2) exclude from coverage any services for which Medicare has denied payment; or (3) amend their plans to exclude services that meet specified criteria. State Medicaid agencies are encouraged to apply the policy to the entire Medicaid population rather than limiting nonpayment for never events to dual eligibles. Letter to State Medicaid Directors, No. SMDL-08-004, July 31, 2008, ¶52,324.

A hospital-based skilled nursing facility (SNF) was properly declared to be a separate entity from a hospital and was therefore required to begin its cost reporting period on the first day it began rendering services covered by Medicare, making reimbursement subject to the prospective payment system (PPS) reimbursement methodology, not the cost-based method. The SNF was classified as a “new provider,” because the SNF (1) was certified by CMS as a provider five years after the hospital was certified, (2) was issued its own unique provider number different from that of the hospital, (3) had entered into a separate agreement with CMS to participate in Medicare, and (4) had met certain requirements of 42 C.F.R. §483.1pertaining to the provision of services, quality of care, and relationships with other providers distinct from those for hospitals. The hospital claimed reimbursement for the SNF on a reasonable-cost basis, because the hopsital's cost reporting period began before the effective date of the implementation of prospective payment systems (PPS) for SNFs. The fiscal intermediary initially accepted the cost report, then reversed its decision, disallowing $355,465 in costs and applying a PPS methodology of reimbursement. Community Care v. Leavitt, 5th Cir., July 29, 2008, ¶302,479.

A district court's determination that a fiscal intermediary's (FI) rejection of a hospital's request for an adjustment of its Notice of Program Reimbursement (NPR) was proper, because the hospital's request was filed on an untimely basis with the FI. The intermediary issued a NPR on June 24, 1997, for the cost reporting period ending December 31, 1994. Under the Tax Equity and Fiscal Responsibility Act of 1982 (PubLNo 97-248) (TEFRA) a hospital, under certain circumstances, can request an exception to the rate-of-increase ceilings relevant to the reimbursement of operating costs. The hospital prepared a TEFRA adjustment request for its cost reporting period and placed the request in the mail on December 22, 1994. It was received December 24, 1997, 183 days after June 24, 1997. The fiscal intermediary denied the request as untimely under the 180-day time period set forth at 42 C.F.R. §413.40(e)(1)because the request was received 183 days after the NPR date. The hospital relied upon regulatory language in effect in 1994 that the application be “made” within 180 days, and not received. The regulations did not define the term “ made” thus making the adjustment request timeliness deadline ambiguous. CMS, however, relied upon amended §413.40(e)(1), issued in 1995, to clarify that a TEFRA adjustment request is “made” when “received ” by the fiscal intermediary. The preamble to the proposed rule regarding; the amendment noted that the regulation then in effect used the word “ made,” rather than “received;” but stated that CMS had “ consistently interpreted the word made' to mean received by the fiscal intermediary' since the original rule was promulgated” in 1982. St. Mary's Hospital v. Leavitt, 8th Cir., July 28, 2008, ¶302,477.

A federal court in Massachusetts approved the settlement of enforcement proceedings in a class action by nursing home residents with developmental disabilities against the Massachusetts agencies responsible for their care. Counsel for the class, the state officials, and the court agreed that the state's efforts were best spent on establishing community placement and access to therapy for nearly all of the class members rather than struggling to provide active treatment for them in standard nursing facilities. A group of parents and guardians of class members at one specialized residential facility objected to the settlement because these class members were receiving comprehensive services, and the settlement did not require “active treatment ” for individuals placed in the community. They expressed concern that these class members might be required to leave the facility and lose the services they were receiving. They asked the court either to reject the settlement or decertify the class. The court approved the settlement over the objections of this group, noting that it must consider the fairness of the settlement toward the class as a whole. Safeguards were in place to assure that no one who needed nursing facility services would be forced out. The needs of each class member were to be addressed individually. The settlement obligated the state to continue to provide the services at the existing level pending a transition to the community and to provide transition services. Rolland v. Patrick, D. Mass., June 16, 2008, ¶302,478.

When Maine's Medicaid agency learned that one recipient of home- and community-based services had obtained additional hours through payment by a third party, it reduced the services available to him. After an administrative appeal, the recipient sued the agency. He claimed that its action was inconsistent with two requirements of federal Medicaid law: (1) to set reasonable standards for the provision of medical assistance; and (2) to consider the income and resources of others to be available to a recipient only if the recipient is that person's spouse or minor child. Soc. Sec. Act §1902(a)(17)(D) prohibits the agency from considering the income or resources of any individual available to meet the needs of a recipient unless the recipient is the individual's spouse or minor child. The state's regulation requiring consideration of resources already provided may conflict with the statute. If so, the federal law would preempt the regulation. The court allowed the litigation to proceed on this count. Suzman v. Harvey, D. Me., July 25, 2008, ¶302,480.

An owner of a durable medical equipment supply (DME-supply) company properly received a sentencing enhancement because she was an integral part of a conspiracy with certain pharmacies to defraud the Medicare program. The DME-supply company owner recruited doctors to fraudulently prescribe aerosol medications and collected a kickback of 50 percent of the reimbursement amount the pharmacies received from each fraudulent claim. Prior to the DME supply owner's sentencing, a probation officer recommended that she receive a four-level leadership-role enhancement because she was a leader of a criminal activity that involved five or more participants. The owner objected to this enhancement, and argued that she was not an organizer of the conspiracy because she did not control any of the Medicare beneficiary participants. The DME-supply owner's participation in the conspiracy was integral, however, because she provided the doctors and the Medicare beneficiaries necessary for the scheme to work. Also, the owner received a larger share of the financial fruits of the crime. U.S. v. Perez, 11th Cir., July 30, 2008, ¶302,482.

The Emergency Medical Treatment and Active Labor Act's (EMTALA) retaliation provision does not constitute a valid abrogation of state sovereign immunity, nor does EMTALA permit actions against a hospital administrators. In addition, the constitutional harm in a claim based on dissemination of damaging information by an employer is not the defamation itself, but the deprivation of procedural due process, such as denial of a hearing. An EMTALA whistleblower alleged retaliatory discharge by the hospital and its director after he complained to the director that patients were being transferred from a regional medical center when their insurance benefits would no longer pay for their stay at the medical center, but prior to the patients being fully stabilized. The Eleventh Amendment does not allow an action by a private individual against a state hospital in federal court except by consent of the state or under a valid abrogation of state sovereign immunity by Congress. Although the language of EMTALA undoubtedly creates a federal cause of action, it does not specifically provide for suits against states and the mere acceptance of Medicare funds does not establish that a state has consented to suit in federal court. Secondly, under EMTALA, suits must be brought against the “participation hospital,” not an individual. Finally, because the discharged whistleblower was allowed a hearing to challenge his termination, he suffered no procedural due process violation. The motion to dismiss was granted. Morres v. Deer's Head Hospital Center, D. Md., July 25, 2008, ¶302,481.

Technical and typographical errors were identified and corrected in a correction notice for the July 7, 2008, Proposed Rule addressing the Medicare Part B payment policy, including the physician fee schedule. CMS added contact information regarding the educational requirements for nurse practitioners and clinical nurse specialists, and physician certification and recertification for Medicare home health services. Information regarding a formula for cost per equipment was corrected, and language summarizing the current nurse practitioner qualification standards was corrected. Proposed rule; correction, 73 FR 44952, Aug. 1, 2008, ¶220,609.

According to the report, of 100 local, community pharmacies, 78 relied on pharmacy services administrative organizations (PSAOs) to contract with prescription drug plan (PDP) sponsors and, overall, these pharmacies were satisfied with their PSAO services. Almost all of the 100 sampled pharmacies and all of their PSAOs reported concerns about contracting with PDP sponsors. These concerns related to network development methods, standard terms and conditions, extended-day supply terms, negotiations, and contracting deadlines. OIG suggests that CMS: (1) consider issuing guidance requiring PDP sponsors to make available to pharmacies the procedures for opting out of contract addendums; and (2) determine whether PDP sponsors are complying with the “ any willing pharmacy” provision as it relates to contracting with PSAOs. OIG Report, July 29, 2008, ¶52,325.

Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 1570, Aug. 1, 2008, ¶157,455. Premium content

One-Time Notification Manual, Pub. 100-20, Transmittal No. 362, Aug. 1, 2008, ¶157,456. Premium content

State Operations Provider Certification Manual, Pub. 100-07, Transmittal No. 36, Aug. 1, 2008, ¶157,457. Premium content

Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 1568, Aug. 1, 2008, ¶157,458. Premium content

A civil money penalty (CMP) of $5,000 was properly imposed against a skilled nursing facility (SNF) when one of its residents was placed in an immediate jeopardy due to a medication error. A SNF is required to assure that residents are free from significant medication errors as stated in 42 C.F.R. §483.25(m)(2). A nurse who had a history of medication errors, administered insulin to a resident at ten times the amount prescribed by the resident's physician. This error was not identified for six hours. This particular nurse posed an immediate jeopardy situation for all the SNFs residents. In addition, a civil money penalty (CMP) of $22,000 was properly imposed against the SNF for violations of the Life Safety Code requirements. The SNF failed to comply with the Life Safety Code requirements governing exit access when a gate at the facility was found with a delayed egress lock that did not conform to a pressure lock requirement that opens within 15 seconds. The facility did not a post a sign by the locked exit gate that instructs the user to push the release device until an alarm sounds. The SNF did not seek assurances from each of the resident's physicians that the clinical needs of the residents for security out-weighed safety needs of egress from the locked gate to obtain the exception from this Life Safety Code requirement. It was not sufficient for the SNF to simply make sure that a staff member had the unlock code at all times. Hallmark House Nursing Center v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-07-434, Dec. No. CR1814, July 10, 2008, ¶121,400. Premium content

Two per-instance civil money penalties of $5,000 each were imposed because of a skilled nursing facility's noncompliance with the requirements of 42 C.F.R. §§483.25(m)(2) and 483.60 to ensure that residents are free of significant medication errors and to provide pharmacy services under the supervision of a licensed pharmacist, respectively. The resident was admitted from the hospital with several medications. There were two orders for a drug used to treat cancer, one for weekly and one for daily administration. A nurse resolved the conflict herself without consulting either the attending physician or the pharmacist and entered the daily dose in the resident's records, omitting any mention of the weekly order. When the pharmacist contacted the SNF to question the medication order, another nurse confirmed the daily order without mentioning the weekly order. Neither the pharmacist nor the nursing department attempted to contact the resident's physician. The physician also had made an entry in the medication record to correct the daily administration. The penalties were reasonable because they were in the middle of the range for per-instance violations and the failure to catch or correct the error or contact the physician at several points established culpability. Hawthorne Inn of Danville v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-07-746, Dec. No. CR1801, June 11, 2008, ¶121,391. Premium content

On remand from an appellate panel of the Departmental Appeals Board (see ¶121,387), it was found that CMS' findings of a skilled nursing facility's (SNF) substantial noncompliance for the period from September 5 to September 17, 2006, was supported by the evidence; therefore, the penalties of $100 per day for that period were within the agency's discretion. The facility also was in substantial noncompliance with 42 C.F.R. §483.15(g)(1)because it failed to provide necessary medical social services. The SNF staff mentioned to the resident's daughter that they were considering hospice placement, but did not ask for her consent before ordering a hospice consultation, which required a visit with a new provider and a significant change in the plan of care. SNF staff knew that the resident's family was uncertain about hospice care but ordered the hospice consultation without asking for the family's consent. CMS' imposition of denial of payment for new admissions (DPNA) for the period from August 20 through September 5, 2006, was reasonable and within its discretion. Claiborne and Hughes Healthcare Center v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-08–525, Dec. No. CR1815, July 10, 2008, ¶121,401. Premium content

A preponderance of evidence demonstrated that skilled nursing facility (SNF) was in substantial compliance with Medicare conditions of participation and there was no basis for the imposition of enforcement remedies. A SNF must immediately inform the resident, consult with the resident's physician, and notify the resident's legal representative or interested family member when there is a significant change in a resident's physical, mental or psychosocial status as required by 42 C.F.R. §483.10(b)(11). CMS contended that the resident vomited four times, based on reports by the resident's granddaughter who did not have any medical training, and that the facility failed to contact the resident's physician and family after the second vomiting episode. CMS argued this was a significant change in the resident's condition. However, the SNF proved that it did comply with 42 C.F.R. §483.10(b)(11)because the evidence supported a finding that there was only one vomiting episode extended over a limited time, not four episodes, and that it took action after the resident's vital signs became unstable in accordance with accepted medical protocols. Furthermore, the SNF was in compliance with 42 C.F.R. §483.75, which addressed the standards of administration and provides that a facility must be administered in a manner that enables it to use it resources effectively and efficiently for the benefits of its residents. Life Care Center of Bardstown v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-07-468, Dec. No. CR1818, July 16, 2008, ¶121,403. Premium content

A civil money penalty (CMP) of $266,550 was properly imposed on a skilled nursing facility (SNF) that delayed treatment of a protruding fractured femur for a cognitivly impaired resident who also suffered from seizures and uncontrolled movement of her extremities as required by 42 C.F.R. §483.10(b)(11). The SNF failed to: (1) immediately notify the resident's physician of the need to use a pressure dressing for bleeding; (2) inform the physician the femur was protruding through her right knee; and (3) notify the family of the seizure activity and right knee injury until the following day. Also, because the resident was not seen by a physician until 38 hours had passed since the fracture was noticed, the SNF failed to provide the necessary care and services needed to attain or maintain, the resident's highest practicable physical, mental, and psychosocial well-being in accordance with 42 C.F.R. §483.25. In addition, the SNF failed to administer the facility in a manner that enables it to use its resources effectively and efficiently as required in 42 C.F.R. §483.75when the SNF's systems failed to prevent the prior violations. Magnolia Estates Skilled Care v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-06-192, Dec. No. CR1804, June 13, 2008, ¶121,392. Premium content

CMS' motion for summary judgment was granted against a skilled nursing facility's (SNF) that had failed to implement its policy governing mechanical lift and failed to follow the residents' assessments and care plans regarding mechanical lifts. The SNF was found not in substantial compliance with 42 C.F.R. §483.25(h)(2)which mandates that a SNF provide each of its residents adequate supervision and assistance devices to prevent accidents. The SNF argued that summary judgment was unfair based on a single finding of noncompliance and that material facts in this case are in dispute. However, the finding of noncompliance were sustained because a condition of immediate jeopardy to the residents of the SNF existed. The civil money penalty (CMP) of $13,600 was found to be reasonable. Golden Living Center - North Little Rock v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-07-676, Dec. No. CR1810, June 26, 2008, ¶121,397. Premium content

CMS' determination that a skilled nursing facility (SNF) violated 42 C.F.R. §483.25(h)(2), which requires a SNF to provide adequate supervision and assistance devices to prevent accidents, was not clearly erroneous. SNF staff left the resident unsupervised in a dining area reserved for those who needed assistance with eating and placed hot soup in front of her. The staff knew that the resident believed she could eat independently despite her inability to maintain a sitting position, hold her head up, and convey food to her mouth with a spoon without spilling. The resident suffered a second degree burn about 20 square inches in size. The risk of spills and burns created by the lack of supervision and assistance was clear and foreseeable, and the SNF's practice of leaving the bowls of soup covered and supplying the resident with a cover for her lap reflects an awareness of the risk. The finding of immediate jeopardy also is not clearly erroneous. The immediate jeopardy remained until the complete plan of correction was submitted to the agency, and the violation continued until all staff had been trained to follow the new, safer procedures in the plan of correction. Civil money penalties of $4,500 for the six days of immediate jeopardy were in the middle range, and $150 for the remainng period of noncompliance was near the minimum. Both were reasonable. Mercy Bellbrook v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-07-628, Dec. No. CR1812, July 7, 2008, ¶121,398. Premium content

CMS properly imposed a per instance civil money penalty (PICMP) of $6,500 against a skilled nursing facility (SNF) for failure to prevent a resident from eloping from the facility and failure to ensure the resident received adequate supervision in accordance with 42 C.F.R. §483.25(h)(2) . A resident with a history of elopements disappeared from the SNF and was found the next morning a few blocks away from the facility in his wheelchair wearing only underclothes that were soaked with urine. As a result, the resident suffered from hypothermia which required his hospitalization and treatment. The SNF argued that CMS failed to show that it violated 42 C.F.R. §483.25(h)(2) because there was no accident, that this resident's elopement was not foreseeable, and the resident chose to leave the facility voluntarily with his girlfriend which was his right. Although compelling, the SNF's argument was not persuasive because even though the resident does have a right to depart, if the resident and the facility does not follow proper procedure the departure is an elopement and not a resident's right to depart. It is part of the SNF's responsibility to supervise the resident, and the SNF is expected to be notified when a resident leaves the facility. An unsupervised departure is clearly not planned or intended by the SNF and therefore this was an elopement that did cause actual harm to the patient. Heritage Park Rehabilitation and Nursing Center v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-06-366, Dec. No. CR1820, July 29, 2009, ¶121,405. Premium content

Because A skilled nursing facility's (SNF) fire alarm system was not working as required by the Life Safety Code during surveys on April 12 and May 24, 2007, CMS was required to impose a Denial of Payment for New Admissions (DPNA) and the disapproval of the SNF's nurse aide training program for two years. The system included doors that were held open with a magnetic charge and that were suppose to close automatically when activated by the alarm. They failed to close when tested during each survey. The SNF obtained a new system. At a survey on July 24, 2007, the doors failed to close again. The SNF claimed that its staff later learned that the system had not been programmed properly, and the installers of the system corrected the problem. The failure of the system to operate properly during the July 24th survey was not an unforeseeable or isolated incident because the deficiency was in the same component of the system as the previous deficiencies, which also were connected to programming. Van Wert Manor v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-08-69, Dec. No. CR1806, July 19, 2008, ¶121,394. Premium content

A civil money penalty (CMP) of $100,000, an assessment of $42,220, and an exclusion from participating in Medicare and other federal healthcare programs for seven years was imposed properly against a group of durable medical equipment, prosthetics, orthotics, and suppliers (DMEPOS) that submitted false and fraudulent claims for payment to the Medicare program. The group had fabricated patient records to support Part B reimbursement claims, and falsely claimed that they had supplied orthotics to patients after the patients were discharged from the hospital. The imposition of a CMP of $100,000 was reasonable given that the maximum CMP allowed would have been $540,000. The $42,220 assessed against the group also was reasonable because it was within the maximum assessment amount allowed under the law, and based on the aggravating evidence in the case and the lack of mitigating evidence. The exclusion of seven years from federal healthcare programs also was warranted, given the “concerted and sophisticated scheme to defraud the Medicare program extending over a period of years.” The Inspector General's determination was upheld. The Inspector General v. Frounfelter and Kast Orthotics and Prosthetics, Inc., HHS Departmental Appeals Board, Appellate Division, Doc. No. C-07-618, Dec. No. CR1808, June 23, 2008, ¶121,396. Premium content

A durable medical equipment prosthetics orthotics and suppliers (DMEPOS), which had his Medicare enrollment revoked and later reinstated, did not have a right to a hearing when there was no adverse determination by CMS. Under 42 C.F.R. §424.545(a)and 42 C.F.R. §498.5(e) , a supplier has a right to a hearing to contest a determination by CMS to revoke his or her enrollment in the Medicare program, but only if there was an extant adverse determination. Because CMS unconditionally reinstated the supplier's enrollment retroactively, there was no extant adverse determination that the supplier could challenge. The supplier's request for a hearing was dismissed. Clifford v. CMS, HHS Departmental Appeals Board, Appellate Division, Doc. No. C-08-359, Dec. No. CR1817, July 15, 2008, ¶121,402. Premium content

The provider's right to a hearing was dismissed because of (1) “abandonment” and (2) failure to comply to an administrative law judge's (ALJ) orders. The provider's failure to comply with the Clinical Laboratory Improvement Amendments of 1988 (CLIA) proficiency testing requirements resulted in suspension of the provider's CLIA certificate, cancellation of Medicare payments and a civil money penalty of $500. The provider failed to file evidence and briefs addressing issues in the case for a pre-hearing exchange and subsequently ignored an order from the ALJ to comply. Under 42 C.F.R. §498.69(b)“abandonment” occurs when a party fails to appear at a pre-hearing conference or hearing without previously showing good cause for failing to do so and where the party fails to respond with good cause to an ALJ order to show cause. Aly v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-08-51, Dec. No. CR1807, June 23, 2008, ¶121,395. Premium content

A skilled nursing facility (SNF) did not file a timely request for a hearing regarding per instance civil money penalties (PICMP) imposed against it, and it did not show good cause for an extension of time to file a request for a hearing. The SNF was notified on February 13, 2008, that it was not in substantial compliance with Medicare program participation requirements and that it would receive a $10,000 PICMP it was also notified that it had no later than 60 days from the date of the letter to file a request for a hearing before an administrative law judge. On May 6, 2008, the SNF filed a request for a hearing and acknowledged that its request for a hearing was late, but said that it was waiting for results from the informal dispute resolution (IDR) process. The SNF's participation in the state IDR process is not good cause for granting an extension of time to file a request for a hearing because it is a separate procedure in addition to the appeal rights provided to facilities under federal regulations. CMS' motion to dismiss the request for a hearing was granted. Brookside v. CMS, HHS Departmental Appeals Board, Appellate Division, Doc. No. C-08-434, Dec. No. CR1813, July 9, 2008, ¶121,399. Premium content

A physician's office laboratory failed to show good cause for its failure to file a timely request for a hearing, nor did it file for an extension of time to file a request for a hearing regarding a CMS determination that it had violated Medicare and Medicaid conditions of participation. A survey found that the laboratory had immediate jeopardy level deficiencies, which prompted CMS to impose a suspension of the laboratory's clinical laboratory improvement amendments (CLIA) certificate effective October 6, 2007, cancellation of the laboratory's approval to receive Medicare payments for services, and revocation of the laboratory's CLIA certificate for 60 days after the laboratory received the CMS' notice letter on September 25, 2007. The laboratory did not file a request for a hearing until 77 days after the receipt of the CMS notice letter. The laboratory alleged that a November 20, 2007, letter from CMS that dealt with the laboratory's allegation of compliance was a “reconsidered or revised determination.” This letter, however, did not address a request for reconsideration, but stated that the laboratory's allegation of compliance was incomplete. Family Practice Medical Center v. CMS, HHS Departmental Appeals Board, Appellate Division, Doc. No. C-08-226, Dec. No. CR1819, July 16, 2008, ¶121,404. Premium content

A skilled nursing facility's (SNF) request for a hearing was not granted because CMS withdrew the civil money penalty (CMP) and denial of payment for new admissions (DPNA) enforcement remedies. The SNF timely filed a hearing request but CMS rescinded the CMP and DPNA and moved to dismiss the case. Because CMS withdrew its remedies, the SNF no longer has a right to a hearing. Byrd Haven Nursing Home v. CMS, HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-08–369, Dec. No. CR1805, June 13, 2008, ¶121,393. Premium content