[Federal Register: May 23, 2008 (Volume 73, Number 101)]
[Rules and Regulations]
[Page 30189-30267]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23my08-9]
[[Page 30189]]
-----------------------------------------------------------------------
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Parts 405, 413, and 417
Medicare Program; Provider Reimbursement Determinations and Appeals;
Final Rule
[[Page 30190]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 413, and 417
[CMS-1727-F]
RIN 0938-AL54
Medicare Program; Provider Reimbursement Determinations and
Appeals
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: Subpart R of 42 CFR part 405 consists of regulations governing
Medicare reimbursement determinations, and appeals of those
determinations, by health care providers. (For the sake of simplicity,
throughout this final rule, we use ``reimbursement'' to refer to
Medicare payment under both the reasonable cost and prospective payment
systems.) Under section 1878 of the Social Security Act (the Act) and
the subpart R regulations, the Provider Reimbursement Review Board (the
Board) has the authority to adjudicate certain substantial
reimbursement disputes between providers and fiscal intermediaries
(intermediaries). Board decisions are subject to review by the CMS
Administrator, and the final agency decision of the Board or the
Administrator, as applicable, is reviewable in Federal district court.
In addition, under the subpart R regulations, intermediaries have the
authority to hold hearings and adjudicate certain other payment and
reimbursement disputes with providers. This final rule updates,
clarifies, and revises various provisions of the regulations governing
provider reimbursement determinations, appeals before the Board,
appeals before the intermediaries (for lesser disputes), and
Administrator review of decisions made by the Board.
DATES: Effective Date: These regulations are effective August 21, 2008.
Applicability Date: These regulations are applicable to all appeals
pending as of, or filed on or after August 21, 2008, except as noted in
sections II.Y. and III.Y. of this final rule.
FOR FURTHER INFORMATION CONTACT: Morton Marcus, (410) 786-4477; Donald
Romano, (410) 786-1401.
SUPPLEMENTARY INFORMATION: To help readers locate information in this
final rule, we are providing the following Table of Contents.
I. Background
A. Legislative and Regulatory History and Development
B. Medicare Modernization Act Requirements for Issuance of
Regulations
II. Provisions of the Proposed Rule and Public Comments and
Responses
A. Definitions of Entities That Review Intermediary
Determinations or Decisions by Such Entities; Definition of
Reimbursement (Sec. 405.1801(a))
B. Calculating Time Periods and Deadlines (Sec. 405.1801(a) and
Sec. 405.1801(d))
C. Providers Under Subpart R; Limited Applicability to Non-
Provider Entities (Sec. 405.1801(b))
D. Provider Hearing Rights (Sec. 405.1803(d), Sec. 405.1811,
and Sec. 405.1835)
1. Provider Dissatisfaction With Medicare Reimbursement; Revised
Self-Disallowance Policy
2. Audits of Self-Disallowed Items
3. Determining Timeliness of Hearing Requests (Sec. 405.1811
and Sec. 405.1835)
4. Contents of Hearing Request
E. Provider Requests for Good Cause Extension of Time Period for
Requesting Hearing (Sec. 405.1813 and Sec. 405.1836)
F. Intermediary Hearing Officer Jurisdiction (Sec. 405.1814)
G. CMS Reviewing Official Procedure (Sec. 405.1834)
H. Group Appeals (Sec. 405.1837)
I. Amount in Controversy (Sec. 405.1839)
J. Board Jurisdiction (Sec. 405.1840)
K. Expedited Judicial Review (Sec. 405.1842)
L. Parties to Proceedings in a Board Hearing or Intermediary
Hearing (Sec. 405.1843 and Sec. 405.1815)
M. Quorum Requirements (Sec. 405.1845)
N. Board Proceedings Prior to Hearing; Discovery in Board and
Intermediary Hearing Officer Proceedings (Sec. 405.1853 and Sec.
405.1821)
O. Subpoenas (Sec. 405.1857)
P. Record of Administrative Proceedings (Sec. 405.1865 and
Sec. 405.1827)
Q. Board Actions in Response to Failure to Follow Board Rules
(Sec. 405.1868)
R. Scope of Board's Authority in a Hearing Decision (Sec.
405.1869 and Sec. 405.1829)
S. Board Hearing Decision and Intermediary Hearing Decision
(Sec. 405.1871, Sec. 405.1831 and Sec. 405.1833)
T. Administrator Review (Sec. 405.1875)
U. Judicial Review (Sec. 405.1877)
V. Reopening Procedures (Sec. 405.1885 through Sec. 405.1889)
W. Three Additional Proposals Under Consideration
X. Technical Revisions
Y. Effective Date
Z. Children's Health Graduate Medical Education Program (CHGME)
III. Provisions of the Final Rule
IV. Collection of Information Requirements
A. Information Collection Requirements (ICRs) Introduction
(Sec. 405.1801)
B. ICRs Regarding the Right to Intermediary Hearing; Contents
of, and Adding Issues to, Hearing Request (Sec. 405.1811)
C. ICRs Regarding Good Cause Extension of the Time Limit for
Requesting an Intermediary Hearing (Sec. 405.1813)
D. ICRs Regarding CMS Reviewing Official Procedure (Sec.
405.1834)
E. ICRs Right to Board Hearing; Contents of, and Adding Issues
to, Hearing Request (Sec. 405.1835)
F. ICRs Regarding Good Cause Extension of Time Limit for
Requesting a Board Hearing (Sec. 405.1836)
G. ICRs Regarding Group Appeals (Sec. 405.1837)
H. ICRs Regarding Amount in Controversy (Sec. 405.1839)
I. ICRs Regarding Expedited Judicial Review (Sec. 405.1842)
V. Regulatory Impact Statement
VI. Regulation Text
I. Background
A. Legislative and Regulatory History and Development
Section 1878(a) of the Social Security Act (the Act) allows
providers to appeal to the Board final determinations made by a fiscal
intermediary under section 1861(v)(1)(A) of the Act (reasonable cost
reimbursement), as well as certain determinations by the Secretary
involving payment under section 1886(d) (inpatient hospital prospective
payment) and section 1886(b) (commonly known as the Tax Equity and
Fiscal Responsibility Act of 1982 (TEFRA) payment system) of the Act.
In addition, by regulation, providers are given the right to appeal to
the Board or fiscal intermediary certain other determinations. A brief
discussion of the original cost reimbursement, TEFRA, and prospective
payment systems (PPS), and some of the types of determinations that are
appealable, follows.
For cost reporting years beginning before October 1, 1983, all
providers were reimbursed for Part A (hospital insurance) covered items
and services they furnished to Medicare beneficiaries on the basis of
reasonable cost. (Reasonable cost is defined at section 1861(v)(1)(A)
of the Act and implementing regulations at 42 CFR, part 413.) In 1982,
the Congress determined that the reasonable cost reimbursement system
should be modified to provide hospitals with better incentives to
render services more efficiently. Accordingly, in TEFRA, Public Law 97-
248, the Congress amended the Act by imposing a ceiling on the rate of
increase of inpatient operating costs recoverable by a hospital under
Medicare.
The Social Security Amendments of 1983, Public Law 98-21, added
section 1886(d) to the Act, which, effective with cost reporting
periods beginning on or after October 1, 1983, changed the method of
payment for inpatient hospital services under Medicare Part A for
short-term acute care hospitals. The method of payment for these
hospitals was changed from a cost-based
[[Page 30191]]
retrospective reimbursement system to a system based on prospectively
set rates; that is, a PPS. Under Medicare's inpatient hospital PPS,
payment is made at a predetermined specific rate for each hospital
discharge (classified according to a list of diagnosis-related groups
(DRGs)), excluding certain costs that continue to be reimbursed under
the reasonable cost-based system.
Other statutory changes expanded the types of providers that are
subject to a PPS. The Balanced Budget Act of 1997 (BBA), Public Law
105-33, established a PPS for home health agencies (HHAs), for
rehabilitation hospitals, and for all skilled nursing facilities
(SNFs). The Balanced Budget Refinement Act of 1999, Public Law 106-113,
provided for the establishment of a PPS for long term care hospitals
(LTCHs). Although many types of providers are now paid on a
prospectively-determined basis, some types of providers (for example,
hospices, psychiatric hospitals, and children's hospitals) continue to
be paid on a reasonable cost basis.
Payments to providers are ordinarily made through private
organizations, known as fiscal intermediaries, under contracts with the
Secretary. (The term ``intermediary'' includes both fiscal
intermediaries and Medicare Administrative Contractors for the purpose
of this final rule.) For covered items and services reimbursed on a
reasonable cost basis, the intermediary pays a provider during a cost
reporting year interim payments that approximate the provider's actual
costs. Under a PPS, providers are generally paid for each discharge
after each bill is submitted.
Regardless of whether the provider is paid under reasonable cost or
under a PPS, the provider files an annual cost report after the cost
year is completed. The intermediary then reviews or audits the cost
report, determines the aggregate amount of payment due the provider,
and makes any necessary adjustments to the provider's total Medicare
reimbursement for the cost year. This year-end reconciliation of
Medicare payment for the provider's cost reporting period constitutes
an intermediary determination, as defined in Sec. 405.1801(a). Under
Sec. 405.1801(a)(1), Sec. 405.1801(a)(2), and Sec. 405.1803, the
intermediary must render the provider with written notice of the
intermediary determination for the cost period in a notice of amount of
program reimbursement (NPR). The NPR is an appealable determination.
In addition to the NPR, other determinations made by the
intermediary or CMS for hospitals and other providers are appealable to
the intermediary or Board (depending on the amount in controversy).
These include: A denial of a hospital's request for an adjustment to,
or an exemption from, the TEFRA rate of increase ceiling (see Sec.
413.40); a denial of an HHA's or SNF's request for an adjustment to, or
an exemption from, the routine cost limits that were in effect prior to
a PPS for these providers (see Sec. 413.30); a denial of certain
hospice payments (see Sec. 418.311); or a denial of a PPS hospital's
request to be classified as a sole community hospital (see Sec.
412.92) or rural referral center. Also, some health care entities (for
example, end-stage renal dialysis (ESRD) facilities, rural health
clinics (RHCs) and Federally qualified health centers (FQHCs)) are
treated as ``providers'' for purposes of subpart R and have appeal
rights before the intermediaries and the Board. Thus, for example, a
renal dialysis facility may appeal to the intermediary or the Board a
CMS denial of its request for an exception to its composite payment
rate (see Sec. 413.194(b)).
If a provider is dissatisfied with some aspect of an appealable
intermediary or CMS determination, it may request a hearing before the
intermediary or the Board, depending on the amount in controversy. For
an amount in controversy that is at least $1,000 but less than $10,000,
the provider may request an intermediary hearing before the
intermediary hearing officer(s) under Sec. 405.1811. If the amount in
controversy is at least $10,000, the provider may request a hearing
before the Board under section 1878(a) of the Act and Sec. 405.1835 of
the regulations. Alternatively, the provider may request a Board
hearing with one or more additional providers under section 1878(b) of
the Act and Sec. 405.1837, if the amount in controversy is, in the
aggregate, at least $50,000. (This type of appeal is known as a group
appeal.) (Note that under section 1878(f)(1) of the Act, any appeal to
the Board by providers under common ownership or control must be
brought by these providers as a group regarding any matter involving an
issue common to these providers. We interpret this provision to apply
only where the amount in controversy for the common issue is at least
$50,000.) Decisions by the intermediary hearing officer(s) or the Board
are subject to further review. Prior to the implementation of this
final rule, intermediary hearing officers' decisions have been subject
to review by a CMS reviewing official pursuant to section 2917 of the
Provider Reimbursement Manual (PRM), Part 1. Now, Sec. 405.1834
provides for this review. Also, under this final rule, no provisions
remain for judicial review of a final decision of the intermediary
hearing officer(s) or CMS reviewing official, as applicable. Board
decisions are subject to review by the Administrator or the Deputy
Administrator of CMS, under section 1878(f)(1) of the Act and Sec.
405.1875. (The Secretary's review authority under section 1878(f)(1) of
the Act has been delegated to the Administrator, and redelegated to the
Deputy Administrator, of CMS. For ease of use, throughout this proposed
rule, we use the term ``Administrator'' to refer to either the
Administrator or Deputy Administrator, and the term ``Administrator
review'' to review by either official.) A final decision of the Board,
or any reversal, affirmance, or modification of a final Board decision
by the Administrator, is subject to review by a United States District
Court with venue under section 1878(f)(1) of the Act and Sec. 405.1877
of the regulations.
Most of the central provisions of the regulations governing
provider reimbursement determinations and appeals are more than 30
years old. On May 27, 1972, we published a final rule (37 FR 10722),
which provided for the intermediary determination, NPR, intermediary
hearing, and reopening of both intermediary determinations and
intermediary hearing decisions. Five months later, the Congress added
section 1878 to the Act, which established the Board and provided for
review of Board decisions by the Secretary, as well as for judicial
review. (See Social Security Amendments of 1972, Pub. L. 92-603,
section 243(a), 86 Stat. 1420 (October 30, 1972).) We then, on
September 26, 1974, published a final rule (39 FR 34514) that
implemented the 1972 amendments to the Act, and revised and
redesignated the preexisting rules governing the intermediary
determination, NPR, intermediary hearing, and reopening. These
regulations were redesignated as Subpart B of Part 405 of Title 42 of
the CFR (Subpart R) on September 30, 1977 (42 FR 52826). We have
revised these regulations on several occasions, largely in response to
various amendments to section 1878 of the Act.
For several reasons, we believe it is necessary and appropriate to
revise many of the subpart R regulations governing provider
reimbursement determinations and appeals. As noted previously, the
principal provisions of the regulations are more than 30 years old. In
the intervening period, various issues have arisen regarding provider
reimbursement determinations and
[[Page 30192]]
appeals. Important parts of the regulations have been the subject of
extensive litigation, the results of which indicate a need for
reexamination of the rules. Also important is the development of a huge
backlog of cases before the Board (which, at the present time, is
approximately 6,800 cases). Experience gained through long use of the
regulations indicates that revisions to the regulations would lead to a
more effective and efficient appeal process. We recognize that the
Board's inventory of pending cases is dependent in some ways on factors
outside of its control (for example, the number of hearing requests
filed). However, we believe that the revisions made in this final rule
will help the Board reduce the case backlog (or at least forestall
substantial additions to it), and will also reflect changes in the
statute, clarify our policy on various issues, and eliminate outdated
material. The Board's instructions for providers and intermediaries, as
well as the Board's decisions on specific cases brought before it, are
available on the CMS Web site, which, as of the date of publication of
this final rule, is http://www.cms.hhs.gov/PRRBReview.
B. Medicare Modernization Act Requirements for Issuance of Regulations
Section 902 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended section
1871(a) of the Act and requires the Secretary, in consultation with the
Director of the Office of Management and Budget, to establish and
publish regular timelines for the publication of Medicare final
regulations based on the previous publication of a Medicare proposed or
interim final regulation. Section 1871(a)(3)(B) of the Act, as amended
by section 902 of the MMA, also states that the timelines for these
regulations may vary but shall not exceed 3 years after publication of
the preceding proposed or interim final regulation, except under
exceptional circumstances. Section 1871(a)(3)(B) of the Act further
provides that if the Secretary intends to vary such a timeline with
respect to the publication of a final regulation, the Secretary shall
publish in the Federal Register notice of the different timeline by not
later than the timeline previously established with respect to such
regulation. On June 22, 2007, a notice was published in the Federal
Register extending by one year (or until June 25, 2008) the timeframe
for publishing this final rule (see 72 FR 34425). Therefore, this final
rule has been published within the time limit imposed by section 902 of
the MMA.
II. Provisions of the Proposed Rule and Public Comments and Responses
On June 25, 2004, we published a proposed rule in the Federal
Register (69 FR 35716) that set forth proposed regulations seeking to
update, clarify, and revise various provisions of the regulations
governing provider reimbursement determinations, appeals before the
intermediary hearing officers and the Board, and Administrator review
of decisions made by the Board. For purposes of the summary of the
proposed provisions and for the comments and responses, we are using
the same lettering sequence that appeared in the proposed rule. In each
lettered section, we provide a description of our proposals and a
summary of the changes from the proposed rule that we have made in this
final rule. A more extensive description of the proposals is contained
in the proposed rule, and a brief summary of the changes appears at
section III.
A. Definitions of Entities That Review Intermediary Determinations or
Decisions by Such Entities; Definition of Reimbursement (Sec.
405.1801(a))
We proposed definitions for ``intermediary hearing officer''; ``CMS
reviewing official''; ``CMS Reviewing official procedure'';
``Administrator review''; and ``reviewing entity.'' We received no
comments on these proposed definitions and we are adopting them without
change. We note that we incorrectly stated that we were proposing a
definition for ``reimbursement.''
B. Calculating Time Periods and Deadlines (Sec. 405.1801(a) and Sec.
405.1801(d))
We proposed specific provisions to address the timeframes for
appealing determinations, including those for determining the beginning
and end of a specific appeal period. Generally, we proposed to
calculate the beginning period of an appeal as the date a party
receives a triggering notice, and the end period for an appeal as the
date by which a reviewing entity must receive the party's submission.
We proposed a definition for ``date of receipt'' with respect to the
method we would use to determine the date a document or other material
is received by: (1) A party or non-party involved in proceedings before
a reviewing entity and (2) a reviewing entity. Specifically, we
proposed a rebuttable presumption whereby the receipt date of documents
sent by a reviewing entity to providers, intermediaries and other
entities would be 5 days after the postmark date. For materials
submitted to a reviewing entity, we proposed the establishment of a
presumption that the receipt date is the date the reviewing entity
stamps the document ``Received.'' We also proposed that, where a
reviewing entity could not conduct business due to extraordinary
circumstances beyond its control, the designated time period would
resume on the next work day the reviewing entity was again able to
conduct business. Finally, we proposed that the last day of a
designated time period would be excluded if it fell on a Saturday,
Sunday, or Federal legal holiday.
We are amending our proposed definition of ``Date of Receipt'' in
Sec. 405.1801(a) to provide that, where a request for an intermediary
or Board hearing, a request to add issues to a Board or intermediary
hearing, or any other document or material is transmitted to a
reviewing entity by a nationally-recognized, next-day courier service
(for example, the U.S. Postal Service Express Mail, Federal Express,
UPS, or DHL), the ``Date of Receipt'' is presumed to be the date of
delivery noted by the courier, unless it can be shown by clear and
convincing evidence that the materials were received on a different
date. We are also amending the definition of ``Date of Receipt'' to
provide that, where a nationally-recognized, next-day courier service
is not employed to deliver materials to a reviewing entity, the ``Date
of Receipt'' is presumed to be the date stamped ``Received'' by the
reviewing entity, unless it can be shown by clear and convincing
evidence that the materials were received by some other date. The
reviewing entity's determination of whether the presumption of the
correctness of the date of delivery, or the date stamp, is overcome by
clear and convincing evidence is final and binding (that is, it is not
subject to further administrative or judicial review).
Comment: One commenter supported our proposal that the timeframe
for requesting an intermediary hearing or a Board hearing should run
from the date of receipt of the appealable decision. Another commenter
agreed that the ``5-day presumption'' gave an accurate determination of
the date of receipt of a document. One commenter suggested that the
``5-day presumption'' should be used by a reviewing entity when it
sends and receives materials.
Three commenters suggested the rule should offer some reassurance
that the reviewing entity would, in fact, stamp ``Received'' on the
document on the day of arrival. One of these commenters also suggested
using ``date of mailing'' as a
[[Page 30193]]
measure of timeliness. Another commenter stated that date stamps are
unverifiable and suggested that the Board should consider an electronic
docket system that would allow parties to view the actual dates of
receipt of filings and Board actions via the Internet. Another
commenter suggested the use of a reliable ``intermediary'' (for
example, the United States Postal Service, because it would provide a
single source of date verification) instead of relying solely on the
determination of the Board. This commenter suggested that the current
``mailbox rule'' be retained.
Response: After reviewing all of the comments received regarding
the calculation of the various time periods and deadlines set for
appealing final determinations, we have decided to adopt our proposals
as final, with the modifications noted below, regarding the receipt of
documents by a reviewing entity. We continue to believe that the best
and most consistent way to establish a beginning and ending date for
purposes of determining the various appeal periods is through the use
of ``date of receipt.'' (We also note that employing a ``date of
mailing'' can present some practical problems, such as unreadable
postmark dates.) With respect to the situation in which a party (or
interested non-party) to a proceeding receives a document from a
reviewing entity or from another party, we have established a 5-day
presumption for receipt of that document. The presumption may be
rebutted if a preponderance of the evidence establishes that the
document was actually received on a later date. The 5-day presumption
does not apply in the case where the reviewing entity is on the
receiving end of a document from a party (or non-party) to the
proceeding. Except as noted below, the receipt date in this instance is
the date the reviewing entity date stamps the document as ``Received.''
We have decided not to include a 5-day presumption for the receipt of
documents by reviewing entities because there is a presumption of
administrative regularity in agency action. This doctrine presumes that
an arm of a Federal agency, such as the Board, will act responsibly,
fairly, and legally in its duty to provide an appeals forum for
providers of Medicare services. Thus, it is reasonable to presume that
the actual receipt date of a document submitted to a reviewing entity
is the date the reviewing entity stamps ``Received'' on the document.
Nonetheless, although we believe that materials will be timely and
accurately stamped ``Received'' by the Office of Hearings, we wish to
avoid any confusion or possible prejudice to a provider, as well as any
protracted disputes as to when a document was received. We also
recognize the importance of the timeframes for both requesting a Board
or intermediary hearing and for requesting that issues be added prior
to a Board or intermediary hearing. Therefore, we are amending our
definition of ``Date of Receipt'' in Sec. 405.1801, to provide that,
where a request for hearing or a request to add issues prior to a
hearing, or any other document or material is delivered to a reviewing
entity by a nationally-recognized next-day courier service, the ``Date
of Receipt'' shall be presumed to be the date of delivery as noted by
that courier service, unless it can be shown by clear and convincing
evidence that the material was received on a different date. Further,
in order to strongly encourage the use of next-day couriers (especially
for requests for appeal and for requests to add issues), we are
amending the definition of ``Date of Receipt'' to provide that, where a
nationally-recognized next-day courier service is not employed to
deliver materials to the reviewing entity, the ``Date of Receipt''
shall be presumed to be the date stamped ``Received'' by the reviewing
entity, unless it is established by clear and convincing evidence that
the materials were actually received on a different date. In order to
prevent collateral litigation, the reviewing entity's determination as
to whether clear and convincing evidence exists to establish that the
materials were received on a date different from the delivery date or
the date stamped ``Received'' is not subject to further administrative
or judicial review. (We considered requiring, upon penalty of refusal
to accept, that any request for a hearing or request to add issues be
delivered by a next-day courier service.)
Finally, we note that, although it is not feasible at this time for
the Office of Hearings to administer an electronic docket system, such
a system may be implemented in the future.
Comment: One commenter suggested that the 5-day presumption for
receipt of documents from a reviewing entity be five business days
instead of five calendar days because of weekends.
Response: We believe that five calendar days is a sufficient period
of time (and we note that mail is picked up and delivered on
Saturdays).
Comment: One commenter stated that reviewing entities should accept
filings via facsimile (fax), with originals to follow, and use the date
indicated on the fax as the date of receipt.
Response: The Office of the Attorney Advisor, which assists in the
Administrator review process, has allowed parties to submit fax copies.
This practice reflects the short timeframes for Administrator review
and the small number of appeals that are pending in the office at any
one time. In contrast, the Office of Hearings, which assists the Board
in its review, has declined to allow fax transmissions of provider
requests for Board hearings and other relevant documents. The Office of
Hearings' practice reflects the voluminous number of appeals pending in
that office and the large number of documents submitted (several of
which may be due on the same date), making the acceptance of facsimile
transmissions impractical. We are not limiting either the Office of the
Attorney Advisor or the Office of Hearings in determining the best
office practice for the receipt of documents. Additionally, there may
be future technological innovations that will make other modes of
submission feasible, which these offices may wish to have the
flexibility to adopt. Therefore, we decline to specify in regulations
whether the Office of Hearings or Office of Attorney Advisor may or
must accept fax transmissions, or hand delivery, or other modes of
submission, and, consistent with present practice, will leave it to the
discretion of these offices as to the additional types of submission
they will accept.
Comment: One commenter requested that we clarify the types of
relevant evidence (for example, a provider date stamp) that would prove
that materials sent by a reviewing entity were received by a provider
beyond the 5-day presumption period.
Response: We decline to specify types of evidence that will
necessarily establish that a document was received more than five days
after the postmark date. Rather, whether a piece of evidence (for
example, an affidavit from the party or a date stamp from the party) is
persuasive that a document was received more than 5 days after the
postmark date would be determined in context with any other relevant
evidence in a particular case.
Comment: One commenter believed that providers should be allowed to
request extensions of timeframes for appeal in situations involving
employee strikes or extended absence due to illness or maternity leave.
Response: In section II.E. of this final rule, regarding ``Provider
Requests for Good Cause Extension of Time Period for Requesting
Hearing,'' we state the rule that an appeal period may be extended for
``good cause'' only in cases
[[Page 30194]]
where a provider can establish that it could not reasonably have been
expected to submit a hearing request within 180 days due to
extraordinary circumstances beyond its control.
C. Providers Under Subpart R; Limited Applicability to Non-Provider
Entities (Sec. 405.1801(b))
We proposed to amend Sec. 405.1801(b)(1) to recognize as a
provider under Subpart R each entity recognized under the Act for
purposes of provider reimbursement determinations and appeals. In
accordance with the definition of ``provider of services'' in section
1861(u) of the Act, we proposed to recognize specifically a hospital,
critical access hospital, SNF, comprehensive outpatient rehabilitation
facility, HHA, and hospice program. Also, a RHC and a FQHC would be
included in accordance with section 1878(j) of the Act, and an ESRD
facility would be recognized under section 1881(b)(2)(D) of the Act.
Our proposed revision to Sec. 405.1801(b)(1) would also recognize as a
provider any other entity treated as a provider under the Act, in order
to ensure recognition in subpart R of any other entity that may qualify
as a provider under the Act for purposes of provider reimbursement
determinations and appeals. We received no comments on this section and
are adopting our proposals without change.
D. Provider Hearing Rights (Sec. 405.1803(d), Sec. 405.1811, and
Sec. 405.1835)
Under section 1878(a) of the Act, and Sec. 405.1835 and Sec.
405.1841 of the regulations, a provider may obtain a Board hearing if
it meets three jurisdictional requirements: (1) The provider is
dissatisfied with its Medicare reimbursement for a cost reporting
period; (2) the amount in controversy is at least $10,000 (at least
$50,000 for a group appeal); and (3) the provider files a timely
request for a hearing to the Board. The same jurisdictional
requirements govern provider requests for an intermediary hearing under
Sec. 405.1811, except that the amount in controversy requirement is at
least $1,000 but less than $10,000. In this section of the proposed
rule, we proposed changes regarding the first and third jurisdictional
requirements; that is, provider dissatisfaction with Medicare
reimbursement and the timeliness of hearing requests. We are making
several changes to the proposed rule.
Under Sec. 405.1811(a)(1), and Sec. 405.1835 (a)(1), a provider
has a right to an intermediary or Board hearing, as a single provider
appeal, for specific items claimed for a cost reporting period covered
by an intermediary or Secretary determination, if the provider
preserves its right to claim dissatisfaction with the amount of
Medicare payment for the specific item(s) at issue. The provider can
preserve this right either by claiming the cost on its cost report or,
if the provider seeks payment that it believes may not be allowable or
may not be in accordance with Medicare policy (for example, if the
intermediary lacks discretion to award the reimbursement the provider
seeks for the item(s)), by ``self-disallowing a specific item(s) by
following the applicable procedures for filing a cost report under
protest.'' We have amended Sec. 405.1811(a)(1) and Sec.
405.1835(a)(1) to be effective for cost reporting periods that end on
or after December 31, 2008. This revision will be beneficial to both
providers and intermediaries. The delay in the effect of the
requirement will benefit providers because they will have additional
time to evaluate whether they wish to file a cost report item under
protest. This change will also eliminate the transitional
administrative burden that intermediaries otherwise would have faced
under the proposal, which would have necessitated that providers file
requests to amend previously filed cost reports to explicitly file cost
report items under protest.
In response to comments, we have clarified Sec. 405.1811(b) and
Sec. 405.1835(b) to provide that, where required information is not
submitted with the hearing request, the intermediary hearing officer or
Board, as applicable, may dismiss with prejudice the appeal, or take
any other remedial action that the reviewing entity considers
appropriate. We believe that this approach is consistent with the
approach we have taken in section Sec. 405.1868 (``Board Actions in
Response to Failure to Follow Board Rules'') in which we similarly
leave to the Board's discretion whether to dismiss an appeal or take
some other, lesser action.
We are amending proposed Sec. 405.1835(c)(3) to address possible
misleading and unnecessary language concerning adding an issue to an
appeal of a revised NPR. Proposed Sec. 405.1835(c)(3) stated that a
request to add an issue to an appeal is timely if ``[t]he Board
receives the request to add issues no later than 60 days after the
expiration of the applicable 180-day period prescribed in paragraph
(a)(3) of this section or, for a request to add issue(s) following a
reopening conducted in accordance with and within the period specified
in Sec. 405.1885(c)(1).'' We have deleted the language in Sec.
405.1835(c)(3) pertaining to a request to add issues following a
reopening. We note that we did not include such language in the
corresponding proposed intermediary hearing officer regulations at
Sec. 405.1811(c)(3). Such language is potentially misleading in that
it may suggest incorrectly that a notice of reopening is the trigger
point for appealing an issue, whereas, in fact, under our longstanding
policy (which is reaffirmed in this final rule at Sec. 405.1889), only
those matters actually revised and specifically contained in a revised
determination following a notice of reopening are appealable. We also
believe the language is unnecessary because a revised determination is
treated the same under our rules as an original determination for
purposes of the time in which to request a hearing or add an issue.
Thus, if a revised NPR containing two distinct revisions were issued,
and a provider timely appealed one of the revisions (that is, within
180 days after the date of receipt by the provider of the revised NPR),
it could add the second revision as an issue within 60 days after the
expiration of the 180-day period for appealing the revised NPR.
In Sec. 405.1811(b)(2)(i) and Sec. 405.1835(b)(2)(i), we proposed
that a provider would be required to explain its dissatisfaction with
the amount of Medicare payment for the specific item(s) at issue by
stating why Medicare payment is incorrect for each disputed item. We
acknowledge that there may be instances in which a provider may be
uncertain as to whether Medicare payment is incorrect because it does
not have access to underlying data (for example, data from a State
agency). Accordingly, we have revised Sec. 405.1811(b)(2)(i) and Sec.
405.1835(b)(2)(i) to allow a provider to explain why it is unable to
determine whether payment is correct as a result of not having access
to underlying information.
Further, in response to a commenter's suggestion that providers be
required to list their parent corporation at the time of filing a
single appeal so as to assist the Board in identifying providers under
common ownership, we are adding new Sec. 405.1835(b)(4) to require a
provider under common ownership or control to furnish the name and
address of its parent corporation and to provide a statement that: (1)
To the best of the provider's knowledge, no other provider to which it
is related by common ownership or control, has pending a request for a
Board hearing pursuant to this section or pursuant to
[[Page 30195]]
Sec. 405.1837(b)(1) on any of the same issues contained in the
provider's hearing request for a cost reporting period that falls
within the same calendar year as the calendar year covered by the
provider's hearing request; or (2) a pending appeal(s) exist(s), and
the provider name(s) and provider number(s), and the case number(s) (if
assigned), for such appeal(s).
Finally, in preparing this final rule, we have corrected minor
wording inconsistencies between Sec. 405.1811, which pertains to
intermediary hearings, and Sec. 405.1835, which pertains to Board
hearings, where appropriate.
Comment: One commenter stated that the section on who is entitled
to a hearing should be clarified to include those entities that were
formerly providers or the successor organizations that retained
responsibility for previously filed cost reports following a change of
ownership. In recent years, numerous tax-exempt organizations sold
hospital operations and the proceeds went to local charitable
foundations. Frequently, those organizations retained responsibility
for filed cost reports, and the rules should be clarified to grant
hearing rights to those organizations regarding those cost reports.
Response: We made no specific proposal concerning the hearing
rights of former providers or successor organizations following a
change in ownership. However, we appreciate the concerns raised by the
commenter and, therefore, we may seek to address this issue in a future
rulemaking or through other instructions.
1. Provider Dissatisfaction With Medicare Reimbursement; Revised Self-
Disallowance Policy
We proposed that, in order to preserve its appeal rights, a
provider must either claim an item on its cost report where it is
seeking reimbursement that it believes to be in accordance with
Medicare policy, or self-disallow the item where it is seeking
reimbursement that it believes may not be in accordance with Medicare
policy (for example, where the intermediary does not have the
discretion to award the reimbursement sought by the provider). In order
to self-disallow an item, the provider would be required to follow the
applicable procedures, which are contained currently in section 115 of
the PRM, Part II (CMS Pub. 15-2), for filing a cost report under
protest. We stated that we believed our proposal was appropriate under
the Supreme Court's decision in Bethesda Hospital Association v. Bowen,
485 U.S. 399 (1988). We further stated that we believed that our
proposed policy was a reasonable response to statements by the Bethesda
providers and others that it was necessary, for any reimbursement
request in excess of the amount allowed under program policy, to raise
the entire payment request before the Board, because it would be
improper to include a cost report claim for more payment than is
permitted by Medicare policy. We noted that it has been our
longstanding policy that a cost report claim at variance with Medicare
policy is not improper, provided that the claim is not intended to
procure an intermediary determination (or reviewing entity decision) by
fraud or similar fault. We are adopting our proposal, effective with
cost reporting periods ending on or after December 31, 2008.
Comment: One commenter recommended that the text of section 115 et
seq. of the PRM, Part II, be placed in the regulations. The commenter
noted that these sections of the PRM have not changed since 1980.
Another commenter stated that the protested amount line on the cost
report is available for situations where a provider is not in agreement
with Medicare policy and that CMS should be holding that out as the way
to assert differences of opinion with Medicare policy.
Response: We are adopting the proposal, which is essentially a
codification of the protested amount line procedures set forth in
section 115 et seq. of the PRM, Part II. We are modifying the proposal
so that the requirement, that a provider self-disallow an item by
following the applicable procedures for filing a cost report under
protest, is effective for cost reporting periods ending on or after
December 31, 2008.
Comment: One commenter stated that the final rule should require
that, when a provider self-disallows an item in accordance with the
proposed policy, the provider should specifically identify the
regulation or other authority the provider is challenging as invalid,
and that the appeal should be limited to that challenge. The commenter
stated that some providers have been misusing the protested line amount
procedure. Specifically, the commenter said that it was aware of
instances in which a provider listed a claim related to bad debts in
the protested line amount. According to the commenter, the provider was
not challenging any policy related to bad debts, but rather lacked the
documentation for its bad debts claim and was using the protested
amount procedure as a way of avoiding a possible reopening denial based
on Program Memorandum A-01-141 (December 14, 2001). According to the
commenter, this program memorandum gives intermediaries discretion to
deny a reopening request where a provider was culpable in not
adequately documenting its claim and where the claim was reported not
under protest, but rather was made in the cost report proper.
Response: Although we encourage providers to identify the specific
manual provision, CMS Ruling, regulation, or statutory section that
they believe prevents them from receiving payment for the self-
disallowed item, we are not requiring through these regulations that
they do so. We are attempting to strike a balance between, on the one
hand, having providers present enough information so as to put the
intermediaries on notice as to actual or potential reimbursement
disputes, and, on the other hand, not making it unduly burdensome for
providers to file cost reports. For the same reason, we are
encouraging, but not requiring, providers to identify in the hearing
request the specific authority they believe prevents them from
receiving reimbursement for a self-disallowed item. We note, however,
that where the authority allegedly preventing reimbursement for the
self-disallowed item is a CMS Ruling, regulation or statute, the
provider may wish to seek expedited judicial review (EJR) early in the
appeals process, in accordance with the procedures under Sec.
405.1842, or the Board may wish to explore granting EJR on its own
motion. If the provider does seek EJR or the Board initiates own motion
consideration of EJR, the provider would need to identify at that time
the specific authority that it believes prevents it from receiving
reimbursement for the self-disallowed item. We caution that the fact
that we are not requiring by regulation that providers identify in the
hearing request the specific authority at issue should not be seen as
preventing the Board from issuing instructions that would require
providers to do so. Under section 1878(e) of the Act, the Board has the
authority to issue instructions governing hearings before it, provided
that those instructions are not inconsistent with the statute or
regulations of the Secretary.
Finally, although some providers may be using the protested line
amount procedures inappropriately, as alleged by the commenter, we do
not believe that mischaracterizing a documentation issue (or some other
issue) as a self-disallowance prevents an intermediary from denying a
reopening request. Program Memorandum A-01-141
[[Page 30196]]
Chapter 8, section 60.1 of CMS Pub. 100-06, states that intermediaries
should inform providers that, as a general rule, they will not honor
reopening requests for audit adjustments based on lack of
documentation, but it also does not require intermediaries to allow all
requests for reopening audit adjustments that are not based on (or are
not characterized by the provider as based on) lack of documentation.
Moreover, under the self-disallowance policy contained in this rule,
providers should not self-disallow items for which they do not have a
good faith belief that the items may not be allowable under Medicare
payment policy. Under Sec. 405.1835, in order to preserve its appeal
rights, a provider must either include a claim for the specific item on
its cost report, or, where it has a good faith belief that the item may
not be allowable under Medicare policy, list the item on the cost
report. Therefore, if a provider were to simply list an item as a self-
disallowed item, when the provider is aware that the issue is one of
documentation and not policy, the provider would run the risk that the
appeal of that item would be dismissed.
Comment: Several commenters asserted that the proposal that the
provider identify an item as a ``protested amount'' was inconsistent
with the Supreme Court's decision in Bethesda. For example, two
commenters, using identical language, stated that the Supreme Court
concluded that providers could claim ``dissatisfaction,'' within the
meaning of the statute, without incorporating their challenge in the
cost reports filed with their fiscal intermediaries, and that our
proposal directly contradicted the Supreme Court's conclusion by
mandating that a provider had to claim dissatisfaction by incorporating
a challenge into the cost report through either declaring the item as a
cost or declaring it as a protested item. One commenter said that the
Supreme Court concluded in Bethesda that no statute or regulation
expressly mandated that a challenge to the validity of a regulation be
submitted first to the intermediary, and that it would be futile to
submit challenges based on regulations, statutes or CMS's formal
policies to the intermediary before seeking Board review; therefore,
the proposed policy was in direct violation of clear statutory
authority. Another commenter said that rather than reflecting the
reasoning and findings of Bethesda, the proposed policy appeared to
have adopted the narrowing of Bethesda in Little Company of Mary
Hospital and Health Centers v. Shalala, 24 F.3d 984 (7th Cir. 1994).
According to this commenter, the Little Company of Mary Hospital case
narrowed the Bethesda decision by providing that in order for a
provider to be able to self-disallow a cost, there must be a statute,
regulation or CMS ruling that makes reimbursement of an item
unallowable. This commenter stated that the Little Company of Mary
Hospital case was the decision of a single circuit and therefore
conflicts with the more general proposition of the Supreme Court in
Bethesda.
Response: It has been our longstanding view that providers that
fail to claim on their cost reports costs that are allowable under the
Medicare law and regulations cannot meet the ``dissatisfaction''
requirement. See, for example, Little Co. of Mary Hosp. & Health Care
Ctrs. v. Shalala, 165 F.3d 1162 (7th Cir. 1999). This proposed change
would simply codify in our regulations our longstanding interpretation
of ``dissatisfaction.''
We continue to believe that our proposed policy that a provider
must either include a claim for reimbursement of a cost on its cost
report or self-disallow the cost in order for the Board to obtain
jurisdiction over an appeal pertaining to that cost is consistent with
the Supreme Court's decision in Bethesda. We believe the commenters
that specifically mentioned Bethesda have misunderstood the import of
Bethesda on our proposal. In Bethesda, providers that submitted their
cost reports to their intermediary complied with the Secretary's
regulation by self-disallowing malpractice insurance costs in excess of
the regulation. The providers then filed a request for a hearing before
the Board to contest the regulation, and the Board dismissed for lack
of jurisdiction. Ultimately, the Supreme Court rejected the Secretary's
position that section 1878(a)(1)(A)(i) of the Act, which requires that
a provider be dissatisfied with a final determination of its fiscal
intermediary, ``necessarily incorporates an exhaustion requirement.''
The Court found that this ``strained interpretation'' of a statutory
exhaustion requirement was inconsistent with the express language of
the statute. (Bethesda, 485 U.S. at 404.) The Court agreed that, under
section 1878(a)(1)(A)(i) of the Act, a provider's dissatisfaction with
the amount of its total reimbursement is a condition of the Board's
jurisdiction, but held that ``it is clear, however, that the submission
of a cost report in full compliance with the unambiguous dictates of
the Secretary's rules and regulations does not, by itself, bar the
provider from claiming dissatisfaction with the amount of reimbursement
allowed by those regulations. No statute or regulation expressly
mandates that a challenge to the validity of a regulation be submitted
first to the fiscal intermediary. * * * Thus, [the providers in this
case] stand on different ground than do providers who bypass a clearly
prescribed exhaustion requirement or who fail to request from the
intermediary reimbursement for all costs to which they are entitled
under applicable rules. While such defaults might well establish that a
provider was satisfied with the amounts requested in its cost report
and awarded by the fiscal intermediary, those circumstances are not
presented here.'' (Bethesda, 485 U.S. at 404-05 (emphasis added).) In
sum, although the Supreme Court in Bethesda held that the Secretary may
not rely on section 1878(a)(1)(A)(i) as explicitly requiring providers
to present challenges to a regulation to their intermediaries as a
condition to the Board's jurisdiction, the Court specifically
recognized that the Secretary could impose an exhaustion requirement by
regulation, and that a provider who fails to claim all costs to which
it is entitled may fail to meet the jurisdictional prerequisite of
dissatisfaction. We note that we are not requiring providers to claim
costs or items that they believe may not be in accordance with Medicare
payment policy--rather, we are merely requiring that the provider list
such items on the cost report by following the protested line amount
procedures.
In Bethesda, the providers listed on their cost reports the costs
at issue, but deliberately did not claim them. As noted by the Ninth
Circuit in Adams House Health Care v. Bowen, 862 F.2d 1371, 1375 n.3
(9th Cir. 1988), the question was left open by Bethesda as to whether
the Board is deprived of jurisdiction to hear an appeal concerning a
cost that was omitted entirely from the cost report. We interpret
section 1878(a)(1) of the Act to mean that a provider is not
``dissatisfied'' with a final determination of the intermediary or the
Secretary regarding any matter that is omitted from the cost report,
and that, as a result, the Board does not have jurisdiction to hear an
appeal regarding the matter. Although the Supreme Court in Bethesda
indicated that if a provider were to bypass a ``clearly prescribed
exhaustion requirement'' it ``might well'' be precluded from raising
the issue before the Board, we believe our proposal to be even less
than an exhaustion requirement. We believe it to
[[Page 30197]]
be more akin to simply a presentment requirement.
We do not believe that the Little Company of Mary Hospital decision
is inconsistent with the Supreme Court's decision in Bethesda. As the
Seventh Circuit in Little Company of Mary Hospital noted, Bethesda
``says only that a provider can challenge a rule before the Board even
after `admitting' that the rule is applicable when submitting its
expenses to the intermediary,'' and that Bethesda ``strongly suggests
that a hospital that does not ask its intermediary to reimburse it for
all the costs for which it is entitled cannot, on appeal to the Board,
first ask for new costs.'' (24 F.3d at 992-93, emphasis in the
original.) Thus, Little Co. of Mary was not a narrowing of Bethesda, as
one commenter asserted. Rather, it was an application of Bethesda to
the facts before it, facts that mirrored the language quoted above from
Bethesda.
We recognize that the First Circuit's majority opinion reached a
contrary result in Maine General Medical Center v. Shalala, 205 F.3d
493 (1st Cir. 2000). Because Maine General relied on a pre-Bethesda
decision that analyzed Board jurisdiction under 42 U.S.C. 1395oo(d),
and not 42 U.S.C. 1395oo(a), as required by Bethesda, and because it
failed to recognize the implications of the Bethesda dicta, we believe
that Maine General was incorrectly decided.
Although no commenters raised the argument that the
``dissatisfaction'' requirement applies only to the total amount of
program reimbursement reflected in the NPR, and that
``dissatisfaction'' therefore does not need to be expressed with
respect to each issue challenged on appeal, we note that a provider
successfully made this argument in Loma Linda University Medical Center
v. Leavitt, 492 F.3d 1065 (9th Cir. 2007). We respectfully submit that
the Ninth Circuit erred in its analysis. Although there may be nothing
in the statute indicating that dissatisfaction must be expressed with
respect to ``each claim'', there also is nothing in the statute
indicating that the Secretary cannot interpret the dissatisfaction
requirement in this manner. The statute thus is ambiguous on this
point, and the Ninth Circuit should have accorded deference to the
Secretary's interpretation, particularly in light of the Secretary's
expertise in how the Medicare provider reimbursement process works.
Specifically, an intermediary makes distinct reimbursement
determinations for each expense item and then sums these distinct
determinations. The ``final determination,'' which here is the NPR,
thus is not simply one total amount. Rather, it is comprised of many
individual calculations representing the various items for which the
provider seeks payment. A provider rarely, if ever, would challenge
before the Board its payment for every discrete item that goes into the
total reimbursement figure. Instead, a provider challenges discrete
elements of the total amount, only some of which may be reviewed by the
Board. Dissatisfaction with total reimbursement thus is based on
dissatisfaction with items that result in total reimbursement, and it
is completely reasonable to interpret 42 U.S.C. 1395oo(a) to require
dissatisfaction to be shown with respect to each issue being appealed.
Moreover, Bethesda involved the question of whether the Board had
jurisdiction over one particular issue, not whether it had jurisdiction
over an entire NPR. Bethesda thus implicitly assumes that jurisdiction
must be obtained on an issue-specific basis. Furthermore, the facts of
Little Co. of Mary make clear that, in that case, the provider was
dissatisfied with other issues in its NPR. Yet this dissatisfaction
with the overall total amount of program reimbursement did not affect
the court's decision in that case.
We also note that the Secretary's interpretation of the statutory
language at 42 U.S.C. 1395oo(a) is consistent with court decisions
related to reopenings. In those cases, the courts refrained from
similar attempts to exaggerate the significance of the statutory phrase
at 42 U.S.C. 1395oo(a) ``total program reimbursement due the
provider.'' Your Home Visiting Nurse Servs. v. Shalala, 525 U.S. 449,
453 (1999) (Board lacks jurisdiction over intermediary's ``refusal to
reopen * * * [which] is not a `final determination * * * as to the
amount,' but rather a refusal to make a new determination''). In HCA
Health Services of Oklahoma v. Shalala, 27 F.3d 614 (D.C. Cir. 1994),
the court noted that ``when an intermediary revisits only certain
specified determinations contained in the original NPR * * * [p]art of
the final determination is obviously contained in that portion of the
original NPR which was never revisited, while the remaining elements
are clearly to be found in the reopening decision.'' 27 F.3d at 617
(emphasis added). The court thus recognized that the ``final
determination'' is really comprised of many individual determinations.
Finally, an issue-specific requirement of ``dissatisfaction'' has a
sound policy basis. If providers were able to claim items for the first
time during a Board appeal simply because they had expressed
dissatisfaction with respect to other cost items, the Board would be
required to assume responsibilities that are more appropriately borne
by fiscal intermediaries rather than by a ``review'' board. Such a
system also would provide an end-run around the deadline for filing an
accurate cost report, as providers could file ``placeholder'' appeals
with respect to items claimed on their cost reports with the knowledge
that they could always make additional claims later.
In any event, even if the Board has jurisdiction under the statute
to hear an appeal concerning an item that was omitted entirely from the
cost report, whether the cost is one that may be allowable or the item
involves a challenge to a binding regulation, manual instruction or CMS
Ruling, this jurisdiction is not mandatory. In Maine General Medical
Center v. Shalala, 205 F.3d 493 (1st Cir. 2000), the majority held that
the statute did not deprive the Board of jurisdiction to hear a claim
involving a cost omitted from a cost report, but it adopted the
Secretary's position that even if the Board had jurisdiction ``it would
be entirely permissible for the Board to conclude, as a matter of
policy, not to hear [the] claim.'' (Maine General, 205 F.3d at 501.)
The court continued: ``All we hold is that Congress did not, in the
statute, require the Board to reach this result by stripping it of
jurisdiction. This outcome preserves some flexibility for the agency,
which may be exactly what Congress intended. It is not our job to
exercise that flexibility for the agency.'' (Id.) See also Loma Linda,
492 F.3d at 1072-73 (holding that Board jurisdiction is discretionary).
Sections 1102(a) and 1871(a) of the Act authorize the Secretary to
issue regulations for the efficient administration of the Medicare
program. Irrespective of whether the Board has jurisdiction under the
statute to hear an appeal concerning an item that was omitted entirely
from the cost report (and we do not agree with the Maine General or
Loma Linda cases on this point), the requirement that providers either
claim an item on their cost reports or, where the item involves a
challenge to a binding regulation, manual instruction or CMS Ruling,
list the disputed item in accordance with the longstanding instructions
contained in section 115 of the PRM, Part II, fits comfortably within
our statutory authority to issue regulations to administer the Medicare
program and is a reasonable exercise of that authority. Providers are
already required, for program integrity reasons, to list ``protested
items;'' that is, items for
[[Page 30198]]
which they believe they are entitled to receive payment, but for which
they believe that their intermediaries would disallow, on the basis
that reimbursement for such items is contrary to regulation or policy
interpretation. Under section 115 of the PRM, Part II, providers that
do not wish to risk running afoul of the cost report certification
process, by including an item on their cost reports that is contrary to
Medicare regulations or payment policy, are allowed to include these
items on the ``protested amount'' line on their cost reports. We
believe it is reasonable to require providers to notify their
intermediaries, via their cost report submission, of all items for
which they potentially may be claiming reimbursement. Such a
requirement allows the Medicare program to estimate better its
potential liabilities and to issue changes or clarifications to its
policies, and allows intermediaries to estimate better their workload
and audit priorities. Also, if we were to adopt a policy that providers
have to list on their cost reports only those items that they believe
are in accord with Medicare payment policy, the Board would be required
to continue adjudicating disputes as to whether an omitted cost is or
is not in accord with Medicare payment policy (because if the omitted
cost were in accord with Medicare payment policy, the provider would
not have the right to a hearing).
Comment: One commenter stated that it disagreed with the proposed
policy that would require providers to identify self-disallowed issues
as protested items. Providers have to trust the information with which
they are provided when preparing cost reports and follow the directions
that have been issued. The individuals who prepare cost reports may not
have the background, time, or ability to evaluate or question whether
the data provided by government sources or the instructions that have
been issued should be challenged. This provision may put undue pressure
on individuals who prepare cost reports, and could increase
administrative costs as providers seek professional help to identify
issues of which the providers may not be aware. According to the
commenter, it can take a considerable amount of research and
investigation into issues to discover that errors exist in the
underlying government data used to prepare the cost report. Once this
discovery is made, it seems appropriate that the error be corrected and
adjustments made. Providers should not be held responsible for
discovering errors made by government bodies.
Another commenter stated that it is impractical to expect providers
to file under protest every potential item on their cost reports that
may be disallowed under the applicable regulations or manual
provisions. Providers are faced with overwhelming numbers of regulatory
and policy manual issuances covering a complex array of constantly
changing Medicare billing and documentation requirements. According to
the commenter, there is no basis in law or equity for CMS's attempt to
cut off providers' appeal rights because the providers may not
recognize the invalidity of a particular intermediary's interpretation
of CMS's regulations and policies at the time they file their cost
reports.
Response: We do not believe that there should be any significant
difficulty for providers in identifying items for which they believe
they should receive payment in derogation of Medicare payment policy.
Upon deciding that it does, in fact, wish to challenge Medicare payment
policy with respect to one or more item(s) the provider has self-
disallowed, the provider should include the item(s) in its request for
a hearing, or add the issue later, in accordance with the procedures
for adding issues under Sec. 405.1835(c). The Medicare program expects
provider personnel, whether on the provider's staff or outside
professionals, to have the background, time, and ability to complete
and understand the cost reporting requirements.
Comment: One commenter stated that the statute does not require
that providers indicate in the cost report that they will be
dissatisfied with a final determination, and that CMS is placing form
over substance in this regard. This commenter said that, although
increasing efficiency within the appeal system is a worthwhile goal,
any efficiency gain does not justify providers' loss of their rights to
appeal meritorious claims by virtue of inadvertence to procedural
requirements that are not obvious.
Response: We do not agree that our requirement amounts to a
procedural requirement that is not obvious to providers. The statute at
42 U.S.C. 1395oo(a) requires that a provider express dissatisfaction
with a determination of the intermediary or the Secretary. Arguably,
therefore, a provider could not be dissatisfied with a determination
that does not explicitly or implicitly address an item, because the
item is neither claimed nor even listed on the cost report. Moreover,
many providers are already availing themselves of the protested line
amount procedures contained in section 115 of the PRM, Part II. In any
event, in addition to the legal notice that providers are receiving
through this final rule, we anticipate that providers will informally
be alerted to the provisions of this rule, including the self-
disallowance policy, through hospital associations and other provider
organizations, law firms, trade publications and others.
Comment: Several commenters stated that by requiring providers to
follow the procedures in the PRM for filing a cost report under
protest, more administrative work will be created for the hospitals and
the intermediaries because the item or cost has to be manually claimed
and the impact manually calculated. The commenters further stated that
the intermediaries must manually review each protested cost or item and
decide to remove or allow, and that the intermediaries' failure to do
so would automatically reimburse providers for the cost or item.
Response: We believe that our self-disallowance policy will not
create a significant amount of work for most providers and
intermediaries, for several reasons. First, many providers are already
using the protested line amount procedures contained in section 115 of
the PRM, Part II. Also, the commenters are incorrect that the item or
cost has to be manually ``claimed'' on the cost report.
We do not believe that providing an estimate of the self-disallowed
item will prove burdensome to providers. Moreover, if the provider
believes that listing the item on the cost report is worthwhile, the
provider may have already engaged in an estimate of sorts, and in any
event, if the provider does decide to appeal the item, it should
estimate the reimbursement effect of the item at that time. Finally,
intermediaries are not required to review each protested cost or item
to decide to remove or allow that cost or item. Whereas, at one time,
items appearing on the protested amount line were ``above the line''
(that is, they appeared before, and made up part of, the total claim
for reimbursement), that is no longer the case. On the current cost
report, the protested amount appears ``below the line'' and is not
included in the provider's total claim for reimbursement.
2. Audits of Self-Disallowed Items
We proposed that, where a provider is successful in obtaining
reimbursement for a self-disallowed item, the intermediary must audit
the item to determine the proper reimbursement effect.
[[Page 30199]]
Comment: Three commenters believed that our proposal was
unnecessary. One commenter stated that it does not have an objection in
principle with the proposal that an intermediary must audit self-
disallowed items after a decision awarding them to the provider, and
said that its experience has been that in every instance in which
providers have successfully challenged a CMS policy, payment has been
audited or reviewed for accuracy under the agreement of the parties to
the dispute. The second commenter believed that the proposal was
unnecessary because CMS already has the right to, and routinely does,
instruct its intermediaries to perform additional auditing steps before
issuing an NPR as a result of a final agency determination. The third
commenter stated that the Board would expect that self-disallowed items
would be unaudited.
Response: The final decision awarding reimbursement for a self-
disallowed item may come from the Board, the Administrator, or a court.
Although we believe that, in most instances, the administrative or
judicial body that issues a decision would not specify a dollar figure
for reimbursement, the proposal was intended to ensure that
intermediaries, in fact, have the opportunity to determine the correct
amount of reimbursement after an award is made. We believe that it
would be inappropriate for the administrative or judicial body to award
a specific amount for reimbursement without the benefit of an audit by
the intermediary. Of course, the intermediary could audit the self-
disallowed item prior to an award, but this would mean that the
intermediary would be spending resources to determine an amount for an
item that, under Medicare policy, would not be awarded.
Comment: Three commenters said that the regulations should place a
limit on the time an intermediary has to conduct the audit of the
awarded self-disallowed item. One commenter stated that the regulations
should set forth a reasonable time limit to audit and calculate
payment, and that 60 days certainly should be sufficient. The second
commenter stated that, whereas the need for an accurate determination
of the amount of reimbursement is important, the proposal threatens to
prolong indefinitely the closure of the appeal, because no limit is
placed on the time the intermediary would have to complete the audit.
The third commenter stated that any audit subsequent to a decision to
pay a self-disallowed item should occur within a limited period of
time.
Response: We agree that in all cases intermediaries should complete
the audit of an awarded self-disallowed item in a reasonable amount of
time. We decline to impose a specific time limit on intermediaries for
auditing self-disallowed items, however, because what is reasonable in
a given case will depend in part on the scope and complexity of the
audit and the provider's cooperation, as well as the intermediary's
other program priorities.
Comment: Two commenters disagreed with the proposal to permit
intermediaries to audit self-disallowed costs that are ultimately
awarded during the appeals process. In the first commenter's view, the
proposal offends the judicial principle of finality and gives the
Medicare program ``two bites at the apple.'' According to the
commenter, the intermediary has enough time between the time that a
provider appeals a self-disallowed cost and a Board hearing for an
intermediary to audit or otherwise evaluate or question the amount of
the claim. The other commenter stated that the proposal to require
intermediaries to audit eventual awards of self-disallowed costs could
result in an entirely new disallowance and appeal based on new grounds.
A provider could be forced to litigate the same items multiple times,
which would be inconsistent with the due process rights of the
provider. Any audit subsequent to a decision to pay a self-disallowed
item should be restricted to a determination of the payment amount, and
should not open new grounds for disallowance.
Response: We disagree that the proposal is counter to the principle
of finality, or that it would give the Medicare program ``two bites at
the apple.'' The purpose of the proposal was not to allow the
intermediary to relitigate the question of whether the provider is
entitled to reimbursement for the self-disallowed item, but rather to
ensure that the intermediary has the opportunity to determine the
reimbursement effect of the final decision awarding that self-
disallowed item. We believe the language in Sec. 405.1803(d)(3), that
CMS may require the intermediary to ``audit'' a self-disallowed item,
sufficiently conveys that, under this provision, the intermediary is
restricted to determining the amount of program reimbursement, and not
whether the item should be allowed. Although the intermediary could
audit the self-disallowed item prior to an award, the intermediary
would be spending resources to determine the correct amount for an item
that may not, and, at least from the perspective of the program, should
not be awarded.
Comment: One commenter stated that one way to minimize the problem
of unaudited self-disallowed costs would be to allow the provider and
the intermediary to enter into a stipulation regarding whether the
self-disallowed costs have been audited. Another commenter stated that
a more practical procedure would be for the parties to stipulate the
amount in controversy, with an audit by the intermediary, if necessary,
at the outset of the appeal, rather than after a possibly lengthy
process.
Response: We believe that a stipulation that the amount at issue
for a self-disallowed cost that has not been audited may be helpful,
but would not be an adequate substitution for our proposal, which would
prohibit the award of a specific amount of reimbursement in the absence
of an audit. Where the intermediary knows the amount of potential
reimbursement during the pendency of an appeal, either because it has
audited the issue or otherwise has the necessary information, the
intermediary can stipulate to the amount at issue. Intermediaries are
in the best position to know their workload priorities and to decide on
allocation of their resources. We are not preventing intermediaries
from determining the amount at issue prior to a decision awarding the
reimbursement at issue; rather, the purpose of the proposal was to
prevent intermediaries from being forced to audit the amount of
reimbursement prior to a decision favorable to the provider.
Comment: One commenter stated that the regulations should make
clear that any dispute with regard to an audit or calculations would
remain in the jurisdiction of the entity that rendered the last merits
decision.
Response: We decline to require that the entity that awarded the
reimbursement for the self-disallowed item maintain continuing
jurisdiction in case there is a dispute concerning the audit. We would
have no authority to require a court, once having remanded the case for
an audit by the intermediary, to retain continuing jurisdiction over
the case. The Board or the Administrator may not see the need to
maintain continuing jurisdiction over the case, once having ruled for
the provider on the self-disallowed item. To the extent that the
provider disagrees with the calculation of the audited item, the
provider may bring a new appeal to the intermediary or to the Board, if
the
[[Page 30200]]
provider meets the amount in controversy requirements.
3. Determining Timeliness of Hearing Requests (Sec. 405.1811 and Sec.
405.1835)
We proposed to revise our regulations to provide that the 180-day
period for requesting a Board or intermediary hearing begins on the
date of receipt by the provider of the intermediary determination or,
where applicable, the expiration date of the 12-month period for
issuance of a timely NPR by the intermediary. We received one comment
on this issue, which pertained more closely to our proposed definition
for ``date of receipt'' and to our proposal for a presumption that
documents from a reviewing entity are received within 5 days of their
mailing, unless a preponderance of the evidence establishes that they
were received later than the 5-day period. Accordingly, we have
addressed this commenter's concerns in section II.B. of this final
rule.
4. Contents of Hearing Request
In order to facilitate an early focus by the parties and the
reviewing entity on the jurisdictional requirements for a hearing
before the Board or intermediary, we proposed that the original hearing
request include a demonstration (through argument and supporting
documentation) that the provider satisfies the jurisdictional
requirements for the hearing request. We also proposed that, in order
to facilitate the reviewing entity's ability to determine compliance
with our proposed self-disallowance rules, the hearing request must
contain a description of the nature and amount of each self-disallowed
item and the reimbursement sought for each item. Finally, we proposed
clarifying the current requirement that a hearing request include
supporting documentary evidence. We stated that we were aware of
various cases in which the need to determine Board jurisdiction over a
specific matter at issue had been hampered by the absence of the NPR(s)
relevant to the appeal, or by confusion about whether the NPR at issue
was the initial NPR or a revised NPR issued after reopening (see Sec.
405.1885 and Sec. 405.1889). Because the Board would not be able to
make appropriate findings of fact and conclusions of law about its
jurisdiction without this information, proposed Sec. 405.1811(b)(3)
and Sec. 405.1835(b)(3) would require the hearing request to include
each intermediary determination at issue in the appeal.
Comment: One commenter stated that the proposed rule would place an
unreasonable burden on providers to look into the future and defend
against unknown jurisdictional challenges that may arise. This
commenter proposed that, if jurisdictional documentation must be
submitted with the original hearing request, the intermediary should be
required to read it and determine within a reasonable period of 60 to
90 days if any jurisdictional issues exist. Arbitrary jurisdictional
challenges by intermediaries have increased dramatically in recent
years, created additional demands on Board resources, and have caused
substantial delays in cases moving through the administrative process.
Once the Board has taken jurisdiction over an issue, that decision
should have some finality. According to the commenter, if CMS's intent
is to reduce the backlog, an administrative process that is fair to
both the provider and the intermediary should be established.
Response: We disagree that requiring a brief demonstration in
writing that the request for hearing meets the jurisdictional
requirements constitutes an unreasonable burden on providers. The party
seeking relief before an administrative or judicial tribunal has the
burden of demonstrating that the tribunal has jurisdiction over its
claim or appeal. In most cases, the jurisdictional question will be
straightforward and the provider will either be able to demonstrate
easily that the intermediary hearing officer(s) or the Board has
jurisdiction, or, at the least the provider will be able to anticipate
arguments concerning jurisdictional deficiencies. With respect to the
commenter's assertion that some intermediaries make arbitrary
jurisdictional challenges, we believe that claims presented by
providers, as well as defenses raised by intermediaries, should be made
in good faith. If an intermediary has raised a defense, jurisdictional
or otherwise, that does not have a reasonable basis in law or fact, or
has not raised a reasonable jurisdictional defense in a timely manner,
the intermediary's conduct should be reported to the Board, and if the
Board believes it to be appropriate, the Board can refer the matter to
CMS for possible action. This is not to say that, where an intermediary
has raised a jurisdictional defense that is similar to one that it or
another intermediary has raised unsuccessfully before, the intermediary
would be precluded from raising the jurisdictional defense if it was
otherwise reasonable. (However, in that situation, the intermediary
should note its jurisdictional objections to the Board in a way so as
not to delay the resolution of the appeal and, if necessary and
appropriate, renew its jurisdictional objections in a request for
Administrator review of the Board's final determination on the merits.)
Similarly, we do not believe that an intermediary should purposely
delay making jurisdictional defenses, but, again, the burden is on the
provider to demonstrate jurisdiction, and we decline to either impose a
specific time period for an intermediary to raise jurisdictional
defenses or to provide that, having once determined that jurisdiction
exists, the Board is precluded from revisiting the issue. Additional
facts that are developed during the course of proceeding before the
Board may cause the intermediary to challenge, and the Board to deny,
jurisdiction. In civil litigation, jurisdictional defects can generally
be raised at any time, even on appeal. Although a court may be obliged
to dismiss a case for lack of jurisdiction even where the
jurisdictional objection is made at a late stage in the proceedings, it
reserves the authority to sanction a party if the party has
unreasonably delayed in making the objection. If the Board believes
that an intermediary has unreasonably delayed in making a
jurisdictional objection, it may refer the matter to CMS for possible
action.
Comment: One commenter stated that an issue included in a hearing
request may at times be reopened by the intermediary with a partial
revision being made. Such a revised determination by the intermediary
should not preclude the provider from continuing to appeal the balance
of the issue on the basis that it fails to meet the amount in
controversy requirement. The Board should preclude any jurisdictional
challenge in this situation. There is no need for jurisdictional review
in these circumstances.
Response: If a provider satisfies the amount in controversy
requirement at the time it files its appeal, a subsequent revision or
partial revision to an issue or issues that causes the remaining
controversy to go below $10,000 (or $50,000 in the case of a group
appeal) will not deprive the Board of jurisdiction to hear the appeal.
We have added new paragraph (c)(4) to Sec. 405.1839 to clarify this
point.
Comment: One commenter stated that the proposed requirements for
documenting a provider's position in the original hearing request
creates an unreasonable burden due to the time and effort to prepare
the documentation. As a result, this requirement would effectively
reduce the 180-day filing period, in violation of the statute.
[[Page 30201]]
Response: We do not believe that the proposed requirements for
documenting a hearing request are onerous. As we stated in the proposed
rule (69 FR 35723) requiring providers to include certain information
in their hearing requests facilitates an early focus by the parties and
the Board that the jurisdictional requirements for a hearing are met.
Comment: One commenter said that the cost of developing
documentation could be unnecessary for those issues that are likely to
be resolved through the administrative resolution process. Because the
resolution process typically results in a provider accepting less than
full reimbursement for a disputed issue, if providers are forced to
incur the costs of developing documentation, the costs of going forward
with a hearing may be justified. As a result, more cases may go to
hearing and fewer cases may be settled and withdrawn.
Response: We do not believe that the proposed requirements for
documenting a hearing request are onerous. Moreover, we do not believe
that a provider would be able to reach an administrative resolution
with an intermediary on an issue without developing at least as much
documentation as would be needed for a hearing request on that issue.
Comment: One commenter recommended that the final rule add a
provision requiring that providers include intermediary documentation
on the disallowances appealed, and that the intermediaries in turn be
required to provide supporting documentation to providers. Without
intermediary supporting documentation, providers cannot, in the hearing
request, articulate their position and submit documentation in support
of their position. Currently, many intermediaries justify disallowances
by citing only general regulatory provisions and do not state why the
provider did not meet the cited provisions or what auditing standards
were applied. Medicare and Government Accountability Office rules
require that the intermediary document reasons for disallowances and
undergo supervisory review. The commenter stated that if intermediary
disallowances were properly documented, challenges could be narrowed
and the case backlog could be reduced.
Response: In Sec. 405.1835(b)(3), we are requiring providers to
submit to the Board a copy of the intermediary or CMS determination
under appeal. Further, providers must submit any other documentary
evidence that they consider necessary to meet the requirements for
obtaining a Board hearing. We agree that intermediaries should provide
at least a brief explanation for the adjustment, so as to put the
provider on notice as to the reason for the adjustment. However, in
light of the huge number of adjustments that intermediaries make, and
in view of the fact that many of these adjustments are not (and would
not be, regardless of the degree of explanation) appealed, we are not
requiring intermediaries to provide extensive and detailed explanations
of their adjustments prior to the filing of a hearing request.
We also note that the existing requirements in Sec. 405.1803
dictate that the intermediary include appropriate references to law,
regulations, CMS Rulings and program instructions to explain why its
determination of the amount of program reimbursement due to the
provider differs from the amount claimed by the provider. In addition,
we note that the current audit instructions for intermediaries contain
similar requirements. (See CMS Pub. 100-06, Chapter 8, General Audit
Guidelines, 170, Exhibit VI.) (Further, we believe that the
intermediary review and adjustment process is outside the scope of this
rulemaking.) Where a provider disagrees with, or has questions
concerning, an intermediary's adjustment, the provider may contact the
intermediary for further clarification. We note that the 180-day period
for requesting a hearing should allow the parties sufficient time to
exchange information concerning the basis for the claim and the
adjustment and the parties' respective positions concerning the
adjustment. If the provider does not receive a satisfactory response
from the intermediary concerning the adjustment, the provider may
appeal the adjustment. The provider should note in its request for a
hearing the basis for the provider's disagreement, or, where the
provider believes that it does not have enough information to
articulate as full an explanation for its disagreement as it would
prefer, the provider may state that, though it believes that it is
entitled to a reversal of the adjustment, the provider nevertheless
lacks enough information to determine at that point the full basis for
its disagreement with the intermediary. In all cases, through pre-
hearing conference and other communications, or through formal
discovery if need be, the provider and the intermediary should be able
to arrive at an understanding of the basis for the provider's claim and
the intermediary's adjustment. Ultimately, if the provider does not
present a full basis for its claim, it will be difficult to prevail on
its appeal, and if the intermediary does not fully support its
disallowance, it will be difficult for the intermediary to defend its
adjustment.
Comment: One commenter stated that it did not believe that
requiring providers to submit more documentation earlier in the process
would have much of an impact on relieving caseload. This commenter
believes that a more effective proposal might be to charge the
intermediary interest, from the time the provider submits its final
position paper until the time the case is resolved, on the amount that
is eventually paid to the provider.
Response: We do not have the authority to charge interest against
the intermediary, as the commenter suggests. The payment of interest is
a waiver of sovereign immunity, which can be effected only through
legislation enacted by the Congress.
Comment: One commenter stated that the proposal to require
providers to demonstrate in the hearing request that they meet the
requirements for a Board hearing and to include a description of the
nature and amount of each self-disallowed item and the reimbursement
sought for each cost was outside CMS's statutory authority. According
to the commenter, the Congress established the Board as an independent
tribunal within the Department of Health and Human Services, not
subject to CMS's direct oversight or control, permitting CMS only to
review a final decision of the Board after it is issued. Under the
Medicare statute, only the Board, and not CMS, has full power to make
rules and establish procedures, not inconsistent with the provisions of
the statute or the regulations of the Secretary, which are necessary or
appropriate. This commenter also objected to the proposed requirement,
that, where the provider is appealing from a revised NPR, the provider
must include the pertinent reopening notice and the initial NPR so that
an appropriate determination can be made as to whether a specific
matter at issue is within the scope of the revised NPR. CMS's position
that providers can appeal only issues that were actually adjusted in
revised NPRs is contrary to the doctrine in Edgewater Hospital v.
Bowen, 857 F.2d 1123 (7th Cir. 1989). The commenter stated that the
proposed new requirements for hearing requests would create significant
new hurdles for providers and make it much more difficult for providers
to meet appeal deadlines.
Response: We disagree that we do not have authority under the
Medicare statute to govern procedures for hearings before the Board. As
the
[[Page 30202]]
commenter notes, section 1878(e) of the Act provides that the Board's
operating rules are subject to regulations issued by the Secretary,
such as this final rule. With respect to the commenter's point that our
proposal that providers may appeal issues only that were actually
adjusted in revised NPRs is contrary to the court's decision in
Edgewater Hospital v. Bowen, we continue to believe that our proposal
is well-founded. We respond at length in section II.V. of this final
rule (Reopening Procedures) to the assertion that, based on Edgewater,
we should allow an appeal of a revised NPR to include an appeal of
matters that were addressed in a notice of reopening but not actually
revised.
Comment: One commenter stated that clarification was necessary
because providers were adding issues to an appeal of a revised NPR that
were not within the scope of a revised NPR.
Response: We agree that one benefit of requiring providers to
document their position in their request for a hearing is alerting the
Board as to whether the appeal concerns an issue that was or was not
within the scope of a revised NPR.
Comment: Two commenters found confusing the statement in the
proposed rule (69 FR at 35723-24) that a hearing request would no
longer be required to include documents necessary to support the
provider's position on a specific reimbursement matter, because the
reviewing entity is required to make a preliminary finding of its
jurisdiction before it considers the merits of a particular issue. One
of the commenters stated that, in order to determine the merits and
preliminary findings of its jurisdiction, the intermediary (for
purposes of an intermediary hearing officer proceeding) needs the
necessary documents to support the merits of the provider's position.
The commenter recommended that all supporting documentation, and not
just documentation in support of jurisdiction, be required to be
supplied with the hearing request. According to the commenter,
documentary evidence should be required in order to facilitate a review
and possible resolution of the issues. A reopening request must be
accompanied by all supporting documentation, and the same rule should
apply with respect to hearing requests.
Response: We note that, because the intermediary hearing officer
(or the Board in a Board appeal) must make a preliminary determination
of its jurisdiction (that is, whether the request for hearing was
timely and whether the amount in controversy requirement was met) prior
to addressing the merits, the provider would not need initially to file
documents that pertain only to the merits of the appeal. If, however,
the provider believes that there is documentation that is necessary to
support a preliminary determination of jurisdiction and that
documentation is intertwined with the merits of the appeal, the
provider must, under Sec. 405.1835(b)(3), submit that documentation
with its hearing request. Likewise, if the intermediary hearing officer
or the Board believes that additional documentation is necessary to
examine jurisdiction, the reviewing entity may request additional
documentation from the provider. We have amended Sec. 405.1840(a)(2)
to clarify that, by ``preliminary determination of jurisdiction,'' we
mean a determination of whether the request for hearing was timely
(either received within 180 days after the date of receipt by the
provider of the intermediary or Secretary determination, or the period
for receipt was extended under Sec. 405.1836), and whether the amount
in controversy requirement was met.
Comment: One commenter questioned whether the Board would have the
ability to dismiss an appeal if required information is not submitted
with the hearing request. Similarly, another commenter stated that the
rule should specify whether an imperfect but timely request would be
dismissed or whether there would be an opportunity for the provider to
correct the defect.
Response: Proposed Sec. 405.1811(b) and Sec. 405.1835(b) stated
that a request for an intermediary or Board hearing ``must'' be
submitted in writing and ``must'' include certain prescribed items.
Although one could fairly conclude that a hearing request that would
meet the requirements of proposed Sec. 405.1811(b) or Sec.
405.1835(b) would be a prerequisite to obtaining a hearing, the
proposed rule did not state whether a provider that submits a non-
conforming request would have the opportunity to cure the request, and
if so, whether the provider could have more than one opportunity to
cure the request before its appeal would be dismissed. We have
clarified Sec. 405.1811(b) and Sec. 405.1835(b) to state that the
intermediary or Board may dismiss with prejudice an appeal that does
not comply with the requirements of Sec. 405.1811(b) or Sec.
405.1835(b), or take other action as it deems appropriate. We believe
that this approach is consistent with the approach we have taken in
section Sec. 405.1868 (``Board Actions in Response to Failure to
Follow Board Rules'') in which we similarly leave to the Board's
discretion whether to dismiss an appeal or take some other, lesser
action.
Comment: Two commenters stated that they were concerned that the
``detailed'' information required for the content of the initial
hearing request would unduly burden small, rural, and less
sophisticated providers that would not have the ability to file appeals
without the assistance of outside expertise. In addition, the proposed
contents requirements would remove the Board's flexibility to accept
appeals.
Response: We do not believe that the proposed requirement is unduly
burdensome, even for ``small, rural and less sophisticated providers.''
As adopted, our proposal requires only that the provider demonstrate
that it has met the various requirements for obtaining a hearing. As we
stated in the proposed rule (69 FR 35723), the hearing request would no
longer need to include documents necessary to support the merits of the
provider's appeal.
Comment: One commenter stated that it was concerned with proposed
requirements that the provider document and provide argument that its
appeal is strictly and demonstrably within the jurisdiction of the
appeals panel. Likewise, according to the commenter, the proposed
requirements for documentation regarding self-disallowance issues seem
to unfairly shift the burden entirely onto the provider, without
offering detailed and specific criteria for what is and is not
acceptable documentation and standards of argument.
Response: The purpose of proposed Sec. 405.1835(b) was to provide
the Board with the information necessary to make a preliminary
determination (timeliness and amount in controversy) as to whether it
had jurisdiction over the provider's appeal, as well as providing the
intermediary with the information necessary to determine whether it
would file a jurisdictional challenge with the Board. A provider would
not be required to argue its case in detail at this point in the
process. Rather, as the moving party, the provider would be required
only to demonstrate that it is dissatisfied with an intermediary or
Secretary determination and that it has filed its request for a hearing
timely and that the amount in controversy is at least $10,000.
5. Adding Issues to Original Hearing Request (Sec. 405.1811(c) and
(Sec. 405.1835(c))
In the proposed rule, we believed it was necessary to amend the
regulations addressing the provider's ability to add issues to its
original hearing request. Currently, a provider is effectively
[[Page 30203]]
allowed to wait for new issues to appear and add issues anytime before
the hearing begins. It is our view that, because providers may add
issues to a request at any time prior to a hearing, the ability of the
Board to conduct hearings and decide cases expeditiously has been
seriously compromised. At the time of the publication of the June 25,
2004 proposed rule, there were approximately 10,000 cases at the Board
that had yet to be resolved. We believed the availability of such an
extended period for adding issues had become a major obstacle to the
Board's efforts to reduce its backlog.
The ability of providers to add issues at any time to a hearing
request not only has led to larger and more complex cases, but has also
meant that the Board's ability to schedule and hold hearings
efficiently has been significantly impaired through the practice of
some providers of adding issues shortly before the scheduled hearing
date. Some providers apparently wish to keep a hearing request open as
long as possible in the hope or anticipation of a favorable court case
on some reimbursement issue that they can then add to their hearing
requests. Therefore, we proposed that, rather than having an open-ended
period for adding issues, it would be appropriate and prudent to allow
providers a 60-day period for adding issues, commencing with the
expiration of the applicable 180-day period for filing the original
hearing request. In essence, this additional 60-day period would afford
providers an adequate opportunity to appeal all the issues that may
have been overlooked in the original hearing request. We examined
section 1878(d) of the Act, which gives the Board the power not only to
affirm, modify, or reverse the intermediary's determination, but also
to make any other revisions on matters covered by the cost report,
regardless of whether these matters were considered by the intermediary
in its determination. We interpreted this statutory provision to
address only the Board's powers over a jurisdictionally proper appeal
under section 1878(a) of the Act; therefore, section 1878(d) does not
prevent us from limiting the period a provider has to add issues. We
believe our proposal to allow a 60-day period for adding issues is an
appropriate exercise of the Secretary's general rulemaking authority
under sections 1102 and 1871 of the Act.
Comment: Three commenters supported our proposal. One commenter
noted that requiring all issues to be identified within our proposed
timeframe would add huge efficiencies to the process. All three
commenters stated that providers are afforded ample time to decide
which items they wish to appeal during the 180-day appeal period.
Several commenters opposed our proposed change. Some commenters
suggested that the proposed rule restricts provider appeal rights,
denies access to appeal, and is contrary to the statute. One commenter
suggested that the 60-day period is far too brief to allow providers to
add issues to appeals, and that CMS has provided no additional
information as to how it determines 60 days to be an appropriate
period. A few commenters suggested that the Supreme Court's decision in
Bethesda Hospital Association v. Bowen, 485 U.S. 399 (1988), is
informative on this issue. Commenters opined that Bethesda made clear
that, once jurisdiction for a cost reporting year was established, the
only requirement was ``that the matter must have been covered by such
cost report.''
Response: After careful consideration of the comments received in
this final rule, we are adopting our proposal to include a 60-day
period for a provider to add issues beyond the 180-day period permitted
for filing a hearing request. For the efficient administration of the
appeals process, we believe our policy of having the appeal resolved as
early as possible, while at the same time giving the parties to the
hearing ample opportunity to present their cases, is appropriate.
Following a given cost reporting year, providers have five months to
file a cost report. (See Sec. 413.24(f)(2).) After a cost report is
filed, the intermediary typically takes about a year to issue a final
determination on an unaudited cost report. We believe it is quite
reasonable to expect that from the time it takes to file a cost report
to a 240-day period after a final determination has been issued,
covering a span of approximately two years or more, a provider should
have sufficient opportunity to identify the issues it wishes to appeal
for that cost year. The Board will then be able to set a hearing date
with full knowledge that the hearing will not be further delayed by the
inclusion of last minute issues.
We disagree with those commenters that asserted that there is a
statutory right to add issues at any time prior to a hearing. The
Medicare statute does not address a timeframe for adding issues to an
appeal. The only statutory provision related to the timing of an appeal
is found at section 1878(a)(3) of the Act. There, a provider is
entitled to request a hearing before the Board if it files a request
within 180 days after notice of the final determination. We believe it
is reasonable to read this statutory provision in conjunction with
section 1878(d) of the Act to mean that a provider must include in its
notice of appeal all the issues it wants to appeal, especially given
that section 1878(a)(3) of the Act allows a generous 180-day period to
request a hearing. Although we continue to believe that providers
should not be allowed to delay interminably the hearings process by
adding issues at the last minute before a scheduled hearing date, we
believe our approach of providing an additional 60 days beyond the
timeframe for requesting a hearing to add issues that may have been
overlooked strikes an equitable balance that will serve the interests
of the parties to the hearing and the Board.
Section 1878(d) of the Act, the provision upon which some
commenters relied as granting a right to providers to add issues at any
time, in fact affords no such right. Section 1878(d) of the Act states
in relevant part that: ``The Board shall have the power to affirm,
modify, or reverse a final determination of the fiscal intermediary * *
* and to make any other revisions on matters covered by such cost
report * * * even though such matters were not considered by the
intermediary in making such final determination.'' We interpret section
1878(d) of the Act as permitting the Board to make revisions to cost
report items that directly flow from the determination with which the
provider has expressed dissatisfaction and from which the provider has
filed a jurisdictionally proper appeal under section 1878(a) of the
Act. See Little Co. of Mary Hosp. and Health Care Ctrs. v. Shalala, 828
F.Supp. 570, 576 (N.D. Ill. 1993), aff'd 24 F.3d 984 (7th Cir. 1994).
However, section 1878(d) of the Act does not pertain to the timing for
the inclusion of issues, contrary to the commenters' view.
For similar reasons, we disagree with the commenter that suggested
that the Supreme Court's decision in Bethesda controls in this
situation. As discussed more fully in section II.C. of this final rule,
the Bethesda decision involved a challenge to the Board's decision that
it did not have jurisdiction to consider a cost that was not claimed on
the provider's cost report, and did not in any way deal with the
question of the timeliness of adding issues to a hearing request. We
believe that Maine General Medical Center v. Shalala, 205 F.3d 493 (1st
Cir. 2000), also discussed in section II.C. of this final rule, is more
relevant. In Maine General, the court held that the statute did not
deprive the Board of jurisdiction to hear a claim involving a
[[Page 30204]]
cost omitted from a cost report (a conclusion with which we strongly
disagree), but it agreed that ``it would be entirely permissible for
the Board to conclude, as a matter of policy, not to hear [such a]
claim.'' (Maine General, at 501.) The court continued: ``All we hold is
that Congress did not, in the statute, require the Board to reach this
result by stripping it of jurisdiction. This outcome preserves some
flexibility for the agency, which may be exactly what Congress
intended. It is not our job to exercise that flexibility for the
agency.'' (Id.) Similarly, whereas we agree that the statute does not
have to be interpreted as preventing the Board from hearing an appeal
of an issue that was added subsequent to the submission of the request
for hearing, we believe that we retain the authority to prescribe
explicitly by regulation the Board's authority to hear issues that were
not contained in the request for hearing.
Comment: Several commenters suggested that a deadline for adding
issues should be directly related to the imminence of the Board
hearing. For example, the deadline should be set with the filing of
position papers or tied to a reasonable period prior to the scheduled
hearing date, such as 60 or 90 days.
Response: We considered, but ultimately declined to adopt, the
approach of requiring that issues be added no later than a set period
(for example, 60 or 90 days) prior to the scheduled hearing date. We
rejected this approach as potentially unworkable because adding an
issue (or multiple issues) even months prior to a scheduled hearing
could delay the hearing and interfere with the Board's ability to
schedule hearings in a predictable manner.
Comment: One commenter stated that the time in which an issue may
be added is solely within the Board's purview. Another commenter
suggested that the ability to add issues could be waived by agreement
of both the provider and the intermediary.
Response: We disagree with the commenter that suggested that the
time for which an issue may be added is (or should be) solely within
the Board's purview. Section 1878(e) of the Act gives the Board full
power and authority to prescribe rules, to the extent not inconsistent
with the regulations of the Secretary. Here, we believe that it is
appropriate to regulate the time period for adding issues, rather than
allowing the Board to prescribe by rule or determine on a case-by-case
basis the time in which to add an issue. The Secretary, not only the
Board, has an interest in ensuring that the appeals process is
conducted in an efficient manner. The Secretary also has an interest in
gauging at any particular time the Medicare program's potential
liabilities due to administrative and judicial appeals, which is made
much more difficult if issues may be added at any time, or at some
point in time later than the period we proposed. We also believe that,
if the Board had the authority to prescribe or to extend, on a case-by-
case basis, the time for adding an issue, it could be besieged by
requests and objections thereto by the parties. Because we disagree
that the Board should have the discretion to prescribe or extend the
time for adding an issue, it follows that we also disagree with the
commenter that suggested that the timeframe for adding issues could be
waived if both the provider and the intermediary agreed to do so. Any
process in which the parties could waive the time period for adding
issues, without the consent of the Board, is inherently undesirable, as
it would have the potential to interfere with the Board's ability to
effectively manage its caseload.
Comment: Two commenters suggested that CMS has not furnished any
evidence of a cause and effect relationship between the large backlog
of cases before the Board and the addition of issues to pending
appeals. Another commenter suggested that a comprehensive analysis of
the reasons for the large case backlog should be undertaken. Other
commenters suggested that our proposal was unnecessary because steps
already taken by CMS have significantly reduced the backlog at the
Board.
Response: We do not believe that we are required to quantify a
cause and effect relationship between the backlog of cases and the
addition of issues to a pending appeal, nor is it incumbent upon us to
undergo a comprehensive analysis of the reasons for the large backlog
at the Board. We believe the Secretary, under sections 1102(a) and
1871(a) of the Act, has the statutory authority to issue regulations
for the efficient administration of the Medicare program. The Board's
experience with the adding of issues and the resulting increase in the
complexity of cases and the delays in cases because of the need to
reschedule hearings has convinced us that the proposal is necessary. We
also disagree that the proposal is unnecessary because of other
measures that have been taken. At the present time there are
approximately 6,800 cases pending before the Board. Irrespective of
other measures that may have reduced the backlog, the present number of
pending cases is still unacceptable, and can be reduced, or at least
better controlled, with this deadline to add issues.
Comment: One commenter suggested that providers should have the
right to add to pending appeals an issue arising from a change or
clarification in the law. Because intermediaries are prohibited from
conducting a reopening based on a change in the law, adding an issue to
the appeal is the only available means by which a provider may
vindicate its legal rights. Another commenter suggested that a provider
should be given a full year after it receives the NPR to evaluate
potential issues, and noted that a 1-year timeframe is considerably
less than the 3-year timeframe in which an NPR can be reopened. Another
commenter suggested that, just as CMS seeks to limit a provider from
adding issues beyond 60 days from the expiration of the 180-day appeal
period, CMS should also limit an intermediary's right to reopen and
revise an NPR beyond 60 days from the issuance of the NPR.
Response: We disagree that because intermediaries are prohibited
from conducting a reopening based on a change in law, adding an issue
to the appeal is the only means by which a provider may vindicate its
legal rights. A provider may vindicate its legal rights by bringing a
timely appeal from an NPR and identifying in its request for hearing
all issues it wishes to appeal, or by adding any issue within 60 days
after the 180-day period for requesting a hearing. As noted above, a
provider thus has approximately 2 years after filing its cost report to
identify all issues it wishes to bring to the Board.
We disagree with the commenter that suggested that the timeframe
for adding issues should be at least a year after it receives the NPR.
We also disagree with the commenter that suggested that, if the time to
add issues is limited, an intermediary's ability to reopen a previous
determination should be similarly limited. As explained above, we
believe 240 days after receipt of an NPR is a reasonable time to
identify all issues the provider wants to appeal. We also note that the
time period for requesting a reopening does not need to correlate to
the time period for appealing an issue because the reopening and
appeals procedures are separate and distinct. Unlike the effect of
allowing an inordinate amount of time to add an issue, the time period
for requesting a reopening does not directly impact upon the Board's
ability to effectively manage its caseload. Also, the appeals process
is mandated by statute, and is designed to give
[[Page 30205]]
providers the right to contest matters before the Board (assuming that
the timely filing, amount in controversy and other requirements are
satisfied). In contrast, the reopening process is a creature of the
regulations, allowing an intermediary, through the exercise of its
discretion (or upon direction from CMS), to reopen and potentially
revise matters covered by a cost report for which, in most cases, the
time for appealing the matters at issue has expired. Thus, although
there is a lengthy period to request a reopening, there is no right to
a reopening.
Comment: A few commenters also requested a technical clarification
concerning the end of the proposed timeframe for adding issues; that
is, whether the end of the period is 60 days from the date the provider
files an appeal, or 60 days from the end of the 180-day period during
which the provider may file an appeal.
Response: We proposed that providers could add issues to their
hearing requests no later than 60 days beyond the expiration of the
180-day filing period for requesting a Board hearing (or intermediary
hearing, as applicable). After careful consideration of all comments
received, we continue to believe this policy is fair and strikes an
equitable balance for the parties to the hearing and the Board.
Comment: Several commenters suggested that by limiting the
timeframe for adding issues, providers would be forced to appeal
everything and then weed out issues later, as appropriate, causing even
further delays in settling hearings.
Response: We expect that providers will not file frivolous claims.
Also, as we stated above, we believe that our proposal provides ample
time for providers to identify all issues they wish to appeal.
Moreover, the final rule also requires a provider to submit to the
Board with its hearing request an explanation for each specific item at
issue with the reasons that the provider believes Medicare payment is
incorrect, and how and why Medicare payment must be determined
differently. This latter requirement should effectively deter any
provider from disputing every item on the cost report simply to protect
itself on appeal.
Comment: One commenter noted that a provider might not have the
necessary information from the intermediary to meet the proposed
deadline for adding issues. For example, it can take several months for
providers to obtain the intermediary's audit work papers needed to
determine the merits of a new issue. Two commenters suggested that CMS
could provide the Board with the authority to extend the deadline for
adding issues when it deems an extension to be appropriate.
Response: We would expect that an intermediary will promptly
provide its work papers to a provider upon request. If, however, the
intermediary has not timely provided documentation to support an
adjustment, and the provider is dissatisfied with the determination,
the provider must add the issue to its hearing request prior to the 60-
day deadline in order to preserve its appeal rights. If, upon receipt
of the work papers, the provider is satisfied that the adjustment is
correct, the provider should withdraw that issue from the appeal. For
the reasons stated above, we are not providing the Board with the
authority to extend the deadline for adding issues.
Comment: One commenter suggested that the current policy of adding
issues until the hearing is held should continue because providers
would have no other reliable recourse to correct errors found in the
cost report. This commenter stated that intermediaries were abusing
their discretion by refusing to reopen and revise cost reports for
clear and obvious errors within 3 years of the issuance of the NPR.
Response: We disagree with the suggestion that providers should be
able to add issues until the commencement of the hearing because
intermediaries have allegedly abused their discretion in refusing to
reopen and revise cost reports. Providers are responsible for
identifying all issues that they wish to appeal. Under our proposal,
which we are finalizing, providers have ample time to identify all
issues they wish to bring before the Board. As stated in an earlier
response, the appeals process is different from the reopening process.
If intermediaries are allegedly improperly refusing to reopen cost
reports, the remedy does not lie with an adjustment to the appeals
process. CMS would have to investigate the allegations, determine if
the allegations are in fact supportable, and if so, take appropriate
action against the intermediary.
E. Provider Requests for Good Cause Extension of Time Period for
Requesting Hearing (Sec. 405.1813 and Sec. 405.1836)
Under current rules, a provider may request an intermediary hearing
officer or the Board to extend ``for good cause shown'' the 180-day
period for requesting a hearing. The request must be filed within 3
years of the date of the original NPR. In the proposed rule, we cited a
split among the Federal circuit courts of appeals on the basic
authority of the Board to extend the 180-day period. In response to the
case law and the case backlog at the Board, we proposed retaining this
policy, with certain modifications. We believed that, in many
instances, the current 3-year period for requesting an extension was
unreasonably lengthy and could result in an increase in the Board's
backlog of cases. As a result, we proposed allowing providers a shorter
period in which to file for a hearing beyond the normal 180 days, and
only in limited specialized circumstances. Thus, the appeals period
could be extended ``for good cause'' only in cases where a provider
could establish that it could not reasonably have been expected to
submit a hearing request within the 180-day period due to extraordinary
circumstances beyond its control. Also, the request could be made only
if it was submitted within a reasonable time after the expiration of
the 180-day period, and in no event would a request be honored if it
was made more than 3 years after the date of the NPR or other
determination that the provider wished to appeal. This 3-year outside
limit for requesting extension represents the same timeframe that
existed in the previous regulations at Sec. 405.1841(b).
We also proposed that the Board or other reviewing entity would be
prohibited from granting a ``good cause'' extension request if the
provider attempted to rely on a change in the law, regulations, CMS
Rulings, CMS instructions, or other Federal legal provisions as the
basis for the extension request. In addition, we proposed that a
decision by the Board or other reviewing entity to grant or deny an
extension would be reviewable by CMS but would not be subject to
judicial review.
We are adopting our proposals. We have made a technical change to
proposed Sec. 405.1813(e)(1) concerning the component within CMS to
which intermediary hearing officer decisions should be sent. As the CMS
Office of Hearings neither currently receives nor reviews such
decisions, we changed this provision to indicate only that an
intermediary hearing officer decision should be sent to CMS (currently,
the decisions are received by the Center for Medicare Management, a
component within CMS).
As Sec. 405.1813 and Sec. 405.1836 are virtually identical in
their treatment of good cause extension requests for intermediary and
Board hearings respectively, we have made minor, non-substantive
wording changes to make these sections consistent, wherever possible.
Comment: Several commenters were concerned about the proposed lack
of
[[Page 30206]]
judicial review of a decision by the Board to grant or deny an
extension request. One of these commenters asserted that, because the
Board would be prohibited from granting an extension request due to a
change in the law or regulations, our proposal constituted a ``pre-
emptive strike'' at precluding judicial review of an issue that
challenged a provision of the law or the regulations. Another commenter
suggested that a decision by the Board denying a requested extension
constituted a final determination and should therefore be subject to
judicial review in the same manner that a Board's decision finding that
a provider lacked jurisdiction constituted an appealable final
determination.
Response: After a careful review of all of the comments received
regarding provider requests for extension, we have decided to finalize
our policy as proposed. Our longstanding policy has permitted
extensions of the timeframe for requesting hearings only in limited
circumstances, and that concept has been carried forward in the final
rule. Thus, we have retained a procedure whereby a provider will have
the opportunity to request an extension for filing an appeal with the
Board, even after the 180-day statutory period for requesting appeal
has expired. Moreover, even though we will require that the extension
request be made within a reasonable time in all cases, we are retaining
the current outside limit of 3 years after the date of the intermediary
determination or other determination that the provider wishes to
appeal.
With regard to the lack of judicial review following a decision by
the Board to grant or deny an extension request, we believe that the
Supreme Court's decision in Your Home Visiting Nurse Services, Inc. v.
Shalala, 525 U.S. 449 (1999), is informative. In that decision, the
Supreme Court ruled that an intermediary's declination to reopen upon
request a determination was not subject to further review, either
administratively or by a court. It is important to note that Medicare
rules also prohibit an intermediary from reopening a determination at a
provider's request when there is a change in the law or regulations.
Just as the reopening of intermediary determinations are governed
solely by regulations, so too are decisions made by the Board as to
whether an extension request should be granted or denied. Therefore,
under sections 1102(a) and 1871(a) of the Act, which give the Secretary
authority to issue regulations for the efficient administration of the
Medicare program, we believe we are authorized to provide for
discretionary grants and denials of requests to extend the time for
requesting a hearing, and to further provide that these discretionary
actions are not reviewable by the courts.
We disagree with the commenter that suggested that, because the
Board would not be permitted to grant an extension request on the basis
that a change in the law or regulations occurred, judicial review of a
challenge to a law or regulation would be precluded. Providers are
responsible for identifying, at the time of their hearing request or
within 60 days following the expiration of the 180-day appeal period,
all issues they want to appeal. We also disagree with the commenter
that suggested that a decision by the Board denying an extension
request should be treated as a final determination, similar to a final
appealable determination by the Board finding that the Board lacked
jurisdiction. There is an important distinction between these two types
of Board decisions. In the first instance, when the Board denies an
extension request that alleged good cause, the provider has
acknowledged that it failed to meet the statutory 180-day timeframe for
requesting an appeal. Therefore, the provider has lost any statutory
right to appeal in this situation. In contrast, in a case where the
Board issues a decision that it lacks jurisdiction, and dismisses the
appeal, the provider does not necessarily concede that it has failed to
file a timely appeal or that the Board lacks jurisdiction for some
other reason. Therefore, where a provider does not agree that the Board
lacked jurisdiction pursuant to the statute, it is entitled to bring an
appeal to the Administrator and, if applicable, to Federal district
court in order to resolve the issue.
Comment: One commenter suggested that CMS failed to provide
sufficient reasons for the removal of the 3-year timeframe, replacing
it with an ambiguous ``reasonable time'' standard. The commenter
believed the 3-year period should be retained and, in the event that it
is not retained, suggested that the Board be given discretion to
determine whether an extension request was made within a reasonable
timeframe. The commenter also suggested that there is nothing in the
proposed rule that supports proh