[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]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 413, and 417
Medicare Program; Provider Reimbursement Determinations and Appeals;
Final Rule
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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.
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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
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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
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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
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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 prohibiting the reliance on a change in the
law or regulations as a reason for finding that ``good cause'' exists.
Another commenter questioned the phrase ``reasonable time'' and wanted
to know how ``reasonable time'' could be viewed as equaling ``no more
than three years after the date of the intermediary determination.''
Response: As noted in the proposed rule, we considered eliminating
altogether good cause extensions of the 180-day period for requesting a
hearing. We proposed retaining good cause extensions to allow providers
to submit hearing requests beyond the 180-day limit only in
extraordinary circumstances beyond their control (for example, fire,
catastrophe or strike) that existed prior to the expiration of the 180-
day appeal period. We believe it is fair and appropriate that, absent
extraordinary circumstances, providers should be expected to file their
appeals within the 180-day period. Specifically, providers that are
dissatisfied with a final determination should file a timely appeal,
rather than depend on a right to file late if there is a favorable
change in the law at some point after the 180-day appeal period.
We also believe that setting a reasonable time, not to exceed 3
years, for filing a late appeal is appropriate. Again, given that the
circumstances giving rise to the claim of good cause for a late filing
must exist prior to the expiration of the 180-day appeal period, the
purpose of the reasonable time requirement is to allow the provider a
sufficient time to recover from the unseen event and gather the
necessary records, and make the necessary preparations for filing an
appeal. The purpose is not to allow the provider to file a late appeal
based on a favorable change in law or other circumstances that could
arise after the expiration of the 180-day period. We decline to set a
definite period, and instead believe that what constitutes a reasonable
time for filing an appeal beyond the timely filing limit should be left
to the Board's discretion (subject to the outside limit of 3 years)
based on the particular facts before it. Moreover, because a provider
must file a claim under protest to preserve its right to appeal a claim
when the provider seeks reimbursement for an amount that may not be
allowable under the controlling law, regulations, or policy, we do not
consider a subsequent change in the law, regulations, or policy as
falling within the ``good cause'' exception.
Comment: Three commenters suggested that CMS has too much
involvement in the Board's decision-making process. One of the
commenters suggested that the Administrator's ability to review the
Board's decision to grant or deny a good cause extension request was an
example of CMS's intention to gain total oversight over the Board.
Another commenter believed that CMS was attempting to usurp the Board's
discretion in determining whether there was good cause to grant an
extension. The commenter suggested that only the Board is authorized to
[[Page 30207]]
establish the procedures and limitations governing its own independent
review of provider appeals. The other commenter suggested that CMS
should provide for extensions in circumstances where either CMS
employees or appeals personnel contributed to the delays in filing a
timely appeal (for example, unreasonable delays in responding to
written inquiries).
Response: We disagree with the suggestion that we are overly
involved in the Board's decision-making process. Again, we rely upon
sections 1102(a) and 1871(a) of the Act, which grant the Secretary the
necessary authority to issue regulations for the efficient
administration of the Medicare program. It is our view that the parties
to a Board hearing may avail themselves of Administrator review
following a decision rendered by the Board. That particular policy has
never varied throughout the existence of the Board. The Board is
independent of CMS and, as an independent body, issues decisions
outside of the realm of CMS influence. Section 1878(f)(1) of the Act
authorizes the Secretary (delegated to the Administrator of CMS) to
reverse, affirm, or modify a decision made by the Board. A decision
rendered by the Board to grant or deny a provider a good cause
extension request is merely another example of the myriad decisions
handed down by the Board that are subject to review by the
Administrator.
A provider is required to establish ``good cause'' before the Board
can allow an extension of the 180-day time limit for filing a hearing
request. We have not defined all the ``extraordinary circumstances''
that the provider can rely upon to satisfy a ``good cause'' extension.
Therefore, the Board has the discretion to weigh the factual scenarios
presented by a provider and make its decision accordingly.
Finally, in the scenario where a provider believes that CMS or
Board personnel are not responding in a timely fashion to written
inquiries, in our view, the Board should not grant an extension request
for ``good cause.'' Instead, the provider would be expected to protect
its rights by filing a timely appeal within the 180-day period
prescribed by the Act.
F. Intermediary Hearing Officer Jurisdiction (Sec. 405.1814)
In the proposed rule, we sought to clarify the scope of an
intermediary hearing officer's jurisdiction; that is, appeals that have
amounts in controversy of between $1,000 and $9,999.
In proposed Sec. 405.1814(a)(1)(ii) (and Sec. 405.1840(a)(2), for
Board cases), we required the intermediary hearing officer (and the
Board) to make a preliminary determination of the scope of its
jurisdiction and notify the parties of its jurisdictional findings,
before conducting certain proceedings. For clarity, we have amended
these sections by way of a parenthetical to explain that the
intermediary hearing officer's (or Board's) preliminary determination
of the scope of its jurisdiction consists of a review as to whether the
request for hearing was timely and whether the amount in controversy
has been met. Also, we removed language from these sections that
required the intermediary hearing officer (or Board) to ``notify'' the
parties of such preliminary determination. The latter revision was made
primarily because, as most Board cases are settled prior to hearing, it
would be costly and inefficient for the Board to notify the parties of
preliminary jurisdictional findings. Requiring such notification would
unnecessarily slow the ultimate resolution of cases.
For clarity, we also made minor technical changes to other portions
of Sec. 405.1814, and conformed language in Sec. 405.1814 to that in
Sec. 405.1840 (concerning the Board's jurisdiction), wherever
possible.
Comment: One commenter suggested that if an appeal were initially
filed as a request for an intermediary hearing, but it was subsequently
determined that the amount at issue in the appeal had exceeded $10,000,
the regulations should provide that the appeal must be transferred to
the Board.
Response: We agree with the commenter. Our policy is that, when an
intermediary hearing officer has initially accepted jurisdiction
because the amount in controversy is between $1,000 and $9,999, any
change increasing the amount in controversy to at least $10,000 (for
example, a more accurate estimate of the amount in controversy or the
adding of an issue) will produce a change in forum; that is, the Board
will accept jurisdiction. However, where the Board initially accepts
jurisdiction after determining that a case has at least $10,000 in
controversy, and that amount is subsequently reduced to a figure below
$10,000 because one or more of the issues has been settled or
withdrawn, it is our policy that, notwithstanding the amount in
controversy falling to a level below $10,000, the Board will continue
to have jurisdiction and, as a result, may hold a hearing and issue a
decision. (We have a similar policy regarding the situation in which a
group appeal initially satisfies the $50,000 jurisdictional threshold
and subsequently falls below that threshold.) We have added paragraph
(c)(4) to Sec. 405.1839 to clarify the effect of a change in the
amount in controversy.
G. CMS Reviewing Official Procedure (Sec. 405.1834)
In the proposed rule, we sought to codify the procedures currently
located in section 2917 of the PRM for the CMS review of intermediary
hearings. The proposed rule stated that the provider, by submitting a
proper request, would be entitled to review of the intermediary hearing
officer(s) decision, and also proposed that the Administrator would
have discretionary, ``own motion'' review authority. In proposed Sec.
405.1834(d)(2), we stated that the Administrator, through the CMS
reviewing official, may exercise his or her discretionary authority to
review an intermediary hearing officer decision by accepting review
within 60 days after receipt of the decision by CMS's Office of
Hearings. We received one comment on this proposal, which is discussed
below.
We are making the following changes. First, we have revised the
regulation text at Sec. 405.1834(d)(2) to provide that the 60-day
period for noticing own motion review begins from the date of the
intermediary hearing officer decision. In Sec. 405.1834(e)(2), we are
clarifying the proposal that the CMS reviewing official's review of an
intermediary hearing officer decision would not be limited to a hearing
on the written record if certain criteria are met, including that the
CMS reviewing official determines that holding the hearing is
preferable, in the interest of administrative efficiency, to remanding
the matter to the intermediary. For clarity, in Sec.
405.1834(e)(2)(iii), we are replacing the language ``the matter must
not be remanded'' with ``[i]t is not necessary or appropriate to remand
the matter to the intermediary hearing officer(s).''
We have made technical changes to proposed Sec. 405.1834(b) and
Sec. 405.1834(c), and Sec. 405.1834(e)(3) concerning the component
within CMS to which intermediary hearing officer/CMS reviewing official
decisions should be sent. As the CMS Office of Hearings neither
currently receives nor reviews either of these decisions, we changed
these provisions to indicate that intermediary hearing decisions should
be sent to the appropriate CMS component for review by a CMS reviewing
official. Following the review and issuance of a written decision by a
CMS reviewing official, the decision is
[[Page 30208]]
then sent to CMS (currently, both intermediary hearing officer
decisions and CMS reviewing official decisions are received by the
Center for Medicare Management, a component within CMS).
We clarified language in Sec. 405.1834(d)(1), pertaining to own
motion review by the Administrator.
In Sec. 405.1834(e)(1) we proposed that the CMS reviewing official
must give great weight to ``other interpretive and procedural rules and
general statements of policy.'' We revised the quoted language to read
``other interpretive rules, general statements of policy, and rules of
agency organization, procedure, or practice established by CMS'' in
order to be consistent with the language in Sec. 405.1867 regarding
the authorities to which the Board is not bound but must give great
weight.
Comment: One commenter suggested that the proposed provision at
Sec. 405.1834(d)(2) is inconsistent with other provisions that give
CMS the right to conduct and complete review within 60 days of the date
the provider receives the decision. The commenter was also concerned
that there may be a problem with intermediaries sending decisions to
the appropriate CMS component at the same time they send them to
providers.
Response: We believe that the statutory provision that mandates the
Administrator both accept review and render a decision within 60 days
of the provider's receipt of the Board's decision is unusual and not
the optimal procedure for taking review. We continue to believe it
would not be appropriate to constrain the CMS reviewing official in
this manner when taking review of an intermediary hearing officer
decision. We do not share the commenter's concern that the intermediary
hearing officers will unduly delay forwarding their decisions to the
appropriate CMS component. Rather, we believe that intermediary
officers will promptly forward their decisions to CMS. Moreover, to the
extent that a provider is concerned that CMS has not promptly received
an intermediary hearing officer decision, the provider may contact CMS
to verify its receipt of the decision. Nevertheless, in response to the
commenter, we are providing a date certain for the onset of the 60-day
period for the CMS reviewing official to notify the provider and the
intermediary that he or she is taking own motion review. Therefore, we
have revised proposed Sec. 405.1834(d)(2) to provide that the 60-day
period for noticing review begins from the date of the intermediary
hearing officer decision.
H. Group Appeals (Sec. 405.1837)
In the proposed rule, we introduced various revisions to clarify
and update the regulation to reflect longstanding group appeal
procedures. For example, we provided that each provider in a group
appeal must satisfy individually the requirements for a single provider
appeal (except for the $10,000 amount in controversy requirement). We
also provided that a group appeal must be limited to one legal or
factual issue that is common to each provider in the group.
Additionally, we clarified the distinction between mandatory and
optional uses of group appeal procedures. We also added a new provision
that specified the requirements for the contents of a request for a
group appeal. We also clarified existing regulations regarding the
processing of group appeals pending full formation of the group and
issuance of a Board decision.
We are making several changes to the proposed rule, including
technical and editorial changes.
We have revised Sec. 405.1837(b)(1) (with respect to mandatory
group appeals) and Sec. 405.1837(b)(2) (with respect to optional group
appeals) to provide that one or more of the providers in the group may,
as a matter of right, appeal more than one cost reporting period with
respect to the issue that is the subject of the group appeal for
purposes of meeting the $50,000 amount in controversy requirement, and,
subject to the Board's discretion, may appeal more than one cost
reporting period with respect to the issue that is the subject of the
group appeal for other purposes, such as convenience. We have added
some examples in the text following Sec. 405.1837(b)(1) in order to
illustrate the application of--(1) The amount in controversy
requirement; and (2) the rules on when a provider under common
ownership may (either as a matter of right or as a matter of Board
discretion) join a group appeal involving a different cost reporting
period than that pertaining to the provider, to specific situations. We
have revised the language in Sec. 405.1837(b)(3) to clarify that
whereas one or more commonly owned or operated providers may initiate a
mandatory group appeal (group appeals brought under Sec.
405.1837(b)(1)), at least two providers are required to initiate an
optional group appeal (group appeals brought under Sec.
405.1837(b)(2)).
In proposed Sec. 405.1837(c)(4), we would have required the
providers in a group appeal to submit a statement that either--(1) The
providers believe that they meet all the requirements for a group
appeal and that the Board can proceed to make jurisdictional findings;
or (2) the Board ``must defer'' making jurisdictional findings until
the providers request the Board to do so. Consistent with proposed
Sec. 405.1837(c)(4)(ii), proposed Sec. 405.1837(d)(4) and Sec.
405.1837(e)(2) stated that the Board may not make jurisdictional
findings until the providers request them. After further consideration,
however, it is our position that, if the Board believes at any point in
the group appeals process that, for purposes of administrative
efficiency, it should make jurisdictional findings, it should be
allowed to do so. Accordingly, we have revised Sec. 405.1837(c)(4)(ii)
and Sec. 405.1837(e)(2), and have deleted Sec. 405.1837(d)(4).
Likewise, we believe the Board should not be required to make
jurisdictional findings before conducting further proceedings in the
appeal. The Board is in the best position to know whether, in any given
case, it is administratively efficient and proper to conduct
proceedings in advance of making jurisdictional findings. Accordingly,
we have deleted proposed Sec. 405.1837(d)(3).
We have revised proposed Sec. 405.1837(e) with respect to the
procedures for determining that a group is fully formed, to be
consistent with the current regulations and the Board's practice.
Proposed Sec. 405.1837(e)(2) would have provided that a group would be
fully formed upon notice from the providers to the Board, but did not
include a mechanism for determining that the group would be considered
fully formed absent such a notice. We believe that it is appropriate
for the Board to retain the abilities both to determine that a group is
fully formed and that the group appeal should proceed, and to set
schedules for the closures of groups, rather than being required to
hold open indefinitely the group formation. Accordingly, we have
deleted certain language in proposed Sec. 405.1837(e)(2) and have
revised Sec. 405.1837(e)(1) to provide that with respect to mandatory
group appeals, absent a notice from the providers that the group is
fully formed, the Board may issue an order requiring the providers to
demonstrate that there is at least one commonly-owned or controlled
provider that is a potential addition to the group. With respect to
optional group appeals, we have revised Sec. 405.1837(e)(1) to provide
that, absent a notice from the providers that the group is fully
formed, the Board will issue an order that the group is fully formed or
will issue general instructions
[[Page 30209]]
that set forth a schedule for the closing of optional group appeals.
We have revised Sec. 405.1837(e)(2) to state that the Board will
not dismiss any group appeal hearing request for failure to meet the
amount in controversy requirement until the Board has determined that
the group is fully formed.
We have deleted language from proposed Sec. 405.1837(e)(5) that
stated that the Board must grant a request to join a group appeal if
the request is unopposed by the group members and is received by the
Board prior to a final decision by the Board on the appeal. Our
rationale for this revision is that the Board generally should have the
discretion, for purposes of administrative efficiency, to grant or deny
a request for joining a group appeal. We note that the Board may modify
an order that a group has been fully formed, and thus could allow a
provider to join a group appeal that was originally declared fully
formed. Note that we have moved the language in proposed Sec.
405.1837(e)(6), which stated that a denial by the Board of a request to
join a group is without prejudice to the provider bringing a separate
appeal, to Sec. 405.1837(e)(4). We have substantially revised the
language of proposed Sec. 405.1837(e)(7) and also incorporated
proposed Sec. 405.1837(e)(7) into Sec. 405.1837(e)(4). We proposed
that, for purposes of determining the timeliness of any separate
appeal, the period from the date of receipt of the provider's original
hearing request through the date of receipt by the provider of the
Board's denial of the provider's request to join the group appeal, must
be excluded from the applicable 180-day period for filing a separate
appeal (see Sec. 405.1835(a)(3)) and from the 60-day period for adding
issues to any single provider appeal (see Sec. 405.1835(c)(3)). We
have revised this language to state that, for purposes of determining
timeliness for the filing of any separate appeal and for the adding of
issues to that appeal, the date of receipt of the provider's request to
form or join the group appeal is considered the date of receipt for
purposes of meeting the applicable 180-day period prescribed in Sec.
405.1835(a)(3). We were concerned that our proposal was potentially
confusing and could have been disadvantageous for providers that filed
the request for a group appeal hearing on or near the end of the
deadline for doing so. For example, under our proposal, a provider that
filed a request for a Board hearing on a group appeal on the 177th day
after receiving its intermediary determination, would have only three
days after the Board denied its request to join the group to file a
separate appeal. Under our revision, because the provider's request for
a hearing on the group appeal was timely, its subsequent request for a
separate hearing also would be timely.
In response to a comment, in revised Sec. 405.1837(e)(5), we
provide that, as a general rule, where a provider has appealed an issue
through electing to form, or join, a group appeal, it may not
subsequently request the Board to transfer that issue to a single
provider appeal brought in accordance with Sec. 405.1811 or Sec.
405.1835. We provide an exception to the general rule in the case of a
group appeal that does not meet the jurisdictional requirements. Where
the Board determines that the requirements for a group appeal are not
met (that is, where there has been a failure to meet the amount in
controversy or the common issue requirement), it will transfer the
issue that was the subject of the group appeal to a single provider
appeal (or appeals) for the provider (or providers) that meets (or
meet) the requirements for a single provider appeal.
Comment: A commenter objected to our proposal to clarify that each
provider in a group appeal must satisfy the requirements for a single
provider appeal (except for the amount in controversy requirement) as
interfering with the Board's statutory authority to establish the
procedural requirements governing provider appeals.
Response: We believe our proposal is consistent with what is
required by statute. The statute provides for a different amount in
controversy requirement for group appeals, but still requires that
providers appeal from a final determination of an intermediary or the
Secretary and that the appeal be timely.
Comment: One commenter stated that it was generally supportive of
the proposals on group appeals, but sought clarification on a few
points. This commenter stated that some of the proposals, if adopted,
would conflict with the Board's current instructions on group appeals.
Therefore, we should be prepared to immediately revise the Board's
instructions to avoid confusion.
Response: To the extent that there is any conflict between the
provisions of this final rule and the Board's current instructions, the
former will control. We anticipate that the Board will make revisions
to its current instructions as a result of the publication of this
rule.
Comment: Two commenters stated that they supported the proposal to
allow groups to aggregate claims across multiple cost reporting periods
in order to satisfy the $50,000 amount in controversy requirement. One
of these commenters believed that the proposal is ambiguous as to
whether items may be combined across cost years only for the purpose of
meeting the $50,000 amount in controversy requirement. According to the
commenter, providers should be allowed to combine common issues from
multiple cost reporting periods, regardless of cost report year end,
into one group appeal. Because providers have a variety of cost
reporting periods, and some may even have multiple cost reporting
periods within one calendar year, there is no reason to require a
commonality of cost reporting periods as a requirement for a group
appeal.
Response: Our proposals for group appeals were made with the view
that, to the extent we have discretion under the statute, we should
allow appeals to be brought as group appeals so as to reduce the
workload on the Board, as well as the burden on providers and
intermediaries. Our specific proposal to allow providers to combine the
same item for multiple cost reporting periods into one group appeal was
made under the section of the proposed rule pertaining to the amount in
controversy requirements. However, we have further examined the issue
and believe that providers with different cost reporting periods may,
subject to the Board's discretion, raise the same issue in a group
appeal, even when the amount in controversy requirement can be
satisfied without including all of the multiple cost reporting periods.
We have amended Sec. 405.1837(b)(1) and Sec. 405.1837(b)(2)
accordingly.
Comment: One commenter stated that, whereas it agrees that it is
proper to transfer an issue from an individual appeal to a group
appeal, the regulations should specifically state that the amount in
dispute for a transferred issue is applied, for purposes of the amount
in controversy requirement, only to the group appeal. For example, the
commenter stated, if an individual Board appeal had two issues with
$9,000 in dispute for each issue, and one of the issues was transferred
to a group appeal, the $9,000 amount in dispute would be applied to the
group appeal for purposes of meeting (or exceeding) the $50,000 amount
in controversy requirement, and the single appeal would be left with
one issue with $9,000 in controversy (in which case the appeal would
have to be dismissed for not meeting the $10,000 minimum).
Response: Our longstanding approach regarding meeting the amount in
controversy requirement for single provider appeals is that, as long as
the
[[Page 30210]]
provider has met the $10,000 requirement initially, subsequent events
(including, but not limited to, withdrawal, transfer or settlement of
an issue) that takes the amount below $10,000 will not deprive the
Board of jurisdiction. As noted in section II.I. of this final rule, we
are amending Sec. 405.1839(c)(4) to provide specifically that, where a
provider or group of providers has requested a hearing before the Board
pursuant to Sec. 405.1835 or Sec. 405.1837, and the amount in
controversy changes to an amount less than the minimum for a Board
appeal due to the settlement or partial settlement of an issue,
transfer of an issue to a group appeal, or the abandonment of an issue
in an individual appeal, the change in the amount in controversy does
not deprive the Board of jurisdiction.
Comment: One commenter noted that proposed Sec. 405.1837(b)(1)
states that any commonly owned or controlled provider may not appeal to
the Board any common issue in a single provider appeal brought under
Sec. 405.1835. The commenter asked whether this meant that providers
under common ownership or control cannot appeal an issue at all if the
combined amount in controversy does not meet the $50,000 threshold for
a group appeal.
Response: We believe that the language of section 1878(f)(1) of the
Act, which requires that any appeal to the Board by providers that are
under common ownership or control be brought as a group appeal, can
reasonably be read to mean that any appeal by commonly owned or
controlled providers that could be brought as a group appeal must be
brought as a group appeal. Therefore, if there are, for example, three
commonly owned providers that wish to appeal the same issue, but the
amount in controversy is $10,000 for each (so that the $50,000 amount
in controversy requirement for group appeals would not be met), each of
the three providers could bring an individual appeal. We have clarified
the language in Sec. 405.1837(b)(1) for this purpose.
Comment: One commenter asked whether a provider may add an issue to
a group appeal when the provider has appealed one issue of an original
NPR, joined a group appeal, and is within the 60-day proposed time
limit to add an issue, but is beyond 180-days from the original NPR.
Response: We understand the commenter to be asking whether a
provider, having appealed only issue A in an individual appeal, can
join a group appeal that involves issue B. The answer depends on
whether the provider first (or concurrently) requests the Board to add
issue B to its individual appeal and meets the requirements for adding
the issue to its individual appeal. Under Sec. 405.1835(c) of this
final rule, a provider may add an issue to its individual appeal if its
request to do so meets certain requirements, including the requirement
that the Board receive the request no later than 60 days after the
expiration of the applicable 180-day appeal period prescribed in Sec.
405.1835(a)(3). If the provider requests and meets the requirements for
adding an issue to its individual appeal, it may also request, under
Sec. 405.1837(b)(3)(ii), that, upon addition of the issue to the
individual appeal, the issue be transferred from the individual appeal
to the group appeal. If the provider is beyond the time for adding an
issue to its individual appeal, it may not circumvent the time limit
for doing so by seeking to appeal that issue through joining a group
appeal.
Comment: One commenter noted that, under current Board
instructions, a group appeal may be initiated only by two or more
providers, but because of varying fiscal year ends and varying dates of
NPRs, an appeal on a common issue for one provider may be due to be
filed before the time is ripe for other providers to join in the group.
Therefore, this commenter supports the proposal to allow a group appeal
to be initiated by a single provider, with other providers joining
later.
Response: We are clarifying that, although a single provider may
initiate a mandatory group appeal, two or more providers are required
to initially file an appeal for optional groups pursuant to Sec.
405.1837(b)(3). Our policy for optional group appeals is based upon
administrative efficiency concerns. Fundamentally, by definition, a
group appeal must ultimately contain two or more providers.
Accordingly, without the requirement to meet this definition from the
onset of filing an appeal, the Board would be forced to entertain an
abundance of requests to transfer to (or create) an individual appeal
from single providers who filed a group appeal, but failed to join with
another provider before the group closing deadline. We recognize,
however, that due to the statutory requirement that providers under
common ownership or control must appeal common issues as a group,
combined with the fact that these providers may receive their final
determinations on a staggered basis, we will allow, pursuant to Sec.
405.1837(b)(3), a single provider that anticipates that a commonly
owned or controlled provider will have an identical issue under appeal,
to initiate a mandatory group appeal, despite the administrative
efficiency concern above. In the unlikely event that no other providers
ultimately appeal the issue, the Board will either transfer the group
appeal issue to an existing individual appeal, administratively convert
the group case number to an individual case number, or administratively
create a new individual case number for the issue if the jurisdictional
requirements of Sec. 405.1811 or Sec. 405.1835 are met.
Comment: One commenter believed that the current policy permitting
hospitals to file individual appeals and to subsequently transfer
common issues to group appeals should be retained. Providers under
common ownership should not be precluded from pursuing a common issue
in a group appeal if they initially appealed it in an individual
appeal. This would allow hospitals time to determine whether an issue
is common to other hospitals under common ownership, which is not
always evident when one hospital receives a particular adjustment.
Similarly, another commenter stated that it is not practical for a
commonly owned provider to be required to file the initial appeal
request as a group appeal. Not all commonly owned hospitals are
centralized or situated in a way that enables them to coordinate
initial appeals as a group appeal within the 180-day deadline for
seeking a hearing. This commenter suggested that, instead, we could
require consolidation of single appeals into a group appeal within a
certain time after the single appeals have been filed. The commenter
also suggested that providers could be required to list their parent
corporation at the time of filing a single appeal to assist the Board
in identifying providers under common ownership.
Response: We believe it is reasonable to expect that the parent
corporation of commonly owned or controlled providers has a mechanism
in place to identify issues that are common to more than one provider
and to coordinate any appeals of these issues. Further, we believe that
the parent corporation is in a better position than the Board to
identify commonly-owned providers. Therefore, we are requiring a
commonly owned provider to bring a timely appeal, as--(1) A group
appeal (either initiating it or joining it) for an issue that is shared
by other provider(s) to which it is related by common ownership; or (2)
a single provider appeal for an issue that is peculiar to itself. (By
``timely'' we mean an appeal that satisfies the time limits stated in
Sec. 405.1835(a)(3) and Sec. 405.1835(c).) Where a commonly owned or
controlled provider mistakenly files an issue
[[Page 30211]]
within a single provider appeal that should have been brought as a
group appeal, the Board will transfer the issue to an existing group
appeal (or, where applicable, the Board will form a group appeal by
transferring the same issue that was filed by two or more commonly
owned or controlled providers within single provider appeals). We
believe, however, that where a provider has brought a single provider
appeal and then wishes to join (or form) a group appeal involving
providers to which it is not related, the Board should retain
discretion as to whether to deny the provider's request. In order to
assist the Board in identifying individual appeals that should have
been brought as group appeals (or should have been joined to an
existing group appeal), we are amending Sec. 405.1835 to add a new
paragraph (b)(4) to require a commonly owned provider to provide the
Board with certain information. Specifically, a commonly owned provider
must list the name of its parent corporation, and either state that, to
the best of its knowledge, no other provider related to it by common
ownership or control has an individual or group appeal pending before
the Board on the same issue for a cost reporting period that falls
within the same calendar year. Alternatively, when an appeal already
exists, the provider must give information (for example, the provider
name and number) concerning that appeal.
Comment: One commenter stated that, when a group appeal is
instituted by one of a small number of hospitals, there may be
uncertainty as to whether similar adjustments will be received by one
or more of the remaining hospitals. Thus, the final rule should specify
that the issue appealed in a group appeal may be redesignated into an
individual appeal (or appeals) where an insufficient number of
hospitals receives common audit adjustments to meet the $50,000 amount
in controversy requirement. Similarly, another commenter recommended
that we allow providers under common ownership or control to change an
appeal that was originally brought as a group appeal to an individual
appeal under certain circumstances. The commenter gave the following
example: Providers A and B are the two members of a chain organization
and have a common legal or factual issue. Provider A receives an
adjustment from its intermediary on the legal or factual issue and,
consistent with existing policy, files a group appeal before all other
commonly owned providers (here, Provider B) have received their NPRs.
Provider B then receives its NPR from its intermediary, but the
intermediary does not make an adjustment on the same legal or factual
issue. In this case, the case cannot proceed as a group appeal. The
commenter gave as other examples the situations in which two providers
have the same issue, but do not meet the amount in controversy
requirement, or when one of the providers has failed to timely appeal.
Response: In regard to the situation in which only one provider, in
an organization of commonly owned or controlled providers, has received
an adjustment on a particular item, we do not believe that there is
``an issue common to such providers.'' Therefore, the case can proceed
as a single provider appeal (provided that the jurisdictional
requirements for a single appeal are met). Similarly, where providers
timely bring a group appeal, but fail to meet the $50,000 amount in
controversy requirement, the Board will restructure the group appeal as
separate single provider appeals for those providers that meet the
$10,000 amount in controversy requirement for single provider appeals.
We emphasize, however, that, where a group appeal is redesignated as
one or more single provider appeals, the time in which to add issues is
unaffected. That is, under Sec. 405.1835(c)(3) as finalized, the Board
must receive a request to add an issue no later than 60 days after the
expiration of the 180-day period specified in Sec. 405.1835(a)(3) for
bringing the appeal. Thus, if a provider brings an appeal involving
issue A as a group appeal, on the last day of the 180-day period, and
more than 60 days later the group appeal is redesignated as one or more
single provider appeals, the provider would not be able to add issue B
to its single provider appeal. If, on the other hand, the provider
brings a group appeal as to issue A on the 150th day of the 180-day
period, and the group appeal is redesignated as a single provider
appeal 60 days later, the provider would have an additional 30 days to
add issue B to its single provider appeal, as it would have until 60
days after the expiration of the 180-day period to add the issue. We
note that, as revised, Sec. 405.1837(e)(4) states that, for purposes
of determining timeliness for the filing of any separate appeal and for
the adding of issues to that appeal, the date of receipt of the
provider's request to form or join the group appeal is considered the
date of receipt for purposes of meeting the applicable 180-day period
prescribed in Sec. 405.1835(a)(3). We were concerned that our proposal
could have been disadvantageous for providers that filed the request
for a group appeal hearing on or near the end of the deadline for doing
so. For example, under our proposal, a provider that filed a request
for a Board hearing on a group appeal on the 177th day after receiving
its intermediary determination, would have only three days after the
Board denied its request to join the group to file a separate appeal.
Under our revision, because the provider's request for a hearing on the
group appeal was timely, its subsequent request for a separate hearing
also would be timely. Accordingly, the provider's request to add issues
to a subsequent individual appeal is 60 days beyond the applicable 180-
day period prescribed in Sec. 405.1835(a)(3) (regardless of when the
subsequent separate appeal was created).
Comment: One commenter stated that if an issue is transferred to a
group appeal, it should not be transferred back to a single appeal.
According to the commenter, when providers transfer an issue to a group
appeal and then back to a single appeal, it creates an unnecessary
administrative burden for the intermediary and the Board. Also, many
providers transfer issues back and forth as a way to hold the issue
open until they have accumulated the necessary data.
Response: We agree with the commenter's concern. Accordingly, Sec.
405.1837(e)(5) provides that, apart from the situation where the
requirements for a group appeal are not met (that is, where there has
been a failure to meet the amount in controversy requirement or the
common issue requirement), a provider may not transfer an issue from a
group appeal to a single provider appeal. In the situation where a
provider has elected to form or join a group appeal, and the
requirements for a group appeal ultimately are not met, the Board will
transfer the provider's appeal to an individual appeal.
Comment: One commenter noted that proposed Sec. 405.1837(b)(1)
requires commonly owned or operated providers to bring as a group
appeal ``a specific matter at issue that involves a question of fact or
interpretation of law, regulations, or CMS rulings that is common to
providers * * *'' The commenter believes that the proposed regulations
should be clarified, because they do not impose a timeframe for common
issues among commonly-owned providers that must be brought in group
appeals. As drafted, all provider appeals of common issues that were
repeated year after year would have to be combined in one group. This
would make the groups unworkable in
[[Page 30212]]
terms of size and organization, and they would not be able to close
their groups when the same issue repeated itself in new fiscal years.
Therefore, the final rule should specify that all common issue appeals
for fiscal years ending in the same calendar year be included in one
group.
Response: We are amending Sec. 405.1837(b)(1) to clarify that
commonly owned or operated providers must bring as a group appeal a
specific matter at issue that involves a question of fact or
interpretation of law, regulations, or CMS rulings that is common to
providers and that pertains to cost reporting periods ending in the
same calendar year.
Comment: One commenter noted that proposed Sec. 405.1837(c)(3)
would require providers to submit ``a copy of each intermediary or
Secretary determination under appeal, and any other documentary
evidence the providers consider necessary to satisfy the hearing
request requirements of paragraphs (c)(1) and (c)(2) of this section *
* *'' The commenter sought clarification as to exactly what documents
would need to be submitted with the group appeal request. Also, it is
not clear what the proposed regulation means by ``any other documentary
evidence the providers consider necessary to satisfy the hearing
request requirements.'' It is unclear what other documentation is
needed.
Response: We are clarifying that, when referring to ``intermediary
determination,'' we do not intend to require that the entire NPR be
submitted with the group appeal. It is only necessary to submit the
first page of the NPR, showing the date of issuance, along with the
page containing the adjusted amount or protested item in dispute. At a
minimum, to satisfy the documentation requirements of Sec.
405.1837(c)(3), it is necessary to submit the first page of the final
determination (for example, the NPR), showing the date of issuance,
together with the pages containing the adjusted amounts or protested
items in dispute. Providers should also submit any additional
documentation that they consider necessary to satisfy the requirements
for obtaining a group appeal.
Comment: One commenter stated that filing a Schedule of Providers
with supporting documentation can be a costly endeavor. This commenter
recommended that any rule change that affects group appeals be
prospective, that is, any pending group appeals should be excepted to
avoid unnecessary administrative filings and potential jurisdictional
challenges for otherwise properly pending cases.
Response: We believe that the filing of a consolidated Schedule of
Providers with supporting documentation (which is already required by
the Board in its current instructions) is necessary; otherwise, the
intermediary, the Board, the Administrator, and the courts could be
required to review piecemeal jurisdictional documentation. We note
further that the current process, which requires providers to submit
the Schedule to the intermediary, which, in turn forwards the Schedule
to the Board (with comments either challenging or agreeing to the
existence of jurisdiction), appears to be working efficiently.
Accordingly, we are adopting the proposal without change.
Comment: A commenter stated that sometimes there is more than one
disputed fact or question of law pertaining to a single item on the
cost report. A common example of this is the disproportionate share
hospital (DSH) adjustment, which is determined by a combination of
calculations, each of which may have more than one element in dispute.
According to the commenter, the Board should have the authority to
handle more than one question of fact or law in a group appeal if that
would lead to a more efficient resolution. Further, even if the Board
wished to split sub issues into separate groups pursuant to proposed
Sec. 405.1837(f)(2)(ii), we should clarify that a provider may
initiate a single group appeal for a single line item in dispute.
Response: The statute requires that a group appeal involve only a
common question (singular) of fact or interpretation of law or
regulations. The regulations at Sec. 405.1837(a)(2) further specify
that a group appeal involve a single question of fact or interpretation
of law, regulations, or CMS Rulings that is common to each provider in
the group. What constitutes an appropriate group appeal issue in a
given case will be determined by the Board.
Comment: One commenter stated that the present requirement that a
group appeal be closed within 12 months is unworkable. For groups
involving commonly owned providers, the issuance of NPRs for some
would-be members of the group can lag behind substantially the NPRs of
those already in the group. Therefore, the commenter was supportive of
the proposed change that would allow a group to remain open until the
provider notifies the Board that the group is complete. The commenter
requested, however, that, if the proposal is finalized, we should make
clear that the Board's current instructions, that is, those that
mandate the closure of all groups by certain deadlines and the creation
of a ``schedule B'' for any would-be members of a group of commonly
owned providers that do not have their NPRs, are superseded.
Response: Under new Sec. 405.1837(e)(1), the Board will make a
determination that a group formed under Sec. 405.1837(b)(1) (for
mandatory group appeals) is fully formed. That determination will be
made upon the group notifying the Board that the group is fully formed,
or upon an order by the Board, following an opportunity for the group
to show why the group should not be considered fully formed. Similarly,
under Sec. 405.1837(e)(1), the Board will make a determination that a
group formed under Sec. 405.1837(b)(2) (for optional group appeals) is
fully formed based upon its judgment in a particular appeal, under the
facts and circumstances, that the group is fully formed, or through
instructions setting a time limit for keeping non-mandatory group
appeals open, after which the group will be considered fully formed.
There is no need to specifically state in the regulation text that any
contrary instructions of the Board are superseded. Under section
1878(e) of the Act, the provisions of this rule supersede any contrary
instructions promulgated by the Board.
Comment: One commenter stated that, although it supported the
proposed change to allow groups to remain open past 12 months, commonly
owned providers should have the ability to close groups so that they do
not remain open indefinitely. It would be in the interest of both the
Board and commonly owned providers to close a group so that the appeal
may be moved forward, without prejudicing the rights of the remaining
providers under common ownership or control. According to the
commenter, chain organizations should be able to close a group appeal
when a substantial number of providers have been added to the group.
Remaining providers could be put into a subsequent group, which would
be bound by the decision of the Board in the subsequent group. The
commenter believes that this arrangement would be consistent with the
language in section 1878(f)(1) of the Act that an appeal by providers
under common ownership or control ``must be brought by such providers
as a group with respect to any matter involving an issue common to such
providers.''
Response: We believe that we lack the authority to allow, for the
same period, more than one group appeal per issue by commonly owned or
controlled
[[Page 30213]]
providers. We believe that our proposal that a group appeal involving
commonly owned or controlled providers not close until the group
notifies the Board that the group is complete would have adequately
protected other such providers that would like to join the group
appeal.
However, we are adopting our proposal with a modification. We are
providing in Sec. 405.1837(e)(1) that the Board may issue an order
requiring the group to demonstrate that at least one commonly owned or
controlled provider has preserved the issue for appeal, in accordance
with Sec. 405.1835, by claiming the relevant item on its cost report
or by self-disallowing the item. The provider must not yet have
received its NPR or other final determination with respect to an item
for a cost year that is within the same calendar year as that covered
by the group appeal (or it has received its NPR or other final
determination with respect to an item for that time period, and the
provider is still within the time to request a hearing on the issue).
Once the Board has determined that a group appeal involving commonly
owned providers is fully formed, no other provider under common
ownership may appeal the issue (either by joining the group or by
pursuing an individual appeal) that is the subject of the group appeal,
with respect to a cost reporting period that falls within a calendar
year covered by the group appeal, unless the Board modifies its
determination that the group is fully formed.
Comment: A commenter stated that it realizes that the requirement
that commonly owned or operated providers must pursue legal or factual
questions through a group appeal is contained in the statute. However,
in some cases, hospital chain organizations are divided into regional
divisions that operate independently, and therefore could make it
difficult for the organization to identify common issues and manage
group appeals across regions. According to the commenter, we should
establish an exception to allow regional divisions that operate
independently to bring separate group appeals.
Response: Our interpretation of the statute is that commonly owned
or operated providers must bring ``a'' group appeal on the same issue.
If the Congress had intended to permit separate group appeals, it could
have said that the appeal must be brought by ``one or more groups.''
Therefore, at this time, we believe we are constrained to require that
commonly owned or operated providers bring only one group appeal for
the same issue (regarding cost reporting periods ending in the same
calendar year).
Comment: A commenter noted that proposed Sec. 405.1837(c)(2)
requires that the provider provide an explanation for the ``disputed
cost'' or ``specific cost'' at issue in its request for a group appeal.
This provision should be amended to use the more generic term ``item''
rather than ``cost,'' as there are items claimed on the cost report
that may be challenged that are not ``costs'' per se (for example, a
DSH payment). The commenter notes that ``item'' is used at Sec.
405.1837(a).
Response: We agree and have amended Sec. 405.1837(c)(2)
accordingly.
Comment: One commenter stated that the use of the phrases ``each
specific cost at issue'' and ``each disputed cost'' are misleading,
because group appeals are limited to one issue.
Response: Proposed Sec. 405.1837(c) used the phrases ``each
specific cost at issue'' and ``each disputed cost'' because, although a
group appeal is limited to a single legal or factual issue, that issue
could involve more than one line item on a cost report. As stated
above, we have changed the word ``cost'' to ``item'' in Sec.
405.1837(c)(2).
I. Amount in Controversy (Sec. 405.1839)
We sought to clarify in the proposed rule the method for
determining the amount in controversy for both individual and group
appeals. Under our proposal, the amount in controversy would be
determined based only on those particular adjustments that the provider
has challenged and would include the combined total of all issues
raised by the provider that arise within the same cost year. We also
specified that in a single provider appeal, the provider could not
aggregate issues across more than one cost year for purposes of meeting
the amount in controversy requirement. However, two or more providers
would be allowed to aggregate issues across more than one cost year to
meet the amount in controversy requirement for a group appeal.
We are adopting our proposals. In addition, we are adding new Sec.
405.1839(c)(4) to provide that, where a provider has requested a
hearing before an intermediary in accordance with Sec. 405.1811, and
the amount in controversy is subsequently determined to be at least
$10,000 (for example, due to a reassessment of the amount in
controversy by the intermediary hearing office or due to adding an
issue), the appeal will be transferred to the Board. Where a provider
or group of providers has requested a hearing before the Board in
accordance with Sec. 405.1835 or Sec. 405.1837, and the amount in
controversy changes to an amount less than the minimum for a Board
appeal due to the settlement or partial settlement of an issue,
transfer of an issue to a group appeal, or the abandonment of an issue
in an individual appeal, the change in the amount in controversy does
not deprive the Board of jurisdiction. This is consistent with our
longstanding policy. Where a provider or group of providers has
requested a hearing before the Board pursuant to Sec. 405.1835 or
Sec. 405.1837, and the amount in controversy changes to an amount less
than the minimum for a Board appeal due to a more accurate assessment
of the amount in controversy, the Board will not retain jurisdiction.
Comment: One commenter noted that the proposed rule would require
that the provider demonstrate that its reimbursement would increase by
at least $10,000 (for an individual appeal) if the appeal is
successful, and stated that, although the proposal was helpful because
it did not rely upon the reimbursement determination in an NPR, the
proposal does not directly address situations in which no NPR exists.
The commenter suggested that we clarify that the jurisdictional amount
is satisfied if the provider demonstrates that the total disputed
program reimbursement for each cost reporting period at issue meets or
exceeds the $10,000 threshold, without regard to whether an NPR or
other determination reflects the disputed amount. In the past,
confusion has arisen as to whether an amount in controversy for
jurisdictional purposes existed before an NPR has been issued. For
example, intermediaries may settle cost reports and issue original
NPRs, and may subsequently render a final determination impacting the
settled cost report. When a provider files an appeal prior to a
reopening and issuance of a corrected NPR, issues have arisen regarding
how to determine the amount in controversy. The Board has typically
decided that the final CMS determinations are appealable, regardless of
the issuance of a corrected NPR, and the Board allowed providers to
``estimate'' the amount in controversy. The commenter stated that it
appears that the proposed rule confirms the Board's position.
Response: Regarding an appeal of a final CMS or intermediary
determination, a provider satisfies the amount in controversy
requirement by establishing that the final determination has a
reimbursement effect of least $10,000 in controversy.
[[Page 30214]]
J. Board Jurisdiction (Sec. 405.1840)
In the proposed rule, we sought to clarify the rules regarding the
Board's preliminary determination of jurisdiction following a
provider's hearing request. Among other things, at Sec.
405.1840(a)(2), we proposed that the Board should be required to make a
preliminary determination regarding jurisdiction in every case, and
notify the parties of its jurisdictional findings before proceeding
with the case.
In Sec. 405.1840(b)(1), relating to specific matters that are
removed from the Board's jurisdiction, we have updated the regulatory
citations to the coverage appeals process and the Quality Improvement
Organization appeals process. In Sec. 405.1840(c)(2) we corrected a
citation to a specific paragraph of Sec. 405.1842, and in Sec.
405.1840(c)(3), we clarified citations to specific paragraphs of Sec.
405.1875.
For a discussion of other changes we made to Sec. 405.1840(a)(2),
please refer to section II.F. of this final rule (Intermediary Hearing
Officer Jurisdiction).
Comment: One commenter noted that there was no specific timeframe
under which the Board was required to issue a decision when the
intermediary has made a jurisdictional challenge. The commenter
recommended that when the intermediary disputes jurisdiction, the Board
should be given a period of 90 days to render a decision.
Response: Although we understand the commenter's concern, we
decline to impose a strict timeframe under which the Board would be
required to issue a decision regarding a jurisdictional dispute raised
by an intermediary. We believe that the Board, based on its own
workload priorities, should be given unfettered discretion to set
timeframes (with the exception of timeframes for discovery and subpoena
requests) on jurisdictional and other pre-hearing matters such as the
filing of position papers.
Also, although not the subject of a specific comment, we believe
that the notification requirements we imposed on the Board in proposed
Sec. 405.1840(a)(2) are unduly restrictive and burdensome. In order to
promote our vision of a more streamlined appeals process, we believe we
would be ill advised to require the Board in all cases to notify the
parties (presumably in writing) of its preliminary findings (that is,
whether the request for hearing was timely, and whether the amount in
controversy has been met) regarding jurisdiction. In most cases,
jurisdiction is readily obtained, and there is essentially no need to
formalize in writing that the Board has accepted jurisdiction.
Therefore, we have amended new Sec. 405.1840(a)(2) accordingly. Where
the Board finds that it does not have jurisdiction over every specific
matter at issue in the appeal, the Board must issue a dismissal
decision under Sec. 405.1840(c)(2) and notify each party to the
appeal.
K. Expediting Judicial Review (Sec. 405.1842)
Under section 1878(f)(1) of the Act, a provider in certain
situations may immediately seek judicial review of an action of the
intermediary involving a question of the statute or regulations
whenever the Board determines that it is without authority to decide
the issue. If the Board determines that it has jurisdiction over the
issue, but it lacks the authority to decide the issue, the provider may
obtain expedited judicial review (EJR). The intent of this provision is
to eliminate undue delays resulting from a requirement that providers
pursue time-consuming and unproductive administrative reviews before
they could obtain judicial review of a Board determination. We proposed
several changes to Sec. 405.1842 to clarify any confusion surrounding
the procedures and the types of cases to which EJR applies.
We are adopting our proposals. We have revised the text at Sec.
405.1842(e)(3)(ii) to clarify that, upon receiving a request for EJR,
the Board will have 30 days either to issue an EJR decision (if the
request is complete) or issue a written notice to the provider that the
provider has not submitted a complete request (describing in detail the
further information that is needed to complete that request).
Comment: One commenter noted that the proposed rule would require
that, in instances in which a provider request for EJR is deemed
incomplete by the Board, the Board must issue a written notice to the
provider describing in detail the additional information needed to
complete the request. The commenter suggested that the final rule
provide that there be a 30-day period for the Board to provide a notice
to the provider that the request for EJR is incomplete, and another 30-
day period for the provider to respond to the notice of incompleteness.
Once a provider responds to the notice of incompleteness, the Board
would have 30 days either to issue an EJR decision, or to ensure that
the provider has received another notice of incompleteness. The
commenter also suggested that intermediaries be required to comply with
all of the deadlines applicable to the provider in the event that the
intermediary files a response to the provider's request for EJR.
Response: It was our intent that, upon receiving a request for EJR,
the Board would have 30 days either to issue an EJR decision (if the
request is complete) or issue a written notice to the provider that the
provider has not submitted a complete request (describing in detail the
further information that is needed to complete that request). We are
clarifying the text at Sec. 405.1842(e)(3)(ii) accordingly. We decline
to require that the provider be given 30 days to respond to a notice
from the Board that its request for EJR is incomplete. We believe the
time period in which to respond should be left to the Board's
discretion, because a period shorter or longer than 30 days could be
warranted, depending on the facts of the case.
Comment: One commenter stated that the proposed rule would provide
that, if any allegedly relevant lawsuit was filed before a final EJR
decision, the Board would be precluded from conducting any further
proceedings on the EJR decision until the lawsuit was resolved, and
that it appears that the proposed policy would apply, regardless of the
basis for the lawsuit. The commenter suggested that the final rule
provide that the Board be required to conduct further proceedings on an
EJR decision when the provider subsequently files a lawsuit brought on
jurisdictional grounds other than the Social Security Act. If the Board
were allowed to grant EJR, the issues jurisdictionally under the
Medicare statute could be added to the pending matter in court, thus
preserving judicial resources and avoiding multiple lawsuits.
Response: The commenter is correct that the proposed policy would
apply regardless of the jurisdictional basis for the lawsuit. However,
we decline to adopt the commenter's suggestion that we make a
distinction based on the jurisdictional basis pleaded in the complaint.
We do not agree that it would be appropriate for the Board or the
intermediary to spend its limited resources to spend time on a Board
appeal if the provider has filed a complaint that involves a legal
matter that is relevant to a legal issue in the Board appeal. If the
court properly has jurisdiction over the appeal, the decision, that it
or a higher court renders, may resolve the issue or issues in the Board
case, or otherwise inform the Board in reaching a decision, or affect
the parties' decision as to whether they should attempt to settle the
Board case. On the other hand, where the basis for the court's
jurisdiction is defective (which we believe would most likely be
[[Page 30215]]
the situation when a provider attempts to file a complaint based on a
legal issue related to an appeal still pending before the Board), a
contrary rule would not discourage providers from filing improper
appeals with the court. We believe our proposal to be in line with the
general rule practiced by courts that an appeal to a higher court
deprives the lower court of jurisdiction to conduct further proceedings
until the appeal is resolved by the higher court.
L. Parties to Proceedings in a Board Hearing or Intermediary Hearing
(Sec. 405.1843 and Sec. 405.1815)
In the proposed rule, we restated the longstanding position that
CMS is not a party to a Board hearing. However, because CMS decisions
and policies are very often the subject of provider disputes, we stated
that we believed it would be important to include CMS in the hearings
process, without conferring upon it the status of a party. Therefore,
we proposed to authorize intermediaries to designate a representative
from CMS (including an attorney) to defend the intermediary's position
at a Board hearing. We also proposed that CMS could file amicus curiae
briefs with the Board in cases having major policy implications, where
CMS was not formally designated as the intermediary's legal
representative.
We have clarified in Sec. 405.1843(a) and in Sec. 405.1815 that
it is the Board or the intermediary hearing officer (and not the
intermediary) that determines whether an entity is a related
organization of the provider, and that such a determination is made in
accordance with the principles enunciated in Sec. 413.17 (and is not,
strictly speaking, a determination made ``under'' Sec. 413.17).
In Sec. 405.1843(b), we have clarified that, although the Board
may call as a witness any employee or officer of Health and Human
Services or CMS having personal knowledge of the facts and the issues
in controversy in an appeal, the Department's Touhy regulations at 45
CFR, Part 2 (Testimony by employees and production of documents in
proceedings where the United States is not a party) apply as to whether
such employee or officer will appear.
We have added Sec. 405.1843(e) to provide that a non-party other
than CMS may seek leave from the Board to file amicus curiae briefing
papers with the Board. We have also added new Sec. 405.1843(f) to
provide that the Board may exclude from the record all or part of an
amicus curiae briefing paper. Where the Board excludes from the record
all or part of an amicus curiae briefing paper submitted by CMS, it
will state for the record its reason(s) in writing.
Comment: Most of the commenters that addressed this proposal
opposed enhanced involvement by CMS before the Board. One commenter
suggested that if CMS files a timely amicus curiae submission with the
Board, that submission should be based upon the record of the case.
Upon Administrator review, any information or documentation submitted
by CMS that was not included in the hearing record should be
prohibited. Another commenter suggested that if CMS is allowed as a
non-party to file amicus curiae submissions with the Board, other
interested non-parties should also be able to file amicus curiae
submissions. Two commenters suggested that the filing of an amicus
brief provides a means for CMS to influence the process. One of these
commenters suggested unfairness due to a lack of proper inquiry or the
absence of cross-examination. Another commenter suggested that CMS
should not be permitted to make amicus curiae submissions because CMS
has sufficient opportunity to address its policies in other forums (for
example, proposed rules or instructions). One commenter fully supported
the proposal, stating that intermediaries would be better equipped to
defend their actions by having a CMS representative handle the case.
Response: We emphasize again that CMS will not be a party to a
Board proceeding and, moreover, we do not anticipate that CMS normally
will take a proactive role in defending policy positions before the
Board. However, we reiterate that many Board appeals are directly the
result of a CMS determination, not an intermediary determination, and,
where this is the case, we believe it is reasonable to permit CMS an
opportunity to defend its rationale for making the determination.
Regarding the commenter that stated that if CMS will be allowed to
file amicus curiae briefs, other non-parties should also be allowed to
make amicus curiae submissions, we agree that the Board should retain
the discretion on whether to accept them. We have added a new paragraph
(e) to Sec. 405.1843 to state that a non-party other than CMS may seek
leave from the Board to file an amicus curiae brief. The Board will
have unfettered discretion to grant leave, and if leave is granted, the
Board can accept or reject the brief in whole or in part.
Regarding the commenter that was concerned that an amicus curiae
submission filed by CMS with the Board might not be based upon the
record of the case, we note that amicus curiae submissions in court are
generally argumentative and not evidentiary in nature. To the extent
that an amicus curiae submission purports to rely on evidence not
before the Board, the Board may choose to attempt to have the record
supplemented by that evidence, as well as to have the discretion to
exclude from the record the submission in whole or in part. We have
added new paragraph (f) to section Sec. 405.1843 to provide that the
Board may exclude, in full or in part, an amicus curiae brief submitted
by CMS or any other interested non-party (but that where it excludes
all or part of an amicus curiae brief) submitted by CMS, it must state
its reason(s) in writing.
We also disagree with the commenter that suggested that the ability
of CMS to file an amicus curiae brief somehow places CMS in a position
where it can unduly influence the Board decision making process. The
Board is an impartial, independent forum, and therefore takes its
responsibility seriously in addressing and resolving the matters before
it. The Board's only concern is to provide a fair and just hearing
process and issue decisions in accordance with the law and regulations.
As stated previously, the Board has discretionary authority, after
reviewing a submission by CMS, to admit or exclude the submission from
the record.
Finally, we disagree with the commenter that suggested that CMS,
rather than being able to submit amicus curiae briefs to the Board,
should address its policies by way of publishing proposed rules or by
issuing instructions. During the course of an adversary proceeding
where potentially millions of dollars are at issue and significant
program policies may be in dispute, the best means of defending
existing policies are through effective advocacy and cogent oral and
written arguments.
Comment: One commenter suggested that we should acknowledge that
CMS is the real party in interest in a Board proceeding so that
providers would then have the full right to obtain discovery and
testimony from CMS.
Response: After reconsidering the issue, in this final rule we are
not providing for discovery against CMS. As explained in section II.N.
of this final rule, we are concerned that the ability of CMS to conduct
its day-to-day business could be significantly compromised if it is
constantly engaged in responding to discovery or forced to seek
immediate Administrator review of
[[Page 30216]]
Board orders granting discovery. We also believe that discovery
disputes concerning CMS, or the Secretary or a Federal agency, which
may involve motions to compel or motions for protective orders or other
procedural filings, will cause a further backlog of cases before the
Board. For these reasons, we have decided that the discovery procedures
in Sec. 405.1821 and Sec. 405.1853 will not apply to CMS, the
Secretary (or any other component of HHS), or any other Federal agency.
We have also revised the procedures for depositions at Sec.
405.1853(e)(2)(ii) to clarify that the Department's Touhy regulations
at 45 CFR, Part 2 (Testimony by employees and production of documents
in proceedings where the United States is not a party) will apply as to
whether an employee or officer of CMS or HHS will appear at a
deposition.
Comment: One commenter requested clarification as to whether the
intermediary could call a CMS employee as a witness in a case before
the Board. Two commenters suggested that proposed Sec. 405.1843 be
eliminated and replaced with a provision that, where CMS has made the
final determination upon which the Board hearing is based, a CMS
representative should be required to testify at the hearing.
Response: Current practice at the Board is that an intermediary
will occasionally ask a CMS employee to testify at an oral hearing.
We disagree with the commenters that suggested that Sec. 405.1843
of the regulations be eliminated and replaced with a provision stating
that a CMS employee should always be required to testify at a Board
hearing when there is a CMS determination that is under dispute.
Although CMS's policies and actions bear at least indirectly on each
and every hearings dispute before the Board, CMS is not an adversarial
party in the Board proceeding. That adversarial responsibility falls
upon the intermediary. In most cases, the written submissions made by
an intermediary in defense of a CMS determination are clear and
succinct and would not require additional evidence, in the form of oral
testimony by a CMS employee, to explain the determination.
Comment: One commenter suggested that CMS representation of an
intermediary violates the regulation (Sec. 405.1843(b)) which does not
permit CMS to be a party to a Board hearing, unless CMS acts as an
intermediary.
Response: Our current regulation at Sec. 405.1843(b) permitted CMS
to act as a party to a Board hearing in those cases where we served as
a direct dealing intermediary for a small number of providers. We no
longer act as an intermediary, and, for that reason, we proposed
deleting the provision that allowed CMS party status at the Board. We
have adopted this proposal. We note that when CMS provides
representation for an intermediary at a Board hearing, the
representation does not in any way elevate CMS to party status.
Comment: Two commenters suggested that no matter how we
characterize it, CMS should be considered a party to the Board hearing
if it participates at the hearing. One of the commenters stated that,
if CMS represents the intermediary at the hearing, the Administrator
should not be allowed to review and overturn the Board's decision.
Also, prevailing providers should be entitled to legal fees under the
Equal Access to Justice Act (5 U.S.C. 504).
Response: We once again reject the suggestion that the proposed
limited participation by CMS at future Board hearings should define CMS
as a party to the Board hearing. We also disagree with the suggestion
that, if we represent the intermediary at the hearing, the
Administrator would be required to recuse himself from reviewing the
Board decision.
The statute at section 1878(f) of the Act provides for the
Secretary's review of a decision of the Board. This review is also
consistent with section 557 of the Administrative Procedure Act (APA),
which provides agency review of an initial decision. In this review
process, the Administrator acts, pursuant to his or her delegated
authority, for the Secretary in rendering a final decision.
Consequently, the commenter's suggestion that the Administrator should
be prohibited from reviewing a Board decision under the proposed
circumstances is contrary to the plain language of the controlling law
and the statutory framework provided by the APA.
Because CMS is not a party to a Board hearing, we do not believe
that the provisions of the Equal Access to Justice Act are applicable
relative to the reimbursement of expenses incurred (for example, legal
fees, expert witness fees, etc.).
M. Quorum Requirements (Sec. 405.1845)
Three Board members, at least one of whom is representative of
providers of services, constitute a quorum. Current regulations state
that, with the provider's approval, the Board Chairman may designate
one or more Board members to conduct a hearing and prepare a
recommended decision for adjudication by a quorum of Board members.
In order to expedite the resolution of the large number of cases
backlogged at the Board, we proposed that the Board Chairman could
designate one Board member to conduct a hearing, allowing for more than
one hearing to be held simultaneously. The Board Chairman would not be
required to obtain the approval of the provider or the intermediary
before assigning the case to a single Board member. In our view, the
rights of the parties would not be prejudiced because the hearing
decision would be issued by a quorum of Board members. We also proposed
that a recommended decision would not be needed when less than a quorum
conducted the hearing. Board members who were not present at the
hearing would be able to review the record of the hearing and make an
informed decision based upon that review. Also, we proposed that the
Board could offer the parties the option to have a hearing on the
written record. Both parties would be required to agree to waive their
rights to an oral hearing as a condition for holding a hearing on the
written record. We are not making any substantive changes to our
proposal. We have clarified in Sec. 405.1845(d)(1) that a quorum is
not required to issue a dismissal decision, which reflects current
Board practice. We have made a technical change to proposed Sec.
405.1845(f)(2), and, for clarity, we have renumbered proposed Sec.
405.1845(f)(3) as paragraph (g), and accordingly renumbered proposed
Sec. 405.1845(g) as paragraph (h).
Comment: One commenter suggested that the interest of justice
cannot adequately be served with only one Board member hearing the case
in person. The other Board members could not fairly decide a case
because they could not adequately adjudge the credibility of witnesses
based on only a review of the written transcript of the hearing.
Several commenters suggested that the Board should be required to
obtain the approval of the provider or the intermediary before
assigning less than a quorum to conduct a hearing. Because of the
highly technical issues, if a Board member is not present, a simple
review of the written record may not be sufficient to render an
appropriate decision. Another commenter wanted to know if the full
Board could be required to hear a case at the request of either the
intermediary or the provider.
Response: We disagree with the commenter that suggested that
justice could not be served if only one Board member heard the case in
person. Administrative law principles clearly allow for an adjudicator
to resolve
[[Page 30217]]
disputes without being present at an oral hearing. Consistent with 5
U.S.C. 557(b) of the APA, an administrative officer charged with the
decision making (for example, a member of the Board) is not required to
personally hear the testimony, but may rely instead on the written
record. Although only one Board member may preside at the hearing, a
quorum of at least three Board members (at least one of whom is
representative of providers) is required to issue a final Board hearing
decision. We believe our quorum requirement adequately ensures that the
hearing process will be fair and that the resulting decision will
reflect the reasoned opinion of the Board and not merely a single
member of the Board.
We also disagree with the commenters that suggested that the Board
be required to obtain approval of the provider or intermediary before
assigning less than a quorum to conduct a hearing. We do not believe
that the rights of the parties are prejudiced in any way by not
requiring the Board to obtain the permission of one or both of the
parties to the hearing. Provided that the hearing decision is issued by
at least a quorum of Board members, the parties to the hearing are
being afforded procedural due process under the principles of
administrative law. As stated above, the APA clearly permits an
adjudicative officer to formulate a decision based only upon a review
of the written record.
As to the commenter that inquired whether a provider or
intermediary could request the full Board membership to hear a case, we
note that the Board has the discretionary authority to grant such a
request.
Comment: One commenter suggested that there should be at least two
Board members present at live hearings to ensure that an individual
Board member would not be able to sway the outcome of a Board decision.
Response: We disagree with the suggestion that if only one Board
member hears a case, that particular member is in a position to unduly
influence the other decision makers. We disagree that fairness and
impartiality in the decision making process is ensured only when a
minimum of two Board members conduct a hearing.
Comment: One commenter suggested that a provider might be
prejudiced if two Board members assigned to a case reflect a
``minority'' view of the Board. This could lead to inconsistent
decisions on the same legal questions by different Board panels. Also,
allowing less than five members to decide cases distorts Congress's
intention in creating the Board.
Response: Section 1878(h) of the Act requires that the Board be
composed of five members, two of whom are representative of providers
of services. At least one member must be a certified public accountant,
and all of the members must be knowledgeable in provider payment
principles. The Board, like all adjudicative bodies, strives for
consistency in decision making. However, there may be occasions in
which one panel of the Board hearing an appeal on an issue could decide
differently from another panel of the Board with respect to the same
issue. The Board, at its discretion, may seek to identify issues on
which it is divided and ensure that a full complement of the Board
(which at any given time may be less than five members) hears those
issues. If either party is dissatisfied with a decision issued by the
Board, review mechanisms are in place (Administrator, judicial review)
to contest the decision. We also disagree with the commenter's
statement that all five Board members must decide a case, so that
congressional intent will not be distorted. Our longstanding policy, as
contained in the regulations, allows for a quorum of at least three
Board members (at least one of whom is representative of providers of
services) to issue Board hearing decisions. This policy has been
implemented for many years, has not been controversial, and has helped
to create a more effective and efficient appeals process.
N. Board Proceedings Prior to Hearing; Discovery in Board and
Intermediary Hearing Officer Proceedings (Sec. 405.1853 and Sec.
405.1821)
We proposed several revisions to Sec. 405.1853. Proposed Sec.
405.1853(a) specified the present requirement that, prior to any Board
hearing, the intermediary and provider must attempt to resolve legal
and factual issues, and following that attempt, must send to the Board
joint or separate written stipulations setting forth the specific
issues that remain for Board resolution. We proposed removing the
requirement that the intermediary ensure that all documentary evidence
in support of each party's position is in the record. We proposed
continuing the present requirement that the intermediary be required to
place in the record a copy of all evidence that it considered in making
its determination, and would add, that, where the determination under
appeal is a Secretary determination, the intermediary would be
responsible for placing in the record all evidence considered by CMS in
making the Secretary determination.
In proposed Sec. 405.1853(b), we made several proposals concerning
the timing, content and format of position papers. Specifically, we
proposed that the Board would set the deadlines for submitting position
papers in each case as appropriate, and that the Board would have the
authority to extend the deadline for good cause shown.
Proposed Sec. 405.1853(c) and Sec. 405.1853(d) set forth
requirements relating to ``initial'' and ``further'' status
conferences, which could be for a wide variety of purposes.
In Sec. 405.1853(e) and Sec. 405.1821 we proposed changes in
discovery procedures for Board and intermediary hearing officer
hearings. Proposed Sec. 405.1853(e)(1), and proposed Sec.
405.1821(b)(1) specified the basic requirements for discovery,
including the requirement that the matter sought to be discovered must
be relevant to the specific subject matter of the Board or intermediary
hearing. Proposed Sec. 405.1853(e)(2) specified that the method of
discovery permitted would generally be limited to reasonable requests
for the production of documents for inspection and copying, and a
reasonable number of interrogatories, with depositions permitted in
limited circumstances. A party would not be permitted to take an oral
or written deposition of another party or a non-party, unless the
proposed deponent agrees to the deposition, or the Board finds that the
proposed deposition is necessary and appropriate under criteria
contained in the Federal Rules of Civil Procedure. We proposed that
requests for admissions, or any other form of discovery other than
requests for production of documents, interrogatories and depositions
would not be permitted. Proposed Sec. 405.1821(b)(2) was similar,
except that it would not permit depositions in proceedings before an
intermediary hearing officer(s).
In Sec. 405.1853(e)(3), we proposed time limits for requesting
discovery. We proposed that a party's discovery request would be timely
if the date of receipt of such a request by another party or non-party,
as applicable, is no later than 90 days before the scheduled starting
date of the Board hearing. A party would not be permitted to conduct
discovery any later than 45 days before the scheduled starting date of
the Board hearing. We further proposed that, upon request and upon a
showing of good cause, the Board could extend the time for making a
discovery request or extend the time for performing discovery. The
Board would be permitted to extend the time for requesting discovery or
for conducting discovery only if the
[[Page 30218]]
requesting party establishes that it was not dilatory or otherwise at
fault in not meeting the original discovery deadline. If the Board
granted the extension request, it would be required to impose a new
deadline and, if necessary, reschedule the hearing date so that all
discovery ended no later than 45 days before the hearing. Proposed
Sec. 405.1821(a) would be similar for proceedings before an
intermediary hearing officer(s).
In Sec. 405.1853(e)(4) and Sec. 405.1821(c), we proposed to
specify the rights of non-parties with respect to discovery requests. A
non-party would have the same rights as a party in responding to a
discovery request. These rights would include, but would not be limited
to, the right to select and use any attorney or other representative,
and to submit discovery responses, objections, motions, or other
pertinent materials to the Board.
In Sec. 405.1853(e)(5) and Sec. 405.1821(c)(3), we proposed a
specific procedure for motions to compel and for protective orders. In
order to conserve Board resources and promote an efficient hearing
process, each party would be required to make a good faith effort to
resolve or narrow any discovery dispute, including a dispute with a
non-party. Any motion to compel discovery and any motion for a
protective order, and any response thereto, would have to include a
self-sworn declaration describing the movant's or respondent's efforts
to resolve or narrow the discovery dispute.
In Sec. 405.1853(e)(6), and in Sec. 405.1821(d)(2), we proposed a
general rule, and an exception thereto, for the reviewability of Board
or intermediary hearing officer(s) orders on discovery. Generally, any
discovery or disclosure ruling issued by the hearing officer(s) or the
Board would not be final and would not be subject to immediate review
by the Administrator. Rather, such a ruling could be reviewed solely
during the course of Administrator review of one of the Board decisions
specified as final, or deemed to be final by the Administrator, or of
judicial review of a final agency decision. However, we also proposed
that, where the Board or hearing officer(s) authorize discovery or
compel disclosure of a matter for which a party or non-party made an
objection based on privilege, or some other protection from disclosure,
that portion of the discovery ruling would be reviewable immediately by
the Administrator. We proposed that there would be an automatic stay
where the party or non-party, as applicable, notifies the Board or
intermediary hearing officer(s) of its intention to seek immediate
review. The duration of the stay would be limited to no more than 15
days in the case of Board proceedings and to no more than 10 days in
the case of intermediary hearing officer(s) proceedings. If the
Administrator granted a request for review or takes own motion review
before the expiration of the stay, the stay would continue until the
Administrator or CMS reviewing official renders a written decision, but
if the Administrator did not grant or take review within the time
allotted for the stay, the stay would be lifted and the Board or
hearing officer(s) ruling would not be immediately reviewable.
We have made several changes to our proposals, as discussed below.
We note that, in preparing this final rule, we remain concerned that,
although under certain circumstances CMS would have had the right to
seek immediate Administrator review of a Board disclosure or discovery
ruling, the ability of CMS to conduct its day-to-day business could be
significantly compromised if it is constantly engaged in responding to
discovery or forced to seek immediate Administrator review of Board
orders. We also believe that discovery disputes concerning CMS, or the
Secretary or a Federal agency, which may involve motions to compel or
motions for protective orders or other procedural filings, will cause a
further backlog of cases before the Board. For these reasons, we have
decided that the discovery procedures in Sec. 405.1821 and Sec.
405.1853 will not apply to CMS, the Secretary (or any other component
of HHS), or any other Federal agency. A non-party (other than CMS, or
other Federal agency as described above) may only be required to
respond to requests for the reasonable production of documents. A party
will not be allowed to serve written interrogatories on any non-party,
consistent with the general rule that interrogatories are not normally
served on non-parties. We have also revised the procedures for
depositions at Sec. 405.1853(e)(2)(ii) to clarify that the
Department's Touhy regulations at 45 CFR Part 2 (Testimony by employees
and production of documents in proceedings where the United States is
not a party) will apply as to whether an employee or officer of CMS or
HHS will appear at a deposition.
As a result of these changes, we are hopeful that the discovery
procedures as finalized will be fair to the parties and will streamline
the appeals process. We believe that the current process for seeking
documents under the Freedom of Information Act procedures will meet
providers' needs for gaining access to information in our possession.
We note that because these procedures are a procedural rule, and hence
exempt from notice and comment rulemaking, we would be able to modify
the rule's provisions insofar as they relate to CMS (or other Federal
agency) through a CMS Ruling or other means.
In Sec. 405.1853(b)(2), we removed the requirement that the Board
must find good cause for extending the deadline for submitting a
position paper. We believe that, for administrative efficiency and for
purposes of fairness, the Board should have wide discretion to extend
the time for submitting a position paper, as the facts and
circumstances in any given case may so require.
In Sec. 405.1853(b)(3), we have clarified that the ``timeframe to
be decided by the Board,'' for purposes of submitting exhibits on the
merits of the provider's claim, may be through a schedule applicable to
a specific case or through general instructions. We also revised this
paragraph to provide that the general rule, that any supporting
exhibits regarding jurisdiction must accompany the position paper, is
subject to a Board order or general instructions to the contrary.
In Sec. 405.1853(e)(2), we have clarified the reference in the
proposed rule to Federal Rules of Civil Procedure (FRCP) 32 governing
the allowance of depositions in certain circumstances, and have
specifically referenced FRCP 32(a)(3), with respect to the criteria the
Board must employ in order to permit the deposition of a witness who
does not wish to be deposed.
In Sec. 405.1853(e)(3) and Sec. 405.1821(a)(2) we have modified
the proposal's requirement that discovery must be ``received'' by a
certain time, and have instead provided that discovery must be
``served'' by a certain time, in order to prevent any disagreement and
collateral litigation before the Board or the intermediary hearing
officer(s) as to when discovery was actually received. With respect to
the time period itself, we have changed the timeframe from 90 days
before the scheduled date of the hearing, to 120 days before the
initially scheduled starting date of the hearing, to ensure that the
parties and Board have sufficient time to address any discovery
disputes prior to the hearing. We have added clarifying language at
Sec. 405.1821(c)(3)(iii)(B) and Sec. 405.1853(e)(5)(vii) to state
that nothing in Sec. 405.1821 or Sec. 405.1853 authorizes the
intermediary hearing officer or Board to compel any action from the
Secretary or CMS. Likewise, in Sec. 405.1821(c)(2) and Sec.
405.1853(e)(4), we have revised language that stated
[[Page 30219]]
that a non-party has the ``same'' rights as any party when responding
to discovery requests. Although this statement was generally true under
our proposal and remains generally true under this final rule, it is
not entirely accurate with respect to CMS or the Secretary or any other
Federal agency, as a non-party. Neither an intermediary hearing officer
nor the Board may compel CMS or the Secretary or any other Federal
agency to respond to discovery or take other action.
In Sec. 405.1821(d)(2) we have revised the minimum time for the
stay in the case of a CMS reviewing official reviewing a discovery
ruling from 10 days to 15 days.
Comment: Several commenters disagreed with our proposal to modify
the requirement in section Sec. 405.1853(a) that providers must submit
position papers to the Board no later than 60 days after the hearing
request, and instead allow the Board to set position paper deadlines on
a case-by-case basis. One commenter stated that the proposed change
would reduce the certainty of timeliness and critical due dates, making
case management more difficult for all parties, and that only the Board
had authority to establish the appeals process before the Board. Other
commenters stated that the Board should not have the authority to
arbitrarily remove the reference to the 60-day timeframe for submitting
position papers, or to set the deadlines for submitting position papers
on a case-by-case basis as the Board deems appropriate, because there
would be no consistency.
Response: We disagree that our proposal would reduce the certainty
of timeliness and critical due dates and make case management more
difficult for all parties. The Board will issue a schedule of due dates
for the filing of position papers and other events in each case, and
the provider and intermediary will have adequate notice of the
deadlines. We also note that it is very common for due dates for
position papers to be extended beyond 60 days after the hearing
request, and for the Board to set the due dates for other events on a
case-by-case basis; we therefore, do not regard the proposal as a
significant change in the way proceedings are currently conducted.
Finally, we do not agree with the commenter's point that only the Board
has the authority to establish appeals procedures before it. Under
section 1878(e) of the Act, the Board has the authority to determine
procedures to the extent that they are not inconsistent with the
Secretary's regulations. Moreover, our proposal gives more, not less,
discretion to the Board with respect to the setting of due dates for
position papers, as compared to the current regulatory requirements.
Changes that may occur from time to time in the volume and relative
complexity of the Board's caseload weigh in favor of allowing the Board
flexibility in setting due dates. In order to afford the Board greater
flexibility, we are modifying our proposal that the Board may extend,
for good cause shown, the deadline for submitting a position paper. We
believe that the Board should have the discretion to extend the
deadline without a showing of good cause (particularly because the
Board has the discretion to set the initial deadline for the filing of
the position paper).
Comment: One commenter supported our proposal to remove the current
requirement that the intermediary ensure that all documentary evidence
in support of each party's position be in the record. This commenter
also agreed with the proposal that the intermediary should be
responsible for placing in the record all evidence considered by CMS in
making a determination about an issue. The commenter suggested,
however, that ``all relevant evidence,'' regardless of whether that
evidence was considered by CMS, be placed in the record. The commenter
also stated that the proposal should be expanded to specify the remedy
to which a provider is entitled if CMS or the intermediary does not
comply with the requirement to place evidence in the record. The
proposal should also be expanded to specify the powers that the Board
has to compel CMS to produce evidence, including documentary evidence,
answers to interrogatories, and depositions of CMS witnesses. Finally,
according to the commenter, the rule should provide effective,
compulsory measures to ensure compliance by CMS.
Response: We are not adopting the suggestion that the intermediary
be required to place ``all relevant evidence'' in the record,
regardless of whether that evidence was considered by CMS. We believe
it is unclear whether, and to what extent, evidence that was not
considered by CMS is nonetheless ``relevant.'' If a provider believes
other evidence is relevant and therefore deserves to be made part of
the record, the provider can move for its admission. Where a provider
believes that an intermediary has not fulfilled its obligation to
include evidence in the record that was considered by CMS in making a
determination, the provider may seek an order from the Board. If the
intermediary does not comply with an order of the Board, the Board may
refer the matter to the component of CMS that has oversight of
contractors. Also, on review of a final decision of the Board, the
Administrator would have the authority to remand to the intermediary,
if necessary, to supplement the record. As discussed below in section
II.O. in connection with subpoenas, the Board does not have authority
to compel CMS to take actions, including placing evidence in the
record, answering discovery, or making witnesses available for
depositions. However, upon review of a Board decision, the
Administrator or a court may order the record to be supplemented with
additional information, if necessary. We have added clarifying language
at Sec. 405.1821 and Sec. 405.1853(e)(5)(vii) to state that nothing
in Sec. 405.1821 or Sec. 405.1853 authorizes the intermediary hearing
officer or Board to compel any action from the Secretary or CMS.
Likewise, in Sec. 405.1821(c)(2) and Sec. 405.1853(e)(4), we have
revised language that stated that a non-party ``including HHS and CMS''
has the same rights as any party when responding to discovery requests.
We have deleted the reference to ``HHS and CMS'' because the
intermediary hearing officer and Board discovery processes do not apply
to CMS, HHS or any other Federal agency. The statement remains true
with respect to other non-parties.
Comment: One commenter stated that the current backlog of cases at
the Board must be reduced. This commenter believes that a more
aggressive approach to reducing issues that involve clear errors would
be beneficial. According to this commenter, a number of appeals to the
Board involve audit errors, clerical errors, or other minor issues that
amount to little more than protective appeals. Although the proposal to
require providers and intermediaries to attempt to resolve legal and
factual issues would seem to be a mechanism to resolve these issues or
errors, absent the involvement of the Board or its staff, no resolution
occurs, and the appeal drags on to a hearing. The commenter recommended
that a mechanism be established by which a provider can identify issues
that should be quickly resolvable, and explain why they can be resolved
quickly, followed by the Board or its staff convening a conference call
to address the issues. In the commenter's view, bringing the parties
together early in the appeal can eliminate some or all issues quickly,
minimizing the burden on all involved.
Response: Currently, intermediaries and providers are encouraged to
work together to resolve disputes in order to avoid taking an issue to
a hearing that
[[Page 30220]]
can and should be settled. We believe our proposal will further
facilitate the resolution of issues. What the commenter recommends is
descriptive of what currently takes place in many cases.
Comment: One commenter noted that, although the proposed rule would
encourage an early focus by the parties and the reviewing entity on the
jurisdictional requirements for a hearing before the Board, the Board
should be required to issue jurisdictional decisions early in the
appeals process. There are many instances in which a hearing is held on
the merits and the jurisdictional challenge simultaneously. Unless time
limits for jurisdictional decisions are imposed, the parties may engage
in additional, and possibly unnecessary, work. Preferably, all Board
jurisdictional decisions should be rendered before the Board sends the
acknowledgment letter establishing due dates for position papers and a
tentative hearing date. Moreover, all Board jurisdictional decisions
should be published for public viewing.
Response: We decline to impose time limits for jurisdictional
decisions at this time. The Board must balance the need for issuing
jurisdictional decisions in an expeditious manner so as not to cause
the parties possible unnecessary work with the need to schedule
hearings and manage its caseload. We will monitor the situation, and,
if necessary, we may impose specific time limits or issue guidance
through a CMS Ruling, which would be binding on the Board. The Board
has published jurisdictional decisions that it feels would provide
guidance for intermediaries and providers. It is impractical and
unnecessary for the Board to publish every jurisdictional
determination.
Comment: One commenter agreed with the proposal to include non-
parties, such as CMS, within the Board discovery procedures.
Response: As finalized, the Board discovery procedures will apply
to non-parties other than CMS, the Secretary (or other component of
HHS) or any other Federal agency. We have decided to except Federal
agencies from the intermediary hearing officer and Board discovery
processes due to our concerns that a more expanded discovery process
could cause significant disruption in their ability to manage their
day-to-day activities, and due to our concern that discovery disputes
involving CMS or other Federal agencies could cause a further backlog
of cases before the Board. The Freedom of Information Act process
remains available to providers and others seeking information from CMS
or other Federal agency, and CMS employees are subject to being
deposed, or required to testify or produce documents under the
Department's Touhy regulations at 45 CFR Part 2.
Comment: One commenter stated that it understood our concern that
broad discovery procedures may impact the Board's ability to schedule
and hold hearings in an efficient manner, but recommended that we
expand the existing types of discovery permitted to include requests
for admissions. Requests for admission have been an effective means of
narrowing the issues on appeal, and can expedite the appeals process by
facilitating settlement and reducing the amount of time necessary for
the hearing. Moreover, allowing requests for admissions would be no
more onerous to parties than responding to interrogatories. Another
commenter stated that we have provided no rational reason why providers
should be denied this important discovery tool, which is provided under
the FRCP.
Response: We are not including requests for admissions within the
permitted types of discovery. We disagree that allowing requests for
admissions would be no more onerous than responding to interrogatories.
Apart from the burden caused by allowing another form of discovery in
addition to interrogatories and requests for production of documents,
there are special concerns with respect to requests for admissions.
Failure to respond to requests for admissions timely could result in
matters being deemed admitted, which could have dire consequences for
the non-responding party in the case at hand and possibly for other,
similar cases. We believe that the present process, whereby
intermediaries and providers stipulate to matters not in dispute, works
reasonably well in terms of narrowing issues, expediting appeals, and
facilitating settlements. Our proposed revision to Sec. 405.1853
places the duty on intermediaries to expeditiously attempt to join with
the provider in resolving specific factual or legal issues and entering
into stipulations. We are adopting this proposed revision. We expect
that intermediaries will approach this requirement in good faith and
will not seek to unduly prolong cases or force the provider to litigate
matters that are not fairly in dispute. If a party believes, however,
that an intermediary has not fulfilled its obligations, it may complain
to the Board, and the Board may refer the matter to CMS if the Board
believes it is appropriate to do so.
Comment: One commenter stated that we should consider including a
provision whereby the parties could stipulate that the issues and facts
in their case are identical to the issues and facts in one or more
cases, and could request that the same Board decision that has been
rendered, or will be rendered in the like cases, be applied to their
case.
Response: We do not believe it is necessary to amend the
regulations to state that the parties may so stipulate. As noted in our
previous response, the intermediary must attempt to join with the
provider to narrow the factual and legal issues in dispute. We see no
reason why the parties could not stipulate that the facts and issues in
one case are identical in all material respects to those in another
case or cases. The Board has the discretion to consolidate like cases
for hearing or (with the parties' consent) to dispense with the hearing
in a case and effectively have that case be governed consistently with
the decision in another case.
Comment: One commenter stated that the final rule should clarify
for discovery deadline purposes that the scheduled starting date of the
Board hearing is the specific date the hearing is on the docket, and
not the anticipated month of the hearing date listed on the ``key
dates'' letter received from the Board when the appeal is filed.
Response: Proposed Sec. 405.1853(e)(3), which we are adopting,
uses the term ``scheduled starting date of the Board hearing,'' which
is the specific date on the Board's docket. As discussed more fully
below, this final rule references the deadlines to the ``initially''
scheduled starting date of the hearing, in recognition that hearings
are often rescheduled.
Comment: One commenter stated that an incomplete or late response,
or no response at all, to a timely-filed request for discovery should
be grounds for an extension of discovery.
Response: Proposed Sec. 405.1853(e)(3) would have allowed the
Board, for good cause, to extend the time for requesting or conducting
discovery. On reexamination of our proposal, we believe that the Board
should be allowed to extend the time for requesting or conducting
discovery without requiring a showing of good cause. We do not believe
it advisable to state that a late or incomplete response, or a non-
response, would necessarily lead to an extension of the time to seek or
conduct discovery; rather, in any given case, the Board should evaluate
the circumstances before it and exercise its discretion to allow or
disallow an extension for seeking or responding to discovery.
Comment: One commenter disagreed with our proposal to modify the
time
[[Page 30221]]
limits for requesting discovery so that a party's discovery request
must be received no later than 90 days before the scheduled hearing,
and that discovery must be completed no later than 45 days before the
scheduled hearing. The commenter noted that current Sec. 405.1853(b)
technically allows parties to file discovery requests as late as one
day before the hearing. The commenter nevertheless viewed the proposal
as an attempt to restrict provider appeal rights through
technicalities. Several commenters said that, in order for discovery to
be timely, it should be received no later than 60 days prior to the
hearing. Also, allowing a party to conduct discovery up to 45 days
before the scheduled date of the hearing is excessive, and allowing 30
days for discovery is adequate.
Response: We believe it prudent to set deadlines on requesting,
conducting, and responding to, discovery. We believe that it is
important to strike an appropriate balance between allowing parties a
sufficient time to conduct discovery for case preparation without
disrupting the hearing process through last minute discovery requests.
Our proposal would have allowed parties to request discovery no later
than 90 days before the scheduled date of the hearing and to conduct
discovery no later than 45 days before the scheduled date of the
hearing. Upon further reflection, we have decided to require that a
party's discovery request is timely if it is served no later than 120
days before the initially scheduled starting date of the hearing,
unless the Board extends the time for requesting discovery. We have
modified the proposal's requirement that discovery must be ``received''
by a certain time, and instead provided in Sec. 405.1853(e)(3) and
Sec. 405.1821(a)(2) that discovery must be ``served'' by a certain
time, in order to prevent any disagreement and collateral litigation
before the Board or the intermediary hearing officer(s) as to when
discovery was actually received. ``Served'' has the same meaning as
given to that term under the FRCP. We decided to use the initially
scheduled starting date of the hearing as the focal point, because
using the actual hearing date as the focal point would mean that a new
discovery period could be obtained any time the hearing is rescheduled
(as is often the case). We also want to ensure that the parties and the
Board have sufficient time to address discovery disputes that may
arise. We believe that, as finalized, the deadlines for submitting and
responding to discovery do not pose significant difficulties for
parties (and we note that, as revised in this final rule, the Board has
discretion to extend the deadlines without a finding of good cause) and
are necessary for the efficient administration of the hearing process.
We have revised the language in Sec. 405.1853(e)(3)(ii) of the
proposed rule that said discovery may not be ``conducted'' by a party
any later than 45 days before the Board hearing, because we were
concerned that ``conducted'' may have been unclear. In revised Sec.
405.1853(e)(3)(ii), we set deadlines for holding a deposition, and for
responding to interrogatories and requests for production of documents.
Specifically, we have revised this paragraph to state that, in the
absence of a Board order or instruction setting a specific starting
date for the deposition, a party desiring to take a deposition must
give reasonable notice of a scheduled deposition in writing to the
deponent. However, in no event may the deposition be conducted later
than 45 days before the initially scheduled starting date of the Board
hearing, unless the Board extends the time for conducting the
deposition. In the absence of a Board order or instruction setting a
specific time, a party or non-party must respond to interrogatories or
to requests for production of documents within the time allotted by the
FRCP or according to a schedule agreed upon by the party requesting
discovery and the party or non-party to which the discovery is
directed. Responses to interrogatories and requests for production of
documents must be served no later than 45 days prior to the scheduled
starting date of the Board hearing, unless the Board extends the time
for responding.
We have deleted the requirement that the Board may extend the time
in which to request discovery or conduct or respond to discovery only
upon a showing by the requesting party that it was not dilatory or
otherwise at fault in not meeting the original discovery deadline. Upon
reexamination, we believe it is better to afford the Board the
flexibility to extend discovery deadlines without such a showing.
We are not prescribing deadlines for a time when a party must
submit a motion to compel discovery or for a time when a party or non-
party must submit a motion for a protective order. Rather, the Board
may wish to issue specific instructions as to a time when the motions
must be filed.
We have also amended proposed Sec. 405.1853(e)(3)(v) to state
that, if the Board grants an extension for requesting or conducting
discovery or responding to interrogatories or requests for production
of documents, it may set a new hearing date, instead of (as proposed)
being required to set a new hearing date.
Finally, we have made corresponding changes to Sec. 405.1821, with
respect to discovery in intermediary hearing proceedings.
Comment: One commenter asked what would happen under the proposal
if documentation was received after 45 days. Specifically, the
commenter wished to know whether the documentation would be considered
by the Board at the hearing, and stated that, if this were the case,
the 45-day deadline meant little as timely discovery from the
intermediary depended on what the intermediary had to review and from
whom the request came. The same commenter also asked what the result
would be if documentation was requested and received in the 45-day
period, but additional data needed by the intermediary to supplement
and test the original documentation arrived after the 45-day period had
expired. The commenter also stated that further clarification was
needed with regard to what documentation was due within 45 days, and
what was due within 90 days.
Response: We believe our revisions to Sec. 405.1853(e)(3)(ii),
noted above, address the commenter's concerns. Discovery responses must
be served no later than 45 days before the initially scheduled start of
the Board hearing, unless the time for responding is extended by the
Board. Where a party or non-party files responses late (or not at all),
the Board will have the discretion to postpone the hearing or order
some other remedy within its authority.
Comment: Several commenters stated that, because it is likely that
a party would never agree to a deposition, the rule needs to specify
that in certain cases a party must agree to a deposition.
Response: We do not agree that it is likely that a party will never
agree to a deposition. Litigants in civil cases routinely agree to
appear at depositions, whether in a spirit of cooperation or with the
knowledge that the court can compel their attendance if necessary and
appropriate. We anticipate that parties before the Board also will
generally comply with notices of deposition. Moreover, we have
specifically referenced, in the regulations text, Rule 32(a)(3) of the
FRCP--this rule will be applied by the Board to allow the taking of a
deposition in order to preserve testimony of an individual who might
not be otherwise available to appear at the hearing. However, there may
be instances in which a party reasonably believes that the time or
place of the deposition, or the deposition itself, is unreasonable,
[[Page 30222]]
and, therefore may wish to resist appearing. In that situation, the
party may petition the Board for a protective order. Conversely, where
the party noticing the deposition believes that the deposed party is
unreasonable in refusing to appear, it may file a motion to compel with
the Board. We do not believe it is possible to state in advance,
however, in which types of cases a party will not be allowed to refuse
a notice of deposition. Whether a notice of deposition is reasonable or
unreasonable will depend on the facts and circumstances of each case
and is best left to the Board to manage through its ability to issue
protective orders and orders to compel.
Comment: Several commenters (in identical language) said that the
proposed duration of the automatic stay (no more than 15 days for Board
proceedings, and no more than 10 days for intermediary hearing
officer(s) proceedings) is too strict, and that it would be more
effective to have the automatic stay for Board and intermediary hearing
officer(s) proceedings last no more than 30 days and 15 days,
respectively.
Response: The commenters misunderstood our proposals in Sec.
405.1853(e)(6) and Sec. 405.1821(d)(2). We proposed that the duration
of the automatic stay could be no less than 15 days for Board
proceedings, and no less than 10 days for intermediary hearing
officer(s) proceedings. In proposing minimum lengths for the stay, we
wanted to ensure that the Administrator would have sufficient time to
decide whether to take review of the matter before the stay had
expired. Although we continue to believe that the proposed periods are
sufficient, in order to ensure that the CMS reviewing official would
have sufficient time to review an intermediary hearing officer order,
we have revised the minimum time for the stay in Sec. 405.1821(d)(2)
to 15 days. With respect to the commenters' suggestion that the
automatic stay not last more than 30 days for Board proceedings, and
not more than 15 days for intermediary hearing officer(s) proceedings,
we decline to restrict the Board or intermediary hearing officer from
initially setting a longer stay than the minimum period prescribed, in
order to address the possibility that, due to unusual circumstances,
the Board or intermediary hearing officer may believe that a longer
period is needed for a party to seek review of the discovery order and
for the Administrator or CMS reviewing official to decide whether to
take review. Likewise, we believe that, as we proposed in Sec.
405.1853(e)(6)(ii) and Sec. 405.1821(d)(2), if the Administrator or
CMS reviewing official decides to take review, the stay should continue
until the Administrator or CMS reviewing official issues a decision on
the matter, rather than prescribing a set period for which the
Administrator or CMS reviewing official may rule, as some cases may be
more complex than others, and the Administrator's or CMS reviewing
official's other review responsibilities may be more voluminous at one
time than at another.
O. Subpoenas (Sec. 405.1857)
Section 1878(e) of the Act states that the provisions of sections
205(d) and 205(e) of the Social Security Act with respect to subpoenas
apply to the Board to the same extent that they apply to the
Commissioner of Social Security with respect to title II (Social
Security) of the Act. In the proposed rule, we proposed time limits for
requesting Board subpoenas that would be similar in some respects to
those we proposed for the discovery process. For subpoenas requested
for purposes of discovery, a request would be timely if received at
least 90 days before the scheduled hearing date. For a subpoena
requested for the purpose of compelling attendance of a witness at the
hearing, a request would be timely if received at least 45 days before
the scheduled hearing. The Board could not issue a discovery subpoena
any later than 75 days before the initial scheduled hearing date, and
could not issue a hearing subpoena any later than 30 days before the
scheduled hearing. The Board would have discretion to extend the
timeframes for requesting subpoenas. The Board would also have the
authority to issue subpoenas to non-parties. Finally, only the
Administrator would have the authority to seek enforcement of a Board
subpoena.
We have adopted our proposals, with some modifications. Some of the
modifications are parallel to those revisions we made to our discovery
proposals in Sec. 405.1853(e). That is, in Sec. 405.1857(a)(2)(i), we
revised the deadline by which a request for a subpoena for discovery
must be received by the Board, from 90 days before the scheduled
starting date of the Board hearing, to 120 days of the initially
scheduled starting date of the hearing. The revised time period
essentially mirrors the time period for requesting discovery under
Sec. 405.1853(e)(3)(i). As explained in section II.N. of this final
rule, we decided to use the initially scheduled starting date of the
hearing as the focal point, because using the actual hearing date as
the focal point would mean that a new discovery period could be
obtained any time the hearing is rescheduled, and we also wish to focus
the parties' attention on discovery early in the appeals process.
Because we revised the deadline by which the Board must receive a
request for subpoena for discovery, we have also revised the deadline
for issuing a subpoena, from 75 days before the scheduled starting date
of the Board hearing to 90 days before the initially scheduled starting
date of the Board hearing. Like the deadline for seeking discovery,
however, under this final rule, the deadlines for requesting a Board
subpoena for discovery and for the Board to issue a subpoena for
discovery, are subject to extension by the Board in its discretion.
Likewise, if the Board extends the period for requesting or issuing a
subpoena, the Board has the discretion to reschedule the hearing date.
The extension procedures also apply to requests for, and issuances of,
Board subpoenas for purposes of an oral hearing. (See Sec.
405.1857(a)(4).) We have also made a clarifying change to proposed
Sec. 405.1857(d)(2)(v). With respect to the situation where a party or
non-party seeks immediate review of a Board subpoena, and the
Administrator may, but chooses not to, grant or take own motion review
of the subpoena, we have revised the language that stated ``the Board's
action stands'' to ``the Board's action is not immediately
reviewable.'' The revision was made in recognition of the fact that the
Administrator could review the subpoena in the course of review of a
final decision made by the Board. We clarified language in Sec.
405.1857(b)(3) that suggested the Board ``must comply'' with the FRCP
and the Federal Rules of Evidence for guidance. As revised, this
paragraph states that the Board ``uses'' such authorities for guidance.
Finally, we are adding language to proposed Sec. 405.1857(a)(1)(i)
to clarify that the Board may not issue a subpoena to CMS or to the
Secretary (or to any Federal agency), and we are also removing the
references to HHS and CMS in proposed Sec. 405.1857(c)(4),
redesignated to Sec. 405.1857(c)(3), in order to prevent any
implication that the Board may issue a subpoena to CMS or to the
Secretary.
Comment: One commenter stated that an incomplete or late response,
or no response at all, to a timely-filed request for discovery should
be grounds for an extension of a subpoena request.
Response: Proposed Sec. 405.1857(a)(4) would have allowed the
Board, for good cause, to extend the time for requesting or issuing a
subpoena. On reexamination of our proposal, we
[[Page 30223]]
believe that the Board should be allowed to extend the time for
requesting or issuing a subpoena without requiring a showing of ``good
cause.'' We do not believe, however, that it is advisable to state that
a late or incomplete response, or a non-response to a discovery
request, will necessarily lead to an extension of the time to request
or issue a subpoena. Rather, in any given case, the Board should
evaluate the circumstances before it, and exercise its discretion to
allow or disallow an extension for requesting a subpoena, or for
permitting itself an extension for issuing a subpoena. We have also
decided, for the reasons stated above with respect to the time for
requesting and completing discovery, to modify the proposed timeframes
for a party to request a subpoena for purposes of discovery and for the
Board to issue a subpoena for that purpose. Under the final rule at
Sec. 405.1857(a)(2)(i), a party may request a subpoena for purposes of
discovery no later than 120 days before the initially scheduled
starting date of the Board hearing, and, at Sec. 405.1857(a)(3)(i),
the Board may issue a subpoena for that purpose no later than 90 days
before the initially scheduled starting date of the Board hearing.
Comment: One commenter opposed the proposal that a Board subpoena
may be enforced only by the Administrator. The Board's decision to seek
enforcement is interlocutory (that is, non-final) in nature, and
therefore is not subject to immediate review by the Administrator.
Moreover, even if the Administrator otherwise could review a non-final
decision by the Board, section 1878(e) of the Act grants the Board sole
authority to decide to initiate judicial action to enforce a Board
subpoena.
Response: For the reasons stated in section II.T. of this final
rule, we disagree that the Administrator lacks the authority to review
non-final orders of the Board. We also disagree that section 1878(e) of
the Act grants the Board sole authority to decide whether to pursue
judicial enforcement of one of its subpoenas. Under the commenter's
view, the Administrator could reverse a decision of the Board on the
merits, but would be unable to prevent the Board from seeking any
enforcement action that the Administrator would believe was
inconsistent with law or agency policy. This position contravenes the
well-established principle that the Administrator, on review of Board
actions, has all of the powers that the Administrator would have had in
making the initial decision. (See Homan & Crimen v. Harris, 626 F.2d
1201, 1205 (5th Cir. 1980); 5 U.S.C. 577(b).) Moreover, the statute
plainly grants the Secretary, and by extension the Secretary's
designee, that is, the Administrator, the authority to issue subpoenas
and seek enforcement of them, as sections 205(d) and 205(e) of the Act
have been incorporated into title XVIII of the Act through section 1872
of the Act. It is not clear how litigation to enforce a subpoena could
proceed on behalf of the Administrator if the Administrator, as the
Secretary's designee, were opposed to bringing that action.
Comment: One commenter commended us for proposing that non-parties
may be subpoenaed by the Board. Another commenter stated that the rule
should expressly acknowledge that the Board has the power to subpoena
HHS and other government agencies. A provider's appeal rights under
section 1878 of the Act would be rendered meaningless if the Board
lacked the power to subpoena relevant and material evidence from HHS.
This is particularly important in cases where CMS has rendered the
determination at issue. Another commenter objected to the proposal that
the Administrator may review and overrule a Board decision to subpoena
a witness or documents as an affront to the Board's independence. This
commenter was concerned that the Administrator might abuse this power
to avoid having CMS policy experts testify before the Board.
Response: For the reasons stated in the Administrator's Order dated
July 29, 2004, in Baystate Medical Center v. Mutual of Omaha (PRRB Case
Nos. 96-1822, 87-1579), and in the Administrator's Order dated November
20, 2006, in Duane Morris Outpatient Blended Rate Group v. Blue Cross
Blue Shield Association (PRRB Case No. 06-2057G), we believe there is
no statutory basis for the Board to subpoena HHS and other Federal
agencies. The United States and its agencies, as sovereign, are immune
from suit, except to the extent to which they consent to be sued. It is
also well-settled that a waiver of sovereign immunity ``cannot be
implied, but must be unequivocally expressed.'' (See Franconia
Associates v. United States, 536 U.S. 129, 141 (2002).) There is no
indication in the language of sections 205(d) and 205(e) of the Act, or
in the legislative history of those sections, that the Congress
intended to effect a waiver of sovereign immunity. (Indeed, the fact
that the party seeking to enforce the subpoena would be a Federal
agency makes it even more unlikely that the Congress intended to waive
sovereign immunity, for it cannot be lightly assumed that when the
Congress enacted sections 205(d) and (e) in 1939, it intended to allow
one agency to sue another agency.) To the contrary, the use of the
words ``individual'' and ``person'' in sections 205(d) and 205(e) of
the Act indicate that the Congress did not intend to waive sovereign
immunity. It is a well-settled rule of statutory construction that
``person'' does not include the sovereign, unless the statute
affirmatively provides otherwise, and this rule is particularly
applicable where it is claimed that the Congress intended to waive
sovereign immunity. (See Will v. Michigan Dep't of State Police, 491
U.S. 58, 64 (1989).) Because the Congress did not waive sovereign
immunity in sections 205(d) or 205(e) of the Act, it did not waive it
in section 1878(e) of the Act (which grants the Board the subpoena
powers contained in sections 205(d) and 205(e)). Because only the
Congress, and not Federal agencies, has the authority to waive
sovereign immunity, (see United States v. N.Y. Rayon Importing Co., 329
U.S. 654, 660 (1947)), we would be unable to subject HHS and other
agencies to the Board's subpoena authority even if we were otherwise so
inclined.
We are adding language to proposed Sec. 405.1857(a)(1)(i) to
clarify that the Board may not issue a subpoena to CMS or to the
Secretary (or to any Federal agency), and we are also removing the
references to HHS and CMS in proposed Sec. 405.1857(c)(4),
redesignated to Sec. 405.1857(c)(3), in order to prevent any
implication that the Board may issue a subpoena to CMS or to the
Secretary.
Although the Board does not have the authority to subpoena HHS and
other Federal agencies, we do not agree with the commenter that a
provider's appeal rights are rendered meaningless in the absence of
that authority. In cases in which the provider believes it is necessary
to obtain information from HHS (including CMS), the provider may gain
access to information through the Freedom of Information Act, which is
applicable to all Federal agencies. Most, if not all, agencies
(including HHS) also have ``Touhy regulations,'' by which agencies may
make documents or witnesses available to the requester if sufficient
need is shown, and other criteria are satisfied. Finally, upon review
of a final decision of the Board or the Administrator, a court may
order that the record be supplemented with additional information.
Comment: Several commenters, in identical language, said that the
proposed duration of the automatic stay (no more than 15 days for Board
proceedings and no more than 10 days for intermediary hearing
officer(s) proceedings) is too strict and that it
[[Page 30224]]
would be more effective to have the automatic stay for Board and
intermediary hearing officer(s) proceedings last no more than 30 days
and 15 days, respectively.
Response: The commenters misunderstood our proposals. We proposed
that the duration of the automatic stay could be no less than 15 days
for Board proceedings. In proposing a minimum length for the stay, we
wanted to ensure that the Administrator would have sufficient time to
decide whether to take review of the matter before the stay had
expired. We continue to believe that the proposed periods are
sufficient. With respect to the commenters' suggestion that the
automatic stay not last more than 30 days for Board proceedings, and
not more than 15 days for intermediary hearing officer(s) proceedings,
we decline to restrict the Board from initially setting a longer stay
than the minimum period prescribed, in order to address the possibility
that, due to unusual circumstances, the Board may believe that a longer
period is needed for a party to seek review of the subpoena and for the
Administrator to decide whether to take review. Likewise, we believe
that, as we proposed, if the Administrator decides to take review, the
stay should continue until the Administrator issues a decision on the
matter, rather than prescribing a set period for which the
Administrator may rule, as some cases may be more complex than others,
and the Administrator's other review responsibilities may be more
voluminous at one time compared to another.
P. Record of Administrative Proceedings (Sec. 405.1865 and Sec.
405.1827)
We proposed to amend Sec. 405.1865 to address with specificity the
required contents of the record on appeal and to explain how excluded
material is to be treated. In particular, we proposed to specify that
all evidence, argument and any other tangible material (admissible or
inadmissible) received by the Board, as well as a transcript of the
proceedings of any oral hearing before the Board, would be made part of
the record of the appeal. Any evidence ruled inadmissible by the Board,
and any other material not considered by the Board in making its
decision, would, to the extent practicable, have to be clearly
identified and segregated in an appendix to the record for the purpose
of any review by the Administrator and/or the judiciary. We further
proposed that, for purposes of Administrator review, the administrative
record would also include all documents and any other tangible matter
submitted to the Administrator by the parties to the appeal or by any
non-party, in addition to all correspondence from the Administrator or
the Office of the Attorney Advisor and all rulings, orders, and
decisions by the Administrator. We also proposed that the Administrator
would have the authority to reverse the Board's determination regarding
the admissibility of evidence or other matter. Additionally, we
proposed corresponding changes, in part, to Sec. 405.1827, relative to
the record established at intermediary hearings. We are adopting our
proposals.
Comment: One commenter stated that the proposed revision to allow
the Administrator to reverse Board determinations on evidence and
unilaterally include or exclude evidence could cause the entire
administrative process to be viewed negatively. If the Administrator is
given the authority to dismiss evidence after the hearing decision has
been rendered, there should be a process provided for provider rebuttal
or alternative arguments to be filed on the record prior to proceeding
to judicial review.
Response: Our proposal was facially neutral, in that it would
permit the Administrator to include, where appropriate, evidence that
the intermediary or provider wanted included (but that was excluded by
the Board), or to exclude, where appropriate, evidence that the
intermediary or provider wanted excluded (but that was included by the
Board). Because, under longstanding policy, the Board employs a relaxed
standard for the introduction of evidence (rather than following the
Federal Rules of Evidence), we believe there will be relatively few
instances in which the Board does not allow evidence that should have
been allowed, or includes evidence that should not have been allowed.
In those relatively few instances, however, in which the Board makes an
improper (in the Administrator's view) ruling on an evidentiary matter,
it is appropriate that, where practicable, the Administrator, as the
final agency arbiter, includes within, or excludes the evidence from,
the record. Where the Administrator takes review of a case, the parties
may comment on the Board's decision, including whether evidence that
was excluded by the Board should have been included, and whether
evidence that was included by the Board should have been excluded. If
the provider does not agree with the Administrator's ruling as to the
composition of the record, it may pursue its objections with a court.
We believe that, in most cases, a provider will have advance notice as
to any issues concerning the inclusion or exclusion of evidence, but in
any instance the provider believes that it was surprised by the
Administrator's action, it is adequately protected by pursuing its
judicial remedies (it may also seek reopening from the Administrator).
We note that in any case in which the Administrator takes review, his
or her precise reasoning on legal or policy issues or on the weight to
be given certain evidence may be unanticipated by a provider, yet there
has never been (nor, we submit, a need for) a formal process to make
objections prior to seeking judicial review.
Q. Board Actions in Response to Failure To Follow Board Rules (Sec.
405.1868)
In the proposed rule, we sought to specify how the Board would
exercise its authority under section 1878(e) of the Act to respond to:
(1) Intentional delaying tactics by a provider or intermediary; or (2)
a failure by the provider or intermediary to timely heed a Board order
or rule. We proposed that, if a provider fails to meet a filing or
procedural deadline or other requirement set by the Board, the Board
may dismiss the hearing request or take other appropriate action. We
also proposed that, if the intermediary failed to meet any filing or
procedural deadlines or other Board requirements, the Board would have
the right to issue a decision based on the written record submitted to
that point or to take other appropriate action. (We note, however, that
the text of the proposed rule inadvertently failed to reflect this
specific proposal, which we have adopted and incorporated into the text
of this final rule.)
We have adopted our proposals. We have clarified that the Board's
authority, in the situation where an intermediary fails to meet a
filing deadline or other requirement established by the Board, does not
extend to, as a sanction, reversing or modifying the intermediary or
Secretary determination or ruling against the intermediary on a
disputed issue of law or fact. We have renumbered proposed Sec.
405.1868(d)(3) as paragraph (e) and made corresponding numbering
changes. We have also added paragraphs (f) and (g) as a result of
adopting the first and second of our ``Three Additional Proposals Under
Consideration'' (see section II.W. of this final rule). We have also
corrected a citation error in Sec. 405.1868(d)(2), which referred to a
Board dismissal decision ``under [non-existent] paragraph (f)(1) of
this section.''
[[Page 30225]]
Comment: One commenter suggested that, although the provider may be
penalized with a dismissal sanction, there is no corresponding sanction
for an intermediary. The commenter noted that an intermediary could
deliberately fail to file a position paper, have the case heard and
decided on the record, and then submit a motion for CMS Administrator
review with no provider rebuttal. The commenter believes that the only
way the intermediary sanction provision could be effective is if the
intermediary would not be allowed to request Administrator review.
Another commenter noted that the proposed rule lacked an appropriate
sanction against the intermediary for failing, for example, to meet
filing deadlines. The commenter suggested that the Board should try to
motivate the intermediary into compliance by barring the intermediary
from submitting certain evidence, or limiting the materials that the
intermediary could submit. Another commenter supported the intermediary
sanction proposal and suggested that an intermediary's failure to
follow a Board order should be entered in the written record of the
proceedings and passed along to CMS as a potential contract violation.
Response: After reviewing all the comments, we are adopting the
proposals that we set forth in the proposed rule. Most of the comments
we received on this subject came from providers, and reflect a
perceived disparate treatment by the Board when a provider, rather than
an intermediary, fails to follow a procedural rule or timeframe set by
the Board. We proposed two possible actions by the Board, one
applicable to a provider and the other applicable to an intermediary.
That is, the worst case scenario for a provider would be a dismissal of
the appeal by the Board, while the harshest remedy for an intermediary
would be the issuance of a decision by the Board based on the written
record established at the point of the intermediary's violation.
However, we note that, because providers are the proponents of a case,
they are responsible for moving the case forward by meeting all
deadlines. Additionally, at section 1878(e) of the Act, the Congress
has given the Board authority to make rules and establish procedures to
carry out its function. Moreover, we note that the Board will have
broad discretion to weigh the particular facts at hand in order to
decide whether or not an offense merits remedial action. We disagree
with the commenter that suggested that an intermediary should not be
allowed to request Administrator review if the Board has sanctioned the
intermediary and issued a decision on the record. The commenter is
incorrect in suggesting that the provider would be unable to rebut the
intermediary's position at the Administrator level. It has been
longstanding policy that, when the Administrator accepts review, each
party may rebut the other party's legal arguments (although the parties
are prohibited from submitting additional factual evidence that is not
within the record). Moreover, we believe that any sanction assessed by
the Board against a party should factor into a reviewing entity's
deliberations. For example, where the Board issues a decision based on
the written record because an intermediary did not file a position
paper, the Administrator, upon review, may look unfavorably at the
intermediary's inaction.
We also disagree with the commenter that believed that the proposed
rule did not provide for an effective sanction against the
intermediary. Again, we are clarifying that the proposed rule did not
identify a complete listing of all potential Board sanctions. The Board
has the authority to take appropriate action against either party for
procedural violations, but appropriate action does not necessarily mean
a dismissal or the early issuance of a decision by the Board. We
believe that these provisions will alert both parties that the Board
has a mechanism in place to effectively stop a delaying tactic, or to
redress other procedural violations. As a result, the parties should be
less inclined to ignore procedural requirements and, accordingly, be
more motivated to meet the deadlines set by the Board.
Finally, we agree with the commenter that suggested that if an
intermediary failed to abide by an order of the Board in a timely
fashion, the Board could pass along that information to CMS as a
possible contract violation. In Sec. 405.1868(c)(2), we codify the
Board's ability to take this action.
Comment: One commenter noted that intermediaries often miss Board
deadlines for filing position papers, leaving providers unaware of the
arguments the intermediary intends to use at the hearing. The commenter
suggested that the final rule should require the Board to bar an
intermediary from submitting late evidence and arguments, unless there
is a showing of good cause. Another commenter suggested that the
intermediary's evidence should be excluded from the hearing when the
intermediary is noncompliant with Board rules.
Response: We believe that the Board's authority to sanction either
party pursuant to section 1878(e) of the Act will serve as a strong
impetus for the parties to customarily respond in a timely manner to
Board-ordered deadlines. As to the commenters' suggestions regarding
the possible exclusion of evidence, we note that it is within the
Board's discretion to decide whether a party should be barred from
submitting late evidence and arguments.
Comment: Two commenters noted that, contrary to our stated
intention in the preamble, the proposed regulations text at Sec.
405.1868(c) did not specify that the Board may issue a decision based
on the written record to that point when the intermediary fails to meet
a filing or procedural deadline set by the Board.
Response: We agree with the commenters and have added new text at
Sec. 405.1868(c)(1) to specify that the Board may issue a decision
based on the written record when the intermediary fails to meet a
filing deadline or other procedural requirement imposed by the Board.
Comment: One commenter noted that, when an intermediary fails to
comply with a Board order or deadline, and the Board issues a decision
based on the written record, upon review, the Administrator will remand
all these cases back to the Board to consider additional arguments. The
commenter suggested that, due to intermediary non-compliance, when the
Board decides to close the record and issues a decision based on the
written record to that point, the Administrator should not be able to
remand the case to the Board or consider the arguments not in the
record.
Response: We do not agree that in this situation the Administrator
would always remand a case back to the Board to consider any missing
arguments. We believe that if the Board issues an early decision based
on the written record because of an intermediary violation, the
Administrator, on review, may regard the intermediary violation in a
negative light. Therefore, we would not expect that the Administrator
would necessarily remand the matter to the Board for further evidence,
unless the Administrator believes that the Board's decision to close
the record itself was erroneous.
R. Scope of Board's Authority in a Hearing Decision (Sec. 405.1869 and
Sec. 405.1829)
Section 1878(d) of the Act provides that the Board has the
authority to affirm, modify, or reverse the intermediary's findings on
each specific matter at issue in the intermediary's determination and
to make other revisions on specific matters, regardless
[[Page 30226]]
of whether the intermediary has considered those matters in making its
determination. In the proposed rule, we sought to clarify that the
Board's power to make additional revisions would not authorize the
Board to consider or decide a specific matter at issue for which it
lacked jurisdiction or for which it was not timely raised in the
hearing request. Additionally, we proposed revising the title of Sec.
405.1829 and made certain corresponding changes to this section
relative to intermediary hearings. We are adopting our proposals. We
have deleted paragraphs Sec. Sec. 405.1869(b)(2)(i) and (b)(2)(ii) as
superfluous.
Comment: One commenter suggested that, because the Board has the
authority to affirm, modify, or reverse an intermediary's determination
and to make additional revisions, regardless of whether the
intermediary considered those matters, the Board should likewise have
the authority to direct intermediaries to make reopenings necessary to
effect the ``flow-through'' of issues affecting multiple years. For
example, a reversal of interest capitalized by the intermediary in one
year, but not subsequently amortized by the provider pending the
outcome of the appeal, should be corrected for all years involved.
Response: We disagree with the suggestion that the Board has, or
should have, any authority to direct intermediaries to reopen to effect
the ``flow-through'' of issues impacting multiple years. The Board's
authority is limited by statute to ruling on appeals that have been
brought before it. Therefore, the onus is on the provider to identify,
on an annual basis, any disputed items on its cost report for that
particular cost year, and, if it chooses, and the amount in controversy
requirement is met, to file an appeal before the Board for that cost
year. The Board is not empowered to rule on cost years not before it,
and generally lacks any equitable powers to direct an intermediary to
take any specific action. Moreover, even if we had the authority to
confer upon the Board the authority to direct the intermediary to
reopen previous cost years, we would not do so. Reopenings generally
have been a matter of intermediary discretion, and have not been used
as a substitute for appeals. We do have the authority to direct
intermediaries to conduct reopenings where we provide explicit notice
to the intermediary that the intermediary's determination was
inconsistent with the applicable law, regulations, CMS Ruling, or CMS
general instructions in effect, based on our understanding of those
legal provisions at the time that the intermediary determination was
made (and not based on any change in policy, whether self-realized or
directed by a court).
Comment: Two commenters suggested that the proposed clarification
would be inconsistent with the plain meaning of section 1878(d) of the
Act, because it imposes impermissible limits on the Board's statutory
authority to consider all matters covered by the cost report. One of
the commenters believed the policy directly contravened the decision by
the D.C. Court of Appeals in HCA Health Services of Oklahoma v.
Shalala, 27 F.3d 614 (D.C. Cir. 1994). In that case, the court stated
that ``once Board jurisdiction pursuant to subsection (a) [of section
1878 of the Act] obtains, anything in the original cost report is fair
game for a challenge by virtue of subsection (d).''
Response: We disagree with the suggestion that our proposal,
specifying that the Board can only make additional revisions to an
intermediary determination when it has jurisdiction to grant a hearing
on the issue and the issue has been timely raised, is inconsistent with
the statute. As we stated in our discussion of ``Adding Issues to
Original Hearing Request'' in section II.D., the straightforward
language of section 1878(d) of the Act grants the Board the authority
to consider a wide range of issues, but does not address the timing for
the inclusion of issues. The statutory provision relating to the timing
of an appeal is located at section 1878(a)(3) of the Act, wherein it is
clearly stated that a provider has the right to request a Board hearing
within 180 days after notice of the final determination. Thus, if a
provider does not indicate to the Board in a timely fashion that it is
dissatisfied with a certain aspect of the final determination, the
provider does not satisfy one of the key components for establishing
jurisdiction, that is, timeliness. Accordingly, the provider will be
unable to dispute that particular issue before the Board. Moreover, we
believe that the Board must obtain jurisdiction over an issue before it
can rule on the issue. If the Board decides that it lacks jurisdiction
over a particular issue, it cannot entertain that issue, despite the
language contained in section 1878(d) of the Act. We read section
1878(d) of the Act as permitting the Board to make revisions to cost
report line items that flow directly from determinations in which the
provider has expressed dissatisfaction and 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).
Finally, we disagree that our proposed clarification is contrary to
the decision in HCA Health Services of Oklahoma v. Shalala. The timing
of a request for an appeal is critical to establishing jurisdiction. If
a provider does not timely express dissatisfaction to the Board of a
particular matter in a final determination and, therefore, does not
establish jurisdiction before the Board over that matter, the provider
cannot then seek to rely upon section 1878(d) of the Act for relief.
S. Board Hearing Decision and Intermediary Hearing Decision (Sec.
405.1871, Sec. 405.1831 and Sec. 405.1833)
We proposed to require that the Board's decision, with respect to
any issue for which the policy expressed in a CMS instruction (other
than a regulation or CMS Ruling) is dispositive, but for which the
Board did not affirm the intermediary's adjustment, explain how the
Board gave great weight to such instruction (as required by Sec.
405.1867), but did not affirm the intermediary's adjustment.
We are adopting our proposals. We are amending proposed Sec.
405.1871(a)(4) to state that where the Board's decision reverses or
modifies an intermediary determination on an issue for which the policy
expressed in an interpretive rule (other than a regulation or a CMS
Ruling), general statement of policy or rule of agency organization,
procedure or practice established by CMS would be dispositive of that
issue (if followed by the Board), the Board decision must explain how
it gave great weight to such interpretive rule or other such
instruction but did not uphold the intermediary's determination on the
issue. We are also revising the reference to ``general CMS
instructions'' in proposed Sec. 405.1871(a)(4) to read ``other
interpretive rules, general statements of policy, and rules of agency
organization, procedure or practice established by CMS.'' We are making
a similar change to other sections in the proposed regulations text
where the term ``general CMS instructions'' appeared.
Relative to intermediary hearings, we have made a technical change
to Sec. 405.1831(d) 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 amended this provision to indicate that the decisions
should be sent to CMS (currently, the decisions are received by the
Center for Medicare Management, a component within CMS). Additionally,
[[Page 30227]]
we revised Sec. 405.1833 to clarify that an intermediary hearing
decision is final and binding unless the decision is reviewed by a CMS
reviewing official. Also, intermediary hearing decisions are subject to
the provisions of Sec. 405.1803(d).
Comment: One commenter recommended that the preponderance of the
evidence standard of proof be replaced with the Generally Accepted
Government Auditing Standards' standard, which is ``sufficient,
competent, and relevant evidence that would persuade a reasonable
person of the validity of the findings.'' Because CMS has issued manual
instructions to comply with Government Auditing Standards, it would be
inappropriate to impose a higher standard of proof in the appeal than
required by auditing standards.
Response: We are not adopting the comment. We believe the
preponderance of the evidence standard to be well-understood and widely
used by administrative and judicial tribunals. We do not see any
inconsistency between Government Auditing Standards, which pertain to
whether audit findings are valid, and our proposal, which pertains to
the determination of whether the provider has ultimately met its burden
of proof regarding a certain issue.
Comment: Two commenters objected to the statement in the preamble
that the Board would be required to explain how it has given great
weight to CMS instructions (other than regulations and CMS Rulings)
when declining to uphold an intermediary's adjustment. The first
commenter stated that it was not clear to which instructions the
statement was referring. Moreover, according to the commenter, we have
failed to identify any valid reason why the Board should give CMS
instructions any weight beyond whatever weight they deserve by reason
of their own inherent power to persuade. Only substantive rules that
have gone through notice and comment rulemaking have the force and
effect of law. The second commenter stated that the proposal was
inconsistent with the requirements of the Administrative Procedure Act
and offends the authority and independence of the Board. In this
commenter's view, the Board should merely be required to acknowledge
that it had considered and given weight to the instructions. According
to this commenter, the proposal suggests that the Administrator will
have grounds to reverse the Board's decision if the Board does not
follow the instructions, raising this to the same level as statutes or
regulations.
Response: Existing Sec. 405.1867 (issued in 1983) provides that
``the Board must comply with all the provisions of title XVIII of the
Act and regulations issued thereunder, as well as CMS Rulings'' and
that ``[t]he Board shall afford great weight to interpretive rules,
general statements of policy, and rules of agency organization,
procedure or practice established by CMS.'' We did not propose to
change this provision and we are not doing so. The purpose of the
proposal was to require the Board, in order to facilitate Administrator
or court review, to explain, where a CMS instruction was seemingly on
point, how the Board complied with the existing requirement that it
give great weight to the instruction, but nevertheless reversed an
intermediary's adjustment. With respect to the commenter's point that
it was not clear to which instructions we were referring, the final
rule, at Sec. 405.1871(a)(4), uses the language ``an interpretive rule
(other than a regulation or CMS Ruling), general statement of policy,
or rule of agency organization, procedure or practice established by
CMS.''
We are unsure of the meaning of the first commenter's statements:
(1) That we had failed to identify a valid reason why the Board should
give CMS instructions any weight beyond whatever weight they deserved
by reason of their own inherent power to persuade; and (2) that only
substantive rules that have gone through notice and comment rulemaking
have the force and effect of law. To the extent that the commenter was
arguing that we were proposing that CMS instructions (other than
regulations and CMS Rulings) were binding on the Board, this is
incorrect. Under current Sec. 405.1867, CMS instructions (other than
regulations and CMS Rulings) are not binding on the Board, but rather
must be given great weight by the Board, and, again, we did not propose
to change this regimen. In many cases, if an instruction is squarely on
point and is given great weight by the Board, the instruction may be
determinative of the outcome. However, that is not always the case
(hence our proposal to explain how an instruction was given great
weight but was not determinative). If the commenter was asserting that
only substantive rules that have gone through notice and comment
rulemaking are entitled to some level of automatic deference by the
Board, we disagree. As noted above, Sec. 405.1867 has long provided
that CMS instructions other than regulations or CMS Rulings are
entitled to great weight by the Board. Moreover, CMS Rulings and some
regulations are not substantive (that is, legislative) rules, and yet
CMS Rulings and all CMS regulations are binding on the Board under
Sec. 405.1867. Finally, we note that courts are required to give
controlling weight to an agency's interpretation of its regulations,
unless plainly erroneous or inconsistent with the regulation. See
Thomas Jefferson University v. Shalala, 512 U.S. 504, 512 (1994). It
would be anomalous if the Board were not required to give great weight
to a manual instruction that (unless plainly erroneous or inconsistent
with the regulation) would be given controlling weight by a court.
Comment: One commenter suggested a refinement in the proposal that
the Board must explain how it gave great weight to a CMS instruction
(other than a regulation or CMS Ruling) that would be dispositive of
the issue if followed by the Board but nevertheless did not uphold the
intermediary's determination. The commenter stated that the requirement
should be limited to published instructions distributed or available to
providers, which would include policy positions published in the
Federal Register, but which would not include individual letters to CMS
internal components or to other individuals.
Response: By ``instructions,'' we mean an interpretive rule (other
than a regulation or CMS Ruling), general statement of policy, or rule
of agency organization, procedure or practice established by CMS. The
Board is already required, by virtue of Sec. 405.1867, to give great
weight to these instructions. For purposes of our proposal, we do not
believe it is necessary or advisable to amend the types of instructions
for which the Board is required to give great weight.
Comment: One commenter stated that there should be a deadline for
decisions to be made by the Board from, as applicable, the date of the
hearing, the date of the agreement for an on-the-record hearing, or the
date a jurisdictional challenge is submitted. A deadline would assure
all the parties that the Board's decision would be issued by a certain
date, that follow-up from all parties would not be necessary, and that
cases would not get lost in the system. The same commenter also
recommended that ``the instructions'' include various timeframes as
guidelines for the Board to follow, which would increase the efficiency
of monitoring the cases for all parties.
Response: We decline generally to prescribe by rule the time by
which the Board must issue decisions. We believe the Board is in the
best position to manage its own docket and determine when it can issue
decisions. Some cases
[[Page 30228]]
will be more complicated than others or otherwise will take longer to
resolve. For example, Board members may or may not be in complete
agreement about all of the issues, or there may be Board vacancies that
may affect the quorum necessary for issuing a decision. This rule does
prescribe the time for the Board to issue an EJR decision (or a
determination that the request for EJR is incomplete), because the
statute places a time limit on the issuance of EJR decisions by the
Board.
T. Administrator Review (Sec. 405.1875)
In the proposed rule, we offered clarifications to the existing
procedures for obtaining Administrator review of a Board decision. For
example, we proposed to clarify that the date the Administrator
decision is rendered is the date the Administrator signs the decision,
not the date the decision is mailed. We also provided a list of the
types of final Board decisions that would be subject to immediate
review by the Administrator. In addition, we specified that the
Administrator would have the authority to remand a matter not only to
the Board, but also to any component of HHS or CMS, or to an
intermediary.
We are adopting our proposed clarifications. In Sec.
405.1875(b)(1) and Sec. 405.1875(b)(5), pertaining to the illustrative
list of criteria for obtaining Administrator review, and in Sec.
405.1875(e)(3)(i), relating to the authorities upon which the
Administrator's decision may rely, we have made a technical change,
replacing ``general CMS instructions'' with ``other interpretive rules,
general statements of policy, and rules of agency organization,
procedure, or practice established by CMS.'' In Sec. 405.1875(e)(3),
we revised the language that stated the Administrator's decision
``must'' rely on certain authorities to the Administrator's decision
``may'' rely on those authorities, in order not to suggest that the
Administrator's decision must rely on an authority (such as a prior
decision of the Board), that is on point but not persuasive. (Note that
current Sec. 405.1875(g)(4) states that the Administrator ``may'' rely
on prior decisions of the Board, the Administrator and the courts.) We
have also made certain organizational changes to paragraphs Sec.
405.1875(c)(1) and Sec. 405.1875(c)(2), moving material from Sec.
405.1875(c)(2) to Sec. 405.1875(c)(1), and have made a number of minor
wording changes.
Comment: A commenter objected to our proposal to add Sec.
405.1875(f)(5) to state that the Administrator has the authority to
remand a matter to a component of HHS, CMS, or to an intermediary under
appropriate circumstances (including, but not limited to, the purpose
of implementing a court's order). According to the commenter, the
proposal is inconsistent with section 1878(f) of the Act, which states
that a decision of the Board will be final, unless the Administrator
reverses, affirms, or modifies the Board's decision. If the
Administrator disagrees with the Board's determination, the
Administrator can take necessary action without further delaying
provider appeal rights. There is no need for the Administrator to
remand to a lower component of his or her own agency to obtain
necessary input. This commenter also disagreed with our proposal to
revise Sec. 405.1877(b) to state that an Administrator remand of a
Board decision is not subject to judicial review. The commenter
believes that the proposal is without legal support of any kind, and is
simply intended to delay indefinitely providers' judicial appeal
rights.
Response: We recognized in the proposed rule that there is a split
of authority on the issue of whether the Administrator has remand
authority. We continue to believe, however, that the better view is
that he or she does. See Gulf Coast Home Health Services, Inc. v.
Califano, 1978 U.S. Dist. LEXIS 15069 (D.D.C.). From a textual point of
view, the fact that section 1878(f) of the Act states that the
Secretary may affirm, reverse, or modify a decision of the Board does
not mean that the Administrator (as designee of the Secretary) may not
also take the lesser action of remanding a case to the Board. We also
discern no reason why the Congress would have wanted the Administrator
to issue a final decision in a case that the Administrator believed
needed further development. The Administrator and the Office of the
Attorney Advisor are not well-situated to take additional testimony or
develop further facts, seek additional documentation, clarify or
perform additional audit findings, etc. Thus, without authority to
remand, the Administrator would be forced to choose between possibly
disadvantaging the program or the provider in a case that the
Administrator believes is not ripe for decision, but that needs further
development. In this case, if the Administrator were to issue a
decision against the provider, and the provider were to appeal the
decision to a court, the likely and ironic result would be that the
court would remand the case back to the Administrator or the Board for
further findings. In a decision issued against the Medicare program,
the program would fare worse than the provider in the first example, as
CMS cannot appeal a decision of the Administrator. We believe that a
more fair and efficient process is for the Administrator to retain the
authority to remand to the Board for further action in appropriate
circumstances. We also do not agree with the commenter's assertion that
our proposed provision, that an Administrator remand order is not
judicially reviewable, is without legal foundation. Remand orders of
agencies and courts are interlocutory (non-final) in nature and
generally are not subject to immediate review.
Comment: One commenter objected to our proposal to allow immediate
Administrator review of discovery or disclosure rulings and subpoenas
to which objections were made based on privilege or other protection
from disclosure. According to the commenter, neither type of
interlocutory (that is, non-final) appeal should be permitted, because
neither type is defined by statute to be a final decision. If, however,
the Administrator should be given the authority to review immediately
Board rulings granting discovery or issuances of subpoenas, the
Administrator should also have the authority to review Board rulings
denying a discovery request or a request to issue a subpoena.
Response: We believe that our proposal is consistent with the
statute, because the statute does not specifically prohibit the
Administrator from taking immediate review of non-final Board rulings.
We also note that the Administrator, on review of Board actions, has
all of the powers that he or she would have had in making the initial
decision. See Homan & Crimen v. Harris, 626 F.2d 1201, 1205 (5th Cir.
1980); 5 U.S.C. 577(b). Thus, we believe that, just as the Board has
the authority to rule on discovery or subpoena matters, so too does the
Administrator. In the proposed rule, we explained that it was important
that the Administrator be able to take immediate review of Board
rulings granting discovery or issuing a subpoena over an objection
based on privilege or other protection from disclosure because, once
complied with, any harm from an inappropriately ordered disclosure
cannot be undone. Experience has shown that objections based on
privilege or other protection from disclosure will be infrequently
made, but, where asserted, will be made in a good faith belief that
disclosure will be unduly burdensome or harmful. Moreover, we believe
that objections will be made most often by CMS, or by intermediaries on
behalf of CMS, with
[[Page 30229]]
respect to CMS records in the custody of intermediaries. Because the
Board has no statutory authority to compel production of CMS records
(including records subject to the Privacy Act), we believe it is
appropriate, as a condition to allowing the Board under our regulations
to compel the intermediary to produce CMS records, that the
Administrator reserve the right to review immediately a Board order
compelling production of CMS records.
We are not adopting the commenter's suggestion that Board orders
denying discovery should be subject to immediate review. Although we
recognize that, in some cases, it may be inconvenient for an
intermediary or provider to proceed with its case without discovery
that was requested but inappropriately denied, we believe that the
potential inconvenience does not rise to the level of the potential
harm that could result from inappropriate disclosures, and thus do not
believe that the Board proceedings should be potentially disrupted by
appeals of Board orders denying discovery or subpoenas, or that it
would be a wise use of CMS's resources to present these appeals to the
Administrator for his immediate review. Where the Board denies a
party's request for a Board order granting discovery or its request for
the Board to issue a subpoena, the party may raise the issue, if
necessary, in an appeal of the final decision of the Board to the
Administrator or to a court, as applicable.
Comment: One commenter objected to the proposal that the date of
the Administrator's decision, for purposes of meeting the 60-day
requirement in section 1878(f)(1) of the Act is the date it is signed,
instead of the date it is mailed or transmitted. This commenter
believes that a signed, but untransmitted, decision is not official and
can be withdrawn, changed, or otherwise modified before transmission.
Further, the date of mailing or transmission is not subject to
tampering and can easily be confirmed. Any internal problems with
obtaining timely Administrator decisions or transmission following
signing should be the responsibility of the agency, and these
shortcomings should not prejudice the providers. Use of the date
signed, rather than transmitted, is inconsistent with compliance for
every other deadline associated with these rules.
Response: We are adopting our proposal without change. The statute
requires that the Board's decision will be final unless the
Administrator, within 60 days after the provider of services is
notified of the Board's decision, ``reverses, affirms or modifies the
Board's decision.'' We believe that upon the Administrator's signing of
a decision, the reversal, affirmance, or modification action is
complete. Our interpretation is reinforced by the statute's provision
that the time for which a provider must seek judicial review of an
Administrator decision does not begin to run until the provider has
received the decision. Thus, we believe our proposal is consistent with
the language of the statute. We note that the court in Sun Towers, Inc.
v. Heckler, 725 F.2d 315 (5th Cir. 1984), agreed with this
interpretation in rejecting the provider's argument that the
Administrator's decision was untimely because it was signed before, but
mailed after, the 60th day after the provider received the Board's
decision. According to the court in Sun Towers, the plain wording of
the statute requires only that the Administrator's decision be rendered
within 60 days of the provider's receipt of the Board's decision, 715
F.2d at 319, that there is no additional requirement in the statute
that the decision be entered on any docket or mailed within 60 days of
the provider's receipt of the Board's decision, 715 F.2d at 324, and
that, therefore, the Secretary's interpretation that the
Administrator's decision is effective upon signing was entitled to
deference, 715 F.2d at 324-25.
We are also guided by practical considerations in choosing our
interpretation over any other possible interpretation. Under
longstanding practice, a signed Administrator decision is returned to
the Office of the Attorney Advisor for making copies and for
transmitting to the parties. If the Administrator's decision had to be
received by the Office of the Attorney Advisor and mailed by the 60th
day, the decision would have to be signed several days in advance, thus
reducing the already very constricted time period for Administrator
review. Although the statute gives the Administrator 60 days after the
provider receives the Board's decision to conduct review and render a
decision (which by itself is very brief), the period is effectively
reduced by our process for seeking Administrator review.
We believe that parties to the Board's decision should have an
adequate period in which to decide whether to seek Administrator
review, and that, following a notice of intent to review, the parties
should have a further period to submit comments on the Board's
decision. Therefore, consistent with the existing regulations, we
proposed that a party to the Board's decision would have 15 days after
receipt of the Board decision to request that the Administrator review
it, and that, upon notice from the Administrator of intent to review
the decision, a further 15-day period for submitting comments will be
granted. (Having received no comments on this proposal, we are adopting
it without change.) If the Administrator decision had to be mailed by
the 60th day, we would have to consider reducing the period of time in
which the parties could submit comments on the Board's decision.
Finally, we disagree with the commenter that providers are
disadvantaged by our proposal. Regardless of whether the Administrator
has 60 days in which to sign a decision or 60 days in which to mail a
decision, the provider's time in which to seek judicial review of the
Administrator's decision does not run until it receives the decision.
Comment: One commenter stated that the criteria we proposed for
Administrator review should be exclusive, not illustrative.
Response: We are not adopting the commenter's suggestion. Although
we believe we have listed all of the reasons that would motivate the
Administrator to take review, we nevertheless have chosen not to make
the list exclusive. This is because there can be more reasons than we
have listed, and also because we do not want to encourage any
litigation on whether the reason given by the Administrator for taking
review in any given case actually fits within the criteria specified.
By making the list of reasons for review illustrative and not
exclusive, the parties may have greater opportunity to seek
Administrator review of Board decisions. This is a matter of
convenience to providers, as it would allow them to appeal to the
Administrator, rather than having to file a lawsuit, and is more than a
convenience to the intermediaries, as the intermediaries may not appeal
to court an unfavorable Board decision that becomes the final decision
of the Secretary because the Administrator did not take review.
Comment: Several commenters stated that, regarding the proposal
that the Administrator be able to include or exclude evidence that was
excluded or included by the Board, the Administrator should only be
able to rule on the record, because it is the record on which the Board
based its decision, and it is the only thing a court may use to
overturn a Board or Administrator decision.
Response: We believe it is appropriate that, as the Secretary's
designee, the Administrator should have the final
[[Page 30230]]
administrative say as to whether the Board admitted evidence presented
to it that it should have excluded, or excluded evidence presented to
it that it should have admitted, or that the record before the Board
was incomplete and should be supplemented on remand. Notwithstanding
the commenters' assertions, we believe that our proposal is consistent
with the authority courts have in reviewing administrative agency
decisions, including decisions of the Board or the Administrator.
U. Judicial Review (Sec. 405.1877)
In the proposed rule, we sought to clarify the existing procedures
for timely obtaining judicial review of a Board or Administrator
decision. In particular, we proposed to clarify that a provider is not
required to seek Administrator review in order to obtain judicial
review. In the final rule, we have made certain technical changes to
the proposed text, including clarifying language in Sec.
405.1877(c)(3). We have also reorganized proposed Sec. 405.1877(g)(2)
and Sec. 405.1877(g)(3) by reversing their order.
Comment: One commenter agreed with the proposal to clarify that,
when the Administrator notifies the parties that he will review a Board
decision, and does not render a decision within the 60-day period for
review, the provider has 60 days from the end of the Administrator
review period to file an action for judicial review.
Response: We are adopting the proposal without change. We believe
that the clarification will assist providers in understanding the time
period for filing for judicial review in this situation.
V. Reopening Procedures (Sec. 405.1885 through Sec. 405.1889)
Reopening procedures are authorized specifically by our
regulations, based on the Secretary's general rulemaking authority in
sections 1102(a) and 1871(a) of the Act. The following is a non-
exhaustive list of matters that we sought to clarify and revise in the
proposed rule:
CMS retains the ultimate authority as to whether an
intermediary may or may not reopen a matter.
A change in legal interpretation or policy by CMS in a
regulation, CMS Ruling, or CMS general instruction (whether self-
directed or influenced by a court decision) is not a basis for
reopening a determination.
CMS may direct an intermediary to reopen a determination
in order to implement a final agency decision, a final court judgment,
or an agreement to settle an administrative appeal or a lawsuit.
A decision whether to reopen or not to reopen a
determination is not subject to further administrative review or
judicial review.
For own motion reopenings, the notice of reopening must be
mailed no later than 3 years after the date of the determination.
In cases not involving an allegation of fraud, a
provider's request for reopening must be received no later than 3 years
after the date of the determination; however, the intermediary or
reviewing entity may issue the notice of reopening within a reasonable
time after the expiration of the 3-year period.
A final determination may not be reopened after the 3-year
period, except where the determination was procured by fraud or similar
fault.
An intermediary may reopen a determination that is pending
on appeal before the Board or the Administrator; the intermediary may
also reopen a determination for which no appeal has been taken, but for
which the time to appeal to the Board has not yet expired.
An intermediary or reviewing entity is obliged to provide
written notice of the reopening, allow the parties an opportunity to
present additional evidence, and notify the parties at the conclusion
of the reopening of the results, including any revisions.
Any matter considered during the course of a reopening,
but not subsequently revised, is not appealable through any revised
determination issued after the reopening; as a corollary, the scope of
appeal of a revised determination is limited to the specific revisions
that were made in the revised determination.
We are adopting our proposals. We added clarifying language to
Sec. 405.1885(a) to emphasize that only the entity that made the
original determination or decision may conduct the reopening of the
determination or decision. We have also added clarifying language to
Sec. 405.1885(b)(2) to state that, if a request for reopening is made
timely, for example, shortly before the expiration of the 3-year period
specified therein, the request remains timely, notwithstanding that the
notice of reopening required by Sec. 405.1887 is issued after the
expiration of the 3-year period. We also clarified in Sec.
405.1885(b)(2) that the rules for the date of receipt of a reopening
request be consistent with our revised definition of ``date of
receipt'' at Sec. 405.1801(a). We have also added clarifying language
to Sec. 405.1885(c)(3) to provide that a matter may be reopened while
it is pending on appeal before the Administrator.
Comment: Two commenters suggested that, if items within the scope
of a reopening notice are not in fact revised, and therefore, are not
appealable (because the time to appeal the original NPR has expired),
providers will be forced to file concurrent appeal and reopening
requests in order to protect their appeal rights. Another commenter
noted that its intermediary had denied reopening requests solely on the
basis that an appeal existed for that year. The commenter wanted
intermediaries to be informed that an existing appeal before the Board
should not be a factor in considering whether or not to accept or deny
a reopening request for the same issues.
Response: Where an intermediary has issued a notice of reopening,
the provider should not assume that matters within the scope of the
reopening will in fact be revised. Therefore, to the extent that the
appeal period has not already run by the time that the provider
receives the reopening notice, the provider should file an appeal if it
wishes to preserve the right to appeal matters covered by the notice of
reopening. (If the time to appeal has already expired by the time the
provider receives the notice of reopening, the only way in which the
provider may appeal a matter addressed in the notice of reopening is if
the matter is specifically revised in a revised determination issued
after the notice of reopening.) With respect to the second commenter's
point, and with respect to reopenings that are within an intermediary's
discretion (that is, CMS has not directed the intermediary to reopen or
not to reopen), we agree that an intermediary should not, as a matter
of course, deny a request to reopen and revise an item simply because
the item is already the subject of an appeal. However, we do not agree
that the existence of an appeal or of an appeal right should never be
taken into consideration by an intermediary in deciding whether to
reopen. Rather, the intermediary should evaluate the totality of the
circumstances surrounding the reopening request and decide whether it
wishes to reopen.
Comment: Two commenters cited the 7th Circuit decision in Edgewater
Hospital v. Bowen, 857 F.2d 1123 (7th Cir. 1989), as justification for
their opposition to our proposal limiting a provider's right to appeal
matters stated in a notice of reopening, but not addressed in a revised
determination. One of the commenters agreed with a statement made by
the court that ``[i]t simply is nonsense to argue that the
[[Page 30231]]
only matters which the provider can appeal are those actually changed
by the intermediary.'' The other commenter suggested that we
erroneously misread the Edgewater decision, asserting that our attempt
to overrule binding judicial precedent was without legal authority.
Response: In the proposed rule (69 FR 35741 through 35742), we
explained that the Edgewater decision, in which the court held that the
provider was entitled to appeal issues that were within the scope of
the reopening notice, but were not subsequently revised in the revised
NPR, was based on the court's reading of the regulations. We also noted
that in Edgewater, the provider still had time to appeal the first NPR
at the time that the intermediary issued its notice of reopening. The
district court stated that the provider was unaware that the two cost
items that it appealed (from the revised NPR) were not going to be
revised until it received the revised NPR (at which time it was too
late to appeal the items from the original NPR). The court of appeals
indicated that its decision may have been based in part on fairness
concerns.
We believe that our existing regulations were clear that only if a
matter is actually revised as a result of a reopening may that matter
be appealed through an appeal of the revised determination.
Nonetheless, we believe that we have addressed the Edgewater court's
concerns in this final rule by: (1) The language in new Sec.
405.1887(b) and new Sec. 405.1889(b) (both of which explicitly state
that a matter that was a subject of a reopening notice but not
subsequently revised may not be appealed through an appeal of the
revised determination); and (2) putting providers on explicit notice
that if they wish to appeal an issue that is contained in an NPR, they
should file a timely appeal from that NPR and not assume that the issue
will be resolved in a revised NPR (even if the issue is addressed in a
notice of reopening). For the sake of clarity, wherever the proposed
text stated that a determination or decision was final and binding
unless appealed ``or reopened,'' we have revised the language to read
``or reopened and revised.''
As courts have noted, the reopening procedures are strictly a
creature of the Secretary's regulations, and are not required, or
specifically authorized, by statute. See HCA Health Servs. of Oklahoma
v. Shalala, 27 F.3d 614, 618 (D.C. Cir. 1994) and Albert Einstein Med.
Ctr. v. Sullivan, 830 F. Supp. 846, 851 (E.D. Pa. 1992), aff'd 6 F.3d
778 (3d Cir. 1993). We acknowledge that the Edgewater decision was
based in part on Bethesda and the statutory language. (See Edgewater,
857 F.2d at 1132-34.) We also note, however, that the Edgewater court's
reasoning was specifically rejected by the Ninth Circuit in French
Hospital Medical Center v. Shalala, 89 F.3d 1411, 1417 (1996), which
relied on the Medicare regulations. (Id. at 1420 n. 11.) In designing
the reopening procedures, we have chosen, as is our prerogative, to
extend appeal rights only to those matters actually revised following a
reopening. Although Edgewater stated that it was ``illogical'' that the
plaintiff in the case before it would wish to appeal only the matter
that was actually revised and not others that were contained in a
notice of reopening, 857 F.2d at 1137, the issue is not what a provider
wishes to appeal. Rather, the issue is what a provider should be
allowed to appeal. The statute gives a provider the right to appeal
matters covered by an initial intermediary determination if the amount
in controversy requirement is met and the provider timely requests a
Board hearing. If the provider does not pursue its statutory appeal
right with respect to a certain item, it loses its right to appeal that
item. That right may be resuscitated if that item is actually revised
in a revised determination, because, under our longstanding policy, the
revised determination is considered a separate and distinct
determination to which the intermediary and Board appeals procedures
(including the amount in controversy and timely request for hearing
requirements) apply. If an item is not actually revised, however, there
is no need to extend appeal rights to that matter simply because it was
mentioned in a notice of reopening. Courts that rejected providers'
arguments that the issuance of a revised determination subjected the
entire cost report to appeal did so on the basis that the statutory
deadline for appealing matters would be defeated. (See Anaheim Mem.
Hosp. v. Shalala, 130 F.23 845, 852 (9th Cir. 1997) and HCA Health
Services of Oklahoma v. Shalala, 27 F.3d at 620-21 (and cases cited
therein)). If we were to allow an appeal of a matter that is addressed
in a notice of reopening but not actually revised, there similarly
would be a frustration of the statutory deadline for appealing. A
matter that is addressed in a reopening, but not revised, remains just
as administratively final as an item not addressed in a notice of
reopening. To illustrate, suppose a provider claims a certain amount of
interest in connection with a borrowing, and the intermediary denies
the claim on the basis that the borrowing was unnecessary. If the
intermediary later issues a notice of reopening and the interest issue
is addressed in the notice of reopening, the intermediary does not send
a check to the provider along with the notice of reopening. To the
contrary, the claim for the interest remains denied until such time, if
ever, there is a revision to the intermediary's original adjustment.
Apart from traditional notions of administrative finality, there are
practical reasons for not structuring the reopening procedures to allow
an appeal of a matter that is addressed in a notice of reopening but
not subsequently revised. One court noted that allowing the entire cost
report to be subject to appeal based on a reopening notice would
discourage the Secretary from reopening determinations for fear of
being forced to endure a lengthy appeals process on extraneous issues.
Albert Einstein Med. Ctr. v. Sullivan, 830 F. Supp. at 851. Similarly,
if intermediaries knew that they would have to commit resources to
defending appeals on matters that are addressed in a notice of
reopening but not revised, they may be reluctant to broaden the scope
of the notice of reopening. In this regard, we note that there are time
limits on issuing a notice of reopening, and intermediaries should be
encouraged, rather than discouraged, to include matters in a notice of
reopening, even if a closer examination of the matters later may reveal
that no revision is appropriate, in order to preserve the opportunity
to make revisions.
Comment: Some commenters suggested that there are cases where the
intermediary denied valid reopening requests and believe CMS should
have the authority to ascertain whether the intermediary complied with
CMS policy.
Response: We retain the authority to direct intermediary
reopenings; therefore, we may require an intermediary to reopen a
determination of that intermediary where we believe it is appropriate
(and the time for reopening has not expired).
Comment: Several commenters objected to the proposal that an
intermediary denial of a reopening request would not be subject to
further review. In particular, commenters suggested that a provider
should be entitled to a Board hearing under Sec. 405.1835(a) if an
intermediary refuses to reopen when the rules and regulations require
the intermediary to do so. It was also suggested that intermediaries
have denied reopenings in the past because of personal bias.
Response: Our longstanding policy is that a ``decision'' to reopen
or not reopen is not subject to further
[[Page 30232]]
administrative or judicial review. (See Your Home Visiting Nurse
Services, Inc. v. Shalala, 525 U.S. 449 (1999).) We decline to change
our policy. With respect to the suggestion that Board review should be
available where an intermediary refuses to reopen, despite the fact
that the regulations require the intermediary to do so, the reopening
rules as amended require intermediaries to reopen only when directed by
CMS to do so. We do not anticipate that intermediaries will fail to
comply with a CMS directive to reopen. We have no direct or indirect
knowledge of any case where an intermediary denied a reopening due to
an alleged personal bias. We suggest that if a provider believes that
an intermediary has refused to reopen based on a bias against the
provider, the provider should contact CMS. We can investigate any
allegations made by a provider, determine if they are in fact
supportable and, if so, take appropriate action against the
intermediary. CMS could, if appropriate, also direct a reopening.
Comment: Two commenters suggested that because an intermediary must
provide written notice of its intention to reopen, it should provide
notice quickly; that is, within 30 days of the provider's reopening
request. One of these commenters also suggested that all reopened cost
reports should be settled within 180 days of receipt of the information
necessary to resolve the case.
Response: Although we encourage intermediaries to react to provider
requests for reopening as quickly as possible, it would be impractical
to have mandated timeframes regarding notices of intention to reopen.
Intermediaries have very large workloads and cannot be expected to give
immediate attention to each and every provider's written request for
reopening. Moreover, as is the case with many reopening requests, an
intermediary must often ask a provider to submit additional
documentation in support of the provider's allegations. Thus, we do not
believe that it is advisable to compel an intermediary to furnish an
expedited notice of reopening following a request made by a provider.
We expect that intermediaries, within a reasonable time, will either
issue a notice of reopening that meets the requirements of Sec.
405.1887, or notify the provider that the intermediary declines to
reopen.
Also, due to an intermediary's large workload of cases and the
highly technical nature of the cost report and audit process, we do not
believe it would be prudent to set timeframes on an intermediary for
the resolution of a reopened cost report. (The requirement that a
reopened cost report be resolved within a certain time may serve to
discourage an already overtaxed intermediary from granting a reopening
request.) Again, we note that intermediary reopenings are discretionary
and, therefore, a provider reopening request should not be equated with
a timely filed provider appeal request, where timeframes for action are
clearly established. We suggest that if a provider believes an
intermediary is purposely stalling or is acting in an improper manner
relative to a reopening request, the provider should contact CMS so
that we can determine if the activity is inappropriate and whether
action should be initiated against the intermediary.
Comment: One commenter opposed our proposal to allow an
intermediary to unilaterally reopen items on a cost report that are on
appeal before the Board. The commenter suggested that we provided no
rationale for this policy and cited longstanding Medicare policy that,
once the Board accepts jurisdiction over an appeal, only the Board
should be involved in making any further determinations on that
appealed issue. The commenter believes that if the intermediary reopens
while an appeal is pending before the Board, the Board could suspend
the case, which would result in a slowing down of the appeals process
and an exacerbation of the Board's backlog. The commenter recommended
that an intermediary should reopen an issue currently pending at the
Board only for purposes of implementing an administrative resolution of
that issue. Another commenter suggested that allowing the intermediary
to reopen an issue under appeal before the Board has the effect of
circumventing the Administrator review process. The commenter suggested
that if the intermediary reopens, the provider would drop the issue at
the Board and the Administrator would not have the opportunity to
adjudge the issue. Another commenter suggested that it is overly
burdensome to require an intermediary, during the course of an appeal,
to notify the Board that a reopening has occurred for an issue that is
under appeal. The commenter suggested that the provider is the proper
entity to notify the Board when an intermediary reopens during an
appeal.
Another commenter suggested deletion of the proposal that an
intermediary may reopen a determination for which the time to appeal to
the Board has not yet expired. This commenter believed the proposal
serves no purpose, because a cost report can be reopened anytime within
3 years of the date of the intermediary's determination.
Response: We disagree with the commenters that suggested that an
intermediary should not be permitted to reopen a determination that is
being appealed to the Board. We acknowledge that some intermediaries
previously would not reopen a determination during the pendency of an
appeal. However, we believe that reopening in this instance is
justified because of the large volume of work at the Board and the long
delays in having cases heard and resolved. Moreover, we are not aware
of any legal requirement that would prohibit an intermediary from
reopening in this situation. Although we do not expect intermediaries
to use this authority frequently, we believe that an intermediary's
ability to reopen a determination while a case is before the Board or
the Administrator may, in fact, hasten the resolution of the case. We
therefore disagree with the commenter that suggested that the appeals
process would necessarily be slowed if the intermediary reopened prior
to the case being heard. In fact, the reopening could produce a
complete resolution of one or all of the issues before the Board or the
Administrator.
We disagree with the commenter that suggested that a reopening by
an intermediary while a case is pending before the Board would
effectively circumvent the Administrator review process. First, the
reopening could very well be favorable to a provider, in which case the
provider would have no desire to seek Administrator review. Second, we
note that any revision to a determination following a reopening may
(depending on the amount in controversy remaining) trigger new appeal
rights for a provider regarding the revision. If a provider elects to
appeal a revised determination following a reopening, the appealed
issue(s) may ultimately return to the Board and the Administrator for
resolution.
We also disagree with the commenter that suggested that a provider,
rather than an intermediary, is the proper party to notify the Board
when the intermediary reopens during the course of a Board appeal.
Regardless of any possible administrative burden, because the
intermediary is the party that initiates a reopening, we believe the
intermediary has an affirmative duty to notify not only the provider of
the reopening, but also the reviewing entity.
Finally, we disagree with the commenter that suggested that we
delete proposed Sec. 405.1885(c)(4), which permits CMS or an
intermediary to reopen a determination for which the
[[Page 30233]]
time to appeal to the Board has not expired and no appeal has been
filed. Although the commenter is correct that a cost report can be
reopened anytime within 3 years of the date of the determination, our
previous policy was unclear as to whether an intermediary could indeed
reopen during the appeals period timeframe. Therefore, we believed a
clarification was needed to inform the intermediaries that they have
the authority to reopen a determination in the appeal period following
the issuance of the determination.
Comment: One commenter suggested that an intermediary should be
allowed to reopen a determination that is pending on appeal before the
Administrator.
Response: The preamble to the proposed rule stated specifically
that the intermediary had such authority (69 FR 35741). We have made
corresponding changes to the regulations text at Sec. 405.1885(c)(3)
to make clear that a reopening may also be initiated while a case is on
appeal before the Administrator.
Comment: One commenter noted that the proposed regulations text at
Sec. 405.1885(b)(3) states that ``no determination may be reopened
after the 3-year period,'' unless fraud or similar fault is involved.
The commenter suggested that the text does not comport with the
preamble comments which permit the intermediary to reopen after the 3-
year period if the request for reopening is received by the
intermediary towards the end of the 3-year period. Another commenter
fully supported our proposal clarifying that a provider's request to
reopen is timely even if received by the intermediary near the end of
the 3-year deadline.
Response: We did not include regulations text language that would
permit expressly an intermediary to issue a notice of reopening after
the expiration of the 3-year reopening period when the request for
reopening is received shortly before the expiration of the 3-year
period. Accordingly, we are modifying language at Sec. 405.1885(b)(2)
to comport the text of the regulations with our proposed policy.
Comment: A commenter suggested that we should define ``fraud or
similar fault,'' because it can be interpreted in many different ways.
The commenter suggested that ``fraud'' should be defined as an
intentional deception harming the government and resulting in a
criminal conviction. ``Similar fault'' should be defined as an
intentional deception harming the government and resulting in a
judgment in a civil proceeding.
Response: We disagree that we need to define ``fraud or similar
fault'' so that an intermediary will be able to better ascertain
whether a determination may be reopened after the expiration of the 3-
year reopening period. The term ``fraud or similar fault'' was inserted
as original language in our reopening regulations, and we are not aware
that intermediaries have had any problem in interpreting its meaning.
Without defining the term in regulation, we note that when the
intermediary invokes ``fraud'' as the reason for reopening beyond the
3-year period, the intermediary has concluded that the determination
under review was procured by: (1) An intentionally false oral or
written representation of a matter or fact; or (2) by concealment of a
matter that should have been disclosed. On the other hand, ``similar
fault'' covers determinations that do not rise to the level of fraud.
For instance, an intermediary could find that a provider received money
that it knew or reasonably should have known it was not entitled to
retain.
Comment: A commenter suggested that a provider not be allowed to
add issues to a reopening request after the 3-year period has expired.
Response: We note that current Medicare policy prohibits a provider
from adding issues to a reopening request after the 3-year period has
expired. Reopenings are issue specific; therefore, if a provider
receives an NPR that pertains to issues A and B, and it requests a
reopening on issue A within the 3-year limit, if it desires the
intermediary to reopen issue B, it must also request a reopening of
that issue within the 3-year period. Requesting a reopening for one
issue does not, whether the intermediary is considering the request,
has granted the request, or has issued a revised determination, toll
the time for requesting a reopening for any other issue.
Comment: A commenter suggested that a provider would be required
only to have ``reasonable'' accompanying documentation in support of a
request for reopening, so that the intermediary, after the 3-year
period has expired, could not deny the request due to insufficient
support. According to the commenter, the intermediary should also be
afforded a specific amount of time either to request additional
documentation from the provider or to decide whether it wishes to
reopen.
Response: We are not prescribing by regulation any particular
documentation or evidence that needs to accompany a reopening request.
Therefore, any request that is received by the intermediary within the
applicable 3-year period and puts the intermediary on fair notice as to
the matter or matters for which the provider is seeking reopening
(including identifying the determination at issue) should satisfy the
minimum requirements for requesting a reopening. Because it is within
the intermediary's discretion whether to grant a request to reopen,
however, a provider should strive to present the best case possible in
support of its request to reopen, which may necessitate, in some cases,
sending documentation or other evidence to the intermediary. Because of
the large volume of work that the intermediaries process, we decline to
impose specific timeframes on the intermediaries for the resolution of
provider reopening requests.
Comment: One commenter wanted to know whether, if an intermediary
reopens and revises a particular issue on a cost report, that issue
would be subject to another 3-year reopening period.
Response: If an intermediary reopens and revises an issue in a cost
reporting year, the revision may be appealed in accordance with Sec.
405.1889. Moreover, a new 3-year reopening period would apply to the
revised issue. Any issue not revised following a reopening does not
carry with it any further appeal rights or a new reopening period with
regard to that issue.
Comment: One commenter suggested that the reason that issues are
added to Board cases (subsequent to the initial request for hearing) is
that the reopening provisions have not been fairly applied in the past.
The commenter suggested that the proposed rule reduces the amount of
discretion intermediaries have in granting reopenings by prohibiting
intermediaries from reopening issues based on a change in legal
interpretation or policies.
Response: We disagree with the commenter. We believe that the
reopening process is fair. We acknowledge that, because of the wide
discretion intermediaries have in deciding whether to reopen or not to
reopen, one intermediary may decide differently on a given provider
reopening request than another intermediary would based on similar
facts. Because reopenings are discretionary, rather than rely upon a
reopening request being granted, providers should preserve their appeal
rights by including in their request for hearing all issues that they
believe were wrongly decided. Finally, we note that, as explained in
the August 1, 2002 final rule (67 FR 50096), it has always been
Medicare's policy to prohibit intermediaries from reopening based on
[[Page 30234]]
a change in legal interpretation or policy.
Comment: One commenter suggested that we incorrectly cited to two
court decisions (Foothill Presbyterian Hospital v. Shalala, 152 F.3d
1132 (9th Cir. 1998) and HCA Health Services of Oklahoma, Inc. v.
Shalala, 27 F.3d 614 (D.C. Cir. 1994)) when we proposed that the scope
of appeal of a revised determination is limited to the specific
revisions that were made in the determination. The commenter suggested
that we are improperly attempting to alter through regulations the
scope of the Board's jurisdiction, and that the Board is clearly able
to define its own scope of jurisdiction, without interference by CMS.
Response: We disagree with the commenter. Our longstanding
reopening policy, as contained in the regulations (that were, in fact,
published prior to the formation of the Board) (see Sec. 405.1889),
specifies that the scope of appeal of a revised determination is
limited to the specific revisions that were made in the revised
determination. We cited the cases of Foothill Presbyterian Hospital v.
Shalala and HCA Health Services of Oklahoma, Inc. v. Shalala as
examples of court decisions that agreed that the scope of a provider's
appeal of a revised determination is limited to the issues that were
specifically revised. (We note that in those cases, the courts were not
presented with the factual situation in which the provider was
attempting to appeal, through an appeal of a revised NPR, a matter that
was addressed in a reopening notice but not subsequently revised.) The
Board has jurisdiction only over final determinations made by an
intermediary or the Secretary, and only matters specifically revised
are part of a final determination.
Comment: One commenter noted that there were no deadlines imposed
on intermediaries to process reopening requests and issue revised
determinations. The commenter suggested that it is unreasonable to have
reopenings pending for more than a year, and recommended that we
require intermediaries to complete their actions within 1 year of the
date of the notice of reopening.
Response: As we stated previously, it would be inappropriate for us
to require intermediaries to resolve reopening requests under strict
time constraints. We cannot accurately gauge intermediary workloads
(reopening requests comprise only a fraction of the workload) and,
therefore, we cannot mandate specific timeframes for intermediaries in
their processing of provider reopening requests.
W. Three Additional Proposals Under Consideration
In the proposed rule, we stated that we were considering amending
the regulations on three matters that did not surface until very late
in the development of the rule. They are as follows:
An ex parte contact with a Board staff member concerning a
procedural matter in a case should not be considered a prohibited ex
parte communication.
Upon receipt of a credible allegation that a party's
counsel has a conflict of interest in the party's representation, the
Board would be able to order the party to show cause why the case
should not be dismissed or why other appropriate action should not be
taken.
Where an intermediary denies reimbursement for a claimed
item without auditing the reimbursement effect of that claim, and the
intermediary's denial is reversed by the Board, the Administrator, or a
court (making the decision final and non-appealable), we may require
the intermediary to determine the reimbursement effect of the claim
prior to payment.
We are adopting the proposals. Specifically, we have added Sec.
405.1868(f) to state that ex parte communications with Board staff
concerning procedural matters are not prohibited. We added Sec.
405.1868(g) to provide that upon receipt of a credible allegation that
a party's representative has divulged to that party or to the Board
information that was obtained during the course of the representative's
relationship with an opposing party and that was intended by that party
to be kept confidential, the Board will investigate the allegation.
Where the Board determines that it is appropriate to do so, it may take
remedial action against the party or the representative (such as
prohibiting the representative from appearing before it, excluding such
information from the record, or if the overall fairness of the hearing
has been compromised, dismissing the case). We amended Sec.
405.1803(d) to state that CMS may require the intermediary to audit any
item at issue in an appeal or a civil action before any revised
intermediary determination or additional Medicare payment, recoupment,
or offset may be determined for an item under paragraph (d)(2) of that
section. We added Sec. 405.1831(e) and Sec. 405.1871(b)(4), and
amended Sec. 405.1875(f)(5), to provide that, where the intermediary's
denial of the relief that the provider seeks before the intermediary
hearing officer(s), the Board or the Administrator was based on
procedural grounds (for example, the alleged failure of the provider to
satisfy a time limit) or was based on the alleged failure to supply
adequate documentation to support the provider's claim, and the
reviewing entity rules that the basis of the intermediary's denial is
invalid, the reviewing entity will remand to the intermediary for the
intermediary to make a determination on the merits of the provider's
claim.
Comment: In response to our proposal to explicitly state that ex
parte communications with Board staff concerning procedural matters are
not prohibited ex parte communications, we received one comment, which
was in favor of its adoption.
Response: We are adopting the proposal as new Sec. 405.1868(f).
Although ex parte communications concerning procedural matters are not
prohibited, we strongly encourage parties to avoid them wherever
possible. That is, a party should strive to copy the other party(ies)
on any written correspondence with Board staff, and, where oral
communication with Board staff is to take place, to include the other
party(ies) (for example, joining them in a conference call), or, where
it is not practical to do so, immediately convey the substance of the
oral conversation to the other party(ies).
Comment: We received two comments on our proposal to give the Board
the authority to order a party to show cause why it should not dismiss
an appeal or take other action where the Board has credible evidence
that the party's counsel may have a conflict of interest. One commenter
was in favor of the proposal, whereas the second commenter stated that
there was no legitimate basis for dismissing a provider's appeal due to
a potential or even actual conflict on the part of the provider's
representative, and the Board would have no legal authority to take
punitive action against the provider. In addition, the latter commenter
stated that the suggestion in the proposal that a conflict arose from
any use of information obtained from another party while in that
party's employ is overbroad and inappropriate because it fails to
consider circumstances in which the information was not, or was not
intended to be kept confidential, or in which disclosure was expressly
permitted by the party from whom the information was obtained.
Response: Our proposal stemmed from our recognition that, not
infrequently, persons well-versed in Medicare reimbursement may switch
from being a provider representative to
[[Page 30235]]
an intermediary representative, or vice versa. In that situation, it
would be inappropriate for a representative to use any confidential
information obtained during the course of his or her former employment.
By ``confidential information,'' we mean information that the
representative is not authorized to disclose. We disagree that the
Board would not have the authority to dismiss an appeal in a case in
which it determines that the provider representative has a conflict of
interest. The Board historically has had plenary power to dismiss
appeals, even in the absence of a regulation so authorizing, for
violation of procedural rules, such as the time in which to file a
position paper. (See, for example, Novacare, Inc. v. Thompson, 357 F.
Supp. 2d 268 (D.D.C. 2005)). We believe that we have the authority to
allow the Board to dismiss an appeal, if the overall fairness of the
hearing has been compromised, or take other appropriate action, based
upon a determination by the Board that a provider representative or an
intermediary representative has engaged in misconduct. We have adopted
our proposal as new Sec. 405.1868(g).
Comment: We received six comments on our third additional proposal.
We received two comments on our specific proposal that, where an
intermediary denies reimbursement without auditing the effect of the
denial, and that determination is later reversed by a final decision of
the Board, the Administrator or a court, CMS may require the
intermediary to determine the reimbursement effect of the claim prior
to payment. We noted that this proposal was similar to our proposal for
auditing self-disallowed costs that are ultimately allowed. We received
one comment in favor of this proposal and one comment questioning the
scope of the audit. The latter commenter asked in particular what the
scope of the audit would be in the example cited in the proposed rule
concerning an exception to a provider's ESRD payment rate. The same
commenter also asked what the scope of an audit would be in the case in
which a provider successfully appeals the issue of whether Medicaid
eligible days should be included in the numerator of the Medicaid
fraction component of the DSH calculation. That is, would the scope of
the audit be restricted to only the Medicaid eligible days issue, or
would the intermediary be permitted to look at other potential DSH
issues such as total days?
Response: We are adopting this part of the proposal at Sec.
405.1803(d)(3). The scope of the audit will be determined by CMS (in
accordance with the decision of the reviewing entity) and will be based
on the particular issue(s) before the reviewing entity or the court.
The purpose of the audit will be to determine the reimbursement impact
of the issue(s) decided by the reviewing entity or court; the purpose
is not to make additional adjustments or to reach other issues that
were not appealed by the provider.
Comment: We received four comments on our related proposal that,
where an intermediary or CMS determines that reimbursement for an item
should be disallowed on one basis and that determination is later
reversed, the intermediary should then have the opportunity to
determine whether reimbursement should be denied for any other reason.
We stated that it is potentially a waste of resources for a decision
maker to consider all possible reasons why an item or request (for
example, a provider's request for an exception to its ESRD payment
rate) would not be allowed where the intermediary has a good faith
belief that its determination is correct, and given that the
determination may never be challenged or, if challenged, may be upheld.
One commenter stated that this proposal, along with the greater body of
proposed amendments, is designed to have a chilling effect on the
willingness and capacity of providers to appeal legitimate concerns.
Another commenter stated that providers expend great resources in
preparing for an appeal, and that allowing intermediaries to create new
arguments, even after a decision from the Board, would simply lead
providers to forego meritorious appeals simply because the intermediary
had greater resources than the provider. The appeals process would be
futile if a provider could not ever obtain final relief due to the
intermediary's repeated use of delay tactics. The third commenter was
concerned that this proposal, if adopted, could be interpreted to allow
CMS or the intermediary to re-challenge an issue following a Board
decision, as long as the basis for the challenge was not originally
raised. All issues related to a dispute should be considered in the
appeal at the same time. The fourth commenter stated that the
intermediary has full opportunity to raise whatever objections it has,
with respect to a claimed cost, in connection with its audit and review
of the provider's submitted cost report. In the event of an appeal, the
intermediary has another opportunity to change or supplement its
position in proceedings before the Board. The intermediary should not
have a third or potentially endless opportunity, even after a final
administrative or judicial decision on an appeal, to deny payment for
reasons not raised before and outside of the usual 3-year reopening
period. According to the commenter, this proposal is grossly unfair to
providers, particularly in view of the fact that CMS holds the amount
in controversy from the time an intermediary effects a disallowance
until an appeal is resolved, and is contrary to the Secretary's
purported concern about the backlog of pending appeals.
Response: We agree that intermediaries should not be able to delay
indefinitely the resolution of an issue on appeal by making an endless
series of objections. Our proposal was not designed to prolong
unnecessarily cases before the Board or to discourage providers from
pursuing appeals. Rather, it was intended to address the difficulties
that intermediaries and CMS face in allocating a finite amount of
resources among their many responsibilities. We continue to believe
that, in the situation in which an intermediary makes a good faith
determination that the provider is not entitled to the relief it seeks
because it has failed to satisfy a condition that is a necessary
prerequisite to that relief, it makes little sense for the intermediary
to devote its resources to exploring whether the provider meets other
necessary conditions for the relief it seeks. For example, if an
intermediary determines that a provider is not entitled to claim an
item because it failed to meet a statutory or regulatory deadline, the
intermediary should not have to spend resources in determining whether
the provider met the substantive requirements for entitlement to the
item, to guard against the possibility that a court may declare the
denial invalid. (Our proposal was motivated in part by the actual
situation in which an intermediary disallowed a provider's claim for a
loss on depreciation because the underlying transaction took place
after December 1, 1997. The provider subsequently argued that the
transaction took place prior to December 1, 1997, due to a special law
enacted by the State legislature in 1998 to address specifically the
transaction at issue, and also argued that our regulation interpreting
the statute as preventing claims for losses on depreciation for
transactions that occurred on or after December 1, 1997 was invalid.
The provider indicated that it would argue to a court that, if it was
successful in its claim that the transaction was timely, the
intermediary should be prevented from arguing that the provider did not
satisfy the
[[Page 30236]]
substantive requirements for claiming a loss on depreciation. The claim
at issue involved approximately $30 million in Medicare reimbursement.)
Likewise, if an intermediary determines that a provider has not met a
clearly prescribed documentation requirement, and the Board agrees, but
the provider is successful in convincing the Administrator or a court
to overturn the Board's decision, the provider should not simply be
awarded the reimbursement without the intermediary having the
opportunity to determine whether the provider was entitled to it on the
merits. We are adopting the proposal, but are limiting its
applicability to the situation in which the intermediary makes an
adjustment on the cost report, or otherwise denies the relief the
provider seeks, for procedural reasons (for example, the alleged
failure to meet a deadline) or lack of documentation. Where the
reviewing entity disagrees with the basis for the denial, it must
remand the case to the intermediary for a determination on the merits.
We are adding new paragraph (e) to Sec. 405.1831 and new paragraph
(b)(4) to Sec. 405.1871 and are amending Sec. 405.1875(f)(5) to
effectuate the finalized proposal.
X. Technical Revisions
We proposed certain technical revisions to the following sections:
Sec. 413.30(c)(1), Sec. 413.30(c)(2), Sec. 413.40(e)(5), Sec.
413.64(j)(1), Sec. 417.576, and Sec. 417.810. We received no comments
on our proposed technical revisions and are adopting them as proposed.
We note that we inadvertently failed to include regulations text for
our proposed revision to Sec. 413.30(c)(2) and have corrected that
omission in this final rule.
Y. Effective Date
This section is new. We proposed no specific effective date, but
two commenters made suggestions for an effective date.
Comment: One commenter said that the effective date for the final
rule should be for cost reporting periods beginning on or after at
least 3 months after the rule is published in the Federal Register. In
the alternative, the final rule should be effective with respect to
cost reports, reopenings, and appeals filed, requested, or issued on or
after at least 9 months after the rule is published in the Federal
Register. Providers need time to put into effect, digest, and react to
the massive changes in approach set forth in this final rule. Another
commenter said that the final rule should not be applied retroactively
to pending appeals. Particularly troublesome would be an application of
the rules that would prohibit a provider from adding issues to an
appeal more than 60 days after the filing deadline for the appeal. A
retroactive application of the new 60-day limit would violate the due
process rights of providers whose otherwise valid claims would be
extinguished by a retroactive regulation. Even ``grandfathering''
current appeals would prejudice some providers. For example, if the
proposals on requesting an extension of the time to request a Board
hearing were effective upon the issuance of a final rule, providers
that have relied on their ability to receive good cause for an
extension to file an appeal may be barred from bringing the appeal if
it is determined that the amount of time that has passed since the
issuance of their NPR is longer than the ``reasonable time'' to file
the appeal. The final rule, if enacted as proposed, would violate a
provider's rights by changing the rules of procedure in the middle of
the appeal process. The commenter recommended that we issue an interim
final rule, which would not apply to currently pending appeals or to
currently existing claims that could give rise to an appeal. Use of an
interim final rule would allow the public an opportunity to comment on
an appropriate effective date.
Response: We do not agree that it is necessary to make the rule
effective for cost reporting periods beginning at some point after the
effective date of the rule, or that it is necessary to publish this
rule as an interim final rule or a final rule with comment. Although
the proposed rule was published on June 25, 2004, giving providers
adequate notice of the potential provisions of the final rule, we are
taking certain precautions to ensure that no provider is disadvantaged
by the timing of our procedural changes. First, the rule is generally
effective 90 days after publication in the Federal Register. Second, we
are providing special rules for adding issues to appeals pending as of
the effective date, and for requesting an extension of time, for good
cause, of the date to seek a Board or intermediary hearing officer
hearing. For appeals pending before an intermediary hearing officer(s)
or the Board prior to the effective date of this rule, a provider that
wishes to add one or more issues to its appeal must do so by the
expiration of the later of the following periods: (1) 60 days after the
expiration of the applicable 180-day period prescribed in Sec.
405.1811(a)(3) (for intermediary hearing officer hearings) or Sec.
405.1835(a)(3) (for Board hearings); or (2) 60 days after the effective
date of this rule. For appeals filed on or after the effective date of
this rule, the provisions of Sec. 405.1811(c) and Sec. 405.1835(c)
apply. With respect to requests for good cause extensions under Sec.
405.1813 (intermediary hearing officer hearings) and Sec. 405.1836
(Board hearings), providers that have not filed a timely appeal as of
the effective date of this rule and that wish to seek an extension of
the time limit for filing an appeal based on good cause, have an
additional 60 days after the effective date of this rule to seek an
extension without meeting the ``reasonable time'' requirements of
revised Sec. 405.1813 and Sec. 405.1836 (but must meet all other
requirements of those sections). Finally, and as noted above in section
II.D.1. of this final rule, the requirement that a provider must self-
disallow a specific item(s) by following the applicable procedures for
filing a cost report under protest, if the provider seeks payment that
it believes may not be allowable or may not be in accordance with
Medicare policy, is effective for cost reporting periods ending on or
after December 31, 2008.
Z. Children's Health Graduate Medical Education Program (CHGME)
This section is new. We made no proposals specific to appeals
involving the CHGME program, but received one comment.
Comment: One commenter noted that our proposed rule did not address
appeals that may be filed by children's hospitals under the CHGME
program. The commenter stated that any appeal under the CHGME program
must be placed on a ``fast track'' for the Board and the Health
Resources and Services Administration Administrator. The commenter
recommended that a specific set of regulations be created to
specifically address the CHGME program's unique timeframes for appeals.
Response: The CHGME payment program, as authorized by section 340E
of the Public Health Service Act, 42 U.S.C. 256e, provides funds to
children's hospitals to address disparity in the level of Federal
funding for children's hospitals that results from Medicare funding for
graduate medical education. Public Law 106-310 amended the CHGME
statute to extend the program through FY 2005. Under 42 U.S.C. 256e, a
children's hospital with a CHGME program is a hospital with a Medicare
provider agreement. Therefore, CHGME appeals are governed by Part 405,
Subpart J--Expedited Determinations and Reconsiderations of Provider
Service Terminations, and
[[Page 30237]]
Procedures for Inpatient Hospital Discharges. We do not believe it is
necessary at this time to issue regulations that are specific to the
CHGME program. Rather, the Board will schedule and hold hearings on any
CHGME appeals that may be filed in accordance with the requirements of
the regulations at 42 CFR Part 405 Subpart R--Provider Reimbursement
Determinations and Appeals. We note that the statute does not require
that CHGME appeals be placed on a ``fast track.'' However, the Board
gives expedited treatment to CHGME appeals, because payments to
children's hospitals are based on the hospital's share of the total
amount of direct and indirect Medicare education funding available in
any Federal fiscal year (FFY). This funding is part of a fixed payment
pool that is distributed prior to the close of each FFY. As a result,
appeals before the Board are heard on an accelerated hearing schedule
so that a provider's reimbursement is accurately determined prior to
the end of the FFY.
III. Provisions of the Final Rule
For purposes of this section, we are using the same lettering
sequence that appeared in the proposed rule and in section II in this
final rule. In each lettered section, we provide a listing of the
changes from the proposed rule that we have made in this final rule. A
detailed description of the proposals is contained in the proposed
rule, and a detailed explanation regarding the changes appears at
section II in the preamble to this final rule. Certain Minor technical
revisions may not be listed in this section III or discussed above in
section II.
B. Calculating Time Periods and Deadlines (Sec. 405.1801(a) and Sec.
405.1801(d))
Section 405.1801(a)--``Date of Receipt'' is revised.
Section 405.1801(d)--''Calculating time periods and
deadlines'' is revised.
D. Provider Hearing Rights (Sec. 405.1803(d), Sec. 405.1811, and
Sec. 405.1835))
Section 405.1811(a)(1)(ii) and Sec. 405.1835(a)(1)(ii)--
The provisions of these paragraphs are effective for cost reporting
periods that end on or after December 31, 2007.
Section 405.1811(b) and Sec. 405.1835(b)--These
paragraphs are clarified 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.
Section 405.1835(c)(3)--We have deleted the language in
this paragraph pertaining to a request to add issues following a
reopening.
Section 405.1811(b)(2)(i) and Sec. 405.1835(b)(2)(i)--We
have revised the hearing rights criteria in these paragraphs 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.
Section 405.1835(b)(4)--We are adding this paragraph to
require a provider under common ownership or control to furnish
additional information regarding its parent corporation and related
providers, and to provide: (1) A statement that no other provider to
which it is related has a pending hearing request or appeal on any of
the same issues contained in the provider's hearing request for the
relevant timeframe; or (2) a statement that 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).
Miscellaneous--We have rectified, where appropriate, minor
wording inconsistencies between Sec. 405.1811, which pertains to
intermediary hearings, and Sec. 405.1835, which pertains to Board
hearings.
E. Provider Requests for Good Cause Extension of Time Period for
Requesting Hearing (Sec. 405.1813 and Sec. 405.1836)
405.1813(e)(1)--We have made a technical change concerning
the component within CMS to which intermediary hearing officer
decisions should be sent.
Miscellaneous--We have made minor, non-substantive wording
changes to make Sec. 405.1813 and Sec. 405.1836 consistent, wherever
possible.
F. Intermediary Hearing Officer Jurisdiction (Sec. 405.1814)
Section 405.1814(a)(1)(ii)--We have amended Sec.
405.1814(a)(2) (and Sec. 405.1840(a)(2) relating to Board
jurisdiction) to explain that the preliminary determination of the
scope of the reviewing entity's jurisdiction consists of a review as to
whether the request for hearing was timely and whether the amount in
controversy has been met.
Miscellaneous--We made minor technical changes to other
portions of Sec. 405.1814 and conformed language in Sec. 405.1814 to
that in Sec. 405.1840, wherever possible.
G. CMS Reviewing Official Procedure (Sec. 405.1834)
Section 405.1834(d)(2)--This paragraph has been revised to
provide that the 60-day period for noticing review begins from the date
of the intermediary hearing officer decision.
Section 405.1834(e)(2)--We have clarified that the CMS
reviewing official's review of an intermediary hearing officer decision
would not be limited to a hearing on the written record if certain
criteria are met.
Miscellaneous--We have made technical changes to proposed
Sec. 405.1834(b), Sec. 405.1834(c) and Sec. 405.1834(e)(3)
concerning the component within CMS to which intermediary hearing
officer/CMS reviewing official decisions should be sent.
Section 405.1834(d)(1)--We clarified language pertaining
to own motion review by the Administrator.
Section 405.1834(e)(1)(i)--We have revised Sec.
405.1834(e)(1) to state that the CMS reviewing official must give great
weight to ``other interpretive rules, general statements of policy, and
rules of agency organization, procedure, or practice established by
CMS.''
H. Group Appeals (Sec. 405.1837)
Section 405.1837(b)(1)--This paragraph is revised to
clarify that commonly owned or operated providers must bring as a group
appeal a specific matter at issue that involves a question of fact or
interpretation of law, regulations, or CMS rulings that is common to
providers and that pertains to cost reporting periods ending in the
same calendar year.
Section 405.1837(b)(1) and Sec. 405.1837(b)(2)--We have
revised Sec. 405.1837(b)(1) (with respect to mandatory group appeals)
and Sec. 405.1837(b)(2) (with respect to optional group appeals) to
provide that one or more of the providers in the group may, as a matter
of right, appeal more than one cost reporting period for purposes of
meeting the $50,000 amount in controversy requirement, and, subject to
the Board's discretion, may appeal more than one cost reporting period
that is the subject of the group appeal for other purposes, such as
convenience. Illustrative examples follow the text of Sec.
405.1837(b)(1).
Section 405.1837(b)(3)--This paragraph is revised to
clarify that, whereas one or more commonly owned or operated providers
may initiate a mandatory group appeal, at least two providers are
required to initiate an optional group appeal.
[[Page 30238]]
Section 405.1837(c)(2)--This paragraph was revised to use
the term ``item'' rather than ``cost.''
Section 405.1837(c)(4)(ii), Sec. 405.1837(e)(2), Sec.
405.1837(d)(3), and Sec. 405.1837(d)(4)--We have revised Sec.
405.1837(c)(4)(ii) and Sec. 405.1837(e)(2), and have deleted Sec.
405.1837(d)(4) in order to permit the Board to make jurisdictional
determinations at any time. We have deleted proposed Sec.
405.1837(d)(3) to permit the Board to conduct various proceedings prior
to making jurisdictional findings.
Section 405.1837(e)(1) and Sec. 405.1837(e)(2)--We have
deleted certain language in proposed Sec. 405.1837(e)(2) and have
revised Sec. 405.1837(e)(1) to provide that, with respect to mandatory
group appeals, absent a notice from the providers that the group is
fully formed, the Board may issue an order requiring the providers to
demonstrate that there is at least one commonly owned or controlled
provider that is a potential addition to the group. With respect to
optional group appeals, we have revised Sec. 405.1837(e)(1) to provide
that, absent a notice from the providers that the group is fully
formed, the Board will issue an order that the group is fully formed or
will issue general instructions that set forth a schedule for the
closing of optional group appeals.
Section 405.1837(e)(2)--This paragraph is revised to
provide that the Board will not dismiss any group appeal hearing
request for failure to meet the amount in controversy requirement until
the Board has determined that the group is fully formed.
Section 405.1837(e)(5), Sec. 405.1837(e)(6)--We have
deleted language from proposed Sec. 405.1837(e)(5) that stated that
the Board must grant a request to join a group appeal if the request is
unopposed by the group members and is received by the Board prior to a
final decision by the Board on the appeal. We have revised this
paragraph to provide that, as a general rule, where a provider has
appealed an issue through a group appeal, it may not subsequently
request the Board to transfer that issue to a single provider appeal.
We provide an exception to the general rule in the case of a group
appeal that does not meet the jurisdictional requirements where the
Board determines that the requirements for a group appeal are not met.
We have moved the language in proposed Sec. 405.1837(e)(6), which
stated that a denial by the Board of a request to join a group is
without prejudice to the provider bringing a separate appeal, to Sec.
405.1837(e)(4). We have also incorporated proposed Sec. 405.1837(e)(7)
into Sec. 405.1837(e)(4).
I. Amount in Controversy (Sec. 405.1839)
Section 405.1839(c)(4)--We are adding this paragraph to
provide that, where a provider has requested a hearing before an
intermediary and the amount in controversy is subsequently determined
to be at least $10,000, the appeal will be transferred to the Board.
Where the amount in controversy changes to an amount less than the
minimum for a Board appeal due to the settlement, transfer or
abandonment of an issue, the Board retains jurisdiction. Where the
amount in controversy changes to an amount less than the minimum for a
Board appeal due to a more accurate assessment of the amount in
controversy, the Board will not retain jurisdiction.
J. Board Jurisdiction (Sec. 405.1840)
Section 405.1840(b)(1)--We have updated the regulatory
citations to the coverage appeals process and the Quality Improvement
Organization appeals process.
Section 405.1840(c)(2) and Sec. 405.1840(c)(3)--In
paragraph Sec. 405.1840(c)(2) we corrected a citation to a specific
paragraph of Sec. 405.1842, and in Sec. 405.1840(c)(3), we clarified
citations to specific paragraphs of Sec. 405.1875.
For a discussion of other changes we made to Sec.
405.1840(a)(2), please refer to section III.F. (Intermediary Hearing
Officer Jurisdiction) above.
K. Expedited Judicial Review (Sec. 405.1842)
Section 405.1842(e)(3)(ii)--We have revised this paragraph
to clarify that, upon receiving a request for EJR, the Board will have
30 days either to issue an EJR decision (if the request is complete) or
issue a written notice to the provider that the provider has not
submitted a complete request.
L. Parties to Proceedings in a Board Hearing or Intermediary Hearing
(Sec. 405.1843 and Sec. 405.1815)
Section 405.1843(a) and Sec. 405.1815--We have clarified
in Sec. 405.1843(a) and in Sec. 405.1815 that it is the Board or the
intermediary hearing officer (and not the intermediary) that determines
whether an entity is a related organization of the provider, and that
such a determination is made in accordance with the principles
enunciated in Sec. 413.17.
Section 405.1843(b)--We have clarified this paragraph to
state that, although the Board may call as a witness any employee or
officer of HHS or CMS having personal knowledge of the facts and the
issues in controversy in an appeal, the Department's Touhy regulations
at 45 CFR, Part 2 apply as to whether that employee or officer will
appear.
Section 405.1843(e) and Sec. 405.1843(f)--We have added
Sec. 405.1843(e) to provide that a non-party other than CMS may seek
leave from the Board to file amicus curiae briefing papers with the
Board. We have also added new Sec. 405.1843(f) to provide that the
Board may exclude from the record all or part of an amicus curiae
briefing paper.
M. Quorum Requirements (Sec. 405.1845)
Section 405.1845(d)(1) --We have clarified that a quorum
is not required to issue a dismissal decision, which reflects current
Board practice.
Section 405.1845(f)(2), Sec. 405.1845(g) and Sec.
405.1845(h)--We have made a technical change to proposed Sec.
405.1845(f)(2), and, for clarity, we have renumbered proposed Sec.
405.1845(f)(3) as Sec. 405.1845(g), and accordingly have renumbered
proposed Sec. 405.1845(g) as Sec. 405.1845(h).
N. Board Proceedings Prior to Hearing; Discovery in Board and
Intermediary Hearing Officer Proceedings (Sec. 405.1853 and Sec.
405.1821)
Section 405.1853(b)(2)--We removed the requirement that
the Board must find ``good cause'' for extending the deadline for
submitting a position paper.
Section 405.1853(b)(3)--We clarified that the ``time frame
to be decided by the Board,'' for purposes of submitting exhibits on
the merits of the provider's claim, may be through a schedule specific
to a given case or through general instructions. We also revised this
paragraph to provide that the general rule, that any supporting
exhibits regarding jurisdiction must accompany the position paper, is
subject to a Board order or general instructions to the contrary.
Section 405.1853(e)(2)(i)--This paragraph has been revised
to provide that neither CMS, the Secretary nor any Federal agency is
subject to the Board discovery process. A party may propound written
interrogatories only to another party, and not to a non-party.
Section 405.1853(e)(2)(ii)--This paragraph has been
revised to specifically reference Rule 32(a)(3) of the FRCP governing
the allowance of depositions in certain circumstances. We have also
revised this paragraph to provide that the Department's Touhy
regulations at 45 CFR, Part 2 (Testimony by employees and production of
[[Page 30239]]
documents in proceedings where the United States is not a party) will
apply as to whether an employee or officer of CMS or HHS will appear at
a deposition.
Section 405.1853(e)(3)(i)--This paragraph has been revised
to provide that (unless the time is extended by the Board), discovery
requests must be served no later than 120 days before the initially
scheduled starting date of the hearing.
Section 405.1853(e)(3)(ii)--This paragraph has been
revised to clarify language concerning when discovery may be
``conducted,'' and to provide that, in the absence of an order or
instruction by the Board setting a schedule for the holding of a
deposition, a party desiring to take a deposition shall give reasonable
notice in writing to the deponent of a scheduled deposition, and unless
the Board orders otherwise, the deposition may not be held any later
than 45 days before the initially scheduled starting date of the Board
hearing. Responses to interrogatories or requests for production of
documents must be served no later than 45 days before the initially
scheduled starting date of the Board hearing, unless the Board orders
otherwise. The requirement that the Board must find ``good cause'' to
extend the period for discovery has been deleted.
Section 405.1853(e)(3)(iv)--We have deleted the
requirement that the Board may extend the time to request, conduct, or
respond to discovery only upon a showing by the requesting party that
it was not dilatory or otherwise at fault.
Section 405.1853(e)(3)(v)--We have clarified that, upon
granting an extension request, the Board has the discretion to
reschedule the hearing date (without being required to find that such
rescheduling is ``necessary'').
Section 405.1853(e)(4), Sec. 405.1853(e)(5)(vii)--We have
added clarifying language at Sec. 405.1853(e)(5)(vii) to state that
nothing in Sec. 405.1853 authorizes the intermediary hearing officer
or Board to compel any action from the Secretary or CMS. Accordingly,
at Sec. 405.1853(e)(4), we have revised language that stated that a
non-party has the ``same'' rights as any party when responding to
discovery requests.
We have made corresponding changes throughout Sec.
405.1821, with respect to discovery in intermediary hearing
proceedings, where appropriate.
O. Subpoenas (Sec. 405.1857)
We are adding language to proposed Sec. 405.1857(a)(1)(i)
to clarify that the Board may not issue a subpoena to CMS or to the
Secretary (or to any Federal agency).
Section 405.1857(a)(2)(i)--We have revised the deadline by
which a request for a subpoena for discovery must be received by the
Board from 90 days before the date of the hearing to 120 days of the
initially scheduled starting date of the hearing.
Section 405.1857(a)(3)(i)--We have revised the deadline
for issuing a subpoena from 75 days before the date of the hearing to
90 days before the initially scheduled starting date of the Board
hearing.
Section 405.1857(a)(4)--We have eliminated the
subparagraphs to Sec. 405.1857(a)(4) and have revised this paragraph
to provide that the Board may extend the deadlines for requesting a
Board subpoena and for the Board to issue a subpoena without a finding
of ``good cause.'' We have also revised this paragraph to provide that,
if the Board grants an extension to the deadline for requesting a Board
subpoena or for the Board to issue a subpoena, the Board has the
discretion to reschedule the hearing date without a finding that it was
``necessary'' to do so.
Section 405.1857(b)(3)--We have clarified this paragraph
to state that the Board ``uses'' (rather than ``must comply'' with) the
FRCP and the Federal Rules of Evidence for guidance.
Section 405.1857(c)(3)--This section is redesignated from
proposed Sec. 405.1857(c)(4) and the references to HHS and CMS are
removed.
Section 405.1857(d)(2)(v)--With respect to the situation
where a party or non-party seeks immediate review of a Board subpoena,
and the Administrator may, but chooses not to, grant or take own motion
review of the subpoena, we have revised the language that stated ``the
Board's action stands'' to ``the Board's action is not immediately
reviewable.''
Q. Board Actions in Response To Failure To Follow Board Rules (Sec.
405.1868)
Section 405.1868(c)(1)--We have added this paragraph to
provide that, if the intermediary fails to meet any filing or
procedural deadlines or other Board requirements, the Board may issue a
decision based on the written record submitted to that point or take
other appropriate action.
Section 405.1868(c)--We have added language at the end of
this paragraph to clarify that the Board's authority, in the situation
where an intermediary fails to meet a filing deadline or other
requirement established by the Board, does not extend to, as a
sanction, reversing or modifying the intermediary or Secretary
determination or ruling against the intermediary on a disputed issue of
law or fact.
Miscellaneous--We have renumbered proposed Sec.
405.1868(d)(3) as Sec. 405.1868(e) and made corresponding numbering
changes. We have also added Sec. 405.1868(f) and Sec. 405.1868(g) as
a result of adopting the first and second of our ``Three Additional
Proposals Under Consideration'' (see section II.W. of this final rule).
R. Scope of Board's Authority in a Hearing Decision (Sec. 405.1869 and
Sec. 405.1829)
Section 405.1869(b)(2)(i), Sec. 405.1869(b)(2)(ii)--We
have deleted these paragraphs as superfluous.
S. Board Hearing Decision and Intermediary Hearing Decision (Sec.
405.1871, Sec. 405.1831 and Sec. 405.1833)
Section 405.1871(a)(4) and Sec. 405.1831(c)--We are
revising the proposed rule's reference to ``general CMS instructions''
to read ``other interpretive rules, general statements of policy, and
rules of agency organization, procedure or practice established by
CMS.''
Section 405.1831(d)--We have made a technical change
concerning the component within CMS where intermediary hearing officer
decisions should be sent.
T. Administrator Review (Sec. 405.1875)
Section 405.1875(b)(1) and Sec. 405.1875(b)(5)--We have
made a technical change, replacing ``general CMS instructions'' with
``other interpretive rules, general statements of policy, and rules of
agency organization, procedure, or practice established by CMS.''
Section 405.1875(e)(3)--We have clarified language to
state that the Administrator's decision ``may'' (instead of ``must'')
rely on certain authorities.
Miscellaneous--We have made certain organizational changes
to paragraphs Sec. 405.1875(c)(1) and Sec. 405.1875(c)(2), moving
material from Sec. 405.1875(c)(2) to Sec. 405.1875(c)(1), and have
made a number of minor wording changes.
U. Judicial Review (Sec. 405.1877)
Minor technical changes were made to this section.
V. Reopening Procedures (Sec. 405.1885 Through Sec. 405.1889)
Section 405.1885(a)--Clarifying language has been added to
emphasize that only the entity that made the
[[Page 30240]]
original determination or decision may conduct the reopening of the
determination or decision.
Section 405.1885(b)(2)--We added clarifying language to
state that if a request for reopening is made timely, the request
remains timely notwithstanding that the notice of reopening required by
Sec. 405.1887 is issued after the expiration of the 3-year period. We
also clarified that the calculation of the date of receipt for a
reopening request must be consistent with the definition of ``date of
receipt'' in Sec. 405.1801(a).
Section 405.1885(c)(3)--We added clarifying language to
provide that a matter may be reopened while it is pending on appeal
before the Administrator.
W. Three Additional Proposals Under Consideration
Section 405.1868(f)--We have added this section to address
ex parte communications with Board staff.
Section 405.1868(g)--We have added this section to provide
the Board with authority to address allegations that a party's
representative has divulged confidential information obtained during
the course of the representative's relationship with an opposing party.
Section 405.1803(d)--We have revised this section to state
that CMS may require the intermediary to audit any item at issue in an
appeal or a civil action before any revised intermediary determination
or additional payment, recoupment, or offset may be determined under
paragraph Sec. 405.1803(d)(2) of that section.
Section 405.1831(e) and Sec. 405.1871(b)(4)(added) Sec.
405.1875(f)(5)(amended)--We have added Sec. 405.1831(e) and Sec.
405.1871(b)(4), and have revised Sec. 405.1875(f)(5), to provide that,
where the intermediary's denial of relief was based on procedural
grounds or on the failure to supply adequate supporting documentation,
and the reviewing entity rules that the basis of the intermediary's
denial is invalid, the reviewing entity will remand to the intermediary
to make a determination on the merits.
X. Technical Revisions
Section 413.30(c)(2)--We have added language, that was
consistent with our proposal, but which was inadvertently omitted from
the proposed text, to state that the time required by the intermediary
to review a request for a SNF exception is considered good cause for
the SNF to request an intermediary hearing.
Y. Effective Date
The rule is generally effective 90 days after publication
in the Federal Register.
For appeals pending before an intermediary hearing
officer(s) or the Board prior to the effective date of this rule, a
provider that wishes to add one or more issues to its appeal must do so
by the expiration of the later of the following periods:
++ Sixty days after the expiration of the applicable 180-day period
prescribed in Sec. 405.1811(a)(3) (for intermediary hearing officer
hearings).
++ Section 405.1835(a)(3) (for Board hearings); or (ii) 60 days
after the effective date of this rule. For appeals filed on or after
the effective date of this rule, the provisions of Sec. 405.1811(c)
and Sec. 405.1835(c) apply.
With respect to requests for good cause extensions under
Sec. 405.1813 (intermediary hearing officer hearings) and Sec.
405.1836 (Board hearings), providers that have not filed a timely
appeal as of the effective date of this rule and that wish to seek an
extension of the time limit for filing an appeal based on good cause,
have an additional 60 days after the effective date of this rule to
seek an extension without meeting the ``reasonable time'' requirements
of revised Sec. 405.1813 and Sec. 405.1836 (but must meet all other
requirements of those sections).
As noted above in section II.D.1. of this final rule, the
requirement that a provider must self-disallow a specific item(s) by
following the applicable procedures for filing a cost report under
protest, if the provider seeks payment that it believes may not be
allowable or may not be in accordance with Medicare policy, is
effective for cost reporting periods ending on or after December 31,
2008.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act (PRA) of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA of 1995 requires that
we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
For the purpose of discussion, below is a summary of the
information collection requirements (ICRs) associated with the hearing
process. Because these collection requirements are collected in
accordance with an administration action or audit or both, they are not
subject to the PRA, as stipulated under 5 CFR 1320.4.
A. Information Collection Requirements (ICRs)--The Introduction Sec.
405.1801
Section 1801(b) states that in order to be paid for covered
services furnished to Medicare beneficiaries, a provider must file a
cost report with its intermediary as specified in Sec. 413.24(f). For
the purposes of this subpart, the term ``provider'' includes a
hospital, hospice program, critical access hospital, comprehensive
outpatient rehabilitation facility, renal dialysis facility, Federally
qualified health center, home health agency, rural health clinic,
skilled nursing facility, and any other entity included under the Act.
The burden associated with this requirement is the time and effort
associated with a provider completing and submitting a cost report.
While this requirement is subject to the PRA, it is currently approved
under the following OMB control numbers.
------------------------------------------------------------------------
Provider type OMB Control No. Expiration date
------------------------------------------------------------------------
Hospital............................ 0938-0050 05/31/2008
Hospice Program..................... 0938-0758 01/31/2008
Critical Access Hospital............ 0938-0050 05/31/2008
Comprehensive Outpatient 0938-0037 01/31/2008
Rehabilitation Facility............
Renal Dialysis Facility............. 0938-0236 **06/30/2007
Federally Qualified Health Center... 0938-0107 06/30/2008
[[Page 30241]]
Home Health Agency.................. 0938-0022 **04/30/2007
Rural Health Clinic................. 0938-0107 06/30/2008
Skilled Nursing Facility............ 0938-0463 **04/30/2007
------------------------------------------------------------------------
** We have initiated the OMB approval process to obtain reapproval of
the currently approved information collection request.
B. ICRs Regarding the Right to Intermediary Hearing; Contents of, and
Adding Issues to, Hearing Request Sec. 405.1811
This section outlines the criteria a provider must meet to request
an intermediary hearing. As stated in Sec. 405.1811(b), a provider's
request for an intermediary hearing must be submitted in writing to the
intermediary. The request must demonstrate that the provider meets all
of the requirements for an intermediary hearing, explain the
dissatisfaction for each item at issue, and contain a copy of the
intermediary or Secretary's determination under appeal.
In addition to the initial hearing request described in Sec.
405.1811(b), Sec. 405.1811(c) explains the criteria providers must
meet to add issues to a hearing request that has already been filed.
The specific Medicare payment issues must be submitted in writing to
the intermediary hearing officer. The request to add additional issues
to a hearing request must be received no later than 60 days after the
expiration date of the applicable 180-day time limit.
The burden associated with the requirements listed in both Sec.
405.1811(b) and Sec. 405.1811(c) is the time and effort associated
with drafting and submitting the written requests to the intermediary
hearing officer. While these requirements impose burden, we believe
they are exempt from the PRA as defined in 5 CFR 1320.4. Information
collected during the conduct of a criminal investigation or civil
action or during the conduct of an administrative action,
investigation, or audit involving an agency against specific
individuals or entities is not subject to the PRA.
C. ICRs Regarding Good Cause Extension of the Time Limit for Requesting
an Intermediary Hearing Sec. 405.1813
As stated in Sec. 405.1813(a)(3), an intermediary must dismiss any
hearing requests received after the 180-day time limit, except that the
hearing officer may extend the deadline if the provider demonstrates
good cause. A provider must explain, in writing, why it could not file
the hearing request in a timely manner.
The burden associated with this requirement is the time and effort
associated with drafting and submitting the written request for a
deadline extension. While this requirement imposes a burden, we believe
it is exempt from the PRA as defined in 5 CFR 1320.4. Information
collected during the conduct of a criminal investigation or civil
action or during the conduct of an administrative action,
investigation, or audit involving an agency against specific
individuals or entities is not subject to the PRA.
D. ICRs Regarding CMS Reviewing Official Procedure Sec. 405.1834
Section 405.1834(a) states that a provider, dissatisfied with a
final decision by the intermediary hearing officer(s), may request
further administrative review of the decision. Section 405.1834(c)
explains the submission criteria for such a request. The Office of
Hearings cannot receive the request later than 60-days after the
provider receives the final decision of the intermediary hearing
officer. The request must be in writing with an attached copy of the
intermediary hearing officer decision in question, and any additional
supporting information.
The burden associated with this requirement is the time and effort
associated with drafting the written request for further administrative
review, gathering the necessary supporting information, and submitting
the request to the Office of Hearings. While this requirement imposes
burden, we believe it is exempt from the PRA as defined in 5 CFR
1320.4. Information collected during the conduct of a criminal
investigation or civil action or during the conduct of an
administrative action, investigation, or audit involving an agency
against specific individuals or entities is not subject to the PRA.
E. ICRs Right to Board Hearing; Contents of, and Adding Issues to,
Hearing Request Sec. 405.1835
Section 405.1835(a) discusses the criteria a provider must meet to
request a Board hearing. Section 405.1835(b) states a provider's
request for a Board hearing must be submitted in writing to the Board.
In addition, Sec. 405.1835(b) outlines the required contents of the
written submission to the Board. The request must demonstrate that the
provider meets all of the requirements for a Board hearing, explain the
provider's dissatisfaction for each item at issue, and contain a copy
of the intermediary or Secretary's determination under appeal.
Section 405.1835(c) explains the criteria providers must meet to
add issues to a hearing request that has already been filed. The
specific Medicare payment issues must be submitted in writing to the
Board. The Board cannot receive the request to add additional issues to
a hearing request later than 60-days after the expiration date of the
applicable 180-day time limit.
The burden associated with the information collection requirements
listed in both Sec. 405.1835(b) and Sec. 405.1835(c) is the time and
effort required to draft and submit the written requests to the Board.
While these requirements impose burden, we believe they are exempt from
the PRA as defined in 5 CFR 1320.4. Information collected during the
conduct of a criminal investigation or civil action or during the
conduct of an administrative action, investigation, or audit involving
an agency against specific individuals or entities is not subject to
the PRA.
F. ICRs Regarding Good Cause Extension of Time Limit for Requesting a
Board Hearing Sec. 405.1836
As stated in Sec. 405.1836(a), the Board must dismiss any hearing
requests received after the 180-day time limit. However, the Board may
extend the deadline if the provider demonstrates good cause. A provider
must explain, in writing, why it could not file the hearing request in
a timely manner.
The burden associated with this requirement is the time and effort
necessary to draft and submit a written explanation showing good cause.
While this requirement imposes a burden, we believe it is exempt from
the PRA as defined in 5 CFR 1320.4. Information collected during the
conduct of a criminal investigation or civil action or during the
conduct of an administrative action, investigation, or audit involving
an agency against specific individuals or entities is not subject to
the PRA.
[[Page 30242]]
G. ICRs Regarding Group Appeals Sec. 405.1837
Providers have the right to a Board hearing as an individual or as
a part of a group appeal with other providers. Sections 405.1837(a)(1
through 3) list the eligibility criteria associated with submitting a
Board hearing request as part of a group appeal. Section 405.1837(b)
discusses the usage and filing of group appeals. Specifically, Sec.
405.1837(b)(1) states that two or more providers under common ownership
or control must bring a group appeal on an issue that is common to the
providers and for which there is an aggregate amount in controversy of
at least $50,000. Under Sec. 405.1837(b)(2), two or more providers not
under common ownership or control may bring a group appeal on an issue
involving at least $50,000. A written request for a Board hearing as a
group must be submitted in accordance with the criteria listed in Sec.
405.1837(c).
Section 405.1837(e)(2) explains that the Board may make
jurisdictional findings under Sec. 405.1840 at any time. This section
also explains that providers may request jurisdictional findings by
notifying the Board in writing. The written request must notify the
Board that the group appeal is fully formed or that the providers
believe they have satisfied all of the requirements for a group appeal
hearing request.
Section 405.1837(e)(4) states that a provider may submit a request
to the Board to join a group appeal. The request must be granted by the
Board unless it is opposed by any of the existing group members. In
addition, the provider must make the request prior to Board issuance of
one of the decisions specified in Sec. 405.1875(a)(2).
While all of the aforementioned requirements in Sec. 405.1837
impose burden, we believe they are exempt from the PRA as defined in 5
CFR 1320.4. Information collected during the conduct of a criminal
investigation or civil action or during the conduct of an
administrative action, investigation, or audit involving an agency
against specific individuals or entities is not subject to the PRA.
H. ICRs Regarding Amount in Controversy Sec. 405.1839
Section 405.1839(a) discusses the amount in controversy
requirements for single provider appeals. This requirement pertains to
both intermediary hearings and Board hearings. The provider is required
to demonstrate that if the appeal were successful, the provider's total
program reimbursement for each cost reporting period under appeal
increases by at least $1,000 but by less than $10,000 for an
intermediary hearing or by at least $10,000 for a Board appeal.
Similarly, Sec. 405.1839(b) explains that groups must satisfy the
amount in controversy requirement as well. The group must demonstrate
that in the event of a successful appeal, the total program
reimbursement for the cost reporting periods under appeal increases by
a minimum of $50,000.
All of the information collection requirements listed in Sec.
405.1839 are exempt from the PRA as defined in 5 CFR 1320.4. The
information collection is part of an administrative action. Information
collections conducted or sponsored during the conduct of a criminal or
civil action, or during the conduct of an administrative action,
investigation, or audit are not subject to the PRA.
I. ICRs Regarding Expedited Judicial Review Sec. 405.1842
The burden associated with this section is detailed in Sec.
405.1842(d). Providers have the right to request expedited judicial
review of a legal question relevant to a specific matter at issue in a
Board appeal. The Board must have jurisdiction to conduct a hearing on
the matter and must determine that it lacks the authority to decide a
legal question. Specifically, a provider must submit a request in
writing to the Board and to each party to the appeal. The request must
contain the information specified in Sec. 405.1842(d)(1) and Sec.
405.1842(d)(2).
The burden associated with this requirement is the time and effort
necessary for a provider to draft and submit the written request to the
Board and to each party to the appeal. While this requirement imposes a
burden, we believe it is exempt from the PRA as defined in 5 CFR
1320.4. Information collected during the conduct of a criminal
investigation or civil action or during the conduct of an
administrative action, investigation, or audit involving an agency
against specific individuals or entities is not subject to the PRA.
V. Regulatory Impact Statement
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA), September 16, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995, Public Law No. 104-4, and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any one year). This rule
does not reach the economic threshold and thus is not considered a
major rule.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations and government agencies. Most
hospitals and most other providers and suppliers are small entities,
either by nonprofit status or by having revenues of $6 million to $29
million in any one year. Individuals and States are not included in the
definition of a small entity. We are not preparing an analysis for the
RFA because we have determined, and we certify, that this rule will not
have a significant economic impact on a substantial number of small
entities. The only burden attached to this final rule is the
information collection burden associated with filing a request for an
intermediary or Board hearing. This proposed rule does not impose any
new paperwork burdens on providers. It will merely require providers to
prepare their hearing requests in a more expedited fashion. Moreover,
this final rule will lessen the time it takes small entities to pursue
appeals and receive decisions.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. We are not preparing
analyses for section 1102(b) of the Act because we have determined, and
we certify, that this rule would not have a significant impact on the
operations of a substantial number of small rural hospitals. Again, the
only impact on small rural hospitals would be the potential increase in
the amount of time a provider would need to file a request for an
intermediary or Board hearing. This final rule does not impose any new
paperwork burdens on providers. It merely proposes requiring providers
to prepare their hearing requests in a more expedited fashion.
[[Page 30243]]
Moreover, this final rule will lessen the time it takes rural hospitals
to pursue appeals and receive decisions.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any one year by
State, local, or tribal governments, in the aggregate, or by the
private sector, of $110 million. This rule will have no consequential
effect on the governments mentioned or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Because this regulation does not impose any costs on
State or local governments, the requirements of E.O. 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, X-rays.
42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 417
Administrative practice and procedure, Grant programs-health,
Health care, Health insurance, Health maintenance organizations (HMO),
Loan programs-health, Medicare, Reporting and recordkeeping
requirements.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR Chapter IV as set forth below:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
Subpart R--Provider Reimbursement Determinations and Appeals
0
1. The authority citation for part 405, subpart R continues to read as
follows:
Authority: Secs. 205, 1102, 1814(b), 1815(a), 1833, 1861(v),
1871, 1872, 1878, and 1886 of the Social Security Act (42 U.S.C.
405, 1302, 1395f(b), 1395g(a), 1395l, 1395x(v), 1395hh, 1395ii,
1395oo, and 1395ww).
0
2. Section 405.1801 is amended by--
0
A. In paragraph (a), removing `` 's '' from Administrator's in the term
``Administrator's review''.
0
B. In paragraph (a), removing the definition of ``date of filing'' and
``date of submission of materials.''
0
C. In paragraph (a), adding a definition for ``CMS reviewing
official.''
0
D. In paragraph (a), revising the definition for ``Date of receipt.''
0
E. In paragraph (a), adding the definitions of ``CMS reviewing official
procedure'', ``Intermediary hearing officer(s)'', and ``Reviewing
entity'' in alphabetical order.
0
E. Revising paragraph (b).
0
F. Adding a new paragraph (d).
The revisions and additions read as follows:
Sec. 405.1801 Introduction.
(a) Definitions. * * *
* * * * *
CMS reviewing official means the reviewing official provided for in
Sec. 405.1834.
CMS reviewing official procedure means the review provided for in
Sec. 405.1834.
* * * * *
Date of receipt means the date a document or other material is
received by either of the following:
(1) A party or an affected nonparty. A party or an affected
nonparty, such as CMS, involved in proceedings before a reviewing
entity.
(i) As applied to a party or an affected nonparty, the phrase
``date of receipt'' in this definition is synonymous with the term
``notice,'' as that term is used in section 1878 of the Act and in this
subpart.
(ii) For purposes of an intermediary hearing, if no intermediary
hearing officer is appointed (or none is currently presiding), the date
of receipt of materials sent to the intermediary hearing officer is
presumed to be the date that the intermediary stamps ``Received'' on
the materials.
(iii) The date of receipt by a party or affected nonparty of
documents involved in proceedings before a reviewing entity is presumed
to be 5 days after the date of issuance of an intermediary notice or a
reviewing entity document. This presumption, which is otherwise
conclusive, may be overcome if it is established by a preponderance of
the evidence that such materials were actually received on a later
date.
(2) A reviewing entity. For purposes of this definition, a
reviewing entity is deemed to include the Office of the Attorney
Advisor. The determination as to the date of receipt by the reviewing
entity to which the document or other material was submitted is final
and binding as to all parties to the appeal. The date of receipt of
documents by a reviewing entity is presumed to be the date--
(i) Of delivery where the document or material is transmitted by a
nationally-recognized next-day courier (such as the United States
Postal Service's Express Mail, Federal Express, UPS, DHL, etc.); or
(ii) Stamped ``Received'' by the reviewing entity on the document
or other submitted material (where a nationally-recognized next-day
courier is not employed). This presumption, which is otherwise
conclusive, may be overcome if it is established by clear and
convincing evidence that the document or other material was actually
received on a different date.
Intermediary hearing officer(s) means the hearing officer or panel
of hearing officers provided for in Sec. 405.1817.
Reviewing entity means the intermediary hearing officer(s), a CMS
reviewing official, the Board, or the Administrator.
(b) General rules. (1) Providers. In order to be paid for covered
services furnished to Medicare beneficiaries, a provider must file a
cost report with its intermediary as specified in Sec. 413.24(f) of
this chapter. For purposes of this subpart, the term ``provider''
includes a hospital (as described in part 482 of this chapter), hospice
program (as described in Sec. 418.3 of this chapter), critical access
hospital (CAH), comprehensive outpatient rehabilitation facility
(CORF), renal dialysis facility, Federally qualified health center
(FQHC), home health agency (HHA), rural health clinic (RHC), skilled
nursing facility (SNF), and any other entity included under the Act.
(FQHCs and RHCs are providers, for purposes of this subpart, effective
with cost reporting periods beginning on or after October 1, 1991).
(2) Other nonprovider entities participating in Medicare Part A.
(i) Providers of services, as well as, other entities (including, but
not limited to health maintenance organizations (HMOs) and competitive
medical plans (CMPs) (as described in Sec. 400.200 of this chapter))
may participate in the Medicare program, but do not qualify as
providers under the Act or this subpart.
(ii) Some of these non-provider entities are required to file
periodic cost reports and are paid on the basis of information
furnished in these reports. These non-provider entities may not obtain
an intermediary hearing or a
[[Page 30244]]
Board hearing under section 1878 of the Act or this subpart.
(iii) Some other hearing will be available to these nonprovider
entities, if the amount in controversy is at least $1,000.
(iv) For any nonprovider hearing, the procedural rules for a Board
hearing set forth in this subpart are applicable to the maximum extent
possible.
* * * * *
(d) Calculating time periods and deadlines. In computing any period
of time or deadline prescribed or allowed under this subpart or
authorized by a reviewing entity the following principles are
applicable:
(1) The day of the act, event, or default from which the designated
time period begins to run is not included.
(2) Each succeeding calendar day, including the last day, is
included in the designated time period, except that, in calculating a
designated period of time for an act by a reviewing entity, a day is
not included where the reviewing entity is unable to conduct business
in the usual manner due to extraordinary circumstances beyond its
control such as natural or other catastrophe, weather conditions, fire,
or furlough. In that case, the designated time period resumes when the
reviewing entity is again able to conduct business in the usual manner.
(3) If the last day of the designated time period is a Saturday, a
Sunday, a Federal legal holiday (as enumerated in Rule 6(a) of the
Federal Rules of Civil Procedure), or a day on which the reviewing
entity is unable to conduct business in the usual manner, the deadline
becomes the next day that is not one of the aforementioned days.
(4) For purposes of paragraph (d) of this section, the reviewing
entity is deemed to also include--
(i) The intermediary, if the intermediary hearing officer(s) is not
yet appointed (or none is currently presiding); and
(ii) The Office of the Attorney Advisor.
0
3. Section 405.1803 is amended by:
0
A. In the first sentence of paragraph (a) introductory text, remove the
citation ``(see Sec. 405.1835(b))'' and add ``(as described in Sec.
405.1835(a)(3)(ii))'' in its place.
0
B. In the second sentence of paragraph (b), remove the phrase ``after
the date of the notice.'' and add ``after the date of receipt of the
notice.'' in its place.
0
C. Adding new paragraph (d).
The addition reads as follows:
Sec. 405.1803 Intermediary determination and notice of amount of
program reimbursement.
* * * * *
(d) Effect of certain final agency decisions and final court
judgments; audits of self-disallowed and other items.
(1) This paragraph applies to the following administrative
decisions and court judgments:
(i) A final hearing decision by the intermediary (as described in
Sec. 405.1833 of this subpart) or the Board (as described in Sec.
405.1871(b) of this subpart).
(ii) A final decision by a CMS reviewing official (as described in
Sec. 405.1834(f)(1) of this subpart) or the Administrator (as
described in Sec. 405.1875(e)(4) of this subpart) following review of
a hearing decision by the intermediary or the Board, respectively.
(iii) A final, non-appealable judgment by a court on a Medicare
reimbursement issue that the court rendered in accordance with
jurisdiction under section 1878 of the Act (as described in Sec.
405.1842 and Sec. 405.1877 of this subpart).
(2) For any final agency decision or final court judgment specified
in paragraph (d)(1) of this section, the intermediary must promptly,
upon notification from CMS--
(i) Determine the effect of the final decision or judgment on the
intermediary determination for the cost reporting period at issue in
the decision or judgment; and
(ii) Issue any revised intermediary determination, and make any
additional program payment, or recoup or offset any program payment (as
described in Sec. 405.371 of this subpart), for the period that may be
necessary to implement the final decision or judgment on the specific
matters at issue in the decision or judgment.
(3) CMS may require the intermediary to audit any item, including
any self-disallowed item, at issue in an appeal or a civil action,
before any revised intermediary determination or additional Medicare
payment, recoupment, or offset may be determined for an item under
paragraph (d)(2) of this section.
(4) For any final settlement agreement, whether for an appeal to
the intermediary hearing officer(s) or the Board or for a civil action
before a court, the intermediary must implement the settlement
agreement in accordance with paragraphs (d)(2) and (d)(3) of this
section, unless a particular administrative or judicial settlement
agreement provides otherwise.
0
4. Section 405.1811 is revised to read as follows:
Sec. 405.1811 Right to intermediary hearing; contents of, and adding
issues to, hearing request.
(a) Criteria. A provider (but no other individual, entity, or
party) has a right to an intermediary hearing, as a single provider
appeal, for specific items claimed for a cost reporting period covered
by an intermediary or Secretary determination for the period, but only
if--
(1) The provider has preserved its right to claim dissatisfaction
with the amount of Medicare payment for the specific item(s) at issue,
by either--
(i) Including a claim for a specific item(s) on its cost report for
a period if the provider seeks payment that it believes to be in
accordance with Medicare policy; or
(ii) Effective with cost reporting periods that end on or after
December 31, 2008, self-disallowing a specific item(s) by following the
applicable procedures for filing a cost report under protest, 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)),
(2) The amount in controversy (as determined in accordance with
Sec. 405.1839 of this subpart) is at least $1,000 but less than
$10,000; and
(3) Unless the provider qualifies for a good cause extension under
Sec. 405.1813 of this subpart, the date of receipt by the intermediary
of the provider's hearing request must be--
(i) No later than 180 days after the date of receipt by the
provider of the intermediary or Secretary determination; or
(ii) When the intermediary determination is not issued (through no
fault of the provider) within 12 months of the date of receipt by the
intermediary of the provider's perfected cost report or amended cost
report (as specified in Sec. 413.24(f) of this chapter), no later than
180 days after the expiration of the 12-month period for issuance of
the intermediary determination. The date of receipt by the intermediary
of the provider's perfected cost report or amended cost report is
presumed to be the date the intermediary stamped ``Received'' unless it
is shown by a preponderance of the evidence that the intermediary
received the cost report on an earlier date.
(b) Contents of request for an intermediary hearing. The provider's
[[Page 30245]]
request for an intermediary hearing must be submitted in writing to the
intermediary, and the request must include the elements described in
paragraphs (b)(1) through (b)(3) of this section. If the provider
submits a hearing request that does not meet the requirements of
(b)(1), (b)(2), or (b)(3) of this section, the intermediary hearing
officer may dismiss with prejudice the appeal, or take any other
remedial action he or she considers appropriate.
(1) A demonstration that the provider satisfies the requirements
for an intermediary hearing as specified in paragraph (a) of this
section, including a specific identification of the intermediary or
Secretary determination under appeal.
(2) An explanation, for each specific item at issue (as described
in paragraph (a)(1) of this section), of the provider's dissatisfaction
with the intermediary or Secretary determination under appeal,
including an account of--
(i) Why the provider believes Medicare payment is incorrect for
each disputed item (or, where applicable, why the provider is unable to
determine whether Medicare payment is correct because it allegedly does
not have access to underlying information concerning the calculation of
its payment); and
(ii) How and why the provider believes Medicare payment should be
determined differently for each disputed item.
(iii) If the provider self-disallows a specific item, a description
of the nature and amount of each self-disallowed item and the
reimbursement sought for any item.
(3) A copy of the intermediary or Secretary determination under
appeal, and any other documentary evidence the provider considers
necessary to satisfy the hearing request requirements of paragraphs
(b)(1) and (b)(2) of this section.
(c) Adding issues to the hearing request. After filing a hearing
request in accordance with paragraphs (a) and (b) of this section, a
provider may add specific Medicare payment issues to the original
hearing request by submitting a written request to the intermediary
hearing officer, only if the following requirements are met:
(1) The request to add issues complies with the requirements of
paragraphs (a)(1) and (b) of this section as to each new issue.
(2) The specific matters at issue raised in the initial hearing
request and the matters identified in subsequent requests to add
issues, when combined, satisfy the requirements of paragraph (a)(2) of
this section.
(3) The intermediary hearing officer 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.
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5. Section 405.1813 is revised to read as follows:
Sec. 405.1813 Good cause extension of time limit for requesting an
intermediary hearing.
(a) A request for an intermediary hearing that is received by the
intermediary after the applicable 180-day time limit prescribed in
Sec. 405.1811(a)(3) of this subpart must be dismissed by the
intermediary hearing officer(s), except that the hearing officer(s) may
extend the time limit upon a good cause showing by the provider.
(b) The intermediary hearing officer(s) may find good cause to
extend the time limit only if the provider demonstrates in writing it
could not reasonably have been expected to file timely due to
extraordinary circumstances beyond its control (such as a natural or
other catastrophe, fire, or strike), and the provider's written request
for an extension is received by the intermediary hearing officer(s)
within a reasonable time (as determined by the intermediary hearing
officer(s) under the circumstances) after the expiration of the
applicable 180-day limit prescribed in Sec. 405.1811(a)(3) of this
subpart.
(c) The intermediary hearing officer(s) may not grant a request for
an extension under this section if--
(1) The provider relies on a change in the law, regulations, CMS
Rulings, or general CMS instructions (whether based on a court decision
or otherwise) or a CMS administrative ruling or policy as the basis for
the extension request; or
(2) The date of receipt by the intermediary of the provider's
extension request is later than 3 years after the date of the
intermediary or other determination that the provider seeks to appeal.
(d) If an extension request is granted or denied under this
section, the intermediary hearing officer(s) must give prompt written
notice to the provider, and mail a copy to each party to the appeal.
The notice must include an explanation of the reasons for the decision
by the hearing officer(s) and the facts underlying the decision.
(e)(1) A decision denying an extension request under this section
and dismissing the appeal is final and binding on the provider, unless
the dismissal decision is reviewed by a CMS reviewing official in
accordance with Sec. 405.1834(b)(2)(i) of this subpart or reopened and
revised by the intermediary hearing officer(s) in accordance with Sec.
405.1885 through Sec. 405.1889 of this subpart. The intermediary
hearing officer(s) promptly mails the decision to the appropriate
component of CMS (currently the Center for Medicare Management) (as
specified in Sec. 405.1834(b)(4) of this subpart).
(2) A decision granting an extension request under this section is
not subject to immediate review by a CMS reviewing official (as
described in Sec. 405.1834(b)(3) of this subpart). Any decision may be
examined during the course of CMS review of a final jurisdictional
dismissal decision or a final hearing decision by the intermediary
hearing officer(s) (as described in Sec. 405.1834(b)(2)(i) and Sec.
405.1834(b)(2)(ii) of this subpart).
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6. A new Sec. 405.1814 is added to read as follows:
Sec. 405.1814 Intermediary hearing officer jurisdiction.
(a) General rules. (1) After a request for an intermediary hearing
is filed under Sec. 405.1811 of this subpart, the intermediary hearing
officer(s) must do the following:
(i) Determine in accordance with paragraph (b) of this section
whether or not it has jurisdiction to grant a hearing on each of the
specific matters at issue in the hearing request.
(ii) Make a preliminary determination of the scope of its
jurisdiction (that is, whether the request for hearing was timely, and
whether the amount in controversy requirement has been met), if any,
over the matters at issue in the appeal before conducting any of the
following proceedings:
(A) Determining its authority to decide a legal question relevant
to a matter at issue (as described in Sec. 405.1829 of this subpart);
(B) Permitting discovery (as specified in Sec. 405.1821 of this
subpart); or
(C) Conducting a hearing (as specified in Sec. 405.1819 of this
subpart);
(2) The hearing officer(s) may revise a preliminary jurisdictional
determination at any subsequent stage of the proceedings in an appeal,
and it must promptly notify the parties of any revised determination.
(3) Under paragraph (c)(1) of this section, each intermediary
hearing decision (as described in Sec. 405.1831 of this subpart) must
include a final jurisdictional finding for each specific matter at
issue in the appeal.
(4) If the hearing officer(s) finally determines it lacks
jurisdiction over every specific matter at issue in the appeal, it
issues a jurisdictional
[[Page 30246]]
dismissal decision under paragraph (c)(2) of this section.
(5) Final jurisdictional findings and jurisdictional dismissal
decisions by the hearing officer(s) are subject to the CMS reviewing
official procedure in accordance with paragraph (d) of this section and
Sec. 405.1834(b)(2)(i) and (b)(2)(ii) of this subpart.
(b) Criteria. Except for the amount in controversy requirement, the
jurisdiction of the intermediary hearing officer(s) to grant a hearing
is determined separately for each specific matter at issue in the
intermediary or Secretary determination for the cost reporting period
under appeal. The hearing officer(s) has jurisdiction to grant a
hearing over a specific matter at issue in an appeal only if the
provider has a right to an intermediary hearing under Sec. 405.1811.
Certain matters at issue are removed from the jurisdiction of the
intermediary hearing officer(s); these matters include, but are not
limited to, the following:
(1) A finding in an intermediary determination that expenses
incurred for certain items or services furnished by a provider to an
individual are not payable under title XVIII of the Act because those
items and services are excluded from coverage under section 1862 of the
Act and part 411 of the regulations. Review of these findings is
limited to the applicable provisions of sections 1155, 1869, and
1879(d) of the Act, and of subpart I of part 405 and subpart B of part
478, as applicable.
(2) Certain matters affecting payments to hospitals under the
prospective payment system, as provided in section 1886(d)(7) of the
Act and Sec. 405.1804 of this subpart.
(3) Any self-disallowed item except as permitted in Sec.
405.1811(a)(1)(ii) of this subpart.
(c) Final jurisdictional findings, and jurisdictional dismissal
decisions by intermediary hearing officer(s). (1) In issuing a hearing
decision under Sec. 405.1831 of this subpart, the intermediary hearing
officer(s) must make a final determination of its jurisdiction, or lack
thereof, for each specific matter at issue in the hearing decision.
Each intermediary hearing decision must include specific findings of
fact and conclusions of law as to the jurisdiction of the hearing
officer(s), or lack thereof, to grant a hearing on each matter at issue
in the appeal.
(2) If the hearing officer(s) finally determines it lacks
jurisdiction to grant a hearing for every specific matter at issue in
an appeal, it must issue a jurisdictional dismissal decision. Each
jurisdictional dismissal decision by the hearing officer(s) must
include specific findings of fact and conclusions of law explaining the
determination that there is no jurisdiction to grant a hearing on each
matter at issue in the appeal. A copy of the jurisdictional dismissal
decision must be mailed promptly to each party to the appeal.
(3) A jurisdictional dismissal decision by the intermediary hearing
officer(s) under paragraph (c)(2) of this section is final and binding
on the parties, unless the decision is reviewed by a CMS reviewing
official in accordance with Sec. 405.1834 of this subpart or reopened
and revised by the intermediary hearing officer(s) in accordance with
Sec. 405.1885 through Sec. 405.1889 of this subpart.
(d) CMS reviewing official review. Any finding by the intermediary
hearing officer as to whether it has jurisdiction to grant a hearing on
a specific matter at issue in an appeal is not subject to further
administrative review, except as provided in this paragraph. The
intermediary hearing officer's jurisdictional findings as to specific
matters at issue in an appeal may be reviewed solely during the course
of CMS reviewing official review of one of the intermediary hearing
officer decisions specified in Sec. 405.1834(b)(2) of this subpart.
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7. Section 405.1815 is revised to read as follows:
Sec. 405.1815 Parties to proceedings before the intermediary hearing
officer(s).
When a provider files a request for an intermediary hearing in
accordance with Sec. 405.1811 of this subpart, the parties to all
proceedings before the intermediary hearing officer(s) are the provider
and, if applicable, any other entity found by the intermediary hearing
officer(s) to be a related organization of the provider under the
principles enunciated in Sec. 413.17 of this chapter. The parties must
be given reasonable notice of the time, date, and place of any
intermediary hearing. Neither the intermediary nor CMS may be made a
party to proceedings before the intermediary hearing officer(s).
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8. Section 405.1821 is revised to read as follows:
Sec. 405.1821 Prehearing discovery and other proceedings prior to the
intermediary hearing.
(a) Discovery rule: Time limits. (1) Limited prehearing discovery
may be permitted by the intermediary hearing officer(s) upon request of
a party, provided the request is timely and the hearing officer(s)
makes a preliminary finding of its jurisdiction over the matters at
issue in accordance with Sec. 405.1814(a) of this subpart.
(2) A prehearing discovery request is timely if the request by a
party is served no later than 120 days before the initially scheduled
starting date of the intermediary hearing, unless the intermediary
hearing officer(s) extend the time for requesting discovery.
(3) In the absence of a specific schedule for responses set by the
intermediary hearing officer(s), responses to interrogatories and
requests for production of documents are due according to the schedule
agreed upon by the party serving discovery and the party to which the
discovery is directed. Responses by a party to interrogatories or
requests for production of documents must be served no later than 45
days before the initially scheduled start of the intermediary hearing,
unless the intermediary hearing officer(s) orders otherwise. Responses
by a nonparty to requests for production of documents must be served no
later than 75 days after the date the requests were served on the
nonparty, unless the party requesting the documents and the nonparty to
which the requests are directed agree on a different time for
responding, or unless the intermediary hearing officer(s) extends the
time for responding.
(4) Before ruling on a request to extend the time for requesting
discovery or for responding to discovery, the hearing officer(s) must
give the other parties to the appeal and any nonparty subject to a
discovery request a reasonable period to respond to the extension
request.
(5) If the extension request is granted, the hearing officer(s)
sets a new deadline and has the discretion to reschedule the hearing
date.
(b) Discovery criteria. (1) General rule. The intermediary hearing
officer(s) may permit discovery of a matter that is relevant to the
specific subject matter of the intermediary hearing, provided the
matter is not privileged or otherwise protected from disclosure and the
discovery request is not unreasonable, unduly burdensome or expensive,
or otherwise inappropriate. In determining whether to permit discovery,
and in fixing the scope and limits of any discovery, the hearing
officer(s) uses the Federal Rules of Civil Procedure and Rules 401 and
501 of the Federal Rules of Evidence for guidance.
(2) Limitations on discovery. Any discovery before the intermediary
hearing officer(s) is limited as follows:
(i) A party may request of another party, or of a nonparty other
than CMS, the Secretary or any Federal agency, the reasonable
production of documents for inspection and copying.
[[Page 30247]]
(ii) A party may request another party to respond to a reasonable
number of written interrogatories.
(iii) A party may not request admissions, take oral or written
depositions, or take any other form of discovery not permitted under
this section.
(c) Discovery procedures. Rights of nonparties: Motions to compel
or for protective order. (1) A party may request discovery of another
party to the proceedings before the intermediary hearing officer(s) or
of a nonparty other than CMS, HHS or other Federal agency. Any
discovery request filed with the intermediary hearing officer(s) must
be mailed promptly to the party or nonparty from which the discovery is
requested, and to any other party to the intermediary hearing (as
described in Sec. 405.1815 of this subpart).
(2) If a discovery request is made of a nonparty to the
intermediary hearing, the nonparty has the rights any party has in
responding to a discovery request. The rights of the nonparty include,
but are not limited to, the right to select and use any attorney or
other representative, and to submit discovery responses, objections, or
motions to the hearing officer(s).
(3) Each party and nonparty is required to make a good faith effort
to resolve or narrow any discovery dispute, regardless of whether the
dispute is with another party or a nonparty.
(i) A party may submit to the intermediary hearing officer(s) a
motion to compel discovery that is permitted under this section, and a
motion for a protective order regarding any discovery request may be
submitted to the hearing officer(s) by a party or nonparty.
(ii) Any motion to compel or for protective order must include a
self-sworn declaration describing the movant's efforts to resolve or
narrow the discovery dispute. A self-sworn declaration describing
efforts to resolve or narrow a discovery dispute also must be included
with any response to a motion to compel or for a protective order.
(iii) The hearing officer(s) must--
(A) Decide the motion in accordance with this section and any prior
discovery ruling; and
(B) Issue and mail to each party and any affected nonparty a
discovery ruling that grants or denies the motion to compel or for
protective order in whole or in part, if applicable, the discovery
ruling must specifically identify any part of the disputed discovery
request upheld and any part rejected, and impose any limits on
discovery the hearing officer(s) finds necessary and appropriate.
Nothing in this section authorizes the intermediary hearing officer to
compel any action from the Secretary or CMS.
(d) Reviewability of discovery or disclosure rulings. (1) General
rule. A discovery ruling issued in accordance with paragraph (c)(3) of
this section, or a disclosure ruling (such as one issued at a hearing),
is not subject to immediate review by a CMS official (as described in
Sec. 405.1834(b)(3) of this subpart). A discovery ruling may be
examined solely during the course of CMS review under Sec. 405.1834 of
this subpart of a jurisdictional dismissal decision (as described in
Sec. 405.1814(c)(2) of this subpart) or a hearing decision (as
described in Sec. 405.1831 of this subpart) by the intermediary
hearing officer(s).
(2) Exception. To the extent a ruling authorizes discovery or
disclosure of a matter for which an objection based on privilege or
other protection from disclosure such as case preparation,
confidentiality, or undue burden, was made before the intermediary
hearing officer(s), that portion of the discovery or disclosure ruling
may immediately be reviewed by a CMS reviewing official in accordance
with Sec. 405.1834(b)(3).
(i) Upon notice to the intermediary hearing officer that the
provider intends to seek immediate review of a ruling, or that the
intermediary or other affected nonparty intends to suggest that the
Administrator through the CMS reviewing official, take own motion
review of the ruling, the intermediary hearing officer stays all
proceedings affected by the ruling.
(ii) The intermediary hearing officer must determine, under the
circumstances of a given case, the length of any stay, but in no event
may the stay be less than 15 days.
(iii) If the Administrator through the CMS reviewing official--
(A) Grants a request for review, or takes own motion review, of a
ruling, the ruling is stayed until such time as the CMS reviewing
official issues a written decision that affirms, reverses, modifies, or
remands the intermediary hearing officer's ruling.
(B) Does not grant review or take own motion review within the time
allotted for the stay, the stay is lifted and the ruling is not subject
to immediate review.
(e) Prehearing conference. The intermediary hearing officer(s) has
discretion to schedule a prehearing conference. A prehearing conference
may be conducted in person or telephonically, at the discretion of the
intermediary hearing officer(s). When a panel of intermediary hearing
officers is designated, the panel may appoint one or more hearing
officers to act for the panel for any prehearing conference or any
matter addressed at the conference.
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9. Section 405.1827 is revised to read as follows:
Sec. 405.1827 Record of proceedings before the intermediary hearing
officer(s).
(a) The intermediary hearing officer(s) must maintain a complete
record of all proceedings in an appeal.
(b) The record consists of all documents and any other tangible
materials timely submitted to the hearing officer(s) by the parties to
the appeal and by any nonparty (as described in Sec. 405.1821(c) of
this subpart), along with all correspondence, rulings, orders, and
decisions (including the final decision) issued by the hearing
officer(s).
(c) The record must include a complete transcription of the
proceedings at any intermediary hearing.
(d) A copy of the transcription must be made available to any party
upon request.
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10. Section 405.1829 is amended by--
0
A. Revising the section heading.
0
B. In paragraph (a), the parenthetical phrase ``(see 42 CFR 401.108)''
is removed and add ``(as described in Sec. 401.108 of this chapter)''
in its place.
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C. Revising paragraph (b).
The revisions are to read as follows:
Sec. 405.1829 Scope of authority of intermediary hearing officer(s).
* * * * *
(b)(1) If the intermediary hearing officer(s) has jurisdiction to
conduct a hearing on the specific matters at issue under Sec.
405.1811, and the legal authority to fully resolve the matters in a
hearing decision (as described in Sec. 405.1831 of this subpart), the
hearing officer(s) must affirm, modify, or reverse the intermediary's
findings on each specific matter at issue in the intermediary or
Secretary determination for the cost year under appeal.
(2) The intermediary hearing officer(s) also may make additional
revisions on specific matters regardless of whether the intermediary
considered the matters in issuing the intermediary determination for
the cost year, provided the hearing officer(s) does not consider or
decide any specific matter for which it lacks jurisdiction (as
described in Sec. 405.1814(b) of this subpart) or which was not timely
raised in the provider's hearing request.
(3) The authority of the intermediary hearing officer(s) under this
paragraph to make the additional revisions is limited to those
revisions necessary to fully resolve a specific matter at issue if--
[[Page 30248]]
(i) The hearing officer(s) has jurisdiction to grant a hearing on
the specific matter under Sec. 405.1811 and Sec. 405.1814 of this
subpart; and
(ii) The specific matter was timely raised in an initial request
for an intermediary hearing filed in accordance with Sec. 405.1811(b)
of this subpart or in a timely request to add issues to an appeal
submitted in accordance with Sec. 405.1811(c) of this subpart.
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11. Section 405.1831 is revised to read as follows:
Sec. 405.1831 Intermediary hearing decision.
(a) If the intermediary hearing officer(s) finds jurisdiction (as
described in Sec. 405.1814(a) of this subpart) and conducts a hearing
the intermediary hearing officer(s) must promptly issue a written
hearing decision.
(b) The intermediary hearing decision must be based on the evidence
from the intermediary hearing (as described in Sec. 405.1823 of this
subpart) and other evidence as may be included in the record (as
described in Sec. 405.1827 of this subpart).
(c) The decision must include findings of fact and conclusions of
law on jurisdictional issues (as described in Sec. 405.1814(c)(1) of
this subpart) and on the merits of the provider's reimbursement claims,
and include appropriate citations to the record evidence and to the
applicable law, regulations, CMS Rulings, and other interpretive rules,
general statements of policy, and rules of agency organization,
procedure, or practice established by CMS.
(d) A copy of the decision must be mailed promptly to the
intermediary, to each party and to the appropriate component of CMS
(which currently is the Center for Medicare Management).
(e) When the intermediary's denial of the relief that the provider
seeks before the intermediary hearing officer(s) was based on
procedural grounds (for example, the alleged failure of the provider to
satisfy a time limit), or was based on the alleged failure to supply
adequate documentation to support the provider's claim, and the
intermediary hearing officer(s) rule(s) that the basis of the
intermediary's denial is invalid, the intermediary hearing officer(s)
remands to the intermediary for the intermediary to make a
determination on the merits of the provider's claim.
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12. Section 405.1833 is revised to read as follows:
Sec. 405.1833 Effect of intermediary hearing decision.
An intermediary hearing decision issued in accordance with Sec.
405.1831 of this subpart is final and binding on all parties to the
intermediary hearing and the intermediary unless the hearing decision
is reviewed by a CMS reviewing official in accordance with Sec.
405.1834 of this subpart or reopened and revised by the intermediary
hearing officer(s) in accordance with Sec. 405.1885 through Sec.
405.1889 of this subpart. Final intermediary hearing decisions are
subject to the provisions of Sec. 405.1803(d) of this subpart.
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13. A new Sec. 405.1834 is added to read as follows:
Sec. 405.1834 CMS reviewing official procedure.
(a) Scope. A provider that is a party to, and dissatisfied with, a
final decision by the intermediary hearing officer(s), upon submitting
a request that meets the requirements of paragraph (c) of this section,
is entitled to further administrative review of the decision, or the
decision may be reviewed at the discretion of the Administrator. No
other individual, entity, or party has the right to the review. The
review is conducted on behalf of the Administrator by a designated CMS
reviewing official who considers whether the decision of the
intermediary hearing officer(s) is consistent with the controlling
legal authority (as described in Sec. 405.1834(e)(1) of this subpart)
and the evidence in the record. Based on the review, the CMS reviewing
official issues a decision on behalf of the Administrator.
(b) General rules. (1) A CMS reviewing official may immediately
review any final decision of the intermediary hearing officer(s) as
specified in paragraph (b)(2) of this section.
(i) Nonfinal decisions and other nonfinal actions by the
intermediary hearing officer(s) are not immediately reviewable, except
as provided in paragraph (b)(3) of this section.
(ii) The CMS reviewing official exercises this review authority in
response to a request from a provider party to the appeal that meets
the requirements of paragraph (c) of this section or may exercise his
or her discretion to take own motion review.
(2) A CMS reviewing official may immediately review the following:
(i) Any final jurisdictional dismissal decision by the intermediary
hearing officer(s), including any finding that the provider failed to
demonstrate good cause for extending the time in which to request a
hearing (as described in Sec. 405.1813(e)(1) and Sec. 405.1814(c)(3)
of this subpart).
(ii) Any final intermediary hearing decision (as described in Sec.
405.1831 of this subpart).
(3) Nonfinal decisions and other nonfinal actions by the
intermediary hearing officer(s) are not subject to the CMS reviewing
official procedure until the intermediary hearing officer(s) issues a
final decision as specified in paragraph (b)(2) of this section (as
described in Sec. 405.1813(e)(2), Sec. 405.1814(c) and (d), and Sec.
405.1821(d)(1) of this subpart), except that the CMS reviewing official
may immediately review a ruling, authorizing discovery or disclosure of
a matter, where there is a claim of privilege or other protection from
disclosure such as case preparation, confidentiality, or undue burden.
(4) In order to facilitate the Administrator's exercise of this
review authority, the intermediary hearing officer(s) must promptly
send copies of any decision specified in paragraph (b)(2) of this
section or Sec. 405.1821(d)(2) of this subpart to the appropriate
component of CMS (currently the Center for Medicare Management).
(i) All requests for review by a CMS reviewing official and all
written submissions to a CMS reviewing official under paragraphs (c)
and (d) of this section also must be sent to the appropriate component
of CMS.
(ii) The appropriate CMS component examines each intermediary
hearing officer decision that is reviewable under paragraph (b)(2) of
this section or Sec. 405.1821(d)(2) of this subpart, along with any
review requests and any other submissions made by a party in accordance
with the provisions of this section, in order to assist the
Administrator's exercise of this review authority.
(c) Request for review. (1) A provider's request for review by a
CMS reviewing official is granted if--
(i) The date of receipt by the appropriate CMS component of the
review request is no later than 60 days after the date of receipt by
the provider of the intermediary hearing officer decision; or
(ii) The request seeks review of a decision listed in paragraph
(b)(2) of this section, and the provider complies with the requirements
of paragraph (c)(2) of this section.
(2) The provider must submit its request for review in writing,
attach a copy of the intermediary decision for which it seeks review
and include a brief description of all of the following:
(i) Those aspects of the intermediary hearing officer decision with
which the provider is dissatisfied.
[[Page 30249]]
(ii) The reasons for the provider's dissatisfaction.
(iii) Any argument or record evidence the provider believes
supports its position.
(iv) Any additional, extra-record evidence relied on by the
provider, along with a demonstration that such evidence was improperly
excluded from the intermediary hearing (as described in Sec. 405.1823
of this subpart).
(3) A provider request for immediate review of an intermediary
hearing officer ruling authorizing discovery or disclosure in
accordance with paragraph (b)(3) of this section must--
(i) Be made as soon as practicable after the ruling is made, but in
no event later than 5 business days after the date it received notice
of the ruling; and
(ii) State the reason(s) why the ruling is in error and the
potential harm that may be caused if immediate review is not granted.
(d) Own motion review. (1) The Administrator has discretion to take
own motion review of an intermediary hearing officer decision
(regardless of whether the decision was favorable or unfavorable to the
provider) or other reviewable action.
(2) In order to exercise this authority, the CMS reviewing official
must, no later than 60 days after the date of the intermediary hearing
officer's decision, notify the parties and the intermediary that he or
she intends to review the intermediary hearing officer decision or
other reviewable action.
(3) In the notice, the CMS reviewing official identifies with
particularity the issues that are to be reviewed, and gives each party
(as described in Sec. 405.1815 of this subpart) and affected nonparty
a reasonable period to comment on the issues through a written
submission complying with paragraph (c)(2) of this section.
(e) Review procedure. (1) In reviewing an intermediary hearing
officer decision specified in paragraph (b)(2) of this section, the CMS
reviewing official must--
(i) Comply with all applicable law, regulations, and CMS Rulings
(as described in Sec. 401.108 of this chapter), and afford great
weight to other interpretive rules, general statements of policy, and
rules of agency organization, procedure, or practice established by
CMS;
(ii) Subject to paragraph (e)(1)(iii) of this section, limit the
review to the record of the proceedings before the intermediary hearing
officer(s) (as described in Sec. 405.1827 of this subpart) and any
written submissions by the parties under paragraphs (c)(2) or (d) of
this section; and
(iii) Consider additional, extra-record evidence only if he or she
determines that the evidence was improperly excluded from the
intermediary hearing (as described in Sec. 405.1823 of this subpart).
(2) Review of an intermediary decision specified in paragraph
(b)(2) of this section is limited to a hearing on the written record in
accordance with paragraph (e)(1)(ii) of this section, unless the CMS
reviewing official determines that--
(i) Additional, extra-record evidence may be considered in
accordance with paragraph (e)(1)(iii) of this section;
(ii) An oral hearing is necessary for consideration of the extra-
record evidence; and
(iii) It is not necessary or appropriate to remand the matter to
the intermediary hearing officer(s).
(3) Upon completion of the review of an intermediary hearing
decision specified in paragraph (b)(2) of this section, the CMS
reviewing official issues a written decision that affirms, reverses,
modifies, or remands the intermediary hearing decision. A copy of the
decision must be mailed promptly to each party, to the intermediary,
and to the appropriate component of CMS (currently the Center for
Medicare Management).
(f) Effect of a decision: Remand. (1) A decision of affirmation,
reversal, or modification by the CMS reviewing official is final and
binding on each party and the intermediary. No further review or appeal
of a decision is available, but the decision may be reopened and
revised by a CMS reviewing official in accordance with Sec. 405.1885
through Sec. 405.1889 of this subpart. Decisions of a CMS reviewing
official are subject to the provisions of Sec. 405.1803(d) of this
subpart. A decision by a CMS reviewing official remanding an appeal to
the intermediary hearing officer(s) for further proceedings under
paragraph (f)(2) of this section is not a final decision.
(2) A remand to the intermediary hearing officer(s) by the CMS
reviewing official must--
(i) Vacate the intermediary hearing officer decision;
(ii) Be governed by the same criteria that apply to remands by the
Administrator to the Board under Sec. 405.1875(f)(2) of this subpart,
and require the intermediary hearing officer(s) to take specific
actions on remand; and
(iii) Result in the intermediary hearing officer(s) taking the
actions required on remand and issuing a new intermediary hearing
decision in accordance with Sec. 405.1831 and Sec. 405.1833 of this
subpart.
0
14. Section 405.1835 is revised to read as follows:
Sec. 405.1835 Right to Board hearing; contents of, and adding issues
to, hearing request.
(a) Criteria. A provider (but no other individual, entity, or
party) has a right to a Board hearing, as a single provider appeal, for
specific items claimed for a cost reporting period covered by an
intermediary or Secretary determination, only if--
(1) The provider has preserved its right to claim dissatisfaction
with the amount of Medicare payment for the specific item(s) at issue,
by either--
(i) Including a claim for specific item(s) on its cost report for
the period where the provider seeks payment that it believes to be in
accordance with Medicare policy; or
(ii) Effective with cost reporting periods that end on or after
December 31, 2008, self-disallowing the specific item(s) by following
the applicable procedures for filing a cost report under protest, where
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)).
(2) The amount in controversy (as determined in accordance with
Sec. 405.1839 of this subpart) is $10,000 or more; and
(3) Unless the provider qualifies for a good cause extension under
Sec. 405.1836 of this subpart, the date of receipt by the Board of the
provider's hearing request is--
(i) No later than 180 days after the date of receipt by the
provider of the intermediary or Secretary determination; or
(ii) If the intermediary determination is not issued (through no
fault of the provider) within 12 months of the date of receipt by the
intermediary of the provider's perfected cost report or amended cost
report (as specified in Sec. 413.24(f) of this chapter), no later than
180 days after the expiration of the 12 month period for issuance of
the intermediary determination. The date of receipt by the intermediary
of the provider's perfected cost report or amended cost report is
presumed to be the date the intermediary stamped ``Received'' unless it
is shown by a preponderance of the evidence that the intermediary
received the cost report on an earlier date.
(b) Contents of request for a Board hearing. The provider's request
for a
[[Page 30250]]
Board hearing must be submitted in writing to the Board, and the
request must include the elements described in paragraphs (b)(1)
through (b)(4) of this section. If the provider submits a hearing
request that does not meet the requirements of paragraphs (b)(1),
(b)(2), or (b)(3) of this section, the Board may dismiss with prejudice
the appeal, or take any other remedial action it considers appropriate.
(1) A demonstration that the provider satisfies the requirements
for a Board hearing as specified in paragraph (a) of this section,
including a specific identification of the intermediary's or
Secretary's determination under appeal.
(2) An explanation (for each specific item at issue, see paragraph
(a)(1) of this section) of the provider's dissatisfaction with the
intermediary's or Secretary's determination under appeal, including an
account of all of the following:
(i) Why the provider believes Medicare payment is incorrect for
each disputed item (or, where applicable, why the provider is unable to
determine whether Medicare payment is correct because it does not have
access to underlying information concerning the calculation of its
payment).
(ii) How and why the provider believes Medicare payment must be
determined differently for each disputed item.
(iii) If the provider self-disallows a specific item, a description
of the nature and amount of each self-disallowed item and the
reimbursement or payment sought for the item.
(3) A copy of the intermediary or Secretary determination under
appeal, and any other documentary evidence the provider considers
necessary to satisfy the hearing request requirements of paragraphs
(b)(1) and (b)(2) of this section.
(4) With respect to a provider under common ownership or control,
the name and address of its parent corporation, and a statement that--
(i) 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
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
(ii) Such a pending appeal(s) exist(s), the provider name(s),
provider number(s), and the case number(s) (if assigned), for such
appeal(s).
(c) Adding issues to the hearing request. After filing a hearing
request in accordance with paragraphs (a) and (b) of this section, a
provider may add specific Medicare payment issues to the original
hearing request by submitting a written request to the Board, only if
the following requirements are met:
(1) The request to add issues complies with the requirements of
paragraphs (a)(1) and (b) of this section as to each new issue.
(2) The specific matters at issue raised in the initial hearing
request and the matters identified in subsequent requests to add
issues, when combined, satisfy the requirements of paragraph (a)(2) of
this section.
(3) The 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.
0
15. Section 405.1836 is added to read as follows:
Sec. 405.1836 Good cause extension of time limit for requesting a
Board hearing.
(a) A request for a Board hearing that the Board receives after the
applicable 180-day time limit prescribed in Sec. 405.1835(a)(3) of
this subpart must be dismissed by the Board, except that the Board may
extend the time limit upon a good cause showing by the provider.
(b) The Board may find good cause to extend the time limit only if
the provider demonstrates in writing it can not reasonably be expected
to file timely due to extraordinary circumstances beyond its control
(such as a natural or other catastrophe, fire, or strike), and the
provider's written request for an extension is received by the Board
within a reasonable time (as determined by the Board under the
circumstances) after the expiration of the applicable 180-day limit
specified in Sec. 405.1835(a)(3).
(c) The Board may not grant a request for an extension under this
section if--
(1) The provider relies on a change in the law, regulations, CMS
Rulings, or general CMS instructions (whether based on a court decision
or otherwise) or a CMS administrative ruling or policy as the basis for
the extension request; or
(2) The date of receipt by the Board of the provider's extension
request is later than 3 years after the date of the intermediary or
other determination that the provider seeks to appeal.
(d) If an extension request is granted or denied under this
section, the Board must give prompt written notice to the provider, and
mail a copy of the notice to each party to the appeal. The notice must
include a detailed explanation of the reasons for the decision by the
Board and the facts underlying the decision.
(e)(1) If the Board denies an extension request and determines it
lacks jurisdiction to grant a hearing for every specific matter at
issue in an appeal, it must issue a Board dismissal decision dismissing
the appeal for lack of Board jurisdiction. This decision by the Board
must be in writing and include the explanation of the extension request
denial required under paragraph (d) of this section, in addition to
specific findings of fact and conclusions of law explaining the Board's
determination that it lacks jurisdiction to grant a hearing on each
matter at issue in the appeal (as described in Sec. 405.1840(c) of
this subpart). A copy of the Board's dismissal decision must be mailed
promptly to each party to the appeal (as described in Sec. 405.1843 of
this subpart).
(2) A Board dismissal decision under paragraph (e)(1) of this
section is final and binding on the parties, unless the decision is
reversed, affirmed, modified, or remanded by the Administrator under
Sec. 405.1875(a)(2)(ii) and Sec. 405.1875(e) or Sec. 405.1875(f) of
this subpart, no later than 60 days after the date of receipt by the
provider of the Board's decision.
(i) This Board decision is inoperative during the 60-day period for
review of the decision by the Administrator, or in the event the
Administrator reverses, affirms, modifies, or remands that decision,
within the period.
(ii) A Board decision under paragraph (e)(1) of this section that
is otherwise final and binding may be reopened and revised by the Board
in accordance with Sec. 405.1885 through Sec. 405.1889 of this
subpart.
(3) The Administrator may review a Board decision granting an
extension request solely during the course of an Administrator review
of one of the Board decisions specified as final, or deemed final by
the Administrator, under Sec. 405.1875(a)(2) of this subpart.
(4) A finding by the Board or the Administrator that the provider
did or did not demonstrate good cause for extending the time for
requesting a Board hearing is not subject to judicial review.
0
16. Section 405.1837 is revised to read as follows:
Sec. 405.1837 Group appeals.
(a) Right to Board hearing as part of a group appeal; criteria. A
provider (but no other individual, entity, or party) has a right to a
Board hearing, as part of a group appeal with other providers, for
specific items claimed for a cost reporting period covered by an
intermediary or Secretary determination for the period, only if--
[[Page 30251]]
(1) The provider satisfies individually the requirements for a
Board hearing under Sec. 405.1835(a), except for the $10,000 amount in
controversy requirement under Sec. 405.1835(a)(2) of this subpart;
(2) The matter at issue in the group appeal involves a single
question of fact or interpretation of law, regulations, or CMS Rulings
that is common to each provider in the group; and
(3) The amount in controversy is, in the aggregate, $50,000 or
more, as determined in accordance with Sec. 405.1839 of this subpart.
(b) Usage and filing of group appeals. (1) Mandatory use of group
appeals.
(i) Two or more providers under common ownership or control that
wish to appeal to the Board a specific matter at issue that involves a
question of fact or interpretation of law, regulations, or CMS Rulings
that is common to the providers, and that arises in cost reporting
periods that end in the same calendar year, and for which the amount in
controversy is $50,000 or more in the aggregate, must bring the appeal
as a group appeal.
(ii) One or more of the providers under common ownership or control
may appeal more than one cost reporting period with respect to the
issue that is the subject of the group appeal for purposes of meeting
the $50,000 amount in controversy requirement, and, subject to the
Board's discretion, may appeal more than one cost reporting period with
respect to the issue that is the subject of the group appeal for other
purposes, such as convenience.
(iii) A group appeal involving two or more providers under common
ownership or control must consist entirely of providers under common
(to all) ownership or control.
(iv)(A) Example 1: A, B, C and D are commonly owned providers
that wish to appeal issue X. This issue was adjusted on A, B and C's
CY 2004 cost reports, and on D's CY 2005 cost report. The amount in
controversy is more than $50,000 in the aggregate for providers A, B
and C, and more than $10,000 for provider D. Providers A, B and C
must appeal issue X as a group appeal. Provider D may pursue an
individual appeal to the Board under the procedures set forth in
Sec. 405.1835 of this subpart, or if the Board agrees, Provider D
may join the group appeal. (If Provider D joins the group appeal,
the calendar years in the group appeal would then be 2004 and 2005,
and any provider related to Providers A through D by common
ownership or control would be required to appeal issue X for its
cost reporting period ending in 2004 or 2005 through the group
appeal.)
(B) Example 2: A, B and C are commonly owned providers that wish
to appeal issue X. This issue was adjusted on A, B and C's CY 2004
cost reports. The amount in controversy is less than $50,000 in the
aggregate for providers A, B and C ($10,000 for A, $10,000 for B and
$7,000 for C). Providers A, B and C cannot appeal issue X as a group
appeal. Provider A, if it wishes, and provider B, if it wishes, may
pursue an individual appeal to the Board under the procedures set
forth in Sec. 405.1835 of this subpart. Provider C may not pursue
an individual appeal to the Board, because the amount in controversy
is less than $10,000; however, it may pursue an appeal to the
intermediary under the procedures set forth in Sec. 405.1811 of
this subpart.
(2) Optional group appeals. (i) Two or more providers not under
common ownership or control may bring a group appeal before the Board
under this section, if the providers wish to appeal to the Board a
specific matter at issue that involves a question of fact or
interpretation of law, regulations, or CMS Rulings that is common to
the providers. Alternatively, any provider may appeal to the Board any
issues in a single provider appeal brought under Sec. 405.1835 of this
subpart.
(ii) One or more of the providers bringing a group appeal under
this paragraph may appeal more than one cost reporting period with
respect to the issue that is the subject of the group appeal for
purposes of meeting the $50,000 amount in controversy requirement, and,
subject to the Board's discretion, may appeal more than one cost
reporting period with respect to the issue that is the subject of the
group appeal for other purposes, such as convenience.
(3) Initiating a group appeal. With respect to group appeals
brought under paragraph (b)(1) of this section, one or more commonly
owned or operated providers must make a written request for a Board
hearing as a group appeal in accordance with paragraph (c) of this
section. Any group appeal filed by a single provider must be joined by
related providers on common issues in accordance with paragraphs (b)(1)
and (e) of this section. With respect to group appeals brought under
paragraph (b)(2) of this section, two or more providers may submit--
(i) A written request for a Board hearing as a group appeal in
accordance with paragraph (c) of this section; or
(ii) A request to the Board in accordance with paragraph (e)(4) of
this section that a specific matter at issue in a single provider
appeal, filed previously under Sec. 405.1835 of this subpart, be
transferred from the single appeal to a group appeal.
(c) Contents of request for a group appeal. The request for a Board
hearing as a group appeal must be submitted in writing to the Board,
and the request must include all of the following:
(1) A demonstration that the request satisfies the requirements for
a Board hearing as a group appeal, as specified in paragraph (a) of
this section.
(2) An explanation (for each specific item at issue; see Sec.
405.1835(a)(1)) of each provider's dissatisfaction with its
intermediary or Secretary determination under appeal, including an
account of--
(i) Why the provider believes Medicare payment is incorrect for
each disputed item;
(ii) How and why the provider believes Medicare payment must be
determined differently for each disputed item; and
(iii) If the provider self-disallows a specific item, a description
of the nature and amount of each self-disallowed item and the
reimbursement sought for each item.
(3) A copy of each intermediary or Secretary determination under
appeal, and any other documentary evidence the providers consider
necessary to satisfy the hearing request requirements of paragraphs
(c)(1) and (c)(2) of this section, and a precise description of the one
question of fact or interpretation of law, regulations, or CMS Rulings
that is common to the particular matters at issue in the group appeal;
and
(4) A statement that--
(i) The providers believe they have satisfied all of the
requirements for a group appeal hearing request under paragraph (a) of
this section and requesting the Board to proceed to make jurisdictional
findings in accordance with Sec. 405.1840; or
(ii) The Board is requested to defer making jurisdictional findings
until the providers request the findings in accordance with paragraph
(e)(2) of this section.
(d) Board's preliminary response to group appeal hearing requests.
(1) Upon receipt of a group appeal hearing request, the Board must take
any necessary ministerial steps.
(2) The steps, include, for example--
(i) Acknowledging the request;
(ii) Assigning a case number to the appeal; or
(iii) If applicable, transferring a specific matter at issue from a
single provider appeal filed under Sec. 405.1835 of this subpart to a
group appeal filed under this section.
(e) Group appeal procedures pending full formation of the group and
issuance of a Board decision. (1) A provider (or providers) may file a
group appeal hearing request with the Board under this section before
each provider member of the group identifies or complies with
paragraphs (a)(1) and
[[Page 30252]]
(a)(2) of this section, or before the group satisfies the $50,000
amount in controversy requirement under paragraph (a)(3) of this
section. Proceedings before the Board in any partially formed group
appeal are subject to the provisions of paragraphs (e)(2), (e)(3), and
(e)(4) of this section. The Board will determine that a group appeal
brought under paragraph (b)(1) of this section is fully formed upon a
notice in writing from the group that it is fully formed. Absent such a
notice from the group, the Board may issue an order, requiring the
group to demonstrate (within a period of not less than 15 days) that at
least one commonly owned or controlled provider has preserved the issue
for appeal by claiming the relevant item on its cost report or by self-
disallowing the item, but has not yet received its final determination
with respect to the item for a cost year that is within the same
calendar year as that covered by the group appeal (or that it has
received its final determination with respect to the item for that
period, and is still within the time to request a hearing on the
issue). The Board determines that a group appeal brought under
paragraph (b)(2) of this section is fully formed upon a notice in
writing from the group that it is fully formed, or following an order
from the Board that in its judgment, that the group is fully formed, or
through general instructions that set forth a schedule for the closing
of group appeals brought under paragraph (b)(2) of this section. When
the Board has determined that a group appeal brought under paragraph
(b)(1) of this section is fully formed, absent an order from the Board
modifying its determination, no other provider under common ownership
or control may appeal to the Board the issue that is the subject of the
group appeal with respect to a cost reporting period that falls within
the calendar year(s) covered by the group appeal.
(2) The Board may make jurisdictional findings under Sec. 405.1840
at any time, including, but not limited to, following a request by the
providers for the jurisdictional findings. The providers may request
jurisdictional findings by notifying the Board in writing that the
group appeal is fully formed, or that the providers believe they have
satisfied all of the requirements for a group appeal hearing request,
and the Board may proceed to make jurisdictional findings. The
providers must include with the notice any additional information or
documentary evidence that is required for group appeal hearing
requests. The Board does not dismiss a group appeal hearing request for
failure to meet the $50,000 amount in controversy requirement until the
Board has determined, in accordance with paragraph (e)(1) of this
section, that the group is fully formed.
(3) If the Board makes a preliminary determination of jurisdiction
to conduct a hearing as a group appeal under this section, the Board
then takes any further actions in the appeal it finds to be appropriate
under this subpart (as described in Sec. 405.1840(a) of this subpart).
The Board may take further actions, even though the providers in the
appeal may wish to add other providers to the group in accordance with
paragraph (e)(4) of this section. The Board must make separate
jurisdictional findings for each cost reporting period added
subsequently to the group appeal (as described in Sec. 405.1837(a) and
Sec. 405.1839(b) of this subpart).
(4) A provider may submit a request to the Board to join a group
appeal anytime before the Board issues one of the decisions specified
in Sec. 405.1875(a)(2). By submitting a request, the provider agrees
that, if the request is granted, the provider is bound by the Board's
actions and decision in the appeal. If the Board denies a request, the
Board's action is without prejudice to any separate appeal the provider
may bring in accordance with Sec. 405.1811 of this subpart, Sec.
405.1835 of this subpart, or this section. For purposes of determining
timeliness for the filing of any separate appeal and for the adding of
issues to such appeal, the date of receipt of the provider's request to
form or join the group appeal is considered the date of receipt for
purposes of meeting the applicable 180-day period prescribed in Sec.
405.1835(a)(3) of this subpart.
(5)(i) Except as specified in paragraph (ii) of this paragraph,
when a provider has appealed an issue through electing to form, or
joining, a group appeal under the procedures set forth in this section,
it may not subsequently request that the Board transfer that issue to a
single provider appeal brought in accordance with Sec. 405.1811 or
Sec. 405.1835 of this subpart.
(ii) Exception. When the Board determines that the requirements for
a group appeal are not met (that is, when there has been a failure to
meet the amount in controversy or the common issue requirement), it
transfers the issue that was the subject of the group appeal to a
single provider appeal (or appeals) for the provider (or providers)
that meets (or meet) the requirements for a single provider appeal.
(f) Limitations on group appeals. (1) After the date of receipt by
the Board of a group appeal hearing request under paragraph (c) of this
section, a provider may not add other questions of fact or law to the
appeal, regardless of whether the question is common to other members
of the appeal (as described in Sec. 405.1837(a)(2) and (g) of this
subpart).
(2) The Board may not consider, in one group appeal, more than one
question of fact, interpretation of law, regulations, or CMS Rulings
that is common to each provider in the appeal. If the Board finds
jurisdiction over a group appeal hearing request under Sec. 405.1840
of this subpart--
(i) The Board must determine whether the appeal involves specific
matters at issue that raise more than one factual or legal question
common to each provider; and
(ii) When the appeal is found to involve more than one factual or
legal question common to each provider, the Board must assign a
separate case number to the appeal of each common factual or legal
question and conduct further proceedings in the various appeals
separately for each case.
(g) Issues not common to the group appeal. A provider involved in a
group appeal that also wishes to appeal a specific matter that does not
raise a factual or legal question common to each of the other providers
in the group must file a separate request for a single provider hearing
in accordance with Sec. 405.1811 or Sec. 405.1835 of this subpart, or
file a separate request for a hearing as part of a different group
appeal under this section, as applicable.
0
17. Section 405.1839 is revised to read as follows:
Sec. 405.1839 Amount in controversy.
(a) Single provider appeals. (1) In order to satisfy the amount in
controversy requirement under Sec. 405.1811(a)(2) of this subpart for
an intermediary hearing or the amount in controversy requirement under
Sec. 405.1835(a)(2) of this subpart for a Board hearing for a single
provider, the provider must demonstrate that if its appeal were
successful, the provider's total program reimbursement for each cost
reporting period under appeal increases by at least $1,000 but by less
than $10,000 for an intermediary hearing, or by at least $10,000 for a
Board hearing, as applicable.
(2) Aggregation of claims. For purposes of satisfying the
applicable amount in controversy requirement for a single provider
appeal to the intermediary or the Board, the provider may aggregate
claims for additional program payment for more than one
[[Page 30253]]
specific matter at issue, provided each specific claim and issue is for
the same cost reporting period. Aggregation of claims from more than
one cost reporting period to meet the applicable amount in controversy
requirement is prohibited, even if a specific claim or issue recurs in
the appeal for multiple cost years.
(b) Group appeals. (1) In order to satisfy the amount in
controversy requirement under Sec. 405.1837(a)(3) of this subpart for
a Board hearing as a group appeal, the group must demonstrate that if
its appeal were successful, the total program reimbursement for the
cost reporting periods under appeal increases, in the aggregate, by at
least $50,000.
(2) Aggregation of claims. (i) For purposes of satisfying the
amount in controversy requirement, group members are not allowed to
aggregate claims involving different issues.
(A) A group appeal must involve a single question of fact or
interpretation of law, regulations, or CMS Ruling that is common to
each provider (as described in Sec. 405.1837(a)(2) of this subpart).
(B) The single issue that is common to each provider may exist over
different cost reporting periods.
(ii) For purposes of satisfying the amount in controversy
requirement, a provider may appeal multiple cost reporting periods and
different providers in the group may appeal different cost reporting
periods.
(c) Limitations on change in Medicare reimbursement. (1) In order
to satisfy the applicable amount in controversy requirement for a
single provider appeal or a group appeal, an appeal favorable to the
provider(s) on all specific matters at issue in the appeal increases
program reimbursement for the provider(s) in the cost reporting
period(s) at issue by an amount that equals or exceeds the applicable
amount in controversy threshold.
(2) The applicable amount in controversy requirement is not
satisfied if the result of a favorable appeal decreases program
reimbursement for the provider(s) in the cost reporting year(s) at
issue in the appeal.
(3) Any effects that a favorable appeal might have on program
reimbursement for the provider(s) in cost reporting period(s) not at
issue in the appeal have no bearing on whether the amount in
controversy requirement is satisfied for the cost year(s) at issue in
the appeal.
(4) When a provider (or group of providers) has requested a hearing
before an intermediary under Sec. 405.1811 of this subpart, and the
amount in controversy is subsequently determined to be at least $10,000
(for example, due to a reassessment of the amount in controversy by the
intermediary hearing office or due to adding an issue), the appeal is
transferred to the Board. The Board is not bound by any jurisdictional
finding of the intermediary hearing officer(s).
(5) When a provider or group of providers has requested a hearing
before the Board under Sec. 405.1835 or Sec. 405.1837 of this
subpart, and the amount in controversy changes to an amount less than
the minimum for a Board appeal due to--
(A) The settlement or partial settlement of an issue, transfer of
an issue to a group appeal, or the abandonment of an issue in an
individual appeal, the change in the amount in controversy does not
deprive the Board of jurisdiction.
(B) A more accurate assessment of the amount in controversy, the
Board does not retain jurisdiction.
0
18. A new Sec. 405.1840 is added to read as follows:
Sec. 405.1840 Board jurisdiction.
(a) General rules. (1) After a request for a Board hearing is filed
under Sec. 405.1835 or Sec. 405.1837 of this part, the Board must
determine in accordance with paragraph (b) of this section, whether or
not it has jurisdiction to grant a hearing on each of the specific
matters at issue in the hearing request.
(2) The Board must make a preliminary determination of the scope of
its jurisdiction (that is, whether the request for hearing was timely,
and whether the amount in controversy requirement has been met), if
any, over the matters at issue in the appeal before conducting any of
the following proceedings:
(i) Determining its authority to decide a legal question relevant
to a matter at issue (as described in Sec. 405.1842 of this subpart).
(ii) Permitting discovery (as described in Sec. 405.1853 of this
subpart).
(iii) Issuing a subpoena (as described in Sec. 405.1857 of this
subpart).
(iv) Conducting a hearing (as described in Sec. 405.1845 of this
subpart).
(3) The Board may revise a preliminary determination of
jurisdiction at any subsequent stage of the proceedings in a Board
appeal, and must promptly notify the parties of any revised
determination. Under paragraph (c)(1) of this section, each expedited
judicial review (EJR) decision (as described in Sec. 405.1842 of this
subpart) and hearing decision (as described in Sec. 405.1871 of this
subpart) by the Board must include a jurisdictional finding for each
specific matter at issue in the appeal.
(4) If the Board finally determines it lacks jurisdiction over
every specific matter at issue in the appeal, the Board must issue a
dismissal decision under paragraph (c)(2) of this section.
(5) Final jurisdictional findings and dismissal decisions by the
Board under paragraphs (c)(1) and (c)(2) of this section are subject to
Administrator and judicial review in accordance with paragraph (d) of
this section.
(b) Criteria. Except with respect to the amount in controversy
requirement, the jurisdiction of the Board to grant a hearing must be
determined separately for each specific matter at issue in each
intermediary or Secretary determination for each cost reporting period
under appeal. The Board has jurisdiction to grant a hearing over a
specific matter at issue in an appeal only if the provider has a right
to a Board hearing as a single provider appeal under Sec. 405.1835 of
this subpart or as part of a group appeal under Sec. 405.1837 of this
subpart, as applicable. Certain matters at issue are removed from
jurisdiction of the Board. These matters include, but are not
necessarily limited to, the following:
(1) A finding in an intermediary determination that expenses
incurred for certain items or services furnished by a provider to an
individual are not payable under title XVIII of the Act because those
items or services are excluded from coverage under section 1862 of the
Act and Part 411 of the regulations. Review of these findings is
limited to the applicable provisions of sections 1155, 1869, and
1879(d) of the Act and of Subpart I of Part 405 and Subpart B of Part
478 of the regulations, as applicable.
(2) Certain matters affecting payments to hospitals under the
prospective payment system, as provided in section 1886(d)(7) of the
Act and Sec. 405.1804 of this subpart.
(3) Any self-disallowed cost, except as permitted in Sec.
405.1835(a)(1)(ii) and Sec. 405.1837(a)(1) of this subpart.
(c) Board's jurisdictional findings and jurisdictional dismissal
decisions. (1) In issuing an EJR decision under Sec. 405.1842 of this
subpart or a hearing decision under Sec. 405.1871 of this subpart, as
applicable, the Board must make a separate determination of whether it
has jurisdiction for each specific matter at issue in each intermediary
or Secretary determination under appeal. A decision by the Board must
include specific findings of fact and conclusions of law as to whether
the Board has jurisdiction to grant a hearing on each matter at issue
in the appeal.
[[Page 30254]]
(2) Except as provided in Sec. 405.1836(e)(1) and Sec.
405.1842(f)(2)(i) of this subpart, where the Board determines it lacks
jurisdiction to grant a hearing for every specific matter at issue in
an appeal, it must issue a dismissal decision dismissing the appeal for
lack of Board jurisdiction. The decision by the Board must include
specific findings of fact and conclusions of law explaining the Board's
determination that it lacks jurisdiction to grant a hearing on each
matter at issue in the appeal. A copy of the Board's decision must be
mailed promptly to each party to the appeal (as described in Sec.
405.1843 of this subpart).
(3) A dismissal decision by the Board under paragraph (c)(2) of
this section is final and binding on the parties unless the decision is
reversed, affirmed, modified or remanded by the Administrator under
Sec. 405.1875(a)(2)(ii) and Sec. 405.1875(e) or Sec. 405.1875(f) of
this subpart, no later than 60 days after the date of receipt by the
provider of the Board's decision. The Board decision is inoperative
during the 60-day period for review of the decision by the
Administrator, or in the event the Administrator reverses, affirms,
modifies or remands that decision within that period. A final Board
decision under paragraphs (c)(2) and (c)(3) of this section may be
reopened and revised by the Board in accordance with Sec. 405.1885
through Sec. 405.1889 of this subpart.
(d) Administrator and judicial review. Any finding by the Board as
to whether it has jurisdiction to grant a hearing on a specific matter
at issue in an appeal is not subject to further administrative and
judicial review, except as provided in this paragraph. The Board's
jurisdictional findings as to specific matters at issue in an appeal
may be reviewed solely during the course of Administrator review of one
of the Board decisions specified as final, or deemed to be final by the
Administrator, under Sec. 405.1875(a)(2) of this subpart, or during
the course of judicial review of a final agency decision as described
in Sec. 405.1877(a) of this subpart, as applicable.
Sec. 405.1841 [Removed]
0
19. Section 405.1841 is removed.
0
20. Section 405.1842 is revised to read as follows:
Sec. 405.1842 Expedited judicial review.
(a) Basis and scope. (1) This section implements provisions in
section 1878(f)(1) of the Act that give a provider the right to seek
EJR of a legal question relevant to a specific matter at issue in a
Board appeal if there is Board jurisdiction to conduct a hearing on the
matter (as described in Sec. 405.1840 of this subpart), and the Board
determines it lacks the authority to decide the legal question (as
described in Sec. 405.1867 of this subpart, explains the scope of the
Board's legal authority).
(2) A provider may request a Board decision that the provider is
entitled to seek EJR or the Board may consider issuing a decision on
its own motion. Each EJR decision by the Board must include a specific
jurisdictional finding on the matter(s) at issue, and, where the Board
determines that it does have jurisdiction on the matter(s) at issue, a
separate determination of the Board's authority to decide the legal
question(s).
(3) The Administrator may review the Board's jurisdictional
finding, but not the Board's authority determination.
(4) The provider has a right to seek EJR of the legal question
under section 1878(f)(1) of the Act only if--
(i) The final EJR decision of the Board or the Administrator, as
applicable, includes a finding of Board jurisdiction over the specific
matter at issue and a determination by the Board that it has no
authority to decide the relevant legal question; or
(ii) The Board fails to make a determination of its authority to
decide the legal question no later than 30 days after finding
jurisdiction over the matter at issue and notifying the provider that
the provider's EJR request is complete.
(b) General. (1) Prerequisite of Board jurisdiction. The Board (or
the Administrator) must find that the Board has jurisdiction over the
specific matter at issue before the Board may determine its authority
to decide the legal question.
(2) Initiating EJR procedures. A provider or group of providers may
request the Board to grant EJR of a specific matter or matters under
appeal, or the Board on its own motion may consider whether to grant
EJR of a specific matter or matters under appeal. Under paragraph (c)
of this section, the Board may initiate own motion consideration of its
authority to decide a legal question only if the Board makes a
preliminary finding that it has jurisdiction over the specific matter
at issue to which the legal question is relevant. Under paragraphs (d)
and (e) of this section, a provider may request a determination of the
Board's authority to decide a legal question, but the 30-day period for
the Board to make a determination under section 1878(f)(1) of the Act
does not begin to run until the Board finds jurisdiction to conduct a
hearing on the specific matter at issue in the EJR request and notifies
the provider that the provider's request is complete.
(c) Board's own motion consideration. (1) If the Board makes a
finding that it has jurisdiction to conduct a hearing on a specific
matter at issue in accordance with Sec. 405.1840(a) of this part, it
may then consider on its own motion whether it lacks the authority to
decide a legal question relevant to the matter at issue.
(2) The Board must initiate its own motion consideration by issuing
a written notice to each of the parties to the appeal (as described in
Sec. 405.1843 of this subpart). The notice must--
(i) Identify each specific matter at issue for which the Board has
made a finding that it has jurisdiction under Sec. 405.1840(a) of this
part, and for each specific matter, identify each relevant statutory
provision, regulation, or CMS Ruling; and
(ii) Specify a reasonable period of time for the parties to respond
in writing.
(3) After considering any written responses made by the parties to
its notice of own motion consideration, the Board must determine
whether it has sufficient information to issue an EJR decision for each
specific matter and legal question included in the notice. If
necessary, the Board may request additional information regarding its
jurisdiction or authority from a party (or parties), and the Board must
give any other party a reasonable opportunity to comment on any
additional submission. Once the Board determines it needs no further
information from the parties (or that any information has not been
rendered timely), it must issue an EJR decision in accordance with
paragraph (f) of this section.
(d) Provider requests. A provider (or, in the case of a group
appeal, a group of providers) may request a determination by the Board
that it lacks the authority to decide a legal question relevant to a
specific matter at issue in an appeal. A provider must submit a request
in writing to the Board and to each party to the appeal (as described
in Sec. 405.1843 of this subpart), and the request must include--
(1) For each specific matter and question included in the request,
an explanation of why the provider believes the Board has jurisdiction
under Sec. 405.1840 of this subpart over each matter at issue and no
authority to decide each relevant legal question; and
(2) Any documentary evidence the provider believes supports the
request.
(e) Board action on provider requests. (1) If the Board makes a
finding that it has jurisdiction to conduct a hearing on a specific
matter at issue in accordance
[[Page 30255]]
with Sec. 405.1840(a) of this part, then (and only then) it must
consider whether it lacks the authority to decide a legal question
relevant to the matter at issue. The Board is required to make a
determination of its authority to decide the legal question raised in a
review request under paragraph (d)(1) of this section by issuing an EJR
decision no later than 30 days after receiving a complete provider
request as defined in paragraph (e)(2) of this section.
(2) Requirements of a complete provider request. A complete
provider request for EJR consists of the following:
(i) A request for an EJR decision by the provider(s).
(ii) All of the information and documents found necessary by the
Board for issuing a decision in accordance with paragraph (f) of this
section.
(3) Board's response to provider requests. After receiving a
provider request for an EJR decision, the Board must review the
request, along with any responses to the request submitted by other
parties to the appeal (as described in Sec. 405.1843 of this subpart).
The Board must respond to the provider(s) as follows:
(i) Upon receiving a complete provider request, issue an EJR
decision in accordance with paragraph (f) of this section no later than
30 days after receipt of the complete provider request. If the Board
does not issue a decision within that 30-day period, the provider has a
right to file a complaint in Federal district court in order to obtain
EJR over the specific matter(s) at issue.
(ii) If the provider has not submitted a complete request, issue no
later than 30 days after receipt of the incomplete request a written
notice to the provider describing in detail the further information
that the provider must submit in order to complete the request.
(f) Board's decision on EJR: Criteria for granting EJR. Subject to
paragraph (h)(3) of this section, the Board is required to issue an EJR
decision following either the completion of the Board's own motion
consideration under paragraph (c) of this section, or a notice issued
by the Board in accordance with paragraph (e)(3)(i) of this section.
(1) The Board's decision must grant EJR for a legal question
relevant to a specific matter at issue in a Board appeal if the Board
determines the following conditions are satisfied:
(i) The Board has jurisdiction to conduct a hearing on the specific
matter at issue in accordance with Sec. 405.1840 of this subpart.
(ii) The Board lacks the authority to decide a specific legal
question relevant to the specific matter at issue because the legal
question is a challenge either to the constitutionality of a provision
of a statute, or to the substantive or procedural validity of a
regulation or CMS Ruling.
(2) The Board's decision must deny EJR for a legal question
relevant to a specific matter at issue in a Board appeal if any of the
following conditions are satisfied:
(i) The Board determines that it does not have jurisdiction to
conduct a hearing on the specific matter at issue in accordance with
Sec. 405.1840 of this subpart.
(ii) The Board determines it has the authority to decide a specific
legal question relevant to the specific matter at issue because the
legal question is neither a challenge to the constitutionality of a
provision of a statute, nor a challenge to the substantive or
procedural validity of a regulation or CMS Ruling.
(iii) The Board does not have sufficient information to determine
whether the criteria specified in paragraph (f)(1)(i) or (f)(1)(ii) of
this section are met.
(3) A copy of the Board's decision must be sent promptly to--
(i) Each party to the Board appeal (as described in Sec. 405.1843
of this subpart) and
(ii) The Office of the Attorney Advisor.
(g) Further review after the Board issues an EJR decision. (1)
General rules.
(i) Under Sec. 405.1875(a)(2)(iii) of this subpart, the
Administrator may review, on his or her own motion, or at the request
of a party, the jurisdictional component only of the Board's EJR
decision.
(ii) Any review by the Administrator is limited to the question of
whether there is Board jurisdiction over the specific matter at issue;
the Administrator may not review the Board's determination of its
authority to decide the legal question.
(iii) An EJR decision by the Board becomes final and binding on the
parties unless the decision is reversed, affirmed, modified, or
remanded by the Administrator under Sec. 405.1875(a)(2)(iii) and Sec.
405.1875(e) or Sec. 405.1875(f) of this subpart no later than 60 days
after the date of receipt by the provider of the Board's decision.
(iv) A Board decision is inoperative during the 60-day period for
review by the Administrator, or in the event the Administrator
reverses, affirms, modifies, or remands that decision within that
period.
(v) Any right of the provider to obtain EJR from a Federal district
court is specified at paragraphs (g)(2) and (g)(3) of this section
(when the Board issues a timely EJR decision) and paragraph (g)(4) of
this section (in the absence of a timely Board decision).
(vi) A final Board decision under paragraph (f) of this section,
and a final Administrator decision made upon review of a final Board
decision (as described in Sec. 405.1875(a)(2) and (e) of this subpart)
may be reopened and revised in accordance with Sec. 405.1885 through
Sec. 405.1889 of this subpart.
(2) Board grants EJR. If the Board grants EJR, the provider may
file a complaint in a Federal district court in order to obtain EJR of
the legal question. If the Administrator renders, no later than 60 days
after the date of receipt by the provider of the Board's decision
granting EJR, a decision finding that the Board has no jurisdiction
over the matter at issue, the Board's decision is rendered nonfinal and
the provider has no right to obtain judicial review based on the
Board's decision (as described in Sec. 405.1877(a)(3) and (b)(3) of
this subpart).
(3) Board denies EJR. If the Board's decision denies EJR because
the Board finds that it has the authority to decide the legal question
relevant to the matter at issue, the Administrator may not review the
Board's authority determination, and the provider has no right to
obtain EJR. If the Board denies EJR based on a finding that it lacks
jurisdiction over the specific matter, the provider has no right to
obtain EJR unless--
(i) The Administrator renders timely a final decision reversing the
Board, finding the Board has jurisdiction over the matter at issue, and
remanding to the Board; or
(ii) A court reverses the Board's or Administrator's decision as to
jurisdiction, the Administrator remands to the Board, and the Board
subsequently issues on remand from the Administrator an EJR decision
granting EJR on the basis that it lacks the authority to decide the
legal question.
(4) No timely EJR decision. The Board must issue an EJR decision no
later than 30 days after the date of a written notice under paragraph
(e)(3)(i) of this section, when the provider submits a complete request
for EJR. If the Board does not issue an EJR decision within a 30-day
period, the provider(s) has a right to seek EJR under section
1878(f)(1) of the Act.
(h) Effect of final EJR decisions and lawsuits on further Board
proceedings. (1) Final decisions granting EJR. If the final decision of
the Board (or the Administrator), as applicable (as described in Sec.
405.1842(g)(1) and
[[Page 30256]]
Sec. 405.1875(e)(4) of this subpart), grants EJR, the Board may not
conduct any further proceedings on the legal question. The Board must
dismiss--
(i) The specific matter at issue from the appeal.
(ii) The entire appeal if there are no other matters at issue that
are within the Board's jurisdiction and can be fully decided by the
Board.
(2) Final decisions denying EJR. If the final decision:
(i) Of the Board denies EJR solely on the basis that the Board
determines it has the authority to decide the legal question relevant
to the specific matter at issue, the Board must conduct further
proceedings on the legal question and issue a decision on the matter at
issue in accordance with this subpart.
Exception: If the provider(s) file(s) a lawsuit pertaining to the
legal question, and for a period that is covered by the Board's
decision denying EJR, the Board may not conduct any further proceedings
under this subpart on the legal question or the matter at issue before
the lawsuit is finally resolved.
(ii) Of the Board (or the Administrator) denies EJR on the basis
that the Board lacks jurisdiction over the specific matter at issue,
the Board (or the Administrator) must, as applicable, dismiss the
specific matter at issue from the appeal, or dismiss the appeal
entirely if there are no other matters at issue that are within the
Board's jurisdiction and can be fully decided by the Board. If only the
specific matter(s) is dismissed from the appeal, judicial review may be
had only after a final decision on the appeal is made by the Board or
Administrator, as applicable (as described in Sec. 405.1840(d) and
Sec. 405.1877(a) of this subpart). If the Board or the Administrator,
as applicable, dismisses the appeal entirely, the decision is subject
to judicial review under Sec. 405.1877(a) of this subpart.
(3) Provider lawsuits. (i) If the provider files a lawsuit seeking
judicial review (whether on the basis of the EJR provisions of section
1878(f)(1) of the Act or on some other basis) pertaining to a legal
question that is allegedly relevant to a specific matter at issue in a
Board appeal to which the provider is a party and that is allegedly not
within the Board's authority to decide, the Office of the Attorney
Advisor must promptly provide the Board with written notice of the
lawsuit and a copy of the complaint.
(ii) If the lawsuit is filed after a final EJR decision by the
Board or the Administrator, as applicable (as described in Sec.
405.1842(g)(1) and Sec. 405.1875(e)(4) of this subpart), on the legal
question, the Board must carry out the applicable provisions of
paragraphs (h)(1) and (h)(2) of this section in any pending Board
appeal on the specific matter at issue.
(iii) If the lawsuit is filed before a final EJR decision is issued
on the legal question, the Board may not conduct any further
proceedings on the legal question or the matter at issue until the
lawsuit is resolved.
0
21. Section Sec. 405.1843 is revised to read as follows:
Sec. 405.1843 Parties to proceedings in a Board appeal.
(a) When a provider files a request for a hearing before the Board
in accordance with Sec. 405.1835 or Sec. 405.1837 of this subpart,
the parties to all proceedings in the Board appeal include the
provider, an intermediary, and, where applicable, any other entity
found by the Board to be a related organization of the provider under
the principles enunciated in Sec. 413.17 of this chapter.
(b) Neither the Secretary nor CMS may be made a party to
proceedings in a Board appeal.
(1) The Board may call as a witness any employee or officer of the
Department of Health and Human Services or CMS having personal
knowledge of the facts and the issues in controversy in an appeal.
(2) The regulations at 45 CFR Part 2 (Testimony by employees and
production of documents in proceedings where the United States is not a
party) apply as to whether such employee or officer will appear.
(c) An intermediary may designate a representative from the
Secretary or CMS, who may be an attorney, to represent the intermediary
in proceedings before the Board.
(d) Although CMS is not a party to proceedings in a Board appeal,
there may be instances where CMS determines that the administrative
policy implications of a case are substantial enough to warrant comment
from CMS (as described in Sec. 405.1863 of this subpart). CMS--
(1) May file amicus curiae (friend of the court) briefing papers
with the Board in accordance with a schedule to be determined by the
Board.
(2) Must promptly mail copies of any documents filed with the Board
to each party to the appeal.
(e) A nonparty other than CMS may seek leave from the Board to file
amicus curiae briefing papers with the Board.
(f) The Board may exclude from the record all or part of an amicus
curiae briefing paper. When the Board excludes from the record all or
part of an amicus curiae briefing paper submitted by CMS, it states for
the record its reason(s) in writing.
0
22. Section 405.1845 is amended by--
0
A. Revising the section heading.
0
B. Revising paragraphs (c) and (d).
0
C. Adding paragraphs (e) through (h)
The revisions and additions read as follows:
Sec. 405.1845 Composition of Board; hearings, decisions, and remands.
* * * * *
(c) Composition of the Board. The Secretary designates one member
of the Board as Chairperson. The Chairperson coordinates and directs
the administrative activities of the Board and the conduct of
proceedings before the Board. CMS provides administrative support for
the Board. Under the direction of the Chairperson, the Board is solely
responsible for the content of its decisions.
(d) Quorum. (1) The Board must have a quorum in order to issue one
of the decisions specified as final, or deemed final by the
Administrator, under Sec. 405.1875(a)(2)(i), (a)(2)(iii), and
(a)(2)(iv), but a quorum is not required for other Board actions.
(2) Three Board members, at least one of whom is representative of
providers, are required in order to constitute a quorum.
(3) The opinion of the majority of those Board members issuing a
decision specified as final, or deemed as final by the Administrator,
under Sec. 405.1875(a)(2), constitutes the Board's decision.
(e) Hearings. The Board may conduct a hearing and issue a hearing
decision (as described in Sec. 405.1871 of this subpart) on a specific
matter at issue in an appeal, provided it finds jurisdiction over the
matter at issue in accordance with Sec. 405.1840 of this part and
determines it has the legal authority to fully resolve the issue (as
described in Sec. 405.1867 of this subpart).
(f) Oral hearings. (1) In accordance with paragraph (d) of this
section, the Board does not need a quorum in order to hold an oral
hearing (as described in Sec. 405.1851 of this subpart). The
Chairperson of the Board may designate one or more Board members to
conduct an oral hearing (where less than a quorum conducts the
hearing). Because the presence of all Board members is not required at
an oral hearing, the Board, at its discretion, may hold more than one
oral hearing at a time.
(2) Waiver of oral hearings. With the intermediary's agreement and
the Board's approval, the provider (or, in the case of group appeals,
the group of providers) and any related organizations
[[Page 30257]]
(as described in Sec. 405.1843(a) of this subpart) may waive any right
to an oral hearing and stipulate that the Board may issue a hearing
decision on the written record. An on-the-written-record hearing
consists of all the evidence and written argument or comments submitted
to the Board and included in the record (as described in Sec. 405.1865
of this subpart).
(g) Hearing decisions. The Board's hearing decision must be based
on the transcript of any oral hearing before the Board, any matter
admitted into evidence at a hearing or deemed admissible evidence for
the record (as described in Sec. 405.1855 of this subpart), and any
written argument or comments timely submitted to the Board (as
described in Sec. 405.1865 of this subpart).
(h) Remands. (1) Except as provided in paragraph (h)(3) of this
section, a Board remand order may be reviewed solely during the course
of Administrator review of one of the Board decisions specified in
Sec. 405.1875(a)(2) of this subpart), or of judicial review of a final
agency decision as described in Sec. 405.1877(a) and (c)(3) of this
part, as applicable.
(2) The Board may order a remand requiring specific actions of a
party to the appeal. In ordering a remand, the Board must--
(i) Specify any actions required of the party and explain the
factual and legal basis for ordering a remand;
(ii) Issue the remand order in writing; and
(iii) Mail the remand order promptly to the parties and any
affected nonparty, such as CMS, to the appeal.
(3) A Board remand order is not subject to immediate Administrator
review unless the Administrator determines that the remand order might
otherwise evade his or her review (as described in Sec.
405.1875(a)(2)(iv) of this subpart).
0
23. Section 405.1853 is revised to read as follows:
Sec. 405.1853 Board proceedings prior to any hearing; discovery.
(a) Preliminary narrowing of the issues. Upon receiving
notification that a request for a Board hearing is submitted, the
intermediary must--
(1) Promptly review both the materials submitted with the provider
hearing request, and the information underlying each intermediary or
Secretary determination for each cost reporting period under appeal.
(2) Expeditiously attempt to join with the provider in resolving
specific factual or legal issues and submitting to the Board written
stipulations setting forth the specific issues that remain for Board
resolution based on the review; and
(3) Ensure that the evidence it considered in making its
determination, or, where applicable, the evidence the Secretary
considered in making his or her determination, is included in the
record.
(b) Position papers. (1) After any preliminary narrowing of the
issues, the parties must file position papers in order to narrow the
issues further. In each case, and as appropriate, the Board establishes
the deadlines as to when the provider(s) and the intermediary must
submit position papers to the Board.
(2) The Board has the discretion to extend the deadline for
submitting a position paper. Each position paper must set forth the
relevant facts and arguments regarding the Board's jurisdiction over
each remaining matter at issue in the appeal (as described in Sec.
405.1840 of this subpart), and the merits of the provider's Medicare
payment claims for each remaining issue.
(3) In the absence of a Board order or general instructions to the
contrary, any supporting exhibits regarding Board jurisdiction must
accompany the position paper. Exhibits regarding the merits of the
provider's Medicare payment claims may be submitted in a timeframe to
be decided by the Board through a schedule appli