PRRB—2012 Year In Review

Appeals of Medicare cost report determinations must follow specific administrative procedures found at 42 C.F.R. §405.1801 et seq. This administrative review process follows this course: (1) hearings by Medicare administrative contractors, (2) Provider Reimbursement Review Board (PRRB) hearings, (3) CMS Administrator review; and (4) review by the courts. The administrative review process prevents unnecessary intervention into CMS’s decision-making authority, provides CMS with an opportunity to correct its errors, affords district courts the benefit of CMS’ expertise, and establishes a factual record for the courts.

Below are highlights from 2012 regarding decisions of the Provider Reimbursement Review Board (PRRB) and 2012 reviews by the CMS Administrator and courts related to PRRB decisions from 2012 or previous years.

Judicial Decisions

Grossmont Hospital Corp.v. Sebelius, D.D.C. Nov. 9, 2012.  Providers who believed that a state Medicaid agency failed to pay all of the dual-eligible inpatient claims for which it was responsible could not bill Medicare by writing the claims off as bed debts because the providers did not first bill Medicaid and receive an official determination from the state agency. The Secretary of HHS did not act arbitrarily and capriciously when she determined that the providers’ claims were not reimbursable because they failed to bill the California state Medicaid agency, Medi-Cal, and receive an official determination on Medi-Cal’s liability for dual-eligible claims before billing Medicare for bad debts. The district court thus granted the Secretary’s motion for summary judgment.

Nazareth Hospital v. Sebelius, E.D. Pennsylvania, October 16, 2012. A challenge to the regulations governing the calculation of the disproportionate share hospital (DSH) adjustment will proceed. The court rejected HHS Secretary Sebelius’ argument that the court had no jurisdiction to consider the validity of the regulations and ordered her to produce the agency’s record of the rulemaking process.

Abraham Lincoln Memorial Hospital v. Sebelius, 7th Cir. October 16, 2012. The district court was correct in finding that the Secretary’s decision to adjust the cost reports of a group of Illinois hospitals to take into account payments the hospitals received from the state just days before paying a health care tax which the hospitals claimed in full as a Medicare cost was proper. The Secretary’s decision (1) was not arbitrary or capricious, or contrary to law; (2) correctly applied Medicare law to the term “actually incurred”; (3) was not inconsistent with her decision in the state plan amendment (SPA); (4) was not a reversal of a long-standing policy; and (5) did not create a new rule in violation of the Administrative Procedures Act. The district court’s decision, which granted summary judgment in favor of the Secretary, was affirmed.

Waterbury Hospital v. Sebelius, D. Connecticut, September 29, 2012. The court sustained a decision by the CMS administrator that program days covered by the State- Administered General Assistance (SAGA) must be excluded in the count of Medicaid-related days in calculating the providers’ disproportionate share hospital (DSH) percentages to the extent that these SAGA days were associated with individuals who were not eligible for medical assistance under a state Medicaid plan.

Columbia St. Mary’s Hospital Milwaukee, Inc. v. Sebelius, D.D.C., September 28, 2012. The court vacated a CMS Administrator decision that a PRRB decision that an intermediary had improperly calculated 365 disproportionate share hospital (DSH) Long Term Respiratory Unit patient days was incorrect.

Cove Associates Joint Venture v. Sebelius, D.D.C., March 26, 2012.  The Secretary properly denied bad debt claims made by a skilled nursing facility and a long-term care hospital (facilities) for failure to prove that the debt was uncollectable. The Secretary denied reimbursement because the facilities failed to comply with the agency’s must-bill policy. The policy required facilities to bill its state Medicaid program before claiming payment for costs associated with dual eligibles as Medicare bad debt.

Hospital of the University of Pennsylvania v. Sebelius, D.D.C., March 20, 2012. The Secretary improperly denied supplemental medical education payments to three hospitals for failing to comply with the requirements for filing the reimbursement of claims. The hospitals challenged the denial of reimbursement for graduate medical education (GME) and indirect medical education (IME) costs arguing that they never received notice of the requirements for filing the claims, that they mailed the claims for the GME/IME payments to the intermediary, and that the deadlines were improper. The district court found that the Secretary was obliged to give fair notice to the parties where, as here, there is a tension between the regulatory text and the statute. The Secretary failed to show that it provided the hospitals adequate notice that the deadlines in 42 C.F.R. § 424.44 applied to the filing of the claims for GME/ IME payments.

Swedish American Hospital v. Sebelius, D.D.C., February 29, 2012. A hospital’s motion for relief upon reconsideration was denied because it failed to present new evidence or arguments. The hospital, a Medicare provider, previously sought administrative review of a Department of Health and Human Services ruling requiring it to repay Medicare nearly $5 million for the training of its medical residents.

Adirondack Medical Center v. Sebelius, D.D.C., January 31, 2012. The Provider Reimbursement Review Board’s (PRRB) decision regarding whether it had jurisdiction over several hospitals’ challenge of the calculation of hospital specific Medicare payment rates after January 1, 2009, stands as the final decision of the agency because the CMS Administrator did not take any action on the decision within 60 days.

Catholic Health Initiatives – Iowa, Corp. d/b/a Mercy Medical Center – Des Moines v. Sebelius, D.D.C., January 30, 2012. The Secretary’s current interpretation of payments to disproportionate share hospitals (DSH) represents a substantive change from her prior policy and practice of including dual-eligible exhausted benefit days in the “Medicaid fraction” when calculating DHS payments. Accordingly, the Secretary’s interpretation may not be retroactively applied to a hospital’s 1997 cost reporting period. The hospital’s motion for summary judgment is granted.

CMS Administrator Decisions

In the Case of: Ober Kaler DSH Charity Care Groups v Blue Cross Blue Shield Association Highmark Medicare Services and Cahaba Government Benefit Administrators, (Review of PRRB Decision No. 2012-D17), August 15, 2012. The exclusion of days of care provided under the New Jersey Charity Care Program (NJCCP) from the numerator of the Medicaid fraction for calculating the Medicare disproportionate share hospital (DSH) adjustment was correct. The decision of the Provider Reimbursement Review Board (PRRB) was correct and is affirmed by the CMS Administrator.

In the case of: QRS 1991-2006 Colorado DSH/General Assistance Days Group, (Review of PRRB Decision No. 2012-D23), November 6, 2012. The Provider Reimbursement Review Board (PRRB) properly concluded that the intermediary properly excluded Colorado Indigent Care Program (CICP) days from the numerator of the provider’s Medicaid proxy of the Medicare disproportionate share hospital (DSH) calculation. The CMS Administrator found that the days related to patients eligible for CICP do not fall within the legal meaning of patient days attributable to patients who were eligible for a medical assistance under a state plan approved under the Medicaid program. Therefore, those days are not properly included in the numerator of the Medicaid patient percentage fraction in calculating the Medicare DSH adjustment.

Canon Healthcare Hospice v. CMS (Review of PRRB Decision No. 2012-D15), June 6, 2012. There was no legal basis on which the Provider Reimbursement Review Board (PRRB) could permit or approve a waiver of recoupment from a hospice of payments exceeding the hospice cap during the cap period ending October 31, 2006. Therefore, the PRRB erred when it waived the recoupment of the portion of the overpayment attributable to the hurricane. The waiver granted by Secretary Leavitt did not affect conditions for payment or any requirements related to reimbursement.

Norwalk Hospital v. BCBS/ National Government Services Inc., (Review of PRRB Decision No. 2012-D14), May 21, 2012.The Provider Reimbursement Review Board (PRRB) did not have jurisdiction to adjust the number of Medicaid days in the provider’s disproportionate share hospital (DSH) calculation. The provider failed to demonstrate that it was dissatisfied with the intermediary’s determination of the number of Medicaid days, and as such the PRRB did not have jurisdiction. There was no practical impediment to the provider to make it impossible for the provider to obtain the necessary data in time to file a claim for these days on its cost report, and as such the possible jurisdiction provided by the U.S. Supreme Court in the Bethesda Hospital Association v. Bowen case did not exist. The decision of the PRRB was reversed.

Research Medical Center v. Wisconsin Physician Service (Review of PRRB Decision No. 2012-D12), May 14, 2012.  An intermediary properly disallowed additional 1998 data to be considered for a provider’s fiscal year 2001 for nursing and allied health (N&AH) education payments for Medicare + Choice (M+C) enrollees. Under CMS payment methodology, the provider was only permitted to submit additional N&AH days data for the period ending December 31, 1998 if it submitted it by December 31, 2000.

Alameda Hospital SNF v. BCBS/First Coast Service Options, Inc. (Review of PRRB Decision No. 2012-D10), April 10, 2012. The decision of the Provider Reimbursement Review Board (PRRB) to remand the case so that the intermediary can examine the hospital-based skilled nursing facility’s (SNF) alternative proposal for application of the low occupancy adjustment to its routine cost limits (RCLs) is appropriate. The United States District Court for the District of Columbia’s decision that CMS changed its policy for determining the 112 percent reimbursement gap that affects atypical service exception requests without proper notice and comment period does not apply to the provider’s low occupancy issue.

Rush University Medical Center v. BCBS/ National Government Services Inc. (Review of PRRB Decision No. 2012-D9), April 4, 2012. The Provider Reimbursement Review Board (PRRB) incorrectly reversed the Intermediary’s finding that certain beds were available for inpatient care. The provider, Rush University Medical Center (Rush), did not present adequate documentation of its claims regarding either of the two contested groups of beds. The PRRB’s determination that research time could not be counted in determining indirect medical education costs was correct.

Rush University Medical Center v. BCBS/ National Government Services Inc., (Review of PRRB Decision No. 2012-D8), April 4, 2012. The Provider Reimbursement Review Board (PRRB) erred when it accepted the contentions of the Provider, Rush University Medical Center (Rush) that certain beds should be excluded from the resident-to-bed ratio because they had been removed from service or were used for observation services. The Administrator found that Rush had not submitted adequate documentation to support the unavailability of the beds. However, the Administrator upheld the PRRB’s determinations disallowing claimed costs for resident time spent in elective rotations or in research activity.

Lifespan SWC 2003 DSH Medicare+Choice Days Group v. National Government Services Blue Cross Blue Shield Association (Review of PRRB Decision No. 2012-D6), February 29, 2012.  The fiscal intermediary (FI) is ordered by the Administrator to revise the payment determination of the Provider Reimbursement Review Board (PRRB) to include the disputed Medicare+Choice (M+C) days in the Medicaid fractions. Although the Administrator believes that Medicare policy has always been to exclude M+C days from the Medicaid fraction numerator, the Administrator is bound by the decision in Northeast Hospital Corp. v. Sebelius that concluded that while the statute does not foreclose the Secretary’s interpretation that a Medicare beneficiary enrolled in Medicare Part C still qualifies as a person “entitled to benefits” under Medicare Part A, and that the days should be included in the numerator of the Medicare fraction, the Secretary could not apply this interpretation to patient discharges prior to October 1, 2004.

Youngstown-Warren 02 Wage Index v. BlueCross BlueShield Association/National Government Services, Inc. (Review of PRRB Decision No. 2012-D5), February 29, 2012. The intermediary properly used total hours paid in the computation of the wage index. The Provider Reimbursement Review Board (PRRB) determined that the intermediary should use the hours actually worked. The PRRB should have referred to the Adventist GlenOaks Hospital case which stated that the Secretary has provided sufficient justification for the policy of counting hours paid as a opposed to hours worked. That policy avoids the slippery slope that comes with trying to exclude certain types of paid leave but not others and conforms with CMS’ longstanding policy to use paid hours because paid hours more appropriately reflects the basis of salary.

Lakeland Regional Medical Center v. Blue Cross Blue Shield Association/National Government Services(Review of PRRB Decision No. 2012-D3), February 16, 2012. The fiscal intermediary (FI) properly disallowed a provider’s uncollected Medicare accounts as bad debts since they were still held at a collection agency. The Provider Reimbursement Review Board’s held that the FI had improperly disallowed the provider’s bad debts.  The Administrator reasonably expects that a provider demonstrate it has completed its collection effort including outside collection, before claiming debts as worthless.

PRRB Decisions

Pennsylvania General Assistance Days Group v BlueCross BlueShield Association/Novitas Solutions, Inc., Decision No. 2013-D1, November 20, 2012. The patient days for which two hospitals were compensated under Pennsylvania’s state-run charity care program may not be included in the patient days used in the numerator of the “Medicaid fraction” under Soc. Sec. Act sec. 1886(d)(5)(F)(vi)(II) to calculate the hospitals’ Medicare disproportionate share hospital (DSH) adjustment. The patients represented by these days were not eligible for medical assistance under the state medical plan. Although the charity care program is identified in the state plan, it receives no federal Medicaid funding, and patients who are eligible for Medicaid under the state plan are, by definition, not eligible for the charity care program.

QRS 93 DSH/Iowa Indigent Patient/Charity Care (GA) Group v. BlueCross BlueShield Association/Wisconsin Physicians Service, Decision No. 2013-D2, November 21, 2012. Charity care beneficiaries were not eligible for Medicaid and the services that were provided under that program would not be matched with federal funds except under the Medicaid disproportionate share hospital (DSH) provisions. Acute care hospitals located in Iowa and Nebraska, appealed the Intermediary’s decision not to include Iowa Charity Care Program days in the numerator of the providers’ Medicaid proxy for the cost reporting periods of 1996 to 2007. The hospitals participated in the Iowa State Plan which provides medical assistance to uninsured low-income patients not eligible for other medical assistance programs, including Medicaid.

Bergen Regional Medical Center (Paramus, NJ) v. BlueCross BlueShield Association/Novitas Solutions Inc., Dec. No. 2012-D25, September 25, 2012. The Provider Reimbursement Review Board (PRRB) had no jurisdiction to hear an appeal of the intermediary’s determination of the redistribution of the provider’s 1996 resident cap amounts. Section 422 of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) ( P.L. 108-173) required CMS to redistribute resident slots and specifically barred review of the reductions or distributions.

Swedish American Hospital (Rockford, IL) v. Wisconsin Physicians Service- (formerly Mutual of Omaha Insurance Co.), Dec. No. 2012-D24, September 6, 2012. The intermediary properly adjusted the provider’s graduate medical education (GME) and indirect medical education (IME) full-time equivalent (FTE) counts for the years in question. The provider, which had assumed residency slots from a hospital that closed its residency program failed to seek a redistribution of unused IME/GME resident FTE positions by the deadline for doing so. The Provider Reimbursement Review Board (PRRB) also determined that the provider was not eligible to assume the residents of a hospital that had terminated its residency program because all of those residents would have completed their residency before the provider sought the increase.

San Joaquin Community Hospital v. BCBS/First Coast Service Options Inc., Dec. No. 2012-D21, August 8, 2012. The skilled nursing facility (SNF) based at San Joaquin Community Hospital (SJ SNF) did not establish that CMS’ allegedly inappropriate methodology affected the amount of the exception to routine cost limits. Although CMS constructed the peer group used to determine average costs without addressing the effects of the variation among SNFs in their assignment of direct and indirect costs to cost centers, SJ SNF’s sample was not representative of the SNFs across the nation and could not be substituted.

HCR Manor Care 1999 Laundry and Central Supply Statistics Group v. BCBS/Highmark Medicare Services, Dec. No. 2012-D19, July 19, 2012. A new intermediary properly adjusted the cost reports for a group of skilled nursing facilities (SNF) that inappropriately apportioned their costs for laundry and linen as well as central services and supplies costs. The SNFs did not demonstrate that their method of appropriating these costs using patient day weighting was more accurate or sophisticated than the allocation bases required by the cost reporting instructions.

Doctors Hospital Columbus Ohio v. BCBS CGS Administrators, Dec. No. 2012-D18, July 18, 2012. The intermediary’s disallowance of bad debts because of the hospital’s inability to produce a copy of the patients’ applications for charity care was incorrect. The use of comprehensive documentation in patient account files regarding income information acquired by the provider’s representatives during telephone conversations with patients is adequate to support the provider’s determination of indigency.

Alegent Health Immanuel Medical Center v. Wisconsin Physician Service, Dec. No. 2012-D16, June 15, 2012. The intermediary’s reduction of the provider’s graduate medical education (GME) reimbursement was appropriate. The provider and the other hospital participating in the affiliation agreement to share GME full time equivalent (FTE) positions failed to extend their existing agreement beyond its original expiration date and therefore did not have an agreement in place for fiscal years (FYs) 2004 and 2005.

Fort Wayne (Ind.) FFY 2002 MSA Wage Index Group v. BlueCross BlueShield Association/National Government Services, Dec. No. 2012-D13, March 16, 2012. The intermediary and CMS appropriately included certain paid hours not actually worked by hospital employees in calculating a wage index. The provider filed a timely request to correct the exclusion of these hours from the calculation of the wage index and included supporting documentation. At the time of the provider’s request, no guidance existed as to what constituted adequate documentation. The provider and the intermediary both understood, however, that the provider’s pay distribution report was necessary to make a correct calculation when determining the correct wage index. Because that report was not included in the request nor made available prior to the deadline, the supporting documentation was considered insufficient, and the request was not considered timely.

Doctors Medical Center of Modesto (Modesto, Calif) v. Wisconsin Physician Services, Dec. No. 2012-D11, February 24, 2012. The intermediary properly eliminated all direct medical education and indirect medical education payments for the hospital’s family practice residency program for cost reporting periods ending May 31, 2001 to May 31, 2007.

Alegent Health—Immanuel Medical Center (Omaha, Neb.) v. Wisconsin Physicians Service, Dec. No. 2012-D7, January 20, 2012. The written affiliation agreement between a hospital without previous participation in graduate medical education and a hospital with an existing residency program met the requirements of the regulations then in effect because it specified that residents would work in both hospitals and the number of resident full-time-equivalent (FTEs) that each hospital would claim.