RECENT COST REPORT APPEAL ISSUES PRRB AND CMS ADMINISTRATOR DECISIONS 2012 REVIEW

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1 RECENT COST REPORT APPEAL ISSUES PRRB AND CMS ADMINISTRATOR DECISIONS 2012 REVIEW Leslie Demaree Goldsmith, Esquire Principal Ober, Kaler, Grimes & Shriver I. ALLOCATION OF COSTS The Provider Reimbursement Review Board (Board or PRRB) affirmed the Intermediary s adjustment to the Provider s allocation of nursing administration costs. The Board found that the Provider failed to document either: (1) that it received written approval by the Intermediary to change the allocation methodology or (2) that the Provider s allocation methodology was supported by adequate documentation. The Centers for Medicare and Medicaid Services (CMS) Administrator declined review. Genesis Health 96 Salaries of Therapists Group v. BlueCross and BlueShield Ass n/first Coast Serv. Options, Inc., PRRB Hearing Dec. No D10 (Jan. 6, 2010), declined to review, CMS Adm r Dec. (Mar. 2, 2010). II. AMBULANCE SERVICES The Board upheld the Intermediary s adjustment to the Provider s ambulance service rates. The Board found that the Provider, a critical access hospital, was not entitled to an exemption from ambulance fee schedule since other ambulance services existed within a 35-mile radius of the hospital. The fact that the Provider was designated by the State of Washington as a Necessary Provider and that it was the only 911 emergency responder in its service area did not invalidate the need for the Provider to meet the 35-mile rule. The Administrator declined to review the Board s ruling. Prosser Mem l Hosp. v. Blue Cross Blue Shield Ass n/noridian Admin. Servs., PRRB Hearing Dec. No D38 (July 13, 2011), declined to review, CMS Adm r Dec. (Aug. 30, 2011). Only PRRB decisions issued with a D number, and related CMS Administrator decisions, are reviewed herein. Thus, many jurisdictional decisions, which often do not have a D number, are not included in this outline. In addition, subsequent court decisions, which may have affirmed, reversed, or modified the final agency decision, are not included in this outline, but should be sought out on any case of import to the reader. 1

2 III. BAD DEBT A. At Collection Agency The Board reversed the Intermediary, finding that the Intermediary improperly disallowed the Providers Medicare bad debts solely on the ground that the accounts were still at outside collection agencies. The Board found the Intermediary s disallowance was contrary to the Bad Debt Moratorium laws, relying on Foothill Hosp. v. Leavitt, 558 F.Supp.2d 1 (D.D.C. 2008). The Administrator reversed, finding that when a provider sends accounts to a collection agency, the provider cannot establish (1) reasonable collection efforts, (2) the debt was uncollectible when claimed as worthless, and (3) there was no likelihood of recovery. The Administrator further ruled that the Moratorium laws do not apply but did not address the Foothill Hosp. decision. Universal Health Servs., Inc and 2005 Medicare Bad Debts Still at Agency Group Appeal v. BlueCross BlueShield Ass n/highmark Medicare Servs./Wis. Physicians Serv., PRRB Hearing Dec. No D30 (May 27, 2011), rev d, CMS Adm r Dec. (July 26, 2011); George Washington Univ. Hosp. v. BlueCross BlueShield Ass n/carefirst of Maryland, Inc. and Highmark Medicare Servs., PRRB Hearing Dec. No D31 (May 27, 2011), rev d, CMS Adm r Dec. (July 26, 2011). The Board reversed the Intermediary, finding that the Intermediary improperly disallowed the Provider s Medicare bad debts solely on the ground that the accounts were still at outside collection agencies. The Board relied on the presumption of noncollectibility after pursuit of a bad debt for at least 120 days, at Provider Reimbursement Manual (PRM) 310.A, and the lack of regulatory or program instruction supporting the Intermediary s position. The Board found the Intermediary s disallowance was also contrary to the Bad Debt Moratorium laws, relying on Foothill Hosp. v. Leavitt, 558 F.Supp.2d 1 (D.D.C. 2008). No Administrator decision or statement by the Administrator declining to review the decision had been issued at the time of drafting of this summary. Lakeland Reg l Med. Ctr. v. BlueCross BlueShield Ass n/nat l Gov t Servs. PRRB Hearing Dec. No D3 (Dec. 14, 2011). B. Dual Eligible Beneficiaries The Board held that the Intermediary improperly disallowed the bad debts arising from coinsurance and deductibles for dual eligible Medicare and Medicaid beneficiaries. The Board found the Provider pursued reasonable collection efforts even though the Provider did not bill the State, because State law barred Medicaid payment for Medicare deductible and coinsurance for services not covered by Medicaid. The Administrator 2

3 reversed, finding that despite the State law and State Plan, the Medicaid statute requires the State to pay the beneficiaries deductible and coinsurance amounts. Thus, the Provider s failure to bill the State for these amounts results in a determination that the Provider did not pursue the requisite reasonable collections effort to allow the bad debts at issue. Royal Coast Rehab. Ctr. v. BCBSA/First Coast Serv. Options, Inc., PRRB Hearing Dec. No D13 (Jan. 29, 2010), rev d, CMS Adm r (Mar. 30, 2010). The Board found the Providers appropriately billed the California State Medicaid program for the Medicare amounts at issue and that the Providers cross-over bad debts were allowable. The Administrator reversed, finding that there was no determination by the State on these claims. SC 94/95/96-97 Inpatient Crossover Bad Debts Groups/Sharp HC 97 Inpatient Unproc Crossover Bad Debts Group v. BCBSA/Nat l Gov t Servs., Inc., PRRB Hearing Dec. No D20 (Mar. 18, 2010), rev d, CMS Adm r Dec. (May 17, 2010). The Provider claimed Medicare bad debt for services which were not covered by Florida Medicaid and, therefore, the Provider could not bill Medicaid for the related deductible and coinsurance amounts. The Board reversed the Intermediary s denial of the Provider s bad debt claim, finding the Provider was not required to bill Medicaid in this situation. The Administrator reversed, finding that regardless of any errors in the State plan, the Medicaid statute obligates a State to Pay Qualified Medicare Beneficiaries (QMBs) deductible and coinsurance amounts. Accordingly, the Provider should have billed the Medicaid program. Reflections Wellness Ctr., Inc. v. BCBSA/First Coast Options, Inc., PRRB Hearing Dec. No D21 (Mar. 19, 2010), rev d, CMS Adm r Dec. (May 10, 2010). The Board reversed the Intermediary s disallowance of the Provider s bad debts related to dual eligible beneficiaries, finding the application of the must-bill policy when the Provider (a skilled nursing facility) does not participate in the Medicaid program to be improper. The Administrator reversed because the Provider failed to bill and receive remittance advices from the State Medicaid program. The Administrator found the Provider s business decision not to participate in the Medicaid program necessarily included the decision that it was foreclosed to Medicare bad debts for dually eligible patients. Life Care Ctr. of Scottsdale v. BCBSA/ Riverbend Gov t Benefits Admin., PRRB Hearing Dec. No D23 (Mar. 31, 2010), rev d, CMS Adm r Dec. (June 1, 2010). The Board reversed the Intermediary s disallowance of the Providers bad debts related to dual eligible beneficiaries, finding the application of the 3

4 must-bill policy when the Providers (long-term acute care hospitals) do not participate in the Medicaid program to be improper. The Administrator reversed because the Providers failed to bill and receive remittance advices from the State Medicaid program. The Administrator found the Provider s business decision not to participate in the Medicaid program necessarily included the decision that it was foreclosed from receiving reimbursement for Medicare bad debts for dual eligible patients. Select Specialty 05 Medicare Dual Eligible Bad Debts Group v. Wis. Physicians Serv., PRRB Hearing Dec. No D25 (Apr. 13, 2010), rev d, CMS Adm r Dec. (June 9, 2010). The Board reversed the Intermediary s disallowance of the Providers bad debts related to dual eligible beneficiaries. It found the application of the must-bill policy improper when the Providers (community mental health centers) do not participate in the Medicaid program and when state law prohibits the Medicaid program from paying any portion of the Medicare copayment or deductible amounts. The Administrator reversed because it found that the State had a legal obligation to pay the amounts at issue, and the Providers failed to bill and receive remittance advices from the State Medicaid program. Hope Horizon Ctr., Inc. and Homestead Behavioral Clinic, Inc. v. BlueCross Blue Shield Ass n/first Coast Serv. Options, Inc., PRRB Hearing Dec. No D29 (May 18, 2010), rev d, CMS Adm r Dec. (July 13, 2010). The Board reversed the Intermediary s disallowance of the Providers bad debt arising from coinsurance and deductible amounts for dual eligible Medicare and Medicaid beneficiaries. The Board found the Providers were unable to obtain remittance advices from the State of Tennessee s Medicaid program and that such documentation was not the only source of documentation to support reasonable collection efforts. The Administrator reversed, finding remittance advices from the State are required to determine the State s liability. Diversicare Medicare Bad Debts Group v. BlueCross BlueShield Ass n/nat l Gov t Servs., Inc., PRRB Hearing Dec. No D3 (Oct. 22, 2010), rev d, CMS Adm r Dec. (Dec. 20, 2010). C. Dual Eligible Beneficiaries & Reasonable Collection Efforts The Board reversed the Intermediary s disallowance of Medicare bad debts solely on the basis of no telephone contact with the debtor. The Board found the Providers policy did not create an absolute requirement that telephone calls be made. The Board found no support for the Intermediary s assertion that the Providers claimed bad debt while it was still at a collection agency and further found that even if that were the case, the Providers pursued reasonable collection efforts. Further, the 4

5 Board struck down the Intermediary s absolute must bill policy, finding it has no foundation in law or regulation and is beyond the requirements of the regulations and manuals. The Administrator reversed the Board s determinations. The Administrator found the Providers collection efforts were not reasonable because the Providers failed to document all of the telephone calls made in furtherance of collection. The Administrator further found that the Providers failed to prove that their bad debts were actually uncollectible and worthless, because they failed to bill the State and receive remittance advices for the accounts. Various Genesys Health Care Corp. Providers v. BlueCross BlueShield Ass n/highmark Medicare Servs., PRRB Hearing Dec. No D12 (Dec. 10, 2010), rev d, CMS Adm r Dec. (Feb. 1, 2011). D. Outpatient Therapy Services The Board Majority reversed the Intermediary s disallowance of deductible and coinsurance amounts arising from the Providers outpatient therapy services paid under the Part B fee schedule. The Administrator reversed the Board s decision, finding that it is Medicare s longstanding policy not to pay bad debt for any services paid under a reasonable charge or fee schedule methodology. HCA 2001 Outpatient Therapy Bad Debts Group v. Wis. Physicians Servs., PRRB Hearing Dec. No D11 (Jan. 28, 2010), rev d, CMS Adm r Dec. (Mar. 24, 2010). IV. BOARD JURISDICTION A. Amount in Controversy This case was remanded from a court decision with instruction to address whether the Provider met the amount in controversy requirement for Board jurisdiction, necessary to support the Board s earlier expedited judicial review (EJR) order. The reimbursement at issue involved the hospice cap. The Board found that when the reimbursement method pursued by the Provider is compared with the data utilized in the appealed final determination, the threshold $10,000 amount in controversy is reached. Accordingly, the Board ruled that it did have jurisdiction and thus appropriately issued an EJR. The Administrator reversed, finding that the Provider failed to meet the $10,000 threshold. The Administrator held that the amount in controversy cannot include the rolling impact of the next year based on the determination in the instant year, as Board jurisdiction does not permit the aggregation of periods to meet the amount in controversy requirement. The Administrator also ruled that the Board does not retain jurisdiction when more accurate data that becomes available at a later date, results in a determination of less than $10,000 at issue. Autumn Bridge, LLC v. BlueCross BlueShield Ass n/palmetto 5

6 Gov t Benefits Admins., PRRB Hearing Dec. No D8 (Dec. 22, 2009), rev d, CMS Adm r Dec. (Jan. 21, 2010). The Board held that the Provider s calculation of the amount in controversy met the requisite $10,000 threshold as the calculation was made in good faith, even if it was an estimate and differed from the Intermediary s calculation. The Administrator reversed and vacated the Board s decision, finding the Board lacked jurisdiction over the appeal due to its failure to meet the requisite amount in controversy, accepting the Intermediary s calculation. Interim Health Care of Okla. City v. BlueCross BlueShield Ass n/palmetto Gov t Benefits Adm r, PRRB Hearing Dec. No D49 (Sept. 24, 2010), rev d and vacated, CMS Adm r Dec. (Nov. 22, 2010). The Board found that the Provider met the requisite $10,000 amount in controversy using data in existence at the time of the Intermediary s final determination. The Administrator declined to review. Autumn Bridge, LLC v. BlueCross BlueShield Ass n/palmetto Gov t Benefits Admin., PRRB Hearing Dec. No D8 (Nov. 10, 2010), declined to review, CMS Adm r Dec. (Jan. 12, 2011). The Provider appealed CMS s reversal of the Provider s rural referral center (RRC) classification. The Board Majority found that it lacked jurisdiction over the appeal as there was no reimbursement impact for the years at issue because the Medicare Classification Geographic Review Board (MCGRB) denied the Provider s application for redesignation from rural to urban status. If it had jurisdiction, the Board Majority determined there would have been no prohibition on the Intermediary s/cms s termination or reversal of a decision regarding RRC status as long as the Intermediary complied with reopening requirements, which it failed to follow in this case. The Administrator affirmed the Board s ruling on jurisdiction but ruled that due to its lack of jurisdiction, it should not have proceeded to address the merits of the case. Coosa Valley Med. Ctr. v. BlueCross BlueShield Ass n/cahaba Gov t Benefits Admin., LLC, PRRB Hearing Dec. No D11 (Nov. 22, 2010), aff d on jurisdiction, vacated for lack of jurisdiction, CMS Adm r Dec. (Jan. 20, 2011). B. DSH - CMS Ruling 1498-R (Ruling) The Board granted the Providers request for EJR, concluding that EJR is appropriate to determine the validity of those provisions of the Ruling that would, if valid, deprive the Board of jurisdiction and thereby prohibit it from granting EJR as to the validity of other substantive provisions of the Ruling. The Administrator vacated the Board s decision on the basis that the Ruling removes jurisdiction from the Board and the Administrator in 6

7 this case. The Administrator remanded the case to the appropriate Medicare contractor for action consistent with the Ruling. Southwest Consulting 2004 DSH Dual Eligible Days Group; CHI 2004 Dual Eligible Days Group; and Caritas Christi Health Care 2004 DSH Dual Eligible Days Group v. BlueCross BlueShield Ass n/wis. Physicians Serv./Nat l Gov t Servs. ME, PRRB Hearing Dec. No D36 (June 4, 2010), vacated and remanded, CMS Adm r Dec. (Aug. 12, 2010); Salt Lake Reg l Med. Ctr. v. BlueCross BlueShield Ass n/noridian Admin. Servs. PRRB Hearing Dec. No D39 (June 30, 2010), vacated and remanded, CMS Adm r Dec. (Aug. 23, 2010). The Board found that the issue of inclusion of Medicare Part C days in the disproportionate share hospital (DSH) calculation for the years under appeal, fiscal years (FY) , was outside the scope of the Ruling, and the Board therefore continued to have jurisdiction over this issue. That Board granted EJR, finding that it was without authority to grant the relief sought by the Providers: (1) invalidating the Secretary s interpretation of entitled to benefits published in a 2004 Federal Register; (2) invalidating the regulations that insulate CMS from discovery or subpoenas for production of data; and (3) mandating compliance with Section 951 of the Medicare Modernization Act, requiring the Secretary to supply providers with information needed to perform the DSH calculation. The Administrator declined to review the Board s decision. King & Spalding Inclusion of Medicare Advantage Days in 2007 SSI Ratios/Shands HealthCare Inclusion of Medicare Advantage Days in 2007 SSI Ratios/North Shore-Long Island Jewish HS Inclusion of Medicare Advantage Days in 2007 SSI Ratio Groups v. BlueCross BlueShield Ass n//nat l Gov t Servs. IN/First Coast Serv. Options, PRRB Hearing Dec. No D38 (June 29, 2010), declined to review, CMS Adm r Dec. (July 26, 2010). The Board found that the Provider properly substantiated an additional 161 days in the SSI percentage calculation and remanded the issue to the Intermediary pursuant to the Ruling, to recalculate the SSI percentage and include the additional 161 days. The Administrator vacated the Board s decision on the basis that the Ruling removes jurisdiction from the Board and the Administrator for this issue, even if the Provider is not arguing that it is not a data matching case. The Administrator remanded the case to the appropriate Medicare contractor for action consistent with the Ruling. St. Joseph Mercy Hosp. v. BlueCross BlueShield Ass n/nat l Gov t Servs.-WI, PRRB Hearing Dec. No D42 (Aug. 5, 2010), vacated and remanded, CMS Adm r Dec. (Oct. 6, 2010). 7

8 A Provider asserted that CMS understated the Provider s SSI eligible days used in the Medicare fraction of the DSH adjustment. The Board remanded the issue pursuant to the Ruling. The Administrator affirmed. Borgess Med. Ctr. and Bronson Methodist Hosp. v. BlueCross BlueShield Ass n/nat l Gov t Servs., Inc., PRRB Hearing Dec. No D46 (Sept. 27, 2011), rev d in part, aff d in part, CMS Adm r Dec. (Nov. 22, 2011). The Board found it lacked the authority to determine whether the Ruling deprives the Board of jurisdiction and granted the Provider s EJR request. The Administrator vacated the Board s ruling, finding the Ruling removes all jurisdiction from the Board and Administrator. The Administrator remanded the case to the Medicare contractor for resolution consistent with the Ruling. Southwest Consulting DSH SSI Group Appeals Consolidated Pilot Project v. Blue Cross Blue Shield Ass n/wis. Physician Servs., PRRB Hearing Dec. No D48 (Sept. 24, 2010), vacated and remanded, CMS Adm r Dec. (Nov. 9, 2010). C. Dissatisfaction Costs Not Claimed The Board Majority held that the Provider does not have a right to a hearing to correct its cost report to reclassify certain nurse expenses. The Majority concluded that for a provider to have a right to a hearing on a cost report issue under 42 U.S.C. 1395oo(a), the expense must be in the cost report unless a predetermination has been made that the cost would be disallowed. The cost was not included on the cost report. Furthermore, the Majority declined to exercise its discretionary jurisdiction under 42 U.S.C. 1395oo(d). The Administrator declined to review. Mercy Hosp. v. BCBSA/First Coast Serv. Options, PRRB Hearing Dec. No D14 (Mar. 11, 2010), declined to review, CMS Adm r Dec. (May 3, 2010). The Board Majority held that the Provider does not have a right to a hearing to correct its cost report to reduce the available bed count for indirect medical education payment purposes. The Majority concluded that for a provider to have a right to a hearing on a cost report issue under 42 U.S.C. 1395oo(a), the expense must be in the cost report unless a predetermination has been made that the cost would be disallowed. The beds at issue were inadvertently claimed and allowed inaccurately on the cost report. Furthermore, the Majority declined to exercise its discretionary jurisdiction under 42 U.S.C. 1395oo(d). The Administrator declined to review. Affinity Med. Ctr. v. BCBSA/Nat l Gov t Servs., PRRB Hearing Dec. No D15 (Mar. 11, 2010), declined to review, CMS Adm r Dec. (May 3, 2010). 8

9 The Board Majority held that it did not have jurisdiction over certain costs not claimed by the Provider on its cost report but brought to the Intermediary s attention during the audit and before issuance of the Notice of Program Reimbursement (NPR). The Majority ruled that in order to have the right to a Board hearing on a particular cost, that cost must have been included in the cost report unless it was self-disallowed because the Intermediary would have been bound by statute, regulation or rule to disallow the costs, or its inclusion was impossible or unnecessary. The Majority further ruled that the Intermediary s adjustment of other components of the costs at issue does not render all costs related to that issue subject to the Board s jurisdiction. Lastly, the Majority declined to exercise its discretionary jurisdiction over these issues. The Administrator declined to review the Board s ruling. Charleston Area Med. Ctr. v. Blue Cross and Blue Shield Ass n/united Gov t Servs., PRRB Hearing Dec. No D17 (Jan. 6, 2010), declined to review, CMS Adm r Dec. (Feb. 22, 2011). The Board Majority held that the Provider does not have a right to a hearing on the issue of interest cost implicit in the capital lease of the hospital facilities and equipment. Although the Provider claimed the depreciation costs related to the lease, it did not claim the imputed interest cost. The Majority concluded that for a provider to have a right to a hearing on a cost report issue under 42 U.S.C. 1395oo(a), the expense must be in the cost report unless a predetermination has been made that the cost would be disallowed. Once the Board has authority over certain issues claimed on the cost report and appealed by the provider, the Board may then exercise discretion under 1395oo(d) over any other matters covered by the cost report, such as the interest in this case. In determining whether to exercise its discretion, the Majority considered whether the Intermediary s instructions to the Provider were erroneous or incomplete. Finding no support that they were, the Majority declined to exercise its discretionary jurisdiction under 1395oo(d). The Administrator declined to review. Mem l Hermann Mem l City Hosp. v. BlueCross BlueShield Ass n/trailblazer Health Enters., LLC, PRRB Hearing Dec. No D42 (Aug. 11, 2011), declined to review, CMS Adm r Dec. (Sept. 20, 2011). The Board held that the Provider does not have a right to a hearing on the issue of late charges that were never billed to the Medicare Program. The only issue appealed by the Provider was the late charges. The Board determined that it therefore has no jurisdiction over this appeal under 42 U.S.C. 1395oo(a). The Administrator declined to review. Kingsbrook Jewish Med. Ctr. v. BlueCross BlueShield Ass n/nat l Gov t Servs., Inc., PRRB Hearing Dec. Nos D43 (Sept. 14, 2011) and 2011-D44 (Sept. 14, 2011), declined to review, CMS Adm r Dec. (Oct. 24, 2011). 9

10 The Provider appealed the Medicaid eligible days in its DSH calculation. The parties settled the issue with the Intermediary allowing some of the days requested by the Provider. The Provider appealed the resulting revised NPR, requesting additional days that had not been included in its earlier request to the Intermediary. The Board found it did not have jurisdiction over the Provider s appeal of additional days under 42 U.S.C. 1395oo(a), because the Provider failed to meet the dissatisfaction requirement for Board jurisdiction. The Board further ruled that it could not execute its discretionary jurisdiction under 42 U.S.C. 1395oo(d), because there was no jurisdiction under 42 U.S.C. 1395oo(a). The Administrator affirmed, finding the days sought by the Provider were outside the scope of the revised NPR as the Medicaid eligible days considered on the revised NPR did not include general assistance or nursing days. The Administrator further opined that the Provider could not demonstrate the requisite dissatisfaction as the revised NPR was issued pursuant to a settlement agreement. Illinois Masonic Med. Ctr. v. BlueCross BlueShield Ass n/nat l Gov t Servs., Inc., PRRB Hearing Dec. No D47 (Sept. 17, 2010), aff d, CMS Adm r Dec. (Nov. 16, 2010). The Board found that the Intermediary properly excluded the Provider s Kansas MediKan program days from the Medicaid Fraction of the Medicare DSH calculation for FY The Board further found that the Providers did not meet the criteria in PM A to permit inclusion of MediKan secondary days in the Medicaid Fraction. The Administrator affirmed these findings of the Board, but modified the Board s decision by holding that the Board did not have jurisdiction over one of the Providers in the appeal based on the limitations of the revised NPR appealed. QRS 1996 DSH MediKan Days v. Wis. Physicians Serv., PRRB Hearing Dec. No D24 (Apr. 6, 2011), aff d in part, modified in part, CMS Adm r Dec. (May 27, 2011). D. Timely Filing The Provider asserted that the supplemental security income (SSI) percentage used to calculate its DSH adjustment for FYs 2003 and 2004 was understated due to flaws in the data collection and matching process. The Provider filed its appeals more than 180 days after the NPRs were issued; one appeal was filed within the three years of the NPR but the other was filed more than three years after the NPR. The Provider relied on the reopening regulations, including those addressing fraud for the appeal filed more than three years after the NPR, as the basis to excuse the late filings. The Board also considered general equitable tolling principles and the good cause exceptions to the timely filing rules for Board appeals, but found it lacked jurisdiction to hear the cases. The Administrator 10

11 affirmed the Board s decisions. Medical College of GA Hosp. v. BlueCross BlueShield Ass n/cahaba Gov t Benefit Admins.-GA, PRRB Hearing Dec. Nos D30, 2010-D31 (May 25, 2010), aff d, CMS Adm r Dec. (July 13, 2010). E. Subject Matter Statutorily Barred The Board held that the applicable statute and regulation prohibited review of the wage index budget neutrality adjustment, and thereby barred the Board s jurisdiction over the Providers challenge. The Board therefore denied the Providers request for EJR as Board jurisdiction is a prerequisite. For purposes of administrative economy, in the event its jurisdiction determination was reversed, the Board also determined that there were no facts in dispute and that it did not have the authority to decide the legal question of the validity of the budget neutrality issue. The CMS Administrator reversed the Board s jurisdictional decision and remanded the case to the Board to determine whether at this time, this case should be held in abeyance per an earlier ruling of the Board, or whether EJR is most appropriate. Crozer-Keystone Hosp. Specific 2007 Wage Index Rural Floor Group v. BlueCross BlueShield Ass n/highmark Medicare Servs., PRRB Hearing Dec. No D3 (Oct. 20, 2009), remanded, CMS Adm r Dec. (Dec. 21, 2009). The Board found that a partial waiver of recovery of the Provider s overpayment was permitted from Aug. 29, 2005 through Oct. 31, 2005, pursuant to the 1115 waiver issued by the Secretary of Health and Human Services on Sept. 4, The Administrator modified the Board s decision. The Administrator affirmed the Board s decision that the Provider, a hospice located in New Orleans, was not entitled to a waiver based on the Provider s arguments related to equitable relief, extraordinary circumstances or Social Security Act However, the Administrator ruled that the Board did not have jurisdiction or the authority to grant relief pursuant to Social Security Act Canon Healthcare Hospice, LLC v. BlueCross BlueShield Ass n/palmetto Gov t Benefits Admin., PRRB Hearing Dec. No D26 (Apr. 15, 2011), modified, CMS Adm r Dec. (June 13, 2011). V. CAPITAL COSTS A. Hold Harmless Methodology The Board held that the Intermediary s refusal to reimburse the Provider for capital-related costs under the hold-harmless methodology for the Provider s FYs was improper, since the Provider was a new provider during the capital transition period and the Provider s hospitalspecific rate for the periods in dispute exceeded the Federal rate. The 11

12 CMS Administrator reversed, finding the hospital was not entitled to reimbursement under the hold-harmless methodology for the years at issue, because it was not paid under the hold-harmless methodology during the transition period. Southcrest Hosp. v. Wis. Physicians Serv., PRRB Hearing Dec D44 (Sept. 15, 2010), rev d, CMS Adm r Dec. (Nov. 9, 2010). VI. DELAYED NPRS The Board found no authority to allow it to set aside the Provider s NPRs issued after considerable delay, ten and nine years respectively for each of the cost years under appeal. The Board further found that the delays were primarily the result of the Provider s bankruptcy, were not arbitrary and capricious, and did not result in prejudice to the Provider. With regard to the bad debts, the Board found that despite the delay in issuance of the NPRs, the Provider was still responsible for maintaining any necessary documentation to pursue an appeal. The Board noted that the Provider was given ample opportunity to dispute the adjustments at the time they were first proposed and that the Provider had at that time accepted some of the proposed adjustments and submitted additional documentation related to other adjustments which resulted in revisions to the adjustments. The Board found no evidence to indicate the Intermediary s disallowance related to the bad debts was improper. No Administrator decision or statement by the Administrator declining to review the decision had been issued at the time of drafting of this summary. L.O. Crosby Mem l Hosp. v. BlueCross BlueShield Ass n/pinnacle Business Solutions, Inc., PRRB Hearing Dec. No D2 (Dec. 9, 2011). VII. DSH A. Charity / General Assistance Days The Board found that the Intermediary properly excluded New Jersey Charity Care Program (NJCCP) days from the Medicaid fraction of the Medicare DSH calculation for FYs The CMS Administrator affirmed the Board s ruling. New Jersey 2000/2001/2002 Charity Care DSH Groups v. BlueCross BlueShield Ass n/riverbend Gov t Benefits Admin., PRRB Hearing Dec. No D5 (Nov. 6, 2009), aff d, CMS Adm r Dec. (Dec. 15, 2009). The Board found that the Intermediary properly excluded the Provider s Pennsylvania General Assistance days from the Medicaid fraction of the Medicare DSH calculation for FY The Administrator affirmed the Board s ruling. Nazareth Hosp. and St. Agnes Med. Ctr. v. BlueCross BlueShield Ass n/riverbend Gov t Benefits Admin., PRRB Hearing 12

13 Dec. No D22 (Mar. 23, 2010), aff d, CMS Adm r Dec. (May 17, 2010). The Board found that the Intermediary properly excluded NJCCP days from the Medicaid fraction of the Medicare DSH calculation for FYs The Administrator affirmed the Board s ruling. Saint Barnabas DSH Adjustment Group Appeals and St. Peter s Univ. Hosp. v. BlueCross BlueShield Ass n/riverbend Gov t Benefits Admin., PRRB Hearing Dec. No D27 (May 7, 2010), aff d, CMS Adm r Dec. (June 29, 2010). The Board found that the Intermediary properly excluded Pennsylvania Charity Care Program days from the Medicaid fraction of the Medicare DSH calculation for FYs The Administrator affirmed the Board s ruling. UPMC DSH Medical Assistance Under State Medicaid Plan Groups v. BlueCross BlueShield Ass n/highmark Medicare Servs., PRRB Hearing Dec. No D33 (May 27, 2010), aff d, CMS Adm r Dec. (July 13, 2010). The Board found the Intermediary properly excluded Ohio Hospital Care Assurance Program (HCAP) days from the Medicaid fraction of the Medicare DSH calculation for FYs The Administrator affirmed the Board s ruling. Charity Care/Ohio HCAP DSH Groups v. BlueCross BlueShield Ass n/nat l Gov t Servs., Inc., PRRB Hearing Dec. No D9 (Nov. 16, 2010), aff d, CMS Adm r Dec. (Jan. 12, 2011). The Board found the Intermediary properly excluded Indiana Hospital Care for the Indigent (HCI) program days from the Medicaid fraction of the Medicare DSH calculation for FYs The Administrator declined to review the Board s ruling. Indiana DSH-HCI Days Group I, Indiana DSH-HCI Days Group II, Indiana DSH-HCI Days Group III, Indiana DSH-HCI Days Group IV, Indiana DSH-HCI Days Group V v. BlueCross BlueShield Ass n/nat l Gov t Servs., Inc., PRRB Hearing Dec. No D10 (Nov. 19, 2011), declined to review, CMS Adm r Dec. (Dec. 20, 2010). The Board found that the Intermediary properly excluded the Provider s Connecticut State-Adjusted General Assistance days from the Medicaid fraction of the Medicare DSH calculation for FYs The Administrator affirmed the Board s ruling. Yale New Haven Health Servs DSH SAGA Days Group v. BlueCross BlueShield Ass n/nat l Gov t Servs., Inc., PRRB Hearing Dec. No D14 (Dec. 8, 2010), aff d, CMS Adm r Dec. (Feb. 1, 2011). 13

14 The Board found that the Intermediary properly excluded the Provider s Kansas MediKan program days from the Medicaid Fraction of the Medicare DSH calculation for FY The Board further found that the Providers did not meet the criteria in PM A to permit inclusion of MediKan secondary days in the Medicaid Fraction. The Administrator affirmed these findings of the Board, but modified the Board s decision by holding that the Board did not have jurisdiction over one of the Providers in the appeal based on the limitations of the revised NPR appealed. QRS 1996 DSH MediKan Days v. Wis. Physicians Serv., PRRB Hearing Dec. No D24 (Apr. 6, 2011), aff d in part, modified in part, CMS Adm r Dec. (May 27, 2011). The Board found that the Provider did not follow the required process for properly submitting its patient day records to the State for matching to the Medicaid eligibility files for purposes of the DSH calculation. Nonetheless, the Intermediary tested the additional days submitted by the Provider and determined that 1001 Medicaid health maintenance organization (HMO) days were allowable, but that General Assistance, Title XXI days and days lacking supporting documentation were not allowable. The Board ruled the Intermediary s adjustment should be modified to include the additional 1001 Medicaid HMO days in the numerator of the Medicaid Fraction of the Medicare DSH calculation. The Administrator declined to review the Board s ruling. Mem l Hosp. of Salem County v. BlueCross BlueShield Ass n/highmark Medicare Servs. (formerly Riverbend Gov t Benefits Adm r), PRRB Hearing Dec. No D29 (May 26, 2011), declined to review, CMS Adm r Dec. (July 5, 2011). The Board found that the Intermediary properly excluded days for Puerto Rico Category 6 beneficiaries from the numerator of the Medicaid Fraction of the Medicare DSH calculation. These beneficiaries are not eligible for medical assistance under an approved State Medicaid plan. The Administrator declined to review the Board s ruling. S. Christian Med. Ctr. v. BlueCross BlueShield Ass n/first Coast Serv. Options, Inc. FL, PRRB Hearing Dec. No D36 (June 22, 2011), decided not to review, CMS Adm r Dec. (Aug. 26, 2011). B Days The Board found that the Intermediary properly excluded from the numerator of the DSH Medicaid Fraction, expansion waiver days for patients who received medial assistance through Tennessee s Medicaid demonstration project waiver program approved by the Secretary under section 1115 of the Social Security Act. The Board relied on the court s decision in Cookville Reg l Med. Ctr. v. Leavitt, 531 F.3d 844 (D.C. Cir. 14

15 2008), cert. denied, 129 S. Ct (2009) in ruling that it was within the Secretary s discretion to exclude these days from the calculation. The cost years at issues spanned 1995 through The Administrator declined to review the Board s ruling. Adventist DSH Waiver Days Group v. BlueCross BlueShield Ass n/first Coast Serv. Options, Inc., PRRB Hearing Dec. No D40 (July 2, 2010), declined to review, CMS Adm r Dec. (Aug. 17, 2010). C. Part A Exhausted Days and Medicare Secondary Benefit Days The Board ruled that the Intermediary improperly excluded the Medicaideligible days at issue from the numerator of the Provider s DSH Medicaid Fraction for the Providers 1996 and 1997 fiscal years. The CMS Administrator reversed the Board s decision. The Administrator ruled that the days at issue cannot be included in the Medicaid Fraction because although the Medicare Part A benefit period for the patients at issue had been exhausted, the patients entitlement to Part A had not. Mercy Med. Ctr. v. Wis. Physicians Serv., PRRB Hearing Dec. No D7 (Dec. 4, 2009), rev d, CMS Adm r Dec. (Jan. 14, 2010). The Board reversed the Intermediary s adjustment and ruled that the Provider s Part A Exhausted Benefit, Intermediate Care Waitlist and Medicare Secondary Payments Days for patients also eligible for Medicaid, should be included in the Medicaid fraction of the DSH calculation. The Administrator vacated the Board s decision and remanded the case to the Medicare contractor for resolution in accordance with the Ruling. The Queen s Med. Ctr. v. BCBSA/First Coast Serv. Options, Inc.-CA, PRRB Hearing Dec. No D24 (Apr. 2, 2010), vacated and remanded, CMS Adm r Dec. (May 24, 2010). D. Medicare+Choice (M+C) Days The Board held that the Intermediary improperly excluded M+C days from the numerator of the DSH Medicaid Fraction for the years at issue, The CMS Administrator reversed, asserting that it has always been Medicare policy to include these days in the Medicare, rather than the Medicaid, DSH Fraction. Southwest Consulting DSH Medicare+Choice Days Groups v. BlueCross BlueShield Ass n/nhic Corp. c/o Nat l Gov t Servs., Wis. Physicians Servs., and Noridian Admin. Servs., PRRB Hearing Dec. No D52 (Sept. 30, 2010), rev d, CMS Adm r Dec. (Nov. 22, 2010). The Board found the Intermediary improperly excluded the dual-eligible Part C days from the numerator of the Medicaid Fraction of the DSH calculation for cost reporting periods from 1999 through The Administrator reversed the Board s ruling, finding Medicare Part C 15

16 beneficiaries maintain their eligibility under Medicare Part A and, therefore, days for these beneficiaries cannot be included in the Medicaid Fraction of the DSH calculation. Rather, such days are eligible for inclusion in the numerator of the Medicare Fraction. QRS DSH Medicare Part C Days Group v. Blue Cross Blue Shield Ass n/noridian Admin. Servs.; Nat l Gov t Servs., TrailBlazer Health Enters.; and Wis. Physicians Serv., PRRB Hearing Dec. No D19 (Mar. 16, 2011), rev d, CMS Adm r Dec. (May 10, 2011). The Board found the Intermediary properly excluded dual eligible Medicare managed care days from the Medicaid Fraction of the DSH calculation for cost years prior to Prior to 1999, Part C of the Medicare Act had not been created and HMO inpatient hospital services were paid by Medicare pursuant to Part A. The Administrator declined to review the Board s ruling. QRS DSH Medicare HMO Days Group v. Blue Cross Blue Shield Ass n/noridian Admin. Servs.; Nat l Gov t Servs., and TrailBlazer Health Enters., PRRB Hearing Dec. No D20 (Mar. 16, 2011), declined to review, CMS Adm r Dec. (Apr. 25, 2011). The Board ruled that the Intermediary s sampling methodology and the exclusion of M+C days (prior to October 1, 2004) from the numerator of the DSH Medicaid fraction were improper. The Board found that: (1) results based upon sample sizes under 30 per stratum were inadequate for eliminating the entire DSH payment, (2) no relationship existed between the strata based on length of stay, and (3) the sample size was too small to result in an acceptable precision rate. With regard to the M+C days, the Board found these days should be included in the numerator of the Medicaid fraction prior to the change in the regulations effective October 1, 2004, citing to Northeast Hosp. Corp. v. Sebelius, 699 F.Supp.2d 81 (D.D.C. Mar. 29, 2010). The Administrator reversed, finding (1) the judgment of the auditor to stratify and extrapolate the findings were acceptable and (2) the M+C days were not allowable in the Medicaid fraction because the patients were entitled to benefits under Part A, with no discussion of the Northeast decision. Exempla Lutheran Med. Ctr. v. Wis. Physicians Serv., PRRB Hearing Dec. No D32 (June 3, 2011), rev d, CMS Adm r Dec. (July 27, 2011). The Board ruled that the Intermediary s exclusion of M+C days from the numerator of the DSH Medicaid fraction for the Providers cost reporting periods ending in 1996 through 2004, was improper. The Board ruled that once an individual has enrolled in an M+C plan under Part C, that individual no longer is entitled to benefits under part A. The Board further found that it was not CMS s historic practice to count M+C days as Part A days. The Board relied on the decision in Northeast Hosp. Corp. v. 16

17 Sebelius, 699 F.Supp.2d 81 (D.D.C. Mar. 29, 2010) and Metropolitan Hosp., Inc. v. U.S. Dept. of Health and Human Servs., 702 F. Supp. 2d 808 (W.D. Mich. 2010). The Administrator reversed, finding the M+C days were not allowable in the Medicaid fraction because the patients were entitled to benefits under Part A, with no discussion of the Northeast or Metropolitan Hosp. decisions. Partners DSH Medicare+Choice Groups v. BlueCross BlueShield Ass n/nhic Corp., c/o Nat l Gov t Servs., Inc, PRRB Hearing Dec. No D37 (June 30, 2011), rev d, CMS Adm r Dec. (Aug. 23, 2011); Baycare 2002 Medicare+Choice Days Group v. Blue Cross Blue Shield Ass n/first Coast Options, Inc., PRRB Hearing Dec. No D39 (July 15, 2011), rev d, CMS Adm r Dec. (Sept. 14, 2011); UMass Health Sys DSH Medicare+Choice Group/Blue Cross Blue Shield Ass n/nhic Corp., c/o Nat l Gov t Servs., Inc., PRRB Hearing Dec. No D40 (July 15, 2011), rev d, CMS Adm r Dec. (Sept. 14, 2011); Strategic Reimbursement, Inc./Carondelet/Resurrection Health Medicare Part C Days-DSH Group Appeals v. Blue Cross Blue Shield Ass n/nat l Gov t Servs./Noridian Admin. Servs., LLC, PRRB Hearing Dec. No D41 (Aug. 4, 2011), rev d, CMS Adm r Dec. (Sept. 29, 2011). The Board held that the Intermediary improperly excluded M+C days from the numerator of the DSH Medicaid Fraction for the 2003 year at issue. The Board found that M+C days are not Medicare Part A days and so should not be excluded from the Medicaid Fraction, relying on Northeast Hosp. Corp. v. Sebelius, 699 F.Supp.2d 82 (D.D.C. 2010) and Metropolitan Hosp., Inc. U.S. Dept. of Health and Human Services, 702 F.Supp.2d 808 (W.D. Mich. 2010). No Administrator decision or statement by the Administrator declining to review the decision had been issued at the time of drafting of this summary. Lifespan SWC 2003 DSH Medicare+Choice Days Group v. BlueCross BlueShield Ass n/nhic Corp., PRRB Hearing Dec. No D6 (Jan. 18, 2012). E. Part A Days, Unbilled The Providers failed to timely bill Medicare Part A for patients entitled to Medicare Part A benefits. As a result, the days at issue were not considered for inclusion in the Medicare fraction of the DSH calculation. The Board found the Providers failure to bill appropriately resulted in the exclusion of the days from the Medicare fraction. The Board further found that the days could not be included in the Medicaid fraction as the patients were entitled to Part A benefits at the time. The Board affirmed the Intermediary s adjustments. The Administrator affirmed the Board s determination excluding the days at issue from both the Medicare and Medicaid fractions of the DSH calculation. QRS Medicare Part A Title XIX Eligible Patient Days Group I v. BCBSA/Noridian Admin. Servs., 17

18 PRRB Hearing Dec. No D26 (Apr. 14, 2010), aff d, CMS Adm r Dec. (June 15, 2010). F. CMS Ruling 1498-R See cases discussed under Board Jurisdiction, DSH-CMS Ruling 1498-R. VIII. INPATIENT REHABILITATION, FEDERAL RATE ELECTION The Board found the Provider failed to timely elect fully federal prospective payment and, therefore, the Intermediary properly reimbursed the Provider based on the blended rate for inpatient rehabilitation facilities. Although the Board empathized with the Provider s arguments related to new providers having to make an election before they become certified under the Medicare program, the Board found that neither the statute nor the regulation permitted any exception or exemption from the election deadline. The Administrator declined to review. Good Shepherd Rehab. Hosp. v. BlueCross BlueShield Ass n/highmark Medicare Servs.-PA, PRRB Hearing Dec. No D45 (Sept. 15, 2011), declined to review, CMS Adm r Dec. (Nov. 1, 2011). IX. LOSS ON DISPOSAL OF ASSETS The Board affirmed the Intermediary s adjustments disallowing the Provider s claimed loss on the disposal of assets which occurred via a statutory merger. The Board found there was no bona fide sale because the Provider did not receive reasonable compensation for its assets. The Administrator modified the Board s decision. The Administrator agreed with the Board s finding that there was no bona fide sale, but disagreed with the Board s determination that the regulation bars the application of the related party principle to the merging parties relationship to the surviving entity. Marian Med. Ctr. v. Blue Cross Blue Shield Ass n/nat l Gov t Servs. (n/k/a First Coast Serv. Options- CA), PRRB Hearing Dec. No D7 (Nov. 30, 2010), modified, CMS Adm r Dec. (Jan. 4, 2011). The Board affirmed the Intermediary s adjustments disallowing the Provider s claimed loss on the disposal of assets which occurred pursuant to a statutory merger. The Board found there was no bona fide sale due to the wide discrepancy between the consideration given for the assets and their fair market value. The Administrator agreed with the Board s finding that there was no bona fide sale, but disagreed with the Board s determination that the regulation bars the application of the related party principle to the merging parties relationship to the surviving entity. The Administrator found the transaction was between related parties based on continuity of control. Memorial Hermann Hosp. v. BlueCross BlueShield Ass n/trailblazer Health Enters., LLC, PRRB Hearing Dec. No D23 (Mar. 24, 2011), aff d in part, rev d in part, CMS Adm r Dec. (May 23, 2011). 18

19 X. MEDICAL EDUCATION A. Graduate Medical Education (GME) & Indirect Medical Education (IME) 1. Full-Time Equivalent (FTE) Caps The Board affirmed the Intermediary s calculation of the Providers 1996 resident caps for GME and IME payments. The Board found the transaction at issue was not a merger, and there was therefore no legal authority to allow a permanent increase in the Providers resident cap. The Administrator declined to review the Board s decision. UPMC Count of FTE Residents CIRP Groups v. BlueCross Blue Shield Ass n/highmark Medicare Servs., PRRB Hearing Dec. No D6 (Oct. 28, 2010), declined to review, CMS Adm r Dec. (Dec. 6, 2010). The Board reversed the Intermediary s disallowance of the new program FTEs in the Provider s FTE cap for GME purposes. The Board determined that the rules in place during the year at issue place the authority for determination of a new program with the accrediting body, which granted the initial accreditation to the Provider in The Board further found that the Intermediary s attempt to apply changes in the rules that occurred after the year at issue to be an impermissible retroactive application of a new standard. The program at issue was therefore a new program during the year at issue and the FTEs in the program must be used to set the resident cap. No Administrator decision or statement by the Administrator declining to review the decision had been issued at the time of drafting of this summary. Oakwood Annapolis Hosp. v. BlueCross BlueShield Ass n/nat l Gov t Servs., Inc., PRRB Hearing Dec. No D4 (Dec. 30, 2011). The Board found that because the Provider did not establish a new medical residency training program after January 1, 1995, but only became a new training site for an existing program, the Provider was not entitled to a new FTE residency cap for GME and IME payment purposes. The Board further found that the Provider had a proper affiliation agreement in place for fiscal years 2000 and 2001, but since that the agreement lapsed in Accordingly, the Board ruled that the Provider satisfied the requirements for an affiliated group and was permitted to aggregate its caps for 2000 and 2001, but not for 2002 and No Administrator decision or statement by the Administrator declining to review the decision had been issued at the time of drafting of this summary. Alegent Health Immanuel Med. Ctr. v. Wis. Phys. Serv., PRRB Hearing Dec. No D7 (Jan. 20, 2012). 19

20 2. M+C Patients The case was remanded by the United States District Court for the District of Columbia. The Administrator opined that the IME and GME payments for the M+C patients at issue are made under Part A and not Part C and, as such, 42 C.F.R , , and control timely filing of the applicable claims. The Administrator further opined that the requirement that providers submit no-pay claims to their intermediaries is consistent with the past approved use of the claim form and therefore does not violate the Paperwork Reduction Act. Santa Barbara Cottage Hospital v. BCBSA/National Government Services, PRRB Dec. No D78R. (Dec. 13, 2010). The Board ruled that the Intermediary improperly disallowed the Providers GME and IME payments for their Medicare beneficiaries who were also enrolled in the M+C or other Medicare risk plans for fiscal years 1998 and The Board ordered the Intermediary to recalculate the Providers reimbursement based on the patient listings supplied to the Intermediary. The Administrator reversed, finding that the Providers failed to file the requisite UB92 forms to allow for additional reimbursement for the Medicare managed care patients. Sutter Managed Care (CIRP) Group v. BlueCross BlueShield Ass n/first Coast Serv. Options, Inc., PRRB Hearing Dec. No D34 (June 16, 2011), rev d, CMS Adm r Dec. (Aug. 16, 2011). The United States District Court for the District of Columbia remanded this case for further analysis pursuant to Loma Linda v. Sebelius, No , 408 Fed. App. 383 (D.C. Cir. 2010). The court in Loma Linda found that Loma Linda did not receive notice with ascertainable certainty of the billing deadline for seeking payment for medical education costs associated with M+C patients. The Administrator opined that the Santa Barbara Cottage Hospital had constructive notice of the billing deadline in that a reasonably prudent provider would have known that the notices requiring filing of a nopay UB 92 would have to be filed within the Part A claims filing deadline. The Administrator further opined that the Provider had actual notice of the requirement which was reflected in communications from the Provider to the Intermediary wherein the Provider discussed its attempts to submit the no-pay UB 92s. The Administrator concluded that the Provider therefore had notice of the billing deadline with ascertainable certainty. Santa Barbara Cottage Hosp. v. Blue Cross Blue Shield Ass n/nat l Gov t Servs., 20