Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
Reed’s Drug Store,
Centers for Medicare & Medicaid Services.
Docket No. C-17-1124
Decision No. CR5086
Petitioner’s Medicare billing privileges were deactivated on November 12, 2016, as a result of its failure to timely comply with a request that it revalidate its Medicare enrollment. For the reasons discussed below, I conclude that the effective date of Petitioner’s reactivated Medicare billing privileges remains February 16, 2017.
I. Background and Procedural History
On March 22, 2016, Palmetto GBA (Palmetto), a Medicare administrative contractor, sent a letter to Petitioner, a pharmacy, requesting that it revalidate its Medicare enrollment no later than May 31, 2016. See Centers for Medicare & Medicaid Services (CMS) Exhibit (Ex.) 7 at 1. Palmetto instructed Petitioner to “update or confirm all the information in [its] record . . . .” CMS Ex. 7 at 1. Palmetto cautioned Petitioner that a “[f]ailure to respond to this notice will result in a hold on [its] payments, and possible deactivation of [its] Medicare enrollment,” and further warned that in the event of deactivation, “[Petitioner] will not be paid for services rendered during the period of
deactivation” which “will cause a gap in [its] reimbursement.” CMS Ex. 7 at 1. Palmetto provided two telephone numbers that Petitioner could call if it needed assistance, and also provided various public websites that it could reference.
Because Petitioner did not submit a revalidation application in response to Palmetto’s request, Palmetto deactivated Petitioner’s enrollment effective November 12, 2016.1 CMS Ex. 8 at 1-2 (written testimony of Randi Heyward, a manager of provider enrollment for Palmetto, stating “[o]n November 12, 2016, Reed’s Drug Store’s PTAN, FV96351, was deactivated for failure to respond to the revalidation request.”); CMS Ex. 9 (“screen shot” of Palmetto database showing that Palmetto deactivated Petitioner’s enrollment on November 12, 2016).
Petitioner submitted a revalidation application, Form CMS-855B, via the internet-based Provider, Enrollment, Chain, and Ownership System (PECOS) that Palmetto received on February 16, 2017. CMS Ex. 6. After Petitioner provided additional information in response to a March 16, 2017 request for additional information (CMS Ex. 4), Palmetto reactivated Petitioner’s Medicare enrollment, effective February 16, 2017, the date that it received the revalidation application. CMS Ex. 8 at 2; see CMS Ex. 6 at 1.
On May 19, 2017, Palmetto received Petitioner’s request for reconsideration that disputed the effective date assigned to its reactivated billing privileges. CMS Ex. 2. Petitioner explained that it had completed a separate revalidation request from the National Supplier Clearinghouse (NSC) at approximately the same time that Palmetto requested that it revalidate its enrollment in March 2016, and it mistakenly believed that Palmetto’s March 2016 revalidation request was duplicative and had been “sent in error.” CMS Ex. 2 at 1. Petitioner acknowledged that “this was a misunderstanding and mistake on [its] part.” CMS Ex. 2 at 2.
Palmetto issued a reconsidered determination on July 27, 2017, in which it maintained the February 16, 2017 effective date of Petitioner’s reactivated billing privileges. CMS Ex. 1. Palmetto explained that it received the enrollment application for purposes of reactivation on February 16, 2017. CMS Ex. 1 at 2.
Petitioner submitted a request for an administrative law judge (ALJ) hearing that was received on August 30, 2017. I issued an Acknowledgment and Pre-Hearing Order (Pre-Hearing Order) on September 13, 2017, at which time I directed the parties to file their respective pre-hearing exchanges. CMS filed a Pre-Hearing Brief and Motion for Summary Judgment (CMS Br.), along with nine proposed exhibits (CMS Exs. 1-9).
Petitioner, through counsel, filed a pre-hearing brief, along with one proposed exhibit (P. Ex. 1).2
CMS has submitted the written direct testimony of one witness. CMS Ex. 8. Petitioner has not requested a hearing for purposes of cross-examination of CMS’s witness, and a hearing for the purpose of cross‑examination is therefore unnecessary. See Pre-Hearing Order §§ 8, 9, and 10. I consider the record in this case to be closed, and the matter is ready for a decision on the merits.3
Whether CMS had a legitimate basis to assign Petitioner a February 16, 2017 effective date for its reactivated billing privileges.
I have jurisdiction to decide this case. 42 C.F.R. §§ 498.3(b)(15), 498.5(l)(2).
IV. Findings of Fact, Conclusions of Law, and Analysis
1. On March 22, 2016, Palmetto requested that Petitioner revalidate its Medicare enrollment no later than May 31, 2016.
2. Petitioner did not respond to the revalidation request, and Palmetto deactivated Petitioner’s billing privileges effective November 12, 2016.
3. Palmetto received Petitioner’s enrollment application for purposes of revalidation and reactivation on February 16, 2017, and Palmetto ultimately processed that application to approval.
4. An effective date earlier than February 16, 2017, is not warranted for the reactivation of Petitioner’s Medicare enrollment and billing privileges.
Petitioner provides immunizations (CMS Exs. 2 at 1; 6 at 1) and is a “supplier” for purposes of the Medicare program. See 42 U.S.C. § 1395x(d); 42 C.F.R. §§ 400.202 (definition of supplier); see also 42 C.F.R. § 498.2. A “supplier” furnishes services under Medicare and the term applies to physicians or other practitioners that are not included within the definition of the phrase “provider of services.” 42 U.S.C. § 1395x(d). A supplier must enroll in the Medicare program to receive payment for covered Medicare items or services. 42 C.F.R. § 424.505. The regulations at 42 C.F.R. Part 424, subpart P, establish the requirements for a supplier to enroll in the Medicare program. 42 C.F.R. §§ 424.510 - 424.516; see also 42 U.S.C. § 1395cc(j)(1)(A) (authorizing the Secretary of the U.S. Department of Health and Human Services to establish regulations addressing the enrollment of providers and suppliers in the Medicare program). A supplier that seeks billing privileges under Medicare “must submit enrollment information on the applicable enrollment application.” 42 C.F.R. § 424.510(a)(1). “Once the provider or supplier successfully completes the enrollment process . . . CMS enrolls the provider or supplier into the Medicare program.” 42 C.F.R. § 424.510(a)(1); see also 42 C.F.R. § 424.510(d) (listing enrollment requirements). Thereafter, “[t]o maintain Medicare billing privileges, a . . . supplier . . . must resubmit and recertify the accuracy of its enrollment information every 5 years.” 42 C.F.R. § 424.515.
CMS is authorized to deactivate an enrolled supplier’s Medicare billing privileges if the enrollee does not provide complete and accurate information within 90 days of a request for such information. 42 C.F.R. § 424.540(a)(3). If CMS deactivates a supplier’s Medicare billing privileges, “[n]o payment may be made for otherwise Medicare covered items or services furnished to a Medicare beneficiary.” 42 C.F.R. § 424.555(b). Further, and quite significantly, the Departmental Appeals Board (DAB) has unambiguously stated that “[i]t is certainly true that [the petitioner] may not receive payment for claims for services during any period when his billing privileges were deactivated.” Willie Goffney, Jr., M.D., DAB No. 2763 at 6 (2017); see Urology Group of NJ, LLC, DAB No. 2860 at 11 (2018) (“Taking these unique effects of revocation into consideration, it is reasonable to conclude that CMS intended for revocations and deactivations to share the feature of precluding a provider or supplier from collecting reimbursement for services rendered during the period of inactive Medicare billing privileges, while simultaneously intending for revocations to have more severe consequences on a provider’s or supplier’s ability to participate.”). The regulation authorizing deactivation explains that “[d]eactivation of Medicare billing privileges is considered an action to protect the provider or supplier from misuse of its billing number and to protect the Medicare Trust Funds from unnecessary overpayments.” 42 C.F.R. § 424.540(c).
On March 22, 2016, Palmetto mailed a letter to Petitioner directing it to revalidate its Medicare enrollment record no later than May 31, 2016, and Palmetto warned that Petitioner’s failure to revalidate could result in deactivation of its Medicare enrollment and billing privileges, with a resulting gap in reimbursement. CMS Ex. 7 at 1. Petitioner acknowledges it received this letter, but due to confusion on its part and its mistaken belief that it had already revalidated its enrollment, Petitioner did not comply with the revalidation request. CMS Ex. 2 at 1. After Petitioner did not submit an enrollment application for purposes of revalidation, Palmetto deactivated Petitioner’s billing privileges. CMS Exs. 8 at 1-2; 9. Petitioner submitted a revalidation application that was received on February 16, 2017, and Palmetto granted an effective date of reactivated billing privileges effective that same date. CMS Ex. 3.
The pertinent regulation with respect to the effective date of reactivation is 42 C.F.R. § 424.520(d). Urology Group, DAB No. 2860 at 7 (“The governing authority to determine the effective date for reactivation of Petitioner’s Medicare billing privileges is 42 C.F.R. § 424.520(d).”). Section 424.520(d) states that “[t]he effective date for billing privileges for physicians, non-physician practitioners, physician and non-physician practitioner organizations . . . is the later of – (1) [t]he date of filing of a Medicare enrollment application that was subsequently approved by a Medicare contractor; or (2) [t]he date that the supplier first began furnishing services at a new practice location.” The DAB has explained that the “date of filing” is the date “that an application, however sent to a contractor, is actually received.” Alexander C. Gatzimos, MD, JD, LLC, DAB No. 2730 at 5 (2016) (emphasis omitted). Palmetto deactivated Petitioner’s billing privileges based on its failure to comply with the revalidation request (CMS Exs. 8 at 1-2; 9), and, on February 16, 2017, Petitioner filed the application for purposes of revalidation and reactivation that was processed to approval. CMS Ex. 6 at 1. Based on the February 16, 2017 receipt date of the enrollment application that was processed to approval, NGS Palmetto did not err in assigning a February 16, 2017 effective date for reactivated billing privileges. See Urology Group, DAB No. 2860 at 9 (“Moreover, the fact that a supplier must file a new enrollment application in order to reactivate its billing privileges is consistent with the language of section 424.520(d) and compelling evidence that the provision should apply to reactivations.”); Willie Goffney, DAB No. 2763 at 6 (“It is certainly true that [the petitioner] may not receive payment for claims for services during any period when [its] billing privileges were deactivated.”); 42 C.F.R. § 424.520(d).
Petitioner is challenging the assignment of a February 16, 2017 effective date of its reactivated billing privileges, which resulted in an approximately three-month gap in its Medicare billing privileges. Petitioner was required to timely respond to the revalidation request to avoid the prospect of deactivation pursuant to 42 C.F.R. § 424.540(a)(3), and Palmetto deactivated Petitioner’s billing privileges due to Petitioner’s failure to comply with the revalidation request. See CMS Exs. 1; 9. The DAB has explained that a deactivation action is not reviewable, Willie Goffney, DAB No. 2763 at 3-5, and “[t]he only action in the reconsidered determination which is appealable is . . . the initial
determination of the effective date of the enrollment application reinstating [the petitioner].”4 Id. at 5. Petitioner did not comply with the revalidation request within the time period prescribed by 42 C.F.R. § 424.540(a)(3), and Palmetto had a legitimate basis to assign an effective date of February 16, 2017, for Petitioner’s reactivated billing privileges based on a correct application of 42 C.F.R. § 424.520(d).
As I previously discussed, CMS has not offered evidence that Palmetto notified Petitioner, on November 12, 2016, that it had deactivated Petitioner’s enrollment even though procedures dictate that Petitioner should have been notified of its deactivation. MPIM, § 188.8.131.52. It is logical to conclude that Palmetto’s failure, assuming in the absence of evidence that it did fail, to provide such notice was detrimental to Petitioner, because Petitioner would have been on notice that it would not be reimbursed by Medicare for any services provided after November 12, 2016. This is all the more significant because Petitioner credibly explained that it did not complete the revalidation request because of a simple misunderstanding, as it had separately revalidated with the NSC at approximately the same time and mistakenly believed that Palmetto’s revalidation request was duplicative of the NSC’s revalidation request. While CMS and Palmetto have the discretion to consider such circumstances when determining whether billing privileges should be deactivated and determining the effective date for reactivated billing privileges, I am not empowered with the same discretion and authority. Despite the unfortunate nature of these circumstances, I do not have the authority to reverse Petitioner’s deactivation. Willie Goffney, DAB No. 2763 at 5. Further, I am not authorized to grant Petitioner equitable relief, and to the extent that Petitioner is requesting equitable relief in the form of an earlier effective date of reactivated billing privileges, I am unable to grant equitable relief. US Ultrasound, DAB No. 2302 at 8 (2010) (“Neither the ALJ nor the [DAB] is authorized to provide equitable relief by reimbursing or enrolling a supplier who does not meet statutory or regulatory requirements.”). I do not have the authority to “[f]ind invalid or refuse to follow Federal statutes or regulations or secretarial delegations of authority.” See, e.g., 1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (“An ALJ is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground, even a constitutional one.”).
In the absence of any basis to grant an earlier date for the reactivation of billing privileges, the February 16, 2017 effective date for the reactivation of Petitioner’s billing privileges must stand.
For the foregoing reasons, I uphold the February 16, 2017 effective date of Petitioner’s reactivated billing privileges.
Leslie C. Rogall Administrative Law Judge
- 1. CMS does not present any evidence that Palmetto notified Petitioner of its deactivation, as required by Section 184.108.40.206 of the Medicare Program Integrity Manual (MPIM), CMS Pub. 100-108.
- 2. Petitioner filed additional documents more than two months after its pre-hearing exchange deadline, and well after the time prescribed for CMS to file any evidentiary objections. In addition to being filed out of time, Petitioner did not mark these documents as exhibits. Further, the documents are irrelevant to the question of whether Palmetto had a legitimate basis to assign Petitioner a February 16, 2017 effective date for its reactivated billing privileges. Therefore, I have not admitted these documents into the evidentiary record.
- 3. CMS argues that summary disposition is appropriate. It is unnecessary in this instance to address the issue of summary disposition, as neither party has requested an in person hearing.
- 4. The DAB explained: “Moreover, neither [42 C.F.R. §] 424.545(b) nor any other regulation provides appeal rights from the contractor’s deactivation determination or any rebuttal determination.” Willie Goffney, DAB No. 2763 at 5; see also Arkady B. Stern, M.D.,DAB No. 2417 at 3 n.4 (2011) (Petitioner argues on appeal that deactivation was improper, but the DAB “does not have the authority to review” deactivation under circumstances of this case, citing42 C.F.R. §§ 424.545(b) and 498.3(b)); Andrew J. Elliott, M.D.,DAB No. 2334 at 4 n.4 (2010) (DAB “does not have authority to review” a deactivation). Therefore, I may not disturb Petitioner’s deactivation.