Diabetes & Osteoporosis Center PC, DAB CR6682 (2025)

DECISION

This decision grants the Centers for Medicare & Medicaid Services’ (CMS) Motion for Summary Judgment and affirms the determination to revoke the Medicare enrollment and billing privileges of Diabetes & Osteoporosis Center PC (Petitioner or the Center) and to place it on the CMS preclusion list. 

I.      Background and Procedural History

Dr. Brian Fertig opened the Center in June 1996.  Petitioner’s Exhibit (P. Ex.) 1; Petitioner’s Brief (P. Br.) at 4.  The Center was enrolled as a supplier in the Medicare program.  

By letter dated August 17, 2022, CMS, through its contractor, Novitas Solutions (Novitas), notified Petitioner that its Medicare billing privileges were being revoked effective September 16, 2022, due to abuse of billing privileges in violation of 42 C.F.R.

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§ 424.535(a)(8)(ii).  CMS Ex. 15.  The letter also noted that due to the revocation, Petitioner was placed on the CMS preclusion list pursuant to 42 C.F.R. §§ 422.2 and 422.222.  Id.  

On November 18, 2022, Petitioner filed an untimely request for reconsideration of the revocation of its billing privileges.  CMS Ex. 17. 

CMS issued a Reconsideration Request Decision on February 16, 2023, finding that good cause existed for the untimely reconsideration request.  CMS Ex. 1.  The hearing officer determined that no error was made in the revocation of Petitioner’s billing privileges or in placing Petitioner on the preclusion list and upheld CMS’s determinations.  Id. at 13. 

Petitioner timely requested a hearing before an administrative law judge on April 14, 2023.  The case was assigned to me for hearing and decision, and the Civil Remedies Division issued my Standing Order at my direction. 

On June 23, 2023, CMS filed a prehearing brief and a motion for summary judgment (CMS Br.) with 24 exhibits (CMS Exs. 1-24).  On July 25, 2023, Petitioner filed a prehearing brief (P. Br.) with six exhibits (P. Exs. 1-6).  On August 8, 2023, CMS filed its objections to some of Petitioner’s exhibits. 

II.      Admission of Evidence

Petitioner did not object to CMS’s proposed exhibits, but CMS objected to Petitioner’s Exhibits 5 and 6.  CMS’s objection is overruled.  

Petitioner filed Petitioner’s Offer of New Evidence for Good Cause, asserting that there is good cause for submitting at the ALJ level evidence previously not submitted to CMS during the reconsidered determination level.  CMS’s exhibits (CMS Ex. 1-24) and Petitioner’s exhibits (P. Exs. 1-6) are admitted into the record.  

Petitioner also requested that I order CMS to make available “Representative Katie” for cross-examination under 42 C.F.R. § 498.62.  CMS objects and notes that “Katie” works for Novitas, not CMS.  The proper mechanism to request a witness is to request a subpoena pursuant to 42 C.F.R. § 498.58, which Petitioner failed to request.  Petitioner’s request is denied.  I have determined that summary judgment is appropriate in this case.  Therefore, all evidence has been viewed in the light most favorable to Petitioner, including the calls with Novitas representatives.  

III.    Issues

1. Whether CMS has a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(ii); and

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2. Whether CMS has a legal basis to place Petitioner on the CMS preclusion list.

IV.    Jurisdiction 

I have jurisdiction to hear and decide the issues in this case.  42 C.F.R. §§ 498.3(b)(17), (20), 498.5(l)(2), (n)(2); see also 42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 405.803(a), 424.545(a), 498.1(g). 

V.    Summary Judgment

CMS requested summary judgment, arguing that there are no material facts in dispute.  Petitioner opposes CMS’s motion.  CMS’s motion is granted because the undisputed material facts show that CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(ii). 

Summary judgment is appropriate if a case presents no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law.  Bartley Healthcare Nursing & Rehab., DAB No. 2539 at 3 (2013) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986)); Ill. Knights Templar Home, DAB No. 2274 at 3-4 (2009).  The moving party may show the absence of a genuine factual dispute by presenting evidence so one-sided that it must prevail as a matter of law or by showing that the non-moving party has presented no evidence “sufficient to establish the existence of an element essential to [that party’s] case, and on which [that party] will bear the burden of proof at trial.”  Livingston Care Ctr. v. U.S. Dep’t of Health & Human Servs., 388 F.3d 168, 173 (6th Cir. 2004) (quoting Celotex, 477 U.S. at 322).  To avoid summary judgment, the non-moving party must then act affirmatively by tendering evidence of specific facts showing that a dispute exists.  Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986); see also Vandalia Park, DAB No. 1939 (2004); Lebanon Nursing & Rehab. Ctr., DAB No. 1918 (2004).  The non-moving party may not simply rely on denials but must furnish admissible evidence of a dispute concerning a material fact.  Ill. Knights Templar, DAB No. 2274 at 4; Livingston Care Ctr., DAB No. 1871 at 5 (2003).  In doing so, the non-moving party must show more than “some metaphysical doubt as to the material facts.”  W. Tex. LTC Partners, Inc., DAB No. 2652 at 6 (2015), aff’d sub nom. W. Tex. LTC Partners, Inc. v. Dep’t of Health & Human Servs., 843 F.3d 1043 (5th Cir. 2016); 1866ICPayday.com, L.L.C., DAB No. 2289 at 3 (2009) (quoting Matsushita, 475 U.S. at 587). 

In examining the evidence for purposes of determining whether summary judgment is appropriate, I must draw all reasonable inferences in the light most favorable to the non-moving party.  Heritage House of Marshall Health & Rehab., DAB No. 3035 at 8 (2021); Brightview Care Ctr., DAB No. 2132 at 2, 9 (2007); Livingston Care Ctr., 388

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F.3d at 172; Guardian Health Care Ctr., DAB No. 1943 at 8 (2004); see also Brightview, DAB No. 2132 at 10 (entry of summary judgment upheld where inferences and views of non-moving party are not reasonable).  However, drawing factual inferences in the light most favorable to the non-moving party does not require that I accept the non-moving party’s legal conclusions.  W. Tex. LTC Partners, DAB No. 2652 at 6-7; cf. Guardian, DAB No. 1943 at 11 (“A dispute over the conclusion to be drawn from applying relevant legal criteria to undisputed facts does not preclude summary judgment if the record is sufficiently developed and there is only one reasonable conclusion that can be drawn from those facts.”); see Green Valley Healthcare & Rehab. Ctr., DAB No. 2947 at 8 (2019) (quoting Johnson v. Perez, 823 F.3d 701, 705 (D.C. Cir. 2016) (noting that a genuine factual dispute does not exist “when a putatively disputed body of evidentiary material could not, even assuming a sympathetic factfinder, reasonably support a finding crucial to the nonmoving party’s legal position”)). 

In relation to administrative proceedings involving Medicare, it is well-established that an ALJ is empowered to decide a case on summary judgment, without an evidentiary hearing.  Shah v. Azar, 920 F.3d 987, 996 (5th Cir. 2019) (citing Cedar Lake Nursing Home v. U.S. Dep’t of Health & Human Servs., 619 F.3d 453, 457 (5th Cir. 2010)); see Fal-Meridian, Inc. v. U.S. Dep’t of Health & Human Servs., 604 F.3d 445, 449 (7th Cir. 2010).  “All it means for a decision to be based on a grant of summary judgment is that there are no issues that would benefit from being resolved in an evidentiary hearing.”  Fal-Meridian, 604 F.3d at 449 (emphasis added). 

Finally, deciding a case on summary judgment does not mean that it is decided without a hearing.  In reviewing administrative appeals decided on summary judgment, courts describe the case as having been decided without an “oral hearing” or without an “evidentiary hearing.”  They recognize that, by considering the evidence and applying the law, the ALJ has granted the petitioner a hearing.  See CNG Transmission Corp. v. FERC, 40 F.3d 1289, 1293 (D.C. Cir. 1994) (holding that a “paper hearing” satisfies statutory requirements for “notice and opportunity for hearing”). 

VI.     Legal Authorities

The Social Security Act (Act) authorizes the Secretary of Health and Human Services to establish regulations for enrolling providers and suppliers in the Medicare program.  42 U.S.C. § 1395cc(j)(1)(A).  Providers must enroll in the Medicare program and receive a billing number to obtain payment for services rendered to Medicare beneficiaries.  42 C.F.R. § 424.505. 

CMS or a Medicare contractor may revoke a provider or supplier’s Medicare enrollment and billing privileges for any of the reasons listed in 42 C.F.R. § 424.535(a).  42 C.F.R. §§ 405.800(b)(1), 424.535(a).  If CMS revokes a provider or supplier’s Medicare enrollment and billing privileges, the revocation becomes effective 30 days after CMS or

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one of its contractors mails the revocation notice to the provider or supplier, subject to some exceptions not applicable in this case.  42 C.F.R. §§ 405.800(b)(2), 424.535(g).  After CMS revokes a provider or supplier’s enrollment and billing privileges, CMS bars the provider from reenrolling in the Medicare program for a minimum of one year, but no more than 10 years.  42 C.F.R. § 424.535(c).  

CMS may revoke the enrollment of a provider or supplier who engages in abuse of billing privileges.  42 C.F.R. § 424.535(a)(8).  CMS may determine that there has been an abuse of billing privileges if a provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.  42 C.F.R. § 424.535(a)(8)(ii).  In making that determination, CMS will consider any or all of the four factors specified in the regulations, as applicable or appropriate in an individual case.  42 C.F.R. § 424.535(a)(8)(ii)(A)-(D). 

Furthermore, CMS may place certain individuals and entities on the CMS preclusion list.  Medicare Advantage organizations and Medicare Part D plan sponsors may not provide reimbursement for any items or services furnished by an individual or entity on CMS’s preclusion list, or for prescriptions the individuals write.  42 C.F.R. §§ 422.2, 422.222, 422.224, 423.100, 423.120(c)(6). 

When evaluating a challenge to a revocation, the Departmental Appeals Board (DAB) has adopted an evidentiary structure that includes burden shifting.  CMS must make a prima facie showing that the provider or supplier failed to comply with the regulations.  If this occurs, the provider or supplier must prove, by a preponderance of the evidence, that it was in compliance.  Hillman Rehab. Ctr., DAB No. 1611 (1997); see Adora Healthcare Services, Inc., DAB No. 2714 at 3-4 (2016); Medisource Corp., DAB No. 2011 at 2-3 (2006) (applying Hillman to all cases adjudicated under 42 C.F.R. pt. 498.). 

VII.    Undisputed Facts

1. Dr. Fertig is a physician who opened the Center in June 1996.  P. Br. at 4; P. Ex. 1.  The Center primarily serves endocrinology patients with an emphasis on diabetes and osteoporosis.  P. Br. at 4.  
2. The Center was enrolled as a Medicare Part B supplier in 1999.  CMS Ex. 2.
3. Dr. Hassan Kanj joined the Center as an associate physician on October 1, 2000.  P. Br. at 4.

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2019 Audit

On September 20, 2019, SafeGuard Services, LLC (SGS), a Unified Program Integrity Contractor (UPIC), acting on behalf of CMS, conducted an audit of a random sample of 81 claims for services that Petitioner provided to 10 Medicare beneficiaries paid between January 31, 2019 and July 26, 2019.  CMS Ex. 3.  

By letter dated December 11, 2019, SGS notified Petitioner of the results of the audit, reporting that 81 claims, encompassing 202 services, were reviewed and 100% of the claims were denied.  CMS Ex. 4 at 3.  The audit revealed the following problems:  

• -    the documentation associated with the audited files failed to support the medical necessity of the lab testing codes that were billed;
• -    all audited beneficiaries had multiple lab tests billed at each office visit;
• -    the medical records did not include a clinical rationale for or intent to order the tests that would have been established from reviewing patient history, physical exam and/or previous lab results;
• -    there was no documentation of new clinical complaints reported by the beneficiaries to explain why the tests were ordered;   
• -    documentation was insufficient to support that the billed lab tests were actually rendered on the dates of service provided;
• -    the medical records failed to include the results from a number of the lab tests performed;
• -    a medical record was missing an order written and signed by the rendering provider for the laboratory tests billed;
• -    the rendering provider failed to sign the order forms for generic laboratory tests; and
• -    all documentation was handwritten and either completely or somewhat illegible.

CMS Ex. 4 at 3, 4.  

The notice advised Petitioner that it was “absolutely necessary” for all services rendered to be properly documented and for medical records to be complete and legible.  CMS Ex. 4 at 5.  It also noted that “documentation of each patient encounter should include:  the date, the reason for the encounter, appropriate history and physical examination, review of laboratory results, x-ray results, other ancillary services (where appropriate), assessment, and plan of treatment.”  Id.  The letter was intended to be educational regarding the appropriate submission of Medicare claims.  CMS Ex. 4 at 7.  Lastly, the letter informed Petitioner of CMS’s authority to revoke Medicare billing privileges if certain conditions are not met pursuant to 42 C.F.R. § 424.535.  Id.

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As a result of the audit, Petitioner was found liable for a $5,855.08 overpayment from Medicare.  CMS Ex. 4 at 5.  By letter dated January 15, 2020, Novitas Solutions (Novitas), a Medicare administrative contractor, notified Petitioner that the Center received a Medicare payment in error, stating that the overpayment amount was $5,824.32, which is an adjusted overpayment amount.  Petitioner did not appeal the overpayment demand and submitted payment.  P. Ex. 1 at 2; CMS Ex. 21 at 2. 

2021 Audit

As part of its efforts to investigate potential fraud, waste, and abuse, SGS performed a second post-payment audit of Petitioner’s records on March 16, 2021, reviewing a random sample of 33 claims for services provided to 10 beneficiaries paid between June 17, 2020 and November 2, 2020.  CMS Ex. 7 at 2.  

Petitioner was informed of the audit results by notice letter dated June 7, 2021.  Once again, all audited claims were denied because the documentation did not support the medical necessity for the services billed.  CMS Ex. 8. The audit revealed the following issues:  

• -    Documentation failed to support the medical necessity for the laboratory testing billed.  
• -    The medical records consisted of documentation for the claim date only.  
• -    There was a physical examination form that contained a list of diagnoses and labs to be ordered for the diagnoses.  However, there was a lack of documentation to confirm the diagnoses listed, how the ordering physician planned to utilize the laboratory results in the management of the beneficiary’s specific medical problem, and in the continuation or modification of the beneficiary’s care.

CMS Ex. 8 at 3. 

The notice again stated that documentation of all services rendered is absolutely necessary for a claim to be properly evaluated.  CMS Ex. 8 at 5.  The notice also stated, “the documentation should be of such content and clarity as to make it abundantly clear to any third[-]party reviewer, the patients’ symptoms, history, physical findings, and plan of treatment.  Services that are not proven to be reasonable or medically necessary are denied under the authority of Section 1862(a)(1)(A) of the Social Security Act.”  Id.  The notice also informed Petitioner of CMS’s authorization to revoke billing privileges, especially pursuant to 42 C.F.R. § 424.535(a)(8)(ii).  Id at 5, 6.  The notice identified an overpayment amount of $3,623.10.  CMS Ex. 8 at 2.

As a result of the second audit, Novitas identified an overpayment of $3,312.60 and of $310.50, totaling $3,623.10.  CMS Ex. 10.  Petitioner was notified of the overpayment,

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along with its appeal rights, by letters dated June 22, 2021 and June 23, 2021.  Id.  Petitioner did not appeal the results of the second audit and submitted the respective payment.  P. Ex. 1 at 4. 

2022 Audit

On May 24, 2022, SGS notified Petitioner that a pre-payment audit would be conducted because an analysis of their billing data indicated that there may be anomalies in Petitioner’s billing.  CMS Ex. 11 at 2. 

Petitioner was required to submit claims to Novitas.  CMS Ex. 11 at 4.  Once Novitas received the claims, they would issue an Additional Development Request (ADR) if additional information was needed.  

By letters dated June 3, 7, and 15, 2022, CMS, through Novitas, requested additional documentation for the claims that Petitioner submitted.  CMS Ex. 13.  As a result of the audit, Novitas reviewed 17 claims with dates of service from May 10, 2022 through May 19, 2022.  Novitas determined that the documentation did not support the medical necessity of the services billed for all 17 claims.  CMS Ex. 12. 

On July 11, 12, and 13, 2022, Novitas issued remittances which stated, “if you do not agree with what we approved for these services, you may appeal our decision.  To make sure that we are fair to you, we require another individual that did not process your initial claim to conduct the appeal.  However, to be eligible for an appeal, you must write to us within 120 days of the date you received this notice, unless you have a good reason for being late.”  CMS Ex. 14 at 2, 5, 6. 

To date, Petitioner has not appealed the prepayment denials.  CMS Ex. 21 at 4. 

CMS’s Revocation and Preclusion Determination

On August 17, 2022, CMS issued a notice informing Petitioner that its Medicare billing privileges were revoked effective September 16, 2022.  CMS Ex. 15.  CMS imposed the revocation after determining that Petitioner engaged in a pattern or practice of submitting claims that failed to meet Medicare requirements, in violation of 42 C.F.R. § 424.535(a)(8)(ii).  Id.  

CMS also added Petitioner to the CMS preclusion list pursuant to 42 C.F.R. §§ 422.2 and 422.222 for providers/suppliers, and pursuant to 42 C.F.R. §§ 423.100 and 423.120(c)(6) for physicians and non-physician practitioners.  CMS Ex. 15 at 2-3. 

Lastly, CMS established a reenrollment bar for 10 years pursuant to 42 C.F.R. § 424.535(c).  CMS Ex. 15 at 4.

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Petitioner’s Phone Calls to Novitas

On July 20, 2022,1 Petitioner contacted Novitas with questions regarding the third audit.  CMS Ex. 16; P. Br. at 6. Petitioner also stated that they want to correctly bill Medicare, and the audit was difficult for the office because they are short-staffed.  CMS Ex. 16 at 1; P. Br. at 7. 

The Center made several follow-up calls to Novitas.  P. Br. at 15. 

An updated note from the Novitas call center dated October 17, 2022, states:  

I received information back from the UPIC related to this provider.  The UPIC indicated that the provider’s Medicare billing privileges have been revoked as of 9/16/2022.  As a result of the revocation, the prepay edit will remain in effect at this time.  No prepay education has been provided by the NE UPIC to date regarding this investigation as it is still open/ongoing.  You can advise the provider the following information:  The provider should refer to the revocation letter they should have received and follow any instruction within that letter. Otherwise[,] the provider should await any further instruction provided by the UPIC and continue to send SGS their medical records for any claim billed that hits the edit. Novitas is not able to provide any further information at this time.  

CMS Ex. 16.  “Representative Katie” followed-up with Dr. Fertig on October 18, 2022.  P. Br. at 15. 

Request for Reconsidered Determination and Issuance of Reconsidered Determination

On November 18, 2022, Petitioner submitted a request reconsidered determination.  CMS Ex. 17.  On February 16, 2023, CMS issued a reconsidered determination upholding the revocation and Petitioner’s placement on the CMS preclusion list.  CMS Ex. 1.

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VIII.  Analysis and Conclusions of Law

1. The undisputed evidence shows that Petitioner did not appeal the results of the 2019, 2021, or 2022 audits.

It is undisputed that Petitioner did not contest the results of the 2019 or 2021 audits and remitted payments to CMS for the overpayments.  Therefore, both of those audits are administratively final under the regulations.2

The parties agree that Petitioner did not appeal the results of the 2022 prepayment audit.  However, Petitioner argues that they would have appealed that audit had they not been given advice from a Novitas employee named “Katie” who advised Dr. Fertig to “stop sending the records, wait for the denials, and appeal directly with Medicare.”  P. Br. at 7. 

It is undisputed that Petitioner contacted Novitas to seek guidance on “a more effective way to manage Audit 3” and that Dr. Fertig spoke with a Novitas representative identified as “Katie”.  P. Br. at 15.3  Petitioner argues that it relied upon the representations of “CMS representative Katie” in the July 20, 2020 call who advised them to “withhold records and submit claims and instead wait for the withheld claims to be denied and for a post payment to be issued.”  P. Br. at 16.  The notes provided by CMS indicate that Petitioner called Novitas on July 20, 2022, and stated that the audit was difficult because they were short-staffed and asked what could be done to end the audit.  CMS Ex. 16 at 2.  It is important to note that prior to Petitioner’s call, Novitas had already issued remittances for the 17 claims that were denied in the third audit.  See CMS Ex. 14.4  Therefore, Katie’s representations did not have an impact on whether documents were submitted for the 17 claims assessed in the third audit.  Nor is there any indication that Petitioner sought guidance on appealing the denial of the 17 claims in the prepayment audit, as the appeal information was already provided by Novitas.  Accepting the phone call with “Katie” as Petitioner has relayed it still does not explain why Petitioner failed to appeal the third audit.

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Katie followed up with Petitioner on October 17, 2022.  Notes from that call indicate that Petitioner’s billing privileges were revoked as of September 16, 2022.  The note goes on to state, “The provider should refer to the revocation letter they should have received and follow any instruction within that letter.  Otherwise, the provider should await any further instruction provided by the UPIC and continue to send SGS their medical records for any claim billed that hits the edit.  Novitas is not able to provide any further information at this time.”  CMS Ex. 16 at 4. 

Petitioner argues that there are issues of genuine material facts as to whether Petitioner was compliant with its billing during the third audit and whether Petitioner rightfully relied on instructions provided by the CMS contractor in the phone calls with Novitas.   However, the mechanism by which to challenge the third audit was to initiate an appeal with Novitas.  As mentioned, the remittance issued by Novitas provided Petitioner with 120 days from the date of receipt to appeal the results of the third audit, “unless [Petitioner] ha[s] a good reason for being late.” CMS Ex. 14 at 6.  Petitioner has not disputed receipt of the remittance containing the appeal rights for the third audit, nor is there any record of Petitioner requesting an appeal of the audit.  Here, there is no dispute regarding the appeal of the audits.  The record is clear that Petitioner did not appeal any of the audits.  The alleged “dispute” involves why Petitioner chose not to appeal the third audit. 

As Petitioner candidly admitted in its request for reconsideration, communication between Petitioner and Novitas regarding the prepayment audit was not ideal.  CMS Ex. 17 at 7.  When Petitioner placed the call to Novitas, it was in receipt of the remittance with its appeal rights.  There is no indication that Petitioner discussed the appeal rights with Katie.  By all accounts, the call focused on what Petitioner could do to end the prepayment audit, due to its demands on its staff.  Furthermore, even if Petitioner received erroneous advice from “Katie” it would not excuse Petitioner’s duty to know the claim submission requirements as a Medicare supplier.  The Supreme Court has held that a Medicare program participant has a “duty to familiarize itself with the legal requirements for cost reimbursement,” and erroneous advice from a governmental agent is, “in itself, insufficient to raise an estoppel.”5  Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc., 467 U.S. 51, 64 (1984).  I find that the conversation with “Katie” is not dispositive of the issue in this case, nor is it a dispute of a material fact. 

Because Petitioner did not appeal the results of the prepayment audit, and the deadline for the appeal has passed, it is considered finally and fully adjudicated.  Therefore, I do not have jurisdiction over the claim denials in the third audit.  Claim denials are subject to a

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separate administrative appeal process, which permits ultimate review by the Medicare Appeals Council and judicial review.  See 42 U.S.C. § 1395ff; 42 C.F.R. Part 405, Subpart I.  Each level of review, from initial determination onward, is final and binding on all parties unless further appealed per regulation.  42 C.F.R. §§ 405.928(b), 405.958, 405.978; Devine Solutions Grp. LLC, DAB No. 3159 at 14-18 (2024).

Petitioner argues that it intended to appeal the third audit, and it was deprived of due process rights to appeal the third audit when CMS revoked its billing privileges.  P. Br. at 12.6  While I find the timing of the revocation notice concerning, there is no evidence that Petitioner was denied the opportunity to appeal the third audit.  There is no evidence in the record that Petitioner even questioned whether an appeal was still possible after receiving the revocation notice.  Additionally, the regulations do not require CMS to allow the third appeal period to expire prior to revoking Petitioner’s Medicare enrollment. 

2. Petitioner engaged in a pattern or practice of submitting claims for services that were not in compliance with Medicare requirements under 42 C.F.R. § 424.535(a)(8)(ii).

CMS may revoke a currently enrolled provider’s or supplier’s Medicare enrollment and any corresponding provider agreement or supplier agreement if it determines that the provider or supplier has a pattern of submitting claims that fail to meet Medicare requirements.  42 C.F.R. § 424.535(a)(8)(ii).  In making this determination, CMS considers:  

• (A)    The percentage of submitted claims that were denied during the period under consideration.  
• (B)    Whether the provider or supplier has any history of final adverse actions and the nature of any such actions.

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• (C)    The type of billing non-compliance and the specific facts surrounding said non-compliance (to the extent this can be determined).
• (D)    Any other information regarding the provider or supplier’s specific circumstances that CMS deems relevant to this determination.

42 C.F.R. § 424.535(a)(8)(ii).  The hearing officer contemplated each factor in the reconsideration. 

1. Percentage of submitted claims that were denied during the period under consideration

The record shows, and the hearing officer confirmed, that the first audit reviewed 81 claims from 10 beneficiaries from January 7, 2019 to July 3, 2019.  It was determined that the documentation did not support the medical necessity of the lab services billed.  CMS Ex. 1 at 3; CMS Ex. 4.  This resulted in 100% of the claims being denied.  

The second post-payment review audited 33 claims for 10 beneficiaries May 28, 2020 through October 7, 2020.  CMS Ex. 1 at 4; CMS Ex. 7 at 8.  All 33 claims were denied because the documentation did not support the medical necessity of the lab services billed.  CMS Ex. 1 at 4; CMS Ex. 7. 

The third audit, a prepayment audit, reviewed and denied 17 claims because the documentation failed to confirm the diagnosis listed and how the physician planned to use the lab results in the management of the beneficiary’s care.  CMS Ex. 1 at 9; CMS Ex. 12.  Again 100% of the audited claims were denied. 

Petitioner argues that the number of claims that were audited are insignificant in comparison with the number of claims that the practice would have billed Medicare during the time period of the audits.  Req. for Hrg. at 28.  While this may be true, a 100% denial rate is high, and it calls into question how many claims would have been denied if more claims were audited.  Additionally, the hearing officer noted that CMS considers the percentage of denied claims for the audits to be “very consistently high” rates of noncompliance.  CMS Ex. 1 at 7.  The hearing officer also noted that the claims remained high despite the education provided by CMS.  Id.  I agree with the hearing officer’s assessment.  

2. History of adverse actions

Petitioner does not have a history of adverse actions.  CMS Ex. 1 at 8.

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3. Type of billing non-compliance and specific facts

Regarding the third factor, all claims in the 2019 audit were denied because the documentation did not support the medical necessity of the lab services billed and the documentation was insufficient to support the lab tests billed.  Id.  The audit reviewed the Center’s lab services involving the following procedure codes:  82024, 82306, 82627, 82670, 83001, 83970, 84146, 84270, 84403, and 84681.  Id at 8.  The hearing officer noted that there was no documentation of new complaints reported by patients that would justify why the tests were ordered.  Id.  Furthermore, the submitted documentation was not legible and could not support the performance of the laboratory services and the billing codes.  Id. 

Similarly, all claims were denied in the 2020 post-payment audit because the documentation did not support the medical necessity of the lab services billed.  Id.  The hearing officer noted that the 2020 audit reviewed the following procedure codes, which were also included in the 2019 audit:  82024, 82306, 82670, 83001, 83970, 84146, 84270, and 84403.  CMS Ex. 1 at 9.  Additionally, “the documentation was insufficient to confirm the diagnoses listed, how the ordering physician planned to use the laboratory results in the management of the specific medical problem, and in the continuation or modification of the patient’s care.”  Id.  

In the 2022 prepayment review, all claims were again denied due to insufficient documentation to support medical necessity of the lab services billed or ordered.  Id.  The hearing officer noted that 13 of the 17 claims in the third audit included some of the same procedure codes as the two previous audits:  82024, 82306, 82670, 83001, 83970, 84146, 84270, and 84403.  Id.  

The record shows that most of the claims were denied for lack of medical records to support the medical necessity of claims.  CMS Exs. 4, 7, 12.  Medical necessity is a requirement for a Medicare claim and furnishing appropriate documentation to a CMS contractor in order to determine whether payment is due and the amount of payment.  42 C.F.R. § 424.6(a)(6).

The Center argues that the claims review results were due to mistakes, not due to fraud or intentional misconduct.  CMS Ex. 17 at 4; P. Br. at 14.  Though I accept Petitioner’s argument, and the hearing officer also noted that the issue was due to the insufficient documentation of medical records, not fraud, CMS is not required to prove intent or fraudulent behavior.  CMS Ex. 17 at 5.  The Board has rejected the notion that CMS must show fraudulent or dishonest intent or that a pattern of billing errors was not accidental.  Donald W. Hayes, D.P.M., DAB. No. 2862 (2018).

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4. Additional information

Lastly, the hearing officer found that the underlying conduct that led to the revocation was detrimental to the best interests of the Medicare program.  CMS Ex. 1 at 9.  CMS expects suppliers enrolled in the Medicare program to be familiar with program requirements.  Id.  

The denial of 100% of claims in three separate audits over a three-year period for similar codes is significant.  The hearing officer found it relevant that Petitioner was enrolled as a supplier for over two decades, but it continued to submit documentation that did not meet Medicare requirements for over three years.  CMS Ex. 1 at 10. 

The hearing officer concluded that “a supplier who refuses to properly document the services it provides places both Medicare beneficiaries and Trust Funds at risk.”  CMS Ex. 1 at 9. 

3. CMS acted within its authority in revoking Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(ii).

The evidence supports CMS’s conclusion that Petitioner engaged in a pattern or practice of abuse of billing practices.  Three audits were conducted over a three-year period, assessing 131 claims and 431 services, and each audit resulted in 100% of the audited claims being denied.  Despite two separate audits, with instructions and education on documentation, Petitioner continued to submit claims that did not comply with Medicare regulations.  In the reconsidered determination, the hearing officer considered all four factors and found a pattern or practice of abusive billing.  CMS Ex. 1 at 11.  

4. I do not have the authority to review the 10-year reenrollment bar imposed by CMS.

An ALJ is authorized to review CMS’s initial determination to “revoke a . . . supplier’s Medicare enrollment.”  42 C.F.R § 498.3(b)(17).  However, the determination of the reenrollment bar is not considered an initial determination and is not subject to review by an ALJ.  42 C.F.R. § 498.3(b), (d).  “An appealable determination to revoke a supplier’s enrollment, and a decision about how long the revoked supplier must wait before being allowed to apply for reentry to the program, are factually distinct matters governed by different legal requirements.”  Vijendra Dave, M.D., DAB No. 2672 at 10 (2016). 

5. CMS had a valid basis to place Petitioner on its preclusion list.

The CMS preclusion list is comprised of individuals and entities who are precluded from receiving payment for Medicare Advantage items and services or Medicare Part D drugs

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furnished or prescribed to Medicare beneficiaries.  42 C.F.R. §§ 422.222, 423.120(c).  CMS may place an individual or entity on the preclusion list if: 

• (i)    The individual or entity is currently revoked from Medicare for a reason other than that stated in [42 C.F.R.] § 424.535(a)(3) of this chapter.
• (ii)    The individual or entity is currently under a reenrollment bar under [42 C.F.R.] § 424.535(c).
• (iii)    CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program.

42 C.F.R. §§ 422.2, 423.100 (defining Preclusion list).  In determining whether conduct is detrimental to the best interests of the Medicare program, CMS considers: 

• (A)    the seriousness of the conduct underlying the revocation,
• (B)    the degree to which that conduct could affect the integrity of the Medicare program, and
• (C)    any other evidence that CMS deems relevant to its determination. 

42 C.F.R. §§ 422.2, 423.100 (defining Preclusion list). 

When CMS made the decision to add Petitioner to the preclusion list, Petitioner was “revoked from Medicare” under 42 C.F.R. § 424.535(a)(8)(ii) and was under a reenrollment bar pursuant to 42 C.F.R. § 424.535(c).  CMS Ex. 1 at 11.  CMS also determined that Petitioner’s pattern of submitting claims that failed to meet Medicare standards to be very detrimental to the best interests of the Medicare program.  CMS Ex. 1 at 12. 

CMS determined that the conduct underlying Petitioner’s revocation is very serious and harmful to the integrity of the Medicare program.  CMS noted that it calls on its partners to only submit claims that comply with Medicare requirements.  CMS Ex. 1 at 12.  CMS also stated that Petitioner’s continued submission of claims that failed to meet Medicare requirements “calls into question the Center’s ability and willingness to be a trustworthy Medicare partner.”  Id.

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CMS also questioned whether Petitioner’s continued “abusive” billing after two education efforts calls into question whether the Center is willing or able to submit claims that meet requirements.  Id.  

CMS determined that the conduct underlying Petitioner’s revocation was detrimental to the best interests of the Medicare program and therefore warranted placing Petitioner on the preclusion list for the duration of the reenrollment bar.  CMS Ex. 1 at 12-13. 

Petitioner argues that should the preclusion stand, there will be a dangerous shortage of endocrine specialty expertise as Dr. Fertig and Dr. Kanj are “uniquely respected and often relied upon for the more difficult cases,” especially in the intensive care unit.  CMS Ex. 17 at 8.  Based on the information provided, Dr. Fertig is an expert in his field and is well regarded by his colleagues.  CMS Ex. 17 at 9.  Though I may disagree with the length of the reenrollment bar and CMS’s addition of Petitioner to its preclusion list, the Board has ruled that I may not substitute my own judgment for CMS’s use of discretion.  Where the regulations have granted CMS discretion to determine whether a provider or supplier’s underlying conduct is detrimental to the Medicare program, the ALJ may not substitute their own judgment as to whether CMS properly exercised that discretion.  Brian K. Ellefsen, DAB No. 2626 at 7 (2015); see also Pa. Physicians, P.C., DAB No. 2980 at 13 (2019). 

Here, CMS met its regulatory obligation to consider whether the conduct underlying Petitioner’s revocation was detrimental to the best interests of the Medicare program by assessing the seriousness of that conduct, the degree to which that conduct could affect the integrity of the Medicare program, and any other information CMS deemed relevant to its determination.  42 C.F.R. § 422.2 (defining Preclusion list). 

6. CMS correctly applied the January 1, 2022 version of the regulation for Petitioner’s revocation.

Lastly, Petitioner argues that CMS abused its discretion by relying on the incorrect version of 42 C.F.R. § 424.535(a)(8)(ii) to revoke Petitioner’s Medicare enrollment because Audits 1 and 2 were conducted prior to the implementation of the new regulation, which became effective on January 1, 2022.  Req. for Hrg. at 7.  However, contrary to Petitioner’s argument, the regulation in effect at the time of the initial revocation governs this case.  John P. McDonough III, Ph.D.,DAB No. 2728 at 2 n.1 (2016).  The initial determination of revocation is dated August 17, 2022, and CMS revoked Petitioner’s billing privileges effective September 16, 2022.  CMS Ex. 15.  Therefore, CMS correctly used the January 1, 2022 regulation.

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IX.    Conclusion

For the foregoing reasons, CMS’s motion for summary judgment is granted.  I affirm CMS’s revocation of Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(ii) and uphold Petitioner’s inclusion on the CMS preclusion list.