SUBJECT: Oak Lawn Endoscopy,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Oak Lawn Endoscopy (OLE, Petitioner) appealed the June 3, 2004 decision of Administrative Law Judge (ALJ) Steven T. Kessel granting summary disposition in favor of the Centers for Medicare & Medicaid Services (CMS). Oak Lawn Endoscopy, DAB CR1187 (2004) (ALJ Decision). In that decision, the ALJ upheld the CMS determination that the effective date of Medicare participation for OLE is July 2, 2003. For the reasons discussed below, we uphold the ALJ's conclusion that summary judgment in favor of CMS was appropriate. More specifically, we conclude that there is no genuine dispute of material fact raised by the parties, and that the current record supports a July 2, 2003 effective date based on the State survey on that date finding OLE to be in compliance with all Medicare requirements.

Case Background

OLE is an ambulatory surgical center (ASC) in the State of Illinois which CMS certified for initial participation in the Medicare program effective July 2, 2003. In requesting a hearing on that determination, OLE contended that CMS should have granted an effective date of January 9, 2003 (which OLE indicated was the date it began providing services, and the day after it was licensed by the State). In support of its hearing request, in pre-hearing exchanges, OLE submitted 10 proposed exhibits and CMS submitted 47 proposed exhibits. Because one of the CMS exhibits was submitted untimely, the ALJ excluded it from his consideration (and, for purposes of reviewing the ALJ Decision, we do so as well). CMS also submitted a motion for summary disposition, which OLE opposed, and a reply brief.

The ALJ determined that summary disposition was appropriate in this case by applying the principles for summary judgment set forth at Rule 56 of the Federal Rules of Civil Procedure. Under those rules, summary disposition is appropriate only where there is no genuine dispute of material fact, where a "material fact" is a fact which might affect the outcome of the case, and the moving party would prevail under applicable law. The ALJ then reviewed the legal framework for the case, determined the material facts, and concluded that there was no disputed material fact. Based on facts that the ALJ determined to be material and undisputed, and his interpretation of applicable law, the ALJ ruled in favor of CMS. Specifically, the ALJ listed his Findings of Fact and Conclusions of Law (FFCLs) as:

1. Summary disposition is appropriate because there are no disputed issues of material fact.

2. The effective date of Petitioner's participation in Medicare is July 2, 2003.

ALJ Decision at 2, 4. In OLE's request for Board review of the ALJ Decision, OLE asserted that the ALJ erred in finding that certain facts alleged by CMS were undisputed. Appeal of the Decision Granting Summary Disposition in Favor of Respondent By Administrative Law Judge Steven T. Kessel ("Review Request"). Specifically, OLE asserted that there were disputed issues of material fact related to whether OLE's accreditation status justified an effective date of January 9, 2003 instead of July 2, 2003. Review Request at 7. OLE specified that these material facts concerned the nature of the Accreditation Association for Ambulatory Health Care (AAAHC) accreditation that OLE had initially received September 30, 1999 (which was extended first until March 31, 2003 and then for an additional three years). Id. In addition, OLE asserted that the ALJ had failed to consider under what circumstances a retroactive certification period should or could be applied to OLE consistent with 42 C.F.R. § 489.13(d)(2). Id.

Standard of Review

Whether summary judgment is appropriate is a legal issue that we address de novo. Lebanon Nursing and Rehabilitation Center, DAB No. 1918 (2004). Summary judgment is appropriate if there are no genuine disputes of fact material to the result. Everett Rehabilitation and Medical Center, DAB No. 1628, at 3 (1997). In reviewing a disputed finding of fact, we view proffered evidence in the light most favorable to the non-moving party. See Crestview Parke Care Center, DAB No. 1836 (2002), rev'd on other grounds, Crestview Parke Care Center v. Thompson, 373 F.3d 743 (6th Cir. 2004). The standard of review on a disputed conclusion of law is whether the ALJ decision is erroneous.

Summary of Relevant Legal Authority

Title XVIII of the Social Security Act (Medicare) provides for payment of part or all of the cost of covered services furnished to eligible individuals by qualified providers of services and suppliers. Section 1832(a)(2)(F) includes under Medicare Part B coverage for services furnished in connection with surgical procedures specified by the Secretary at an ambulatory surgical center (ASC) which meets health, safety and other standards specified by the Secretary and has entered into an agreement with the Secretary to participate and accept payment as an ASC. (Meeting applicable standards is referred to as "certification.")

CMS regulations at 42 C.F.R. Part 416 contain both the requirements for an ASC participation agreement and the substantive health, safety and other conditions for coverage specified by the Secretary. An entity may qualify for a participation agreement if CMS finds the entity in compliance based on a survey of the facility by a State survey agency. 42 C.F.R. § 416.26(b). Alternatively, an entity may qualify for a participation agreement based on accreditation "by a national accrediting body . . . that CMS determines provides reasonable assurance that the conditions are met." 42 C.F.R. § 416.26(a). This latter approach is referred to as "deemed status."

The effective date for such a participation agreement is subject to the requirements of 42 C.F.R. § 489.13. For a facility (other than a federally qualified health center, or a community mental health center) that is surveyed by federal or state surveyors and meets all federal requirements, the effective date of the provider or supplier participation agreement is "the date the survey (including the Life Safety Code survey, if applicable) is completed, if on that date the provider or supplier meets all applicable Federal requirements as set forth in this chapter." ⁽¹⁾ 42 C.F.R. § 489.13(b). If such a facility (other than a skilled nursing facility) fails to meet any of the specified requirements on the date the survey is completed, the effective date is the earlier of the following:

(i) The date on which the provider or supplier meets all requirements.
(ii) The date on which a provider or supplier is found to meet all conditions of participation or coverage, but has lower level deficiencies, and CMS or the State survey agency receives an acceptable plan of correction for the lower level deficiencies, or an approvable waiver request, or both. (The date of receipt is the effective date regardless of when CMS approves the plan of correction or the waiver request, or both.)

42 C.F.R. § 489.13(c)(2).

Under 42 C.F.R. 489.13(d)(1), a different rule applies to determine the effective date for a provider or supplier "currently accredited by a national accrediting organization whose program had CMS approval at the time of the accreditation survey and accreditation, and on the basis of accreditation, CMS has deemed the provider or supplier to meet Federal requirements." In that instance, the effective date depends on whether the provider or supplier is subject to requirements in addition to those included in the accreditation organization's approved program. If the entity is subject to requirements in addition to the accreditation, then the effective date "is the date on which the provider or supplier meets all requirements, including the additional requirements." 42 C.F.R. § 489.13(d)(1)(i). If, at the time of the initial request to participate, the entity "is not subject to additional requirements," then the effective date is the date of the "initial request for participation if on that date the provider or supplier met all Federal requirements." 42 C.F.R. § 489.13(d)(1)(ii).

A retroactive effective date for a participation agreement is available pursuant to 42 C.F.R. § 489.13(d)(2). That section permits an effective date that is retroactive "for up to one year to encompass dates on which the provider or supplier furnished, to a Medicare beneficiary, covered services for which it has not been paid."

We review below each of the facts OLE alleged in the Review Request to be disputed material facts. In light of our conclusions on each of these allegations, we then apply the relevant provisions of law to the undisputed facts, to determine whether the ALJ's determination to grant summary judgment was appropriate.

In large part, OLE's Review Request essentially reiterates the argument that the ALJ summarized on page 3 of his decision:

OLE's principal argument to challenge [the July 2, 2003] certification date is that it should have been "deemed" to have been certified effective January 9, 2003 based on an accreditation that it received from the Accreditation Association for Ambulatory Health Care (AAAHC). OLE asserts that this accreditation ought to have been accepted by CMS because the AAAHC is an organization whose accreditation of a provider or a supplier of items [or] services is accepted under applicable regulations as sufficient to deem that provider [or in this instance, supplier] as having met Medicare participation requirements.

As we detail below, this argument primarily raises issues of law, not disputed issues of material fact. We find no genuine dispute as to the factual predicate for this argument, that OLE's AAAHC accreditation was not under a Medicare-approved accreditation program. We therefore agree with the ALJ that there is no basis to accord OLE an earlier effective date under the rules for accredited entities at 42 C.F.R. § 489.13(d). Applying the rules for an effective date based on a survey, we find no basis in the current record for an earlier effective date than July 2, 2003.

A. OLE's Allegations of Disputed Material Facts

In the Review Request at 8, OLE identified 11 facts which it alleged to be material and OLE asserted that the record demonstrated that facts 5-11 were disputed. Review Request at 9 (expressly indicating no dispute with the first three facts, and indicating that the dispute on the fourth fact was limited to the legal implication). All but the last two alleged disputed facts consist of statements found in the ALJ Decision. We address these alleged disputed facts individually below, using OLE's numbering.

Alleged Disputed Fact 5: OLE contested the ALJ's statement that it was undisputed that "Petitioner's AAAHC accreditation is a regular accreditation and Petitioner did not receive an AAAHC Medicare Accreditation." Review Request at 10; see ALJ Decision at 7. OLE cited various statements in its initial brief before the ALJ that OLE "met every Federal requirement necessary to participate in the Medicare Program" as of the date (January 9, 2003) it began to provide services, that it had a three-year accreditation from AAAHC indicating the highest level of AAAHC confidence that OLE was in "substantial or partial compliance in every applicable area, including Life Safety Codes," that such an accreditation "is functionally equivalent to a Medicare Deemed Status Survey," and that OLE had not corrected any deficiencies (indicating no change in status) between January 9, 2003 and the survey conducted June 16, 2003. Review Request at 10-11.

The statements cited by OLE do not demonstrate a genuine dispute of material fact. As discussed by the ALJ in some detail, the record contains undisputed evidence that AAAHC offered a Medicare accreditation, which had been the basis for CMS recognition of AAAHC as a national accreditation agency for purposes of according deemed status. ALJ Decision at 6. The record also contains undisputed evidence that AAAHC offered a different level of accreditation review which CMS did not approve for purposes of according Medicare deemed status. Id.; see CMS Exhibit 44, at 1. While CMS did not dispute that OLE had an accreditation from AAAHC, CMS provided evidence that this accreditation was based on a "regular accreditation survey and not the accreditation survey for Medicare Deemed Status." CMS Exhibit 45, at 2. CMS also provided evidence that the AAAHC accreditation letter "did not contain a statement that Oak Lawn had met all Medicare-related criteria required for accreditation in the Medicare Deemed Status program." CMS Exhibit 46, at 2. The absence of an accreditation that specifically certified that all Medicare requirements were met is not placed in dispute by OLE's assertions that the regular AAAHC review covered all Medicare requirements, that OLE was in substantial compliance with all Medicare requirements, or that it held the highest level of non-Medicare accreditation (the three-year accreditation).

Moreover, OLE admitted that it understood that its AAAHC accreditation was not sufficient to establish Medicare certification in letters to CMS dated May 16, 2003, and May 19, 2003. CMS Exs. 17 and 18. These letters clearly indicate an understanding that AAAHC issues different types of accreditation and an understanding that the one issued OLE was not sufficient to establish Medicare certification.

In sum, while OLE argued that the AAAHC review nevertheless covered all Medicare requirements, and was functionally equivalent to a deemed status review, OLE never specifically disputed that its accreditation was not a Medicare accreditation. OLE's arguments that it may have, in fact, met all Medicare requirements at the time do not raise a genuine dispute about whether OLE had an AAAHC Medicare accreditation. See Review Request at 10-14.

Certainly it may have been confusing to OLE that the accreditation entity offered two different levels of review and referred to both as "accreditation" even though only one was a level that was based on review of compliance with all Medicare requirements, in accordance with CMS-approved procedures, and only that level could result in Medicare deemed status. OLE did not specifically dispute, however, the evidence put forth by CMS that OLE did not receive the AAAHC accreditation that, on its face, certifies compliance with all Medicare requirements and can be the basis for Medicare deemed status. ⁽²⁾

Alleged Disputed Fact 6: OLE also contested the ALJ's statement that it was undisputed that "[o]n June 16, 2003, a Medicare survey found OLE to be in compliance with all health related Medicare requirements, but that there were deficiencies with respect to Life Safety Codes." Review Request at 12, citing ALJ Decision at 6. OLE cited as evidence disputing this statement the first page of the June 16, 2003 survey report summary, which contains the following text: "The facility has been found to be in compliance with the requirements for Ambulatory Treatment Centers, on survey date 6/16/03." ⁽³⁾ CMS Exhibit 24, at 1.

The quoted sentence in the survey report, however, must be read in a context that includes, on the second page, a handwritten notation indicating that the facility was given a statement of deficiencies at the close of the survey. CMS Exhibit 24, at 2. The record also includes the plan of correction submitted by the facility. CMS Exhibit 26. In the plan of correction, OLE did not indicate any dispute with the identified deficiencies and agreed to correct a number of Life Safety Code deficiencies. ⁽⁴⁾ Id. OLE did not request a hearing on whether the deficienceies existed at the time of the survey, nor proffer any evidence that they did not exist.

While there could be an issue as to whether these documents establish that the facility was in "substantial compliance" with all Medicare requirements, as we discuss below, that is not the standard for the effective date of a participation agreement under 42 C.F.R. § 489.13. In light of the undisputed evidence that a statement of deficiencies was issued and a plan of correction submitted without any indication of factual disagreement that deficiencies were present, we find no genuine disputed issue of fact with regard to the existence of deficiencies as of the June 16, 2003 State survey.

Alleged Disputed Facts 7 and 8: OLE contested the ALJ's statement that "OLE suggests, without offering any facts to support its suggestion, that there is a fact dispute as to whether its AAAHC accreditation was a regular accreditation or a Medicare accreditation which included accreditation for Life Safety Code requirements." Review Request at 13, citing ALJ Decision at 7. OLE asserted that the very wording of this statement indicates that OLE has alleged a factual dispute. In addition, OLE disputed the following finding by the ALJ: "OLE acknowledges that it did not receive certification from AAAHC, prior to July 2, 2003, that it met Life Safety Code requirements." Review Request at 14, citing ALJ Decision at 8.

The context of the cited statements makes clear that the main thrust of the dispute was about the legal characterization of OLE's accreditation status. As discussed above, in reference to alleged disputed fact 5, based on our review of the record, we find no genuine dispute on the basic fact that AAAHC had not issued OLE an accreditation for Medicare certification purposes.

OLE specifically asserted that the AAAHC non-Medicare accreditation included review of Life Safety Code compliance. OLE relied on the March 19-20 AAAHC Survey Report Form (or excerpt) indicating review of OLE's compliance with the Life Safety Code. Pet. Exhibit 1, p. 2. While this evidence could be questioned in light of the findings of the June 16, 2003 survey that the facility had Life Safety Code deficiencies, CMS Exhibits 24 and 26, we view the evidence in the most favorable light to OLE for purposes of summary judgment. Thus, we agree that whether AAAHC's accreditation included review of Life Safety Code compliance is a disputed issue of fact.

Nevertheless, as we discuss in section B of this analysis, we do not find the dispute to be material to the issue of the effective date for the participation agreement. We conclude as a matter of law that, in the absence of a Medicare accreditation, CMS regulations require that the effective date be set based on the State survey process. Because it is undisputed that OLE lacked a Medicare accreditation from AAAHC, it is not necessary to identify the precise distinction between the Medicare and non-Medicare AAAHC accreditation.

Alleged Disputed Fact 9: OLE contested the ALJ finding that "OLE admits that at the June 16, 2003, survey, it was found to be deficient." Review Request at 14-15, citing ALJ Decision at 8. OLE relied primarily on the statement in the survey report for the June 16, 2003 State survey that "[t]he facility has been found to be in compliance with the requirements for Ambulatory Treatment Centers, on survey date 6/16/03." CMS Exhibit 24.

As we discussed above, in connection with Alleged Disputed Fact 6, we find that this statement does not raise a genuine dispute over whether there were deficiencies at the facility, since it must be read in conjunction with the handwritten notation that a statement of deficiencies was issued to the facility. Furthermore, OLE itself admitted that there were "extraordinarily minor defects all of which related to fire safety" and asserted that these violations were so minor as to not prevent the facility from functioning in accordance with Medicare standards." Review Request at 15.

Therefore, we find no genuine dispute that there were deficiencies at the facility. While OLE argued that the level of deficiencies was minor, as we discuss in section B, we do not find that to be material to the result.

Alleged Disputed Fact 10: OLE contested the ALJ's statement that "OLE asserts that CMS has previously allowed and currently allows a provider to claim reimbursement retroactively for services provided between the date that the provider first applies to be certified to participate in Medicare and the date on which CMS acts to certify it to participate. OLE characterized retroactive certification as 'a disputed fact.'" Review Request at 15-16, citing ALJ Decision at 8. OLE asserted that the ALJ erred in not giving full consideration to this issue, which it believed to be central to the case at hand.

We conclude that this disputed issue is a matter of law rather than fact. Even if, for purposes of summary judgment, we accepted that there may have been instances in which CMS has extended retroactive certification to ASCs, we find no provision of statute or regulation that required retroactive certification or otherwise entitled OLE to such treatment. ⁽⁵⁾ Thus, while OLE correctly identified the issue as a material disputed issue, the dispute concerns the legal requirements for effective dates.

Alleged Disputed Fact 11: OLE asserted that there was a disputed issue of fact as to whether CMS should have granted it a waiver of Life Safety Code compliance. OLE stated that regulations give CMS discretion to waive the requirement of strict compliance with Life Safety Codes if a rigid application would result in an unreasonable hardship upon an ASC, but only if the waiver will not adversely affect the health and safety of patients. OLE then asserted that CMS's failure to give it a waiver was a denial of equal protection under the law and an act of bad faith. Review Request at 17, citing ALJ Decision at 9.

We find the issue of whether a waiver is legally required, permissible, or authorized to be a matter of law rather than fact. While we discuss the issue of waivers further in the following section, we note OLE did not allege, nor does the record indicate, that OLE made any waiver request.

B. Application of Relevant Law to Facts

We concluded above that the undisputed facts establish that OLE did not, on January 9, 2003 or any time thereafter, hold a Medicare accreditation from AAAHC. Instead, OLE had an accreditation status that did not reflect a determination by AAAHC that OLE met all Medicare requirements. Because there are separate rules for the effective date of an agreement depending on whether the facility establishes compliance with Medicare requirements based on a Medicare accreditation or based on a survey by the State survey agency, we do not find it material for purposes of applying these rules whether OLE might have met Medicare requirements at some earlier point than the date compliance was established by either a Medicare accreditation or a survey by the State survey agency. Because OLE did not have a Medicare accreditation from AAAHC, we affirm the ALJ's conclusion that the effective date should be based on the effective date rules applicable when a State survey is performed.

As a matter of law, we find that the ALJ correctly rejected OLE's assertion that the rules for accredited facilities should apply to determine the effective date of its agreement, even though OLE did not have a Medicare accreditation. Essentially, OLE asserted that, since AAAHC had been approved as an authorized accreditation entity for ASCs by CMS, an effective date based on deemed status extended to any ASC reviewed and given accreditation by AAAHC even when the accreditation was not under the approved accreditation program. Review Request at 13-14. OLE argued that the approval of AAAHC as a national accreditation organization constituted blanket authority for deemed status based on any accreditation activities in which AAAHC engages. As we discuss below, we find CMS's interpretation of 42 C.F.R. § 489.13 in setting the effective date to be permissible and reasonable. In contrast, we find that OLE's suggested interpretation is not required by the effective date rules, would not provide assurance that an accredited facility met all Medicare requirements, could potentially lead to limitations on non-Medicare activities, and does not appear to be consistent with overall agency practices. We therefore defer to CMS's reasonable reading of its own regulations.

The effective date rules specify at 42 C.F.R. § 489.13(d)(1) that the deemed status effective date provisions apply to a provider or supplier "accredited by a national accrediting organization whose program had CMS approval." We find that CMS permissibly interpreted this language to limit the applicability of deemed status effective dates to accreditations under an approved "program" rather than to extend to all accreditation activities of the accreditation organization. To conclude that CMS must enroll providers who have not been accredited under a Medicare-approved program would effectively undercut Medicare requirements, and there is no indication in the statute or regulations that this was an intended result.

The Federal Register notice in which CMS announced its approval of AAAHC as an accrediting organization is consistent with CMS's interpretation that its approval was based on a specific accreditation protocol, and did not extend to other accreditation activities or protocols. 67 Fed. Reg. 70,439, 70,440 (Nov. 22, 2002). In this notice, CMS clearly approved a specific accreditation protocol, and indicated awareness that AAAHC engaged in other accreditation activities that were not approved for Medicare certification purposes. Specifically, the Federal Register notice refers to accreditation of applicants "requesting an AAAHC deemed status survey." Id. at 70,440-41. The approval notice specifically indicates that AAAHC will incorporate additional requirements and procedures in requests for accreditation from facilities requesting deemed status. Id. This language shows that CMS was aware that AAAHC had a separate, non-Medicare accreditation process that would continue but would not be used or recognized for Medicare purposes. Id. OLE relied on language in this notice describing the durations of various AAAHC accreditations, the longest being a three-year term "when it has no reservations about the accuracy of the survey findings or the ASC's commitment to continue providing high quality care" that culminated in the statement that "CMS deems an ASC accredited by AAAHC for any of these terms to have met or exceeded Medicare standards for the duration of that term." Id. at 70,441. Reading the document as a whole, however, we find this reliance was misplaced where, in context, references to accreditation are reasonably read to mean only the approved protocol to award deemed status to a facility.

Even without the explicit reference in 42 C.F.R. § 489.13(d) to the word "program," we conclude that CMS's interpretation is reasonable in light of the underlying statutory and regulatory framework. Under the CMS interpretation, accreditation refers to a particular review, and review process, that is the basis for deemed status and that provides the same assurance that a Medicare survey would regarding the health and safety of patients. Under OLE's reading, once an accrediting entity received approval to grant Medicare accreditations, accreditation means any type of accreditation under any process. Under OLE's reading, accreditation activities under non-Medicare accreditation programs would be given the same weight as Medicare accreditation (which CMS could limit only by withdrawing that approval). The effect of this reading would be to allow accreditation entities to relax Medicare requirements for supplier participation in the program. There is no indication that this was the intent of the statutory and regulatory provisions permitting accreditation organizations to establish compliance with Medicare requirements. ⁽⁶⁾

We further reject as a matter of law the suggestion that because the non-Medicare AAAHC review was in some way "functionally equivalent" to an AAAHC Medicare accreditation, it should be treated as a Medicare accreditation. Review Request at 10-14, 17. The effective date regulations do not refer to functional equivalence, or to meeting the requirements for a Medicare accreditation program. 42 C.F.R. § 489.13(d)(1). Instead they refer to actual Medicare accreditation. The regulations establish a clearly delineated structure for setting effective dates that relies on accreditation programs that have CMS approval, and does not provide flexibility for other accreditation programs, even if operated by the same entity.

It is important to note that the distinction between an approved Medicare accreditation program and a non-Medicare accreditation may extend beyond the scope of the elements reviewed. A Medicare accreditation program must meet certain procedural requirements to ensure a reliable outcome. These requirements may include, for example, procedures to ensure the qualification and appropriate composition of survey teams, the use of unannounced inspections, and procedures to respond to deficiencies. See, e.g. State Operations Manual, CMS Pub. 7, §§ 2700-2826. There is no assurance that a non-Medicare accreditation would meet these requirements.

We conclude that because there is no dispute that OLE did not hold an AAAHC Medicare accreditation, as a matter of law, the ALJ correctly determined that OLE did not qualify for an effective date based on the provisions of 42 C.F.R. § 489.13(d), which are applicable only to providers or suppliers holding a valid Medicare accreditation. ⁽⁷⁾

In applying the regulatory provisions at 42 C.F.R. § 489.13(c)(2), which set forth the requirements for the effective date of agreements based on survey findings, we further conclude that there is no basis in the current record for an effective date prior to the July 2, 2003 survey finding OLE to be in compliance with all Medicare requirements. Our conclusion is based on the undisputed evidence that the June 16, 2003 survey, which was the first comprehensive survey by the State agency, found deficiencies and that the July 2, 2003 survey found full compliance with Medicare requirements. ⁽⁸⁾ As we discuss below, neither party asserted the materiality of the plan of correction OLE submitted on June 26, 2003, so the current record does not support any change to the effective date based on that submission.

We do not agree with OLE that an effective date of June 16, 2003 or earlier would be justified on the basis that OLE was in substantial compliance with all Medicare requirements at the June 16, 2003 survey (as indicated on the summary sheet at CMS Exhibit 24). Under 42 C.F.R. § 489.13(c)(2)(i), the effective date can be the date of a survey finding that the facility "meets all requirements." This phrase cannot be reasonably read to mean "substantial compliance," as OLE argued, in light of the language in the following provision at 42 C.F.R. § 489.13(c)(2)(ii) which provides for the effective date for a facility that "meets all conditions of participation or coverage, but has lower level deficiencies." Because the language of 42 C.F.R. § 489.13(c)(2)(ii) includes facilities that meet the conditions (but still have deficiencies and thus are not in full compliance with all Medicare standards), we conclude that the language of 42 C.F.R. 489.l3(c)(2)(i) must be read to mean the absence of any deficiencies (even "lower-level" deficiencies). ⁽⁹⁾ Thus, 42 C.F.R. § 489.13(c)(2)(ii) applies in this case in light of our finding above that there were deficiencies identified in the June 16, 2003 State survey. ⁽¹⁰⁾

In the current record, the parties did not assert the materiality of the June 26, 2003 plan of correction. CMS did not allege that it had determined this plan of correction unacceptable, nor did OLE allege that it was found acceptable. In light of the regulatory language at 42 C.F.R. § 489.13(c)(2) providing that the effective date shall be "the earlier of" submission of an acceptable plan of correction or a satisfactory resurvey, a determination by CMS that the plan of correction submitted June 26, 2003 was acceptable would dictate the proper effective date. Therefore, nothing in this decision should be read to preclude adjustment of the effective date to June 26, 2003, consistent with 42 C.F.R. § 489.13(c)(2)(ii), to the extent there is a determination by CMS that the plan of correction was acceptable.

We conclude that summary judgment is appropriate because the current record supports an effective date of July 2, 2003 based on the State survey finding OLE to be in compliance with all Medicare requirements as of that date.

Amended Findings of Fact and Conclusions of Law

Accordingly, we vacate the ALJ's FFCLs 1 and 2, and substitute the following:

1. Oak Lawn Endoscopy (OLE) did not have an accreditation from the Accreditation Association for Ambulatory Health Care (AAAHC) under a Medicare accreditation program.

2. The AAAHC accreditation status held by OLE did not assure that AAAHC had determined, using approved procedures, that OLE met all Medicare requirements.

3. The State survey agency conducted its first comprehensive survey of OLE for compliance with Medicare requirements on June 16, 2003.

4. The State survey agency identified deficiencies in OLE's compliance with Medicare requirements in the June 16, 2003 survey.

5. OLE submitted a plan of correction addressing the identified deficiencies on June 26, 2003, and OLE presented no evidence that the plan of correction was found acceptable by CMS.

6. OLE was not entitled to an effective date for its Medicare participation agreement based on Medicare accreditation status, since it did not hold a Medicare accreditation.

7. OLE was not entitled to an effective date for its Medicare participation agreement prior to the July 2, 2003 survey finding that it was in compliance with all Medicare requirements.

Conclusion

For the reasons discussed above, we uphold summary judgment in favor of CMS because we conclude that there is no genuine dispute of material fact raised by the parties, and that the current record supports a July 2, 2003 effective date based on the State survey on that date finding OLE to be in compliance with all Medicare requirements.

Judith A. Ballard

Donald F. Garrett

Daniel Aibel
Presiding Board Member

1. The separate reference to the Life Safety Code reflects the fact that the Life Safety Code survey may be conducted separately from the rest of the survey. See, e.g., State Operations Manual, CMS Pub. 7, Sections 2700B and 2700C.

2. As we discuss later in this decision, the ALJ did not err in rejecting OLE's purely legal argument that, because AAAHC had been approved by CMS as a national accrediting organization for ASCs seeking to participate in Medicare, deemed status should be accorded even to ASCs that do not receive a Medicare accreditation but only receive an accreditation based on AAAHC requirements.

3. Neither party disputed that "Ambulatory Treatment Center" should be read as meaning "Ambulatory Surgical Center."

4. The Life Safety Code is a set of standards issued by the National Fire Protection Association and incorporated in the conditions for ASCs at 42 C.F.R. § 416.44(a).

5. We view this proferred evidence in the light most favorable to OLE, as supporting the presence of a disputed fact, notwithstanding our view that the proffered evidence is not on point and could not itself support OLE's contention. OLE relied principally on a draft agreement it alleged permitted retroactive payment, CMS Exhibit 38, and letters from physicians that it alleged indicated that CMS had a policy of permitting retroactive payment, Petitioner's Exhibit 3. We agree with CMS that the agreement, which relates to assignment of payment, is not relevant to the effective date of program participation. We also agree with CMS that policies with respect to physicians are not relevant, since physicians are not subject to survey and certification by CMS or the State survey agency, and thus are not subject to the effective date rules at 42 C.F.R. § 489.13.

6. Alternatively, such an interpretation might result in CMS imposing express limitations on non-Medicare accreditation activities as a condition of approving accreditation organizations. This might present a hardship for facilities that do not participate in Medicare or Medicaid, and for accreditation organizations that may wish a larger role than Medicare accreditation. In contrast, the CMS reading provides greater flexibility and is more consistent with the legal framework. See CMS Exhibit 44 (issuance from an AAAHC website indicating that permitting separate Medicare and non-Medicare accreditation provides greater flexibility for facilities and the accrediting organization).

7. Because we find that OLE is not entitled to an effective date for participation based on accreditation status, we do not need to reach the issue of how CMS has applied the retroactive certification provisions of 42 C.F.R. § 489.13(d)(2), which apply only to providers or suppliers with Medicare accreditation status. We note, however, that in the preamble to the final rule including this provision, CMS (then known as the Health Care Financing Administration, or HCFA) explained that this exception was included in response to comments asserting that an entity should be able to obtain a retroactive agreement to "receive payment for services furnished after accreditation but before it sought participation in Medicare or Medicaid." 62 Fed. Reg. 43,933 (Aug. 18, 1997). It does not appear that this situation would apply to OLE. Moreover, the plain language of the regulation supports the ALJ's conclusion that retroactive certification is permitted but not required. Thus, even if the regulation was applicable, it would not entitle OLE to a retroactive effective date.

8. Although OLE argued at some length that CMS should have waived the Life Safety Code deficiencies, and had authority to do so, OLE neither asserted nor provided any evidence indicating that a waiver had been timely requested. Review Request at 17. Because we find no evidence that any waiver had been requested, it is not necessary to consider the issue of our jurisdiction to review waiver determinations or OLE's assertions that failure to grant a waiver violated the Equal Protection Clause of the United States Constitution. Review Request at 18.

9. In contrast, separate effective date rules for skilled nursing facilities provide for an effective date based on the date the facility is in "substantial compliance" with Medicare requirements.

10. Since we find that 42 C.F.R. § 489.13(c)(2)(i) must be read to require compliance with all requirements, we reject OLE's arguments that this provision would justify an earlier effective date if OLE had been in substantial compliance prior to the June 16, 2003 survey.