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PRRB/CMS Administrator Update

 
 
 

Loss on Disposal of Depreciable Assets 

The Provider merged into the Temple University Health System and claimed a loss on its Fiscal Year (FY) 1996 cost report. The Intermediary denied the loss, which the Board reversed. The Centers for Medicare and Medicaid Services (CMS) Administrator reversed the Board�s ruling and denied the loss, finding the parties were related by continuity of control. The U.S. District Court for the Eastern District of Pennsylvania reversed the Administrator�s finding of relatedness but remanded the case for further fact finding on fair market value of the depreciable assets, in order to determine whether a bona fide sale occurred. On remand, the Board found the consideration received by the Provider, $69,214,000, was reasonable compared to the fair market value of its assets, which did not exceed $71,969,000, as determined by an appraisal, noting that $30,100,000 was attributable to depreciable assets and land. The CMS Administrator again reversed the Board�s decision, finding there was no bona fide bargaining at arm�s length between well-informed parties acting in their own self-interest. The CMS Administrator rejected the appraiser�s use of an income approach to assess the fair market value of the assets and instead utilized the reproduction cost approach to conclude the Provider did not receive reasonable consideration when it received $69,214,000 for assets with a value of $103,403,000. 

Jeanes Hosp. v. Wis. Physician Servs., PRRB Hearing Dec. No. 2009-D23 (May 27,2009), rev�d CMS Adm�r Dec. (July 24, 2009). 

Loss on Disposal of Depreciable Assets 

The Board reversed the Intermediary�s denial of the Provider�s claimed loss on disposition of its assets due to change of ownership resulting from a statutory merger. The Board found the Intermediary�s denial was contrary to 42 C.F.R. � 413.134(l)(2)(i) and that the allocation of consideration to the merged assets should be performed based on the Provider�s submitted appraisal using the pro-rata method discussed in 42 C.F.R. � 413.134(f)(2)(iv). The CMS Administrator reversed the Board�s decision, finding (1) the Provider did not receive reasonable consideration for its assets and (2) the parties were related by continuity of control. 

New England Deaconess Hosp. v. BlueCross BlueShield Ass�n/Nat�l Gov�t Servs., PRRB Hearing Dec. No. 2009-D24 (May 29, 2009), rev�d CMS Adm�r Dec. (July 24, 2009). 

DSH � Medicaid Fraction, General Assistance Days 

The Board held that the Intermediary properly excluded Connecticut�s State-Administered General Assistance program days from the Medicare disproportionate share hospital (DSH) calculation. The Board further found that it had jurisdiction over three Provider years that were timely appealed and transferred to the group, but did not have jurisdiction over two provider years in which the Intermediary�s revised Notice of Program Reimbursement (NPRs) did not address the issue under appeal. The CMS Administrator affirmed the Board�s ruling.

Conn. 94-98 DSH Group v. BlueCross BlueShield Ass�n/Nat�l Gov�t Servs., PRRB Hearing Dec. No. 2009-D25 (June 17, 2009), aff�d CMS Adm�r Dec. (Aug. 13, 2009). 

DSH � Dual Eligible Days 

The Board reversed the Intermediary�s adjustments and ruled that the Providers� dual eligible days for (1) Medicare Part A exhausted benefit days, (2) Medicare secondary payer days, and (3) denied days for lack of medical necessity or custodial care, should be included in the Medicaid fraction of the DSH calculation. The Board agreed with the ruling of various U.S. courts that the term �entitlement� denotes a right to have payment made under Medicare. The CMS Administrator reversed the Board�s ruling, finding that the term �entitled� does not require payment by the Medicare program. 

National DSH Dual Eligible Group Appeals v. BlueCross BlueShield Ass�n Nat�l Gov�t Servs., PRRB Hearing Dec. No. 2009-D26 (June 23, 2009), rev�d CMS Adm�r Dec. (Aug. 24, 2009).


DSH � Medicaid Fraction, Exhausted Benefit Days 

The Board reversed the Intermediary�s adjustment. The Board ruled that the Provider�s Long Term Respiratory Unit days, which are days for which the beneficiaries have exhausted their Medicare benefit and therefore cannot be paid by Medicare, are not days for which the beneficiaries are entitled to Medicare Part A benefits. Accordingly, these days should be included in the numerator of the Medicaid fraction. The CMS Administrator reversed the Board�s ruling finding that payment by Medicare is not required in order to be entitled to Medicare. 

St. Mary�s Hosp. � Milwaukee v. BlueCross Blue Shield Ass�n/Nat�l Gov�t Servs., LLC-WI, PRRB Hearing Dec. No. 2009-D27 (June 24, 2009), rev�d CMS Adm�r Dec. (Aug. 24, 2009). 

Wage Index � Lunch Period Hours 

The Board upheld the Intermediary�s position that paid lunch hours should be included in the total paid hours, rather than hours worked, used to calculate the Providers� average hourly wage rate. The CMS Administrator declined to review the Board�s ruling. 

�Lunch Hour Dispute� Wage Index Group Appeals v. BlueCross Blue Shield Ass�n/Nat�l Gov�t Servs., Inc.-IL, PRRB Hearing Dec. No. 2009-D28 (June 26, 2009), declined to rev., CMS Adm�r Dec. (July 24, 2009). 

Loss on Disposal of Depreciable Assets 

The Board found that the Intermediary�s adjustments disallowing the Provider�s claimed loss on the disposal of assets due to a change of ownership through a consolidation were contrary to the regulations at 42 C.F.R. � 413.134(l)(3)(i) and reversed the adjustments. The Board remanded the case to the Intermediary to recalculate the loss. The CMS Administrator reversed the Board�s decision, ruling no gain or loss could be recognized because (1) the parties were related based on a continuity of control of the assets both before and after the consolidation, and (2) the transaction was not bona fide as there was no evidence of arm�s-length bargaining or an attempt to maximize the sale price. 

St. Francis Reg�l Med. Ctr. v. BlueCross BlueShield Ass�n/Blue Cross Blue Shield of Kan., PRRB Hearing Dec. No. 2009-D29 (July 8, 2009), rev�d CMS Adm�r Dec. (Sept. 1, 2009).

DSH � Dual Eligible M+C Days 

The Board found that the dual eligible M+C days were properly excluded by the Intermediary from the DSH Medicaid fraction, but should be included in the Medicare fraction. The CMS Administrator modified the Board�s ruling, affirming that the days at issue should not be included in the Medicaid fraction. The CMS Administrator, however, ruled that there should be no modification of the Medicare fraction calculation as the Providers had not demonstrated that the days at issue had not already been included in the Medicare fraction or that, if they were not already included, it was due to error as the M+C claims had been timely processed. 

SRI 1998 DSH Medicare Part C Days Group v. BlueCross BlueShield Ass�n/Nat�l Gov�t Servs., PRRB Hearing Dec. No. 2009-D30 (July 9, 2009), modified, CMS Adm�r Dec. (Sept. 9, 2009).  

DSH Eligibility 

The Board reversed the Intermediary�s determination. The Board found that the Intermediary�s determination of the number of available beds for DSH eligibility purposes should have included the Provider�s observation bed days and that once included, the Provider had 100 available beds necessary to qualify for a DSH payment. The CMS Administrator reversed the Board�s ruling, finding that observation beds should not be included in the count of available beds. 

College Station Med. Ctr. v. Wis. Physician Serv., PRRB Hearing Dec. No. 2009-D31 (July 9, 2009), rev�d CMS Adm�r Dec. (Sept. 1, 2009). 

DSH � Medicaid Fraction, Dual Eligible Part A Exhausted Days, Subacute Unit Patient Days 

The Board held that the Provider�s subacute unit and dual eligible Part A exhausted days should be included in the Medicaid DSH fraction. The Board found the decision in Alhambra Hosp. v. Thompson, 259 F.3d 1071 (9th Cir. 2004), controlling on the issue of subacute unit patient days for this Provider, also located in the Ninth Circuit. The Board further held that CMS� policy change with regard to exhausted benefit days applies only to discharges on or after October 1, 2004 and, therefore, cannot be applied to the years under appeal, FYs 2000 and 2001. The CMS Administrator reversed the Board�s ruling, noting that only subacute days in inpatient prospective payment system areas of the hospital may be considered for inclusion but that none of these days that are considered dual eligible are allowable as these patients are entitled to Medicare. 

Sharp Coronado Hosp. and HealthCare Ctr. v. BlueCross BlueShield Ass�n/United Gov�t Servs., LLC-CA, PRRB Hearing Dec. No. 2009-D32 (July 15, 2009), rev�d, CMS Adm�r Dec. (Sept. 9, 2009). 

DSH � Available Beds 

The Board determined that the Provider�s observation and swing-bed days met all of the Medicare program�s requirements for inclusion in the bed size calculation used to determine the Provider�s DSH eligibility. The CMS Administrator reversed the Board�s decision, ruling that the Provider did not meet the 100-bed threshold for DSH eligibility as the Provider�s observation and swing-bed days could not be included in the bed count. 

Cleveland Reg�l Med. Ctr. v. Wis. Physician Servs., PRRB Hearing Dec. No. 2009-D33 (July 16, 2009), rev�d, CMS Adm�r Dec. (Sept. 21, 2009). 

Loss on Disposal of Depreciable Assets: SNF New Provider Exemption 

The Board reversed the Intermediary�s denial of the Provider�s claimed loss on disposition of its assets due to a change of ownership resulting from a statutory merger. The Board found the Intermediary�s denial was contrary to 42 C.F.R. � 413.134(l)(2)(i) and that the allocation of consideration to the merged assets should be performed using the pro-rata method discussed in 42 C.F.R. � 413.134(f)(2)(iv). The CMS Administrator reversed the Board�s decision finding (1) the Provider did not receive reasonable consideration for its assets, and (2) the parties were related by continuity of control.  

With regard to the skilled nursing facility (SNF) new provider exemption issue, the Board reversed the Intermediary�s denial of new provider status. The Board ruled that a change in the state statute resulted (1) in the Provider receiving the requisite Determination of Need from the state and therefore the beds were not considered transferred from another facility, and (2) there was otherwise no common ownership of the beds at issue before and after the Provider began its operation. The CMS Administrator reversed the Board�s ruling finding the Provider purchased bed rights from an existing entity that provided services equivalent to a SNF during the three-year look back period. 

Whidden Mem�l Hosp. v. BlueCross BlueShield Ass�n/Nat�l Gov�t Servs. � MN, PRRB Hearing Dec. No. 2009-D34 (July 28, 2009), rev�d, CMS Adm�r Dec. (Sept. 22, 2009).  

DSH � Medicaid Fraction, Dual Eligible Part A Exhausted Days, Medicare Secondary Payor Days 

The Board reversed the Intermediary�s adjustments. The Board ruled that the Providers� dual eligible Part A exhausted days and Medicare Secondary Payor days should be included as Medicaid eligible days in the Medicaid fraction of the Providers� DSH calculation. The CMS Administrator reversed the Board�s ruling, excluding the days at issue from the Medicaid fraction. 

Allina Health Sys. 1995 � 2003 DSH Dual Eligible Days Group v. BlueCross BlueShield Ass�n/Noridian Admin. Servs., PRRB Hearing Dec. No. 2009-D35 (July 30, 2009), rev�d CMS Adm�r Dec. Sept. 21, 2009). 

Capital Cost 

The Board Majority affirmed the Intermediary�s denial of the Providers� requests for new hospital status under the capital cost regulations, which would have resulted in additional allowable start-up costs for the hospitals during their first two years of operation. The Board ruled that since the Providers� lease space was operated by another hospital for more than two years prior to its lease by the Providers and that the Medicare program had presumably made payment to the other hospital for use of its assets, the Providers were not eligible for new provider status and the resulting additional capital costs at issue. The CMS Administrator affirmed the Board�s ruling. 

Select Medical 2002-2003 Freestanding �New Hospital� Capital-Related Costs Groups v. Wis. Physician Servs., PRRB Hearing Dec. No. 2009-D36 (Aug. 19, 2009), declined to rev., CMS Adm�r Dec. (Oct. 9, 2009).  

SNF Routine Cost Limit Exception 

The Board found that the CMS methodology for determining the amount of the Provider�s �exception to the hospital-based SNF routine cost limit was improper,� and the Provider was entitled to all those costs above the cost limit, as opposed to only those costs that exceed 112% of the peer group�s mean per diem cost. The CMS Administrator reversed the Board�s ruling, finding that the Provider�s exception was properly limited to 112% of the peer review group number. 

Canonsuburg Gen. Hosp. v. Blue Cross of W.Pa/Highmark Medicare Servs. (d/b/a Veritus Medicare Servs.), PRRB Hearing Dec. No. 2009-D37 (Aug. 20, 2009), rev�d CMS Adm�r Dec. (Oct. 14, 2009). 

DSH � Medicaid Fraction, Charity Days 

The Board found that the Intermediary properly excluded Massachusetts Uncompensated Care Pool days from the Medicaid fraction for FYs 1992-2002. The CMS Administrator affirmed the Board�s ruling. 

Southwest Consulting 1999-2002 [State of] MA Uncompensated Care Days Group v. BlueCross BlueShield Ass�n/Associated Hosp. Servs., PRRB Hearing Dec. No. 2009-D38 (Aug. 28, 2009), aff�d, CMS Adm�r Dec. (Oct. 19, 2009). 

DSH � Medicaid Fraction, Charity Days 

The Board found that the Intermediary properly excluded Georgia Indigent Care Trust Fund days from the Medicaid fraction for FYs 1995-2001. The CMS Administrator affirmed the Board�s ruling. 

Southwest Consulting 95-01 DSH Ga. Indigent Care Trust Fund v. BlueCross BlueShield Ass�n/ Blue Cross Blue Shield of Ga., PRRB Hearing No. 2009-D39 (Sept. 21, 2009), aff�d, CMS Adm�r Dec. (Nov. 13, 2009). 

Validity of Revised NPRs 

The parties disputed whether the Intermediary ever sent the requisite Notices of Reopening prior to issuing revised NPRs. The Board upheld the Intermediary�s adjustments, resolving the factual dispute in favor of the Intermediary. The Administrator declined to review the Board�s ruling. 

Nat�l Parkinsons Found. CORF, NPF Rehab of Fla./Pompano, NPF Rehab of Fla. N. Miami Beach v. BlueCross BlueShield Ass�n/First Coast Serv. Options, Inc., PRRB Hearing Dec. No. 2009-D40 (Sept. 22, 2009), declined to rev., CMS Adm�r Dec. (Oct. 20, 2009).  

GME and IME FTE Count for Non-Provider Settings 

The Board Majority upheld the Intermediary�s adjustments to the Provider�s allowable graduate medical education (GME) and indirect medical education (IME) payments based on a disallowance of the Provider�s full-time equivalents (FTEs) for resident time at non-provider settings. The Board found the Provider lacked the adequate written agreements required by 42 C.F.R. � 413.86(f)(4). The Board further found the Provider did not qualify for an exemption to this requirement pursuant to Section 713 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The CMS Administrator declined to review the Board�s ruling. 

Kingston Hosp. v. BlueCross BlueShield Ass�n/National Gov�t Servs. � NY (formerly Empire Medicare Servs.), PRRB Hearing Dec. 2009-D41 (Sept. 23, 2009), declined to rev., CMS Adm�r Dec. (Nov. 4, 2009).  

 

Health Lawyers thanks Leslie Demaree Goldsmith, of Ober, Kaler, Grimes & Shriver, in Baltimore, Maryland, for providing these summaries.

 

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