CMS' imposition of civil money penalties (CMP) against a skilled nursing facility (SNF) for violation of 42 C.F.R. §483.25, which requires SNFs to provide the care and services necessary for a resident to maintain or attain the highest practicable level of well-being, was improper. There is no particular standard outlining when the SNF must notify a resident's physician of a change in the resident's vital signs. Three physicians testified credibly that the SNF's care was consistent with professional standards. The nurses had consulted the physician in the afternoon when the resident experienced nausea and vomiting, and they followed the physician's instructions thereafter. Although the resident's pulse and respiration were markedly elevated at night, they were reduced substantially by the time of the nurses' intervention. The SNF proved by a preponderance of the evidence that it was in substantial compliance with the regulation. Therefore, no penalties were warranted.

CMS properly imposed per-instance civil money penalties (PICMP) totaling $10,000 against a skilled nursing facility (SNF) for two violations of 42 C.F.R. §483.25(h), which requires SNFs to maintain an environment free of foreseeable hazards and to provide reasonable supervision of residents to prevent accidents. A resident started fires on three separate occasions. The SNF's interventions on the day of and after the second fire were insufficient to protect that resident and others from the fire hazard posed by the resident. These facts, together with the proof that another resident was caught with lighters, matches and cigarettes from outside the facility also establish a violation of 42 C.F.R. §483.75, which requires SNFs to maintain an environment that fosters the highest practicable well-being of residents. Given the seriousness of the risk and the failure of the SNF to consider or plan for effective prevention of the fire hazard, PICMPs of $3,500 for each violation of 42 C.F.R. §483.25(h)and $3,000 for the third violation were reasonable.

CMS properly denied 22 applications by entities to enroll as home health agencies (HHA) participating in Medicare because it determined that the purported HHAs were not operational, as required by 42 C.F.R. §424.530(a). CMS proved that the applicants all claimed to operate from one of two suites in the same building and they shared phone or fax numbers as well as email addresses. When an investigator attempted to verify that a home health agency was operating at the stated location, he learned that the applicant(s) were no longer using their single space in one suite and that they had been locked out of the other for nonpayment of rent. None of the applicants presented any evidence that it had any employees, had any equipment or supplies necessary to furnish home health services, or were open to the public. In order to defeat the agency's request for a ruling as a matter of law, the applicants were required to present evidence; because they did not, CMS was entitled to prevail.

CMS' denial of enrollment applications from the owners of two independent diagnostic testing facilities (IDTF) was proper because the applicants did not meet the requirements for enrollment as a Medicare supplier. Neither furnished any services within the meaning of 42 C.F.R. §400.410because they did not own, maintain or calibrate any diagnostic equipment and had no legal power to make it available as required by 42 C.F.R. §410.33(g). The administrative law judge (ALJ) had no authority to order equitable relief or damages and thus could not require CMS or its contractor to make payments that the applicant could not legally receive.

The request for hearing by a clinical laboratory was dismissed because the lab did not specifically challenge CMS' finding of noncompliance or state why the lab disagreed with the remedy in its hearing request as required by 42 C.F.R. §498.40(b)(1). The clinical laboratory's hearing request discussed only two findings of noncompliance from the original survey out of the many that were part of the original survey and the facility did not specifically challenge any of these findings.

A long-term care facility's request for a hearing was denied, as all enforcement actions by CMS were rescinded. The facility argued that its property interests would be adversely affected if it was denied a right to a hearing on the noncompliance findings, because the findings would remain on the facility's record. The facility argued that its right to a hearing was triggered by the imposition of remedies and not lost by CMS' decision to rescind the remedies and that the facility is being denied its due process right by the recision. No right to a hearing exists pursuant to 42 C.F.R. §498.3(b)(13)unless CMS determines to impose and actually does impose one of the specified remedies. It is specifically the imposition or proposed imposition of an enforcement remedy and not the citation of deficiency that triggers the right to a hearing. When the enforcement remedy is eliminated so, too, is the petitioner's right to review.

A durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier's billing privileges were properly revoked by the National Supplier Clearinghouse (NSC) because the supplier was not open during posted business hours. On four occasions when an investigator went to inspect the business, the supplier's business was not open during the posted business hours. Medicare participation requirements provide that the business location “must be accessible during reasonable business hours to beneficiaries and to CMS” as stated in 42 C.F.R. §424.57(c)(8). The DMEPOS supplier explained that the business was not open because he was out making deliveries and his assistant was ill/hospitalized. The DMEPOS supplier's arguments fail because there is no equitable defense for failing to comply with Medicare participation standards.

The supplier number of a durable medical equipment supplier was properly revoked given that the supplier failed to comply with standards governing its enrollment as a Medicare supplier, and was not operational. The supplier's enrollment was properly revoked because the supplier: (1) was not accessible during reasonable business hours, (2) failed to maintain a primary business telephone number and instead relied on a facsimile machine number, and (3) was not open to the public and therefore was not operational. The supplier's arguments that its proprietor was on vacation or that the supplier was not doing business because it was in “start up mode” did not obviate the requirement that it must maintain operations during business hours.

A per instance civil money penalty (CMP) of $3,500 against a skilled nursing facility (SNF) for failure to develop residents' plans of care was properly assessed because the SNF was not in substantial compliance with program requirements. Under 42 C.F.R. 483.20(d)and 483.30(k)(1), results of comprehensive assessments of each resident's condition must be used to develop, review, and revise the particular resident's plan of care. The plan of care must include measurable objectives and timetables to meet the resident's medical, nursing, and mental and psychosocial needs. The SNF's plan of care for various residents', however, did not address specific instances where the residents were known to have a history of falls or risks of leaving the facility. The CMP was therefore reasonable.

A physician does not have a right to a hearing to challenge a determination that denied her enrollment as a participant in the Medicare program until reconsideration of the denial is complete, as stated in 42 C.F.R. §498.5(a)(1)and (d)(1). The regulations do not permit a prospective provider to bypass the reconsideration step nor do they allow a prospective provider to request reconsideration and a hearing simultaneously. In this case, the physician requested reconsideration and a hearing simultaneously, and reconsideration of the initial determination was not yet complete. These facts establish that the physician does not have a right to a hearing at this time. The hearing request was dismissed.

A long-term care facility failed to comply with three Medicare conditions of participation (COPs) and posed immediate jeopardy to its residents when its staff failed to honor a resident's advance directive that requested cardio-pulmonary resuscitation (CPR) in the event of a cardiac arrest. A resident went into cardiac arrest and, through a series of errors and bad judgment, the staff made no efforts to revive him until well after he was dead. The facility argued that staff may decline to administer CPR, without regard to the resident's wishes, if they determine the resident was not an “appropriate candidate” for CPR. The staff's actions were inconsistent with the facility's own resuscitation policy because staff must initiate CPR and call emergency medical services unless the resident had in place a valid “do not resuscitate” order in his chart. The facility's staff does not have a right to decide who is an “appropriate candidate” for CPR or disregard advance directives. The staff's actions clearly failed to meet the professional standards of quality required by 42 C.F.R. §483.20(k)(3)(i); the facility failed to provide quality care in accordance with his comprehensive assessment and plan of care as required by 42 C.F.R. §483.25; and the facility was not administered in accordance with 42 C.F.R. §483.75. CMS properly determined that these deficiencies posed immediate jeopardy to resident health and safety.

CMS properly revoked for one year an optometrist's provider enrollment when he failed to inform CMS he no longer operated at the address he gave on his provider enrollment application and failed to notify Medicare of his change of business location. A provider must have a place of business at which he or she offers services to the public during normal business hours and must notify Medicare of the location of his or her business as required by 42 C.F.R. §424.535(a)(5). An investigator went to the optometrist's practice location and found that the business had ceased operations there for several months. The optometrist admitted that he had closed that office in June 2008 and continued his practice at another address. He also admitted he failed to notify Medicare of his change of location. CMS properly revoked his application for one year because the facts are uncontested. CMS was authorized to revoke his enrollment for one year pursuant to 42 C.F.R. §424.535(c).

Findings of immediate jeopardy and the imposition of civil penalties were amply supported because a skilled nursing facility (SNF): (1) violated the Life Safety Code, creating a high probability of accidental and uncontrollable fire, by failing to install an automatic sprinkler system in a building with ceiling tiles, roof trusses, duct work and lighting that required such a sprinkler system; and (2) disregarded the rights of residents to a 30-day notice, when it suddenly closed its facility, causing grave emotional distress to residents who were moved, sometimes without any idea of where they were going. The SNF argued that the residents were happier in their new facilities, which acted diligently to protect resident interests. This argument was irrelevant and no defense to the SNF's flagrant failure to protect vulnerable residents during the moving process. Civil money penalties of $5050 per day for the 15 days of noncompliance with the fire sprinkler requirement were reasonable, as were civil money penalties of $3400 per day for the 23 days during which residents were moved without proper notice and planning.

A physician's Medicare enrollment and billing privileges were properly revoked for three years because he pled guilty to a financial crime of filing a false income tax return. CMS’ authority to revoke billing privileges is not conditioned on a final judgment; the guilty plea plainly satisfied regulatory requirements. A financial crime need not be one of the crimes listed in 42 C.F.R. §424.535(a)(a)(3)(i)(B). The administrative law judge (ALJ) was not authorized to second-guess CMS’s judgment in weighing the equities in the case because the issue was simply whether the agency had the authority to revoke billing privileges, which it did. Similarly, CMS had the authority to set the revocation period between one and three years, and the physician had no right to challenge the duration of the revocation. CMS was not a party to the physician’s plea agreement, and there was no showing that CMS ever agreed that it would not revoke the doctor’s billing privileges; thus, the terms of the plea agreement had no effect on CMS authority.

CMS had the authority to terminate from Medicaid program participation, a state-owned-and-operated intermediate care facility for the mentally retarded (ICF/MR) that was not in substantial compliance with ICF/MR conditions of participation for more than a year. Although the facility had written policies and procedures in place that prohibited mistreatment, neglect or abuse of its clients the ICF/MR failed to (1) adequately implement its policies prohibiting mistreatment and neglect and abuse of its clients; (2) report allegations of mistreatment, neglect, abuse, and injuries of an unknown source; and (3) did not take appropriate corrective actions in response to verified violations (see 42 C.F.R. §483.420(d)). In addition, the ICF/MR lacked sufficient direct care staff to manage and supervise clients according to their individual program plans as required under §483.430(d). Finally, the ICF/MR was not in substantial compliance with §483.410because its governing body failed to direct the facility adequately as evidenced by the ICF/MR's failure to protect its clients from mistreatment, abuse and neglect and provide adequate staffing.

The intermediary properly excluded the patient days of patients receiving assistance under the state indigent care trust fund (ICTF) from the Medicaid fraction of disproportionate share hospital (DSH) payment calculations. The ICTF program is a general assistance program paid though the state's Medicaid assistance program, and the state receives federal Medicaid matching funds for those payments. The hospital argued that those payments amounted to “medical assistance” and the inpatient days attributable to those patients should be included in the DSH calculation. However, patients eligible for ICTF are not eligible for traditional Medicaid, as described in Soc. Sec. Act §1901, and are thus not furnished medical assistance, as the hospital claimed. Further, a CMS program memorandum (A-99-62) supports the position that patients must be eligible for traditional Medicaid to be included in the calculation.

Direct and indirect graduate medical education full-time equivalent (FTE) counts were properly adjusted downward for cost years 2000 and 2001 because a provider did not meet the requirement in 42 C.F.R. §413.86(f)(4)for a written agreement with a nonhospital setting, providing that the hospital will incur the costs of residents' salary and fringe benefits and pay for supervisory teaching activities. The hospital paid 20 residents who split their time between it and a family practice institute.

An intermediary excluded the time residents spent at the institute, finding that no valid contract for resident training in a nonhospital setting was in place. The hospital argued that a 1983 “undertakingwith another hospital to set up the institute, a 1999 contract establishing the institute for several residency disciplines, and a resident payment contract effective on July 1, 2001, all prove that it met the written agreement requirement, and that alternately it should have been granted an exception to the written agreement requirement under Section 713 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) (PubL No 108-173).

The intermediary successfully contended that: the 1983 agreement was not between the hospital and the nonhospital setting, as required by the regulation: (1) the 1999 agreement placed responsibility for resident salaries with the institute, not with the hospital, and it was silent on the cost of supervisory teaching activities; (2) the third, 2001 agreement was executed too late to apply to residents who were placed in the nonhospital setting six months earlier; and finally (3) the Section 713 exception was unavailable because the hospital's cost reports were not settled during the exception window. It was held (with a concurring opinion attached) that the written agreement regulation was properly prescribed by the Secretary, the hospital failed to meet the requirement, and the intermediary's adjustment reducing FTE counts was proper.

A group of hospitals were not eligible to receive 85 percent of their allowable Medicare inpatient hospital capital-related costs for their first two years of operations as long-term care hospitals (LTCHs) because they could not be considered "new" hospitals. A "new hospital" is a hospital that has operated (under previous or present ownership) for less than two years as defined in 42 C.F.R. §412.300(b). New hospitals are eligible to be reimbursed for two years at 85 percent of their allowable Medicare inpatient hospital capital-related costs, instead of being paid under the lower capital prospective payment system (PPS). After two years the hospital is no longer considered "new."

The LTCHs had lease agreements with `host' hospitals, an arrangement called "hospital-within-a-hospital." Each "host" had operated as a hospital for more than two years prior to the lease agreements. The intermediary had properly rejected the inpatient hospital capital-related costs claims because the lease agreement merely changed who operated that part of the hospital but did not alter the fact that a hospital had operated out of that space. The “new hospital” exemption is limited only to assets for which the Medicare program has not previously made payment. The facilities' original costs in this case are presumed to have been reimbursed previously.

The intermediary properly disallowed reimbursement for direct graduate medical education (DGME) costs in a non-hospital setting by reducing the provider's full-time equivalent (FTE) resident count. Under 42 C.F.R. §413.86(f)(1)(i), the regulation applicable during the cost reporting period ending on June 30, 1996, only residents in an approved program working in all areas of the hospital could be counted for DGME purposes. The provider sought to have residents doing research at its health sciences center, part of its medical school, counted, contending that the hospital and the health center effectively functioned as a single complex.

The intermediary argued that the health sciences center was not a part of the hospital complex and that even though the hospital and the health sciences center were physically intertwined they did not automatically collapse into a single entity. The hospital and the health sciences center were set up as two separate legal structures. CMS had addressed appropriate parts of a hospital complex in a 1988 proposed rule, instructing that providers such as skilled nursing facilities and home health agencies, where residents often work, may sometimes be included in a hospital complex. A medical school, however, is not part of a hospital complex. Costs for the 17.4502 FTE residents, amounting to approximately $1.5 million in Medicare reimbursement, were disallowed.

An intermediary's decision to treat two hospitals' refunds from a voluntary pool arrangement as state tax refunds, and to offset these payments against a state federal reimbursement allowance (FRA) tax on Medicaid payments, was reversed as inconsistent with Medicare laws and guidance. Certain hospitals in Missouri, which paid the state an FRA tax on Medicaid payments, voluntarily participated in a pool that collected their Medicaid reimbursement from the state and then reallocated the money to the participating hospitals under an agreed-upon payment methodology, to pay for Medicaid and uninsured patients.

After the Office of Inspector General (OIG) released a 2004 report calling for the pool payments to be reclassified as tax refunds rather than Medicaid revenue and to be offset against the FRA tax, an intermediary reopened the hospitals' cost reports for four years. Contrary to the OIG's position, these pool payments are not refunds of the FRA tax and thus they are not refunds of previous expense payments, as contemplated under 42 C.F.R. §413.98(a). They are derived from a voluntary pooling arrangement among private parties, to which the state is not a party. The pool is independent of the FRA tax, even though the pool and the tax were created at approximately the same time. There is no basis to conclude that reimbursement going into the pool is somehow converted to tax refunds coming out of the pool. Nor are the pool payments credits or returns. The pool payments are properly characterized as "other revenue," according to generally accepted accounting principles. The intermediary's contention that the hospitals and the state colluded to create the FRA tax and the pooling arrangement was not relevant; the laws governing the state's health care tax and the facts regarding the FRA and the pool control. The intermediary's adjustments were reversed.

The intermediary's adjustments to three hospitals' notices of program reimbursement (NPRs), reducing allowable home office costs, were proper because notices of reopening were issued within three years of the date of the original NPRs. NPRs were issued in September 1996 to the hospitals, and according to the intermediary, notices of reopening were issued within weeks, indicating that the NPRs would be revised to account for home office costs determined from an audit. Although the hospitals claim to have never received the notices of reopening, and it is possible that either the recipient hospital lost the notice or that the intermediary did not send them, it is unlikely that this occurred with all three notices. Because the hospitals were not prejudiced or disadvantaged by the reopening of the original NPRs, the intermediary's adjustments were affirmed.

The Provider Reimbursement Review Board (PRRB) lacks jurisdiction over the provider's appeal because administrative and judicial reviews of budget neutrality adjustments are expressly prohibited by statute and regulations. The providers argued in their appeal that the budget neutrality factors have been overstated annually and the final rates listed in the financial year (FY) 2007 Final rule are incorrect. The PRRB, however, lacks jurisdiction to review budget neutrality adjustments because (1) 42 USC §1395ww(d)(7)bars administrative and judicial review of determinations of adjustments, (2) 42 C.F.R. §405.1804lists them as one of the “[m]atters not subject to administrative and judicial review”, and (3) the Administrative Procedure Act states that appeal provisions do not apply where judicial review is precluded by statute. Further, and despite the providers' claim that the preclusion of such review is limited to FYs 1984 and 1985, the years in which the prospective payment system rates were enacted, the Secretary did not interpret review to be off-limits for only those two years. As a result, the PRRB is bound by the Final rule and the case is closed.