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ABA Health eSource
July 2008 Volume 4 Number 11

Medicare Launches New Provider Reimbursement Appeal Rules
by John P. Wagner, Nossaman, Sacramento, CA

John P. WagnerOn May 23, 2008, the Centers for Medicare and Medicaid Services (CMS) promulgated long-awaited new provider reimbursement appeal rules, primarily dealing with appeals of Medicare Part A reimbursement before the Provider Reimbursement Appeals Board (PRRB). The major rule changes were expected -- and the new rules are actually less onerous in some cases than the earlier proposed rules published in 2004. Some of the major aspects are as follows.

Shorter time for adding appeals--immediate attention needed for existing appeals.

Now, providers have 180 days after issuance of the Notice of Program Reimbursement (NPR) to file their appeals and then have no deadline for adding new issues until the hearing commences--a process that generally covers several years. In addition, providers must add any new issues within 60 days of their 180-day deadline. Of critical importance is that, for all existing appeals as of August 21, 2008, providers have only 60 days from the expiration of the 180-day deadline or October 20, 2008, to add new appeal issues. Therefore, providers and reimbursement counsel must immediately review all outstanding PRRB appeals to determine if they should add appeal issues.

Hospital "chains" immediately must establish procedures for coordinating appeal issues.

Currently, while the PRRB requires commonly owned or controlled providers having the same appeal issue to file that issue in a group appeal, there is no deadline for doing so. Under the new rules, a provider must state, as part of its hearing request, whether it is commonly owned or controlled with other providers; if so, it must either state that no other provider under its parent has any similar issues or it must bring any similar issues as a group appeal. As the new rules state: "any appeal by commonly owned or controlled providers that could be brought as a group appeal must be brought as a group appeal." 1 Thus, CMS expects parent corporations to have (or immediately develop) mechanisms in place to (1) identify appeal issues common to one or more chain members and (2) coordinate all appeals of those issues. 2

Consequences For Intermediary Failures to Follow Board Rules.

Now, if a provider fails to follow Board rules, such as meeting deadlines for position papers, the Board may dismiss its appeal; but if the intermediary fails to follow the same rules, there is no penalty or "consequence." The new rules purport to change this, allowing the Board to impose the sanction of issuing a decision based on the written record at the time of the Intermediary's infraction or to "take other appropriate action." 3 If the Board truly will act, this would provide at least some deterrent to current "sharp practices" of certain intermediaries, although the CMS Administrator could always reverse such Board action. Indeed, the new rules are somewhat Pollyannish in their expectations that the intermediaries will work with providers in good faith and that the Administrator will look unfavorably on intermediary delaying tactics or failures to cooperate on procedural issues.

Need to specifically claim self-disallowed items.

Currently, healthcare attorneys generally take the position a provider that does not claim a given cost--i.e., that "self-disallows" that cost--because it is not allowed by regulation or intermediary policy may nevertheless appeal that cost pursuant to the Bethesda decision. 4 Under the new rules, however, if the provider does not claim the disputed cost on the cost report, it must expressly show the cost as a self-disallowed protested amount on the cost report. In other words, the provider cannot remain silent about the cost in the cost report and appeal the cost later.

Overall: Need for Early Evaluation and Coordination of Appeal Issues.

There are many more specific rule changes that need to be carefully analyzed. Overall, the new rules require more "front-loading" of appeals in such areas as jurisdictional documentation and evaluation of possible group appeals; require more specificity in defining the precise issues being appealed; and require much earlier evaluation of appeal and coordination.

More To Come: PRRB to issue New Instructions.

Reimbursement counsel should carefully and immediately review the new appeal rules and discuss the changes with their clients. And there is more to come. The PRRB is now expected to issue new instructions that will implement the new appeal rules and may themselves create more significant changes. Stay tuned ...


1 73 Fed. Reg. at 30210.
2 Id.
3 Id. at 30225.
4 Bethesda Hosp. Ass'n v. Bowen, 485 U.S. 399 (1988).

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