Fort Atkinson Emergency Physicians, S.C., DAB CR5643 (2020)

DECISION

In this case, it appears that, for many years, a Medicare supplier may have misrepresented its ownership.  However, I am not authorized to consider that issue; I review only whether the effective date of the supplier’s enrollment is correct.

Petitioner, Fort Atkinson Emergency Physicians, S.C., is a group medical practice located in Fort Atkinson, Wisconsin, that participates in the Medicare program as a supplier of services.  After the Medicare contractor deactivated its program participation, it applied to reenroll in the program.  The Centers for Medicare and Medicaid Services granted the application, effective July 24, 2017.  Petitioner now challenges that effective date.

Because Petitioner filed its subsequently-approved enrollment application on July 24, 2017, that is the correct effective date for its enrollment.

Background

The Medicare contractor, National Government Services, deactivated Petitioner’s Medicare program participation as of July 11, 2017, because the practice had not updated

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its enrollment information following the death of one of its registered owners, Dr. Peter Holzhauer.  CMS Ex. 6.  Petitioner reapplied, and, in a letter dated August 17, 2017, the contractor advised Petitioner that it approved its Medicare enrollment, effective July 24, 2017, which resulted in a coverage lapse of approximately two weeks.  CMS Ex. 8.

On August 18, 2017, Petitioner requested reconsideration, asking for a July 11 effective date, and complaining that it had not received a February 27, 2017 notice letter advising it to update its enrollment record.  CMS Ex. 9; see CMS Ex. 3.  In a reconsidered determination, dated October 19, 2017, the Medicare contractor upheld the July 24 effective date and reminded Petitioner that the supplier was legally responsible for reporting any enrollment changes/updates to Medicare within stated timeframes.  CMS Ex. 10.

In a letter dated November 22, 2017, Petitioner appealed the reconsidered determination.  Its appeal is signed by George Keng, M.D., president of the practice; it claims, for the first time, that, at the time of his death, Dr. Holzhauer was not affiliated with the medical practice.  The letter asks that Petitioner’s effective date of enrollment be changed “back to the original effective date of February 7, 2001.”  (emphasis added).  The letter does not explain where the February 7, 2001 date comes from except to say that that the “original file was terminated due to [the] death of one of the original partners of the group.”  The letter reiterates that the practice had not received the contractor’s February 27, 2017 notice letter, which, as the reconsidered determination explained, is irrelevant.

Order to show cause.  On December 6, 2017, I issued an acknowledgment and pre-hearing order.  In that order, I directed the parties to submit their pre-hearing exchanges (pre-hearing brief, exhibit list, copies of proposed exhibits, and list of proposed witnesses with written direct testimony).  I directed CMS to submit its exchange no later than January 10, 2018; I directed Petitioner to submit its exchange no later than February 14, 2018.  Acknowledgment and Pre-hearing Order at 3 (¶ 4).  I warned the parties that I may impose sanctions for failing to comply with my order.  Order at 6 (¶ 12).

CMS timely filed its pre-hearing exchange.  Petitioner did not file anything.

In an order to show cause, dated March 1, 2018, I reminded Petitioner that, pursuant to 42 C.F.R. § 498.69(a), (b)(2), I may dismiss a case if a party appears to abandon its appeal and does not respond to my order to show cause.  I ordered Petitioner to advise me in writing, no later than March 15, 2018, whether it intended to pursue its hearing request.  I emphasized that the Petitioner “must include its pre-hearing exchange” along with its response.  Order to Show Cause at 1 (March 1, 2018).

Petitioner’s response was far from satisfactory.  In a March 15 submission, an administrative supervisor from Petitioner’s billing and credentialing service explained that she “was under the impression this would take a minimum of a year or two before we

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would be awarded time in front of [an] Administrative Law Judge.”  She also complained that she was “extremely confused” by the language of the order and promised to “obtain assistance” from individuals who are more knowledgeable.

Petitioner did not submit anything that remotely resembled a pre-hearing exchange.  Instead, it submitted an odd letter from Dr. Keng, dated March 8, 2018, and addressed to the Medicare contractor.  It challenges the deactivation and again asks for a February 7, 2001 effective date.  The letter claims that, in fact, Dr. Holzhauer left the practice “years prior to the start of any person . . . who is currently employed/working in our group,” an assertion that does not appear to be correct, and, in any event, raises serious questions about Petitioner’s disclosures of ownership (discussed below).1

I agree with CMS that Petitioner did not establish good cause for failing to comply with the deadlines I set.  CMS Reply at 1-2; see 42 C.F.R. § 498.69(b) (authorizing dismissal if the party fails to appear at a prehearing conference or hearing without showing good cause).  However, although Petitioner failed to submit its prehearing exchange, it did not fail to appear at a prehearing conference or hearing.  And, inadequate as it may have been, its response to my order to show cause indicates that it has not wholly abandoned its appeal.  I therefore decline to dismiss.

Decision on the written record.  CMS has moved for summary judgment.  However, because neither party proposes any witnesses, an in-person hearing would serve no purpose.  See Order at 3, 5 (¶¶ 4, 10).  I may therefore decide this case based on the written record, without considering whether the standards for summary judgment are satisfied.

CMS submits its motion and brief (CMS Br.), along with ten exhibits (CMS Exs. 1-10).  In the absence of any objections, I admit into evidence CMS Exs. 1-10.  Petitioner has responded to my order to show cause and submitted the March 8, 2018 letter from Dr. Keng, which I admit into evidence as P. Ex. 1.  CMS replied to Petitioner’s submission (CMS Reply).

Discussion

Petitioner filed its subsequently-approved enrollment application on July 24, 2017, and its Medicare reactivation enrollment can be no earlier than that date.  42 C.F.R. § 424.520(d).2

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Enrollment.  Petitioner participates in the Medicare program as a “supplier” of services.  Social Security Act § 1861(d); 42 C.F.R. § 498.2.  To receive Medicare payments for the services furnished to program beneficiaries, a prospective supplier must enroll in the program.  42 C.F.R. § 424.505.  “Enrollment” is the process by which CMS and its contractors:  1) identify the prospective supplier; 2) validate the supplier’s eligibility to provide items or services to Medicare beneficiaries; 3) identify and confirm a supplier’s owners and practice location; and 4) grant the supplier Medicare billing privileges.  42 C.F.R. § 424.502.

To enroll, a prospective supplier must complete and submit an enrollment application.  42 C.F.R. §§ 424.510(d)(1), 424.515(a).  An enrollment application is either a CMS-approved paper application or an electronic process approved by the Office of Management and Budget.  42 C.F.R. § 424.502.3  When CMS determines that a prospective supplier meets the applicable enrollment requirements, it grants Medicare billing privileges, which means that the supplier can submit claims and receive payments from Medicare for covered services provided to program beneficiaries.  For a physician practitioner organization, the effective date for billing privileges “is the later of the date of filing” a subsequently-approved enrollment application or “the date that the supplier first began furnishing services at a new practice location.”  42 C.F.R. § 424.520(d) (emphasis added); Howard M. Sokoloff, DPM, DAB No. 2972 (2019); Urology Grp. of NJ, LLC, DAB No. 2860 (2018); Willie Goffney, Jr., M.D., DAB No. 2763 at 3-5, 7 (2017), aff’d sub nom. Goffney v. Azar, No. CV 17-8032 MRW (C.D. Cal. Sept. 25, 2019).

Deactivation.  Within 90 days of its occurrence, a physician practitioner organization must report certain information changes, including a change of any managing employee.  Within 30 days of its occurrence, it must report an ownership change.  42 C.F.R. § 424.516(d)(1)(i).  This is an affirmative responsibility; neither CMS nor the Medicare contractor is obligated to remind a supplier of the requirement.  If the supplier does not report one of these changes, CMS may deactivate its billing privileges, and no Medicare payments will be made.  42 C.F.R. § 424.540(a)(2); 424.555(b).  To reactivate its billing privileges, the supplier must complete and submit a new enrollment application.  42 C.F.R. § 424.540(b)(1).  It is settled that, following deactivation, section 424.520(d) governs the effective date of reenrollment.  Sokoloff, DAB No. 2972 at 6-7; Urology Grp., DAB No. 2860 at 7; Goffney, DAB No. 2763 at 7.

I have no authority to review a deactivation.  Sokoloff, DAB No. 2972 at 6; Ark. Health Grp., DAB No. 2929 at 7-9 (2019).

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Petitioner’s deactivation and reenrollment.  Dr. Holzhauer died on January 5, 2017.  CMS Ex. 2.  Although not required to do so, when the Medicare contractor learned of his passing, it sent a letter to the medical practice directing it to update its enrollment information by submitting a CMS-855B change request, deleting the name of the deceased owner/officer.  CMS Ex. 3.  When Petitioner did not respond, the contractor deactivated its program participation.  CMS Ex. 6.

Based on the information the contractor had at the time, the deactivation seemed appropriate.  However, Petitioner now claims that Dr. Holzhauer was not associated with the practice and had not been for many years.  If, in fact, Dr. Holzhauer were not associated with the medical practice, it should not be expected to report his death.

Pointing to language in Petitioner’s request for reconsideration, CMS maintains that Petitioner “has not disputed that [Dr.] Holzhauer was an owner.”  CMS Br. at 2 n.1.  In fact, this is not correct.  Using somewhat cagey language, Petitioner’s request for reconsideration states:  “The original file was terminated due to a death of one of the original partners of the group.”  CMS Ex. 9.  That Dr. Holzhauer was an “original partner” does not mean that he was a partner at the time of his death.

Petitioner’s request for ALJ review confirms that, in fact, Petitioner bases this appeal on the claim that, at the time of his death, Dr. Holzhauer was not affiliated with the group practice.  (Of course, because this represents an attack on the deactivation, it is not reviewable – at least at this level).

The evidence of Dr. Holzhauer’s association with the practice is conflicting.  On December 16, 2013, the practice filed a revalidation application (CMS-855B),4 listing multiple owners; Dr. Holzhauer was not among them.  CMS Ex. 1 at 9-18.  But its June 1, 2017 revalidation application lists Dr. Holzhauer as an owner (5% or more ownership interest) and managing employee, with an effective date of July 1, 2002, which raises the question of why he was not listed on the 2013 application.  CMS Ex. 4 at 5-6.  The practice’s July 24, 2017 application, which deleted Dr. Holzhauer as an owner, lists the “end date” of his ownership as January 1, 2004.  CMS Ex. 7 at 5-6.

Accepting Petitioner’s current representation – that Dr. Holzhauer long ago severed his relationship with the medical practice – creates a much more serious problem for Petitioner than a two-week lapse in coverage.  It suggests that Petitioner has, for years, misrepresented its ownership interests.  At a minimum, Petitioner has not timely reported a change of ownership, subjecting it to an earlier deactivation.  42 C.F.R. § 424.516(d).

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Further, a supplier that certifies as “true” on its enrollment application false or misleading information may have its enrollment revoked.  42 C.F.R. § 424.535(a)(4).

These questions are beyond my authority to resolve.  However, it might be appropriate for CMS to consider whether and the extent to which Petitioner has misrepresented ownership interests in its practice.

Conclusion

Notwithstanding its current claim that Dr. Holzhauer long ago severed his relationship with the practice, Petitioner filed its subsequently-approved application on July 24, 2017, and CMS properly granted its Medicare reenrollment effective that date.

• 1. According to Petitioner’s various applications, one physician/owner, Robert P. Sievert, D.O., began on January 1, 1988, and continues with the practice, which means he would have been there during Dr. Holzhauer’s tenure.  CMS Ex. 4 at 8; CMS Ex. 7 at 5-6, 8.
• 2. I make this one finding of fact/conclusion of law.
• 3. CMS’s electronic process is referred to as PECOS (Provider Enrollment, Chain, and Ownership System).
• 4. To maintain billing privileges, a supplier must, at least every five years – and more often, if asked to do so – resubmit and recertify the accuracy of its enrollment information, a process referred to as “revalidation.”  42 C.F.R. § 424.515.