Martina Sheftic, M.D., DAB CR5563 (2020)

DECISION

I modify the effective date for the reassignment of Petitioner's Medicare benefits to November 2, 2018, with a retrospective effective date of October 3, 2018.

I.  Background and Procedural History

Petitioner is a physician enrolled in the Medicare program.  Petitioner sought to reassign her Medicare benefits to Housecall Doctors Medical Group (Housecall Doctors).  The CMS contractor determined that the effective date for the reassignment was December 28, 2018, with a retroactive effective date of November 28, 2018.

Petitioner requested a hearing to dispute the effective date for reassignment.  On November 26, 2019, the Civil Remedies Division (CRD) acknowledged receipt of the hearing request and issued my Standing Prehearing Order (Order).  In response to the Order, CMS filed a brief and motion for summary judgment (CMS Br.) and 11 proposed exhibits (CMS Exs. 1-11).  Petitioner submitted a brief (P. Br.).  CMS then filed a reply (CMS Reply) and Petitioner a sur-reply (P. Sur-Reply).

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II.  Decision on the Written Record

I admit CMS Exs. 1-11 into the record without objection.  Order ¶ 10; Civil Remedies Division Procedures (CRDP) § 14(e).

I ordered the parties to submit written direct testimony for all of their witnesses and to submit a written request to cross-examine any of the opposing party's witnesses.  Order ¶¶ 11-12; CRDP §§ 16(b), 19(b).  CMS submitted written direct testimony for a single witness.  CMS Ex. 11.  Petitioner neither offered any written direct testimony nor requested to cross-examine CMS's witness.  Therefore, I decide this case based on the written record.  Order ¶¶ 13-14; CRDP § 19(d).

III.  Issue

Whether CMS had a legitimate basis to establish December 28, 2018, as the effective date for Petitioner's reassignment of Medicare benefits to Housecall Doctors, with a retrospective reassignment period commencing November 28, 2018.

IV.  Findings of Fact and Conclusions of Law

1. Petitioner has been enrolled in the Medicare program as a physician.  CMS Ex. 10.
2. On November 2, 2018, Noridian received a CMS-855R Medicare Enrollment Application (Reassignment Application) in which Petitioner sought to reassign her Medicare benefits to Housecall Doctors.  CMS Ex. 1; CMS Ex. 2 at 1; CMS Ex. 11 ¶ 5.
3. Petitioner requested that the effective date of her reassignment be July 1, 2019.  CMS Ex. 1 at 1.
4. In a December 18, 2018 letter, Noridian stated that it was closing Petitioner's Reassignment Application because "[t]he receipt date of the application is more than 60 days prior to the effective date listed on the application."  CMS Ex. 2 at 1.
5. On December 28, 2018, Petitioner faxed to Noridian the first page of a Reassignment Application indicating an effective date for reassignment as July 1, 2018.  CMS Ex. 3 at 2.
6. On the December 28, 2018 fax coversheet, Petitioner stated that "[t]he correction is in the effective date of 7-1-2018, the previous application incorrectly stated the effective date as of 7-1-2019."  CMS Ex. 3 at 1 (emphasis omitted).

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7. In a January 31, 2019 letter, Noridian acknowledged receipt of the December 28 partial Reassignment Application and requested additional information from Petitioner.  Noridian also stated that it had returned Petitioner's original Reassignment Application.  CMS Ex. 5 at 1.
8. Petitioner submitted a completed second page to the Reassignment Application.  CMS Ex. 6 at 6, 11.
9. On April 25, 2019, Noridian issued an initial determination indicating that November 28, 2018, was the effective date for Petitioner's reassignment of Medicare benefits to Housecall Doctors.1  See CMS Ex. 7 at 2.
10. In a June 11, 2019 letter, Petitioner requested reconsideration of the effective date.  CMS Ex. 8.  Petitioner stated that her Reassignment Application had been submitted on July 1, 2018, but after several months, she learned that Noridian never received that application.  Petitioner submitted another Reassignment Application, received on November 2, 2018; however, Petitioner realized that the Reassignment Application provided the incorrect year for the effective date of reassignment (i.e., July 1, 2019 instead of July 1, 2018).  Following instructions from a Noridian representative, Petitioner sent in a corrected section 1 to the Reassignment Application.  CMS Ex. 8 at 2.  Petitioner stated that she has provided health care services to Medicare beneficiaries since July 2018, and requested to either be given a July 1, 2018 effective date or adjust the effective date "from November 28 to October 2, 2018, which is 30 days prior to the November 2 date of the second application."  CMS Ex. 8 at 3.
11. In a September 23, 2019 reconsidered determination, Noridian upheld its initial determination.  CMS Ex. 9.  Noridian stated that it had returned Petitioner's November 2, 2018 Reassignment Application under "CMS guidelines" because the receipt date of the Reassignment Application was more than 60 days prior to the requested effective date.  Noridian stated that it "is not required to ask for clarification of this date prior to returning the application."  CMS Ex. 9 at 4.
12. The reconsidered determination stated that Noridian considered the partial Reassignment Application received on December 28, 2018, to be a new application and that the effective date was based on this application.  Because Noridian allowed the maximum retrospective billing date of 30 days before receipt of the Reassignment Application, Noridian had correctly given Petitioner a November 28, 2018 retrospective effective date.  CMS Ex. 9 at 4.

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13. Because Noridian neither rejected nor denied Petitioner's Reassignment Application, which was received on November 2, 2018, but rather accepted corrected information regarding the requested effective date that was provided by Petitioner, and then processed the Reassignment Application to approval, the effective date for Petitioner's reassignment of Medicare billing privileges to Housecall Doctors is November 2, 2018, with a retrospective effective date of October 3, 2018 (i.e., 30 days prior to November 2, 2018).  42 C.F.R. §§ 424.520(d)(1), 424.521(a)(1).

V.  Analysis

The Social Security Act (Act) authorizes the Secretary of Health and Human Services (Secretary) to promulgate regulations governing the enrollment process for providers and suppliers.  42 U.S.C. §§ 1302, 1395cc(j).  A "supplier" is "a physician or other practitioner, a facility, or other entity (other than a provider of services) that furnishes items or services" under the Medicare provisions of the Act.  42 U.S.C. § 1395x(d); see also 42 U.S.C. § 1395x(u).

A supplier must enroll in the Medicare program to receive payment for covered Medicare items or services.  42 C.F.R. § 424.505.  The terms "Enroll/Enrollment means the process that Medicare uses to establish eligibility to submit claims for Medicare-covered items and services."  42 C.F.R. § 424.502. A supplier seeking billing privileges under the Medicare program must "submit enrollment information on the applicable enrollment application.  Once the . . . supplier successfully completes the enrollment process . . . CMS enrolls the . . . supplier into the Medicare program."  42 C.F.R. § 424.510(a).  CMS then establishes an effective date for billing privileges under the requirements stated in 42 C.F.R. § 424.520(d) and may permit a 30-day retrospective billing period under 42 C.F.R. § 424.521(a)(1).

In addition to approving an enrollment application, CMS has the authority to deny enrollment applications.  CMS promulgated through regulation a list of reasons why it will deny an application.  42 C.F.R. § 424.510.  When CMS or a CMS contractor denies an enrollment application, the supplier has the right to appeal that denial. 42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 405.803(a), 424.545(a), 498.3(b)(17), 498.5(l).

CMS also has the authority to reject an enrollment application.  To "reject" means "that the . . . supplier's enrollment application was not processed due to incomplete information, or that additional or corrected information was not received from the supplier in a timely manner."  42 C.F.R. § 424.502.  CMS may reject an enrollment application immediately after filing if the supplier fails to provide the application fee or a request for waiver of that fee.  42 C.F.R. §§ 424.514(g)(1), 424.525(a)(3).  It may do so 30 days after receiving an enrollment application if the supplier fails to provide all required documentation within those 30 days.  42 C.F.R. § 424.525(a)(2).  However, if a

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supplier simply failed to furnish complete information on the enrollment application, CMS may only reject the enrollment application after the supplier has been given notice that it has 30 days to provide the necessary information or documentation.  42 C.F.R. § 424.525(a)(1).

For Medicare Part B claims, a beneficiary may assign his or her benefits to an enrolled physician or non-physician supplier providing services to that beneficiary.  42 U.S.C. § 1395u(b)(3)(B)(ii).  In certain circumstances, a supplier who has received an assignment of benefits may reassign those benefits to an employer, or to an individual or entity with which the supplier has a contractual arrangement.  42 U.S.C. § 1395u(b)(6); 42 C.F.R. § 424.80(b)(1)-(2).  CMS applies the effective date rules at 42 C.F.R. §§ 424.520(d) and 424.521(a)(1) to reassignments of Medicare benefits.  See Gaurav Lakhanpal, M.D., DAB No. 2951 at 6-7 (2019).

In the present case, Petitioner appears to have argued for a July 1, 2018 effective date, but might have limited her argument to an October 1, 2018 effective date.  P. Br. at 1.  However, Petitioner later refocused her argument to seek an effective date of November 2, 2018, with a retrospective billing date of October 2, 2018.  Further, Petitioner asserted that she never received Noridian's letter returning her Reassignment Application and that she submitted on December 28, 2018, a corrected first page of the Reassignment Application after talking with a Noridian representative.  P. Sur-Reply at 1.

CMS argued in response that, although Noridian characterized its actions as returning Petitioner's Reassignment Application received on November 2, 2018, Petitioner's Reassignment Application "was essentially rejected, in that Noridian informed her that the application was not approved, and Petitioner has no right to appeal a rejection."  CMS Br. at 7.  From this vantage point, CMS argued that the corrected single page from a Reassignment Application received on December 28, 2018, provides the basis for the correct effective date.  CMS Br. at 8-9.

I cannot conclude that Noridian rejected Petitioner's Reassignment Application received on November 2, 2018.  The December 18, 2018 letter from Noridian does not use the word "returned" but neither does it say "rejected."  CMS Ex. 2 at 1.  However, Noridian subsequently made clear that it returned the Reassignment Application under CMS guidelines.  CMS Ex. 5 at 1; CMS Ex. 9 at 4.  Given that CMS's Medicare Program Integrity Manual (MPIM) provides for the return of enrollment applications when there is a requested effective that is more than 60 days in the future, there is no doubt that Noridian followed CMS's sub-regulatory guidance and returned the Reassignment Application.  MPIM Ch. 15, § 15.8.1.  Returning is specifically delineated as one of the three actions discussed in MPIM § 15.8, the other two being rejection and denial of enrollment applications.  Therefore, returning an enrollment application is not rejecting the application.

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The difficulty in this case stems from the fact that Noridian's action was not authorized by statute or regulation.  Rather, returning an enrollment application is an action authorized by a manual that has not been through the public notice and comment process.  The DAB has decided that returning an enrollment application is not a legally authorized method of disposing of an enrollment application:

In section 1866(j) of the [Social Security] Act, Congress specifically directed the Secretary to establish by regulation the procedures for actions on applications, rather than relying merely on instruction manuals.  Neither the regulations nor the regulatory preamble reference the concept of "returning" an application as a part of the enrollment process.  As previously discussed, the regulations authorize CMS only to reject or deny an enrollment application.  See 42 C.F.R. §§ 424.525 and 424.530.  Moreover, the manual instructions state that a "returned application is considered a non-application."  Treating an approved CMS-855 form as a "non-application" merely because it is unsigned is inconsistent with the definition of an "application" at section 424.502.

Tri-Valley Family Medicine, Inc., DAB No. 2358 at 8 (2010) (emphasis in original).  Social Security Act § 1871 supports the DAB's reluctance to give legal effect to sub-regulatory guidance that directly and negatively impacts the effective date for enrollment, billing privileges, and reassignment.  Relevant to this case, that statute requires all rules, requirements, and statements of policy that establish or change a substantive legal standard governing the scope of Medicare benefits, payment of services, or eligibility to furnish services or receive benefits to be promulgated through notice and comment rulemaking.  42 U.S.C. § 1395hh(a)(2).  This statute is significant because it more broadly requires the use of notice and comment rulemaking for Medicare policy than the Administrative Procedure Act does.  See Azar v. Allina, 139 S.Ct. 1804, 1810-14 (2019).  Because "[a] 'returned' application is effectively considered a non-application" (MPIM § 15.8.1(B)), the policy to return enrollment applications has a substantive legal effect on suppliers whose applications have been returned.

With this in mind, I cannot conclude that Noridian's action in attempting to return Petitioner's Reassignment Application had the legal effect of "closing" that application. CMS Ex. 2 at 1.  Rather, within 10 days of Noridian's letter, Petitioner submitted a corrected first page to the Reassignment Application indicating a requested effective date of July 1, 2018, instead of July 1, 2019.  Importantly, Petitioner made clear that the purpose of this submission was the correction of that date on her original Reassignment Application.  CMS Ex. 3.  Submitting "corrected information" is part of the process before a rejection (see 42 C.F.R. § 424.502 (definition of Reject/Rejected)), and Petitioner's corrected information would have been timely had Noridian acted in

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conformance with the regulations and requested it rather than attempting to return it.  When viewing this matter through the legal options Noridian had to dispose of this case, either to deny or reject the Reassignment Application, Noridian did neither.  Cf. Judith E. Wessely, CNS, DAB No. 2909 at 9 (2018) ("Because a manual 'does not have the legal authority of the statute and regulations, its instructions must give way to the statute and regulations to the extent of any conflict.'") (citing Conn. Dep't of Social Servs., DAB No. 1982 at 20 (2005)).  Therefore, I can only interpret Noridian's subsequent actions following Petitioner's submission of the corrected information to the Reassignment Application received on November 2, 2018, as a continuation of processing the original Reassignment Application.  After all, Noridian acted on the single page of a Reassignment Application that Petitioner filed as a correction.

Relevant here, the effective date for Medicare billing privileges for physicians, non‑physician practitioners, and physician or non‑physician practitioner organizations is the "date of filing of a Medicare enrollment application that was subsequently approved by a Medicare contractor."  42 C.F.R. § 424.520(d)(1).  The "date of filing" is the date that the Medicare contractor "receives" a signed enrollment application.  73 Fed. Reg. 69,726, 69,769 (Nov. 19, 2008); Donald Dolce, M.D., DAB No. 2685 at 8 (2016).  CMS may permit a 30-day retroactive period of billing.  42 C.F.R. § 424.521(a)(1).

Because Noridian neither denied nor rejected the Reassignment Application received on November 2, 2018, and Petitioner timely submitted corrected information regarding her requested effective date and later submitted additional information requested from Noridian, I conclude that Noridian "subsequently approved" the Reassignment Application that had been originally received on November 2, 2018.2  Cf. Lindsay Zamis,

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M.D., DAB No. 2802 at 11 (2017) ("In other words, an application indeed need not be approvable as initially submitted, and the contractor may, as it did it here, permit more than one opportunity to provide missing information, but the application must ultimately be approvable and approved to form the basis of an effective date.").  Therefore, Petitioner's effective date of reassignment of Medicare benefits is November 2, 2018, with a retrospective effective date of October 3, 2018.3

V.  Conclusion

I modify the effective date for the reassignment of Petitioner's Medicare benefits to November 2, 2018, with a retrospective effective date of October 3, 2018.

• 1. Although unstated in the initial determination, I interpret the November 28, 2018 effective date as the beginning of the 30-day retrospective billing permitted under 42 C.F.R. § 424.521(a).  The actual effective date would have been December 28, 2018.
• 2. The DAB has limited Tri-Valley to its "unique factual circumstances and do[es] not read [it] to permit a . . .  supplier to dispute the merits of the contractor's handling of a prior reconsideration request from a denial of an enrollment application, administrative actions for which the Secretary has not provided appeal rights, in the context of an effective date review relating to a later approved application."  Karthik Ramaswamy, DAB No. 2563 at 9 (2014) aff'd sub nom. Ramaswamy v. Burwell, 83 F. Supp. 3d 846 (2015).  In Ramaswamy, the DAB found Tri-Valley "clearly distinguishable" because Ramaswamy involved a denial (i.e., an action authorized by both statute and regulation), but the CMS contractor in Tri-Valley "employed a mechanism [i.e., returning an application] not contemplated by the regulation which deprived the supplier of a regulatory review right."  Id. at 8 (emphasis omitted).  The DAB also declined to apply Tri-Valley in another case because "Petitioner's rejected application was incomplete in at least some of the respects stated by the contractor . . . and the contractor did give Petitioner an opportunity to submit the missing information, an opportunity Petitioner did not use."  Wishon Radiological Med. Grp., Inc., DAB No. 2941 at 8 (2019).  Again, in contrast to Tri-Valley, and the present case, the contractor disposed of the application by rejection, an action authorized by the regulation.
• 3. As indicated above, given the specific fact pattern in this case, I consider the November 2, 2018 Reassignment Application to have been processed to approval.  Specifically, I consider it important that Petitioner did not file a "second" application, but rather a correction to the original.  Petitioner also did this promptly.  In Tri-Valley, the CMS contractor returned the enrollment application on October 20, 2008, but it was not until "July 2009, Tri-Valley submitted an enrollment application that was approved."  Tri-Valley, DAB No. 2358 at 2.  As a result, the DAB "determined that it should look to the prior application and determine whether it could have been processed to approval had the contractor provided an opportunity to correct." Ramaswamy, DAB No. 2563 at 8.  Because the facts in the present case differ substantially from Tri-Valley, I only apply the principle from Tri-Valley that returning an enrollment application is not authorized by law or regulation.  I do not base my decision concerning the effective date on Tri-Valley.