CV Operating Co., LLC d/b/a Blueridge Vista Health & Wellness, DAB CR5387 (2019)

DECISION

CV Operating Co., LLC d/b/a Blueridge Vista Health & Wellness (Petitioner) challenges the Centers for Medicare & Medicaid Services’ (CMS’s) reconsidered determination denying Petitioner’s request to assign an effective date of participation in the Medicare program earlier than March 30, 2017.  For the reasons discussed below, I conclude that CMS properly determined that the effective date of Petitioner’s Medicare participation is March 30, 2017.

I. Background and Procedural History

The Joint Commission is a national accrediting organization, approved by CMS to accredit prospective providers and recommend Medicare certification.  80 Fed. Reg. 9466 (February 23, 2015) (Final Notice of Continued Approval of the Joint Commission’s Psychiatric Hospital Accreditation Program, effective February 25, 2015 through February 25, 2019).  Petitioner, a psychiatric hospital located in Cincinnati, Ohio, filed an application to participate in Medicare as an inpatient psychiatric facility.  Petitioner’s Brief (P. Br.) at 3‑4.  Petitioner contracted with the Joint Commission to survey its facility for accreditation.  On November 14-16, 2016, the Joint Commission conducted an unannounced accreditation survey of Petitioner’s facility.  CMS Exhibit (Ex.) 1 at 1.  The Joint Commission report listed no condition-level deficiencies but found several

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standard-level deficiencies.  Id. at 7-8.  Petitioner submitted a plan of correction (also referred to as evidence of standards compliance) on November 30, 2016.  P. Ex. 1; see also P. Br. at 4.  Based on the plan of correction, the Joint Commission granted Petitioner accreditation and recommended to CMS that Petitioner be certified for Medicare participation effective November 30, 2016.  CMS Ex. 2.

By letter dated March 10, 2017, CMS notified Petitioner of CMS’s determination that Petitioner did not meet the requirements for participation in the Medicare program.  CMS Ex. 3.  CMS explained its conclusion that, based on the November 16, 2016 Joint Commission survey, Petitioner was out of compliance with two conditions of participation:  42 C.F.R. § 482.41 (Physical Environment) and 42 C.F.R. § 482.61 (Special Medical Record Requirements for Psychiatric Hospitals).  Id. 

On March 24, 2017, the Joint Commission completed a limited resurvey of Petitioner’s facility, finding standard-level noncompliance.  CMS Ex. 4.  On March 30, 2017, Petitioner submitted a plan of correction, which the Joint Commission found acceptable. The Joint Commission recommended to CMS that it grant participation in the Medicare program effective March 30, 2017.  Id.  CMS accepted the Joint Commission’s second recommendation and granted Petitioner’s request for Medicare participation effective March 30, 2017.  CMS Ex. 5.

By letter dated May 8, 2017, Petitioner requested reconsideration, asserting it was entitled to an effective date of participation of November 30, 2016, the date the Joint Commission had initially recommended, because it was in substantial compliance with Medicare requirements on that date.  CMS Ex. 6.  CMS issued a reconsidered determination, dated May 16, 2017, stating that it had reviewed the evidence submitted by Petitioner and was affirming its original decision that Petitioner’s effective date of Medicare participation was March 30, 2017.  CMS Ex. 7.

Petitioner timely requested a hearing before an administrative law judge and the case was assigned to me for a hearing and decision.  I issued an Acknowledgment and Pre-Hearing Order (Pre-Hearing Order) dated July 21, 2017.  Pursuant to the Pre-Hearing Order, CMS timely submitted a pre-hearing brief and motion for summary judgment (CMS Br.), accompanied by 13 proposed exhibits (CMS Exs. 1-13).  Petitioner timely submitted a pre-hearing brief and response in opposition of CMS’s motion for summary judgment (P. Br.), along with 7 proposed exhibits (P. Exs. 1-7).  Neither party objected to the exhibits offered by the opposing party.  In the absence of objection, I admit into evidence CMS Exs. 1-13 and P. Exs. 1-7. 

Neither party listed any proposed witnesses; nor did either party offer the written direct testimony of any witness.  See Pre-Hearing Order ¶ 8.  As I informed the parties in my Pre‑Hearing Order, a hearing is only necessary if a party offers the written direct testimony of a witness and the opposing party requests to cross-examine the witness. 

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Pre-Hearing Order ¶ 9, 10.  Although CMS moved for summary judgment, because an in‑person hearing to cross-examine witnesses is not necessary, I decide this case based on the written record, without considering whether the standards for summary judgment are satisfied.

II. Issues

The sole issue in this case is whether CMS properly determined March 30, 2017 to be the effective date of Petitioner’s participation in the Medicare program.

III. Jurisdiction

I have jurisdiction to hear and decide this case.  Social Security Act (Act) §§ 1865(c), 1866(j)(8) (codified at 42 U.S.C. §§ 1395bb(c), 1395cc(j)(8)); 42 C.F.R. §§ 489.13, 498.5(a)(2).

IV. Discussion

A. Statutory and Regulatory Background

The Social Security Act (Act) defines “psychiatric hospital” as an institution that is “primarily engaged in providing, by or under the supervision of a physician, psychiatric services for the diagnosis and treatment of mentally ill persons.”  Act § 1861(f)(1) (42 U.S.C. § 1395x(f)(1)).  In order to participate as a provider in Medicare, a psychiatric hospital must meet the conditions and requirements specified in the Act and regulations and enter into a provider agreement with CMS.  Act §§ 1861(e)(3)-(9), (f), 1866 (42 U.S.C. §§ 1985x(e)(3)-(9), (f), 1395bb); 42 C.F.R. § 489.10.  

The “conditions of participation” that a psychiatric hospital must meet in order to begin and continue to participate in Medicare are set forth in 42 C.F.R. Part 482.  Each condition of participation represents a general health or safety requirement codified in a single regulation, which is composed of subparts called “standards.”  A provider is not in compliance with a condition of participation “where the deficiencies are of such character as to substantially limit the provider’s . . . capacity to furnish adequate care or which adversely affect the health and safety of patients.”  42 C.F.R. § 488.24(b).  Whether an entity is in compliance with a particular condition of participation “depends upon the manner and degree to which the provider . . . satisfies the various standards within each condition.”  42 C.F.R. § 488.26(b).  The Secretary may “refuse to enter into an agreement” with a provider that “fails to comply substantially” with the provisions of the provider agreement, the Act, or applicable regulations.  Act § 1866(b)(2)(A) (42 U.S.C. § 1395cc(b)(2)(A)).

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A psychiatric hospital seeking to participate in Medicare may choose to show its compliance with the health and safety requirements in one of two ways.  First, it may undergo a survey by a state survey agency to ascertain whether it complies with the conditions of participation and other statutory and regulatory requirements.  Act § 1864 (42 U.S.C. § 1395aa); 42 C.F.R. Part 488.  A “certification” is a recommendation by the state survey agency on the compliance of a provider with the conditions of participation.  42 C.F.R. § 488.1.  Based on a state survey agency’s findings and recommendations, CMS determines whether the provider qualifies to participate in Medicare and to enter into a provider agreement. 42 C.F.R. §§ 488.12, 488.330, 489.11-.12.

Alternatively, the hospital may apply for accreditation by a national accreditation organization under a CMS-approved accreditation organization program.  Act § 1865(a) (42 U.S.C. § 1395bb(a)); 42 C.F.R. §§ 488.4‑488.9, 488.12.  The Joint Commission is such an approved accreditation organization.  CMS may “deem” a prospective provider to have met the requirements for Medicare participation if the provider demonstrates through accreditation that all applicable Medicare conditions are met or exceeded.  Act § 1865(a) (42 U.S.C. § 1395bb(a)); 42 C.F.R. §§ 488.5, 488.12; 80 Fed. Reg. 9466. 

B. Findings of Fact, Conclusions of Law, and Analysis

1. No statutory provision or regulation authorizes me to review CMS’s refusal to accept the Joint Commission’s recommendation that Petitioner be certified effective November 30, 2016.

Petitioner argues that it is entitled to an effective date of November 30, 2016 because that is the date the Joint Commission received an acceptable plan of correction for standard-level deficiencies, issued a positive accreditation decision, and recommended to CMS that Petitioner was eligible to become a Medicare participant.  P. Br. at 10-11; see also 42 C.F.R. § 489.13(c)(2)(ii)(A).  Despite the Joint Commission’s recommendation, CMS denied Petitioner’s request for Medicare participation, based on its findings that the Joint Commission survey revealed condition‑level noncompliance with 42 C.F.R. §§ 484.41 and 482.61 at Petitioner’s facility.  CMS Ex. 3; CMS Ex. 7.  Although Petitioner acknowledges that CMS has discretion to disregard the accreditation organization’s recommendation, Petitioner argues that it was error for CMS to disregard the recommendation in this case because Petitioner was in substantial compliance with the conditions of participation when it submitted its plan of correction on November 30, 2016.  P. Br. at 13.

A prospective provider’s hearing rights are established by federal regulations, which establish the scope of, and procedures for, appeals of CMS determinations involving provider participation in Medicare.  42 C.F.R. Part 498.  A provider dissatisfied with an initial determination by CMS is entitled to further review, but administrative actions that

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are not initial determinations are not subject to appeal.  42 C.F.R. § 498.3(a); Fla. Health Scis. Ctr., Inc., DAB No. 2263 at 4-5 (2009).  Section 498.3 includes a list of administrative actions that are appealable “initial determinations by CMS,” as well as a list of some of the “[a]dministrative actions that are not initial determinations (and therefore not subject to appeal under [Part 498]).”  42 C.F.R. § 498.3(b), (d).  Relevant here, the regulations provide that “[t]he finding that a hospital accredited by the Joint Commission . . . is not in compliance with a condition of participation, and a finding that that hospital is no longer deemed to meet the conditions of participation” are administrative actions that are not initial determinations.  42 C.F.R. § 498.3(d)(9).

In the present case, CMS declined to enter into a Medicare provider agreement with Petitioner following the Joint Commission’s November 2016 survey because CMS rejected the Joint Commission’s conclusion that Petitioner had only standard-level deficiencies.  Upon its own review of the survey findings, CMS determined that Petitioner was out of compliance with two conditions of participation.  CMS Ex. 3; see also 42 C.F.R. § 488.7(a).  CMS’s action was consistent with the authority delegated to it under the regulations to refuse to enter into a Medicare provider agreement if the prospective provider is “unable to give satisfactory assurance of compliance” with the requirements of the Medicare statute.  42 C.F.R. § 489.12(a)(4).  CMS’s determination that Petitioner was not in compliance with the conditions of participation, despite Petitioner’s accreditation by the Joint Commission, is not an initial determination and is therefore not subject to appeal.1  42 C.F.R. § 498.3(d)(9).  Accordingly, I have no authority to review CMS’s findings that Petitioner was noncompliant with the conditions of participation following the November 2016 survey by the Joint Commission.  42 C.F.R. §§ 498.3(d)(9), 498.5(a); see also Apollo Behavioral Health Hosp., L.L.C., DAB CR2908 at 4‑5 (2013), aff’d, DAB No. 2561 at 5‑6 (2014).

Petitioner argues that CMS does not have unfettered discretion to disregard the Joint Commission’s recommendation for approval.  P. Br. at 11 (citing CSM Home Health Services, Inc., DAB No. 1622 (1997)).  The cited case does not compel a different conclusion.  Significantly, CSM Home Health considered the authority of CMS’s predecessor to terminate a home health agency’s participation in Medicare following a

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survey by a state survey agency that resulted in findings of condition-level noncompliance.  Section 498.3(b)(8) specifically provides that termination of a provider agreement is an initial determination giving rise to appeal rights.  For this reason, the reasoning of CSM Home Health is inapplicable to the present case, which does not involve a reviewable initial determination.

That CMS’s determination whether to accept an accrediting organization’s recommendation for Medicare certification is treated differently than its determination to terminate the agreement of a Medicare-participating provider is consistent with the preamble to the regulations, which explains:

Neither approval of an AO’s [accrediting organization’s] accreditation program nor a section 1864 agreement with an SA [state agency] are delegations of authority to either AOs or SAs to make Medicare participation determinations.

80 Fed. Reg. 29,796, 29,820 (May 22, 2015) (Final Rule, Medicare and Medicaid Programs Revisions to Deeming Authority Survey, Certification, and Enforcement Procedures).  The preamble further describes CMS’s authority to find condition-level noncompliance based on an accrediting organization’s survey results, even when the accrediting organization has accredited the provider:

We have also had instances where an AO’s survey report for a prospective provider or supplier indicated that deficiencies were identified that the AO did not find rose to substantial noncompliance with a Medicare condition. In these cases, the AO recommended deemed status after the facility agreed to an acceptable plan of correction.  However, our review of the AO’s survey report concluded that the AO’s own description of one or more of the identified deficiencies clearly indicated substantial noncompliance, and that the AO should have advised us of this rather than awarding accreditation.  In such circumstances, we would have denied the certification.

Id.  The scenario described in the preamble is precisely what occurred in the present case.

In summary, based on facts revealed during the Joint Commission’s November 2016 survey, CMS determined that Petitioner failed to comply with Medicare conditions of participation, a determination I may not review.  Based on that determination, CMS declined to accept the Joint Commission’s November 2016 recommendation and enter into a Medicare participation agreement with Petitioner.  On these facts, there is no basis to accept November 30, 2016, as the effective date of Petitioner’s Medicare participation.  Rather, as I explain in the following section of this decision, CMS properly set March 30, 2017, as the effective date for Petitioner’s approval to participate in Medicare.

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2. CMS properly established March 30, 2017, as the effective date for Petitioner’s Medicare participation because the record establishes that Petitioner met all program requirements on that date.

Under the regulations, the effective date of a provider’s participation in the Medicare program is the date of the accreditation decision “if on that date the provider meets all applicable Federal requirements”.  42 C.F.R. § 489.13(b) (emphasis added).  If, on the date a survey is completed, the prospective provider meets all applicable conditions of participation but has failed to meet any one of the applicable health and safety standards, the effective date for participation is the date an accreditation organization program issues a positive accreditation decision after it receives an acceptable plan of correction for the lower-level deficiencies.  42 C.F.R. § 489.13(c)(2)(ii)(A).

Petitioner asserts that following the November 16, 2016 survey completed by the Joint Commission, it had only standard, or lower-level noncompliance, for which it submitted an acceptable plan of correction.2  P. Br. at 10-12.  This is the main thrust of Petitioner’s arguments before me.  However, for the reasons explained in the previous section of this decision, I may not second-guess CMS’s determination that the November 2016 survey revealed condition-level deficiencies at Petitioner’s facility.  Certainly, a prospective provider, such as Petitioner, cannot be certified for Medicare participation if it has condition-level deficiencies.  42 C.F.R. § 488.3.

The Joint Commission again surveyed Petitioner on March 24, 2017, and again found standard-level deficiencies.  CMS Ex. 4.  On March 30, 2017, Petitioner submitted a plan of correction, which the Joint Commission found acceptable.  Id.  Pursuant to 42 C.F.R. § 489.13(c)(2)(ii)(A), the effective date of participation for a prospective provider with

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standard-level deficiencies is the date the accreditation organization receives an acceptable plan of correction.  The Joint Commission recommended Petitioner be certified for Medicare participation effective March 30, 2017, and CMS concurred.  CMS Ex. 5.  Because March 30, 2017, is the date the Joint Commission received Petitioner’s acceptable plan of correction, CMS properly determined the effective date of Petitioner’s participation in the Medicare program to be March 30, 2017.  42 C.F.R. § 489.13(c)(2)(i)(A).

V. Conclusion

For the reasons explained above, CMS properly determined the March 30, 2017 effective date for Petitioner’s enrollment in the Medicare Program.

• 1. If the question of whether Petitioner failed to comply with any condition of participation were before me, I would conclude that CMS did not err in finding that Petitioner’s noncompliance rose to condition level.  For example, the Joint Commission survey found that Petitioner’s basement storage rooms had numerous openings that were not equipped with self-closing or automatic closing devices that would resist the passage of smoke in the event of fire, thus failing to comply with 42 C.F.R. § 482.41(b)(1).  CMS Ex. 1 at 19.  The absence of smoke barriers is a deficiency serious enough to “adversely affect the health and safety of patients” (42 C.F.R. § 488.24(b)) and, thus, constitutes condition-level noncompliance.  See CMS Br. at 16 (citing Woodland Village Nursing Ctr., DAB No. 2172 at 7 (2008)).
• 2. Petitioner’s acknowledgment that it had standard-level deficiencies in November 2016, is an admission that it did not meet all applicable federal requirements at that time.  Under the regulations, standard-level deficiencies may be a basis to deny Medicare participation if a prospective provider does not submit an acceptable plan of correction.  Although the Joint Commission found Petitioner’s plan of correction for the standard-level deficiencies to be acceptable, it is apparent that CMS did not agree that Petitioner’s plan of correction adequately addressed Petitioner’s noncompliance.  Thus, one could infer that, by refusing to accept the Joint Commission’s recommendation that Petitioner be certified, CMS was rejecting Petitioner’s plan of correction.  To the extent CMS rejected Petitioner’s plan of correction, that action is not an initial determination subject to appeal.  Apollo Behavioral Health, DAB No. 2561at 10.  This alternative interpretation would also support my conclusion that there is no basis to accept November 30, 2016 as the effective date of Petitioner’s Medicare participation.