Michelle Alexandre, DAB CR5422 (2019)

DECISION

I find that the Centers for Medicare & Medicaid Services (CMS) improperly revoked the Medicare enrollment of Petitioner, Michelle Alexandre, M.D. I premise my decision on the following:

• CMS purported to revoke Petitioner's enrollment pursuant to the provisions of 42 C.F.R. § 424.535(a)(8)(ii);
• In doing so, it incorrectly applied the criteria of a different section of the regulation, 42 C.F.R. § 424.535(a)(8)(i), to reach a conclusion that revocation of enrollment was justified;
• It failed to consider material facts appropriate and applicable to the criteria of 42 C.F.R. § 424.535(a)(8)(ii);
• For the aforesaid reasons, CMS's reconsidered determination sustaining the revocation was wrong as a matter of law;

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• My de novo review of the facts, applying the correct regulatory criteria, establishes that Petitioner did not engage in a "pattern or practice" of filing invalid claims that justifies revocation of her Medicare enrollment.

I. Background

CMS moved for summary judgment or, in the alternative, for a favorable decision based on the written record. With its motion CMS filed two exhibits that it identified as CMS Ex. 1-CMS Ex. 2.

Petitioner filed a brief opposing CMS's motion. She did not file any exhibits. However, her hearing request contains a statement by Petitioner that is testimonial in nature. CMS does not dispute the facts recited in that statement and, indeed, relies on them to support its motion.

I receive CMS Ex. 1-CMS Ex. 2 into evidence, and I accept Petitioner's hearing request as well. It is unnecessary that I decide whether the criteria for summary judgment are satisfied here because CMS offered no testimony to support its motion and, also, because CMS did not request to cross-examine Petitioner. I decide this case based on the written record.

II. Issue, Findings of Fact, and Conclusions of Law

A. Issue

The issue is whether CMS, in a reconsidered determination, improperly revoked Petitioner's Medicare enrollment.

B. Findings of Fact and Conclusions of Law

The facts of this case are undisputed. Petitioner is a physician practicing in Illinois. She has participated in Medicare for 19 years. The Illinois Department of Financial and Professional Regulation (IDFPR) suspended Petitioner's physician's license for a brief period in 2018 – from August 18 through September 6 of that year – due to an issue relating to Petitioner's income tax filing and unrelated to her practice of medicine. After September 6, 2018, IDFPR restored Petitioner's license.

Petitioner did not engage in the practice of medicine during the August 18-September 6 period. She hired another physician, Otto Garcia, M.D., to care for the patients served by her practice. These patients included Medicare beneficiaries. Her billing service submitted reimbursement claims for the services that Dr. Garcia provided to these beneficiaries. However, the reimbursement claims incorrectly listed Petitioner's Medicare billing number, and not Dr. Garcia's number, making it appear as if she, and

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not Dr. Garcia, provided the claimed services. The billing service filed a total of ten incorrect claims for services provided to nine Medicare beneficiaries between August 20 and September 5, 2018. CMS Ex. 1 at 10.

There is no evidence that Petitioner directed that these incorrect claims be filed. Petitioner asserts, without contradiction, that her billing service put the wrong identification number on the claims and that these claims embodied an isolated group of simple clerical errors and not a willful effort to provide false information to CMS. She asserts, also without contradiction, that Dr. Garcia actually provided the claimed services, and that the claims were valid in all respects except for the erroneous identification number. CMS Ex. 1 at 10.

CMS revoked Petitioner's Medicare enrollment and imposed a three-year bar against her re-enrolling in Medicare predicated on these ten erroneous claims.1 In its reconsidered determination, CMS concluded that these erroneous claims established that Petitioner had a "pattern or practice of submitting claims that fail to meet Medicare requirements," within the meaning of 42 C.F.R. § 424.535(a)(8)(ii).

CMS cited two reasons for finding that the claims at issue established a pattern or practice of improper claims. First, it relied on an interpretive statement at 73 Fed. Reg. 36,455 (June 27, 2008), to conclude that a pattern or practice of improper claims exists whenever a supplier files three or more such claims. CMS Ex. 1 at 4. Thus, it found that: "the 10 claims exceeds the three-claim threshold and therefore, establishes a pattern of an abuse of billing." Id. (emphasis supplied). As I shall discuss, the part of the Federal Register that CMS relied on to make its reconsidered determination addresses a subsection of the regulation – then codified as 42 C.F.R. § 424.535(a)(8) and now codified as 42 C.F.R. § 424.535(a)(8)(i) – that is materially different from 42 C.F.R. § 424.535(a)(8)(ii).

Second, CMS noted that 42 C.F.R. § 424.535(a)(8)(ii) sets forth factors that CMS considers, as appropriate or applicable to determine whether a supplier has engaged in a pattern or practice of improper billing. These factors include: (A) the percentage of submitted claims that were denied; (B) the reasons for the claims denials; (C) whether the provider or supplier has any history of final adverse actions and the nature of any such actions; (D) the length of time over which the pattern of improper claims has continued; (E) how long the provider or supplier has been enrolled in Medicare; and (F) any other information regarding the provider or supplier's specific circumstances that CMS deems relevant to its determination as to whether the provider or supplier has or has not engaged in a pattern or practice of improper billing. CMS Ex. 1 at 1‑2.

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However, although CMS cited all of these regulatory factors as a basis for the reconsidered determination, it actually only addressed one of these. CMS asserted that the fact that Petitioner's billing service submitted the erroneous claims over a period of about two weeks was a supporting basis for finding that Petitioner engaged in a pattern or practice of filing improper claims. CMS Ex. 1 at 4. There is nothing in the reconsidered determination that suggests that CMS considered the percentage of submitted claims that were denied, the reasons for the claims denials, whether Petitioner had a history of adverse actions involving Medicare, or the length of time during which Petitioner has been enrolled as a Medicare supplier. See id.

CMS rejected Petitioner's assertion that the claims should not be considered as establishing a pattern or practice of improper billing on the ground that Petitioner's billing service had made inadvertent errors. CMS stated that it was Petitioner's responsibility to assure that the claims were accurate and correct. Moreover, it stated "CMS's authority to revoke the Medicare billing privileges of a supplier for abuse of billing does not require a showing of intent or motive." CMS Ex. 1 at 4.

A fatal flaw in CMS's reconsidered determination is its reliance on the "three or more" improper claims guidance in the Federal Register. As I have explained, CMS gave that guidance as an interpretation of the predecessor version of 42 C.F.R. § 424.535(a)(8) (now codified as 42 C.F.R. § 424.535(a)(8)(i)) and not as an interpretation of 42 C.F.R. § 424.535(a)(8)(ii). CMS thus applied an interpretation of a different regulation to the facts of this case and relied on it to find a pattern or practice of improper claims under subsection (a)(8)(ii). That is wrong as a matter of law.

The original 42 C.F.R. § 424.535(a)(8), now codified as 42 C.F.R. § 424.535(a)(8)(i), states that CMS may revoke a provider or a supplier's Medicare enrollment where:

The provider or supplier submits a claim or claims for services that could not have been furnished to a specific individual on the dates of service.

The subsection lists three non-inclusive examples of such improper claims including situations where: (A) the beneficiary is deceased; (B) the directing physician or beneficiary is not in the state or country when services were furnished; and (C) where the equipment necessary for testing is not present where the testing is said to have occurred.

Subsection (a)(8)(ii), added to the regulation in 2014, addresses different facts. This subsection authorizes revocation of enrollment where a provider or supplier engages in a pattern or practice of submitting claims that fail to meet Medicare requirements. On its face, this regulation subsumes circumstances such as persistent claims for services that are not reimbursable, or persistent errors in claims filing. Thus, while subsection (a)(8)(i) applies to claims for services that could not have been provided, subsection (a)(8)(ii)

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addresses a pattern or practice of submitting claims that may include claims for otherwise valid services, but which contain information that is sufficiently erroneous or incorrect as to render them non-reimbursable.

Importantly, the two subsections utilize different criteria for finding grounds for revocation. Under subsection (a)(8)(i), the submission of even a single claim for, say, a beneficiary who was deceased as of the purported service date is, per se, grounds for revocation. Under that subsection a provider or supplier's intent or motivation for filing such a reimbursement claim or causing it to be filed, is irrelevant.

CMS softened the impact of this subsection slightly in issuing the guidance stated at 73 Fed. Reg. 36,455. There, in a bit of discretionary largesse, CMS cut some slack to providers or suppliers by saying that only one or two claims that met the (a)(8)(i) standard would not necessarily justify revocation. But, anything more than two of such claims would be sufficient to trigger revocation.

Nothing in the language of subsection (a)(8)(ii) suggests that such a strict standard applies in determining whether claims analyzed under that subsection comprise a pattern or practice of improper claims. CMS has offered no guidance suggesting that the "three or more" improper claims rule that it uses to interpret subsection (a)(8)(i) should apply equally to analyzing invalid claims pursuant to subsection (a)(8)(ii).

Indeed, the guidance that CMS issued for applying 42 C.F.R. § 424.535(a)(8)(ii) plainly distinguishes between the criteria for revoking participation under subsection (a)(8)(i) and those for revoking participation under subsection (a)(8)(ii). CMS stated that it "would not use . . . [the provisions of subsection (a)(8)(ii)] to revoke providers for isolated and sporadic claim denials or innocent billing errors." 79 Fed. Reg. 72,500, 72,513 (Dec. 5, 2014). It stressed that it would not revoke a supplier's participation pursuant to subsection (a)(8)(ii) absent "the most careful and thorough consideration of the relevant factors. These points cannot be stressed enough." Id. at 72,514 (emphasis supplied). CMS sharply drew a distinction between: "constant, repeated, and systemic claim denials as opposed to sporadic or occasional claim denials." Id.

CMS stated that "by the time CMS would revoke a provider or supplier under § 424.535(a)(8)(ii), the provider would have received information and education about the reasons for the claim denials on multiple occasions." Id. CMS observed that "[t]he provider's receipt of a substantial number of claim denials, in our view, furnishes adequate notice to the provider that corrective action is necessary." Id. at 72,519. There is no evidence that this notice system took place, nor likely could it have over such a short period of time and because Petitioner's license had been restored before the claims were even submitted, further supporting the conclusion that CMS erred in revoking pursuant to subsection (a)(8)(ii).

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In its reconsidered determination CMS erred in applying the (a)(8)(i) guidance and ignoring the (a)(8)(ii) guidance. That colored its entire evaluation of this case, because once CMS found Petitioner responsible for filing three or more erroneous claims, it assumed that Petitioner had engaged in a pattern or practice of filing such claims.

What CMS should have done was to examine the claims at issue without regard to the subsection (a)(8)(i) guidance but pursuant to the criteria set forth under (a)(8)(ii). As I have stated, CMS failed to pay more than lip service to those criteria. Its reconsidered determination thus fails, not only because it applied the wrong criteria, but also because it failed to apply the correct criteria.

CMS's failure to follow its own guidance in applying regulatory language to the facts of this case is sufficient grounds for me to rule that its revocation of Petitioner's Medicare enrollment is improper. However, a de novo application of the correct regulatory criteria to the facts of this case also establishes that the invalid claims that were filed on behalf of Petitioner comprised an isolated and sporadic instance of invalid claims and did not establish a pattern or practice of filing such claims.

First, the percentage of claims that CMS denied constitute only a tiny fraction of the claims that Petitioner has submitted over the 19 years that she has participated in Medicare. 42 C.F.R. § 424.535(a)(8)(ii)(A). Neither CMS nor Petitioner offered evidence of the total amount of claims that Petitioner caused to be submitted during this period but, plainly, the ten claims that are at issue here constitute a miniscule percentage of the total number of claims that Petitioner submitted or caused to be submitted.

Second, these claims were denied because of the erroneous identification of the supplier who provided the services. 42 C.F.R. § 424.535(a)(8)(ii)(B). The claims were otherwise valid in the sense that the items or services that were claimed were legitimate. There is no evidence that these claims were for services that were not reimbursable or were for services that had not been provided. In context, it is easy to see that these claims embodied simple billing errors.

Third, there is no evidence of record to show that Petitioner has a history of claims denials or other adverse actions. 42 C.F.R. § 424.535(a)(8)(ii)(C). In the absence of such evidence I must conclude that the claims at issue constitute a single instance of improper claims measured against an otherwise unblemished record.2

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Fourth, these claims cover a period of two weeks, a period when Petitioner was not actively involved in her practice. 42 C.F.R. § 424.535(a)(8)(ii)(D). In its reconsidered determination CMS concluded that the two-week period during which these claims were generated proves that Petitioner engaged in a pattern or practice of filing invalid claims. To the contrary, the brief duration of the period, coupled with the fact that Petitioner was not at the time that the services were provided actively involved in her practice, shows that the ten claims at issue were isolated and sporadic.

Fifth, Petitioner has been enrolled in Medicare for 19 years. Nothing in the record shows any problems in that relationship during this period. 42 C.F.R. § 424.535(a)(8)(ii)(E).

Sixth, there are no other facts of record that suggest that Petitioner engaged in a pattern or practice of filing invalid reimbursement claims. 42 C.F.R. § 424.535(a)(8)(ii)(F). There are, however, facts of record that point very strongly in favor of a different conclusion. Nothing refutes Petitioner's assertion that the invalid claims constituted mere billing errors created by someone inadvertently putting the wrong physician's identification on otherwise valid claims for items or services.

In sum, the evidence overwhelmingly supports a conclusion that the ten claims at issue were isolated and sporadic and did not constitute a pattern or practice of invalid claims filing by Petitioner.

CMS argues that it is under no obligation to prove that Petitioner intentionally filed or caused to be filed invalid claims. Louis J. Gaefke, D.P.M., DAB No. 2554 at 5 (2013). The Gaefke case involved the regulation which is now found at 42 C.F.R. § 424.535(a)(8)(i), rather than the provision CMS applied to Petitioner, 42 C.F.R. § 424.535(a)(8)(ii). Even if true, however, that does not mean that Petitioner's intent is irrelevant. The factors expressed at 42 C.F.R. § 424.535(a)(8)(ii)(A)-(F) are intended to distinguish the isolated and innocent filing of invalid claims from those filed repeatedly and/or filed with indifference to regulatory requirements. Here, what is clearly an innocent billing error committed at a time when Petitioner was not involved in her practice, does not justify concluding that Petitioner engaged in a pattern or practice of filing invalid claims.

• 1.A hearing officer, acting on CMS's behalf, issued the reconsidered determination. CMS Ex. 1.
• 2.In its brief, CMS contends that Petitioner's brief license suspension was an "adverse action" that justifies revocation of her Medicare participation. CMS Br. at 7. It is plain that this license suspension had nothing to do with either the quality of services that Petitioner supplies or with her integrity in submitting claims. The license suspension had to do with Petitioner’s tax obligation, a matter that Petitioner resolved within a matter of days. CMS did not identify the factor at 42 C.F.R. § 424.535(a)(8)(ii)(C) in its reconsidered determination as weighing in favor of revocation.