Rural Metro Corporation of Florida, Inc., DAB CR5508 (2020)

DECISION

I reverse the Centers for Medicare & Medicaid Services' (CMS) determination to place Petitioner on its preclusion list.

I. Background and Procedural History

Petitioner participated in the Medicare program as an ambulance transport supplier until CMS revoked its enrollment in 2016. Rural Metro Corp. of Fla., Inc., DAB No. 2977 at 3 (2019). In an August 1, 2018 initial determination, CMS informed Petitioner that:

You are being added to the CMS preclusion list effective January 1, 2019, because your Medicare billing privileges have previously been revoked and you are currently under a reenrollment bar. CMS has determined that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program. This action is taken pursuant to 42 C.F.R. §§ 422.2, 422.222, 423.100, and 423.120(c)(6).

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CMS Ex. 4 at 1 (emphasis in original). CMS described the effect of being on the preclusion list as follows:

[A]ny claims you submit for health care items or services furnished under a Medicare Advantage (MA) benefit may be denied. Additionally, any pharmacy claims submitted for Medicare Part D drugs that you prescribe may be rejected or denied. This means that your patients may not be able to receive coverage of their prescriptions using their Part D benefit at the pharmacy.

CMS Ex. 4 at 1.

In an October 1, 2018 request for reconsideration, Petitioner asserted that its revocation was still being appealed and that it was premature to add Petitioner to the preclusion list. CMS Ex. 5 at 1-2.

On January 4, 2019, a CMS hearing officer issued a reconsidered determination in which it upheld Petitioner's placement on the preclusion list, explaining:

Rural-Metro Corporation of Florida was properly included on CMS's preclusion list, as it is currently revoked pursuant to § 424.535(a)(8)(i), its enrollment is currently under a re-enrollment bar pursuant to § 424.535(c), and CMS has determined that the underlying conduct that led to the revocation of Rural-Metro Corporation of Florida's Medicare billing privileges is detrimental to the best interest of the Medicare program. Therefore, Rural-Metro Corporation of Florida will remain on the CMS preclusion list.

CMS Ex. 6 at 3-4.

Petitioner requested a hearing to further dispute placement on CMS's preclusion list. On March 14, 2019, I issued an Acknowledgment and Prehearing Order (Prehearing Order). In response, CMS filed a brief/motion for summary judgment and six proposed exhibits (CMS Exs. 1-6). On May 28, 2019, I issued an Order to Show Cause because Petitioner did not file a prehearing exchange. Petitioner then filed a response to the Order to Show Cause, a brief/response to CMS's summary judgment motion, and a motion to stay this proceeding pending the outcome of the appeal process involving Petitioner's revocation. Although CMS did not concede Petitioner had good cause to file its exchange late, CMS did not object to the stay in the proceeding. Because I do not conclude that Petitioner abandoned its hearing request, I decline to dismiss the hearing request.

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On November 25, 2019, the Departmental Appeals Board (DAB) issued a decision overturning the revocation of Petitioner's Medicare billing privileges. Rural Metro Corp., DAB No. 2977 at 9.

II. Decision on the Record

I deny CMS's summary judgment motion because, for the reasons stated below, CMS does not have a legitimate basis to add Petitioner to the preclusion list.

Petitioner did not object to any of CMS's proposed exhibits; therefore, I admit CMS Exs. 1-6 into the record.

The Prehearing Order informed the parties that they must submit written direct testimony for all proposed witnesses and that I would only hold an in-person hearing if the opposing party requested to cross-examine one or more of those witnesses. Prehearing Order ¶¶ 7-9; Civil Remedies Division Procedures (CRDP) §§ 16(b), 19(b). Neither party submitted written direct testimony. Therefore, I issue this decision based on the written record.

III. Issue

Whether CMS has a legitimate basis to place Petitioner on the preclusion list. 42 C.F.R. §§ 422.2 and 423.100.

IV. Jurisdiction

I have jurisdiction to decide this case. 42 C.F.R. §§ 498.3(b)(20), 498.5(n)(2).

V. Findings of Fact and Conclusions of Law

1. Petitioner was enrolled as a supplier in the Medicare program providing ambulance services to Medicare beneficiaries. Rural Metro Corp., DAB No. 2977 at 3.
2. In an August 26, 2016 initial determination, CMS revoked Petitioner's Medicare billing privileges based on 42 C.F.R. § 424.535(a)(8)(i). CMS Ex. 1.
3. Petitioner requested reconsideration and, in a November 17, 2016 reconsidered determination, a CMS hearing officer upheld the revocation. CMS Ex. 2.
4. Petitioner requested a hearing, but a March 29, 2019 decision affirmed the revocation. CMS Ex. 3.

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5. Petitioner requested review by the Departmental Appeals Board (DAB) and, in a November 25, 2019 decision, the revocation was overturned. Rural Metro Corp., DAB No. 2977.
6. Because CMS's revocation of Petitioner's Medicare billing privileges was overturned on appeal, CMS did not have a legitimate basis to add Petitioner to the preclusion list under 42 C.F.R. §§ 422.2 and 423.100.

VI. Analysis

Petitioner is a "supplier" for purposes of the Medicare program. See 42 U.S.C. § 1395x(d); 42 C.F.R. § 400.202 (definition of supplier). In order to participate in the Medicare program, a supplier must meet certain criteria to enroll and receive billing privileges. 42 C.F.R. §§ 424.505, 424.510. CMS may revoke a supplier's enrollment and billing privileges for any reason stated in 42 C.F.R. § 424.535(a). After a supplier's Medicare enrollment and billing privileges are revoked, the supplier is barred from reenrolling in the Medicare program for one to three years. 42 C.F.R. § 424.535(c).

On July 22, 2016, the Comprehensive Addiction and Recovery Act of 2016 (CARA) was enacted, and its stated purpose was to "authorize the Attorney General and Secretary of Health and Human Services to award grants to address the prescription opioid abuse and heroin use crisis, and for other purposes." Pub. L. No. 114-198, 130 Stat. 695 (2016). Section 704 of the CARA called on the Secretary of the Department of Health and Human Services (Secretary) to establish a program to prevent prescription drug abuse under Medicare Parts C and D. 130 Stat. at 742-52. Among other things, Section 704 amended the Social Security Act (42 U.S.C. § 1395w-10(c)) to require the Secretary to implement a drug management program to limit access to controlled substances for at-risk Medicare beneficiaries. Id. at 742-48. Section 704(g) of the CARA directed the Secretary to promulgate regulations implementing the provisions of that section of the act. Id. at 751-52. Section 704(g)(1) directed that "amendments made by this section shall apply to prescription drug plans . . . for plan years beginning on or after July 1, 2019." Id. at 751. Additionally, Section 704(b)(2) of the CARA specifically amended the Social Security Act, at 42 U.S.C. § 1395w-104(c), to add a provision for a "utilization management tool to prevent drug abuse," and required that the Secretary conduct a "[r]etrospective utilization review to identify . . . providers of services or suppliers that may facilitate the abuse or diversion of frequently abused drugs by beneficiaries." Id. at 748.

The Secretary issued a notice of proposed rulemaking to implement the CARA on November 28, 2017. 82 Fed. Reg. 56,336. As relevant here, the Secretary proposed that an MA organization may not make payment for an item or service that is furnished by an individual or entity on a newly established preclusion list, and likewise, that a Part D plan sponsor must reject pharmacy claims for Part D drugs if the prescriber is on the same

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preclusion list. Id. at 56,340. The Secretary explained that individuals, entities, and prescribers would be placed on the preclusion list if certain requirements were all met, to include having engaged in conduct that is detrimental to the best interests of the Medicare program and its beneficiaries. Id. The Secretary "note[d] also that [his] proposal is of particular importance when considering the current nationwide opioid crisis" and that "the inclusion of problematic prescribers on the preclusion list could reduce the amount of opioids that are improperly or unnecessarily prescribed by persons who pose a heightened risk to the Part D program and Medicare beneficiaries." Id. at 56,444. With respect to the Part C program, the Secretary remarked that "we believe that an appropriate balance can be achieved between this program integrity objective and the desire to reduce the burden on the provider and supplier communities" and "propose[d] to utilize the same 'preclusion list' concept in MA that we are proposing for Part D." Id. at 56,448. The Secretary further remarked that "[w]e believe this approach would allow us to concentrate our efforts on preventing MA payment for items and services furnished by providers and suppliers that could pose an elevated risk to Medicare beneficiaries and the Trust Funds, an approach, as previously mentioned, similar to the risk-based process in § 424.518." Id. In his final rule, the Secretary established a January 1, 2019 effective date for the preclusion list, which is consistent with the CARA's mandate. 83 Fed. Reg. 16,440 (Apr. 16, 2018).

The regulation established a single list of individuals and entities for whom MA plans cannot provide reimbursement for items and services they provide, and for prescribers to whom Medicare Part D plans cannot provide reimbursement for any prescriptions the individuals write. 42 C.F.R. §§ 422.222 and 423.120(c)(6). As applicable to this case, in order for CMS to include an individual, entity, or prescriber on its preclusion list, all of the following three requirements must be met:

(i) The [individual, entity, or prescriber] is currently revoked from Medicare under [42 C.F.R.] § 424.535.
(ii) The [individual, entity, or prescriber] is currently under a reenrollment bar under [42 C.F.R] § 424.535(c).
(iii) CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program. In making this determination under this paragraph . . . , CMS considers the following factors:

(A) The seriousness of the conduct underlying the . . . revocation.
(B)The degree to which the . . . conduct could affect the integrity of the [Medicare/Part D] program.
(C)Any other evidence that CMS deems relevant to its determination . . . .

42 C.F.R. §§ 422.2 and 423.100.

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CMS added Petitioner to its preclusion list because CMS revoked Petitioner's Medicare billing privileges. However, the DAB subsequently overturned the revocation. The DAB's decision is the final administrative appeal for a revocation and is binding. 42 C.F.R. § 498.90. Because CMS incorrectly revoked Petitioner's Medicare billing privileges, CMS did not have a legitimate basis to include Petitioner on the preclusion list.

VII. Conclusion

For the reasons explained above, I reverse CMS's determination to place Petitioner on the preclusion list.