Kasra Morshedizadeh, MD, DAB CR5934 (2021)

DECISION

 Petitioner, Kasra Morshedizadeh, M.D., appeals the effective date of the determination reassigning his Medicare benefits to Housecall Doctors Medical Group, Inc. (Housecall Doctors).  Noridian Healthcare Solutions (Noridian), an administrative contractor for the Centers for Medicare & Medicaid Services (CMS), determined that the effective date of Petitioner’s reassignment was December 28, 2018, with a retrospective billing date of November 28, 2018.  For the reasons discussed below, I modify the effective date for the reassignment of Petitioner’s Medicare benefits to November 2, 2018, with a retrospective billing date of October 3, 2018. 

I.              Background and Procedural History

Petitioner is enrolled in the Medicare program as a supplier of physician services.  CMS Exhibit (Ex.) 10 at 2.  On November 2, 2018, Noridian received a CMS 855R application, in which Petitioner sought to reassign his Medicare benefits to Housecall Doctors.  CMS Ex. 1.  In that application, Petitioner requested an effective date of July 1, 2019.  CMS Ex. 1 at 1.  In a letter dated December 18, 2018, Noridian informed Petitioner that it was “closing” the application received on November 2, 2018 because the receipt date was more than 60 days prior to the requested effective date.  CMS Ex. 2. 

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Petitioner sent a fax to Noridian on December 28, 2018, with a fax coversheet stating that “[t]he correction is in the effective date of 7-1-2018, the pervious [sic] application incorrectly stated the effective date as of 7-1-2019.”  CMS Ex. 3 at 1 (emphasis in original).  Petitioner also faxed at that time Section 1 of a Reassignment Application, indicating an effective date for reassignment of July 1, 2018.  CMS Ex. 3 at 2.  In a letter from Noridian dated January 31, 2019, Petitioner was asked to provide specified additional information by February 28, 2019.  CMS Ex. 5.  Highlighted in red was the statement that the “ORIGINAL APPLICATION WAS RETURNED.”  CMS Ex. 5 at 1.  On April 25, 2019, Noridian notified Petitioner that the reassignment of benefits had been approved with an effective date of November 28, 2018.  CMS Ex. 7.

Petitioner filed a request for reconsideration dated June 11, 2019, asserting that there had been a Medicare enrollment application filed on July 1, 2018 but he was later informed that this had never been received by Medicare.  CMS Ex. 8 at 8.  Petitioner alleged that he then submitted a second application on November 2, 2018, which was subsequently corrected on December 28, 2018, and he was requesting an earlier effective date of either July 1, 2018 or October 2, 2018.  Id.  However, in a reconsideration determination dated September 23, 2019, Noridian concluded that the effective date was December 28, 2018, with a retrospective billing date of November 28, 2018.  CMS Ex. 9.

Petitioner filed a timely request for hearing before an Administrative Law Judge (ALJ).  On November 26, 2019, Judge Weyn issued a Prehearing Order (Order).1   CMS filed a motion for summary judgment with a brief in support of the motion (CMS Br.), accompanied by 11 proposed exhibits (CMS Exs. 1-11).  Petitioner filed a response to the prehearing exchange, which included written argument.  In the absence of any objection from Petitioner, CMS Exs. 1-11 are admitted into the record.  The Order advised the parties to submit written direct testimony for each witness and that an in-person hearing would be held only if a party requested to cross-examine a witness.  Order ¶ 10.  CMS submitted written direct testimony from a single witness.  CMS Ex. 11.  Petitioner did not offer any written direct testimony and did not request to cross-examine CMS’s witness.  As a result, an in-person hearing is not necessary and I issue this decision based on the written record.2  

II.            Issue 

The issue in this case is whether Noridian, acting on behalf of CMS, properly established December 28, 2018 as the effective date for the reassignment of Petitioner’s Medicare benefits to Housecall Doctors, with a retrospective reassignment period beginning on November 28, 2018. 

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III.          Discussion 

1.    Applicable Authority

The Social Security Act (Act) authorizes the Secretary of Health and Human Services 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 term “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 (emphasis in original).  A supplier seeking billing privileges under the Medicare program must “submit enrollment information on the applicable enrollment application.”  42 C.F.R. § 424.510(a).  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).

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. 530.  When CMS or a CMS contractor denies an enrollment application, the supplier has the right to appeal that determination.  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.  This is authorized when 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.  Enrollment applications that are rejected are not afforded appeal rights.  42 C.F.R. § 424.525(d).

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 reassignment of Medicare benefits.  See Gaurav Lakhanpal, M.D., DAB No. 2951 at 6-7 (2019). 

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2.    Findings of Fact and Conclusions of Law3

1. The effective date of Petitioner’s Medicare billing privileges is November 2, 2018, the date Noridian received the reassignment enrollment application it subsequently processed to approval. 

Petitioner initially asserted that he was entitled to a July 1, 2018 effective date, based on a Medicare reassignment application submitted on that date.  CMS Ex. 8 at 8-9.  However, there is no record of an application submitted in July 2018 in the Noridian file system.  CMS Ex. 11 at 3-4.  Moreover, Petitioner has not provided any objective evidence of any such filing in July 2018.  Given this, I have considered only Petitioner’s second argument, in which he seeks an effective date of November 2, 2018, with a retrospective reassignment date of October 3, 2018.  He argues that he submitted a second reassignment application on November 2, 2018 and subsequently checked its status in late December 2018.  Petitioner asserts that he then discovered the typo in the listed effective date of July 1, 2019, rather than July 1, 2018.  CMS Ex. 8 at 8.  Petitioner alleges that he then called Noridian on December 28, 2018 and was told to fax in a correction along with a corrected Section 1 in order to modify the application to the correct year, which he stated he did immediately. 

In its brief opposing an earlier effective date, CMS initially states that that the reassignment application dated November 2, 2018 was “rejected” but later concedes that “although Noridian used the word ‘return’ in its December 18, 2018 letter rejecting Petitioner’s November 2, 2018 application, Petitioner’s application was essentially rejected in that Noridian informed him that the application was not approved, and Petitioner has no right to appeal a rejection.”4   CMS Br. at 2 and 7 (emphasis added).  CMS then asserts that the submission of a new reassignment of benefits application on December 28, 2018 constituted the basis for the correct effective date, citing CMS Ex. 3. CMS Br. at 8-9.

CMS is correct, of course, that I have no authority to review a rejected application.  42 C.F.R. § 424.525(d) explicitly states that enrollment applications that are rejected are not afforded appeal rights.  But, in this case, Noridian did not reject Petitioner’s

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November 2, 2018 application.  According to the governing regulation, CMS may reject an application if the prospective supplier fails to furnish complete information “within 30 calendar days from the date of the contractor request for the missing information” or, if the prospective supplier fails to submit required supporting documentation “within 30 calendar days of submitting the enrollment application.”  42 C.F.R. § 424.525(a)(1)-(2).  Here, the contractor offered Petitioner no such opportunity to complete his application.  As a result, CMS’s argument that returning an application is “essentially” the same as rejecting it is without merit since Noridian’s actions in the December 18, 2018 letter did not comport with the regulatory requirements for rejecting an application, as set forth above. 

Rather than specifically rejecting Petitioner’s application, Noridian initially notified him that it was “closing” the application received on November 2, 2018 and later informed him the application was “RETURNED.”  CMS Exs. 2 at 1 and 5 at 1.  However, “closing” an application is an action that is not authorized by statute or regulation or even the Manual provisions discussed below. 

There is similarly no reference in the statute or regulations to CMS being authorized to “return” an application.  Noridian does not identify the specific provisions it relied on in returning the application, stating instead that the application “was correctly returned per CMS guidelines”.  CMS Ex. 9 at 4.  It is presumed that this refers to Medicare Program Integrity Manual (MPIM), Ch. 15, § 15.8.1 (now § 10.4(H)1(a)).  That section provides for the return of an enrollment application when there is a requested effective date that is more than 60 days in the future.  Thus, returning an enrollment application is a separate and distinct action from being “essentially rejected.”  

Since returning an application is an action authorized only by a manual, it has not been subject to the public notice and comment process.  The Departmental Appeals Board (DAB) has decided that returning an enrollment application is not a legally authorized method of disposing of an enrollment application.  In Tri-Valley Family Medicine, Inc., DAB No. 2358 (2010), the Board held that

[i]n Section 1866(j) of the 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.’  

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Tri-Valley, DAB No. 2358 at 9. 

In a recent case from the Civil Remedies Division, Judge Anderson noted, in a case with facts nearly identical to those in the instant case, that

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 statue 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. 

Martina Sheftic, M.D., DAB CR5563 at 6 (2020).

Given that the application received on November 2, 2018 was neither rejected nor denied, I cannot conclude that Noridian’s action in closing or returning Petitioner’s Reassignment application precludes finding the receipt date of that application to be the effective date of the reassignment.  As the Board noted in Karthik Ramaswamy, M.D., DAB No. 2563 (2014) (en banc), aff’d, Ramaswamy v. Burwell, 83 F. Supp. 3d 846 (E.D. Mo. 2015),

[t]he regulations provide that the effective date of enrollment is the date on which a contractor received an application which it was subsequently able to process to approval. Thus, while the contractor may require and request additional information to complete the application, the effective date will relate back to the date of filing so long as that application continues to be processed to a decision on whether to approve it.  The process ends, however, once the application is rejected or denied.  71 Fed. Reg. at 20,759 (enrollment process culminates in “the granting of billing privileges or denial or rejection of the application”). 

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Ramaswamy, DAB No. 2563 at 4 (emphasis in original).

Since the reassignment application received on November 2, 2018 was not rejected or denied, the enrollment process did not end with the closing or return letter.  The Board in Ramaswamy, citing Tri-Valley, noted that “[h]aving found that the contractor employed a mechanism not contemplated by the regulation which deprived the supplier of a regulatory review right, the Board 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.”  Id. at 8.5   The question here then becomes whether the reassignment application received on November 2, 2108 “could have been processed to approval”. 

The facts of this case demonstrate that the reassignment application received on November 2, 2018 was processed to approval.  In fact, on December 28, 2018, within 10 days of Noridian’s “closing” letter, Petitioner submitted a one page correction of Section 1 of the November 2, 2018 reassignment application.  CMS Ex. 3 at 2.  Petitioner clearly indicated that this was a “correction” of the effective date from July 1, 2019 to July 1, 2018.  CMS Ex. 3 at 1.  Submitting “corrected information” is part of the process before a rejection, pursuant to the provisions of 42 C.F.R. § 424.502,6  and Petitioner’s corrected information would have been timely had Noridian acted in conformance with the regulations and requested it rather than returning the application. 

The effective date for Medicare billing privileges for physicians, non-physician practitioners, and physician and 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).  Noridian neither denied nor rejected the reassignment application received on November 2, 2018 and, on the basis of the one page correction of that application and subsequent requested additional information, went on to approve the reassignment.  I find that Noridian “subsequently approved” the reassignment application that was received on November 2, 2018 because the enrollment process for that application had not ended with rejection or denial.  Therefore, Petitioner’s effective date of reassignment of Medicare benefits is November 2, 2018, with a retrospective billing date of October 3, 2018. 

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IV.         Conclusion 

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

1. This case was initially assigned to Judge Weyn but was reassigned to me on July 25, 2021.
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2. Because a hearing is not necessary, I need not decide whether summary judgment is appropriate.
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3. My findings of fact and conclusions of law appear as the numbered heading in bold italic type.
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4. CMS mis-states the wording of the December 18, 2018 letter from Noridian several times in its brief.   CMS Br. at 3, 6, 7.   It stated on two occasions that “[o]n December 18, 2018, Noridian sent Petitioner a letter stating that Petitioner’s November 2, 2018 application was being returned . . . .”   CMS Br. at 3 and 6.   As cited above, it also stated that that “although Noridian used the word ‘return’ in its December 18, 2018 letter rejecting Petitioner’s November 2, 2018 application . . . .”   CMS Br. at 7.   However, the terms “return” or “returned” do not appear anywhere in the December 18, 2018 letter.   Rather, Petitioner was informed in that letter that Noridian was “closing” the request.   CMS Ex. 2 at 1.   At no point in its brief does CMS attempt to define “closing”, cite to any authority for “closing” a case, or explain the legal basis for the use of this term.  
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5. Tri-Valley and Ramaswamy involved different facts than those presented here and are cited solely for the procedural principles discussed above. 
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6. 42 C.F.R. § 424.502 provides that “Reject/Rejection means that the provider or supplier’s enrollment application was not processed due to incomplete information, or that additional information or corrected information was not received from the provider or supplier in a timely manner.”
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