Iowa Methodist Medical Center, ALJ Ruling 2019-7 (HHS CRD June 17, 2019)

RULING DISMISSING CASE

For the reasons set forth below, I conclude that Petitioner, Iowa Methodist Medical Center, is not entitled to administrative law judge review of determinations made by the Centers for Medicare & Medicaid Services (CMS) following a March 28, 2018 survey. I therefore dismiss its hearing request pursuant to 42 C.F.R. § 498.70(b).

Discussion

Petitioner has no right to a hearing because CMS did not terminate Petitioner's Medicare provider agreement.1

Petitioner is a hospital located in Des Moines, Iowa, that participates in the Medicare program as a provider of services. On March 28, 2018, the Iowa Department of Inspections and Appeals (state agency) completed a complaint survey of the facility and found that Petitioner was not in substantial compliance with a Medicare condition of participation. The state agency found Petitioner's noncompliance constituted immediate

Page 2

jeopardy. See Departmental Appeals Board (DAB) Electronic Filing system (E-File) Docket Entry #1a; CMS Exhibit (CMS Ex.) 4. By letter dated May 1, 2018, CMS notified Petitioner, inter alia, that it was out of compliance with a condition of participation and that CMS was "removing the hospital's deemed status and placing [it] under the survey jurisdiction of the [state agency]." CMS Ex. 4 at 1. CMS advised Petitioner that its Medicare provider agreement would terminate effective July 30, 2018, unless Petitioner submitted a credible plan of correction within ten days and compliance was verified through an unannounced survey. Id. at 2-3.

By letter dated May 16, 2018, CMS informed Petitioner that the CMS regional office and the state agency had accepted Petitioner's plan of correction. CMS stated that the state agency would conduct an unannounced revisit of the facility. CMS Ex. 5.

On June 7, 2018, Petitioner electronically filed a hearing request challenging the March 28, 2018 survey findings, to which it attached the statement of deficiencies from the survey. DAB E-File Docket Entry #1, 1a. In its hearing request, Petitioner contested the deficiency allegations.

On June 19, 2018, the state agency completed a revisit survey of Petitioner. See CMS Ex. 11. By letter dated July 9, 2018, CMS notified Petitioner that the revisit survey had found that Petitioner had returned to compliance with all conditions of participation. CMS Ex. 11. CMS advised Petitioner that it had rescinded the termination action, and that Petitioner "may again be deemed to meet Federal hospital regulations through its accreditation by [the accreditation organization]." Id.

On October 5, 2018, CMS moved to dismiss Petitioner's hearing request (CMS Motion). With its motion, CMS filed exhibit and witness lists, and CMS Exs. 1 through 11. In its motion, CMS argues that Petitioner has no right to a hearing because CMS rescinded the proposed termination of Petitioner's provider agreement. CMS asserts that the rescission of the termination action has rendered Petitioner's appeal moot, thereby warranting dismissal of the case. CMS Motion at 1. On November 6, 2018, Petitioner opposed the motion (P. Response). With its motion, Petitioner filed exhibit and witness lists, and P. Exs. 1 through 12. I have considered Petitioner's arguments, but they do not convince me that Petitioner has a right to a hearing.

Medicare providers, such as Petitioner, may seek review of administrative actions related to the survey and certification process in accordance with federal regulations codified at 42 C.F.R. Part 498. Under those regulations, a provider dissatisfied with an "initial determination" by CMS or its agent can seek further review. 42 C.F.R. § 498.3(a). By contrast, administrative actions that are not initial determinations are not subject to appeal. Id. The regulations specify the matters on which CMS makes initial determinations. 42 C.F.R. § 498.3(b). The regulations also include examples of actions that are not considered initial determinations. 42 C.F.R. § 498.3(d).

Page 3

As relevant here, CMS's determination to terminate a Medicare provider agreement is an appealable initial determination. 42 C.F.R. § 498.3(b)(8); see also 42 C.F.R. § 498.5(b) ("any provider dissatisfied with an initial determination to terminate its provider agreement is entitled to a hearing"). In contrast, the following determinations by CMS (among others) are not initial determinations conferring appeal rights:

The finding that a provider or supplier determined to be in compliance with the conditions or requirements for participation or for coverage has deficiencies [; and]

****

The finding that a hospital accredited by [certain accrediting organizations] 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.

42 C.F.R. § 498.3(d)(1), (9).

In applying these regulations, an appellate panel of the Departmental Appeals Board (DAB) has held that "a JCAHO-accredited hospital . . . has no right to an ALJ hearing solely to contest findings of noncompliance with the Medicare conditions of participation . . . when a proposed termination has been rescinded." Fla. Health Sciences Ctr., Inc., DAB No. 2263 at 5 (2009). The panel in Florida Health Sciences also noted that prior DAB decisions endorsed dismissing similar appeals by long-term care facilities where CMS did not impose enforcement remedies. Id. at 5 n.2 (citing Fountain Lake Health & Rehab., Inc., DAB No. 1985 (2005); Lakewood Plaza Nursing Ctr., DAB No. 1767 (2001); Schowalter Villa, DAB No. 1688 (1999); and Arcadia Acres, Inc., DAB No. 1607 (1997)). The panel observed, however, that these decisions are based primarily on the language of 42 C.F.R. § 498.3(b)(13), a subsection not directly applicable to hospitals. Id.

In its opposition brief, Petitioner contends:

CMS argues, in its Motion to Dismiss, that under 42 C.F.R. § 498.3(d) [Petitioner] has no basis for appeal because "[t]he finding that a provider or supplier determined to be in compliance with the conditions or requirements for participation or for coverage has deficiencies" is not an appealable action. CMS argues that because [Petitioner] submitted a corrective action plan and was removed by CMS

Page 4

from the termination track for its Condition-Level deficiencies, that there is "no harm, no foul." We disagree.

P. Response at 4. I find Petitioner's argument puzzling because nowhere in CMS's motion does CMS reference 42 C.F.R. § 498.3(d) or make the statements attributed to it by Petitioner.2 Nevertheless, I consider Petitioner's argument based on 42 C.F.R. § 498.3(d) and find it is without merit.

Petitioner concedes, as it must, that CMS found Petitioner back in compliance with all Medicare conditions of participation following a revisit survey by the state agency and, on that basis, rescinded the proposed termination action. Petitioner nevertheless maintains that it is being harmed as a result of CMS's actions. Petitioner asserts that CMS's decision to rescind the termination based on its submission of a corrective action plan "provides no 'checks and balances' to potentially arbitrary decisions by CMS and the state surveyors." P. Response at 7. Petitioner argues further that it will suffer "adverse consequences for CMS deficiencies" even though the termination did not go into effect. Id. at 8. Petitioner notes that CMS provides comparison information on hospitals on-line, including survey deficiency reports and termination notices, and such information could deter patient admissions, even if a termination was rescinded. Petitioner also notes that the Iowa state agency publishes a publically‑available "report card" on its website, and Petitioner's "report card" includes its March 2018 survey findings. Id. at 8-9. Lastly, Petitioner claims that the fact that it was cited for immediate jeopardy means that it will be "excluded from participating in CMS's value-based purchasing program," which will result in economic hardship. P. Response at 9, citing 42 U.S.C. § 1395ww(o).3

The possible adverse consequences Petitioner envisions are speculative. See Fla. Health Sciences, DAB No. 2263 at 6. Moreover, even if the consequences were concrete, none of the negative impacts to which Petitioner objects represent initial determinations under the regulations. As an appellate panel of the Board has explained, "no right to a hearing survives merely to correct [a] compliance record." San Fernando Post Acute Hosp., DAB No. 2492 at 8 (2012) (quoting Fountain Lake, DAB No. 1985 at 6 (internal quotation marks omitted)). Given that CMS did not terminate Petitioner's Medicare participation agreement, Petitioner does not have a right to a hearing to repair any

Page 5

perceived damage caused by a deficiency citation. Once the termination was rescinded, no initial determination remained. 42 C.F.R. § 498.3(b)(8); see also Fla. Health Sciences, DAB No. 2263 at 5.

Finally, I note that Petitioner makes arguments addressing the merits of the alleged regulatory violations cited at the March 2018 survey. P. Response at 11-13. I do not consider these arguments because Petitioner has no right to review of the deficiencies.

In summary, the proposed termination of Petitioner's provider agreement never went into effect. The deficiency findings cited as a result of the March 28, 2018 survey, standing alone, are not initial determinations. 42 C.F.R. § 498.3(d)(1). Similarly, CMS's finding (later resolved) that Petitioner was no longer deemed to meet Medicare participation requirements also is not an initial determination. 42 C.F.R. § 498.3(d)(9). Absent termination of Petitioner's provider agreement, there is no appealable initial determination. 42 C.F.R. §§ 498.3(b)(8), 498.5(b).

Conclusion

For the reasons stated, Petitioner has no right to a hearing, and this matter must be dismissed. 42 C.F.R. § 498.70(b). I therefore grant CMS's motion and dismiss Petitioner's hearing request. The parties may request that an order dismissing a case be vacated pursuant to 42 C.F.R. § 498.72.

• 1. I reach this one conclusion of law.
• 2. I note that Petitioner did not cite to any specific pages in CMS's motion to dismiss.
• 3. Petitioner appears to be referring to a program known as the Hospital Value-Based Purchasing Program. Under this program, CMS makes incentive payments to hospitals which meet certain performance standards. 42 U.S.C. § 1395ww(o). A hospital is excluded from participating in this program if it has been cited for deficiencies that pose immediate jeopardy to the health or safety of patients. 42 U.S.C. § 1395ww(o)(1)(C)(ii)(II).