Gene W. Zdenek A Medical Corp., d/b/a Zdenek Eye Institute, and Gene W. Zdenek, M.D., ALJ Ruling 2020-3 (HHS CRD Oct. 29, 2019)

DISMISSAL

Petitioner, Gene W. Zdenek A Medical Corp. d/b/a Zdenek Eye Institute, is a California medical practice that participates in the Medicare program.  Petitioner, Gene W. Zdenek, M.D., owns the practice.  After their Medicare enrollments were deactivated, they applied to re-enroll in the program.  Although the Centers for Medicare & Medicaid Services (CMS) granted their applications, it seems that deactivation, followed by re-enrollment, resulted in a lapse in payment for the services provided.  Petitioners then attempted to appeal the deactivation.  The Medicare contractor dismissed, as untimely, their request for reconsideration, and Petitioners requested review by an administrative law judge.  CMS moves to dismiss, arguing that Petitioners have no right to further review because they have not obtained a reconsidered determination.

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Petitioners complain that they have been treated unfairly, and I find it hard to disagree.  Nevertheless, my authority is limited here; I have no choice but to grant CMS’s motion and dismiss this case pursuant to 42 C.F.R. § 498.70(b). 

Discussion

Gene W. Zdenek, M.D., is an ophthalmologist, and Gene W. Zdenek A Medical Corp., d/b/a Zdenek Eye Institute, is his medical practice.  CMS Ex. 10.  They participate in the Medicare program as suppliers of services.  See Social Security Act § 1861(d); 42 C.F.R. § 498.2. 

Enrollment. To receive Medicare payments for the services furnished to program beneficiaries, a prospective supplier must enroll in the program.  42 C.F.R. § 424.505.  “Enrollment” is the process by which CMS and its contractors:  1) identify the prospective supplier; 2) validate the supplier’s eligibility to provide items or services to Medicare beneficiaries; 3) identify and confirm a supplier’s owners and practice location; and 4) grant the supplier Medicare billing privileges.  42 C.F.R. § 424.502. 

To enroll, a prospective supplier must complete and submit an enrollment application.  42 C.F.R. §§ 424.510(d)(1), 424.515(a).  An enrollment application is either a CMS-approved paper application or an electronic process approved by the Office of Management and Budget.  42 C.F.R. § 424.502.1 When CMS determines that a prospective supplier meets the applicable enrollment requirements, it grants Medicare billing privileges, which means that the supplier can submit claims and receive payments from Medicare for covered services provided to program beneficiaries.  For a physician or physician organization, the effective date for billing privileges “is the later of the date of filing” a subsequently-approved enrollment application or “the date that [the supplier] first began furnishing services at a new practice location.”  42 C.F.R. § 424.520(d) (emphasis added).

Deactivation. To maintain its billing privileges, a supplier must, at least every five years, resubmit and recertify the accuracy of its enrollment information, a process referred to as “revalidation.”  42 C.F.R. § 424.515.  In addition to periodic revalidations, CMS may, at other times and for its own reasons, ask a supplier to recertify the accuracy of the enrollment information.  42 C.F.R. § 424.515(d) and (e).  Within 60 days of receiving CMS’s notice to recertify, the supplier must submit an appropriate enrollment application with complete and accurate information and supporting documentation.  42 C.F.R. § 424.515(a)(2).

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If, within 90 days from receipt of CMS’s notice, the supplier does not furnish complete and accurate information and all supporting documentation or does not resubmit and certify the accuracy of its enrollment information, CMS may deactivate billing privileges, and no Medicare payments will be made.  42 C.F.R. §§ 424.540(a)(3); 424.555(b).  To reactivate billing privileges, the supplier must complete and submit a new enrollment application.  42 C.F.R. § 424.540(b)(1).  It is settled that, following deactivation, section 424.520(d) governs the effective date of re-enrollment.  Urology Grp. of NJ, LLC, DAB No. 2860 at 7 (2018); Willie Goffney, Jr., M.D., DAB No. 2763 at 7 (2017). 

Petitioners’ re-enrollment. Here, after their Medicare enrollments were deactivated, Petitioners submitted re-enrollment applications.  In letters dated September 12, 2016, the Medicare contractor, Noridian Healthcare Solutions, advised them that their Medicare enrollments were approved.  CMS Exs. 5, 6.  The notice letters leave a lot to be desired; in fact, they are misleading.  They say:  “If you disagree with the effective date determination in this letter, you may request a reconsideration before a contractor hearing officer.”  CMS Ex. 5 at 2; CMS Ex. 6 at 2.  But neither letter includes an effective date determination that makes any sense.  The notice letter to Dr. Zdenek, individually, gives him a June 1, 2011 effective date.  CMS Ex. 5 at 1.  The notice letter for the Zdenek practice says that its effective date is January 1, 2011.  CMS Ex. 6 at 1.

I doubt that Petitioners objected to these (apparently historic) effective dates.  But somehow – and certainly not from any notices in this record – Petitioners learned that, because their Medicare participation was deactivated, they would be subject to a gap in reimbursement.  They seek review of the deactivations.  I am not authorized to review a deactivation.  Ark. Health Grp., DAB No. 2929 at 7-9 (2019), and cases cited therein.

On the other hand, Petitioners should be entitled to review of their new effective dates based on their re-enrollment applications (which could affect the duration of the lapse in payments).  CMS’s determination as to the effective date of enrollment is an “initial determination” that is subject to review under the procedures set forth in 42 C.F.R. Part 498.  42 C.F.R. § 498.3(b)(15).  A supplier or prospective supplier dissatisfied with an initial determination may request reconsideration by filing a written request within 60 days from receipt of the notice of the initial determination.  42 C.F.R. §§ 498.5(d)(1); 498.5(l)(1); 498.22.  If CMS (or its contractor) receives a properly-filed request for reconsideration, it makes a reconsidered determination affirming or modifying the initial determination.  42 C.F.R. § 498.24(c).  A supplier or prospective supplier dissatisfied with a reconsidered determination is entitled to a hearing before an administrative law judge.  42 C.F.R. §§ 498.5(d)(2); 498.5(l)(2); 498.40.  The regulations do not provide for a hearing in the absence of a reconsidered determination, even though this “may[,] in certain situations[,] be unfair . . . .”  Ramaswamy v. Burwell, 83 F. Supp.3d 846, 854 (E.D. Mo. 2015); Denise A. Hardy, D.P.M., DAB No. 2464 at 4-5 (2012); Hiva Vakil, M.D., DAB No. 2460 at 4-5 (2012).

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Here, the Medicare contractor dismissed Petitioners’ request for reconsideration as untimely.  CMS Ex. 1.  The circumstances surrounding that dismissal are troubling.  The contractor sent Petitioners’ notice letters to David Vergara, the medical practice’s office manager, and advised Petitioners that he had been added as a contact person.  Manager Vergara timely requested review on October 17, 2016, well within the 60 days allotted.  CMS Ex. 4.  On October 25, 2016, the contractor rejected his request for review, claiming that the appeal had not been signed by the appropriate official or legal representative.  CMS Ex. 3.  On November 17 – a few days outside the 60-day period – Petitioners submitted a revised request, signed by Dr. Zdenek.  CMS Ex. 2.  Most agencies would have determined that the October 17 request preserved Petitioners’ rights to review, so long as they corrected whatever mistakes the request contained.  Or, the contractor could, and probably should, have found good cause for the late filing, particularly since its notice may have misled Petitioners into thinking that their office manager was a “responsible authorized or delegated official within the entity.”  42 C.F.R. § 498.22(d)(2); see CMS Ex. 5 at 2, CMS Ex. 6 at 2.

I am obviously troubled by the contractor’s dismissal.  Nevertheless, my authority is limited.  I simply have no jurisdiction to review this case.2

Conclusion

Because neither CMS nor its contractor issued a reconsidered determination, Petitioners do not have a right to an ALJ hearing.  I therefore dismiss their hearing request pursuant to 42 C.F.R. § 498.70(b).

• 1. CMS’s electronic process is referred to as PECOS (Provider Enrollment, Chain, and Ownership System).
• 2. But this issue is ultimately not settled. In a Social Security appeal brought pursuant to section 405(g) of the Social Security Act, the Supreme Court recently determined that the Appeals Council’s dismissal of a request for review is a “final decision . . . made after a hearing” and thus subject to federal court review. The Supreme Court explicitly left open the question of whether a federal court may review dismissals made at the lower levels of the administrative review process. Smith v. Berryhill, 139 S. Ct. 1765, 1777 n.17 (2019). In arguing that such a dismissal is not reviewable, an agency advocate might prefer a less disturbing set of facts than those presented here.