Texacare Health Services, Inc., DAB CR5521 (2020)

DECISION

Palmetto GBA (Palmetto), an administrative contractor acting on behalf of the Centers for Medicare & Medicaid Services (CMS), revoked the Medicare enrollment and billing privileges of Petitioner, Texacare Health Services, Inc., because Palmetto determined Petitioner was not operational to furnish Medicare-covered items or services and was not in compliance with the Medicare enrollment requirements.  Specifically, a site visit contractor was unable to gain entry to Petitioner’s practice location during Petitioner’s business hours on two separate days.  For the reasons stated herein, I affirm the revocation of Petitioner’s Medicare enrollment and billing privileges.

I. Background and Procedural History

Petitioner is a provider that was enrolled as a home health agency in the Medicare program.  See 42 U.S.C. § 1395x(u) (classifying home health agencies as “providers” in the Medicare program); CMS Exhibit (Ex.) 2 at 11 (Petitioner’s report on its enrollment application that it is a home health agency).  In July 2018, Petitioner updated its Medicare enrollment record to reflect that, effective August 1, 2018, it would be relocating to a new

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practice location at 4530 Bagley Garden Ct. in Katy, Texas.1 CMS Ex. 3 at 3 (application record data report); see CMS Ex. 4 at 1 (August 15, 2018 letter from Palmetto approving Petitioner’s update of its enrollment record).

At 11:28 am on September 28, 2018, and 11:37 am on October 10, 2018, a site visit contractor attempted to conduct a site visit at Petitioner’s office located at 4530 Bagley Garden Ct. in Katy, Texas.  CMS Ex. 8 at 6, 9 (site visit inspection reports).  At both visits, the site visit contractor observed that the location was a private residence, and that Petitioner was not open for business, did not appear to have employees or staff present, did not show signs of customer activity, and did not appear to be operational.  CMS Ex. 8 at 6, 9.  At the first visit on September 28, 2018, the site visit contractor documented that the location had no signs outside, and that when he called Petitioner, the person who answered the call stated that “they never heard of that address.”  CMS Ex. 8 at 6.  Thereafter, the site inspector “sent a picture of the address” to Petitioner, and “tried to call back 3 times but they would not answer.”2 CMS Ex. 8 at 6.  At the time of the second visit on October 10, 2018, the site visit contractor reported that the person who answered the door “said they don[’]t know what I am talking about.”  CMS Ex. 8 at 9.  Photographs taken by the site visit contractor indicate that Petitioner’s practice location is a single family home.  CMS Ex. 8 at 6-10. 

In a January 11, 2019 initial determination, Palmetto revoked Petitioner’s Medicare enrollment and billing privileges effective October 10, 2018, based on noncompliance with, inter alia, 42 C.F.R. § 424.535(a)(5) as reported by the site visit contractor on September 28 and October 10, 2018.3 CMS Ex. 5 at 1.  Palmetto also informed Petitioner that it would be barred from re-enrolling in the Medicare program for a period of two years, effective 30 days from the postmark date of the letter.  CMS Ex. 5 at 2. 

Petitioner requested reconsideration of the initial determination revoking its enrollment and billing privileges.  CMS Ex. 6.  With respect to the cited noncompliance with 42 C.F.R. § 424.535(a)(5), Petitioner explained that “[o]n the days of the visits we were in the field introducing our business to our new community.”  CMS Ex. 6 at 1.  Petitioner further explained that “[a]s a small business, this required the utilization of all our administrative staff,” and “[t]his was the reason we were not present at the office at the

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time of the visits.”  CMS Ex. 6 at 2.  Petitioner added that it “has infrastructure in place to receive communications (emails, phone calls) from doctors and clients even while offsite,” and that it “would have been able to return to the office within a short period of time if contacted.”  CMS Ex. 6 at 2.  Petitioner further noted that its “new location is not in a commercial building,” and that its “Administrative staff keep the agency open daily within our hours of operations and our field employees show up in the office for in-service training [a] few days per month and for meetings when required.”  CMS Ex. 6 at 2.  Petitioner also submitted two photographs of exterior signage listing its hours of operation, along with several photographs of what appears to be a single furnished office.4 CMS Ex. 7 at 1.

CMS, through its Provider Enrollment & Oversight Group, issued a reconsidered determination on April 10, 2019, at which time it explained that Petitioner’s Medicare enrollment had been revoked pursuant to 42 C.F.R. § 424.535(a)(5) for the following reasons:

Under 42 C.F.R. § 424.535(a)(5), CMS may revoke a currently enrolled provider or supplier’s Medicare billing privileges and any corresponding provider agreement or supplier agreement when, upon on-site review or other reliable evidence, CMS determines that the provider or supplier is either no longer operational to furnish Medicare-covered items or services, or otherwise fails to satisfy any Medicare enrollment requirement.  Here, on September 28, 2018 and October 10, 2018 Inspector Dorsey, conducted two on-site reviews of Texacare’s Katy, TX location.  Upon Inspector Dorsey’s on-site review, there was no indication of business or patient activity.  Pictures, from the on-site review, reveal a single family home with no visible signage for Texacare.  Therefore, based on her observations, Inspector Dorsey concluded that Texacare was not operational at the Katy, TX location, its listed practice address.

Texacare admits in its reconsideration request that its Katy, TX location is not always staffed, and states that its entire staff was in the field introducing its business to its new community at the time the two separate on-site reviews occurred.  However, Texacare is required to have a staffed office, open for business, during its posted hours of operation.  Texacare argues that a majority of home health agency activities, including patient care and business marketing, are done offsite.

Texacare provided pictures showing that its posted business hours are 9:00 a.m. to 5:00 p.m.; therefore, based on the times recorded in the on-site

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review reports, Inspector Dorsey should have been able to gain entry to the facility but was unable to gain access.  Texacare’s pictures of the door and sign with business hours does not demonstrate that it was operational.  As such, CMS finds that Texacare was not operational, and therefore, upholds the initial determination to revoke its Medicare billing privileges, pursuant to 42 C.F.R. § 424.535(a)(5).

CMS Ex. 1 at 5-6.

Petitioner filed a request for an administrative law judge (ALJ) hearing on June 7, 2019.  On June 12, 2019, the Civil Remedies Division acknowledged receipt of Petitioner’s request for hearing and issued my Standing Pre-Hearing Order (Pre-Hearing Order) directing the parties to file pre-hearing exchanges in accordance with specific requirements and deadlines.  CMS filed a motion for summary judgment and pre-hearing brief (CMS Br.), along with eight proposed exhibits (CMS Exs. 1-8).  Petitioner filed a pre-hearing brief (P. Br.) and eighteen proposed exhibits (P. Exs. 1-18).  In the absence of any objections, I admit CMS Exs. 1-8 and P. Exs. 1-18 into the record.

CMS submitted the written direct testimony of the site visit contractor (CMS Ex. 8), and Petitioner has not requested an opportunity to cross-examine this witness.  Therefore, a hearing is unnecessary for the purpose of cross-examination of any witnesses.  Pre‑Hearing Order §§ 12-14.  I consider the record to be closed and the matter ready for a decision on the merits.5

II. Issue

Whether CMS has a legal basis to revoke Petitioner’s Medicare enrollment and billing privileges pursuant to 42 C.F.R. § 424.535(a)(5) because Petitioner was not operational at the practice location on file with CMS.

III. Jurisdiction

I have jurisdiction to hear and decide this case.  42 C.F.R. §§ 498.3(b)(17), 498.5(l)(2); see also 42 U.S.C. § 1395cc(j)(8).

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IV. Findings of Fact, Conclusions of Law, and Analysis

In order to participate in the Medicare program as a provider, entities must meet certain criteria to enroll and receive billing privileges.  42 C.F.R. §§ 424.505, 424.510.  CMS may revoke the enrollment and billing privileges of a provider for any reason stated in 42 C.F.R. § 424.535.  When CMS revokes a provider’s Medicare billing privileges, CMS establishes a re-enrollment bar for a period ranging from one to three years.  42 C.F.R. § 424.535(c).  Generally, a revocation becomes effective 30 days after CMS mails the initial determination revoking Medicare billing privileges, but if CMS finds a provider to be non-operational, as it did here, the revocation is effective from the date that CMS determines that the provider was not operational.  42 C.F.R. § 424.535(g).   

On-site review is addressed in 42 C.F.R. § 424.535(a)(5).  Pursuant to 42 C.F.R. § 424.535(a)(5)(i), (ii), a provider is non-operational if CMS determines upon an on-site review that it is “no longer operational to furnish Medicare-covered items or services” or that it otherwise fails to satisfy any Medicare enrollment requirement.  

1. Petitioner’s location at 4530 Bagley Garden Ct. in Katy, Texas, was not open, accessible, and staffed when a site visit contractor attempted to conduct site inspections on September 28 and October 10, 2018. 

On September 28, 2018, at 11:28 am, a site visit contractor visited Petitioner’s 4530 Bagley Garden Ct. location and observed that there were no signs posted outside, no employees or staff appeared to be present, and that the provider did not appear to be open for business or operational.  CMS Ex. 8 at 6.  Further, when the site visit contractor called Petitioner, he was informed that “they never heard of that address.”  CMS Ex. 8 at 6.  Likewise, on October 10, 2018, at 11:37 am, the site visit contractor again observed that no employees or staff were present and that Petitioner did not appear to be open for business and operational.  CMS Ex. 8 at 9.  And when the site visit contractor knocked on the door of Petitioner’s business, the person who opened the door did not know “what [she was] talking about.”  CMS Ex. 8 at 9.  The photographs submitted by Petitioner show that its posted business hours are between 9:00 am and 5:00 pm, Monday through Friday, meaning that the site visit contractor visited during its business hours.  CMS Ex. 7 at 1; see CMS Ex. 8 at 6, 9.  Petitioner admitted that “[o]n the days of the visits we were in the field introducing our business to our new community” and “were not present at the office at the time of the visits.”  CMS Ex. 6 at 1-2.

Based on the undisputed evidence of record, the site visit contractor attempted to conduct two separate site inspections of Petitioner’s location at 4530 Bagley Garden Ct. on September 28, 2018, at 11:28 am and October 10, 2018, at 11:37 am, but the site visit contractor was unable to complete the inspection because the office was closed and Petitioner’s staff were not present at that location.

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2. CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment under 42 C.F.R. § 424.535(a)(5)(i) because Petitioner has not shown that its qualified physical practice location was operational on September 28 and October 10, 2018.

CMS may revoke a provider’s enrollment and billing privileges if, upon an on-site review, CMS determines that the provider is no longer operational to provide Medicare-covered items or services, or the provider fails to meet enrollment requirements.  42 C.F.R. § 424.535(a)(5)(i), (ii).  The term “operational” means:

the provider or supplier has a qualified physical practice location, is open to the public for the purpose of providing health care related services, is prepared to submit valid Medicare claims, and is properly staffed, equipped, and stocked (as applicable, based on the type of facility or organization, provider or supplier specialty, or the services or items being rendered), to furnish these items or services.

42 C.F.R. § 424.502 (definition of Operational).  In order “[t]o be ‘operational’ in accordance with the definition in section 424.502, a provider, among other things, must have a ‘qualified physical practice location’ that is ‘open to the public for the purpose of providing health care related services.’”  Viora Home Health, Inc., DAB No. 2690 at 7 (2016).  A provider’s “qualified physical practice location” is the provider’s address that is on file with CMS at the time of a site visit.  Care Pro Home Health, Inc., DAB No. 2723 at 5-6 (2016) (footnote omitted).

Petitioner does not dispute that the site visit contractor unsuccessfully attempted to conduct site visits on both days at the location on file with CMS.  Both attempted site visits occurred during the Petitioner’s posted business hours.  CMS Ex. 8 at 6, 9; see CMS Ex. 7 (photograph submitted by Petitioner showing its posted daily business hours of 9:00 am through 5:00 pm).  These facts are sufficient for me to conclude that Petitioner was not open to the public, and therefore, not operational, on September 28 and October 10, 2018.  In making this conclusion, I am mindful “that the proper inquiry is to assess the [provider’s] operational status at the time of the onsite review because the intent of the applicable regulations ‘is that a [provider] must maintain, and be able to demonstrate, continued compliance with the requirements for receiving Medicare billing privileges.’”  Viora, DAB No. 2690 at 7 n.7 (emphasis in original), quoting A to Z DME, LLC, DAB No. 2303 at 7 (2010).  Petitioner’s failure to be open to the public on September 28 and October 10, 2018, prevented the site visit contractor from determining whether Petitioner continued to be compliant with enrollment requirements.

The undisputed evidence establishes that Petitioner’s 4530 Bagley Garden Ct. location was not operational because it was not accessible and staffed during posted business

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hours; therefore, CMS properly revoked Petitioner’s Medicare enrollment and billing privileges.  42 C.F.R. § 424.535(a)(5)(i); see Care Pro, DAB No. 2723 at 6 (holding that CMS lawfully revoked a provider’s Medicare enrollment based on its non-operational status at a single location); see also Viora, DAB No. 2690 at 13 (holding that CMS properly revoked a provider’s Medicare enrollment when a practice location of record was not operational upon onsite review). 

Petitioner argues that “[i]t isn’t clearly stated in the Medicare Program Integrity Manual that when a provider relocates how much time is given to [the] provider to settle in [the] [n]ew location before an inspection is performed.”  P. Br. at 4.  Petitioner reported that it had relocated to its 4530 Bagley Garden Ct. location as of August 1, 2018; that means that Petitioner should have been operational at the 4530 Bagley Garden Ct. location, effective August 1, 2018, and that a site visit anytime thereafter was appropriate.  CMS Ex. 3 at 3; see P. Ex. 4 at 1.  Although Petitioner takes issue with the fact that it was subject to a site visit within two months of its relocation, I note that Petitioner does notallege that it had not yet relocated to that address.  In fact, Petitioner submitted evidence to demonstrate that it had relocated to its new location.  P. Ex. 10 (August 2018 Comcast bill listing an address of the new practice location).  Rather, Petitioner argues it was not onsite on both days because it was “introducing [its] business to [its] new community” and engaging in business development activities.  P. Br. at 3.

In an apparent effort to minimize its obligation to be open to the public and be available for inspection by a site visit contractor during its business hours, Petitioner argues that the majority of home health agency activities are performed offsite, as “[t]echnology and software applications have made documentation accessible on and offsite making it easy to properly document patient centered care and communicate without lag.”  P. Br. 3.  Petitioner added that “most of agency operations are done offsite.”  P. Br. at 3.  However, despite Petitioner’s claims that it can conduct business offsite by email and telephone (P. Br. at 3), the site visit contractor called Petitioner three times on September 28, 2018, and was unable to leave a message.  CMS Ex. 8 at 2, 6.  Petitioner fails to acknowledge that patients and beneficiaries may wish to speak to Petitioner in-person at its office, and a patient or beneficiary should be able to expect to reach a staff member when visiting during Petitioner’s business hours.  Likewise, CMS and/or its contractor should be able to inspect Petitioner’s location during Petitioner’s business hours. 

While Petitioner makes a number of excuses for why it was not open, and thereby not operational, during its posted business hours, to include that it is unnecessary for it to conduct its operations from its office location, the simple fact is the law requires it to be “operational” such that it has a “‘qualified physical practice location, is open to the public for the purpose of providing health care related services, is prepared to submit valid Medicare claims, and is properly staffed, equipped, and stocked . . . to furnish these items or services.’”  Medinn Corp., DAB No. 2928 at 14 (2019), quoting 42 C.F.R. § 424.502

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(emphasis omitted).  Because Petitioner was not open to the public and staffed at the time of the two site visits, it was not operational as required by 42 C.F.R. § 424.535(a)(5)(i).

To the extent that Petitioner may be requesting equitable relief, I am unable to grant equitable relief.  P. Br. at 4 (“This is a case of a small business fighting for survival.”), 6 (reporting that it has “not had a Medicare patient since August of 2018” and its “continued partnership with private insurance and third party contractors is contingent on those privileges”); see US Ultrasound, DAB No. 2302 at 8 (2010) (stating that an ALJ may not grant equitable relief in an instance where statutory or regulatory requirements are not met).  Petitioner points to no authority by which I may grant it relief from the applicable regulatory requirements.  1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (“An ALJ is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground . . . .”).

3. The effective date of Petitioner’s revocation is set by regulation.

The regulation at 42 C.F.R. § 424.535(g) states that when a revocation is based on a provider not being operational, the revocation of the provider’s billing privileges is effective as of the date the practice location is determined by CMS or its contractor not to be operational.  Pursuant to section 424.535(g), Petitioner’s revocation is effective October 10, 2018, the date of the second failed site visit. 

4. The two-year length of the re-enrollment bar is not reviewable.

The Departmental Appeals Board (DAB) has explained that “CMS’s determination regarding the duration of the re-enrollment bar is not reviewable.”  Vijendra Dave, M.D., DAB No. 2672 at 11 (2016).  The DAB explained that “the only CMS actions subject to appeal under Part 498 are the types of initial determinations specified in section 498.3(b).”  Id.  The DAB further explained that “[t]he determinations specified in section 498.3(b) do not, under any reasonable interpretation of the regulation’s text, include CMS decisions regarding the severity of the basis for revocation or the duration of a revoked supplier’s re-enrollment bar.”  Id.  The DAB discussed that a review of the rulemaking history showed that CMS did not intend to “permit administrative appeals of the length of a re-enrollment bar.”  Id.  I have no authority to review this issue, and I do not disturb the two-year re-enrollment bar.

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V. Conclusion

I affirm CMS’s revocation of Petitioner’s Medicare enrollment and billing privileges.

• 1. A previous June 2017 enrollment application reports a practice location address in Houston, Texas. CMS Ex. 2 at 21.
• 2. In written direct testimony submitted by CMS, the site visit contractor added that “there was not a means provided to leave a message” by telephone. CMS Ex. 8 at 2.
• 3. Palmetto also cited noncompliance with 42 C.F.R. § 424.535(a)(1) as a basis for revocation, and informed Petitioner that it could submit a corrective action plan with respect to only this basis. CMS Ex. 5 at 1.
• 4. The photograph Petitioner provided of its front door is consistent with a similar photograph included in the site visit contractor’s report. CMS Exs. 7 at 1; 8 at 6-7, 9-10.
• 5. As an in-person hearing to cross-examine witnesses is not necessary, it is unnecessary to further address CMS’s motion for summary judgment.