Village Apothecary, Inc., DAB CR5931 (2021)

DECISION

Based on non-compliance with 42 C.F.R. § 424.57(c)(22), I sustain the determination by National Supplier Clearinghouse (NSC), a contractor operating on behalf of the Centers for Medicare & Medicaid Services (CMS), to revoke the billing privileges of Village Apothecary, Inc. (Petitioner).

     I.      Procedural History and Background

Petitioner is a retail pharmacy located in Hot Springs, Arkansas, and has been enrolled in the Medicare program as a pharmacy and supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) since 2012.  CMS Exs. 1, 6.  Petitioner has multiple locations and one Provider Transaction Access Number (PTAN) that allows Petitioner to bill Medicare directly.  CMS Ex. 1.  The business location associated with Petitioner’s PTAN is 4440 N. Highway 7, Hot Springs, Arkansas 71909-9301.  CMS Ex. 1 at 1.

By certified mail, and in an initial determination letter dated January 31, 2019, NSC notified Petitioner that its Medicare billing number and billing privileges were revoked effective 30 days from the postmark of the revocation letter.  CMS Ex. 2.  NSC’s letter confirmed that Petitioner was not in compliance with DMEPOS supplier standards by

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failing to maintain comprehensive liability insurance as required by 42 C.F.R. § 424.57(c)(10), and by failing to maintain accreditation by a CMS approved organization as required by 42 C.F.R. § 424.57(c)(22). 

In a February 7, 2019 letter to NSC, Petitioner submitted what it termed a CORRECTIVE ACTION PLAN (CAP) and confirmed that as of February 24, 2018, Petitioner no longer supplied “accredited medical equipment and oxygen” at its pharmacy, located at 4440 Highway 7 North, Hot Springs, Arkansas.  Petitioner explained that its medical supply business outgrew the previous building and Petitioner relocated its medical supply equipment to a new location at 3840 Highway 7 North, Hot Springs, Arkansas.  CMS Ex. 5 at 1.

In its February 7, 2019 letter, Petitioner stated that when it renewed its accreditation with the Accreditation Commission for Healthcare, Inc. (ACHC), it did not renew the certificate for the 4440 Highway 7 North location; asserting that it “no longer did anything but pharmacy” at that location.  Id.

Petitioner also stated in its February 7, 2019 letter that it was submitting a new Medicare enrollment application to obtain a new PTAN that would be associated with its 3840 Highway 7 North, Hot Springs, Arkansas location.  Id.

In a letter dated February 19, 2019, NSC issued a Corrective Action Plan Decision acknowledging Petitioner’s CAP, and concluding that there was no error in its earlier determination to revoke Petitioner’s Medicare billing number.  NSC stated that Petitioner had failed to provide a verifiable explanation for its noncompliance with 42 C.F.R. § 424.57(c)(10) and (22).  CMS Ex. 6 at 3.  Specifically, NSC’s letter stated:  

The supplier failed to provide proof of accreditation, and the billing report run by the NSC shows the supplier continued to bill for products and services requiring accreditation without maintaining accreditation.  Furthermore, the certificate of general liability insurance on file with the NSC expired, and the certificate furnished with the appeal did not show the NSC as a certificate holder.

CMS Ex. 6 at 3.

On March 20, 2019, Petitioner submitted an additional CAP; seeking to prevent the revocation of its Medicare supplier number.  Petitioner also attached an updated certificate of general liability insurance with NSC as the certificate holder, and a document titled “Attestation for Exemption from Accreditation for a Medicare Enrolled Pharmacy” (Attestation).  CMS Ex. 7 at 9-11. 

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In a letter to Petitioner dated March 27, 2019, NSC noted that since a decision had already been rendered on Petitioner’s (initial) CAP, Petitioner’s appeal had been forwarded to the Medicare hearing officer for a reconsidered determination.  CMS. Ex. 8.  

On April 26, 2019, the hearing officer issued a reconsidered determination and accepted Petitioner’s updated insurance certificate as establishing compliance with 42 C.F.R. § 424.57(c)(10).  The hearing officer rejected Petitioner’s submission of its Attestation, noting that Petitioner “does not have a previously accepted attestation on file and is not considered exempt from accreditation.”  CMS Ex. 10 at 3.  Additionally, the hearing officer found that Petitioner did not provide evidence to show that it was in compliance with the standards set forth at 42 C.F.R. § 424.57(c)(22).  CMS Ex. 10 at 5.

On June 25, 2019,1 Petitioner filed a request for a hearing (RFH) before an administrative law judge (ALJ).  On July 1, 2019, the ALJ2 issued an Acknowledgement and Pre‑Hearing Order (APHO).  The APHO set deadlines for the parties to submit exhibits and witness testimony, as well as deadlines for the parties to submit written objections to the opposing party’s proffered exhibits.  On August 5, 2019, CMS filed a motion for summary judgment, or in the alternative, its pre-hearing brief (CMS Br.).  While CMS proffered 10 exhibits, it did not submit any witness testimony.  On September 9, 2019, Petitioner filed its reply to CMS’s pre-hearing brief and motion for summary judgement (P. Br.).  Petitioner did not submit any proposed exhibits or witness testimony.  Petitioner did not object to CMS’s proffered exhibits, thus, I receive CMS Exs. 1-10 into the record. 

As neither party submitted written direct testimony, a hearing is unnecessary for the purpose of cross-examination of witnesses.  APHO ¶ 9.  As the evidence reflects, there is no genuine issue of a material fact.  Nevertheless, inasmuch as there is no basis for conducting an in‑person hearing,3   this matter is ready for a decision on the merits.  

    II.      Issue 

Whether CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges based on its failure to comply with DMEPOS supplier standards.  

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   III.      Jurisdiction 

I have jurisdiction to decide this case.  42 C.F.R. §§ 424.545(a), 498.3(b)(17), 498.5.  

   IV.      Findings of Fact, Conclusions of Law, and Analysis.4  

1. CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges because Petitioner did not comply with 42 C.F.R. § 424.57(c)(22). 

Pursuant to 42 C.F.R. §§ 424.57 and 424.505, a DMEPOS supplier, such as Petitioner, must be enrolled in the Medicare program to be reimbursed for durable medical equipment, prosthetics, orthotics, or supplies to be sold or rented to Medicare beneficiaries.  The regulations also establish specific requirements that suppliers must meet and maintain to enroll in Medicare and to receive and to maintain Medicare billing privileges.  To receive direct-billing privileges, a DMEPOS supplier must meet and maintain the Medicare application certification standards set forth in 42 C.F.R. § 424.57(c).  CMS may revoke a currently enrolled DMEPOS supplier’s Medicare enrollment and billing privileges if CMS determines that the DMEPOS supplier fails to meet the supplier standards.  42 C.F.R. § 424.57(e)(1).

42 C.F.R. § 424.57(c)(22) requires that a DMEPOS supplier “be accredited by a CMS‑approved accreditation organization in order to receive and retain a supplier billing number.”  A supplier must be able to demonstrate that it meets the enrollment requirements and it must be able to make available any documents and records necessary to show its compliance with enrollment requirements.  42 C.F.R. § 424.545(c).

NSC determined, and Petitioner does not dispute, that Petitioner’s accreditation through ACHC expired on February 23, 2018.  CMS Ex. 2 at 1-2; CMS Ex. 3 at 2.  A billing report shows that from February 24, 2018, through at least April 29, 2019, Petitioner, under its only PTAN, billed $1,593,726.28 and was paid $484,386.72 for products and services requiring accreditation.  CMS Ex. 4.  Petitioner has neither demonstrated that it was exempt from accreditation during this period, nor has Petitioner shown that it was accredited at the business location linked with the PTAN from which it billed. 

Petitioner advances several arguments to excuse its violation of 42 C.F.R. § 424.57(c)(22) and seeks a reversal of the revocation.  Petitioner essentially bases its arguments on the procedures following the notice of revocation.  Although Petitioner contends that it did not receive the January 31, 2019 notice of revocation, Petitioner acknowledges that CMS’s February 19, 2019 Corrective Action Plan Decision discusses correspondence in which Petitioner requested a CAP and attached a completed

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enrollment application for the 3840 Highway 7 location.  P. Br. at 4; see CMS Ex. 6 at 3; CMS Ex. 5.  Petitioner’s letter notifying NSC of its change in location and stating that it was submitting a new Medicare enrollment application to obtain a new PTAN associated with its 3840 Highway 7 North location is dated February 7, 2019; 7 days after NSC’s notice of revocation.

Petitioner also argues that it did not intend its February 7, 2019 letter to be a CAP and that it provided an Attestation with its later-submitted “formal” CAP.  Petitioner argues that “if [Petitioner] had received the original notice of revocation, [Petitioner] could have provided its Attestation . . . in response to the NSC’s revocation to illustrate they were, and have been, in compliance with the supplier standards even though their accreditation expired on February 23, 2018.”  P. Br. at 5.

Petitioner’s arguments to excuse its violation of 42 C.F.R. § 424.57(c)(22) and to reverse the revocation of its billing privileges are without merit.  Petitioner does not dispute that its ACHC accreditation expired on February 23, 2018, and yet it continued to bill for goods and services under a PTAN number associated with the 4440 Highway 7 North location.  It is undisputed that during the period from February 24, 2018 through at least April 29, 2019, Petitioner had neither a valid accreditation nor an exemption from accreditation.  It was only after the January 31, 2019 notice of revocation that Petitioner sought to obtain a new PTAN number for its new 3840 Highway 7 North location.  Petitioner’s late-filed Attestation and late-filed enrollment application for the 3840 Highway 7 North location does not absolve Petitioner from its obligation to maintain the accreditation as required under the regulations. 

In Jersey City Med. Supplies, Inc., the Board dealt with a situation in which a supplier’s accreditation had lapsed at the time of the revocation.  Despite the fact that the supplier was subsequently accredited, the Board noted, “[i]t is the lapse of Petitioner’s accreditation prior to the revocation that provided the basis for the revocation; accordingly, that fact, not Petitioner’s current status, is the fact material to our determination.”  DAB No. 2766 at 6 (2017).

Petitioner argues that the revocation could have been prevented if Petitioner had been provided an opportunity to submit a CAP; if CMS had accepted its “formal” CAP; or if CMS had accepted its Attestation.  P. Br. at 6.  Petitioner’s submission of a CAP, whether formal or not, and/or its submission of a late-filed Attestation does not negate Petitioner’s failure to maintain accreditation after February 23, 2018.  To the extent that Petitioner’s request for relief is based on principles of equitable relief, I cannot grant such relief.  US Ultrasound, DAB No. 2302 at 8 (2010).  The Board has consistently held that neither the ALJ nor the Board is authorized to provide equitable relief.  Id. at 8; Sunview Care & Rehab Ctr., LLC, DAB No. 2713 at 12 (2016). 

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Furthermore, I have no authority to review the exercise of discretion by CMS or its contractor to revoke where there is a basis for revocation.  Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 19 (2009), aff’d, Ahmed v. Sebelius, 710 F. Supp. 2d 167 (D. Mass. 2010).  The scope of my review is limited to determining whether there is a legal basis for revocation of Petitioner’s Medicare enrollment and billing privileges.  Inasmuch as Petitioner was not accredited during the pertinent time period, Petitioner was in violation of 42 C.F.R § 424.57(c) and there was a legal basis to revoke Petitioner’s enrollment and billing privileges. 

   V.      Conclusion 

For the reasons stated above, I conclude that Petitioner’s Medicare enrollment and billing privileges are revoked pursuant to 42 C.F.R. §§ 424.57(e), 424.535(a)(1) as determined by CMS.

• 1. Petitioner’s RFH is inadvertently dated June 25, 2018.
• 2. This case was initially assigned to a different ALJ and then transferred to the undersigned.
• 3. The Departmental Appeals Board (Board) has long held that convening a hearing is unnecessary “where no witness testimony is offered or all witness testimony is completed in writing and no cross-examination is sought.”   George Yaplee Med. Ctr., DAB No. 3003 at 5 (2020); see Marcus Singel, D.P.M., DAB No. 2609 at 6 (2014).
• 4. My findings of fact and conclusions of law are set forth in italics and bold font.