Devine Solutions Group LLC d/b/a Quick Response EMS, DAB CR5981 (2021)

DECISION

I uphold the Centers for Medicare & Medicaid Services’ (CMS) revocation of the Medicare enrollment and billing privileges of Devine Solutions Group LLC d/b/a Quick Response EMS (Devine Solutions or Petitioner), based on 42 C.F.R. § 424.535(a)(8)(ii) (i.e., engaging in a pattern or practice of filing claims that do not meet Medicare requirements).

I.  Background and Procedural History

Petitioner was enrolled in the Medicare program on January 15, 2013, as an “Ambulance Service Supplier.”  CMS Ex. 1 at 1-2.

In a December 9, 2019 initial determination, Novitas Solutions (Novitas), a Medicare contractor, informed Petitioner that its Medicare enrollment was being revoked effective January 8, 2020, because “[CMS] has determined that [Petitioner] has engaged in a pattern or practice of submitting claims that fail to meet Medicare requirements, in violation of 42 CFR 424.535(a)(8)(ii).”  CMS Ex. 2 at 1.  The initial determination provided the following factual bases for the revocation:

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1.  A review of 32 Medicare claims that Petitioner filed from January 18, 2014 through February 7, 2015 was conducted, resulting in a finding that 13 of the claims were denied because “the documentation did not support the medical necessity of ambulance transport.”  CMS Ex. 2 at 1. 

2.  In a March 8, 2016 letter, Petitioner was educated on the submission of noncompliant claims.  CMS Ex. 2 at 1. 

3.  A review of 39 Medicare claims that Petitioner filed from September 24, 2018, through October 13, 2018, was conducted, resulting in a finding that 36 of the claims were denied because “the documentation did not support the medical necessity of ambulance transport.”  CMS Ex. 2 at 1.

4.  On December 31, 2018, another letter educating Petitioner regarding the submission of noncompliant claims was sent.  CMS Ex. 2 at 1.

5.  A review of 27 Medicare claims that Petitioner filed from April 22, 2019, through April 27, 2019, was conducted, resulting in a finding that 22 of the claims were denied because “the documentation did not support the medical necessity of ambulance transport.”  CMS Ex. 2 at 1-2. 

The initial determination concluded as follows: 

Despite several instances of specific education, which detailed the correct billing procedures for medical necessity, [Petitioner] has continued to submit claims that fail to meet Medicare requirements.  Evidenced by the continued high percentage of submitted claims that were denied, the reasons for the claim denials and the length of time over which the pattern has continued, [Petitioner]’s . . . billing behavior constitutes a violation of 42 CFR 424.535(a)(8)(ii), and therefore, CMS has determined that the provider, “has a pattern or practice of submitting claims that fail to meet Medicare requirements. . .”

CMS Ex. 2 at 2.  Novitas initially barred Petitioner from re-enrollment in the Medicare program for ten years; however, Novitas later reduced the bar to three years.  CMS Ex. 2 at 3; CMS Ex. 22.  Finally, the initial determination also stated that Petitioner would be added to CMS’s preclusion list related to Medicare Parts C and D.  CMS Ex. 2 at 2. 

On February 5, 2020, Petitioner requested reconsideration of CMS’s determination to revoke and preclude Petitioner.  CMS Ex. 3.  Petitioner argued that CMS incorrectly revoked and precluded because:  a CMS contractor issued the initial determination rather

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than CMS itself; CMS failed to properly consider various factors listed in 42 C.F.R. § 424.535(a)(8)(ii) when revoking; Petitioner appealed the denials of the 2014-2015 claims and the appeal resulted in a reduction of the $563,195.16 overpayment to $3,280.51, thus negating those claims as a basis for revocation; Petitioner appealed the denial of the 2018 claims on February 15, 2019, which must first be resolved to ensure that Petitioner has received due process before revoking Petitioner for abuse of billing privileges; and Petitioner has not been given an opportunity to appeal the 2019 claims denials, thus depriving Petitioner of due process regarding those claims before revoking Petitioner for abuse of billing practices.  CMS Ex. 3 at 1-3, 8-12.

In a March 31, 2020 reconsidered determination, a CMS hearing officer upheld the revocation and preclusion.  CMS Ex. 4.  The CMS hearing officer stated that she confirmed with Novitas that Petitioner did not appeal the denied 2018 claims, making those denials final and binding.  CMS Ex. 4 at 6.  The CMS hearing officer briefly discussed the 2019 claims denials but did not expressly state that those denials were also final and binding.  CMS Ex. 4 at 6.  The CMS hearing officer did, however, deny that CMS failed to give Petitioner the opportunity to appeal the 2019 claims prior to the revocation of its Medicare billing privileges.  CMS Ex. 4 at 8.  The CMS hearing officer also provided an analysis of each of the six factors in § 424.535(a)(8)(ii).  CMS Ex. 4 at 7.  Further, the CMS hearing officer addressed Petitioner’s other arguments.  She rejected Petitioner’s claim that Novitas, and not CMS, had revoked Petitioner, indicating that Novitas issued the initial determination at CMS’s instruction.  CMS Ex. 4 at 8.  Finally, the CMS hearing officer provided an analysis as to why Petitioner’s preclusion was properly imposed.  CMS Ex. 4 at 9-10. 

Petitioner requested a hearing to dispute the reconsidered determination.  On June 2, 2020, the Civil Remedies Division (CRD) acknowledged receipt of Petitioner’s hearing request and issued my Standing Prehearing Order (SPO) that established procedures and deadlines for prehearing submissions in this case.  Under the SPO, the parties were to submit the written direct testimony for all proposed witnesses in the form of an affidavit or a declaration made under penalty of perjury, and submit an affirmative request if the parties wanted to cross-examine any of the opposing party’s proposed witnesses.  SPO ¶¶ 7(d)(iv), 11-13; CRD Procedures §§ 16(b), 19(b). 

In response to the SPO, CMS timely submitted a prehearing brief/motion for summary judgment and 21 proposed exhibits (CMS Exs. 1-21).  Although CMS stated on its witness list that it had yet to determine which persons it would call as witnesses, CMS submitted declarations from two individuals employed by CMS contractors (i.e., Leann Davinroy, CMS Ex. 9 and Leslie O’Neal, RN, CMS Ex. 21).  Petitioner also timely filed its prehearing brief/motion for summary judgment and ten proposed exhibits (P. Exs. 1-10).  Although Petitioner did not include written direct testimony for any witnesses, Petitioner named two individuals as witnesses, one of which was the Novitas employee who signed the initial determination.  Petitioner requested a subpoena for that Novitas

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employee.  Further, Petitioner, noting CMS’s statement that it had not yet identified witnesses for a hearing, indicated that Petitioner wanted to cross-examine any witnesses CMS identified in the future.

In a September 2, 2020 Order, I gave Petitioner an opportunity to clarify whether it was seeking to cross-examine either or both of CMS’s witnesses.  Further, I noted that I would not permit witnesses for whom no written direct testimony had been submitted to testify at a hearing unless the witness was an adverse or uncooperative witness.  I also denied Petitioner’s request for a subpoena because the Novitas employee who issued the initial determination was unnecessary.  I explained that I review the record in this matter de novo. 

In response, Petitioner filed a new witness list with no witnesses listed but with a request to cross-examine Ms. Davinroy and Ms. O’Neal.

CMS timely filed a response to Petitioner’s summary judgment motion along with two additional exhibits (CMS Exs. 22-23).  Petitioner did not object to these proposed exhibits.

I issued a notice to the parties that I would hold a hearing on March 16, 2021, so that Petitioner could cross-examine CMS’s witnesses.  In that notice, I denied the parties’ motions for summary judgment and admitted CMS Exhibits 1 through 23 and Petitioner Exhibits 1 through 10 into the record.  Because the parties disputed the finality of the review process for the 2018 and 2019 Medicare claims that serve as a basis for the revocation, I provided both parties an additional opportunity to submit any evidence as to whether the appeals involving such claims were still pending.  Finally, I stated that I did not have authority to rule on any of Petitioner’s Constitutional arguments and that the initial determination in this matter was not improperly issued by a CMS contractor instead of CMS itself.  Concerning the latter, I stated:

As to Petitioner’s claim that the initial determination was improperly issued by a CMS contractor, I conclude that Petitioner is factually and legally incorrect.  The initial determination expressly states that “[t]he Centers for Medicare & Medicaid Services (CMS) has determined . . . .”  CMS Ex. 2 at 1.  This indicates that CMS made the determination, but the contractor effectuated that decision.  Further, even if the contractor made the initial determination, a CMS official rendered the reconsidered determination, thus curing the matter.  CMS Ex. 4 at 12.  It is the reconsidered determination that provides the basis for my review and not the initial determination.  See 42 C.F.R. §§ 498.5(l), 498.24-498.25, 498.40(a).  Finally, while CMS indicated in preamble

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language in the Federal Register that it, and not contractors, would make decisions to revoke under § 424.535(a)(8)(ii), duly promulgated regulations permit CMS contractors to revoke enrollments and billing privileges, without restriction to the basis for the revocation.  42 C.F.R. § 405.800(b).  Therefore, I will not reverse the revocation in this case because a CMS contractor issued the initial determination.

Notice of Hearing at 5.

On March 16, 2021, I held a hearing in this case at which Petitioner cross-examined both of CMS’s witnesses.  At the conclusion of the hearing, I asked counsel to brief the question as to whether I am bound by the various claims denial determinations that form the basis of the revocation or must I review each of the denied claims to determine if Petitioner’s claims failed to meet Medicare requirements.  Hearing Transcript (Tr.) at 47-48.  I also directed counsel to provide in their post-hearing briefs all arguments that they wanted me to address in my decision.  Tr. at 45; Notice of Receipt of Transcript and Order Directing Post-Hearing Briefing Schedule at 1.

After a transcript of the hearing was produced, CMS and Petitioner filed post-hearing briefs (CMS Br., P. Br.)1 and CMS filed a reply brief (CMS Reply).

II.  Issues

1.  Whether CMS had a legitimate basis for revoking Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(ii).

2.  Whether CMS had a legitimate basis to place Petitioner on CMS’s preclusion list.  42 C.F.R. §§ 422.2 and 423.100.

III.  Jurisdiction

I have jurisdiction to decide whether CMS legitimately revoked Petitioner’s Medicare enrollment and added Petitioner to CMS’s preclusion list.  42 C.F.R. §§ 498.3(b)(17), (20), 498.5(l)(2), (n)(2); see 42 U.S.C. § 1395cc(j)(8); 42 C.F.R. §§ 405.803(a); 424.545(a); 498.1(g).

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IV.  Finding of Fact

1.  Petitioner was licensed in Texas to provide ambulance services in May 2012.  CMS Ex. 1 at 2, 7.

2.  Petitioner was enrolled in the Medicare program as an ambulance service supplier in January 2013.  CMS Ex. 1 at 1.

Denied Claims from 2014 to 2015

3.  On March 8, 2016, a Medicare Zone Program Integrity Contractor (ZPIC) issued a document entitled “Provider Education” in which the ZPIC stated that it reviewed 32 Medicare claims filed by Petitioner from January 18, 2014 through February 7, 2015, and determined that all of the claims should have been denied.  CMS Ex. 19 at 1.

4.  On April 22, 2016, the ZPIC sent Petitioner a notice stating that, based on its review of Petitioner’s claims, an overpayment of $563,195.16 had been extrapolated.  P. Ex. 4 at 2.  The notice indicated that the ZPIC had reviewed a statistically valid sample of claims with service dates from January 18, 2014 through February 7, 2015, and that the sample of the 32 claims that should have been denied “has been extrapolated from the entire number of 2,585 claims in the universe[,]” resulting in the overpayment amount.  P. Ex. 4 at 3.  The notice encouraged Petitioner to remedy the billing issues found by the ZPIC, and warned that CMS may revoke Petitioner’s Medicare enrollment “[i]f CMS determines that [Petitioner] has a pattern or practice of submitting claims that fail to meet Medicare requirements.”  P. Ex. 4 at 4-5.

5.  In a May 2, 2016 notice, Novitas informed Petitioner that the ZPIC identified an overpayment to Petitioner in the amount of $563,195.16 and requested that Petitioner return the overpaid amount by May 31, 2016.  Novitas stated that Petitioner was “responsible for being aware of correct claim filing procedures.  In this situation, you billed and/or received payment for services you should have known you were not entitled to.”  CMS Ex. 5 at 1.

6.  Petitioner appealed the overpayment determination and, on July 20, 2016, Novitas issued an unfavorable redetermination.  Novitas found that Petitioner filed multiple claims with the Medicare program for payment of services to multiple beneficiaries from January 18, 2014 through February 7, 2015.  Novitas noted that, although a Medicare Administrative Contractor had originally paid the claims, a ZPIC concluded that the claims should be denied because the information needed to make the payment was missing or the information provided did not support the

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need for the services.  Novitas provided an individual analysis for 32 claims that should have been denied.  CMS Ex. 6 at 1, 10-47.

7.  The July 20, 2016 redetermination also explained that the overpayment amount of $563,195.16 was “based on an extrapolation of a statistical sample to a universe of paid claims. . . . All of the calculations and requirements are consistent with the statistical sampling instructions provided by CMS.”  CMS Ex. 6 at 3.

8.  Petitioner requested reconsideration of the Novitas redetermination.  A Qualified Independent Contractor (QIC) issued a reconsideration decision on November 18, 2016, that was partially favorable to Petitioner.  The QIC indicated that the redetermination reviewed 64 “claim lines,” of which 32 lines were for base transport and 32 were for mileage (see CMS Ex. 6 at 48-50).  The QIC indicated that six base transport claims were denied for lack of medical necessity and the remaining 26 claims were denied for lack of a physician certification statement.  The QIC also found that a valid statistical sample was defined but the extrapolation calculation was not valid and should be corrected.  CMS Ex. 7 at 24-40.

9.  The QIC provided Petitioner with information on how it could appeal the reconsideration decision by requesting a hearing before an administrative law judge.  CMS Ex. 7 at 42.

10.  On November 29, 2016, Novitas sent a notice to Petitioner that repayment in the amount of $3,280.51 was due by December 28, 2016.  The notice reminded Petitioner that it could appeal this amount to an administrative law judge.  CMS Ex. 8 at 2. 

Denied Claims from 2018

11.  Novitas issued a December 31, 2018 initial determination to Petitioner concerning a prepayment review that Novitas’s Medical Review Department undertook for 39 claims for ambulance services.  The 39 claims billed 40 services provided under procedure code A0425 and 39 services under procedure code A0428.  Novitas determined that 35 of the 39 claims did not meet Medicare requirements because the submitted documentation failed to show that the ambulance transports were medically necessary.  Specifically, Novitas identified a 90% error rate for claimed procedure code A0425 and an 89.74% error rate for claimed procedure code A0428.  CMS Ex. 9 ¶¶ 5-6; CMS Ex. 20 at 1-3, 8-24.

12.  The December 31, 2018 initial determination also indicated that the claims review process is meant to address errors through education.  Novitas advised Petitioner that improper billing and coding can significantly impact the Medicare program.

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Finally, Novitas provided several pages of information under a section entitled “Education,” which included a list of reference documents to read, and specific recommendations and actions to take.  Novitas also stated that one of its employees would call Petitioner “to provide one-on-one education.”  CMS Ex. 20 at 3-6. 

13.  The December 31, 2018 initial determination advised Petitioner of its right to request a redetermination within 120 days.  CMS Ex. 9 ¶ 7; CMS Ex. 20 at 6; Tr. at 17.

14.  Leann Davinroy, Novitas’s Director of the Appeals Department, testified that there is no evidence Novitas received an appeal from Petitioner.  Tr. at 17.  She stated the following in her written direct testimony at CMS Exhibit 9 ¶ 8: 

I oversaw the review of the Novitas databases for any indication that [Petitioner] submitted a redetermination request stemming from the [initial determination].2   I have knowledge that the search of the Novitas database resulted in no appeal documents on file for [Petitioner].  A redetermination must be requested within 120 days from the date of receipt of the notice of initial determination.

15.  The record contains a February 15, 2019 letter, purportedly from Petitioner to Novitas, requesting redetermination of the December 31, 2018 initial determination.  P. Ex. 7.  There is no testimony or other evidence in the record that this letter was mailed to Novitas.  Further, Ms. Davinroy testified that if an appeal is received by Novitas, the appeal would be routed to her team and her team would have knowledge of the appeal.  Tr. at 12.  Ms. Davinroy testified that she had no knowledge of her department receiving an appeal from Petitioner, that she had never seen the February 15 letter until this proceeding, and that “I don’t believe it was ever received at Novitas.”  Tr. at 12-13.

16.  Ms. Davinroy also testified that after she saw the February 15 letter in this proceeding, she noticed that it was addressed to the division in Novitas that receives medical records from suppliers.  Tr. at 18.  She further testified that Novitas’s policy is that mail misdirected to one department must be forwarded to the correct department.  Tr. at 19.  Upon seeing that the letter was misdirected to a

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different department, Ms. Davinroy inquired with the Novitas medical review department and learned that the letter was not received by that department.  Tr. at 18. 

Denied Claims from 2019

17.  Leslie O’Neal, a Medical Review Manager at Qlarant Integrity Solutions, LLC (Qlarant),3 testified in this proceeding that her department reviews Medicare claims before CMS issues payment.  She testified that “[c]laims that do not comply with Medicare regulations are denied.  This process is known as ‘pre-payment review.’”  CMS Ex. 21 ¶ 5.

18.  Ms. O’Neal testified that, in July 2019, her department performed pre-payment review on 27 claims submitted by Petitioner and “Qlarant denied 22 of the 27 claims for failure to comply with Medicare regulations.”4   CMS Ex. 21 ¶ 6; see CMS Ex. 16.  Qlarant calculated that the review resulted in an 81.48% error rate by Petitioner.  CMS Ex. 10; see also Tr. at 41.

19.  Ms. O’Neal testified that following the pre-payment review, the documentation concerning the review was sent to Novitas to issue a “remit notice” to Petitioner.  Tr. at 31.

20.  In a June 24, 2019 Medicare Remittance Advice notice, Novitas informed Petitioner that it was denying 30 claims, 22 of which were the claims identified by Qlarant.5   Compare CMS Ex. 16 with CMS Ex. 23.  All of them were denied under

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code M127, which means the claims were missing the patient’s medical record for the service provided.  Six of the claims also were denied based on code MA27, which means the claims failed to provide an entitlement number or name, or provided one that was incomplete or invalid.  CMS Ex. 23.

21.  Each of the claims itemized on the June 24, 2019 notice displayed code MA01, which provides the following notice of Petitioner’s right to appeal denied claims (CMS Ex. 23 at 5; see Tr. at 31, 37):

Alert:  If you do not agree with what we approve for these services, you may appeal our decision.  To make sure that we are fair to you, we require another individual that did not process your initial claim to conduct the appeal.  However, in order to be eligible for an appeal, you must write to us within 120 days of the date you received this notice, unless you have a good reason for being late.

22.  The Medical Review Manager testified that Qlarant did not receive notice from Novitas that Petitioner requested redetermination of the 22 denied claims and she did not locate any indication that claims were appealed in the Medicare Appeals System (MAS).  CMS Ex. 21 ¶ 8; Tr. at 32, 38. 

23.  In an October 16, 2019 notice, Qlarant advised Petitioner that CMS was suspending Medicare payments to Petitioner as of October 11, 2019, due to credible allegations of fraud.  CMS Ex. 11 at 3. 

V.  Conclusions of Law and Analysis

The Social Security Act (Act) authorizes the Secretary of Health and Human Services to establish regulations for enrolling providers and suppliers in the Medicare program.  42 U.S.C. § 1395cc(j)(1)(A).  Providers must enroll in the Medicare program and receive a billing number in order to obtain payment for services rendered to Medicare beneficiaries.  42 C.F.R. § 424.505. 

Entities providing ambulance services are considered suppliers in the Medicare program.   See 42 U.S.C. § 1395x(d), (u); 42 C.F.R. § 498.2 (definition of Supplier).  Ambulance services are considered “medical and other health services” for Medicare program purposes when the use of other methods of transportation is contraindicated by the individual’s condition, as provided in the regulations.  42 U.S.C. § 1395x(s)(7).  The regulations specify requirements to be a supplier of ambulance services and coverage

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requirements for receiving Medicare reimbursement for those services.  42 C.F.R. §§ 410.40-410.41. 

The regulations delegate to CMS the authority to revoke the enrollment and billing privileges of providers and suppliers.  42 C.F.R. § 424.535.  CMS or a Medicare contractor may revoke a provider or supplier’s Medicare enrollment and billing privileges for any of the reasons listed in 42 C.F.R. § 424.535(a).  42 C.F.R. §§ 405.800(b)(1), 424.535(a).  If CMS revokes a provider or supplier’s Medicare enrollment and billing privileges, the revocation becomes effective 30 days after CMS or one of its contractors mails the revocation notice to the provider or supplier, subject to some exceptions not applicable in this case.  42 C.F.R. §§ 405.800(b)(2), 424.535(g).  After CMS revokes a provider or supplier’s enrollment and billing privileges, CMS bars the provider from reenrolling in the Medicare program for a minimum of one year, but no more than ten years.6   42 C.F.R. § 424.535(c).

CMS may revoke the enrollment of a provider or supplier who engages in abuse of billing privileges.  42 C.F.R. § 424.535(a)(8).  CMS may determine that there has been an abuse of billing privileges if a provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.  42 C.F.R. § 424.535(a)(8)(ii).  In making that determination, CMS will consider any or all of the six factors specified in the regulations, as applicable or appropriate in an individual case.  42 C.F.R. § 424.535(a)(8)(ii)(A)-(F). 

When evaluating a challenge to a revocation, the Departmental Appeals Board (DAB) has adopted an evidentiary structure that includes burden shifting.  CMS must make a prima facie showing that the provider or supplier failed to comply with the regulations.  If this occurs, the provider or supplier must prove, by a preponderance of the evidence, that it was in compliance.  Hillman Rehab. Ctr., DAB No. 1611 (1997); see Adora Healthcare Services, Inc., DAB No. 2714 at 3-4 (2016); Medisource Corp., DAB No. 2011 at 2-3 (2006) (applying Hillman to all cases adjudicated under 42 C.F.R. pt. 498.). 

1.  The November 18, 2016 reconsideration decision, the December 31, 2018 initial determination, and the June 24, 2019 initial determination are binding on Petitioner.

The record contains a reconsideration decision issued by a QIC on November 18, 2016, and two initial determinations issued on December 31, 2018, and June 24, 2019.  CMS Exs. 7, 20, 23.  All of these documents advised Petitioner that it had the right to appeal those determinations.  CMS Ex. 7 at 2; CMS Ex. 20 at 6; CMS Ex. 23 at 5. 

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Petitioner does not dispute that the November 18, 2016 reconsideration decision is final.  However, Petitioner disputes the finality of the December 31, 2018 and June 24, 2019 initial determinations. 

Petitioner indicates that it mailed a timely redetermination request in response to the December 31, 2018 initial determination.  Although Petitioner submitted a copy of a redetermination request (P. Ex. 7), Petitioner provided no evidence of mailing or delivery of the redetermination request.  Petitioner did not even submit written direct testimony from a witness who mailed the letter.  In contrast, CMS provided testimony from a witness who inquired into the matter and concluded that there is no record of Novitas having received the redetermination request.  Further, even after CMS disclosed in this proceeding that Novitas had no record of the redetermination request, Petitioner has not indicated that it has tried to further pursue the appeal that Petitioner allegedly filed.

Petitioner also made vague arguments that it was denied due process related to the June 24, 2019 initial determination.  However, the notice advised Petitioner of its appeal rights, and Petitioner neither expressly disputed receipt of the initial determination nor alleged the filing of a redetermination request.  CMS also provided testimony that there is no record that an appeal was received or is pending adjudication.  Again, even after this initial determination was submitted into the record, Petitioner does not appear to have taken any action to seek review.

Therefore, under 42 C.F.R. §§ 405.928 and 405.978, I conclude all three determinations are final and binding. 

2.  The final determinations denying Petitioner’s claims constitute unrebutted evidence that Petitioner’s denied claims did not meet Medicare requirements.

As detailed in the factual findings above, CMS and its contractors have issued various determinations in which they have denied many of Petitioner’s claims related to ambulance services.  CMS filed both the determinations and the claims documentation on which those determinations are based.  CMS Exs. 7, 13, 15-A through 15-II, 17-A through 17-V, 20, 23.  Because the threshold question under § 424.535(a)(8)(ii) is whether Petitioner filed claims that do not meet Medicare requirements, I asked the parties to brief the question as to whether I am to accept the reasons stated in the determinations as to why Petitioner’s claims were denied or must I review the claims submissions myself and determine if they failed to meet Medicare requirements.

CMS argues that Petitioner is precluded from disputing the merits related to the claims denials.  Regarding the 2014-2015 claims denials, a QIC issued a reconsideration decision concluding that 13 claims that Petitioner filed were properly denied.  CMS cited 42 C.F.R. § 405.978, which states that a reconsideration decision is binding on all parties

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unless there is a further appeal or CMS reopens the determination.  CMS Br. at 12-13.  Similarly, regarding the initial determinations that 35 claims filed from September to October 2018 and 22 claims from the spring of 2019 were denied by Novitas, CMS cited 42 C.F.R. § 405.928 for the proposition that those initial determinations are binding on all the parties unless a redetermination is issued or CMS reopens the claims.  CMS Br. at 14, 16. 

Petitioner responded that its due process rights have been violated because CMS allegedly withheld the opportunity to pursue administrative appeals of the denied claims.  P. Br. at 4.  In support of this, Petitioner claimed that the QIC’s reconsideration decision, which resulted in a reduction of overpayment liability from $563,195.16 to $3,280.51, shows that the few claims that were denied are an insufficient basis for an abuse of billing practices charge.  P. Br. at 6.  Further, Petitioner argued it appealed the initial determination denying claims filed in September and October 2018; therefore, the initial determination does not support an abuse of billing practices.  P. Br. at 7.  In addition, Petitioner asserts that CMS never provided Petitioner with an opportunity to appeal the initial determination denying 22 claims from the spring of 2019.  Therefore, that initial determination is an insufficient basis on which to uphold a revocation for abusive billing practices.  P. Br. at 7.  Finally, Petitioner states in a subheading in its brief that I should review each and every claim that was denied, but Petitioner failed to otherwise explain that statement or provide analysis as to how each of Petitioner’s claims complied with Medicare requirements.  P. Br. at 11.

I am persuaded that CMS’s reasoning is correct and that I should consider administratively final determinations denying claims as, at a minimum, prima facie evidence that those claims did not meet Medicare requirements as stated in those determinations.  Medicare claims adjudicators are in the best position to make those determinations and, especially when there are administratively final determinations, it ensures that the statutory claims appeal process is not duplicated.

The Act provides a Medicare adjudication process that includes an initial determination as to whether a claim should be paid and then four levels of administrative appeal if the claim is not paid.  42 U.S.C. § 1395ff(a)-(d).  More specifically, after a claim is filed with the appropriate CMS contractor, the contractor must issue an initial determination as to whether the claimed items and services are covered or reimbursable under the Medicare program.  42 C.F.R. § 405.920.  The contractor sends an initial determination to providers and suppliers as either an electronic or paper “remittance advice” notice, which will state the basis for denied claims for items and services as well as information on the right to seek redetermination.  42 C.F.R. § 405.921(b). 

If a party is dissatisfied with an initial determination, that party has the right to file a request for redetermination.  42 C.F.R. §§ 405.940-405.946.  A CMS contractor will render a redetermination, based on the evidence of record, that affirms or reverses the

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initial determination.  42 C.F.R. § 405.954.  Significantly, an initial determination concerning a claim for items or services is binding on all parties to the initial determination unless a redetermination is issued or CMS revises the initial determination.  42 C.F.R. § 405.928.

If a party is not satisfied with the redetermination, the party may request reconsideration by a QIC, which will issue a reconsideration decision that includes a summary of the facts, an explanation of pertinent law, and a rationale for the determination.  42 C.F.R. §§ 405.960, 405.976.  A party may further appeal to an administrative law judge and later to the Medicare Appeals Council.  42 C.F.R. §§ 405.1000, 405.1102.  However, unless a party continues to appeal each determination, the last determination or decision issued is binding on the parties.  42 C.F.R. §§ 405.958, 405.978, 405.1048. 

Based on this appeal process, the Secretary received public comments in response to the proposal to promulgate § 424.535(a)(8)(ii), which asked the Secretary not to base revocations on claims denials that were later overturned.  The Secretary agreed that “[a] provider or supplier’s claim denial that has been both – (1) fully (rather than partially) overturned on appeal; and (2) finally and fully adjudicated will be excluded from our consideration in determining whether the provider or supplier’s Medicare billing privileges should be revoked under § 424.535(a)(8)(ii).”  79 Fed. Reg. 72,500, 72,513 (Dec. 5, 2014).  The Secretary stated that “the term ‘finally and fully adjudicated’ means that – (1) the appeals process has been exhausted; or (2) the deadline for filing an appeal has passed.”  79 Fed. Reg. at 72,513. 

Although this comment and response were primarily directed at final determinations that overturn a claim denial, I conclude that its reasoning also supports recognition of final claims denials when adjudicating a revocation based on § 424.535(a)(8)(ii).  Further, the response to the comment proceeds from an understanding that final denied claims may support a revocation under § 424.535(a)(8)(ii).  Therefore, I see no reason that final and binding claims denials should not provide prima facie evidence that a provider or supplier filed claims that failed to meet Medicare requirements. 

In this case, Petitioner makes no effort to show that the claims denied by the QIC or Novitas were wrongly decided.  Therefore, I conclude CMS has met its burden to show Petitioner filed claims that failed to meet Medicare requirements. 

3.  Petitioner engaged in a pattern or practice of submitting claims for ambulance services that were not in compliance with Medicare requirements under 42 C.F.R. § 424.535(a)(8)(ii).

In determining whether a provider or supplier has engaged in a pattern or practice of submitting claims that are not in compliance with Medicare requirements, CMS will consider the following factors “as appropriate or applicable”: 

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(A)  The percentage of submitted claims that were denied.

(B)  The reason(s) for the claim denials.

(C)  Whether the provider or supplier has any history of final adverse actions (as that term is defined under § 424.502) and the nature of any such actions.

(D)  The length of time over which the pattern has continued.

(E)  How long the provider or supplier has been enrolled in Medicare.

(F)  Any other information regarding the provider or supplier’s specific circumstances that CMS deems relevant to its determination as to whether the provider or supplier has or has not engaged in the pattern or practice described in this paragraph.

42 C.F.R. § 424.535(a)(8)(ii).

In this proceeding, Petitioner argues that the initial determination to revoke did not evaluate the regulatory factors.  P. Br. at 4-6.  While the initial determination is more limited in its explanation as to why CMS revoked Petitioner, I note that CMS, in the reconsidered determination, expressly discusses the regulatory factors listed above.  CMS Ex. 4 at 7.  It is the reconsidered determination that is the basis for Petitioner’s hearing request and is the determination that is most important to this review.  42 C.F.R. §§ 498.5(l)(2); 498.40(a); see Neb Group of Arizona LLC, DAB No. 2573 at 7 (2014).

Percentage of Denied Claims

The CMS hearing officer considered the percentage of claims denied regarding each of the three claims review periods.  Specifically, the CMS hearing officer stated that, for the 2014-2015 claims review, 41% of those claims were denied by the QIC.  For the 2018 claims review, 90% of the claims were denied.  And for the 2019 claims review, 81% of claims were denied.  The CMS hearing officer considered these results to show “very high error rates,” especially because CMS contractors twice made the effort to educate Petitioner on how to file compliant claims.  CMS Ex. 4 at 7. 

Based on a review of the record, the CMS hearing officer correctly found that the QIC’s determination related to the 2014-2015 claims review yielded a 41% rate of denial.  See CMS Ex. 7 at 26-40 (showing 26 out of 64 unfavorably decided, i.e., denied, claims). 

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Further, the CMS hearing officer is correct that Novitas indicated that the rate of denial for the 2018 claims review was 90% (CMS Ex. 20 at 2).  See CMS Ex. 20 at 8-24 (71 denials out of 79 billed services).  Finally, the CMS hearing officer is correct that the denial rate for the 2019 claims review was 81%.  CMS Exs. 10, 16, 23.  I agree with the CMS hearing officer’s assessment that these represent very high denial rates. 

Petitioner argues that the 2014-2015 review does not support revocation because the initial determination found an overpayment of hundreds of thousands of dollars and, following the QIC’s review, the overpayment was only a few thousand dollars.  As a result, Petitioner believes this is exculpatory evidence.  P. Br. at 6.  However, Petitioner’s argument fails to acknowledge that the large overpayment amount had been statistically  extrapolated (see 42 U.S.C. § 1395ddd(f)(3)) and that the reduction in the overpayment was attributed to the QIC’s conclusion that the initial determination included a calculation error.  CMS Ex. 7 at 25.  Therefore, the reduction in the amount of the overpayment does not change a 41% denial rate for the 2014-2015 claim review.

Reasons for the Claim Denials 

The CMS hearing officer considered the reasons why the CMS contractors denied Petitioner’s claims for ambulance services.  The CMS hearing officer stated that the 2014-2015 review, the 2018 review, and the 2019 review revealed that Petitioner had a habit of filing the same type of claim and that the medical records Petitioner provided did not support the medical necessity of the transports provided to the beneficiaries.  CMS Ex. 4 at 7.

The record shows that most of the claims were denied for lack of medical necessity or a lack of medical records to support the claims.  CMS Ex. 7 at 27-28, 30-31; CMS Ex. 20 at 8-24; CMS Ex. 23.  Medical necessity is the most basic requirement for a Medicare claim and ambulance service suppliers must maintain appropriate documentation that can be presented to a CMS contractor on request.  42 C.F.R. § 410.40(d); see 42 U.S.C. §§ 1395g(a) (“no such payments shall be made to any provider unless it has furnished such information as the Secretary may request in order to determine the amounts due such provider . . . .”); 1395l(e) (“[n]o payment shall be made to any provider of services . . . unless there has been furnished such information as may be necessary in order to determine the amounts due such provider . . . .”); 1395y(a)(1)(A) (excluding payments “for items and services [that] are not reasonable and necessary for the diagnosis or treatment of illness or injury.”).  

However, many of the claims were denied because Petitioner did not provide a signed and/or dated physician certification statement.  CMS Ex. 7 at 29-30, 38-40; CMS Ex. 20 at 14-17, 21-22.  Such statements are required by the regulations and the date of signature is essential because there are time limitations between the date of the physician’s order and the service being provided.  42 C.F.R. § 410.40(d)(2)-(3). 

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A consistent failure to show medical necessity and a failure to provide properly executed physician certifications for non-emergency ambulance transports is troubling. 

Final Adverse Actions

The CMS hearing officer indicated that the record did not show any final adverse actions against Petitioner.  CMS Ex. 4 at 7.  I agree that the record is devoid of such evidence. 

The Length of Time the Pattern Continued

The CMS hearing officer stated that the length of Petitioner’s pattern of filing noncompliant claims is five years, from 2014 through 2019.  The hearing officer considered this amount of time as justification for revocation, especially in light of the opportunities Petitioner had to correct its behavior.  CMS Ex. 4 at 7. 

The record supports that denied claims were filed in 2014, 2015, 2018, and 2019.  CMS Exs. 7, 20, 23.  Although there is no specific evidence of denied claims in 2016 and 2017, it is of significant concern that Petitioner went through the 2014-2015 statistical sample case appeals process and received education from the contractor on filing proper claims, only to be highly noncompliant in 2018 and 2019.  Even after education efforts based on the 2018 claims review, Petitioner filed many noncompliant claims in 2019, only months after receiving the 2018 initial determination. 

The Length of Petitioner’s Medicare Enrollment

The CMS hearing officer stated that Petitioner had been enrolled as a supplier in the Medicare program since 2013.  The hearing officer indicated that it was particularly concerning that, during its time as a supplier, three reviews showed many denied claims.  CMS Ex. 4 at 7. 

The record shows that Petitioner was enrolled in the Medicare program in 2013.  CMS Ex. 1 at 1.  Therefore, Petitioner has had ample time to conform to the requirements for filing valid claims.  Petitioner’s failure to do so justifies remedial action, such as revocation, to protect the Medicare Trust Fund from paying improper claims. 

Other Information

The CMS hearing officer found it particularly relevant that Petitioner received written education regarding proper billing and submission of claims in 2016 and 2018.  CMS Ex. 4 at 7. 

I agree that the record supports CMS’s efforts to educate Petitioner.  CMS Exs. 19, 20

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4.  CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(ii).

The evidence of record, as analyzed through the regulatory factors, supports CMS’s conclusion that Petitioner engaged in a pattern or practice of abuse of billing practices.  CMS explained in rulemaking for 42 C.F.R. § 424.535(a)(8)(ii) that “a provider or supplier should be responsible for submitting valid claims at all times and that the provider or supplier’s repeated failure to do so poses a risk to the Medicare Trust Funds.”  79 Fed. Reg. at 72,513.  CMS further explained that its intention was not to revoke billing privileges based on a “misunderstanding of these policies,” but cautioned that “Medicare billing privileges come with a responsibility for the provider to diligently seek and obtain clarification of Medicare policies should there be a misunderstanding or confusion.”  79 Fed. Reg. at 72,514.  CMS also discussed that “[t]he term ‘abusive,’ as used in the context of § 424.535(a)(8)(ii), is meant to capture a variety of situations in which a provider or supplier regularly and repeatedly submits non-compliant claims over a period of time.”  79 Fed. Reg. at 72,515. 

Petitioner’s failure to comply with Medicare requirements based on three reviews made in different years and after education efforts by CMS contractors shows that CMS was authorized to revoke Petitioner’s enrollment in the Medicare program. 

5.  Petitioner does not present any legal or factual arguments disputing its inclusion on the preclusion list.

CMS has established a single list of individuals and entities for whom Medicare Advantage plans cannot provide reimbursement for items and services they provide, and for prescribers to whom Medicare Part D plans cannot provide reimbursement for any prescriptions the individuals write.  42 C.F.R. §§ 422.222, 423.120(c)(6).  As relevant here, for CMS to include an individual, entity, or prescriber on its preclusion list, the following three requirements must be met:

(i)  The [individual, entity, or prescriber] is currently revoked from Medicare for a reason other than that stated in [42 C.F.R.] § 424.535(a)(3) . . . .

(ii)  The [individual, entity, or prescriber] is currently under a reenrollment bar under [42 C.F.R] § 424.535(c).

(iii)  CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program.  In making this determination under this paragraph . . . , CMS considers the following factors:

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(A)  The seriousness of the conduct underlying the . . . revocation.

(B)  The degree to which the . . . conduct could affect the integrity of the [Medicare/Part D] program.

(C)   Any other evidence that CMS deems relevant to its determination . . . .

42 C.F.R. §§ 422.2, 423.100.

In the reconsidered determination, the CMS hearing officer found that Petitioner had been revoked and was under a reenrollment bar.  Further, the hearing officer discussed Petitioner’s history of filing noncompliant claims and concluded the following: 

This conduct calls into question [Petitioner’s] ability and willingness to be a trustworthy Medicare partner as it was, at minimum, negligent and at maximum, dishonest in submitting claims for services that were not properly documented to support the medically necessity of ambulance transportation provided [to] its patients.  Additionally, [Petitioner] did not make attempts to rectify its pattern of abusive billing in spite of the two educational resources provided to it.  CMS considers these billing practices a serious threat to the Medicare Program.

CMS Ex. 4 at 9-10.

Petitioner only opposes its inclusion on the preclusion list because it argues that it should not have been revoked.  P. Br. at 10.  However, having concluded above that revocation was legitimate, I reject Petitioner’s argument.  I also agree with the hearing officer that the record supports a conclusion that Petitioner’s conduct underlying the basis for its revocation is detrimental to the best interests of the Medicare program. 7   Therefore, I uphold Petitioner’s inclusion on the preclusion list.

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VI.  Conclusion

For the foregoing reasons, I affirm CMS’s revocation of Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. § 424.535(a)(8)(ii) and uphold Petitioner’s inclusion on CMS’s preclusion list.

• 1.   Petitioner also submitted a portion of the hearing transcript marked as Petitioner
  Exhibit 11.  Because the hearing transcript is already in the record, I do not admit this
  proposed exhibit.  5 U.S.C. § 556(e); see 42 C.F.R. § 498.64. 
• 2.   The written testimony has two paragraphs listed as the eighth paragraph.  The first one is incomplete and refers to the initial determination as being dated December 31, 2018.  The second paragraph, which is complete, indicates that the initial determination is dated October 31, 2018.  CMS Ex. 9 ¶ 8.  Ms. Davinroy confirmed that she meant December 31, 2018.  Tr. at 21.
• 3.   Qlarant is a CMS Unified Program Integrity Contractor (UPIC).  “As a UPIC, Qlarant is responsible for preventing, detecting, and deterring fraud, waste, and abuse in the Medicare program.  Qlarant performs specific program integrity functions to protect Medicare, including investigating fraud and abuse matters, performing data analysis/data mining to identify potentially fraudulent billing, recommending recovery of federal funds through administrative actions, and implementing payment suspensions.  Qlarant also conducts pre-payment review of certain claims submitted to the Medicare program.”  CMS Ex. 21 ¶¶ 2-3. 
• 4.   In her written direct testimony, the Medical Review Manager mistakenly stated that CMS Exhibit 17 provided a list of the 22 denied claims.  At the hearing, she corrected her testimony.  See Tr. at 36.  The list appears in CMS Exhibit 16. 
• 5.   The six additional claims that were denied include two claims each for two beneficiaries who are not listed in Qlarant’s review (i.e., Beneficiaries R.A. and A.W.), as well as two and one additional claims for Beneficiaries C.L. and C.M., respectively, who are listed in Qlarant’s review.  For purposes of this case, I only consider the 22 claims that CMS identified as a basis for revoking Petitioner’s enrollment. 
• 6.   Prior to November 4, 2019, the maximum reenrollment bar in most cases was three years.  84 Fed. Reg. 47,794, 47,826, 47,855 (Sept. 10, 2019). 
• 7.   CMS, without explanation, asserts that administrative law judges may not review its determination as to whether the underlying reasons for the revocation are detrimental to the Medicare program.  CMS Br. at 19.  However, the regulations clearly state that one of the appealable initial determinations that CMS issues is when “[a]n individual or entity is to be included on the preclusion list as defined in [42 C.F.R.] § 422.2 or § 423.100.”  42 C.F.R. § 498.3(b)(20).  Had the Secretary intended to preclude administrative law judge review, the Secretary would not have provided such a broad grant of jurisdiction or would have expressly limited administrative law judge review.