Prodigy Dialysis, LLC, ALJ Ruling 2020-10 (HHS CRD May 11, 2020)

RULING

Located in Johnstown, Pennsylvania, Petitioner, Prodigy Dialysis, LLC, was, until recently, an end stage renal disease (ESRD) facility that supplied dialysis services under the Medicare program.  Following a recertification survey, completed August 30, 2017, the Centers for Medicare & Medicaid Services (CMS) determined that the facility was not in substantial compliance with eight conditions for coverage and that three of its deficiencies posed an immediate and serious threat to patient health and safety.  CMS terminated Petitioner’s Medicare participation.

Petitioner has appealed the termination.  Its appeal does not mention five of the eight condition-level deficiencies cited, but instead complains that CMS rejected its plans of correction for the three deficiencies posing immediate jeopardy.  CMS moves to dismiss because (among other reasons) Petitioner does not have a right to a hearing on the issues it raised.

I agree that Petitioner does not have the right to a hearing on the issues it appealed, and I grant CMS’s motion.

Discussion

1.   Petitioner’s hearing request must be dismissed because Petitioner is not entitled to a hearing on either of the issues it raises:  CMS’s immediate jeopardy determination; or the state agency’s rejection of the facility’s plans of correction.  42 C.F.R. § 498.70(b).1

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Statutory and regulatory background.  Section 1881 of the Social Security Act (Act) extends Medicare coverage to ESRD patients.  The Act establishes the general scheme by which participating individuals qualify and facilities deliver ESRD services; implementing regulations fill in the details and are found at 42 C.F.R. Part 494. 

To participate in and receive payment from Medicare, an ESRD facility must satisfy all the provisions of section 1881 of the Act and it must be in substantial compliance with the conditions for coverage set forth in Part 494.  42 C.F.R. § 488.3(a).  A “condition for coverage” represents a broad category of services.  Each condition is contained in a single regulation, which is divided into subparts called standards.  See 42 C.F.R. § 488.26(b); Angel Kidney Care of Inglewood, Inc., DAB No. 2795 at 1 (2017).  With one exception,2 the failure of an ESRD supplier to meet one or more of the conditions for coverage set forth in Part 494 will result in termination of Medicare coverage for the services furnished by the supplier.  42 C.F.R. § 488.604(a).

If a facility is deficient with respect to one or more standards, it may participate in the Medicare program only if:  a) it has submitted an acceptable plan of correction for achieving compliance within a reasonable period of time acceptable to CMS; and b) the deficiencies “neither jeopardize the health and safety of patients nor are of such character as to seriously limit the provider’s capacity to render adequate care.”  42 C.F.R. § 488.28.  If the facility meets these criteria, the state agency/CMS may grant it a “reasonable time” in which to achieve substantial compliance.  Ordinarily, that amount of time is 60 days, but that depends on the nature of the deficiency and the survey agency’s judgment as to the capabilities of the facility to provide adequate and safe care.  42 C.F.R. § 488.28(c), (d).  Nothing in this or any other regulation authorizes a period of correction where a facility is found out of compliance at the condition level.

To monitor compliance, CMS contracts with state agencies that periodically survey the dialysis facilities.  Act § 1864(a); 42 C.F.R. § 488.10.  Each facility must be surveyed as often as CMS deems necessary.  42 C.F.R. § 488.20(a). 

A dialysis facility dissatisfied with CMS’s determination to terminate its Medicare participation because it does not comply with conditions for coverage may request review by an administrative law judge.  42 C.F.R. §§ 488.24(c), 498.3(b)(6), 498.5(e).  Appeal procedures are governed by 42 C.F.R. Part 498.  Only initial determinations can be appealed.  The regulations list actions that are initial determinations and thus subject to review.  42 C.F.R. § 498.3(b); see § 498.3(d) (administrative actions that are not initial determinations).  The administrative law judge may dismiss an appeal if the party does not have a right to a hearing.  42 C.F.R. § 498.70(b).

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Survey findings.  In this case, surveyors from the Pennsylvania Department of Health (state agency) completed the dialysis facility’s recertification survey on August 30, 2017.  Based on the survey findings, CMS determined that the facility was not in compliance with the following conditions for coverage and that these deficiencies caused immediate jeopardy to patient health and safety:

• 42 C.F.R. § 494.80 (patient assessment);3
• 42 C.F.R. § 494.90  (patient care plan);
• 42 C.F.R. § 494.100 (care at home);
• 42 C.F.R. § 494.110 (quality assessment and performance improvement);
• 42 C.F.R. § 494.140 (personnel qualifications);
• 42 C.F.R. § 494.150 (responsibilities of medical director);
• 42 C.F.R. § 494.170 (medical records);
• 42 C.F.R. § 494.180 (governance).

Termination Notice (September 28, 2017) (Departmental Appeals Board Electronic Filing System document #1a:  Originating case decision); see also 42 C.F.R. § 498.20; CMS Ex. 1 (survey report form).

Termination notice.  In a notice letter dated September 28, 2017, CMS advised the dialysis facility that it did not meet eight condition-level requirements, and that CMS would therefore terminate its program participation, effective October 13, 2017.  Termination Notice at 1-2.  The letter advised that the facility might forestall termination if it submitted an acceptable plan of correction and corrected all of the outstanding conditions for coverage in sufficient time to allow the state agency to verify the corrections prior to the termination date.  Termination Notice at 2. 

The notice letter also advised the facility of its appeal rights.  Citing 42 C.F.R. § 498.40(b), the letter explains that a request for hearing should identify the specific issues, findings of fact, and conclusions of law with which the facility disagreed and should specify the basis for contending that the findings and conclusions are incorrect.  Termination Notice at 3.

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Hearing request.  Petitioner timely requested a hearing.  Consistent with the regulatory requirements, its hearing request identifies the specific issues, findings of fact, and conclusions of law with which it disagreed and specifies why it contends that CMS’s findings and conclusions are incorrect.  42 C.F.R. § 498.40(b).  First, the hearing request:

• describes aspects of the August 30 survey (Hearing Request ¶¶ 5-9);4
• alleges that the facility submitted to the state agency three plans of correction and supplemental documents, which addressed the immediate jeopardy deficiencies (Hearing Request ¶¶ 13, 16, 17, 39-42, 44);
• alleges that the state agency rejected its plans of correction (Hearing Request ¶ 18);
• alleges that the facility asked for more time in which to correct its immediate jeopardy deficiencies (Hearing Request ¶¶ 23, 24).

The request specifies the three reasons it disagrees with CMS’s finding that it did not meet Medicare participation requirements:

1. The facility’s conditions did not cause immediate jeopardy to patient health and safety (Hearing Request ¶ 28).
2. The facility was not afforded sufficient time to correct its deficiencies (Hearing Request ¶¶ 31, 32, 37).
3. CMS erred in finding that the facility failed to submit a proper plan of correction. (Hearing Request ¶ 38).

As a threshold matter, I note first that Petitioner’s hearing request does not mention five of the eight condition-level deficiencies cited by CMS.  The regulations mandate termination when even one condition for coverage is not met.  42 C.F.R. § 488.604(a); Angel Kidney Care, DAB No. 2795 at 3; Dialysis Ctr. at Moreno Valley, Inc., DAB No. 2193 at 23 (2008) (finding that “the mandatory, plain language of [the regulation] compels the termination of Medicare coverage . . . where the supplier fails to meet a condition for coverage [with the one exception].”)  Thus, even assuming Petitioner had raised an issue that could be reviewed in this forum, I would have to sustain the termination based on its undisputed noncompliance with five conditions for coverage.

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And none of the three bases set forth in Petitioner’s hearing request are reviewable in this forum.  First, CMS’s finding of immediate jeopardy is not reviewable.  A supplier’s level of noncompliance is not an initial determination and is therefore not reviewable.  42 C.F.R. § 498.3(b).5

With respect to the remaining bases, CMS is not required to afford a supplier the opportunity to correct a condition-level deficiency before terminating its program participation.  42 C.F.R. § 488.604(a); Angel Kidney Care, DAB No. 2795 at 8 n.7; see Blossom South, LLC v. Sebelius, 987 F. Supp. 2d 289, 302 (W.D.N.Y. 2013) (acknowledging that CMS has the authority to order immediate termination, without giving the provider an opportunity “to rectify matters once that decision had been made”); Oaks of Mid City Nursing & Rehab. Ctr., DAB No. 2375 at 29-30 (2011); Cmty. Home Health, DAB No. 2134 at 14 (2007); Excelsior Health Care Srvs., Inc., DAB No. 1529 at 6-7 (1995).  Affording the facility an opportunity to correct is wholly within CMS’s discretion, and I have no authority to review it. 

Nor may I review either the state agency’s or CMS’s determination to reject a supplier’s plan of correction.  That action is not listed as an initial determination and is therefore not reviewable.  42 C.F.R. §§ 498.3(b), 498.5; see HRT Lab., Inc., DAB No. 2118 at 11 (2007); Hermina Traeye Mem’l Nursing Home, DAB No. 1810 at 13 (2002) (in affirming the termination of a provider, the “ALJ properly concluded that he lacked authority to adjudicate the question of whether [CMS] abused its discretion in deciding to reject the [plan of correction].”).

Responding to CMS’s argument that its hearing request does not raise an appealable issue, Petitioner nevertheless argues that it is entitled to a hearing because it is dissatisfied with CMS’s initial determination.  P. Response at 6-7.  Pointing to paragraphs 27-44 of its hearing request, Petitioner maintains that it “disagrees” with CMS’s findings that it no longer meets Medicare participation requirements.  P. Response at 8.  In fact, in paragraph 44, Petitioner maintained:

In addition to the Plans of Correction, [the facility] provided many other documents and information to [the state surveyor] in an ongoing, good-faith effort to correct the Immediate Jeopardy deficiencies but [the state surveyor] incorrectly

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found that these documents were not sufficient to correct the Immediate Jeopardy deficiencies.

Hearing Request ¶ 44. 

Thus, Petitioner has challenged CMS’s finding that it no longer meets Medicare requirements for participation as a supplier only in the sense that it misconstrues which parts of that determination are reviewable. 

Finally, I deny Petitioner’s request to amend its appeal.  Even in responding to CMS’s motion to dismiss, Petitioner did not point to any one of the deficient conditions for coverage to claim that, in fact, it met that condition.  Indeed, its submissions all suggest the opposite:  it concedes that the conditions were not met but they could have been corrected, had the facility been given sufficient opportunity.  It is simply too late in the process to claim, for the first time, that the facility met all conditions for coverage. 

Conclusion

Because Petitioner has not appealed any issue that I have the authority to review, I dismiss this hearing request pursuant to 42 C.F.R. § 498.70(b).

The parties may request that I vacate this order within 60 days for good cause shown.  42 C.F.R. § 498.72.

• 1. I make this one finding of fact/conclusion of law.
• 2.  Where a dialysis facility does not participate in and pursue the goals of its ESRD network, as required by 42 C.F.R. § 494.180(i), CMS may impose an alternative sanction. 42 C.F.R. § 488.606(a).
• 3. I highlight, in bold, the conditions cited at the immediate jeopardy level.
• 4. To the extent that Petitioner attacks the quality of the survey, it is well-settled that the conduct of the survey is irrelevant.  Petitioner’s Response to CMS’s Motion to Dismiss (Petitioner’s Response) at 3, 5; Angel Kidney Care, DAB No. 2795at 10-11 and cases cited therein.
• 5. The regulations strictly limit review of a facility’s level of noncompliance.  Only three types of providers (skilled nursing facilities, nursing facilities, and home health agencies) are entitled to such review, and under limited circumstances (the range of civil money penalties is affected or a finding of substandard quality of care results in the loss of approval for a nurse aide training program). 42 C.F.R. §§ 498.3(b)(14), 498.3(d)(10).