Good News for GME Reimbursements — Saint Francis Medical Center v. Azar Decision
August 1, 2018:
On June 29, 2018, in the D.C. Circuit Court of Appeals, a significant victory in a Medicare reimbursement appeal was obtained. This case involved 277 hospitals seeking to challenge various payment decisions spanning the last two decades. The providers were contesting so-called “predicated facts” (factual determinations relevant to the payment year at issue, but were made in earlier years). Specifically, errors were made in 1983, based on the hospitals’ cost reporting data from 1981, in determining prospective payment amounts and the errors were acknowledged as being in fact errors. View full case details here.
In late 2013, CMS revised its reopening regulations to clarify the cost reporting periods in which such predicate facts are established are themselves subject to the 3-year reopening time limit, and such cost reporting periods may not be later reopened, even for the purpose of correcting historic errors to ensure accurate reimbursement.
The court found the revised reopening regulations (42 CFR 405.1885(a)(1)(iii) will apply to predicate fact challenges in reopenings, but they do not extend the limitation period beyond any “reopening”. Accordingly, the limitation period does not apply to PRRB administrative appeals.
In addition, Judge Kavanaugh, President Trump’s nominee for the Supreme Court, agreed with the arguments for the plaintiffs (providers) that the agency’s actions in promulgating the new regulation were arbitrary and capricious, and Judge Kavavaugh wrote a concurring opinion in favor of the plaintiffs stating, “it would seem to be the very definition of arbitrary and capricious for HHS to knowingly use false facts when calculating hospital reimbursements”.
So, what’s the good news? Predicated facts can be considered in appeals; therefore, if errors are found in the following scenarios, they could be corrected in future appeals:
- FTE Cap: The Balanced Budget Act of 1997 limited the number of allopathic and osteopathic medical residents that would be counted for purposes of calculating Medicare indirect medical education (IME) and direct graduate medical education (DGME) reimbursement to the unweighted number on each hospital’s most recent cost report as of December 31,1996 (BBA Section 4621). Effective October 1, 1997, to the extent the number of allopathic or osteopathic residents being trained at a teaching hospital exceeds the 1996 limit; teaching hospitals receive no additional IME or DGME payments. If an error is discovered in the calculation of the 1996 cap this predicated fact can be appealed in a subsequent cost report appeal.
- FTE Rolling Average: 42 CFR Sections 412.105(f)(1)(v) and 413.79(d) specifies a “3-year rolling average” which is applied to a hospital’s count of FTE residents to calculate IME and direct GME payments for a cost reporting period (that is, the number of FTEs used to calculate payments is the average of the number of FTE residents reported for the current year, the prior year, and the penultimate year). If an error is discovered in the calculation of the 3 year rolling average a predicated fact can be appealed in a subsequent cost report appeal.
- Per Resident Amount: CFR 413.77(e) discusses hospitals with new GME teaching programs. The hospital’s per resident amount is established based on the lower of the hospital’s direct GME costs per resident amounts in its base year, or the updated weighted mean value of the per resident amounts of all hospitals located in the same geographic wage area as specified at 42 CFR 413.77. If an error is discovered in the calculation of the per resident amount, a predicated fact can be appealed in a subsequent cost report appeal.
Let us help you get the correct (maximum) reimbursement for your GME programs. I have 32 years of experience with the fiscal intermediary (FI), (now called Medicare administrative contractor) including serving as Audit and Reimbursement Manager for the last 20 years. In that capacity, I was responsible for hospital audits and reopenings. Additionally, I have presented cases to the PRRB for the FI and represented the FI as an expert witness. I have conducted training classes for staff, providers, and the US Attorney offices in Los Angeles and San Diego. Currently, I am the Director of Governmental Relations with GME Solutions and have been for the past 10 years.