Tricorex, Inc. d/b/a Healthcare Equipment and Supply Co., DAB CR5550 (2020)

DECISION

Petitioner, Tricorex, Inc. d/b/a Healthcare Equipment and Supply Co., is a supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), located in Potosi, Missouri, that, until recently, participated in the Medicare program. The Centers for Medicare & Medicaid Services (CMS) has revoked its Medicare supplier number, and Petitioner appeals. The parties have filed cross-motions for summary judgment.  

Neither party has any witnesses, so an in-person hearing would serve no purpose. See Acknowledgment and Prehearing Order at 5 (¶¶ 8-11 (July 21, 2017)). This matter may therefore be decided on the written record, without considering whether the standards for summary judgment are satisfied. 

I find that CMS did not establish a prima facie case that it was authorized to revoke Petitioner’s supplier number. Although CMS’s allegations would have justified the revocation, it failed to submit actual evidence in support of those allegations.

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Background

Petitioner participated in the Medicare program as a DMEPOS supplier. See 42 C.F.R. § 424.57.  In a letter dated December 29, 2016, the Medicare contractor, National Supplier Clearinghouse, notified Petitioner that its Medicare supplier number was revoked pursuant to 42 C.F.R. §§ 424.57(c)(2) and 424.57(c)(22).  According to the letter, “[o]ur records reflect that your business location is no longer accredited; therefore you failed to comply with this standard.”  CMS Ex. 3. 

Petitioner apparently sought reconsideration.1 In a reconsidered determination, dated April 25, 2017, a Medicare hearing officer affirmed the revocation of Petitioner’s supplier number, concluding that Petitioner did not comply with supplier standard 2 (requiring that suppliers provide complete and accurate information on their applications and report any changes in information within 30 days of the change) and supplier standard 22 (requiring that the supplier be accredited). CMS Ex. 5. Petitioner now appeals that determination pursuant to 42 C.F.R. § 424.545.

Exhibits. With its motion and brief (CMS Br.), CMS submits four exhibits (CMS Exs. 1-3 and 5). Petitioner, who is not represented by counsel, submitted its own motion and brief, along with four exhibits (P. Exs. A-D).

CMS identifies CMS Ex. 1 as Petitioner’s revalidation application, received by the contractor on July 26, 2016.  It is not.  Medicare contractors stamp paper applications with a “Julian date stamp,” which counts the days of the years consecutively.  The first two digits stamped on CMS Ex. 1 indicate that the year filed was 2017.  The next two digits indicate the date, the 24th day of 2017, or January 24, 2017.  The document itself, CMS Form 855S, indicates that Petitioner was voluntarily terminating its Medicare enrollment, effective November 30, 2016.  CMS Ex. 1 at 7.

Notwithstanding CMS’s mischaracterization, the document is relevant.  In the absence of any objections, I admit into evidence CMS Exs. 1-3 and 5 and P. Exs. A-D.

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Discussion

1. CMS failed to establish a prima facie case that Petitioner was not in substantial compliance with Medicare supplier standards 2 and 22.2

Burden of proof. Although the supplier must ultimately prove its substantial compliance by a preponderance of evidence, CMS has the initial burden of establishing a prima facie case that the supplier was not in substantial compliance with relevant statutory and regulatory provisions. MediSource Corporation, DAB No. 2011 (2006). 

Requirements for a DMEPOS supplier’s Medicare participation. To receive Medicare payments for items furnished to a Medicare-eligible beneficiary, a supplier of medical equipment and supplies must have a supplier number issued by the Secretary of Health and Human Services. Social Security Act § 1834(j)(1)(A); 42 C.F.R. § 424.505. To keep that number, the supplier must meet the standards set forth in 42 C.F.R. § 424.57(c). CMS may revoke its billing privileges if it fails to do so. 42 C.F.R. § 424.57(c)(1) and (e); 42 C.F.R. § 424.535(a)(1), (5).

Among those standards, a supplier must provide complete and accurate information on its enrollment application. Within 30 days of any change, it must report that change to CMS.  42 C.F.R. § 424.57(c)(2). In addition, DMEPOS suppliers must be accredited. 42 C.F.R. § 424.57(22).

Standard 2 compliance. Here, CMS maintains that the contractor received Petitioner’s revalidation application on July 26, 2016, and that inspectors visited the supplier’s physical location on September 20, 2016. CMS submits the September 20, 2016 inspection report, which shows that, as of that date, the supplier complied with enrollment requirements. CMS Ex. 2.  “Subsequently,” according to CMS, the contractor “received notice that [Petitioner’s] accreditation had expired and that it was no longer at the location [the contractor] had inspected” in September. CMS offers no details nor evidence in support of these claims. 

Petitioner concedes that the business closed following the September 20 inspection, but maintains that it timely notified the contractor, by means of PECOS, of its change in status and sought voluntary termination.3 Petitioner submits October 13, 2016 e-mail correspondence from the contractor regarding a “Medicare enrollment application status change notification.”  The message refers to “your Medicare enrollment application” on

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PECOS and indicates that “the application listed below has reached a final status.”  The e-mail includes a tracking number. P. Ex. C. According to Petitioner, this message is referring to Petitioner’s application for voluntary termination. P. Ex. A.  Petitioner also submitted a December 6, 2016 FAX cover sheet, which indicates that the contractor requested additional documents. P. Ex. B. 

On January 24, 2017, Petitioner submitted a paper CMS Form 855S.  That document indicates that the supplier was voluntarily terminating its Medicare enrollment, effective November 30, 2016, and that it terminated business at its practice location, effective November 30, 2016.  CMS Ex. 1 at 7, 8.

The evidence on this issue is sparse.  It establishes that Petitioner was in compliance with Medicare requirements as of the September 20, 2016 inspection.  CMS Ex. 2.  On October 13, 2016, Petitioner filed, through PECOS, an “enrollment application status change notification,” and, on December 6, 2016, it attempted to follow up with the contractor’s requests.  P. Exs. B, C.  Petitioner’s Exhibit C includes a tracking number, and CMS does not suggest that this PECOS filing was anything other than Petitioner’s application to terminate voluntarily its Medicare enrollment, which advised the contractor that it would no longer operate at that business address. 

Standard 22 compliance. Petitioner also maintains that its accreditation was valid until April 23, 2018, and submits a copy of its award of accreditation, dated April 23, 2015, which indicates, on its face, that the supplier’s accreditation “is in effect for three years from” that date.  P. Ex. D.  CMS submits no evidence on this issue.  The evidence in this record thus establishes that Petitioner was accredited, at least through the time the business closed.

Because CMS submitted no evidence showing that Petitioner failed to notify the contractor of a change in status within 30 days of that change or that it lost its accreditation, it has not established a prima facie case that Petitioner failed to satisfy Medicare program requirements.  See Rural Metro Corporation of Florida, Inc., DAB No. 2977 (2019) (ruling, in a fraudulent billing case, that CMS did not establish a prima facie case where it did not provide evidence that the Medicare beneficiaries it identified as deceased on the relevant dates of service were, in fact, deceased).  Nor has it rebutted Petitioner’s evidence that it was, in fact, accredited and that it reported timely its change in information.

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Conclusion

CMS has not established a prima facie case that Petitioner lost its accreditation or failed to report timely its change in information.  I therefore reverse CMS’s revocation of Petitioner’s supplier number.