Village Apothecary, Inc., DAB No. 3060 (2022)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Village Apothecary, Inc. (Petitioner) appeals an Administrative Law Judge (ALJ) decision sustaining the revocation of Petitioner’s Medicare enrollment and billing privileges for not being accredited as a Medicare supplier of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) as required by Medicare law and regulations.  Village Apothecary, Inc., DAB CR5931 (2021) (ALJ Decision).  The ALJ sustained the revocation under 42 C.F.R. § 424.57(e) based on Petitioner’s noncompliance with accreditation requirements and because Petitioner had no valid exemption.  We affirm the ALJ Decision because it is supported by substantial evidence and free of legal error.

Legal Background

The Social Security Act (Act) requires a DMEPOS supplier to obtain a supplier number from the Secretary of Health & Human Services (Secretary) to establish Medicare billing privileges.  Act § 1834(j)(1)(A).The current version of the Act can be found at http://www.socialsecurity.gov/OP_Home/ssact/ssact-toc.htm.  Each section of the Act on that website contains a reference to the corresponding United States Code chapter and section.  Cross-reference tables for the Act and the United States Code can be found at http://uscode.house.gov/table3/1935_531.htm and https://www.ssa.gov/OP_Home/comp2/G-APP-H.html.  DMEPOS suppliers that enroll in Medicare and receive associated billing privileges must comply with the conditions for Medicare payment in 42 C.F.R. Part 424, including the “[s]pecial payment rules for items furnished by DMEPOS suppliers and issuance of DMEPOS supplier billing privileges” in Subpart D.  See 42 C.F.R. § 424.57.We apply the regulations in effect on the date of the challenged revocation.  See John P. McDonough III, Ph.D., DAB No. 2728, at 2 n.1 (2016).  Section 424.57(c) specifies 30 certification standards that a DMEPOS supplier “must meet and must certify in its application for billing privileges that it meets and will continue to meet” to obtain and retain Medicare billing privileges.  Relevant to

Page 2

this case, Standard 22 states that a DMEPOS supplier “must be accredited by a CMS-approved accreditation organization in order to receive and retain a supplier billing number.”  42 C.F.R. § 424.57(c)(22).  Standard 22 implements section 1834(a)(20)(A) of the Act (42 U.S.C. § 1395m(a)(20)(A)), which requires the Secretary to “establish and implement quality standards . . . to be applied by recognized independent accreditation organizations . . . with which [DMEPOS] suppliers shall be required to comply in order to . . . receive or retain a provider or supplier number used to submit claims for reimbursement” under Medicare.

Certain pharmacies may be exempt from the accreditation requirement if they meet each of the following four criteria under the Act:

1. The total billings by the pharmacy for such items and services . . . are less than 5 percent of total pharmacy sales, as determined based on the average total pharmacy sales for the previous 3 calendar years, 3 fiscal years, or other yearly period specified by the Secretary.
2. The pharmacy has been enrolled . . . as a supplier of [DMEPOS], has been issued . . . a provider number for at least 5 years, and for which a final adverse action (as defined in section 424.57(a) of title 42, Code of Federal Regulations) has not been imposed in the past 5 years.
3. The pharmacy submits to the Secretary an attestation, in a form and manner, and at a time, specified by the Secretary, that the pharmacy meets the criteria described in subclauses (I) and (II).  Such attestation shall be subject to section 1001 of title 18, United States Code.
4. The pharmacy agrees to submit materials as requested by the Secretary, or during the course of an audit conducted on a random sample of pharmacies selected annually, to verify that the pharmacy meets the criteria described in subclauses (I) and (II).  Materials submitted under the preceding sentence shall include a certification by an accountant on behalf of the pharmacy or the submission of tax returns filed by the pharmacy during the relevant periods, as requested by the Secretary.

Act § 1834(a)(20)(G)(ii)(I)-(IV).

The Centers for Medicare & Medicaid Services (CMS) “revokes a supplier’s billing privileges if it is found not to meet the standards in paragraphs (b) and (c)” of section 424.57.  42 C.F.R. § 424.57(e)(1); see also 1866ICPayday.com, L.L.C., DAB No. 2289, at 13 (2009) (“[F]ailure to comply with even one supplier standard is a sufficient basis for revoking a supplier’s billing privileges.”).  Revocation is effective 30 days after the supplier is sent notice of the revocation, except where section 424.57 provides otherwise.

Page 3

42 C.F.R. § 424.57(e)(1).  “A Medicare-imposed revocation of any Medicare billing privileges” constitutes a “final adverse action.”  Id. § 424.57(a) (definitions).  Moreover, revocation results in termination of the supplier’s Medicare agreement, and the supplier is barred from re-enrolling in Medicare from one to three years, depending on “the severity of the basis for revocation.”  Id. § 424.535(b), (c)(1). 

A supplier may request reconsideration of the revocation and may then request an ALJ hearing on the reconsidered determination.  42 C.F.R. §§ 424.545(a); 498.5(l); 498.22; 498.40.  If dissatisfied with the ALJ decision, the supplier has a right to request Board review of the ALJ decision.  Id. § 498.80.

Case BackgroundBackground information is drawn from the ALJ Decision and the record before the ALJ and is not intended to substitute for the ALJ’s findings.

Village Apothecary Inc., d/b/a/ Village Health Mart, was enrolled in the Medicare program as a DMEPOS supplier.  See CMS Ex. 1.  On January 31, 2019, Palmetto GBA National Supplier Clearing House (NSC), a Medicare Administrative Contractor for CMS, notified Petitioner via certified mail that its Medicare enrollment and billing privileges were revoked pursuant to 42 C.F.R. §§ 424.57(c)(22), 424.57(e), and 424.535(a)(1); that the revocation was effective 30 days after the postmark of the letter; and that Petitioner could not apply to reenroll in the Medicare program for one year.  ALJ Decision at 1; CMS Ex. 2 (revocation notice).  The revocation notice explained that Petitioner did not comply with the supplier standard in section 424.57(c)(22) because Petitioner’s “accreditation with the Accreditation Commission for Healthcare, Inc (ACHC) expired February 23, 2018,” and Petitioner was not accredited by any other CMS-approved accreditation organization.  CMS Ex. 2, at 1-2 (italics removed).NSC also determined that Petitioner was not in compliance with 42 C.F.R. § 424.57(c)(10), having failed to maintain comprehensive liability insurance of at least $300,000.  CMS Ex. 2, at 1.  NSC later reversed that determination following Petitioner’s reconsideration request, which included a certificate of insurance accepted by NSC.  CMS Ex. 7, at 9-10; CMS Ex. 10, at 5.  The revocation notice also informed Petitioner that it could file a corrective action plan (CAP) within 30 days to correct its deficiencies and establish its eligibility to participate in Medicare (with respect to that part of the revocation based on section 424.535(a)(1)) and could separately seek reconsideration by an NSC hearing officer within 60 days if Petitioner believed the revocation determination was not correct.  Id. at 2 (citing 42 C.F.R. § 405.809).

Page 4

One week later, on February 7, 2019, Petitioner wrote to NSC stating: “In writing this letter, we wish to submit a ‘CORRECTIVE ACTION PLAN’ and let you know that as of 02/24/2018, we no longer supply accredited medical equipment and oxygen at our pharmacy, located at 4440 Highway 7 North, Hot Springs, AR.”  CMS Ex. 5, at 1; ALJ Decision at 2.Petitioner apparently had multiple locations; but, the 4440 Highway 7 location was the only one associated with Petitioner’s Medicare billing number that was the subject of NSC’s revocation decision.  ALJ Decision at 1 (citing CMS Ex. 1).  In the letter signed by Petitioner’s owner/president, Michael Butler, Petitioner represented that its medical supply business outgrew this location, and that Petitioner relocated its equipment to 3840 Highway 7 North, Hot Springs, Arkansas.  CMS Ex. 5, at 1.  Petitioner acknowledged that it did not renew its accreditation certificate for the 4440 Highway 7 location because it “no longer did anything but pharmacy” at that location.  Id.  Petitioner enclosed with its letter an application to enroll its “current location” at 3840 Highway 7 North in the Medicare program.  Id. at 2-30.Contrary to Petitioner’s assertion, the enrollment application enclosed with its CAP listed only the national provider identifier number for the 4440 Highway 7 location, did not seek to add a new business location, provided no accreditation or exemption information, sought enrollment as a pharmacy only, and provided licensing and insurance information for the 4440 Highway 7 location only.  CMS Ex. 5, at 7, 8, 11, 29-30.

In a letter dated February 19, 2019, NSC acknowledged receipt of Petitioner’s CAP but denied reinstatement of Petitioner’s Medicare billing privileges because it “failed to provide proof of accreditation,” and a billing report run by NSC for the 4440 Highway 7 location “shows the supplier continued to bill for products and services requiring accreditation without maintaining accreditation.”  CMS Ex. 6, at 3; ALJ Decision at 2.   

On March 20, 2019, more than 30 days after the revocation notice dated January 31, 2019, Petitioner, through counsel, submitted an additional CAP seeking to “prevent” the revocation of its Medicare billing privileges.  ALJ Decision at 2; CMS Ex. 7, at 2.  Petitioner alleged that its February 7, 2019 letter was not a “formal CAP”; that NSC did not notify Petitioner of its intent to revoke Petitioner’s supplier number; and that NSC did not give Petitioner an opportunity to submit a CAP prior to its February 19, 2019 letter.  CMS Ex. 7, at 2.  Petitioner acknowledged that “accreditation for the 4400 Highway 7 location expired February 23, 2018,” but argued that Petitioner qualified for an exemption because (i) Petitioner had been enrolled in the Medicare program for at least five years with no adverse actions, and (ii) its DMEPOS pharmacy billings were less than five percent of its total pharmacy sales based on the average for the last three years.  Id. at 3.  In support of these assertions, Petitioner submitted an “Attestation for Exemption from Accreditation for a Medicare Enrolled Pharmacy” (Attestation) signed by an authorized or delegated official of Petitioner on March 20, 2019.  Id. at 11.  NSC forwarded Petitioner’s March 20, 2019 correspondence and attachments to a Medicare hearing officer for reconsideration.  ALJ Decision at 3 (citing CMS Ex. 8 (indicating that NSC treated Petitioner’s second CAP as a request for reconsideration)).

Page 5

NSC reviewed Petitioner’s submission and on April 26, 2019, issued a reconsidered determination sustaining the revocation.  ALJ Decision at 3; CMS Ex. 10, at 5.  In support of that determination, the hearing officer found that from February 24, 2018 through February 11, 2019, Petitioner was neither accredited nor exempt from accreditation but nonetheless billed Medicare $1,533,949.77 for products and services requiring accreditation and was paid $481,430.46 during that time period.  CMS Ex. 10, at 4.The hearing officer also reviewed the U.S. Postal Service certified mail receipt for the January 31, 2019 revocation notice and determined that it was delivered to Petitioner.  CMS Ex. 10, at 4.  Petitioner submitted no evidence to refute this determination.  The hearing officer further explained that the Attestation submitted by Petitioner could not be accepted “due to the adverse legal action imposed on the supplier.”  CMS Ex. 10, at4; ALJ Decision at 3.   

Petitioner appealed the reconsidered determination by requesting an ALJ hearing.  Request for Hearing (RFH).  Before the ALJ, CMS filed a motion for summary judgment, or in the alternative, pre-hearing brief and ten proposed exhibits (CMS Br. and CMS Exs. 1-10).  ALJ Decision at 3.  Petitioner responded to CMS’s brief and moved for summary judgment.  Id.  Petitioner did not submit exhibits with its brief and neither party submitted proposed witness testimony.  Id.  “As neither party submitted written direct testimony,” the ALJ decided “there is no basis for conducting an-in person hearing.”  Id.  The ALJ admitted CMS’s exhibits without objection.  Id.  The ALJ did not grant either party’s motion for summary judgment, but issued a decision on the merits based on the written record.  See id. (citing George Yaplee Med. Ctr., DAB No. 3003, at 5 (2020); Marcus Singel, D.P.M., DAB No. 2609, at 6 (2014)). 

The ALJ concluded that CMS had a legitimate basis to revoke Petitioner’s Medicare enrollment and billing privileges because Petitioner conceded that its accreditation expired on February 23, 2018; that a billing report showed Petitioner billed $1,593,726.28 and was paid $484,386.72 for products and services requiring accreditation from February 24, 2018 through at least April 29, 2019; and that during this time, Petitioner was neither accredited nor exempt from accreditation.  ALJ Decision at 4 (citing 42 C.F.R. §§ 424.57(c)(22), 424.57(e)(1)); see also CMS Ex. 4 (billing report).  The ALJ found that “Petitioner’s late-filed Attestation and late-filed enrollment application for the 3840 Highway 7 North location [did] not absolve Petitioner from its obligation to maintain the accreditation as required under the regulations.”  ALJ Decision at 5.  The ALJ explained that “[i]t is the lapse of Petitioner’s accreditation prior to the revocation that provided the basis for the revocation.”  Id. (citing Jersey City Med. Supplies, Inc., DAB No. 2766, at 6 (2017)).  Finally, the ALJ noted that she could not review CMS’s exercise of discretion to revoke Petitioner’s enrollment where there is a valid basis for revocation.  Id. at 6 (citing Abdul Razzaque Ahmed, M.D., DAB No. 2261, at 19 (2009), aff’d, Ahmed v. Sebelius, 710 F. Supp. 2d 167 (D. Mass. 2010)).

Page 6

Standard of Review

The standard of review on a disputed factual issue is whether the ALJ’s decision is supported by substantial evidence in the record as a whole.  The standard of review on a disputed issue of law is whether the ALJ’s decision is erroneous.  See Guidelines – Appellate Review of Decisions of Administrative Law Judges Affecting a Provider’s or Supplier’s Enrollment in the Medicare Program, at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html.

We note that several of Petitioner’s appeal arguments are predicated on its contention that the ALJ granted CMS’s motion for summary judgment.  RR at 2-5 (arguing that the ALJ was required to construe the evidence in a light most favorable to Petitioner and draw all reasonable inferences in favor of Petitioner).  The ALJ did not grant summary judgment in favor of CMS; rather, the ALJ issued a decision on the merits based on the written record.  ALJ Decision at 3 (“[T]his matter is ready for a decision on the merits.”).  Thus, there was no need for the ALJ to consider the evidence in a light most favorable to Petitioner or to draw all reasonable inferences in favor of Petitioner.  We reject Petitioner’s arguments that are based on applying the summary judgment standard and address Petitioner’s arguments based on the standard of review articulated above. 

Analysis

A.       The ALJ’s determination that CMS had a lawful basis to revoke Petitioner’s Medicare billing privileges under 42 C.F.R. § 424.57(e) because Petitioner was not accredited or exempt from accreditation is supported by substantial evidence and free of legal error.

On review of a determination to revoke a Medicare supplier’s billing privileges, an ALJ and the Board “decide only whether CMS has established a lawful basis for the revocation.”  Cornelius M. Donohue, DPM, DAB No. 2888, at 4 (2018).  Revocation of a DMEPOS supplier’s billing privileges under 42 C.F.R. § 424.57(e) is authorized if the supplier fails to meet the accreditation requirements in section 424.57(c)(22).  See 42 C.F.R. § 424.57(e)(1).  If the regulatory elements for revocation are satisfied, “then the revocation must be sustained.”  Douglas Bradley, M.D., DAB No. 2663, at 13 (2015).  Neither an ALJ nor the Board may review how CMS exercises its discretion to revoke a supplier’s billing privileges or substitute its own discretion for that of CMS.  See Blair Allen Nelson, M.D., DAB No. 3024, at 7 (2020).   

Petitioner does not dispute that as a supplier of DMEPOS, it was subject to the certification standards under 42 C.F.R. § 424.57(c), which includes the accreditation requirements.  NSC determined, and Petitioner concedes, that its accreditation expired on February 23, 2018.  ALJ Decision at 4 (citing CMS Ex. 2, at 1-2; CMS Ex. 3, at 2); CMS Ex. 10, at 2; Request for Review (RR) at 5 (“The accreditation for the 4440 Highway 7

Page 7

location expired February 23, 2018 . . . .”).  Despite the lapse of Petitioner’s accreditation, Petitioner continued billing Medicare for goods and services that required accreditation from February 24, 2018 through at least April 29, 2019.  ALJ Decision at 4-5; see also CMS Ex. 4 (billing report); CMS Ex. 6, at 3; CMS Ex. 10, at 3.Petitioner initially represented that it did not furnish goods or services requiring accreditation at its 4440 Highway 7 location after February 23, 2018.  CMS Ex. 5, at 1.  After NSC determined this was untrue based on uncontroverted billing reports, Petitioner changed course, asserting that it “qualifies for an exemption from accreditation requirements . . . .”  CMS Ex. 7, at 3.

In its request for review, Petitioner argues that it complied with the supplier standards because it “met all the criteria” for an exemption.  RR at 3.  According to Petitioner, the Attestation it signed and submitted on March 20, 2019 (CMS Ex. 7, at 11), after its billing privileges were revoked, demonstrated that Petitioner was exempt because (1) it had been enrolled in Medicare for at least five years “with no adverse actions”; and (2) its billings for DMEPOS for the prior three years was less than five percent of its total sales.  RR at 5-6.  We reject Petitioner’s arguments.      

Pharmacies may be exempt from the accreditation requirement if they meet each of the four criteria under the Act.  Act § 1834(a)(20)(G)(ii)(I) – (V).  Petitioner only references the first two criteria.  The latter two criteria require that the pharmacy submit to the Secretary an attestation that it meets the first two criteria under subclauses (I) and (II); and agrees to submit materials as requested by the Secretary to verify that it meets the criteria in subclauses (I) and (II).  See Act § 1834(a)(20)(G)(ii)(III-IV).  Absent the pharmacy’s submission of an attestation and the pharmacy’s agreement to submit materials as requested for verification, the pharmacy has not met each of the criteria for an exemption under the Act.

Petitioner did not meet “all the criteria” for an exemption.  Petitioner did not submit a valid attestation in accordance with section 1834(a)(20)(G)(ii)(III) of the Act at any time before its Medicare billing privileges were revoked.  See 42 C.F.R. § 424.57(e)(1) (providing that the effective date of revocation is 30 days after the supplier is sent notice of the revocation).  We reject Petitioner’s contention that it was exempt from the accreditation requirement merely because it was allegedly “eligible for an exemption” based on the first two criteria.  Reply at 1-2.  Petitioner’s argument ignores the third and fourth criteria requiring the submission of a valid attestation (which it did not do) and its agreement to submit materials as requested for verification (which it avoided by not filing an attestation). 

By not submitting a valid attestation before allowing its accreditation to lapse, Petitioner was plainly not in compliance with the statute and regulations during the time that it continued to bill Medicare for goods and services requiring accreditation and when its

Page 8

enrollment and billing privileges were revoked.  See Jersey City, DAB No. 2766, at 6 (“[A] DMEPOS supplier whose accreditation lapses is not in compliance with the supplier standards.”).

We further reject Petitioner’s implicit contention that it need only submit an attestation for an exemption after it is found to be operating without the required accreditation.  This would undermine the regulations and allow a DMEPOS supplier to continue billing Medicare without either maintaining its accreditation or establishing a valid exemption.  See 42 C.F.R. § 424.57(c)(22) (requiring that DMEPOS suppliers must be accredited to “receive and retain a supplier billing number” (emphasis added)).  Moreover, by failing to submit a valid attestation while continuing to bill Medicare without the necessary accreditation, Petitioner avoided verification of its eligibility for an exemption in that CMS and its contractors were unaware that Petitioner intended to rely on the exemption.  See Act § 1834(a)(20)(G)(ii)(IV) (permitting CMS to request materials to verify that pharmacy meets exemption criteria).

Accordingly, substantial evidence supports the ALJ’s finding that Petitioner “neither demonstrated that it was exempt from accreditation” from February 23, 2018 through April 29, 2019, “nor has Petitioner shown that it was accredited at the business location linked with the [supplier number] from which it billed.”  ALJ Decision at 4.  We conclude that the ALJ did not err in upholding the revocation of Petitioner’s billing privileges under 42 C.F.R. § 424.57(e)(1) based on Petitioner’s noncompliance with section 424.57(c)(22).  Id. at 6.The ALJ further determined that CMS had a lawful basis to revoke Petitioner’s billing privileges under 42 C.F.R § 424.535(a)(1).  ALJ Decision at 6.  The version of section 424.535(a)(1) in effect at the time of Petitioner’s revocation permitted revocation if the supplier is non-compliant “with the enrollment requirements described in this subpart P or in the enrollment application applicable for its . . . supplier type, and has not submitted a plan of corrective action.”  42 C.F.R. § 424.535(a)(1) (2018).  Section 424.57 does not fall under subpart P, Petitioner’s enrollment application on file at the time of revocation is not part of the record, and we note Petitioner did submit a corrective action plan (albeit one that was rejected).  Neither party adequately addressed section 424.535(a)(1) in their briefing.  We find the record does not contain sufficient information to fully evaluate whether CMS had a lawful basis to revoke Petitioner’s billing privileges under section 424.535(a)(1).  In any event, we need not reach that issue having determined that CMS had a lawful basis to revoke Petitioner’s billing privileges under 42 C.F.R. §§ 424.57(c)(22) and 424.57(e)(1).  Cf. Donna Maneice, M.D., DAB No. 2826, at 8 (2017) (“CMS needs to establish only one ground for revocation.”); Thomas Falls, M.D., DAB No. 3056, at 13, n.10 (2022).

B.       Petitioner’s Attestation was rejected because it was false.

Petitioner argues that the ALJ erred by failing to consider the “fact” that NSC refused to review its Attestation.  RR at 6.  Petitioner complains that the Attestation it submitted was “denied review” because NSC “refused to review” Petitioner’s second “CAP.”  Reply at 2.  Petitioner argues that its revocation would have been prevented if NSC had

Page 9

considered and accepted the Attestation.  RR at 6.  Petitioner misunderstands NSC’s determination and, as explained below, we find no error in the ALJ’s conclusion that Petitioner failed to demonstrate that it was exempt from the accreditation requirement.  ALJ Decision at 4-5. 

As NSC recognized, the Attestation Petitioner submitted after the revocation of its billing privileges was false.  CMS Ex. 7, at 11; CMS Ex. 10, at 4.  Petitioner writes: “Village attempted to submit a CAP which included an Attestation showing that Village met the exemption . . . when it became aware that the NSC had revoked its Medicare number.”  RR at 6 (referring to CMS Ex. 7, at 11).  In other words, knowing that its Medicare billing privileges had been revoked, Petitioner submitted an Attestation certifying (without any qualifications) that as of March 20, 2019, it had not been subject to a final adverse action (as defined in 42 C.F.R. § 424.57(a)) in the last five years.  CMS Ex. 7, at 10.Representations made in an attestation seeking an exemption from accreditation are subject to 18 U.S.C. § 1001.  See 42 U.S.C. § 1395m(2)(G)(ii)(III).  The revocation of Medicare billing privileges, however, is a “final adverse action” as defined in section 424.57(a) (“final adverse action” includes “[a] Medicare-imposed revocation of any Medicare billing privileges”).  The reason the Attestation was rejected was not because it was submitted as part of an impermissible CAP, but because it was false due to the revocation of Petitioner’s Medicare billing privileges.  CMS Ex. 10, at 3 (“The attestation cannot be accepted by the NSC due to the adverse legal action imposed against the supplier.”), 4 (“The attestation submitted with the reconsideration cannot be accepted due to the adverse legal action imposed on the supplier.”).  Thus, contrary to Petitioner’s contention, the Attestation was considered by NSC, but rejected because it falsely certified that no final adverse action had been imposed against Petitioner in the past five years.

C.       Petitioner’s contention that it was deprived of the right to respond to the notice of revocation has no merit. 

Petitioner further argues that the ALJ “failed to address the crux of [its] argument–that CMS deprived [Petitioner] of its right to sufficiently respond” to the notice of revocation when it was not allowed to submit a CAP and its Attestation was rejected.  RR at 2.  In its reply, Petitioner expands on this argument, complaining that CMS arbitrarily refused to consider the CAP it submitted on or about March 20, 2019.  Reply at 3.

The notice of revocation advised Petitioner that it may submit a CAP within 30 days of the postmark date of the letter (January 31, 2019) for that part of the revocation based on section 424.535(a)(1), and that the CAP should provide evidence that Petitioner is compliant with Medicare requirements.  CMS Ex. 2, at 2.  A supplier may only submit a

Page 10

CAP for a revocation under section 424.535(a)(1) and the supplier “has only one opportunity to correct all deficiencies that served as the basis of its revocation.”  42 C.F.R. § 405.809(a)(1)-(2).  CMS or its contractor may reinstate a supplier’s billing privileges based on a CAP if the supplier provides sufficient evidence “that it has complied fully with the Medicare requirements . . . .”  Id. § 405.809(b)(1).  However, the refusal of CMS or its contractor to reinstate a supplier’s billing privileges based on a CAP is not an initial determination reviewable by the ALJ or the Board.  Id. § 405.809(b)(2); see also DMS Imaging, Inc., DAB No. 2313, at 8-10 (2010); Health Connect at Home, DAB No. 2419, at 10-11 (2011); Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395, at 9-10 (2011).

The notice of revocation further advised Petitioner that it could request reconsideration from an NSC hearing officer within 60 days of the postmark date of the letter if Petitioner believed the revocation determination was incorrect.  CMS Ex. 2, at 2.  The right to request reconsideration is an important appeal right under the regulations and is a required step before seeking ALJ review.  See 42 C.F.R. § 498.5(l)(1) (permitting an existing supplier dissatisfied with an initial determination related to the revocation of Medicare billing privileges to request reconsideration from CMS or one of its contractors in accordance 42 C.F.R. § 498.22); id. § 498.5(l)(2) (providing that an existing supplier dissatisfied with a reconsidered determination is entitled to a hearing before an ALJ).

Here, Petitioner availed itself of both options.  First, on February 7, 2019, Petitioner submitted a CAP (which was clearly intended to be a CAP before it retained counsel) claiming that it had stopped supplying goods and services requiring accreditation “as of” February 24, 2018—a day after its accreditation lapsed.  CMS Ex. 5, at 1.Petitioner, by counsel, asserts without any evidence that Mr. Butler was “unaware of the revocation notice” dated January 31, 2019, and, therefore, the letter Mr. Butler sent to NSC on February 7, 2019 (CMS Ex. 5) seven days after the notice of revocation was not intended to be a CAP.  RR at 5.  Petitioner makes this assertion despite the letter’s opening sentence: “In writing this letter, we wish to submit a ‘CORRECTIVE ACTION PLAN.’”  CMS Ex. 5 (emphasis by Mr. Butler).  Petitioner submitted no affidavit, written direct testimony, or any other evidence to support counsel’s unsubstantiated assertion that Mr. Butler was “unaware” of the January 31, 2019 notice of revocation when he submitted the initial CAP.  Like the ALJ, we do not accept Petitioner’s assertion.  ALJ Decision at 1 (finding NSC notified Petitioner by certified mail and by letter dated January 31, 2019, that its billing privileges were revoked effective 30 days from the postmark date of the letter) (citing CMS Ex. 2).  Moreover, as the ALJ found, there is no dispute that Petitioner allowed its accreditation to lapse without a valid exemption on file and it was only after the revocation of its billing privileges that Petitioner submitted its Attestation.  ALJ Decision at 5 (“Petitioner’s late-filed Attestation and late-filed enrollment application . . . does not absolve Petitioner from its obligation to maintain accreditation as required under the regulations.”).  NSC determined based on billing reports that Petitioner had, in fact, continued to bill Medicare for goods and services requiring accreditation without maintaining its accreditation and, therefore, denied reinstatement of Petitioner’s billing privileges.  CMS Ex. 6, at 3.

Page 11

Petitioner did not appeal the rejection of its initial CAP and, in any event, that decision is not reviewable by the ALJ or the Board.  See 42 C.F.R. § 405.809(b)(2); DMS Imaging at 8.

Second, on March 20, 2019, Petitioner submitted what it called a “CAP,” which was both untimely and barred under the regulations.  CMS Exs. 7, 9 (submitted more than 30 days after the postmark date of the revocation notice); 42 C.F.R. § 424.809(a)(2) (allowing the submission of a single CAP).  Nevertheless, NSC reasonably treated Petitioner’s second “CAP” as a timely request for reconsideration because it was submitted within 60 days of the postmark date of the revocation notice.  Ironically, if NSC had treated Petitioner’s second “CAP” as a corrective action plan as Petitioner contends it should have done, then Petitioner’s appeal rights would have ended when NSC refused to reinstate Petitioner’s billing privileges based on the second “CAP.”  Instead, Petitioner was able to request an ALJ hearing on the reconsidered determination and has now further appealed the ALJ Decision to the Board in accordance with the regulations.  See 42 C.F.R. §§ 498.5(l)(2), 498.80.  Moreover, contrary to Petitioner’s assertion, the Attestation submitted with its second “CAP” (and all the arguments set forth in the second “CAP”) were considered by NSC as reflected in the reconsidered determination.  CMS Ex. 10, at 3-5.

Petitioner has fully availed itself of the administrative appeal rights available under the regulations and has not been “deprived” of any right to respond to the notice of revocation.  Moreover, substantial evidence in the record supports the ALJ’s conclusion that “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.”  ALJ Decision at 5.

Page 12

Conclusion

For the reasons stated above, the Board affirms the ALJ Decision upholding the revocation of Petitioner’s Medicare enrollment and billing privileges under 42 C.F.R. §§ 424.57(c)(22) and 424.57(e)(1).