Providers Should Use Cost Report Protest Procedure to Preserve Medicare Appeal Rights for Legal Challenges
October 2, 2009
Hospitals and other providers should ensure that they preserve the right to appeal “self-disallowed” items when submitting Medicare cost reports. Effective for cost reporting periods ending on or after December 31, 2008, Medicare regulations require that a provider either include a claim for reimbursement of a cost on its cost report or self-disallow the cost by following the procedures for filing a cost report under “protest,” in order for the Provider Reimbursement Review Board (“PRRB”) to obtain jurisdiction over the claim. 42 C.F.R. § 405.1835(a)(1). The procedures for submitting a cost report protest item are set forth at Provider Reimbursement Manual, Part II, § 115.
Medicare rules now specify that a provider must use the protest procedure when it believes a claim may not be allowable or may not be in accordance with Medicare policy. This means that if a provider believes a Medicare regulation or policy is contrary to law, it will need to preserve its right to appeal that issue by including it as a protest item when filing its cost report. Previously, under the Supreme Court’s decision in Bethesda Hospital Ass’n v. Bowen, 485 U.S. 399 (1988), providers did not need to present a challenge to a Medicare regulation or policy in the cost report in order to preserve appeal rights since presenting such a challenge to the fiscal intermediary would have been futile. While the Centers for Medicare & Medicaid Services (“CMS”) insists that the new rule for self-disallowed items is consistent with the Bethesda decision, it clearly represents a departure from prior PRRB practice.
CMS commentary also suggests that providers should use the protest item procedure to preserve challenges to the accuracy of government data used in preparing cost reports. Thus, for example, if a provider believes that the SSI percentage furnished by CMS is incorrect (or may be incorrect), it should preserve its right to appeal that issue through a protest item. Another current issue that providers should consider preserving through the protest item procedure is the challenge to CMS’s implementation of the rural floor/budget neutrality adjustment.
Along with CMS’s new regulation restricting the time period in which providers may add issues to PRRB appeals, the new rule on self-disallowed items means that providers must be vigilant in ensuring that they preserve and pursue Medicare appeal issues. If you have any questions about this matter, please contact Susan Philp (202-872-6735) or the PPSV attorney with whom you regularly work.
